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/raid1/www/Hosts/bankrupt/TCR_Public/130830.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, August 30, 2013, Vol. 17, No. 240 Headlines 30DC INC: Introduces Digital Publishing Blueprint Business System 38 STUDIOS: Curt Schilling Can't Escape Suit Over Failed Co. ABC LEARNING: Australian Bankruptcies Measure Up Under U.S. Law AEOLUS PHARMACEUTICALS: Registers 15MM Shares Under Stock Plan AFFYMAX INC: Cuts Short Lease Agreement with CA-Foothill AGFEED INDUSTRIES: Equity Committee Supports Assets Sale ALLY FINANCIAL: Inks $1 Billion Investment Agreement AMERICAN AIRLINES: Govt. Sees No Need for Speed on Antitrust Suit AMERICAN AIRLINES: Govt., AMR Can't Agree on Pre-Trial Preparation AMERICAN AIRLINES: Judge Leaning Toward Plan, But Won't Rule Yet AMERICAN AIRLINES: Customers Want DOJ Suit Handled Outside Ch. 11 AMERICAN AIRLINES: US Airways' Wash. Airport Prize Hobbles Merger AMERICAN AIRLINES: TWU Calls on DOJ to Drop US Airways Merger Suit AMERICAN APPAREL: Domestic Subsidiaries Guarantee $206,000 Notes AMERICAN ROADS: Can Employ Curtis as Conflicts Counsel AMERICAN ROADS: Reorganization Survives Objections AMERICAN ROADS: Can Employ Protiviti as Financial Advisor AMERICAN SEAFOODS: Poor Performance Cues Moody's to Cut CFR to B3 AMPAL-AMERICAN: Common Stock Delisted From NASDAQ APPLIED DNA: Chief Financial Officer Resigns AQUEDUCT RACE TRACK: Facing Closure ARCAPITA BANK: Inks Agreed Order Re: Payment of KPMG Invoices ARMORWORKS ENTERPRISES: US Must Defend Delaying $29MM Payments ARROW ALUMINUM: Files First Amended Plan Outline AUTOPARTS HOLDINGS: S&P Lowers Corp. Credit Rating to 'B-' BRANDYWINE REALTY: Fitch Affirms 'BB+' Issuer Default Rating CENGAGE LEARNING: Creditors Seek to Invalidate Copyright Liens CERTENEJAS INCORPORADO: Confirmation Hearing Continued to Oct. 10 CHINA BAK: Incurs $10.3-Mil. Net Loss in June 30 Quarter COLEMAN CABLE: Market Growth Prompts Moody's to Lift CFR to 'B1' COLOMBIA CREST: Concludes Earn-In Agreement for Venecia Project COLOREP INC: Stubbs Alderton Approved as Corporate Counsel COLOREP INC: Stutman Treister Okayed as Reorganization Counsel COMMONWEALTH GROUP: Seeks Dismissal of Chapter 11 Case COMMUNITY TOWERS: EDR Approved as Valuation & Economic Expert CONVERGEX GROUP: S&P Affirms & Withdraws 'B+' Counterparty Rating CORNERSTONE HOMES: Sold Unregistered Securities, SEC Says COUNTRYWIDE FINANCIAL: Beats FDIC's $1.5B RMBS Suit CROC LLC: Bankruptcy Stays SRS North Carolina Property's Lawsuit DESERT LAND: Dist. Ct. Dismisses Related Suit vs. Shotgun Nevada DESIGNLINE CORP: Seeks $3-Million Ch. 11 Loan DETROIT, MI: Retains Casino Tax Revenue DETROIT, MI: Can Keep Casino Tax Revenue, Judge Rules DETROIT, MI: City's Woes Add to Angst Over Municipal Debt DIGERATI TECHNOLOGIES: Proofs of Claim Due by Oct. 16 EAST COAST BROKERS: Real Estate Brings $68.7 Million EASTMAN KODAK: Wins Approval of Amended APA With RED-Rochester ECO BUILDING: Sam Kan Quits as Accountants ECOSPHERE TECHNOLOGIES: Continues to Provide Services to SEECO EDENOR SA: Securities Placed Under "Common Trading" EFL PARTNERS X: Liberty RE Assets Wins Case Dismissal ELBIT IMAGING: Creditors Reject Plan of Arrangement, Court Finds EMPIRE RESORTS: Option to Lease EPT Property Extended to Aug. 30 ENDEAVOUR INTERNATIONAL: Second Supplemental Deed with Cidoval ENDICOTT INTERCONNECT: Gets Court OK for Feather Lane as Advisor ENDICOTT INTERCONNECT: Panel to Tap GlassRatner as Fin'l Advisor ENERGY XXI: Fitch Affirms 'B+' Issuer Default Ratings ENERGY FUTURE: Moody's Lowers CFR to 'Caa1'; Outlook Negative EQUIPOWER RESOURCES: S&P Assigns 'BB' Rating to $635MM Loan EXIDE TECHNOLOGIES: Court Approves Amended Annual Incentive Plan EXPERIENCE ART: Incurs $240K Net Loss in Second Quarter EPAZZ INC: Amends Second Quarter Form 10-Q to Add Exhibit FAIRBANKS PROPERTIES: Case Summary & 8 Unsecured Creditors FIRST DATA: Added Joseph Plumeri to Board of Directors FIRST SEALORD: Must Face Clawback Suit, Pa. Court Says FIRST SECURITY: 401(K) Plan "Blackout Period" on Sept. 16 to 23 FLORIDA GAMING: Can Use Cash Collateral; Court Keeps Receiver FLORIDA GAMING: Prepetition Lenders Object to Cash Collateral Use FOUR OAKS: Incurs $104,000 Net Loss in Second Quarter GARLOCK SEALING: Bankruptcy Trial Concludes in N.C. GELT PROPERTIES: Cash Collateral Hearing Continued to Oct. 29 GENERAL PROPERTIES: Voluntary Chapter 11 Case Summary GEYMONT CONSTRUCTION: Case Summary & 20 Largest Unsec. Creditors GINGER BEEF: Applies for Temporary Management Cease Trade Order GLYECO INC: Sells $2.6 Million Units GMX RESOURCES: Lenders Prevail on Make-Whole Premium Dispute GREEN GOLD: Herb Farm Files Chapter 12 Bankruptcy HARLAN LABORATORIES: Default Risk Cues Moody's to Cut CFR to Caa2 HERCULES OFFSHORE: Files Fleet Status Report as of August 21 HORNE INTERNATIONAL: Incurs $215,000 Net Loss in Second Quarter HOSTESS BRANDS: Properties Are Sold to Hackman Capital HRK HOLDINGS: Can Borrow $1.2 Million From Regions Bank HRK HOLDINGS: Wants to Borrow Add'l $2.5MM From Regions Bank INTERFAITH MEDICAL: Seeks to Obtain $15-Mil. DIP Loan from DASNY INTERFAITH MEDICAL: Can Access Cash Collateral Until Sept. 13 INTERFAITH MEDICAL: Inks Deal to Settle DASNY's $125-Mil. Claims INQUEST TECHNOLOGY: App. Ct. Affirms $2MM Award for Peter Reilly IZEA INC: Sells $2.3 Million Units J.C. PENNEY: Incurs $586 Million Net Loss in Second Quarter JONESBORO HOSPITALITY: Voluntary Chapter 11 Case Summary JRL PROPERTIES: Case Summary & Unsecured Creditor K-V PHARMACEUTICAL: Plan Confirmed; Lenders Lose $33-Mil. K-V PHARMACEUTICAL: Judge Greenlights Reorganization Plan K-V PHARMACEUTICAL: Medicaid Settlement Approved LEO MOTORS: Incurs $188,000 Net Loss in Second Quarter LIGHTSQUARED INC: Lenders Seek Court Approval to Sell 'LP' Assets LIGHTSQUARED INC: Facing Two Major September Hearings M P M INC: Case Summary & Unsecured Creditor MACROSOLVE INC: Names MaloneBailey LLP as New Accountants MUSCLEPHARM CORP: Marine MP to Resell 780,000 Common Shares MYCO PROPERTY: Case Summary & 18 Largest Unsecured Creditors NATIONAL ENVELOPE: R.R. Donnelley Resigns from Creditors Committee NATIONAL ENVELOPE: Committee Can Retain Guggenheim as Advisor NATIONAL ENVELOPE: Committee Can Retain Pachulski Stang as Counsel NATIONAL ENVELOPE: Wants Lease Decision Period Extended to Jan. 6 NEW CENTURY FIN'L: Longos' Unsecured Claim Reduced to $1,850 NESBITT PORTLAND: Seeks to Tap Jones Lang as Real Estate Broker NXT ENERGY: Incurs C$1.15-Mil. Net Loss in Second Quarter OM GROUP: Moody's Withdraws Ba2 Ratings Following Debt Repayment ORCHARD BRANDS: Moody's Withdraws 'B2' Ratings ORCKIT COMMUNICATIONS: May Ink $4.5MM License Pact with ECI PATRIOT COAL: Peabody Must Complete Rule 2004 Documents by Oct. 31 PATRIOT COAL: EY LLP to Provide Union Retirement Plan Audit Svcs. PENNSYLVANIA HIGHER: Fitch Keeps 'B' Ratings on 9 Note Classes PERSONAL COMMUNICATIONS: Seeks to Sell Assets for $105-Mil. PERSONAL COMMUNICATIONS: Can Tap $40-Mil. of JPMorgan DIP Loan PERSONAL COMMUNICATIONS: Can Use Cash Collateral Until Sept. 4 PERSONAL COMMUNICATIONS: Seeks to Pay Non-Insider Employee Bonuses PETTERS GROUP: Fundraiser Seeking Shorter Sentence PETRON ENERGY: To Issue 3 Million Shares Under Incentive Plan PHOENIX COMPANIES: A.M. Best Cuts Fin. Strength Rating to B(fair) PLC SYSTEMS: Gregory Mann Assumes Unit Managing Director Role PRIME TIME: Case Summary & 7 Unsecured Creditors PRM FAMILY: Can Hire Landegger Baron as Immigration Counsel PRM FAMILY: Wants to Employ Gursey Schneider as Accountants PTM TECHNOLOGIES: Court Rejects Debtor's, Lender's Rival Plans PYRAMIDS CHILD: Dist. Ct. Dismisses Suit vs. Clinton County, et al RADIAN GROUP: Mortgage Unit Enters Into Agreement with Freddie Mac REFCO INC: Grant Thornton Settles With Funds Over Collapse RESIDENTIAL CAPITAL: Seeks to Assume, Assign Impac Servicing Deals RESIDENTIAL CAPITAL: Objects to Gilbert Claims RESIDENTIAL CAPITAL: Objects to G. Valeeva & E. Okouneva's Claim RHYTHM AND HUES: Can Hire Fox Rothschild as Special ERISA Counsel ROCK POINTE: Sec. 341 Creditors' Meeting Set for Oct. 4 ROCK POINTE: John Munding Named as Chapter 11 Trustee ROTECH HEALTHCARE: Bankruptcy Court Approves Reorganization Plan SAN BERNARDINO, CA: Granted Chapter 9 Protection SCOOTER STORE: Obtains Court Approval to Use Cash Collateral SCOOTER STORE: Exclusive Period to File Plan Ends Nov. 11 SCOOTER STORE: Obtains Court Approval to Use Cash Collateral SCOOTER STORE: Exclusive Period to File Plan Ends Nov. 11 SEMGROUP LP: 3rd Circuit Issues Key Ruling on Equitable Mootness SEQUA CORP: S&P Affirms 'B' CCR & Revises Outlook to Negative SIRIUS INT'L: Fitch Affirms 'BB+' $250MM Preference Shares Rating SKILLED HEALTHCARE: Moody's Lowers CFR to 'B2'; Outlook Stable SPECIALTY PRODUCTS: Agencies Slam Ch. 11 Disclosure for Plan SPECTRUM BRANDS: Fitch Affirms 'BB-' Issuer Default Rating SPIRE CORP: Guy Mayer Quits From Board SWJ MANAGEMENT: Files Schedules of Assets and Liabilities T-L BRYWOOD: RCG-KC Brywood Balks at Exclusivity Extension Bid T-L BRYWOOD: Urges Court to Approve Plan Outline THEODORO BAKING: Files for Chapter 11 in St. Louis TRIMJOIST CORP: Bankr. Ct. Abstains From Suit v. Company President UNIFIED 2020: Amends Application to Employ J. Slim as Co-Counsel USA COMMERCIAL: Nev. Dist. Ct. Rules Against Compass & D. Blatt VAUGHN COLLEGE: S&P Lowers Rating on 2006 Revenue Bonds to 'BB' VILLAGE AT KNAPP'S: Files Schedules of Assets and Liabilities VILLAGE AT KNAPP'S: Corrected List of Top Unsecured Creditors VITAMINSPICE: Jehu Hand Obtains Judgment in Defamation Suit XTREME GREEN: Files Motion to Obtain $2-Mil. in DIP Financing XTREME IRON: Chap. 11 Trustee Files Joint Plan of Liquidation YRC WORLDWIDE: Amends $350 Million Securities Prospectus Z TRIM HOLDINGS: Edward Smith Held 69.9% Equity Stake at Aug. 20 ZUERCHER TRUST: Case Trustee Can Employ Grobstein as Fin'l Advisor * BlackRock Wins Dismissal of Securities Lending Suit * JPMorgan FERC-Probe Records Sought by Senate Investigators * CoreLogic Reports 49,000 Completed Foreclosures in July * Fitch Says U.S. High Yield Sensitive to Emerging Market Defaults * Regulators Back Away From Tougher Mortgage Rules * S&P Raises Rating on 3 US Wireless Tower Operators After Review * AlixPartners Bags TMA's "Turnaround of the Year" Award * 4th Cir. Appoints Keith L. Phillips as E.D. Va. Bankruptcy Judge * BOOK REVIEW: A Legal History of Money in the United States, 1774-1970 ********* 30DC INC: Introduces Digital Publishing Blueprint Business System ----------------------------------------------------------------- 30DC, Inc., launched a Digital Publishing Blueprint, a complete system consisting of everything needed to develop a business selling content on mobile environments like Apple's Newsstand. With Digital Publishing Blueprint, any Internet publisher of user-generated content can create a digital publication within a business or market niche that they are passionate about. The centerpiece of the program is a new, in-depth, six-week, seven-module training program on how to create, develop and market a digital magazine and other types of digital publications from scratch, and includes the use of the MagCast platform to create an app and effectively build market leadership in a particular niche. Digital Publishing Blueprint was developed from 30DC's MagCast pilot program, introduced in the last year, whereby nearly 400 of its licensees, many without prior magazine publishing experience, technical skills, and limited lists, launched digital publishing businesses from scratch on Apple Newsstand, generating approximately 1,250,000 readers. Members of DIGITAL PUBLISHING BLUEPRINT will learn the strategies and tactics for creating, publishing and marketing magazines both on and outside of Apple Newsstand via seven modules: Module #1: Digital Opportunities Module #2: Content Creation Mastery Module #3: Creating Your Magazine App Module #4: Creating Your First Magazine Issue Module #5: Publishing & Submitting Your App to Apple Module #6: Marketing Secrets & Strategies Module #7: Go Big - Strategic methods to Leverage your MagCast A copy of the press release is available for free at: http://is.gd/cgC3H9 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. 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. 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. 38 STUDIOS: Curt Schilling Can't Escape Suit Over Failed Co. ------------------------------------------------------------ Law360 reported that a Rhode Island judge refused to dismiss a lawsuit accusing former MLB ace Curt Schilling, Wells Fargo Securities LLC and Barclays Capital PLC of misleading Rhode Island about the risks associated with $75 million in taxpayer loan financing for Schilling's now-bankrupt video game venture. According to the report, the defendants' arguments asking the state court to dismiss the case were largely shot down by Rhode Island Superior Court Judge Michael Silverstein in a 99-page opinion. The defendants had said that the state's damage claims lack justiciability, the report related. 38 Studios LLC, a video-game developer founded by former Boston Red Sox pitcher Curt Schilling, filed for liquidation on June 8, 2012, without attempting to reorganize. Although based in Providence, Rhode Island, the company filed the Chapter 7 petition in Delaware (Case No. 12-11743). ABC LEARNING: Australian Bankruptcies Measure Up Under U.S. Law --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that according to an Aug. 27 opinion by the U.S. Court of Appeals in Philadelphia, an Australian corporate bankruptcy satisfies the standards for recognition as a so-called foreign main proceeding under Chapter 15 of U.S. bankruptcy law. The report relates that Australian corporate bankruptcies differ in facially significant aspects. On close examination, Circuit Judge Joseph Scirica said they fall in line with procedures and creditors' rights in the U.S. law. According to the report, Judge Scirica said that only one other U.S. court has decided that Australian bankruptcy proceedings are entitled to recognition in the U.S. A finding of recognition automatically halts creditor actions in the U.S. while allowing the foreign court to draw in assets and make distributions to creditors under foreign law. In the Third Circuit case, an Australian corporation operated in the U.S. through subsidiaries. A U.S. unsecured creditor obtained a judgment and argued unsuccessfully in bankruptcy court in Delaware that Australian proceedings weren't up to snuff compared with U.S. law. In Australia, a receivership on behalf of secured creditors can run parallel with a liquidation on behalf of everyone else. The U.S. creditor contended that Australian law wasn't a "collective proceeding" because the receivership was only for benefit of secured creditors. The report relates that Judge Scirica disagreed, showing in his opinion how U.S. and Australian law work toward the same ends. He said that the Netherlands have similar bankruptcy laws which have been held satisfactory in the U.S. Were the Australian bankruptcy not recognized in the U.S., Judge Scirica said the U.S. creditor, although unsecured, would have been able to jump ahead of Australian secured creditors by glomming assets in the U.S. That would "eviscerate the orderly liquidation proceeding," Judge Scirica said. The case is In re ABC Learning Centres Ltd., 12-2808, 3rd U.S. Circuit Court of Appeals (Philadelphia). About ABC Learning Based in Australia, ABC Learning Centres Limited (ASX: ABS) -- http://www.childcare.com.au/-- provides childcare services and education in more than 1,200 centers in Australia, New Zealand, the United States and the United Kingdom. The Company's subsidiaries include A.B.C. Developmental Learning Centers Pty Ltd., A.B.C. Early Childhood Training College Pty Ltd., Premier Early Learning Centers Pty Ltd., A.B.C. Developmental Learning Centers (NZ) Ltd., A.B.C. New Ideas Pty Ltd., A.B.C. Land Holdings (NZ) Limited and Child Care Centers Australia Ltd. On Jan. 26, 2007, it acquired La Petite Holdings Inc. On Feb. 2, 2007, it acquired Forward Steps Holdings Ltd. On March 23, 2007, it acquired Children's Gardens LLP. In September 2007, the Company purchased the Nursery division (Leapfrog Nurseries) from Nord Anglia Education PLC. In June 2008, the Company completed the sale of a 60% stake in its United States business to Morgan Stanley Private Equity. In November 2008, ABC Learning Centres Limited appointed Peter Walker and Greg Moloney of Ferrier Hodgson as voluntary administrators of the company and a number of its subsidiaries. Subsequent to the appointment of administrators, the company's banking syndicate appointed Chris Honey, Murray Smith and John Cronin of McGrathNicol as receivers. The Administrators filed a Chapter 15 petition for the Company (Bankr. D. Del. Case No. 10-11711) on May 26, 2010. Joel A. Waite, Esq., at Young, Conaway, Stargatt & Taylor, represents the Petitioners in the Chapter 15 case. ABC's debts and assets were estimated to be between US$100 million and US$500 million. A separate Chapter 15 petition was filed for affiliate A.B.C. USA Holdings Pty Ltd., listing assets and debts of at least US$100 million. AEOLUS PHARMACEUTICALS: Registers 15MM Shares Under Stock Plan -------------------------------------------------------------- Aeolus Pharmaceuticals, Inc., will issue 15 million shares of its common stock under the Company's Amended and Restated 2004 Stock Incentive Plan. The proposed maximum aggregate offering price is $3.67 million. A copy of the Form S-8 is available for free at: http://is.gd/Jcu6fX About Aeolus Pharmaceuticals Mission Viejo, California-based Aeolus Pharmaceuticals, Inc., is a Southern California-based biopharmaceutical company leveraging significant government investment to develop a platform of novel compounds in oncology and biodefense. The platform consists of over 200 compounds licensed from Duke University and National Jewish Health. The Company's lead compound, AEOL 10150, is being developed as a medical countermeasure ("MCM") against the pulmonary sub-syndrome of acute radiation syndrome ("Pulmonary Acute Radiation Syndrome" or "Lung-ARS") as well as the gastrointestinal sub-syndrome of acute radiation syndrome ("GI-ARS"). Both syndromes are caused by acute exposure to high levels of radiation due to a radiological or nuclear event. It is also being developed for use as a MCM for exposure to chemical vesicants such as chlorine gas, sulfur mustard gas and nerve agents. Grant Thornton LLP, in San Diego, Cal., expressed substantial dobut about Aeolus Pharmaceuticals' ability continue as a going concern. The independent auditors noted that the Company has incurred recurring losses and negative cash flows from operations, and management believes the Company does not currently possess sufficient working capital to fund its operations through fiscal 2013. The Company's balance sheet at March 31, 2013, showed $4.67 million in total assets, $3.06 million in total liabilities and $1.60 million in total stockholders' equity. AFFYMAX INC: Cuts Short Lease Agreement with CA-Foothill -------------------------------------------------------- Affymax, Inc., executed a Seventh Amendment to Lease, dated as of Aug. 14, 2013, and effective as of Aug. 15, 2013, with CA-Foothill Research Center L.P., as Landlord, which provides for the acceleration of the termination date of the lease agreement for the Company's offices and laboratories located at 4001 Miranda Avenue, 4009 Miranda Avenue and 4015 Miranda Avenue, in Palo Alto, California, dated as of May 30, 1990, as amended by amendments one through six. The Lease Agreement was previously scheduled to expire on Sept. 30, 2014, and the Seventh Amendment provides for the acceleration of the termination date of the Lease Agreement to Aug. 15, 2013. In consideration for the settlement of outstanding and future lease payments and costs associated with a full and complete relinquishment of the facilities under the Lease Agreement, the Company agreed to make a payments to the Landlord totaling approximately $2.6 million, which amount includes rent and acceleration payments, forfeiture of the Company's Security Deposit held by the Landlord and authorization for the Landlord to draw upon the Company's letter of credit held by the Landlord pursuant to the Lease Agreement. The Company is now headquartered at 19200 Stevens Creek Boulevard, Suite 240, Cupertino, CA 95014. About Affymax Affymax, Inc. (Nasdaq: AFFY) is a biopharmaceutical company based in Palo Alto, California. In March 2012, the U.S. Food and Drug Administration approved the Company's first and only product, OMONTYS(R) (peginesatide) Injection for the treatment of anemia due to chronic kidney disease in adult patients on dialysis. OMONTYS is a synthetic, peptide-based erythropoiesis stimulating agent, or ESA, designed to stimulate production of red blood cells and has been the only once-monthly ESA available to the adult dialysis patient population in the U.S. The Company co- commercialized OMONTYS with its collaboration partner, Takeda Pharmaceutical Company Limited, or Takeda during 2012 until February 2013, when the Company and Takeda announced a nationwide voluntary recall of OMONTYS as a result of safety concerns. As of June 30, 2013, the Company had $20.91 million in total assets, $20.58 million in total liabilities and $325,000 in total stockholders' equity. Bankruptcy Warning "Our operations have consumed substantial amounts of cash since our inception. As a result of the February 23, 2013 nationwide voluntary recall of OMONTYS and the suspension of all marketing activities, there is significant uncertainty as to whether we will have sufficient existing cash, cash equivalents and investments to fund our operations for the next 12 months. "Our liabilities exceed our assets. While we continue to reduce cash outflows, there is no assurance that we have sufficient resources remaining to meet existing and future obligations in a timely manner. If Takeda is unable to reintroduce the product or we are unable to obtain additional funding in the near future, our cash resources will rapidly be depleted and we will be required to further reduce or suspend operations, which would likely have a material adverse effect on our business, stock price and our relationships with third parties with whom we have business relationships, at least until additional funding is obtained. If we do not have sufficient funds to continue operations, we could be required to liquidate our assets, seek bankruptcy protection or other alternatives, and it is likely that investors will lose all or some of their investment in us," the Company said in the Form 10-Q filing for the period ended June 30, 2013.. AGFEED INDUSTRIES: Equity Committee Supports Assets Sale -------------------------------------------------------- BankruptcyData reported that AgFeed Industries' official committee of equity security holders filed with the U.S. Bankruptcy Court a statement in support of AgFeed Industries' motion for entry of an order approving the sale of all or substantially all of the assets of AgFeed USA and its Debtor subsidiaries. The committee explains, "The Equity Committee supports the Debtors' sale to the Prevailing Bidder. Despite being formed the Friday evening before the Monday, August 26, 2013 Auction, the Debtors quickly provided information to the Equity Committee and allowed access to their professionals including Keith A. Maib, the Debtors' Chief Restructuring Officer. The members of the Equity Committee and their proposed professionals previously participated in the Ad Hoc Committee of Equity Security Holders (the 'Ad Hoc Committee'). The Ad Hoc Committee, among other things, indentified potential bidders, valued the Debtors' assets and reviewed publicly available information on the Debtors and the industry. These efforts of the Ad Hoc Committee enabled the Equity Committee to quickly and diligently digest and analyze the previously confidential information regarding the competitive bids and the Debtors' marketing efforts. Based upon the information provided and the discussions with the Debtors' professionals, the Equity Committee is confident that the Debtors conducted a robust marketing process which resulted in an additional qualified bid for the purchase of substantially all of the assets of AgFeed USA and its debtor subsidiaries. Moreover, the Auction was a success and resulted in an increase of the net bid value by over $12 million. The Equity Committee believes that the terms, conditions and form of the Prevailing Bid were the highest and best offered at the Auction." About Agfeed Industries AgFeed Industries, formerly known as M2 P2, LLC, is an international agribusiness with operations in the U.S. and China. AgFeed has two business lines: animal nutrition in premix, concentrates and complete feeds and hog production. In the U.S., AgFeed's hog production unit, M2P2, is a market leader in setting new standards for production efficiency and productivity. AgFeed believes the transfer of these processes, procedures and techniques will allow its new Western-style Chinese hog production units to set new standards for production in China. China is the world's largest pork market consuming 50 percent of global production and over 62 percent of total protein consumed in China is pork. Hog production in China currently enjoys income tax free status. AgFeed Industries, Inc., and its affiliates filed voluntary petitions under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 13-11761) on July 15, 2013, with a deal to sell most of its subsidiaries to The Maschhoffs, LLC, for cash proceeds of $79 million, absent higher and better offers. The Debtors estimated assets of at least $100 million and debts of at least $50 million. Keith A. Maib signed the petition as chief restructuring officer. Hon. Brendan Linehan Shannon presides over the case. Donald J. Bowman, Jr., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, serve as the Debtors' counsel. BDA Advisors Inc. acts as the Debtors' financial advisor. The Debtors' claims and noticing agent is BMC Group, Inc. ALLY FINANCIAL: Inks $1 Billion Investment Agreement ---------------------------------------------------- Ally Financial Inc., on Aug. 19, 2013, entered into Investment Agreements with certain investors pursuant to which Ally agreed to issue and sell to those Investors, and those Investors agreed to severally purchase from Ally, an aggregate of 166,667 shares of Ally's common stock, $0.01 par value per share, at an aggregate price of $1 billion. The completion of the Private Placement is subject to the fulfillment or written waiver of certain conditions, including, among others, receipt by Ally of the non-objection of the Board of Governors of the Federal Reserve System to Ally's re-submitted capital plan under the Comprehensive Capital Analysis and Review 2013, the repurchase by Ally of all outstanding shares of its Fixed Rate Cumulative Mandatorily Convertible Preferred Stock, Series F-2 and the elimination or relinquishment of any right of the holder of Series F-2 Preferred Stock to receive, in certain circumstances, additional shares of common stock pursuant to Section 6(a)(i)(B) of the certificate of designations of the Series F-2 Preferred Stock. A copy of the Investment Agreement is available for free at: http://is.gd/Q0TXbc Repurchase Transaction On Aug. 19, 2013, Ally entered into an Agreement in Respect of Securities Repurchase and Share Adjustment Provision with the United States Department of the Treasury for the repurchase by the Company of all outstanding shares of Series F-2 Preferred Stock held by Treasury and the termination of the Share Adjustment Right. Pursuant to the Purchase and Release Agreement, Ally will purchase from Treasury, and Treasury will sell to the Company, all outstanding shares of the Series F-2 Preferred Stock for an aggregate purchase price of an amount in cash equal to $5.2 billion plus accrued and unpaid dividends and Ally will pay to Treasury an amount in cash equal to $725 million in consideration for Treasury's release of any rights it has under the Share Adjustment Right. The obligations of Ally and Treasury to consummate the Repurchase Transaction and the SAR Termination are subject to the fulfillment or written waiver of certain conditions, including, among others, receipt by Ally of the non-objection of the Federal Reserve to Ally's CCAR Plan, and the successful consummation of the Private Placement. A copy of the Repurchase Agreement is available for free at: http://is.gd/bijT7S Relinquishment Agreements In connection with the Private Placement, FIM Holdings LLC and Treasury entered into separate agreements with Ally, each dated Aug. 19, 2013, pursuant to which each of Ally, FIM and Treasury irrevocably relinquished and surrendered all rights, privileges and powers afforded to such party and releasing all obligations and duties owed or required to be performed under the Amended and Restated Governance Agreement, dated May 21, 2009, made by and among Ally, FIM, Treasury and other parties thereto. Upon effectiveness of the Relinquishment Agreements, Ally, FIM and Treasury will also release all parties that had signed a Joinder Agreement to the Governance Agreement from their obligations to be bound by, and subject to, all the terms and conditions of the Governance Agreement. Each Relinquishment Agreement becomes effective only upon the satisfaction of certain conditions, including, the execution and effectiveness of the Stockholders Agreement, and the consummation of the Private Placement, the Repurchase Transaction and the SAR Termination. A copy of each Relinquishment Agreement is available for free at: http://is.gd/DZoKmQ Stockholders Agreement On Aug. 19, 2013, Ally, FIM and Treasury entered into a Stockholders Agreement in order to memorialize certain understandings relating to the composition of the board of directors of the Company. Pursuant to the Stockholders Agreement, the Board will continue to be comprised of 11 directors. A copy of the Stockholders Agreement is available for free at: http://is.gd/gPDMTw 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 percent stake. Private equity firm Cerberus Capital Management LP keeps 14.9 percent, while General Motors Co. owns 6.7 percent. 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. AMERICAN AIRLINES: Govt. Sees No Need for Speed on Antitrust Suit ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Justice Department and seven states say the antitrust trial with AMR Corp. and US Airways Group Inc. should begin in March, not in November as the airlines request. According to the report, U.S. District Judge Colleen Kollar- Kotelly will conduct a status conference today, Aug. 30, to decide on a schedule for the trial to decide if a proposed merger of the two airlines violates antitrust law. The government, the report discloses, sees no need for speed. Although the parent of American Airlines Inc. contends the pending antitrust suit creates uncertainty for workers and passengers, the government points out how AMR's just-filed operating report showed July to be the most-profitable month in the company's history. Likewise, this year's second quarter was the most profitable second quarter in AMR's existence. The government provided a list showing how trials began in comparable antitrust cases about six months or more after the complaints were filed. The Justice Department criticized a similar list provided by AMR because it referenced antitrust suits conducted before a Federal Trade Commission administrative law judge whose opinion would only be a recommendation to the commission. The states and the government propose having four months to conduct document investigations and examinations under oath. There would be one month for experts' reports and examinations, followed by a month to file pre-trial motions and briefs. States joining the government in trying to block the merger include Texas and Arizona, where the two airlines are based. The antitrust suit is U.S. v. US Airways Group Inc., 13-cv-01236, U.S. District Court, District of Columbia. 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. 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: Govt., AMR Can't Agree on Pre-Trial Preparation ------------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the disagreement between the U.S. Justice Department and AMR Corp. and US Airways Group Inc. about the commencement date for an antitrust trial isn't the only pretrial issue on which they can't agree. The two sides are far apart on the question of how much investigation is needed before the case is ready for trial. According to the report, the government and the seven states seeking to block a merger between the two airlines want the trial to begin in March. The government needs six months partly because it wants to take examinations under oath of 50 witnesses. Examinations of the airlines' top four executives should run two days each, according to the government. AMR and US Airways told U.S. District Judge Colleen Kollar-Kotelly in Washington that the government should have only 10 examinations under oath, so trial can begin in November. The airlines also want limits on information-gathering activities. The parties laid out their positions in a jointly filed statement in advance of a status conference the judge will hold Aug. 30 to decide when the trial will start. The parties said they are "at impasse" over a trial-commencement date. According to the report, there are some minor issues on which they agree. They all say there must be a trial with witnesses and that the antitrust issues can't be decided just by filing papers. On the question of settlement, the government said it hasn't received an offer that "addresses competitive concerns." Any settlement would require the airlines to give up capacity at Washington's Reagan National Airport. The antitrust suit is U.S. v. US Airways Group Inc., 13-cv-1236, U.S. District Court, District of Columbia. Settlement? Law360 reported that the U.S. Department of Justice, American Airlines Inc. and US Airways Group Inc. on Aug. 28 expressed their interest in settling the government's challenge to the airlines' $11 billion merger, just one day after the DOJ requested a March 2014 trial date. According to the report, the government said in a joint report that it is "open to a settlement that addresses the competitive harms posed by the merger but have not yet received any such proposal from the defendants." The antitrust suit is U.S. v. US Airways Group Inc., 13-cv-1236, U.S. District Court, District of Columbia. 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. 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: Judge Leaning Toward Plan, But Won't Rule Yet ---------------------------------------------------------------- Law360 reported that a New York bankruptcy judge on Aug. 29 said he was leaning toward approving AMR Corp.'s reorganization plan but once again put off an official ruling on the matter, which has been thwarted by federal antitrust regulators who challenged the airline's proposed merger two weeks ago. According to the report, U.S. Bankruptcy Judge Sean H. Lane said he needed more time to review the arguments made for and against confirmation of the plan, which hinges on a proposed $11 billion merger with US Airways Group Inc. Scott Neuman, writing for Capital Public Radio, reports that Judge Lane said he is "finding the arguments in favor of confirmation fairly persuasive" to allow American to emerge from bankruptcy. Capital Public Radio, citing an Associated Press report, says Judge Lane reportedly could sign off on a restructuring plan for AMR Corp. on Sept. 12. The AP says: "Such a decision would only leave one obstacle -- although a big one -- to American's proposed merger with US Airways. That would be an antitrust lawsuit filed by the government earlier this month." 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. 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: Customers Want DOJ Suit Handled Outside Ch. 11 ----------------------------------------------------------------- Law360 reported that a group of American Airlines Inc. customers on Aug. 28 urged the judge overseeing the airline's bankruptcy to send the antitrust lawsuit they launched to block an $11 billion merger to federal district court, claiming bankruptcy court is not an appropriate forum. According to the report, the customers are asking U.S. Bankruptcy Judge Sean H. Lane to withdraw the reference to the adversary proceeding, which would allow the matter to proceed in the U.S. District Court for the Southern District of New York. The antitrust suit is U.S. v. US Airways Group Inc., 13-cv-1236, U.S. District Court, District of Columbia. 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. 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: US Airways' Wash. Airport Prize Hobbles Merger ----------------------------------------------------------------- Mary Jane Credeur & Sara Forden, writing for Bloomberg News, reported that as U.S. regulators spent the better part of six months preparing to sue to stop the American Airlines-US Airways Group Inc. merger, the carriers devised a plan to allay some antitrust concerns: an offer to cede flight slots at Washington's Reagan National Airport. According to the report, while the proposal fell flat, three people with knowledge of the matter said, the talks show the stakes at an airport where a merged carrier would control 69 percent of the flights. The airlines' overtures weren't enough, said the people, who asked not to be identified because the discussions were private, and the Justice Department sued on Aug. 13 to block the deal. If there's a way to settle the case, one element would almost certainly have to be a loosening of the airlines' grip at National, Washington's only airport with federal flight caps, the report related. JetBlue Airways Co. and Southwest Airlines Co. have said AMR Corp.'s American and US Airways should be forced to give up some slots, a step ordered in other mergers. "The problem is you've got a dominant carrier at the only slot- controlled airport" in Washington, said Jeff Straebler, managing director for aerospace in John Hancock Financial Services' bonds and corporate finance group in Boston, the report further related. A merged airline's market share would be "a big number, no question." The Justice Department, which also is concerned that a tie-up would boost fares, said that it hasn't received a proposed settlement from the airlines that addresses antitrust issues raised by the merger. 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. 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: TWU Calls on DOJ to Drop US Airways Merger Suit ----------------------------------------------------------------- Members of the Transport Workers Union (TWU) in Tulsa, Oklahoma -- home of American Airlines' largest maintenance and repair base -- delivered petitions with more than 8,000 signatures from all over the United States to the offices of the U.S. Department of Justice (DoJ) in Tulsa on Aug. 29. In a similar manner, airline workers and supporters from Chicago, Dallas, Los Angeles, Miami and other cities are calling for the government to drop its irrational lawsuit against the proposed merger of American Airlines and US Airways. The merger will protect good-paying U.S. jobs and give consumers the only real chance for competition with the Delta-United duopoly, which currently dominates the U.S. airline industry. "The DoJ lawsuit is completely inconsistent with its approval of the mergers of United/Continental and Delta/Northwest," said Tom Lee, president of TWU Local 568 in Miami. "Now, by trying to block the American Airlines/US Airways merger, the DOJ is prohibiting a more level field of competition within the industry." "We're counting on this merger to restore a level playing field in the industry and to help keep our jobs secure," said Sean Doyle, president of TWU Local 512 in Chicago. "It will enable us to compete with United and Delta and provide consumers with more choice. If the merger is blocked, we'll be at a competitive disadvantage, our jobs will be at risk, and consumers will lose out." "Workers at American Airlines and US Airways have struggled for more than a decade with reductions in wages, healthcare and pensions," said Donny Tyndall, president of TWU Local 502 in Los Angeles. "We support this merger 100 percent, because it will ensure we have an economic future. We can't understand why our own government is going to court to put good-paying U.S. jobs at risk." "If the DOJ blocks this merger, American Airlines and US Airways could again be faced with deep financial losses," said Darrin Pierce, president of TWU Local 513 in Dallas/Fort Worth. "We're doing everything to we can to make this industry more competitive, by offering quality service and real choices for consumers. Our efforts shouldn't be undermined by government intervention." AMR, the parent company of American Airlines, is ready to emerge from a difficult two-year bankruptcy process with a plan to merge with U.S. Airways. The proposed merger would create -- for the first time in years -- head-to-head competition between Delta and United and an American Airlines more able to compete with foreign carriers. In coming days, TWU members plan to join with members of other unions, consumer advocates, local elected officials and others to reach out to the White House and the Department of Justice, encouraging support for the proposed merger. TWU members have requested a meeting with U.S. Attorney General Eric Holder. "We'd like to let him know, directly, how this merger will help workers and consumers," said Dale Danker, president of TWU Local 514 in Tulsa. This coming Friday, August 30, U.S. District Judge Colleen Kollar- Kotelly will set a trial date for the Department of Justice's lawsuit against the proposed merger. TWU members have joined American Airlines and US Airways in seeking a speedy trial -- if DoJ proceeds with a legal action that appears to violate the precedents set during previous airline mergers. "When you've got a lawsuit this wrong-headed, the best thing is get it over with as soon as possible," said Mr. Danker. "Airline workers, passengers, shareholders -- everybody's going to be better off once we put this behind us and move ahead with a merger that makes sense." The Transport Workers Union of America (TWU) represents 200,000 workers and retirees, primarily in commercial aviation, public transportation and passenger railroads. The union is an affiliate of the AFL-CIO. 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. 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 APPAREL: Domestic Subsidiaries Guarantee $206,000 Notes ---------------------------------------------------------------- American Apparel Inc. issued on April 4, 2013, $206,000 aggregate principal amount of its 13 percent Senior Secured Notes due 2020 with a maturity date of April 15, 2020. The Notes are guaranteed by each of the Company's current and future 100 percent owned direct and indirect domestic subsidiaries, subject to certain customary automatic release provisions, including release of the subsidiary guarantor's guarantee upon the sale of all of that guarantor's equity interest or all or substantially all of its assets, designation of that guarantor as an unrestricted or immaterial subsidiary for purposes of the indenture and satisfaction of the defeasance or discharge provisions of the indenture. These guarantees will be joint and several obligations of the guarantors. The obligations of each guarantor under its note guarantee will be limited as necessary to prevent that note guarantee from constituting a fraudulent conveyance under applicable law. In accordance with Rule 3-10 of Regulation S-X, the Company retrospectively add: * Note 19 to Consolidated Financial Statements, Condensed Consolidating Financial Information, in Item 8 of the Company's annual report on Form 10-K for the year ended Dec. 31, 2012; and * Note 17 to Interim Consolidated Financial Statements, Condensed Consolidating Financial Information, in Item 1 of the Company's quarterly report on Form 10-Q for the quarterly period ended March 31, 2013. These additional notes reflect the Company's domestic subsidiaries, as guarantors under the note guarantees and the Company's international subsidiaries as non-guarantors. Item 8 of the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2012, and Item 1 of the Company's quarterly report on Form 10-Q for the quarterly period ended March 31, 2013, are being restated in their entirety to reflect these adjustments, copies of which are available for free at: http://is.gd/Ye86gw http://is.gd/K1bCGA About American Apparel Los Angeles, Calif.-based American Apparel, Inc. (NYSE Amex: APP) -- http://www.americanapparel.com/-- is a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel. As of September 2010, American Apparel employed over 10,000 people and operated 278 retail stores in 20 countries, including the United States, Canada, Mexico, Brazil, United Kingdom, Ireland, Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland, Israel, Australia, Japan, South Korea and China. Amid liquidity problems and declining sales, American Apparel in early 2011 reportedly tapped law firm Skadden, Arps, Slate, Meagher & Flom and investment bank Rothschild Inc. for advice on a restructuring. In April 2011, American Apparel said it raised $14.9 million in rescue financing from a group of investors led by Canadian financier Michael Serruya and private equity firm Delavaco Capital Corp., allowing the casual clothing retailer to meet obligations to its lenders for the time being. Under the deal, the investors were buying 15.8 million shares of common stock at 90 cents apiece. The deal allows the investors to purchase additional 27.4 million shares at the same price. The Company incurred a net loss of $37.27 million in 2012, as compared with a net loss of $39.31 million in 2011. The Company's balance sheet at June 30, 2013, showed $335.32 million in total assets, $392.67 million in total liabilities and a $57.35 million total stockholders' deficit. * * * American Apparel carries a Caa1 Corporate Family Rating from Moody's Investors Service and a 'B-' corporate credit rating from Standard & Poor's Ratings Services. AMERICAN ROADS: Can Employ Curtis as Conflicts Counsel ------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York authorized American Roads LLC, et al., to employ Curtis, Mallet- Prevost, Colt & Mosle LLP as their conflicts counsel, to be paid the following hourly rates: Partners $740 - $860 Of Counsel $635 Associates $305 - $600 Legal Assistants $190 - $240 Managing Clerk $450 Other Support Personnel $55 - $325 The firm will also be reimbursed for any necessary out-of-pocket expenses. About American Roads American Roads LLC, aka Alinda Roads LLC, which operates highways including the mile-long Detroit Windsor Tunnel linking the U.S. with Canada, sought bankruptcy court protection (Bankr. S.D.N.Y. Case No. 13-12412) in the Southern District of New York on July 25, 2013, citing $830 million in debt related to swaps and bonds. The case is assigned to Judge Burton R. Lifland. Sean A. O'Neal, Esq., and Louis A. Lipner, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, represent the Debtors. Greenhill & Co., LLC, and Protiviti, Inc., serve as the Debtors' financial advisor. The U.S. Trustee was unable to appoint members to an unsecured creditors' committee. An Hoc Committee of Bondholders, consisting of certain holders of Series G-1 Senior Secured Bonds and Series G-2 Senior Secured Bonds issued by American Roads LLC, is represented by Bojan Guzina, Esq., Andrew F. O'Neill, Esq., Allison Ross Stromberg, Esq., Larry J. Nyhan, Esq., Nicholas K. Lagemann, Esq., and Brian J. Lohan, Esq., at Sidley Austin LLP. AMERICAN ROADS: Reorganization Survives Objections -------------------------------------------------- Erik Larson, writing for Bloomberg News, reported that American Roads LLC, operator of the Detroit Windsor Tunnel linking the U.S. with Canada, moved closer to shedding $830 million in debt from swaps and bonds after a judge denied a bondholder group's bid to join the case. According to the report, U.S. Bankruptcy Judge Burton R. Lifland in Manhattan ruled on Aug. 29 that an ad-hoc group of investors didn't have legal standing in the case and therefore couldn't object to American Roads' proposed reorganization. Under the plan, holders of $496 million in bonds will receive nothing and ownership of the company will change hands. Lifland approved the company's materials explaining the plan to creditors -- a key step in advancing a Chapter 11 case through court, and said he would decide later whether to approve the plan, allowing American Roads to exit court protection, the report related. American Roads, based in Detroit, is owned by the private-equity company Alinda Capital Partners LLC, which negotiated the July 25 bankruptcy petition because American Roads couldn't meet obligations under the swaps and bonds, which were issued in 2006 as part of a financial restructuring, the report further related. The plan calls for $334 million in swap liability to be exchanged for sole ownership of American Roads by Bermuda-based Syncora Guarantee Inc., which backed the swap debt, the report said. About American Roads American Roads LLC, aka Alinda Roads LLC, which operates highways including the mile-long Detroit Windsor Tunnel linking the U.S. with Canada, sought bankruptcy court protection (Bankr. S.D.N.Y. Case No. 13-12412) in the Southern District of New York on July 25, 2013, citing $830 million in debt related to swaps and bonds. The case is assigned to Judge Burton R. Lifland. Sean A. O'Neal, Esq., and Louis A. Lipner, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, represent the Debtors. Greenhill & Co., LLC, and Protiviti, Inc., serve as the Debtors' financial advisor. An Hoc Committee of Bondholders, consisting of certain holders of Series G-1 Senior Secured Bonds and Series G-2 Senior Secured Bonds issued by American Roads LLC, is represented by Bojan Guzina, Esq., Andrew F. O'Neill, Esq., Allison Ross Stromberg, Esq., Larry J. Nyhan, Esq., Nicholas K. Lagemann, Esq., and Brian J. Lohan, Esq., at Sidley Austin LLP. AMERICAN ROADS: Can Employ Protiviti as Financial Advisor --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized American Roads LLC, et al., to employ Protiviti Inc. as financial advisor to, among other things, perform various accounting, administrative, and compliance tasks associated with the Chapter 11 process; and assist counsel and provide support and testimony, if needed, for any motions, recovery actions or litigation during the pendency of the case. The initial hourly rates for the professionals at Protiviti who are expected to have primary responsibility for the representation of the Debtors are as follows: Managing Director $580 - $620 Associate Directors and Directors $410 - $510 Managers and Senior Managers $280 - $400 Consultants and Senior Consultants $170 - $260 The Debtors and Protiviti agreed that Protiviti will not exceed $200,000 in fees over the course of its engagement without the Debtors' prior written consent. The Debtors also agreed to reimburse Protiviti for any necessary out-of-pocket expenses provided that the aggregate amount of the reimbursement does not exceed $15,000. About American Roads American Roads LLC, aka Alinda Roads LLC, which operates highways including the mile-long Detroit Windsor Tunnel linking the U.S. with Canada, sought bankruptcy court protection (Bankr. S.D.N.Y. Case No. 13-12412) in the Southern District of New York on July 25, 2013, citing $830 million in debt related to swaps and bonds. The case is assigned to Judge Burton R. Lifland. Sean A. O'Neal, Esq., and Louis A. Lipner, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, represent the Debtors. Greenhill & Co., LLC, and Protiviti, Inc., serve as the Debtors' financial advisor. The U.S. Trustee was unable to appoint members to an unsecured creditors' committee. An Hoc Committee of Bondholders, consisting of certain holders of Series G-1 Senior Secured Bonds and Series G-2 Senior Secured Bonds issued by American Roads LLC, is represented by Bojan Guzina, Esq., Andrew F. O'Neill, Esq., Allison Ross Stromberg, Esq., Larry J. Nyhan, Esq., Nicholas K. Lagemann, Esq., and Brian J. Lohan, Esq., at Sidley Austin LLP. AMERICAN SEAFOODS: Poor Performance Cues Moody's to Cut CFR to B3 ----------------------------------------------------------------- Moody's Investors Service downgraded the Corporate Family Rating for American Seafoods Group LLC (ASG) to B3 from B2, as well as its Probability of Default Rating to B3-PD from B2-PD. As a result, the company's senior subordinated notes due 2016 are downgraded to Caa1 from B3. The ratings on the company's Term loan A, Term Loan B, and revolving credit facility are affirmed at Ba3. The rating outlook is maintained at stable. The downgrade is primarily due to the company's persistently high leverage and weak interest coverage concurrent with weaker than expected operating results. Profitability will remain under pressure unless market prices increase materially for the company's primary products, including surimi, Pollock and Hake block and roe, which Moody's believes is unlikely in the near term. According to Moody's Analyst Brian Silver, "We expect some earnings improvement and debt repayment over the next twelve months, but leverage will remain elevated." The following ratings have been downgraded: Corporate Family Rating to B3 from B2; Probability of Default Rating to B3-PD from B2-PD; $275 million senior subordinated notes due May 2016 to Caa1 (LGD5, 72%) from B3 (LGD5, 72%). The following ratings have been affirmed with point estimate changes: $100 million senior secured term loan A due March 2016 to Ba3 (LGD2, 22%) from Ba3 (LGD2, 24%); $282 million senior secured term loan B due March 2018 to Ba3 (LGD2, 22%) from Ba3 (LGD2, 24%); $85 million senior secured revolver maturing March 2016 to Ba3 (LGD2, 22%) from Ba3 (LGD2, 24%); The outlook is maintained at stable. Ratings Rationale: The downgrade is largely the result of the company underperforming relative to Moody's expectations, as leverage has remained high and continues to increase moderately despite healthy fishing conditions. The key drivers behind the increase in leverage have been declining surimi and roe prices, which were down an average of 12% and 17% during 1H13 relative to 1H12 along with weakness in the Japanese Yen, concurrent with increasing debt balances. The debt increase primarily stem from accretion of the company's senior notes, which have increased nearly $29 million from 2Q12. The Ba3 (LGD2, 22%) ratings on the $85 million revolver, $100 million term loan A, and $282 million term loan B benefit from both upstream and downstream guarantees and are secured by a perfected security interest in substantially all the assets of the borrower (Group) and its subsidiaries, including its fishing rights and license agreements. The Caa1 (LGD5, 72%) rating on the $275 million senior subordinated notes due 2016 reflects their junior position in the capital structure relative to the revolver and term loans A and B as well as their senior position relative to the unrated senior Holdco PIK toggle notes. The stable outlook reflects Moody's expectation that ASG will grow revenues and EBITDA moderately, which will drive free cash flow generation that can be used for some debt repayment, though this will likely be offset by accretion in the company's senior notes. Moody's also expects ASG to continue to have healthy fishing volumes stemming from the increased TAC in the US Bering Sea (Pollock) and Pacific Fishery (Hake). The outlook further assumes that pricing for the company's products will remain inherently volatile. The ratings of ASG could be upgraded if adjusted leverage approaches 6.0 times and the company is able to maintain an adequate liquidity profile. Alternatively, the ratings could be downgraded if operating performance and/or liquidity deteriorates, which could be driven by factors outside of management's control including a poor fishing or pricing environment. If leverage exceeds 8.0 times and/or if coverage as measured by (EBITDA- Capex)/Interest is sustained below 1.0 times during the next twelve months, or if the company fails to generate positive free cash flow over a twelve month period, the ratings could be downgraded. The principal methodology used in this rating was the Global Protein and Agriculture Industry published in May 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. ASG Consolidated LLC (Consolidated), together American Seafoods Group LLC (Group) and its subsidiaries (ASG), is the largest harvester of fish for human consumption in the US in terms of volume (catch volumes in excess of 250,000 metric tons in 2011 and 2012). ASG harvests and processes a variety of fish species aboard sophisticated catcher-processor vessels and at its land-based processing facilities. In the US, ASG is believed to be the largest harvester and at-sea processor of Pollock and Pacific whiting (hake). The company's revenues for the twelve months ended June 30, 2013 were approximately $522 million. AMPAL-AMERICAN: Common Stock Delisted From NASDAQ ------------------------------------------------- The NASDAQ Stock Market LLC filed a Form 25 with the U.S. Securities and Exchange Commission notifying that Ampal-American Israel Corp.'s common stock has been removed from listing and registration on NASDAQ Stock Market. About Ampal-American Ampal-American Israel Corporation -- http://www.ampal.com/-- acquired interests primarily in businesses located in Israel or that are Israel-related. Ampal-American filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-13689) on Aug. 29, 2012, to restructure the Company's Series A, Series B and Series C debentures. Bankruptcy Judge Stuart M. Bernstein presides over the case. Ampal-American sought bankruptcy protection in the U.S. because bankruptcy laws in Israel would lead to the Company's liquidation. Michelle McMahon, Esq., at Bryan Cave LLP, serves as the Debtor's counsel. Houlihan Lokey serves as investment banker. The petition was signed by Irit Eluz, chief financial officer, senior vice president. The Company scheduled $290,664,095 in total assets and $349,413,858 in total liabilities. A three-member official committee of unsecured creditors is represented by Brown Rudnick as counsel. APPLIED DNA: Chief Financial Officer Resigns -------------------------------------------- Kurt H. Jensen resigned as chief financial officer of Applied DNA Sciences, Inc., on Aug. 20, 2013. Karol Gray was appointed as CFO, effective Oct. 7, 2013. Dr. James H. Hayward, chairman, president and chief executive officer of the Company, will serve as acting chief financial officer during the interim period. In connection with her appointment as CFO, Ms. Gray resigned from the Board of Directors of the Company, as a member of the Audit Committee of which she was Chair, and as a member of the Compensation Committee. Ms. Gray was Vice Chancellor for Finance and Administration at the University of North Carolina, Chapel Hill since Dec. 1, 2011, where she oversaw financial planning and budgeting, treasury and risk management, facilities planning, construction and operations, purchases and stores, public safety, environmental health and safety and auxiliary enterprises. The University's financial budget for fiscal year 2012-2113 was approximately $3.4 billion. Ms. Gray also served as the Executive Vice President/Treasurer of the Chapel Hill Foundation Real Estate Holdings, Inc., Treasurer of the University of North Carolina at Chapel Hill Investment Fund, Inc., Treasurer of The University of North Carolina at Chapel Hill Foundation, Inc. and Secretary/Treasurer of UNC Management Company. Ms. Gray is a Certified Public Accountant with a Bachelor in Business Administration from Hofstra University. Pursuant to an offer letter, Ms. Gray will be an at-will employee and will be paid an annual starting salary of $336,000. In addition, after six months employment, she will be granted a five year option pursuant to the Company's 2005 Incentive Stock Plan to purchase up to 2,000,000 shares of the Company's Common Stock, $.001 par value, at the fair market value on the date of grant, vesting in four equal annual increments beginning on the first anniversary of the date of grant. In connection with his resignation, Mr. Jensen executed a Separation Agreement with the Company which provides him with a separation payment of his base salary through Dec. 31, 2013, and one year to exercise his stock options. A copy of the Form 8-K is available for free at: http://is.gd/xmhQej About Applied DNA Stony Brook, N.Y.-based Applied DNA Sciences, Inc., is principally devoted to developing DNA embedded biotechnology security solutions in the United States. The Company's shares of common stock are quoted on the OTC Bulletin Board under the symbol "APDN." Applied DNA incurred a net loss of $7.15 million for the year ended Sept. 30, 2012, compared with a net loss of $10.51 million for the year ended Sept. 30, 2011. The Company's balance sheet at June 30, 2013, showed $3.84 million in total assets, $1.53 million in total liabilities and $2.30 million in total stockholders' equity. AQUEDUCT RACE TRACK: Facing Closure ----------------------------------- Chris Bragg, writing for Crain's New York Business, reports that The New York Racing Association is considering shutting down the financially troubled Aqueduct Race Track in southeast Queens, an action that would take down the money-making casino next door unless state law were changed. According to Crain's, establishments with video lottery terminals, including Resorts World Casino at Aqueduct, cannot exist under the law without being tethered to a race track, according to John Sabini, the former chairman of the New York State Racing and Wagering Board. Aqueduct is the lone state-owned racetrack in New York, so crafting a bill to make the casino there an exception would not be complicated. The Albany-Times Union first reported Thursday that the racing association was considering closing Aqueduct, according to Crain's. ARCAPITA BANK: Inks Agreed Order Re: Payment of KPMG Invoices ------------------------------------------------------------- On Aug. 28, 2013, the U.S. Bankruptcy Court for the Southern District of New York approved a stipulation and agreed order entered into by and among the Arcapita Bank B.S.C.(c), et al., the Official Committee of Unsecured Creditors, Arcapita Limited, Point Park Properties S.R.O ("P3" and together with Arcapita Limited, the "EuroLog Affiliates"), KPMG LLP (UK) and KPMG Audit Plc, which resolves the Committee Objection to the payment of the invoices rendered by KPMG for fees incurred in connection with the EuroLog IPO. In its objection, the Committee asserted, among other things, that the Debtors are not liable for the KPMG Invoices, payment is prohibited under section 503(c)(3) of the Bankruptcy Code, and the Debtors lacked authority to advance funds to satisfy the KPMG Invoices. Pursuant to the Stipulated and Order, among others, the Debtors are authorized and directed to pay Euro 1,685,646.40 to KPMG on the Effective Date of the Plan, representing a twenty percent reduction in fees from that amount requested in the Fee Motion. A copy of the terms of the Stipulation and Order is available at http://bankrupt.com/misc/arcapita.doc1465.pdf Counsel for the Committee can be reached at: Dennis F. Dunne, Esq. Evan R. Fleck, Esq. MILBANK, TWEED, HADLEY & McCLOY LLP 1 Chase Manhattan Plaza New York, NY 10005 Tel: (212) 530-5000 - and - Andrew M. Leblanc, Esq. MILBANK, TWEED, HADLEY & McCLOY LLP 1850 K Street, NW, Suite 100 Washington, DC 20006 Tel: (202) 835-7500 Counsel for the Debtors can be reached at: Michael A. Rosenthal, Esq. Craig H. Millet, Esq. GIBSON, DUNN & CRUTCHER LLP 200 Park Avenue New York, NY 10166 Tel: (212) 351-4000 About Arcapita Bank Arcapita Bank B.S.C., also known as First Islamic Investment Bank B.S.C., along with affiliates, filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-11076) in Manhattan on March 19, 2012. The Debtors said they do not have the liquidity necessary to repay a US$1.1 billion syndicated unsecured facility when it comes due on March 28, 2012. Falcon Gas Storage Company, Inc., filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-11790) on April 30, 2012. Falcon Gas is an indirect wholly owned subsidiary of Arcapita that previously owned the natural gas storage business NorTex Gas Storage Company LLC. In early 2010, Alinda Natural Gas Storage I, L.P. (n/k/a Tide Natural Gas Storage I, L.P.), Alinda Natural Gas Storage II, L.P. (n/k/a Tide Natural Gas Storage II, L.P.) acquired the stock of NorTex from Falcon Gas for $515 million. Arcapita guaranteed certain of Falcon Gas' obligations under the NorTex Purchase Agreement. The Debtors tapped Gibson, Dunn & Crutcher LLP as bankruptcy counsel, Linklaters LLP as corporate counsel, Towers & Hamlins LLP as international counsel on Bahrain matters, Hatim S Zu'bi & Partners as Bahrain counsel, KPMG LLP as accountants, Rothschild Inc. and financial advisor, and GCG Inc. as notice and claims agent. Milbank, Tweed, Hadley & McCloy LLP represents the Official Committee of Unsecured Creditors. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. Founded in 1996, Arcapita is a global manager of Shari'ah- compliant alternative investments and operates as an investment bank. Arcapita is not a domestic bank licensed in the United States. Arcapita is headquartered in Bahrain and is regulated under an Islamic wholesale banking license issued by the Central Bank of Bahrain. The Arcapita Group employs 268 people and has offices in Atlanta, London, Hong Kong and Singapore in addition to its Bahrain headquarters. The Arcapita Group's principal activities include investing on its own account and providing investment opportunities to third-party investors in conformity with Islamic Shari'ah rules and principles. The Arcapita Group had roughly US$7 billion in assets under management. On a consolidated basis, the Arcapita Group owns assets valued at roughly US$3.06 billion and has liabilities of roughly US$2.55 billion. The Debtors owe US$96.7 million under two secured facilities made available by Standard Chartered Bank. Arcapita explored out-of-court restructuring scenarios but was unable to achieve 100% lender consent required to effectuate the terms of an out-of-court restructuring. Subsequent to the Chapter 11 filing, Arcapita Investment Holdings Limited, a wholly owned Debtor subsidiary of Arcapita in the Cayman Islands, issued a summons seeking ancillary relief from the Grand Court of the Cayman Islands with a view to facilitating the Chapter 11 cases. AIHL sought the appointment of Zolfo Cooper as provisional liquidator. As reported in the TCR on Jun 19, 2013, the Bankruptcy Court for the Southern District of New York entered its Findings of Fact, Conclusions of Law, and Order confirming the Second Amended Joint Chapter 11 Plan of Reorganization of Arcapita Bank B.S.C.(c) and Related Debtors with respect to teach Debtor other than Falcon Gas Storage Company, Inc. A copy of the Confirmed Second Amended Joint Plan (With First Technical Modifications) is available at: http://bankrupt.com/misc/arcapita.doc1265.pdf ARMORWORKS ENTERPRISES: US Must Defend Delaying $29MM Payments -------------------------------------------------------------- Law360 reported that the U.S. Department of Defense needs to explain why it halted more than $2.9 million in contract payments to ArmorWorks Enterprises LLC if the agency doesn't want to be held in contempt for violating a bankruptcy-inspired automatic stay, an Arizona judge ordered on Aug. 27. The report related that the government will have to defend delaying payments on a body armor contract with bankrupt ArmorWorks and explain why it shouldn't be held in contempt for such violations of an automatic stay, according to the order. 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. ARROW ALUMINUM: Files First Amended Plan Outline ------------------------------------------------ Arrow Aluminum Industries, Inc., filed with the U.S. Bankruptcy Court for the Western District of Tennessee a First Amended Joint Disclosure Statement explaining the Plan of Reorganization. As reported in the Troubled Company Reporter on July 24, 2013, Samuel K. Crocker, the U.S. Trustee, objected to the Disclosure Statement, complaining that the papers do not contain "adequate information," such as the Debtors' historic financial operating information, statement of operations for the entire postpetition period of operations, tables of projected income and expenses sufficient to allow creditors to determine the reasonableness of the Plan, the dollar amount of all contracts outstanding at the time the Disclosure Statement was filed, a liquidation analysis, and, as it pertains to Ricka Blackwell and Edna Elaine Blackwell, information as to whether once their reverse mortgages are obtained if they will dismiss their Chapter 11 cases. According to the Amended Disclosure Statement, the Plan provides for its primary creditor, First Citizens National Bank, receiving a secured claim for the equipment and the insider principals obtaining reverse mortgages on their homes and properties to pay Citizens Bank. Debtors Ricka Blackwell and Edna Elaine Blackwell join this Disclosure Statement but the cases are not substantively consolidated. The Individual Debtors intend to seek dismissal of their cases in order to effectuate the reverse mortgage. They have no other assets for distribution to creditors. The monthly payments due on account of the allowed claims will be made from the net operational profits (positive cash flow) of the operations, after allowance for operational expenses (vendor costs, taxes) and reserves (to cover extraordinary repairs). The Reorganized Debtor will remain in the current premises for 180 days after the Effective Date. A copy of the Amended Disclosure Statement is available for free at http://bankrupt.com/misc/ARROW_ALUMINUM_1ds.pdf Counsel to the Debtor can be reached at: Steven N. Douglass, Esq. Chandra Madison, Esq. HARRIS SHELTON HANOVER WALSH, PLLC 40 South Main Street, Suite 2700 Memphis, TN 38103 Tel: (901) 525-1455 Fax: (901) 526-4084 About Arrow Aluminum Arrow Aluminum Industries, Inc., filed a Chapter 11 petition (Bankr. W.D. Tenn. Case No. 13-21470) in Memphis on Feb. 11, 2013. The petition was signed by William Ted Blackwell as president. The Debtor has scheduled assets of $126,246,137 and scheduled liabilities of $3,130,103. The Debtor is represented by Steven N. Douglass, Esq., at Harris Shelton Hanover Walsh, PLLC. Arrow Aluminum previously sought Chapter 11 protection (Case No. 12-1348) in December but the case was promptly dismissed. In that case, the U.S. Trustee sought dismissal or conversion to Chapter 7, while Citizens National Bank sought appointment of a Chapter 11 trustee to take over management of the Debtor's properties. The Debtor's Plan provides for Arrow's primary creditor, First Citizens National Bank, to receive a secured claim for the equipment and the insider principals obtaining reverse mortgages on their homes and properties to pay Citizens Bank. Sam Crocker, U.S. Trustee for Region 8, is unable to appoint a committee of unsecured creditors at this time. AUTOPARTS HOLDINGS: S&P Lowers Corp. Credit Rating to 'B-' ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Autoparts Holdings Ltd. to 'B-' from 'B'. The outlook remains stable. At the same time, S&P lowered the issue-level ratings on Autoparts' first-lien facility (the revolver and term loan) to 'B-' from 'B'. The recovery rating remains '3', which indicates meaningful (50%-70%) recovery of principal in the event of a default. S&P also lowered the issue-level rating on Autoparts' second-lien term loan to 'CCC' from 'CCC+'. The recovery rating remains '6', which indicates negligible (0%-10%) recovery of principal in the event of a default. "The downgrade reflects credit measures and free cash flow that are weaker than our expectations for the 'B' rating," said credit analyst Robyn Shapiro. The company continues to face soft end- market demand in the U.S. aftermarket. Although miles driven are up slightly year over year, they remain less than the 2007 peak. Gas prices are higher than first-quarter and year-end 2012 levels, which implies that miles driven are unlikely to rebound in the near term. The company also faced higher raw material costs and adverse mix shifts, which were partially offset by reduced costs from the company's cost-saving initiatives. The rating on Autoparts reflects Standard & Poor's view of the automotive aftermarket company's business risk profile as "weak" and its financial risk profile as "highly leveraged." Autoparts is privately owned by an affiliate of New Zealand private investor Graeme Hart's Rank Group Ltd. An affiliate of Rank Group also owns aftermarket parts company UCI Holdings Ltd. (UCI). Autoparts and UCI have a common senior management team. Autoparts and UCI also have significant operational consolidation opportunities, and S&P believes the two companies may eventually be legally consolidated given that they each have filtration businesses and the same ultimate owner, although existing financial agreements prevent full consolidation for now. If Autoparts and UCI remain separate legal entities, S&P believes it could impair their ability to gain all potential efficiencies across similar businesses. S&P's view of Autoparts' "weak" business risk profile reflects its expectation that the company will be able to maintain double-digit EBITDA margins in 2013. Most of its products have solid market positions, including its Fram filters, Autolite ignition products, and Prestone antifreeze, and continuing brand loyalty in the do- it-yourself market supports some pricing power. Autoparts' business risk profile also reflects its high customer concentration (typical of the industry). S&P views Autoparts' revenue diversity as limited because of its relatively narrow product offerings, its focus on the aftermarket, and the high proportion of sales in North America. Competition from parts suppliers in low-cost countries can result in lower pricing power for U.S. aftermarket participants. Autoparts' earnings are subject to volatility in commodity costs. Raw materials such as ethylene glycol experienced price increases in 2012 and the first half of 2013, which resulted in a slight decrease in profitability. However, Autoparts has the ability to recoup some raw material cost increases from customers, albeit with a time lag. Autoparts derives the majority of revenues from the light-vehicle aftermarket (to which it sells replacement parts for older vehicles). The North American light-vehicle aftermarket is highly competitive. Demand reflects the size of the car parc (the total number of registered vehicles at any time), which continues to expand; the age of the vehicles in the car parc, which has risen in recent years because of the higher quality of new vehicles; and the number of miles driven, which often depends on gas prices. Miles driven is still less than the 2007 peak, and overall aftermarket demand for products such as filters has declined in recent quarters. S&P views Autoparts' financial risk profile as "highly leveraged." S&P views Autoparts' free cash flow generation as low relative to its debt load. Total debt to EBITDA was 7.4x (adjusted for trade receivables sold and operating leases) as of June 30, 2013. Autoparts customers are negotiating extended payment terms, resulting in increasing trade account receivables, as has been the trend over the last 12-18 months for a number of aftermarket suppliers. In order to finance this increase in receivables, Autoparts sells a portion of these receivables pursuant to factoring arrangements, which S&P includes in its adjusted debt balance. The company expects factored receivables to increase in the near term, which will likely result in higher adjusted leverage in 2013. S&P's rating outlook on Autoparts is stable. S&P believes that the company's cost-saving initiatives should offset weak end- market conditions. S&P could lower the ratings further if a weak economy leads to persistently lower consumer demand or customer resistance to commodity cost recovery such that the company continues to generate negative cash flow in 2014. S&P could also lower the ratings if covenant headroom decreases further, and S&P believes there is an increased likelihood of the company violating the covenant. S&P considers an upgrade less likely during the next year based on the company's elevated leverage. For an upgrade, S&P would look for sustained improvement in the business -- likely the result of an increase in miles driven -- strengthening the company's credit metrics to about 5x or better total debt to EBITDA and increasing funds from operations to total debt to about 10% or better. BRANDYWINE REALTY: Fitch Affirms 'BB+' Issuer Default Rating ------------------------------------------------------------ Fitch Ratings has revised the Rating Outlook to Positive for Brandywine Realty Trust and its operating partnership Brandywine Operating Partnership, L.P. The ratings were affirmed as follows: Brandywine Realty Trust -- Issuer Default Rating (IDR) at 'BB+'; -- Preferred stock at 'BB-'. Brandywine Operating Partnership, L.P. -- IDR at 'BB+'; -- Senior unsecured lines of credit at 'BB+'; -- Senior unsecured term loans at 'BB+'; -- Senior unsecured notes at 'BB+'. Key Rating Drivers The ratings reflect Brandywine's improved portfolio of central business district (CBD) and suburban office assets located principally in the Mid-Atlantic United States, improved operating fundamentals, demonstrated actual and expected reduced leverage/increasing fixed-charge coverage, and financial flexibility highlighted by robust liquidity and strong access to capital. The Outlook revision to Positive reflects Fitch's view that Brandywine's credit metrics will continue to see incremental improvement over the next 12-24 months and approach levels that are consistent with an investment-grade rating. Mid-Atlantic Portfolio Focus Brandywine's office portfolio is focused in the Mid-Atlantic U.S. with Pennsylvania and greater Washington, D.C. generating 53% and 20% of second quarter 2013 (2Q'13) net operating income (NOI), respectively. The Pennsylvania portfolio is well-diversified across various submarkets, with the Philadelphia CBD representing the largest submarket at 25% of total portfolio NOI. Fitch expects the company to continue growing its footprint in the CBD and metro regions over the medium term while reducing exposure to slower growth suburban properties in New Jersey, Delaware and Blue Bell, Pennsylvania. Strong Tenant Diversification The General Services Administration (GSA) is BDN's largest tenant and contributes 7.6% of annual base rent (ABR). Excluding the GSA, the top 10 tenants represent only 18% of total base rent, with no tenant representing greater than 3% of ABR. The tenant base is also of strong credit quality with nine of the 20 largest tenants rated investment grade by Fitch. Solid Portfolio Fundamentals Operating fundamentals have remained strong with cash same-store NOI growth of 5.5% during the first six months of 2013. Fitch forecasts sustained strong growth in the latter portion of the year, driven by favorable leasing results and improving occupancy that will approach 90%. Year-to-date GAAP and cash leasing spreads improved 10.2% and 2.7%, respectively. Additionally, leasing capex has continued to moderate to less than $2.30/sf per lease year for each of the last four quarters versus roughly $2.60/sf on average in 2010-2012. Reasonable expiring rent levels over the next several years should support sustained positive leasing spreads over the next 12-24 months. Limited Lease Rollover Brandywine has a well-laddered lease maturity schedule with limited near-term rollover. Less than 22% of base rent expires through 2015, driven by proactive leasing executed well in advance of expirations. Improving Credit Metrics Leverage decreased to 6.8x at June 30, 2013 from 7.6x and 7.2x at Dec. 31, 2012 and Dec. 31, 2011, respectively. The decline was driven primarily by increased cash balances from the April 2013 equity offering. Fitch expects that leverage will continue to decline to approximately 6.5x over the next 12-24 months, driven primarily by sustained same-store NOI growth across the portfolio. Fixed-charge coverage for the trailing 12 months (TTM) ended June 30, 2013 was 1.8x, compared to 1.7x for TTM Dec. 31, 2012 and 1.5x for TTM Dec. 31, 2011. Fitch expects that fixed-charge coverage will exceed 2.0x over the next 12-24 months as growth in recurring operating EBITDA complements reduced interest expense from de- levering and moderating recurring capex from an improved leasing environment. Strong Liquidity Brandywine has strong near-term liquidity highlighted by $216 million of unrestricted cash, full availability under the $600 million unsecured line of credit, and no sizable debt maturities until late 2014. Sources of liquidity cover uses of liquidity by 2.8x from July 1, 2013 - Dec. 31, 2014. Coverage declines materially to 1.2x through 2015 given $480 million of pro-rata debt maturities in 2015. However, Fitch expects the company to continue to access capital via the unsecured bond markets to term out these maturities. The company's December 2012 offering of $250 million 3.95% senior unsecured notes illustrates strong access to capital. Modest Affo Payout Ratio Improving operating fundamentals have led to moderating recurring capex across Brandywine's portfolio, which has complemented an already prudent funds from operations (FFO) payout ratio. Fitch believes that there is potential for a dividend increase over the next 12-24 months but expects that the adjusted FFO (AFFO) payout ratio will remain in a reasonable range given management's longer- term de-levering targets. Adequate Unencumbered Asset Coverage Brandywine's unencumbered asset coverage of unsecured debt (based on 2Q'13 unencumbered NOI capitalized at a stressed 9% cap rate) was 1.6x based on gross unsecured debt. When considering current cash balances, coverage improves to 1.8x. These metrics are adequate for the rating. Rating Sensitivities The following factors may have a positive impact on Brandywine's ratings and/or Outlook: -- Fitch's expectation of leverage sustaining below 6.8x (leverage at June 30, 2013 was 6.8x); -- Fitch's expectation of fixed-charge coverage sustaining above 2.0x (coverage for the TTM ended June 30, 2013 was 1.8x); -- Unencumbered asset coverage of unsecured debt (based on a stressed 9% cap rate) maintaining above 2.0x. The following factors may have a negative impact on the company's ratings and/or Outlook: -- Fitch's expectation of leverage sustaining above 8.0x; -- Fitch's expectation of fixed-charge coverage sustaining below 1.5x. CENGAGE LEARNING: Creditors Seek to Invalidate Copyright Liens -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the creditors' committee for Cengage Learning Inc., the second-largest college textbook publisher in the U.S., wants authority to start a lawsuit aimed at voiding secured lenders' liens on 15,500 copyrights. According to the report, the creditors' committee said it found defects in the collateral package backing up almost $4 billion in debt owing to first-lien lenders. The committee found that security interests weren't put in place against thousands of copyrights until 90 days before bankruptcy. The report relates that there will be a Sept. 11 hearing in U.S. Bankruptcy Court in Brooklyn, New York, for permission to sue. The committee contends that Cengage won't attempt to void the liens on copyrights. The committee said that the "financial impact" of voiding the liens "remains unknown." The committee believes that liens on some 1,500 copyrights are invalid as to bank lenders and first- and second-lien noteholders. Liens on another 14,000 copyrights are only invalid as to first- lien noteholders, according to the committee's analysis. About Cengage Learning Stamford, Connecticut-based Cengage Learning -- http://www.cengage.com/-- provides innovative teaching, learning and research solutions for the academic, professional and library markets worldwide. Cengage Learning's brands include Brooks/Cole, Course Technology, Delmar, Gale, Heinle, South Western and Wadsworth, among others. Apax Partners LLP bought Cengage in 2007 from Thomson Reuters Corp. in a $7.75 billion transaction. The acquisition was funded in part with $5.6 billion in new debt financing. Cengage Learning Inc. filed a petition for Chapter 11 reorganization (Bankr. E.D.N.Y. Case No. 13-bk-44106) on July 2, 2013, in Brooklyn, New York, after signing an agreement where holders of $2 billion in first-lien debt agree to support a reorganization plan. The plan will eliminate more than $4 billion of $5.8 billion in debt. First-lien lenders who signed the so-called plan-support agreement include funds affiliated with BlackRock Inc., Franklin Mutual Adviser LLC, KKR & Co. and Oaktree Capital Management LP. Second- lien creditors and holders of unsecured notes aren't part of the agreement. The Debtors have tapped Kirkland & Ellis LLP as counsel, Lazard Freres & CO. LLC as financial advisor, Alvarez & Marsal North America, LLC, as restructuring advisor, and Donlin, Recano & Company, Inc., as claims and notice agent. A nine-member official committee of unsecured creditors has been appointed in the Debtors' Chapter 11 cases. Arent Fox LLP is the proposed counsel for the Committee. FTI Consulting, Inc., serves as financial advisor to the Committee. Moelis & Company LLC serves as investment banker to the Committee. CERTENEJAS INCORPORADO: Confirmation Hearing Continued to Oct. 10 ----------------------------------------------------------------- The hearing to consider the confirmation of the Plan of Reorganization of Certenejas Incorporado has been continued to Oct. 8, 2013, at 10:00 a.m. As reported in the TCR on June 5, 2013, pursuant to the Plan, Banco Popular de Puerto Rico, holder of a $40.4 million claim secured by substantially all assets of the Debtor, will recover 100 percent. On the effective date, the Debtor will surrender, as payment in kind to BPPR or will consent to the foreclosure of the Motel Molino Azul (valued at $6.95 million), Motel Molino Rojo ($5.60 million), Motel Las Palmas ($8.50 million), Motel El Rio ($6.67 million), and Motel El Eden ($3.25 million), and a parcel of land in Rio Grand, Puerto Rico ($1.45 million). The Debtor will retain the real property known as Motel Flor Del Valle (valued at $4.5 million). The balance of BPPR's secured claim for $4.5 million will be paid through monthly payments with a balloon payment of $4.32 million on Dec. 31, 2014. Holders of general unsecured claims aggregating $4.65 million will recover 1 percent. About Certenejas Incorporado Certenejas Incorporado -- aka Hotel Flor Del Valle, Motel El Eden, Motel Molino Azul, Motel Molino Rojo, Motel Las Palmas, and Motel El Rio -- owns motels or short-term guest houses in Puerto Rico. It filed a Chapter 11 petition (Bankr. D.P.R. Case No. 12-02806) in Old San Juan, Puerto Rico, on April 11, 2012. The Debtor disclosed US$27.68 million in assets and US$45.29 million in debts as of the Chapter 11 filing. Charles Alfred Cuprill, Esq., serves as the Debtor's counsel. The petition was signed by Luis J. Meaux Vazquez, president. Certenejas Incorporado and three of its affiliates previously sought Chapter 11 bankruptcy protection (Bankr. D.P.R. Case Nos. 09-08470 to 09-08473) on Oct. 2, 2009. The affiliates are Rojoazul Hotel, Inc., Jonathan Corporation, and Silvernugget Development Corporation. According to the schedules filed in the 2009 case, Certenejas Incorporado had total assets of US$13,800,000, and total debts of US$41,596,637. The petition was signed by Luis J. Meaux Vazquez, the Company's president. CHINA BAK: Incurs $10.3-Mil. Net Loss in June 30 Quarter -------------------------------------------------------- China BAK Battery, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $10.3 million on $45.6 million of net revenues for the three months ended June 30, 2013, compared with a net loss of $27.6 million on $46.8 million of net revenues for the three months ended June 30, 2012. The Company reported a net loss of $58.1 million on $153.4 million of net revenues for the nine months ended June 30, 2013, compared with a net loss of $45.0 million on $151.4 million of net revenues for the nine months ended June 30, 2012. "Gross loss for the three months ended June 30, 2013 was $1.4 million, or 3.0% of net revenues, as compared to $5.1 million, or 10.8% of net revenues, for the same period in 2012. Such decrease was largely due to the fact that we continued to reduce our supply of low or negative gross margin products including prismatic cells and instead focused on high-end products. In addition, we are expanding sales of lithium polymer cells and high power lithium batteries which generate higher gross profit. However, we are still selling a significant amount of low priced and reconditioned products with low or even negative gross margin as a result of the impairment of inventory due to severe market competition." The Company's balance sheet at June 30, 2013, showed $438.1 million in total assets, $421.9 million in total liabilities, and shareholders' equity of $16.2 million. A copy of the Form 10-Q for the three months ended June 30, 2013, is available at http://is.gd/hlPnpX The Company also amended its quarterly report on Form 10-Q for the three months ended March 31, 2013, to: * correct an improper offset of trade accounts receivable and customers deposits relating to a customer as of Dec. 31, 2012, 2012, which was deemed to be delinquent during the quarter then ended. Accordingly all outstanding amounts owed to the Company by this customer should have been fully impaired as of March 31, 2013. The Condensed Interim Consolidated Statements of Operations and Comprehensive Loss have been restated to properly reflect the impairment of trade accounts receivable owed by this customer as of March 31, 2013; and the Condensed Interim Consolidated Balances Sheets have been restated to present the correct amount of trade accounts receivable and customer deposits as of March 31, 2013. * revise the disclosure under Part I Item 4 regarding Controls and Procedures. This Amendment No. 2 also addresses certain SEC comments provided to the Company and amends the following accordingly: * Part I, Item 1, Condensed Interim Consolidated Statements of Operations and Comprehensive Loss, which have been restated to properly present government grants as part of the Company's operating income/(loss). * Part I, Item 1, Note 1, Principal Activities, Basis of Presentation and Organization, to indicate that the Company does not have claims from other investors except for those originally disclosed. * Part I, Item 1, Note 4, Inventories, to present the correct amount of inventories write-down for the three-months ended March 31, 2013. * Part I, Item 1, Note 16, Commitments and Contingencies (iii) Guarantees, which now provides more information about the guarantees that the Company provided to certain suppliers. In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), this Amendment contains new certifications pursuant to Rules 13a-14 and 15d-14 under the Exchange Act and Section 302 of the Sarbanes- Oxley Act of 2002. A copy of the Form 10-Q/A for the three months ended March 31, 2013, is available at http://is.gd/T0xGg7 The Company also amended its quarterly report on Form 10-Q for the three months ended Dec. 31, 2012, to: * correct an improper offset of trade accounts receivable and customers deposits relating to a customer as of Dec. 31, 2012, 2012, which was deemed to be delinquent during the quarter then ended. Accordingly all outstanding amounts owed to the Company by this customer should have been fully impaired as of Dec. 31, 2012. The Condensed Interim Consolidated Statements Of Operations and Comprehensive Loss, Condensed Interim Consolidated Statements of Shareholders' Equity and Condensed Interim Consolidated Statements of Cash Flows have been restated to properly reflect the impairment of trade accounts receivable owed by this customer as of Dec. 31, 2012; and the Condensed Interim Consolidated Balances Sheets have been restated to present the correct amount of trade accounts receivable and customer deposits as of Dec. 31, 2012. * Present the correct maturity profile of the Company's long- term bank loans as of Dec. 31, 2012, in Part I. Item 1, Note 8. Long-term Bank Loans and to properly reflect the reclassification in the Condensed Interim Consolidated Balance Sheets. * revise the disclosure under Part I Item 4 regarding Controls and Procedures. This Amendment No. 1 also addresses certain SEC comments provided to the Company and accordingly amends the following: * Part I, Item 1, Condensed Interim Consolidated Statements of Cash Flows, which have been restated to properly reflect the reclassification of certain items within cash flows from operating activities. * Part I, Item 1, Condensed Interim Consolidated Statements of Operations and Comprehensive Loss, which have been restated to properly present government grants as part of the Company's operating income/(loss). * Part I, Item 1, Note 1, Principal Activities, Basis of Presentation and Organization, to indicate that the Company does not have claims from other investors except for those originally disclosed. * Part I, Item 1, Note 4, Inventories, to present the impairment of inventories as a write down of each of the inventory components. * Part I, Item 1, Note 6, Property, Plant and Equipment, Net, to (i) present the impairment as a write down of each of the property, plant and equipment components; and (ii) provide a description of the impairment analysis of the Company's property, plant and equipment. * Part I, Item 1, Note 6, Property, Plant and Equipment, Net, to move the description of assets pledged for the Company's banking facilities to Note 7 Short-term Bank loans and to present the correct carrying amounts and description of the assets pledged for the Company's banking facilities in Note 7, Note 8 Long-term Bank Loans and Note 9 Other Long-term Loans. * Part I, Item 1, Note 16, Commitments and Contingencies (iii) Guarantees, which now provides more information about the guarantees that the Company provided to certain suppliers. In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended ("the "Exchange Act"), this Amendment contains new certifications pursuant to Rules 13a-14 and 15d-14 under the Exchange Act and Section 302 of the Sarbanes- Oxley Act of 2002. A copy of the Form 10-Q/A for the three months ended Dec. 31, 2012, is available at http://is.gd/rvDTHL About China BAK Shenzhen, P.R.C.-based China BAK Battery, Inc., is a leading global manufacturer of lithium-based battery cells. The Company produces battery cells for original equipment manufacturers, or OEM and replacement battery manufacturers that are the principal component of rechargeable batteries commonly used to power: cellular phones and smartphones; notebook computers, tablet computers and e-book readers; portable consumer electronics, such as digital cameras, portable media players, portable gaming devices, personal digital assistants, or PDAs, camcorders, digital cameras and Bluetooth headsets; and electric bicycles and other light electric vehicles, hybrid electric vehicles and other electric vehicles; cordless power tools; and uninterruptible power supplies, or UPS. COLEMAN CABLE: Market Growth Prompts Moody's to Lift CFR to 'B1' ---------------------------------------------------------------- Moody's Investors Service upgraded Coleman Cable, Inc.'s corporate family rating to B1 from B2 and the probability of default rating to B1-PD from B2-PD. Moody's also upgraded the rating on the $275 million senior unsecured notes due 2018 to B2 from B3. In addition, Moody's affirmed the company's SGL-2 speculative grade liquidity rating. The ratings outlook is stable. "The upgrade reflects Coleman's strong organic volume growth across the bulk of its end-markets which has led to sustained improvement in the company's credit metrics and cash flow generation trends", commented Harman Saggu, Analyst at Moody's. "We expect the company's plant consolidation/expansion initiatives to further improve profitability and credit metrics over the next 12 to 18 months", Saggu added. Ratings upgraded: Corporate Family Rating to B1 from B2 Probability of Default Rating to B1-PD from B2-PD $275 million 9% senior unsecured notes due 2018 to B2 (LGD5, 72%) from B3 (LGD5, 70%) Ratings affirmed: Speculative grade liquidity rating at SGL-2 Ratings Rationale: Increased demand for Coleman's products, particularly within the industrial sector, has been the leading driver of the company's improved operating performance. In addition, Coleman's increasing, albeit still limited segment and product diversification (relative to larger competitors), will potentially allow the company to better manage through future cyclical downturns. The company has been expanding its product offering to include highly engineered and value-added industrial products across a number of end markets, mainly through business acquisitions. These higher margin products, in combination with Coleman's increased pricing discipline and profit optimization strategies, are expected to have a favorable impact on the company's operating results going forward. Furthermore, Coleman's consolidation of its manufacturing plants (while maintaining operational capacity) will provide additional operating leverage and logistics efficiencies to the company. The affirmation of the SGL-2 speculative grade liquidity rating reflects Moody's expectation that Coleman will maintain a good liquidity profile near-term given its modest cash balance, expectations for positive free cash flow over the next 12 months, available capacity under its $250 million asset-backed revolving credit facility due 2016, and good flexibility under financial covenants. The stable outlook incorporates expectations for sustained organic growth in volumes, positive free cash flow, improved operating margins and good liquidity while maintaining a conservative financial policy. Moody's could upgrade Coleman's ratings with growth in organic volume trends that leads to leverage (on a debt to EBITDA basis) sustained below 3.0 times and EBITA coverage of interest expense of greater than 3.0 times. Moody's could lower Coleman's ratings if negative volume trends, volatility in copper prices, and/or pressure on other input costs have a negative impact on profitability such that leverage approaches 4.5 times and EBITA to interest falls below 2.0 times on a sustained basis and/or there is a material weakening in its liquidity profile. The principal methodology used in this rating was the Global Manufacturing Industry published in December 2010. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Waukegan, Illinois, Coleman Cable, Inc. is a leading designer, developer, manufacturer and supplier of electrical wire and cable products for construction, consumer, commercial and industrial applications, with operations primarily in the United States. The company reported sales of approximately $920 million for the twelve month period ended June 30, 2013. COLOMBIA CREST: Concludes Earn-In Agreement for Venecia Project --------------------------------------------------------------- Colombia Crest Gold Corp. disclosed that effective August 29, 2013, the Company has concluded its option to purchase agreement for the 1,985 hectare Venecia Project with Colombian Mines Corporation for reasons of cash flow and maximizing exploration properties held by Colombia Crest. As announced on August 1, 2013, as a result of a US$25,000 partial cash payment originally due March 30, 2013 that had been extended, as previously announced, and was due in July, Colombia Crest was given a notice of default of the Venecia Agreement and was provided 30 days, to rectify the default. The Company was not able to meet this obligation and has decided instead to prioritize its funding and exploration efforts on the Fredonia Project and the evaluation of the Machacala Project, Peru. "As announced on August 1st, we did everything in our power to raise the funds needed to meet this obligation in order to continue with work on Venecia," commented President and CEO Hans Rasmussen. "In 2012, we did an aggressive 6,500-metre drill program and despite a new porphyry gold-copper discovery at the Arabia Target area, the market didn't reward us -- given the market's support for near-term production and high-grade gold resources, we have decided to focus our limited resources on the evaluation of Machacala, and consider ways to explore or monetize our various concessions that are still held under the Fredonia Agreement in Colombia." About Colombia Crest Gold Corp. Colombia Crest Gold Corp. is focused on systematically exploring, developing and monetizing promising new gold projects in the Americas. The Company is currently evaluating the Machacala Project, Peru and is reviewing its Fredonia Project, Colombia, which comprises over 13,000 hectares under option located approximately 40 km south of the city of Medellin, in Antioquia Province. The Colombia properties are positioned within the Middle Cauca Belt, the most prolific gold belt in Colombia with more than 500 years of gold mining history and several new gold discoveries. COLOREP INC: Stubbs Alderton Approved as Corporate Counsel ---------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California authorized Colorep, Inc., et al., to employ Stubbs, Alderton & Markiles LLP as special corporate counsel. As reported in the Troubled Company Reporter on Aug. 20, 2013, Stubbs has worked with the Debtors on transactional and corporate governance matters since June 2013. Past services have included advice with respect to the Debtors' organizational documents as they relate to the Debtors' pending bankruptcy proceedings; and on various state and federal WARN Act matters in connection with termination of employees. The Debtors wish to employ Jonathan Hodes, Joe Stubbs, Jason Lee, and other members, associates and of-counsel attorneys of Stubbs as the Debtors' special counsel in connection with the cases, effective as of the Petition Date. The Debtors require special corporate counsel to: a. provide general corporate advice to the Debtors and their boards of directors, including any special committees formed, related to governance and operations. b. attend any board of director or special committee meetings, as requested by the Debtors. c. analyze and draft agreements required in connection with the sale of the Debtors' assets, including making sure that any subject transactions conform with applicable nonbankruptcy law. d. prepare contracts or agreements related to the governance or operations of the Debtors. Stubbs will not be responsible for matters of bankruptcy law, including general representation of the Debtors in the cases, as the Debtors have already retained reorganization counsel for such purposes, specifically the firm of Stutman, Treister & Glatt Professional Corporation. On July 15, 2013, Stubbs received a $10,000 postpetition retainer to secure the payment of a portion of Stubbs' fees and expenses. The Chapter 11 Retainer was funded from the distribution made by Meserole, LLC under the postpetition financing approved on an interim basis by the Court on July 18, 2013. Jonathan R. Hodes, Esq., principal at Stubbs, assures the Court that Stubbs neither holds nor represents any interest materially adverse to the interests of the Debtors' estates. About Colorep Inc. Colorep Inc., an industrial printer from Harrisonburg, Virginia, filed for Chapter 11 protection (Bankr. C.D. Cal. Case No. 13-27689) on July 10 in Los Angeles, owing $17 million to secured lender Meserole LLC. The company licenses a fabric-dyeing process known as AirDye. Colorep's subsidiary Transprint USA Inc. also filed in Chapter 11. Transprint produces transfer-printing paper. Meserole, LLC, is represented by Frank T. Pepler, Esq., and Stuart M. Brown, Esq., at DLA Piper LLP (US). COLOREP INC: Stutman Treister Okayed as Reorganization Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California authorized Colorep, Inc., et al., to employ Stutman, Treister & Glatt, P.C. as reorganization counsel. As reported in the Troubled Company Reporter on Aug. 20, 2013, the Debtors have agreed to provide a postpetition retainer to Stutman Treister in the amount of $125,000 to be funded from disbursements under the proposed DIP financing which is currently being presented to the court. Prior to the Petition Date, Stutman Treister received a retainer, paid from the monies advanced to the Debtors by its prepetition secured lender, in the amount of $150,000 for services rendered and expenses incurred prior to the filing of the Debtors' chapter 11 cases. Prior to the commencement of these Chapter 11 cases, Stutman Treister drew down $150,000 from the Pre-Chapter 11 Retainer for prepetition services rendered to the Debtors. The Debtors do not owe Stutman Treister any amount for prepetition services. In addition to the Chapter 11 Retainer, Stutman Treister also received, from funds advanced by the Debtors' prepetition secured lender, $10,000 to be held in trust and to be paid as a retainer to the Debtors' corporate counsel if and when retained and $25,000 to cover filing fees and other expenses incurred in connection with the Debtors' chapter 11 cases. Gary E. Klaus, Esq., senior shareholder at Stutman Treister, assures the Court that Stutman Treister does not hold or represent an interest adverse to the Debtors' estates. About Colorep Inc. Colorep Inc., an industrial printer from Harrisonburg, Virginia, filed for Chapter 11 protection (Bankr. C.D. Cal. Case No. 13-27689) on July 10, 2013, in Los Angeles, owing $17 million to secured lender Meserole LLC. The company licenses a fabric-dyeing process known as AirDye. Colorep's subsidiary Transprint USA Inc. also filed in Chapter 11. Transprint produces transfer-printing paper. Meserole, LLC, is represented by Frank T. Pepler, Esq., and Stuart M. Brown, Esq., at DLA Piper LLP (US). COMMONWEALTH GROUP: Seeks Dismissal of Chapter 11 Case ------------------------------------------------------ Commonwealth Group-Mocksville Partners LP asks the U.S. Bankruptcy Court for the Eastern District of Tennessee to dismiss its Chapter 11 case stating that it has already reached an agreement with PNC Bank, National Association, the principal creditor in the case holding a secured claim amounting to $8,602,427. The claim was scheduled in a lesser amount. The Debtor said it has sufficient funds to pay all of the allowed claims other than the claim of PNC Bank upon dismissal of the case. The Debtor intends to pay unsecured creditors and the claims of Davie County ($1,650) and Town of Mocksville ($1,600) within 10 days of the dismissal of the case. Any quarterly fee owing to the U.S. Trustee will be paid on or before the date of the entry of the order dismissing the case. The Debtor notes that the July 2013 Monthly Operating Report reflects an ending book balance of $349,531. Meanwhile, the Court has continued the hearing to consider confirmation of the Amended Chapter 11 Plan to Sept. 26, 2013, at 10:00 a.m. About Commonwealth Group Commonwealth Group-Mocksville Partners, LP, filed a Chapter 11 petition (Bankr. E.D. Tenn. Case No. 12-34319) on Oct. 25, 2012, in Knoxville, Tennessee. The Debtor disclosed $11,391,578 in assets and $22,668,998 in liabilities in its amended schedules. The Debtor owns 30 acres of commercial property in Mocksville, Davie County, North Carolina. The Debtor constructed a 48,179 square foot retail shopping center on 5.58 acres of the property, which is currently 95% leased to various retail tenants. Judge Richard Stair Jr. presides over the case. Maurice K. Guinn, Esq., at Gentry, Tipton & McLemore P.C., in Knoxville, Tenn., represents the Debtor as counsel. The petition was signed by Milton A. Turner, chief manager and general partner. On March 28, 2013, Mocksville Partners filed its Amended Chapter 11 Plan. On April 22, 2013, the Court entered the Order Approving the Amended Disclosure Statement. COMMUNITY TOWERS: EDR Approved as Valuation & Economic Expert ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California entered an order on Aug. 7, 2013, authorizing Community Towers I LLC et al. to employ EDR Valuations, Inc. as their valuation and economic expert. EDR will provide valuation, economic analysis, and expert testimony services regarding the Debtor's property and operations, and will be paid these rates: Name Rate Per Hour ---- ------------- M. Daniel Close $350.00 Donna W. Close, CPA $175.00 About Community Towers I Community Towers I LLC is a real estate investment company. Community Towers I LLC and various affiliates -- Community Towers II, LLC, Community Towers III, LLC, Community Towers IV, LLC -- filed a Chapter 11 petition (Bankr. N.D. Calif. Lead Case No. 11-58944) on Sept. 26, 2011, in San Jose, California. Community Towers I disclosed $51,939,720 in assets and $39,479,784 in liabilities as of the Chapter 11 filing. In March 2013, the Court denied confirmation of the Debtors' Joint Chapter 11 Plan. Creditor CIBC Inc., voted against the Joint Plan and opposed confirmation contending that the Joint Plan: (1) improperly includes a third party release in violation of Section 524; (2) violates Section 1129(a)(11) because it is not feasible; and (3) is not fair and equitable to CIBC because the interest rate proposed to be paid is inadequate to compensate CIBC for the risk inherent in its loan to Debtors. The Debtors employed John Walshe Murray, Esq., at Dorsey & Whitney LLP as counsel, in substitution for Murray & Murray, A Professional Corporation. CONVERGEX GROUP: S&P Affirms & Withdraws 'B+' Counterparty Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'B+' counterparty credit and senior secured issue ratings on ConvergEx Group LLC. Subsequently, S&P withdrew its 'B+' counterparty credit rating at the company's request. At the time of withdrawal, the outlook was stable. S&P also withdrew its 'B+' senior secured issue rating because the company does not have any debt outstanding. S&P's ratings on ConvergEx reflected that upon the sale of its software platform business in April 2013, the company's remaining business is less diversified and more concentrated and that its revenue model is mostly transactional and depends on market activity. The ratings also reflected that the company will have reduced financial flexibility following the sale of one of its most valuable assets, and S&P is wary of the smaller revenue base to cover fixed costs, which will likely increase earnings and cash flow volatility. Although the company operated with no debt, S&P believes the weaknesses in the business profile were limiting rating factors. CORNERSTONE HOMES: Sold Unregistered Securities, SEC Says --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Cornerstone Homes Inc. must now contend with the Securities and Exchange Commission on the issue of whether the homebuilder improperly sold unregistered securities before bankruptcy. The company has scheduled a Sept. 6 hearing for approval of the reorganization plan where noteholders voted beforehand. The U.S. Trustee came to court this month, insinuating that Cornerstone sold notes and solicited votes on the plan in violation of federal securities laws. According to the report, the SEC filed papers Aug. 28 in U.S. Bankruptcy Court in Rochester, New York, saying the notes "appear to be securities that were not registered" with the SEC. The commission also said it "is not aware of any exemption from registration." The U.S. Trustee says disclosure materials for the pre-bankruptcy vote solicitation from 300 noteholders were inadequate because they didn't explain the registration issue. The SEC wants more time for the government and noteholders to file claims. About Cornerstone Homes Cornerstone Homes Inc., a homebuilder from Corning, New York, filed a Chapter 11 petition (Bankr. W.D.N.Y. Case No. 13-21103) on July 15, 2013, in Rochester alongside a reorganization plan already accepted by 96 percent of unsecured creditors' claims. The Debtor disclosed assets of $18,561,028 and liabilities of $36,248,526. Judge Paul R. Warren presides over the case. Curtiss Alan Johnson, Esq., and David L. Rasmussen, Esq., at Davidson Fink, LLP, in Rochester, N.Y., serve as the Debtor's counsel. As reported in the TCR on July 31, the Debtor scheduled a Sept. 6 hearing for the bankruptcy judge in Rochester, New York, to approve the reorganization plan. Unsecured creditors are chiefly composed of noteholders with $14.5 million in claims. For a 7 percent recovery, they are to receive a note for $1 million, bearing 2 percent interest and maturing in 10 years under the Plan. The note will be paid with proceeds from sales of homes. COUNTRYWIDE FINANCIAL: Beats FDIC's $1.5B RMBS Suit --------------------------------------------------- Law360 reported that a California federal judge dismissed the Federal Deposit Insurance Corp.'s suit against Countrywide Financial Corp. and other major lenders over residential mortgage- backed securities, saying the claims are time-barred. According to the report, the FDIC alleged that Countrywide, CWALT Inc., Bank of America Corp., Deutsche Bank Securities Inc. and Goldman Sachs & Co. lied about the quality of underlying mortgages when they sold eight certificates of residential mortgage-backed securities to Guaranty Bank in violation of the Texas Securities Act and the federal Securities Exchange Act of 1933. The case is Federal Deposit Insurance Corporation as receiver for Guaranty Bank v. Countrywide Securities Corporation et al., Case No. 2:12-cv-08558 (C.D. Calif.) before Judge Mariana R. Pfaelzer. About Countrywide Financial Based in Calabasas, California, Countrywide Financial Corporation (NYSE: CFC) -- http://www.countrywide.com/-- originated, purchased, securitized, sold, and serviced residential and commercial loans. In mid-2008, Bank of America completed its purchase of Countrywide for $2.5 billion. The mortgage lender was originally priced at $4 billion, but the purchase price eventually was whittled down to $2.5 billion based on BofA's stock prices that fell over 40% since the time it agreed to buy the ailing lender. CROC LLC: Bankruptcy Stays SRS North Carolina Property's Lawsuit ---------------------------------------------------------------- SRS NORTH CAROLINA PROPERTY, LLC and STEPHEN R. SMITH, Plaintiffs, v. CROC, LLC, Defendant, No. 2:11-CV-64-BO (E.D.N.C.), has been stayed following CROC LLC's chapter 11 bankruptcy proceeding in the Eastern District of North Carolina on Aug. 15, 2013. District Judge Terrence W. Boyle said any currently pending motions in the lawsuit are dismissed without prejudice for purposes of judicial efficiency. If those motions are still worthy of judicial consideration at the conclusion of the bankruptcy proceeding the parties are free to re-file the same, Judge Boyle said in an Aug. 22 Order available at http://is.gd/jFxBF4from Leagle.com. Plaintiffs SRS North Carolina Properties, LLC, and Stephen R. Smith are represented by C. Everett Thompson, II, Attorney at Law. CROC, LLC, is represented by Phillip H. Hayes, Jr., Attorney at Law. DESERT LAND: Dist. Ct. Dismisses Related Suit vs. Shotgun Nevada ---------------------------------------------------------------- The complaint captioned GONZALES, Plaintiff, v. SHOTGUN NEVADA INVESTMENTS, LLC et al., Case No. 2:13-CV-00931-RCJ-VPC (D. Nev.), is a bankruptcy removal case arising out of the alleged breach of a settlement agreement that was part of a confirmation plan in the Chapter 11 bankruptcy action of Desert Land, LLC, et al. In December 2000, Mr. Gonzales loaned $41.5 million Desert Land for the development of a Las Vegas land parcel. Desert Land filed for bankruptcy in 2002 and eventually obtained confirmation of a bankruptcy plan. The Plan embodied a settlement under which Mr. Gonzales would extinguish his note and reconvey his interest in a certain Land Parcel A to Desert Land. In exchange, Mr. Gonzales would receive 65% of a debtor affiliate's interest in another property and would receive $10 million transfer fee if Parcel A was sold after 90 days. In 2011, Mr. Gonzales sued Desert Land, et al., in state court for judicial foreclosure of Parcel A and his entitlement to the Parcel Transfer Fee. In the present case, Mr. Gonzales alleges that Shotgun Nevada began making loans to Desert Land for the development of Parcel A in 2012 to 2013 despite its knowledge of the Confirmation Order and the Parcel Transfer Fee. He brought charges of intentional interference with contract and unjust enrichment, among other things. Defendants moved for summary judgment, arguing that preclusion of certain issues decided in the 2011 Gonzales-Desert Land case prevents plaintiffs from prevailing in the present case. District Judge Robert Jones granted the Defendants' Summary Judgment Motion as a motion to dismiss. A copy of Judge Jones' July 30, 2013 Order is available at http://is.gd/7PKGVafrom Leagle.com. Tom Gonzales is represented by J. Randall Jones, Esq. -- r.jones@kempjones.com -- and Matthew S Carter, Esq. -- m.carter@kempjones.com -- at HARRISON, KEMP & JONES, LLP. Defendants Shotgun Creek Las Vegas, LLC, Shotgun Creek Investments, LLC, Shotgun Investments Nevada, LLC, and Wayne Perry, are represented by Lenard E. Schwartzer, Esq., of Schwartzer & McPherson Law Firm, at 2850 South Jones Boulevard, Suite 1, Las Vegas, Nevada 89146. DESIGNLINE CORP: Seeks $3-Million Ch. 11 Loan --------------------------------------------- Law360 reported that electric and alternative fuel transit bus manufacturer DesignLine Corp., driven into bankruptcy after losing pledged funding connected to a major contract with New Jersey Transit, sought permission to obtain $3 million in post-petition financing from a group of funds managed by Cyrus Capital Partners LP. The North Carolina-based company intends to use the funds to help it put together either a going-concern sale of the business or a liquidation as it tries to dig itself out of about $40 million in debt, according to court filings, the report related. DesignLine Corp. filed for bankruptcy protection following several weeks of furloughs and layoffs. Federal court documents show the company has assets of $14 million and debts of $37.5 million. DesignLine is the former employer of U.S. Transportation Secretary Anthony Foxx, who was Charlotte's mayor until the Senate confirmed President Obama's nominee in June. The company's largest creditor is New Jersey Transit, which has paid $3.6 million for buses it hasn't received. DesignLine was founded in New Zealand but moved its headquarters to Charlotte in 2006. The company employed about 250 people there earlier this year. DETROIT, MI: Retains Casino Tax Revenue --------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Detroit can have continued access to casino-tax revenue, as the result of a ruling by the bankruptcy judge. Casino taxes are collateral for parties to swaps. The bankruptcy court will hold a hearing in late September on the city's proposal to terminate the swaps through an agreement with the counterparties. About Detroit, Michigan The city of Detroit, Michigan, weighed down by more than $18 billion in accrued obligations, sought municipal bankruptcy protection on July 18, 2013, 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 2013 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. The filing makes Detroit the largest American city to seek bankruptcy, in terms of population and the size of the debts and liabilities involved. The city's $18 billion in debt includes $5.85 billion in special revenue obligations, $6.4 billion in post-employment benefits, $3.5 billion for underfunded pensions, $1.13 billion on secured and unsecured general obligations, and $1.43 billion on pension- related debt, according to a court filing. Debt service consumes 42.5 percent of revenue. The city has 100,000 creditors and 20,000 retirees. Detroit is represented by David G. Heiman, Esq., and Heather Lennox, Esq., at Jones Day, in Cleveland, Ohio; Bruce Bennett, Esq., at Jones Day, in Los Angeles, California; and Jonathan S. Green, Esq., and Stephen S. LaPlante, Esq., at Miller Canfield Paddock and Stone PLC, in Detroit, Michigan. Sharon Levine, Esq., at Lowenstein Sandler LLP, is representing the American Federation of State, County and Municipal Employees and the International Union. Babette Ceccotti, Esq., at Cohen, Weiss & Simon LLP, is representing the United Automobile, Aerospace and Agricultural Implement Workers of America. DETROIT, MI: Can Keep Casino Tax Revenue, Judge Rules ----------------------------------------------------- Bernie Woodall and Joseph Lichterman, writing for Reuters, reported that cash-strapped Detroit can continue to access an estimated $11 million a month in casino tax revenue, a U.S. bankruptcy judge ruled, while the court takes up a deal with creditors related to the revenue. According to the report, U.S. Bankruptcy Judge Steven Rhodes, who is overseeing Detroit's bankruptcy petition, ruled that bond insurer Syncora Guarantee Inc cannot block the city from using taxes paid by the city's three casinos. Rhodes said Syncora does not have a lien on the money used as collateral since 2009 to secure Detroit's obligations on interest- rate swap agreements, the report related. Detroit entered into those agreements in conjunction with the sale of pension debt for its two retirement funds. Sinking under more than $18 billion in debt and other obligations, Detroit on July 18 filed for the biggest Chapter 9 municipal bankruptcy in U.S. history, the report recalled. Many bankruptcy experts believe the case may be a guide for what could happen when other U.S. cities file for Chapter 9 protection. Detroit collects about $180 million annually from casinos, and around $15 million is deposited each month into accounts overseen by U.S. Bank to meet collateral requirements, the report said. The bank sets aside $4 million a month for quarterly payments to swap counterparties, leaving the city with about $11 million. About Detroit, Michigan The city of Detroit, Michigan, weighed down by more than $18 billion in accrued obligations, sought municipal bankruptcy protection on July 18, 2013, 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 2013 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. The filing makes Detroit the largest American city to seek bankruptcy, in terms of population and the size of the debts and liabilities involved. The city's $18 billion in debt includes $5.85 billion in special revenue obligations, $6.4 billion in post-employment benefits, $3.5 billion for underfunded pensions, $1.13 billion on secured and unsecured general obligations, and $1.43 billion on pension- related debt, according to a court filing. Debt service consumes 42.5 percent of revenue. The city has 100,000 creditors and 20,000 retirees. Detroit is represented by David G. Heiman, Esq., and Heather Lennox, Esq., at Jones Day, in Cleveland, Ohio; Bruce Bennett, Esq., at Jones Day, in Los Angeles, California; and Jonathan S. Green, Esq., and Stephen S. LaPlante, Esq., at Miller Canfield Paddock and Stone PLC, in Detroit, Michigan. Sharon Levine, Esq., at Lowenstein Sandler LLP, is representing the American Federation of State, County and Municipal Employees and the International Union. Babette Ceccotti, Esq., at Cohen, Weiss & Simon LLP, is representing the United Automobile, Aerospace and Agricultural Implement Workers of America. DETROIT, MI: City's Woes Add to Angst Over Municipal Debt --------------------------------------------------------- Mike Cherney and Kelly Nolan, writing for The Wall Street Journal, reported that municipal-bond prices have fallen further than other debt amid rising U.S. interest rates this summer, highlighting investor jitters spurred by Detroit's record-setting bankruptcy filing. According to the report, bonds from some financially troubled issuers, like Puerto Rico and Chicago, have been particularly hard hit. Debt from the Windy City, which was downgraded by Moody's Investors Service last month amid questions about its pension liabilities, now yield about 1.50 percentage points more than a municipal market benchmark, up from about one percentage point in early July, according to Dan Toboja, senior vice president in fixed-income trading at investment bank and broker-dealer B.C. Ziegler & Co. in Chicago. Higher yields indicate lower prices. "Credit concerns are front and center in this market," Mr. Toboja said, the report said. The Motor City's case has been particularly worrisome for municipal-bond investors because the city's emergency manager has indicated that bondholders could see significant losses, undermining investors' assumption that states and cities would raise taxes as much is necessary to repay them, the report related. Yields on investment-grade municipal bonds have risen to almost the same as similarly rated corporate bonds, the report said. That is a rare occurrence, considering municipal bonds have lower default rates and the interest is generally tax free. As of Aug. 27, yields on corporate bonds were 3.37% and yields on municipal bonds were 3.33%, according to investment-grade indexes from Barclays. Typically, municipal bonds yield about 25% less than corporate bonds. About Detroit, Michigan The city of Detroit, Michigan, weighed down by more than $18 billion in accrued obligations, sought municipal bankruptcy protection on July 18, 2013, 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 2013 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. The filing makes Detroit the largest American city to seek bankruptcy, in terms of population and the size of the debts and liabilities involved. The city's $18 billion in debt includes $5.85 billion in special revenue obligations, $6.4 billion in post-employment benefits, $3.5 billion for underfunded pensions, $1.13 billion on secured and unsecured general obligations, and $1.43 billion on pension- related debt, according to a court filing. Debt service consumes 42.5 percent of revenue. The city has 100,000 creditors and 20,000 retirees. Detroit is represented by David G. Heiman, Esq., and Heather Lennox, Esq., at Jones Day, in Cleveland, Ohio; Bruce Bennett, Esq., at Jones Day, in Los Angeles, California; and Jonathan S. Green, Esq., and Stephen S. LaPlante, Esq., at Miller Canfield Paddock and Stone PLC, in Detroit, Michigan. Sharon Levine, Esq., at Lowenstein Sandler LLP, is representing the American Federation of State, County and Municipal Employees and the International Union. Babette Ceccotti, Esq., at Cohen, Weiss & Simon LLP, is representing the United Automobile, Aerospace and Agricultural Implement Workers of America. DIGERATI TECHNOLOGIES: Proofs of Claim Due by Oct. 16 ----------------------------------------------------- Creditors of Digerati Technologies, Inc. must file their proofs of claim not later than Oct. 16, 2013. Government entities may file their proofs of claim by Feb. 24, 2014. Digerati Technologies, Inc., filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 13-33264) in Houston, on May 30, 2013. Digerati -- http://www.digerati-inc.com-- is a diversified holding company which owns operating subsidiaries in the oil field services and the cloud communications industry. Digerati and its subsidiaries maintain Texas Offices in San Antonio and Houston. The Debtor has no independent operations apart from its subsidiaries. The Debtor's subsidiaries include Shift 8 Networks, a cloud communication service, Hurley Enterprises, Inc., and Dishon Disposal, Inc., both oil field services companies. The Debtor disclosed $60 million in assets and $62.5 million in liabilities as of May 29, 2013. Bankruptcy Judge Jeff Bohm oversees the case. Deirdre Carey Brown, Esq., Annie E. Catmull, Esq., Melissa Anne Haselden, Esq., Mazelle Sara Krasoff, Esq., and Edward L Rothberg, at Hoover Slovacek, LLP, in Houston, represent the Debtor as counsel. The Debtor tapped Gilbert A. Herrera and Herrera Partners as the investment banker. EAST COAST BROKERS: Real Estate Brings $68.7 Million ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that East Coast Brokers & Packers Inc., the owner of 10,000 acres of tomato farms in Florida and Virginia, held four days of auction this month and raised $68.7 million from the sale of real estate. The bankruptcy court in Tampa, Florida, will hold a hearing on Sept. 5 to approve the sales. Buyers of the real estate include Del Monte Fresh Produce NA Inc. There was an auction Aug. 28 and another on Sept. 4 to sell the equipment in Florida and Virginia. The facilities being sold were six packing plants, including a 312,000 square-foot plant in Plant City, Florida with optical tomato sorters. About East Coast Brokers East Coast Brokers & Packers, Inc., along with four related entities, sought Chapter 11 protection (Bankr. M.D. Fla. Case No. 13-02894) in Tampa, Florida, on March 6, 2013. East Coast Brokers & Packers disclosed $12,663,307 in assets and $75,181,975 in liabilities as of the Chapter 11 filing. Scott A. Stichter, Esq., and Susan H. Sharp, Esq., at Stichter, Riedel, Blain & Prosser, P.A., in Tampa, serve as counsel to the Debtors. Steven M. Berman, Esq., and Hugo S, deBeaubien, Esq., at Shumaker, Loop, & Kendrick, LLP, in Tampa, are the Debtors' proposed special counsel. In June 2013, the bankruptcy court approved the appointment of Gerard A. McHale, Jr., to serve as Chapter 11 trustee. MLIC Asset Holdings LLC and MLIC CB Holdings LLC asked the Bankruptcy Court to appoint a Chapter 11 trustee, or, in the alternative, dismiss the Debtors' Chapter 11 cases. According to the MLIC entities, the Debtors, among other things had mishandled the potential rents from employees, failed to pay taxes, failed to maintain insurance, has inadequate security regarding the Debtors' personal and real property, and delayed the filing of schedules and reports required under the Bankruptcy Code. Brian G. Rich, Esq., at Berger Singerman LLP, in Tallahassee, Fla., represents the Chapter 11 trustee as counsel. EASTMAN KODAK: Wins Approval of Amended APA With RED-Rochester -------------------------------------------------------------- Eastman Kodak Co. on August 28 obtained a court order approving the latest amendment to its asset purchase agreement with RED- Rochester, LLC. The companies amended the agreement to meet the requirements of the New York State Department of Environmental Conservation and the Empire State Development. The agreement governs the sale of Kodak's utility operations at Eastman Business Park to RED-Rochester. U.S. Bankruptcy Judge Allan Gropper approved the sale in January but required Kodak to get the approval of government agencies before consummating the sale. The amended agreement requires RED-Rochester to pay a portion of the purchase price to the company or to the trust (as Kodak's designee), which was established for environmental remediation at the industrial and technology park. The amended agreement also authorizes Kodak to take over contracts and assign them to RED-Rochester. The contracts to be assigned do not include Kodak's 2005 agreement with ITT Industries to lease approximately 2,200 square feet of land from the tech firm. ITT Industries previously opposed the assignment of the 2005 contract, saying it contains a provision which prohibits anti- assignment of the contract without prior consent from the tech firm. The Kodak-ITT agreement will be the subject of a separate ruling, according to the August 28 order signed by Judge Gropper. 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. ECO BUILDING: Sam Kan Quits as Accountants ------------------------------------------ Eco Building Products, Inc., accepted the resignation of Sam Kan and Company as independent registered public accountants. Sam Kan advised the Audit Committee that it will no longer be servicing public clients. The resignation was not a result of any disagreement with the Company. Concurrent with the acceptance of Sam Kan's resignation, the Board of Directors of the Company appointed Sadler Gibb & Associates, LLC, as the Company's independent registered public accounting firm. During the years ended June 30, 2012, and through Aug. 21, 2013, neither the Company nor anyone acting on its behalf consulted Sadler with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, and neither a written report was provided to the Company or oral advice was provided that Sadler concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issues; or (ii) any matter that was the subject of a disagreement or reportable events set forth in Item 304(a)(1)(iv) and (v), respectively, of Regulation S-K. About Eco Building Vista, Calif.-based Eco Building Products is a manufacturer of proprietary wood products treated with an eco-friendly proprietary chemistry that protects against mold, rot, decay, termites and fire. Sam Kan & Company, in Alameda, Calif., expressed substantial doubt about Eco's ability to continue as a going concern following the fiscal 2012 financial results. The independent auditors noted that the Company has generated minimal operating revenues, losses from operations, significant cash used in operating activities and its viability is dependent upon its ability to obtain future financing and successful operations. For the nine months ended March 31, 2013, the Company incurred a net loss of $9.03 million on $4.14 million of total revenue, as compared with a net loss of $3.68 million on $2.08 million of total revenue for the nine months ended March 31, 2012. The Company's balance sheet at March 31, 2013, showed $3.19 million in total assets, $11.85 million in total liabilities and a $8.66 million total stockholders' deficit. ECOSPHERE TECHNOLOGIES: Continues to Provide Services to SEECO -------------------------------------------------------------- Ecosphere Energy Services, LLC, a subsidiary of Ecosphere Technologies, Inc., and Southwestern Energy Production Company and SEECO, Inc., a subsidiary of Southwestern Energy Co., have signed a new work order for EES to continue providing Ecosphere's patented Ozonix(R) water treatment and recycling services to Southwestern Energy in the Fayetteville Shale region of Arkansas. EES has been providing the patented Ozonix(R) wastewater treatment and recycling services to Southwestern Energy in the Fayetteville Shale since November 2009. About Ecosphere Technologies Stuart, Florida-based Ecosphere Technologies (OTC BB: ESPH) -- http://www.ecospheretech.com/-- is a water engineering, technology licensing and environmental services company that designs, develops and manufactures wastewater treatment solutions for industrial markets. Ecosphere, through its majority-owned subsidiary Ecosphere Energy Services, LLC, provides energy exploration companies with an onsite, chemical free method to kill bacteria and reduce scaling during fracturing and flowback operations. Ecosphere disclosed net income of $1.05 million on $31.13 million of total revenues for the year ended Dec. 31, 2012, as compared with a net loss of $5.86 million on $21.08 million of total revenues for the year ended Dec. 31, 2011. The Company's balance sheet at March 31, 2013, showed $9.66 million in total assets, $6.45 million in total liabilities, $3.65 million in total redeemabable convertible cumulative preferred sotck, and a $453,324 total deficit. 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 seen a recent significant decline in its working capital primarily relating to delays in receiving additional purchase orders and related funding from a significant customer. This matter raises substantial doubt about the Company's ability to continue as a going concern. EDENOR SA: Securities Placed Under "Common Trading" --------------------------------------------------- The Buenos Aires Stock Exchange decided to place Edenor's securities on "Common Trading", the Company disclosed in a regulatory filing with the U.S. Securities and Exchange Commission. This decision was based upon the fact that the Company's financial information for the six months ended June 30, 2013, no longer showed a negative shareholders' equity, which was the reason why the Company's securities were placed on a "Reduced Trading". Moreover, the Company received the resignation, for personal reasons, of Ms. Patricia Charvay from her position as director, to which she was appointed at the Ordinary and Extraordinary General Shareholders' Meeting held on April 25, 2013. Said resignation states that it is effective upon its presentation and will be considered by the Board of Directors at its next meeting. The resignation was not unanticipated. About Edenor SA Headquartered in Buenos Aires, Argentina, Edenor S.A. (NYSE: EDN; Buenos Aires Stock Exchange: EDN) is the largest electricity distribution company in Argentina in terms of number of customers and electricity sold (both in GWh and Pesos). Through a concession, Edenor distributes electricity exclusively to the northwestern zone of the greater Buenos Aires metropolitan area and the northern part of the city of Buenos Aires. Edenor S.A. disclosed a loss of ARS1.01 billion on ARS3.72 billion of revenue from sales for the year ended Dec. 31, 2012, as compared with a net loss of ARS291.38 million on ARS2.80 billion of revenue from sales for the year ended Dec. 31, 2011. The Company's balance sheet at Dec. 31, 2012, showed ARS6.80 billion in total assets, ARS6.31 billion in total liabilities and ARS489.28 million in total equity. "Given the fact that the realization of the projected measures to revert the manifested negative trend depends, among other factors, on the occurrence of certain events that are not under the Company's control, such as the requested electricity rate increases or their replacement by a new remuneration system, the Board of Directors has raised substantial doubt about the ability of the Company to continue as a going concern in the term of the next fiscal year," according to the Company's annual report for the year ended Dec. 31, 2012. EFL PARTNERS X: Liberty RE Assets Wins Case Dismissal ----------------------------------------------------- Liberty RE Assets Holdings LLC and Liberty Philadelphia REO LP seek dismissal of the Chapter 11 case of EFL Partners X pursuant to 11 U.S.C. Sec. 1112(b) for cause, including that the petition was filed in bad faith. The Debtor opposes dismissal arguing that its petition was not filed as a litigation tactic and that a Chapter 11 liquidation will enable it to maximize the value of its assets for the benefit of its creditors. Bankruptcy Judge Magdeline D. Coleman is not persuaded by the Debtor and proceeds to dismiss the case. A copy of the Court's Aug. 22, 2013 Memorandum is available at http://is.gd/7IDx1Ofrom Leagle.com. EFL Partners X, based in Villanova, Pennsylvania, filed for Chapter 11 bankruptcy (Bankr. E.D. Pa. Case No. 13-11495) on Feb. 21, 2013. Judge Magdeline D. Coleman oversees the case. Gregory R. Noonan, Esq., at Walfish & Noonan, LLC, serves as the Debtor's counsel. In its petition, the Debtor estimated $1 million to $10 million in both assets and debts. The petition was signed by John Kontra, president of general partner. EFL Partners X owns nine condominiums in Portico Place, Ltd, Condominium located at 908-910 Spruce Street, Philadelphia, Pennsylvania. According to the Debtor's schedules the value of Spruce Street Property is $3,200,000. The Debtor's general partner is EFL Holdings, Inc. and John J. Kontra, Jr. and Lise A. Miller are its limited partners. ELBIT IMAGING: Creditors Reject Plan of Arrangement, Court Finds ---------------------------------------------------------------- The Tel Aviv District Court, in a ruling dated Aug. 19, 2013, rejected the Company's position that the unsecured creditors of the Company approved the resolution at the Company's creditors' meetings held on July 15, 2013, and July 17, 2013, to approve the Company's proposed plan of arrangement of its unsecured financial debt and the transactions contemplated thereby, and, as a result, the Court ruled that the Company did not receive the votes required for approval of the Arrangement. The Court stated that nothing in its ruling sets forth the Court's position regarding the advisability of the Arrangement, and directed the Company and its creditors to attempt to negotiate a revised Arrangement within a short time period. The Company had announced that the proposed Arrangement was approved at the Extraordinary General Meeting and the resolution to approve the proposed arrangement presented by certain representatives of the Company's Series C to Series G and Series 1 noteholders was not approved. 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. EMPIRE RESORTS: Option to Lease EPT Property Extended to Aug. 30 ---------------------------------------------------------------- The option agreement, by and between Monticello Raceway Management, Inc., a wholly-owned subsidiary of Empire Resorts, Inc., and EPT Concord II, LLC, originally entered into on Dec. 21, 2011, was further amended by a letter agreement between the Parties, dated Aug. 23, 2013. Pursuant to the Option Agreement, EPT granted MRMI a sole and exclusive option to lease certain EPT property located in Sullivan County, New York, pursuant to the terms of a lease negotiated between the parties. Pursuant to the Letter Agreement, MRMI and EPT agreed to extend the option exercise period and the final option exercise outside date (as those terms are defined in the Option Agreement) from Aug. 23, 2013, to Aug. 30, 2013. Except for these amendments, the Option Agreement remains unchanged and in full force and effect. A copy of the Letter Agreement is available for free at: http://is.gd/sM93LT About Empire Resorts Based in Monticello, New York, Empire Resorts, Inc. (NASDAQ: NYNY) -- http://www.empireresorts.com/-- owns and operates Monticello Casino & Raceway, a video gaming machine and harness racing track and casino located in Monticello, New York, 90 miles northwest of New York City. Empire Resorts reported a net loss applicable to common shares of $2.26 million in 2012, as compared with a net loss applicable to common shares of $1.57 million in 2011. As of June 30, 2013, the Company had $60.48 million in total assets, $51.51 million in total liabilities and $8.96 million in total stockholders' equity. ENDEAVOUR INTERNATIONAL: Second Supplemental Deed with Cidoval -------------------------------------------------------------- Endeavour Energy UK Limited, a wholly-owned subsidiary of Endeavour International Corporation, entered into a Second Supplemental Deed of Amendment and Restatement with Cidoval S.a r.l. which is supplemental to and amends (a) the sale and purchase agreement dated March 5, 2013, between EEUK and END PP Holdings LLC, as subsequently novated in favor of Cidoval pursuant to a deed of novation and amendment dated March 28, 2013; (b) the deed of grant of a production payment dated April 30, 2013, between EEUK and Cidoval, as previously amended by the Supplemental Deed of Amendment and Restatement dated May 21, 2013, between EEUK and Cidoval. Pursuant to the Deed of Grant, EEUK has granted a production payment from the proceeds of sale from a proportion of EEUK's entitlement to production from its interests in the Alba and Bacchus fields located in the UK sector of the North Sea. The Second Supplemental Deed provides for the sale by EEUK of an additional production payment for an incremental purchase price of $25 million with an implied cost of 8.75 percent, bringing the total amount outstanding under the Grant to $150 million. Obligations under the Grant will cease upon the earlier of the repayment of amounts outstanding under the Grant or production from the Alba and Bacchus licences permanently ceasing. The Company currently expects repayment of the Grant to occur through 2015. If the Grant remains outstanding as expected, the total repayment will be approximately $174.8 million. EEUK's obligations under the Deed of Grant, as amended by the Supplemental Deed and the Second Supplemental Deed, are secured by first priority liens over EEUK's interests in the licenses and joint operating agreements relating to the Alba and Bacchus fields and the accounts into which proceeds from the sale of production from those fields are paid. EEUK's obligations under the Deed of Grant, as amended, are also secured by second priority liens over certain other licenses, joint operating agreements and assets of the Company and its subsidiaries. Those second priority liens are subordinated to the security granted to Cyan Partners, LP, on April 12, 2012, pursuant to an intercreditor agreement. About Endeavour International Houston-based Endeavour International Corporation (NYSE: END) (LSE: ENDV) is an oil and gas exploration and production company focused on the acquisition, exploration and development of energy reserves in the North Sea and the United States. For the year ended Dec. 31, 2012, the Company incurred a net loss of $126.22 million, as compared with a net loss of $130.99 million during the prior year. As of June 30, 2013, the Company had $1.54 billion in total assets, $1.41 billion in total liabilities, $43.70 million in series C convertible preferred stock and $85.12 million in stockholders' equity. * * * As reported by the TCR on March 5, 2013, Moody's Investors Service downgraded Endeavour International Corporation's Corporate Family Rating to Caa3 from Caa1. Endeavour's Caa3 CFR reflects its weak liquidity, small production and proved reserve scale, geographic concentration and the uncertainties regarding its future performance given the inherent execution risks related to its offshore North Sea operations for a company of its size. In the Feb. 22, 2013, edition of the TCR, Standard & Poor's Ratings Services lowered its corporate credit rating on Houston, Texas-based Endeavour International Corp. (Endeavour) to 'CCC+' from 'B-'. The rating action reflects S&P's expectation that Endeavour could have insufficient liquidity to meet its needs due to the delay in production from its Rochelle development. ENDICOTT INTERCONNECT: Gets Court OK for Feather Lane as Advisor ---------------------------------------------------------------- Endicott Interconnect Technologies, Inc., et al., obtained permission from the U.S. Bankruptcy for the Northern District of New York to employ Feather Lane Advisors LLC as financial advisors. The firm will be tasked to review the Debtors' financial plan, strategic plans and business alternatives. It will receive a $20,000 flat fee per month for its services, plus reimbursement of expenses. About Endicott Interconnect Endicott Interconnect Technologies Inc. and its affiliates filed a Chapter 11 petition (Bankr. N.D.N.Y. Case No. 13-bk-61156) in Utica, New York, on July 10, 2013, to sell the business before cash runs out by the end of September. David Van Rossum is the Debtor's chief restructuring officer. Bond, Schoeneck & King, PLLC, is counsel to the Debtor. Based in Endicott, New York, and formed in 2002, EIT is the successor to the microelectronics division of IBM Corp. The products are used in aerospace, defense and medication applications, among others. The company sought Chapter 11 bankruptcy protection after suffering $100 million in operating losses in the last four years. In addition to $16 million in secured claims, trade suppliers are owed $34 million. There is another $32 million owing for loans made by shareholders. The company said the book value of property is $36 million. An official committee of unsecured creditors has been appointed in the case with Avnet Electronics Marketing, Arrow Electronics, Inc., Acbel Polytech, Inc., Cadence Design Systems, Inc., Orbotech, Inc., Tyco Electronics, and High Performance Copper Foil, Inc. as members. The committee is represented by Arent Fox LLP. ENDICOTT INTERCONNECT: Panel to Tap GlassRatner as Fin'l Advisor ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in the cases of Endicott Interconnect Technologies, Inc., et al., seek to retain GlassRatner Advisory & Capital Group, LLC, as financial advisor nunc pro tunc to July 19, 2013. The Committee contemplates utilizing GlassRatner to aid in the evaluation of the Debtors' assets, cash flows and restructuring efforts. GlassRatner's hourly billing rates are: Principals: $500 - $600 Directors & Managing Directors: $350 - $500 Managers & Senior Managers: $250 - $350 Associates & Paraprofessionals: $150 - $250 The firm will also seek reimbursement of reasonable out-of-pocket expenses related to the contemplated services to be rendered. The Committee believes that GlassRatner is a "disinterested person" within the meaning of Sec. 101(14) of the Bankruptcy Code. About Endicott Interconnect Endicott Interconnect Technologies Inc. and its affiliates filed a Chapter 11 petition (Bankr. N.D.N.Y. Case No. 13-bk-61156) in Utica, New York, on July 10, 2013, to sell the business before cash runs out by the end of September. David Van Rossum is the Debtors' chief restructuring officer. Bond, Schoeneck & King, PLLC, is counsel to the Debtor. Based in Endicott, New York, and formed in 2002, EIT is the successor to the microelectronics division of IBM Corp. The products are used in aerospace, defense and medication applications, among others. The company sought Chapter 11 bankruptcy protection after suffering $100 million in operating losses in the last four years. In addition to $16 million in secured claims, trade suppliers are owed $34 million. There is another $32 million owing for loans made by shareholders. The company said the book value of property is $36 million. An official committee of unsecured creditors has been appointed in the case with Avnet Electronics Marketing, Arrow Electronics, Inc., Acbel Polytech, Inc., Cadence Design Systems, Inc., Orbotech, Inc., Tyco Electronics, and High Performance Copper Foil, Inc. as members. The committee is represented by Arent Fox LLP. ENERGY XXI: Fitch Affirms 'B+' Issuer Default Ratings ----------------------------------------------------- Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) of Energy XXI Bermuda and Energy XXI Gulf Coast (NYSE: EXXI) at 'B+'. The company's Ratings Outlook is Stable. Fitch affirms the following: Energy XXI (Bermuda) -- Issuer Default Rating (IDR) at 'B+'; -- Convertible perpetual preferred at 'B-'/RR6. Energy XXI Gulf Coast (Delaware) -- IDR at 'B+'; -- Senior secured revolver at 'BB+'/RR1; -- Senior unsecured notes at 'B+/RR4. Approximately $1.37 billion in balance sheet debt is affected by this rating. All rated debt is issued at the Energy XXI Gulf Coast subsidiary level, with the exception of the convertible perpetual preferreds, which are issued by Energy XXI Bermuda. Key Ratings Drivers Energy XXI's ratings are supported by the company's increased size and scale following property acquisitions and a robust organic drilling program; high exposure to liquids, composed mostly of higher-value black oil linked to waterborne grade pricing; historically strong production economics and cash generation; balanced acquisition funding; operator status on a majority of its properties (94%); and the short-term cash flow protections of its hedging position. The large increase in the company's proven reserves at June 30, 2013 has also resulted in improved debt/boe metrics despite higher absolute debt levels. Ratings issues for bondholders include the company's status as a small offshore GoM producer; lack of basin diversification; recent increases in leverage; flat 2013 production; significantly negative 2013 FCF; and exposure to the riskier ultra-deep shelf exploration program. Increase in 2013 Reserves EXXI reported a large (50%) increase in audited proven (1p) reserves at June 30, 2013, resulting in a 2013 reserve replacement ratio of 393% on an organic basis, and 475% on an all-in basis, as calculated by Fitch. Total 1p reserves climbed to 179 million boe from 119 million boe the year prior, comprised primarily of extensions and discoveries (62 million boe), and to a lesser degree acquisitions (13 million boe). A significant driver of the increase was the company's horizontal drilling program in the GoM, which consists of short laterals (<1000 feet) drilled in EXXI's mature offshore properties. Fitch would note that there is a sizable backlog of such drilling opportunities across EXXI's portfolio. Higher Debt But Reasonable Financial Metrics As calculated by Fitch, EXXI's debt with equity credit (which includes a 50% weighting for the company's preferreds) rose to $1.49 billion at June 30, 2013, versus $1.14 billion at June 30, 2012. The increased borrowings funded higher capex and dividends, as well as net acquisitions of $161 million. LTM free cash flow at June 30, 2013 was -$215.5 million, comprised of cash flow from operations of $626.7 million minus capex of $816.1 million and dividends of $26 million. Fitch anticipates the company will be approximately FCF neutral in 2014 as capex is set to drop to $660 million. Fitch believes the company has reasonable capex flexibility within that number. As a result of debt increases, EXXI's debt/EBITDA rose to 1.94x from 1.28x at June 30, 2012, while EBITDA/interest coverage declined to 7.1x from 8.2x. Both metrics remain robust for the rating category. While EXXI's leverage rose, on a debt/boe basis, the large jump in 2013 reserves more than offset the increase in debt. EXXI's debt/boe 1p at June 30, 2013 declined to $8.36/boe versus debt/1p from $9.54/boe at YE 2012. Debt/boe PD declined to $13.64/boe from $13.97/boe at YE 2012. Debt/flowing barrel rose to $34,690/barrel from $25,880/barrel due to the company's flat 2013 production. Looking forward, Fitch anticipates that any additional near-term improvements in credit ratios are likely to come through EBITDA growth and reserve additions rather than through significant additional debt reductions. Limited Ultra Deep Shelf Commitment It is important to note that the company's 2013 reserve and production figures exclude the impacts of the ultra-deep shelf program, which Fitch anticipates should begin to be booked despite ongoing delays at the Davy Jones #1 well. EXXI has participated in 8 ultra-deep shelf wells to date with participation levels of 9 - 20%. The company seeks to limit its total exposure to these projects to less than 10% of expected cash flow in any one year, and EXXI's strategy has been to fund this higher risk exploration drilling with lower risk drilling prospects across the rest of its portfolio. Total investments at June 30, 2013 were limited and included Davy Jones #1 and #2 ($147 million), Blackbeard East ($51 million), Lafitte ($40 million), Blackbeard West #1 and #2 ($57 million), Lineham Creek ($17 million), and Lomond North ($21 million). Liquidity EXXI's liquidity was adequate at June 30, 2013, and included availability on its main revolver of approximately $286 million after borrowings of $339 million and LoCs of $225 million. The revolver, which expires in April 2018, is secured by a borrowing base linked to at least 85% of the company's proven properties. Similar to other borrowing-based revolvers, the base periodically resizes in line with the underlying value of the collateral. Revolver commitments are $1.7 billion and the current size of the borrowing base is $850 million. We anticipate the facility will be upsized at the next borrowing base redetermination given the significant increase in proved reserves. Key revolver covenants include maximum leverage of 3.5x; minimum interest coverage of 3.0x; and a minimum current ratio of 1.0x, as well as change of control provisions and restricted payments. The company had ample headroom on all covenants at June 30, 2013. Restrictions on dividends from EXXI gulf coast to its Bermuda parent were recently loosened to include $350 million per year, subject to liquidity and minimum cumulative consolidated net income tests. EXXI's other maturities are light, with the no major bonds maturities due over the next three years. Recovery Rating Fitch's Recovery Rating (RR) of '1' on EXXI's secured revolving credit facility indicates outstanding recovery prospects (91% - 100%) for holders of this debt. The revolver is secured by at least 85% of the total value of proven reserves of the company and its subsidiaries. The RR for EXXI's senior unsecured notes of '4' indicates average recovery prospects (31%-50%) for holders of these issues. Other Liabilities EXXI's other liabilities are manageable. The company's Asset Retirement Obligation (ARO) dropped to $287.8 million at June 30, 2013 from $301.4 million the year prior. EXXI recently provided a guarantee to its 20% joint venture M21k for the payment of that company's ARO ($65 million) and other liabilities ($1.8 million) in exchange for a $6.3 million payment from M21k. EXXI hedges a significant portion of its expected output using a range of instruments, including swaps, collars, 3-way collars, and puts. At June 30, 2013, the company had no collateral posted with counterparties and had a net derivative asset of approximately $60.28 million. Other obligations were limited at June 30, 2013, and included undiscounted operating lease payments of $16.04 million, and rig commitments of $107.6 million. Ratings Sensitivities Positive: Future developments that may lead to positive rating actions include: -- Increased size, scale and portfolio diversification, accompanied by a trend of continued improvement in debt/boe metrics and a managerial commitment to lower debt levels. Negative: Future developments that could lead to negative rating action include: -- A major operational issue such as a well blowout or extensive facility damage not covered by existing insurance; -- A change in philosophy on use of balance sheet, which could include debt funded financing of a large acquisition, capex or share buybacks; or a sustained collapse in oil prices without other adjustments to capex. ENERGY FUTURE: Moody's Lowers CFR to 'Caa1'; Outlook Negative ------------------------------------------------------------- Moody's Investors Service downgraded the Corporate Family Rating for Energy Future Intermediate Holding LLC to Caa1 from B3. In addition, Moody's lowered EFIH's Probability of Default Rating to Caa1-PD from B3-PD. The rating outlook remains negative. "We see an increasing likelihood that EFIH will be affected by the restructuring contagion at Energy Future Competitive Holdings Company LLC, despite the attempts to disentangle the legal entities" said Jim Hempstead, Associate Managing Director "As a result, and based on recent company disclosures, we now think EFIH and its ultimate parent holding company, Energy Future Holdings Corp, will likely be included in any bankruptcy restructuring events that could be announced as early as the next quarter." The debt instrument ratings that continue to reside at Energy Future Holdings Corp, the parent organization, are included within the corporate family boundaries of EFIH. Ratings Rationale: EFIH's Caa1 CFR and Caa1-PD PDR reflect the increasing contagion risk with its more distressed affiliate, EFCH, as well as its significant leverage, which points to a capital structure that may become untenable over the longer term horizon, absent any new liquidity infusions or debt reductions. The ratings also reflect the complex intercompany lending arrangements that EFIH maintains with its parent, EFH, and the potential implications that such a relationship may have on EFH and EFIH in an EFCH or TCEH restructuring. The Caa1 CFR still incorporates some of the stable and predictable revenue and cash flow streams of the 80% parent owned rate regulated subsidiary, Oncor Electric Delivery Company LLC (Baa3 senior secured stable), which is considered to be sufficiently ring-fenced from any restructuring or bankruptcy contagion, despite the broad powers that bankruptcy courts enjoy. Because of the strength of these ring-fence type provisions, including the limitations around dividends, there is now an eight notch rating difference between EFIH's CFR and Oncor's senior secured debt, even though EFIH indirectly owns Oncor. EFIH's corporate family boundaries include the remaining debt that resides at EFH, but does not include the debt at Oncor, due to its ring-fence type provisions. Moody's still believes that EFH might engage in additional liability management and debt exchange activities aimed to transfer EFH's remaining debt securities to EFIH from EFH. The Caa1 CFR factors in EFIH's dependence on unreliable external sources of liquidity, which is a growing risk to its already weak capital structure. Moreover, Moody's views the EFH senior unsecured (legacy) note maturity in November 2014 as a risk factor for EFIH, because EFIH owns approximately $282 million of the note and repayment of the note is important to EFIH's 2014 liquidity profile. EFH's stand-alone ability to repay this note is questionable, absent an infusion of liquidity. Based on Moody's LGD methodology and the Caa1 CFR, EFIH's $4.0 billion of senior secured 1st lien notes (which looks to the implied equity value of Oncor as collateral) are rated B3 LGD3 32% (downgraded from B2 LGD3 33%). The Loss Given Default model output indicates a B2 rating for the 1st lien, but a one notch downgrade override was applied to reflect the stock collateral pledge; the $2.2 billion of senior secured 2nd lien notes are rated Caa1 LGD4, 53% (downgraded from B3 LGD4, 53%) and the $1.4 billion of senior unsecured notes due 2018 are rated Caa1 LGD4, 53% (downgraded from B3 LGD4, 53%). Because EFH is included within the EFIH corporate family boundaries, the Caa1 CFR for EFIH and Moody's LGD methodology also drive the instrument ratings for EFH's remaining debt securities. There are $2 million of senior notes due 2019 that used to share, pro-rata, the collateral value of EFIH's senior secured 1st lien notes, the implied equity value in Oncor. The lien was removed as part of recent liability management and debt exchange activities. As such, the security now carries the same rating as EFH's senior unsecured (legacy) notes, Caa3 LGD6 95% (downgraded from Caa2 LGD4, 95%). The lien was also removed from EFIH's 9.75% senior secured 1st lien notes due 2019, which are rated as senior unsecured debt instruments at Caa1 LGD4, 53% (downgraded from B3 LGD4, 53%). EFH's $60 million of remaining senior unsecured LBO notes due 2017, which are guaranteed by both EFIH and EFCH, are rated Caa3, LGD6 90% (downgraded from Caa2, LGD6 90%) and the $1.8 billion of EFH's senior unsecured (legacy) notes due 2014, 2024 and 2034 are rated Caa3, LGD6 95% (downgraded from Caa2, LGD6 95%). Moody's notes that EFIH owns approximately $1.2 billion of the EFH senior unsecured (legacy) notes. EFIH's speculative grade liquidity rating remains a SGL-4. Moody's estimates slightly more than $575 million in cash at EFIH, which will be supplemented by Oncor's upstream dividend (approximately $250 million, excluding the minority investors) and the interest income associated with the $1.2 billion of EFH's senior unsecured (legacy) notes owned by EFIH (approximately $80 million in annual interest income for 2013 and 2014). Combined, EFIH's approximately $320 million in cash inflows is insufficient to fully address the approximately $615 million in cash interest expenses, so the cash balance will quickly be reduced over the next few quarters. This expected reduction in cash balances means EFIH will need to rely on external sources of cash over the near term horizon. Moody's expects EFIH to potentially have two sources of cash infusion over the next eight quarters: up to $250 million in remaining second lien debt capacity and the November 15, 2014 maturity of EFH's 5.55% senior unsecured (legacy) notes, of which EFIH owns roughly $280 million in principal. Neither source of liquidity is strong or reliable, since EFH's ability to repay the 2014 debt maturity is uncertain and EFIH's incremental second lien capacity is subject to market conditions. As a result, the outlook on EFIH's ratings is negative, primarily reflecting its weak liquidity profile, its heavy indirect reliance on Oncor for upstream dividend and tax payments and the potential for contagion risk from an EFCH-TCEH restructuring. Moody's has taken the following actions: The following ratings were changed: Ratings downgraded: Issuer: Energy Future Intermediate Holding Company LLC Corporate Family Rating: Caa1 Probability of Default Rating: Caa1-PD Speculative Grade Liquidity Rating: SGL-4 Rating Outlook: Negative 9.75% Sr Sec 1st Lien Notes due 10/15/2019 (now senior unsecured) to Caa1 LGD4, 53% from B3 LGD4, 53% 10% Sr Sec 1st Lien Notes due 12/01/2020 to B3 LGD3, 32% from B2 LGD3, 33% 6.875% Sr Sec 1st Lien Notes due 08/15/2017 to B3 LGD3, 32% from B2 LGD3, 33% 11.75% Sr Sec 2nd Lien Notes due 03/01/2022 to Caa1 LGD4, 53% from B3 LGD4, 53% 11.25%/12.25% Sr Unsec PIK Notes due 2018: to Caa1 LGD4, 53% from B3 LGD4, 53% Issuer: Energy Future Holdings Corp 10.875% Sr Unsec Notes due 11/01/2017 to Caa3 LGD6, 90% from Caa2 LGD6, 90% 11.25/12% Sr Unsec Toggle Notes due 11/01/2017 to Caa3 LGD6, 90% from Caa2 LGD6, 90% 9.75% Sr Sec 1st Lien EFIH Transfer Notes due 10/15/2019 (senior unsecured) to Caa3 LGD6, 95% from Caa2 LGD6, 95% 10% Sr Sec 1st Lien EFIH Transfer Notes due 1/15/2020 (now senior unsecured) to Caa3 LGD6, 95% from Caa2 LGD6, 95% 5.55% Legacy Sr Unsec Notes Series P due 11/15/2014 to Caa3 LGD6, 95% from Caa2 LGD6, 95% 6.5% Legacy Sr Unsec Notes Series P due 11/15/2024 to Caa3 LGD6, 95% from Caa2 LGD6, 95% 6.55% Legacy Sr Unsec Notes Series P due 11/15/2034 to Caa3 LGD6, 95% from Caa2 LGD6, 95% The principal methodology used in this rating was the Regulated Electric and Gas Utilities published in August 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. EQUIPOWER RESOURCES: S&P Assigns 'BB' Rating to $635MM Loan ----------------------------------------------------------- Standard & Poor's Rating Services said it assigned its 'BB' issue- level rating and '1' recovery rating to power project EquiPower Resources Holdings LLC's $635 million first lien term loan due 2019. The outlook is stable. EquiPower is using proceeds to purchase the 1,093 megawatt (MW) Kincaid coal plant and 50% equity interest in the simple-cycle 735 MW Elwood plant, both in the PJM Interconnection region. The purchase increases the portfolio's generation capacity to 4,221 MW. The project will use debt proceeds and equity to retire its existing $200 million second-lien debt and add liquidity at EquiPower, while also providing $43 million of liquidity at the Elwood asset. S&P will withdraw the rating on the $200 million second-lien debt when it is retired. S&P includes the proportionate share of project-level debt at Elwood in its consolidated debt calculation ($88 million, in line with the 50% share). However, S&P notes that this debt is nonrecourse to EquiPower. Debt is repaid from capacity-, hedge-, and energy- market revenues, with repayment accelerated by 100% cash flow sweeps. The 'BB' rating results from having an overall competitive portfolio of natural gas-fired power plants operating in the New England Independent System Operator (ISO-NE) region and in the PJM Interconnection market with the Liberty plant and now with the addition of Kincaid and Elwood. S&P also believes that the projected debt burden at maturity of about $155 per kilowatt (kW) on a consolidated basis under S&P's rated case assumptions is likely refinanceable on reasonable terms. "The stable outlook on the debt reflects predictable cash flows from some hedges and greater exposure to capacity prices in the PJM region, which we expect will continue to be around $125 per MW-day," said Standard & Poor's credit analyst Richard Cortright. "We see more downside risk than upward momentum for credit quality. In our view, the age of some assets compared with peers may cause risk to the ratings due to operational issues such as more frequent forced outages than currently estimated, or availability that is lower than expected. Ratings may also be affected if Kincaid needed greater environmental compliance- related investment. A downgrade is also possible if merchant revenue suffered from factors such as lower-than-expected spark spreads or operational performance, or higher operating and maintenance costs that led to expected debt at maturities being greater than about $250 per kW or DSCR declining below 1.3x on a steady basis," S&P added. An upgrade is unlikely given the high initial leverage, and would require a large and sustainable improvement in merchant market prices that would lead to refinancing risk of below $100 per kW and debt service coverage levels consistently above 1.75x. EXIDE TECHNOLOGIES: Court Approves Amended Annual Incentive Plan ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware entered an order approving an annual incentive plan that replaced the fiscal 2014 Annual Incentive Plan approved by the Organization & Compensation Committee of the Board of Directors of Exide Technologies for certain employees and named executive officers other than the chief executive officer and approved by the Board for the chief executive officer on March 27, 2013. The Amended AIP provides for certain annual awards to be paid to the named executive officers (other than the chief executive officer) upon the achievement of some or all of the following performance metrics: * Corporate Consolidated EBITDA ("Corporate EBITDA"), defined as earnings before interest, taxes, depreciation, amortization and restructuring, and excludes the impact of one-time events, such as non-operating gains and losses, asset impairments, up to $5 million of environmental remediation charges and reorganization-related expenses. Corporate EBITDA also excludes the costs of various incentive plans approved by the Bankruptcy Court. * Corporate Free Cash Flow ("CFCF"), defined as cash from operating activities as determined from the statement of cash flows in the audited financial statements, excluding fees and expenses for all bankruptcy-related professionals. * Regional EBITDA ("Region EBITDA"), defined as the region's earnings before interest, taxes, depreciation, amortization and restructuring, and excludes the impact of one-time events, such as non-operating gains and losses, asset impairments, up to $5 million of environmental remediation charges and reorganization-related expenses. Region EBITDA also excludes the costs of various incentive plans approved by the Bankruptcy Court. * Regional Free Cash Flow ("RFCF"), defined as the region's cash from operating activities as determined from documents used to develop consolidated statement of cash flows in the audited financial statements, excluding fees and expenses for all bankruptcy-related professionals. Michael Ostermann's target payout under the Amended AIP is 60 percent of his annual base salary and his performance metrics are weighted as follows: Regional EBITDA (50 percent), RFCF (30 percent) and Corporate EBITDA (20 percent). Phillip A. Damasaka's target payout under the Amended AIP is 60 percent of his base salary and his performance metrics are weighted as follows: Corporate EBITDA (70 percent) and CFCF (30 percent). Barbara A. Hatcher's target payout under the Amended AIP is 50 percent of her base salary and her performance metrics are weighted as follows: Corporate EBITDA (70 percent) and CFCF (30 percent). The Amended AIP contains minimum threshold targets for Corporate EBITDA and Regional EBITDA below which no payout under the Amended AIP will be made. In no event may awards under the Amended AIP exceed 200 percent of a participant's target payout. 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 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. The Official Committee of Unsecured Creditors is represented by Lowenstein Sandler LLP and Morris, Nichols, Arsht & Tunnell LLP as co counsel. Zolfo Cooper, LLC serves as its bankruptcy consultants and financial advisors. EXPERIENCE ART: Incurs $240K Net Loss in Second Quarter ------------------------------------------------------- Experience Art and Design, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $240,294 on $121,631 of revenue for the three months ended June 30, 2013, compared with a net loss of $89,205 on $90,857 of revenue for the same period last year. The Company reported a net loss of $327,607 on $121,638 of revenue for the six months ended June 30, 2013, compared with a net loss of $178,502 on $149,693 of revenue for the corresponding period of 2012. "This loss in both periods was primarily due to the increase in general and administrative expenses due to one-time costs related to the purchase transaction and the general inactivity of the Chiurazzi Foundry." The Company's balance sheet at June 30, 2013, showed $2.6 million in total assets, $3.6 million in total liabilities, and a stockholders' deficit of $960,152. The Company said: "For the six months ended June 30, 2013, the Company has a loss from operations of $327,607 and had an accumulated deficit of $1,559,501 as of June 30, 2013. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending Dec. 31, 2013. "These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/lSxSCF Wilsonville, Oregon-based Experience Art and Design, Inc. (OTC BB: EXAD), formerly Clear System Recycling, Inc., through its wholly- owned subsidiary, Chiurazzi Internazionale S.r.l., an Italian Company, owns more than 1,650 historic bronze sculpture moulds representing ancient historic masterpieces (the "Chiurazzi Mould Collection"). The Company's focus is to create reproductions (the "Chiurazzi Collection") of such masterpieces from the Chiurazzi Mould Collection at the Company's Italian foundry. The foundry, located in Casoria, Italy (the "Chiurazzi Foundry"), is the facility where the reproduction sculptures are created from the Chiurazzi Mould Collection. On May 7, 2013, the Company completed the acquisition of the all of the assets of Chiurazzi Internazionale S.r.l. pursuant to the terms of the purchase agreement with CI Holdings, Inc. The Company acquired Chiurazzi Srl, with Chiurazzi Srl continuing as the accounting acquirer and becoming a wholly-owned subsidiary of the Company. In connection with the acquisition, 9,700,000 common shares were issued to acquire 100% of the assets, liabilities, and equity of Chiurazzi Srl. The Company also assumed a secured note payable to Chiurazzi International, LLC, for $2,540,000 in conjunction with the acquisition. At the closing of the purchase transaction, the Company canceled 23,000,000 shares of restricted common stock held by Arthur John Carter, the Company's President prior to the purchase transaction. EPAZZ INC: Amends Second Quarter Form 10-Q to Add Exhibit --------------------------------------------------------- Epazz, Inc., amended its quarterly report on Form 10-Q for the period ended June 30, 2013, to furnish the interactive data files as Exhibit 101, in accordance with Rule 405 of Regulation S-T. No other changes have been made to the Form 10-Q, as originally filed on Aug. 19, 2013. A copy of the Form 10-Q/A is available for free at http://is.gd/MctYyK About EPAZZ Inc. Chicago, Ill.-based EPAZZ, Inc., was incorporated in the State of Illinois on March 23, 2000, to create software to help college students organize their college information and resources. The idea behind the Company was that if the information and resources provided by colleges and universities was better organized and targeted toward each individual, the students would encounter a personal experience with the college or university that could lead to a lifetime relationship with the institution. This concept is already used by business software designed to retain relationships with clients, employees, vendors and partners. Epazz incurred a net loss of $1.90 million on $1.19 million of revenue for the year ended Dec. 31, 2012, as compared with a net loss of $336,862 on $735,972 of revenue for the year ended Dec. 31, 2011. As of March 31, 2013, the Company had $1.29 million in total assets, $1.87 million in total liabilities and a $585,790 total stockholders' deficit. M&K CPAS, PLLC, in Houston, Texas, 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 an accumulated deficit of $(4,114,756) and a working capital deficit of $(681,561), which raises substantial doubt about its ability to continue as a going concern. Bankruptcy Warning "We cannot be certain that any such financing will be available on acceptable terms, or at all, and our failure to raise capital when needed could limit our ability to continue and expand our business. We intend to overcome the circumstances that impact our ability to remain a going concern through a combination of the commencement of additional revenues, of which there can be no assurance, with interim cash flow deficiencies being addressed through additional equity and debt financing. Our ability to obtain additional funding for the remainder of the 2012 year and thereafter will determine our ability to continue as a going concern. There can be no assurances that these plans for additional financing will be successful. Failure to secure additional financing in a timely manner to repay our obligations and supply us sufficient funds to continue our business operations and on favorable terms if and when needed in the future could have a material adverse effect on our financial performance, results of operations and stock price and require us to implement cost reduction initiatives and curtail operations. Furthermore, additional equity financing may be dilutive to the holders of our common stock, and debt financing, if available, may involve restrictive covenants, and strategic relationships, if necessary to raise additional funds, and may require that we relinquish valuable rights. In the event that we are unable to repay our current and long-term obligations as they come due, we could be forced to curtail or abandon our business operations, and/or file for bankruptcy protection; the result of which would likely be that our securities would decline in value and/or become worthless," according to the Company's annual report for the period ended Dec. 31, 2012. FAIRBANKS PROPERTIES: Case Summary & 8 Unsecured Creditors ---------------------------------------------------------- Debtor: Fairbanks Properties, L.L.C. 15575 Bluebird St NW Andover, MN 55304 Bankruptcy Case No.: 13-44201 Chapter 11 Petition Date: August 27, 2013 Court: United States Bankruptcy Court District of Minnesota (Minneapolis) Judge: Kathleen H. Sanberg Debtor's Counsel: James C. Brand, Esq. Clinton E. Cutler, Esq. FREDRIKSON & BYRON PA 200 S Sixth Ste 4000 Minneapolis, MN 55402-1425 Tel: (612) 492-7408 E-mail: jbrand@fredlaw.com ccutler@fredlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/mnb13-44201.pdf The petition was signed by Daniel J. Fairbanks, chief manager. FIRST DATA: Added Joseph Plumeri to Board of Directors ------------------------------------------------------ The Board of Directors of First Data Corporation voted to expand the number of directors that constitute the Board from five to six and elected Joseph J. Plumeri as a director of the Company. Mr. Plumeri was chief executive officer of Willis Group Holdings plc from October 2000 to January 2013 and Chairman of its Board from 2001 to July 2013. The Board may appoint Mr. Plumeri to one or more committees of the Board but any appointment will be determined at a future date. First Data Holdings Inc., the parent company of the Company, also elected Mr. Plumeri to its board of directors and he will receive the standard compensation paid to non-employee directors of First Data Holdings Inc. About First Data Based in Atlanta, Georgia, First Data Corporation provides commerce and payment solutions for financial institutions, merchants, and other organizations worldwide. The Company's balance sheet at June 30, 2013, showed $43.70 billion in total assets, $41.67 billion in total liabilities, $65.2 million in redeemable noncontrolling interest, and $1.95 billion in total equity. * * * The Company's carries a 'B3' corporate family rating, with a stable outlook, from Moody's Investors Service, a 'B' corporate credit rating, with stable outlook, from Standard & Poor's, and a 'B' long-term issuer default rating from Fitch Ratings. FIRST SEALORD: Must Face Clawback Suit, Pa. Court Says ------------------------------------------------------ Law360 reported that a Pennsylvania appeals court ruled that an excavation company could skip the statutory claims process and sue First Sealord Surety Inc., which is in liquidation, to recoup $1 million in collateral on performance bonds the company says the insurer improperly diverted into operating accounts. According to the report, a three-judge Commonwealth Court panel found that a liquidator for First Sealord Surety Inc. could not dodge the lawsuit by arguing that Tenco Excavating Inc. had to rely on the administrative claims process outlined in Pennsylvania's Insurance Department Act of 1921. Commonwealth Court approved the Pennsylvania Insurance Department's petition to liquidate First Sealord Surety Insurance, state Insurance Commissioner Michael Consedine announced on Feb. 8, 2012. First Sealord, a bond and surety company based in Villanova, had experienced a steep drop in its surplus. First Sealord Surety began its operations in 1991 as a mono-line insurance company underwriting surety bonds. The firm insured construction general contractors and subcontractors against loss. Until recently, when it stopped writing bonds, it offered coverage in 39 states. FIRST SECURITY: 401(K) Plan "Blackout Period" on Sept. 16 to 23 --------------------------------------------------------------- First Security Group, Inc., sent a notice to its Plan participants, including certain executive officers, informing them of a "blackout period" with respect to the First Security Group, Inc. 401(k) and Employee Stock Ownership Plan. The "blackout period" is expected to begin during the week of Sept. 16, 2013, and end during the week of Sept. 23, 2013. During the "blackout period," Plan participants will be unable to access the portion of their accounts invested in the common stock of the Company. A copy of the Notice is available for free at: http://is.gd/YTcYnS About First Security Group First Security Group, Inc., is a bank holding company headquartered in Chattanooga, Tennessee, with $1.2 billion in assets as of Sept. 30, 2010. Founded in 1999, First Security's community bank subsidiary, FSGBank, N.A., has 37 full- service banking offices, including the headquarters, along the interstate corridors of eastern and middle Tennessee and northern Georgia and 325 full-time equivalent employees. In Dalton, Georgia, FSGBank operates under the name of Dalton Whitfield Bank; along the Interstate 40 corridor in Tennessee, FSGBank operates under the name of Jackson Bank & Trust. In the auditors' report accompanying the financial statements for year ended Dec. 31, 2011, Joseph Decosimo and Company, PLLC, in Chattanooga, Tennessee, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has recently incurred substantial losses. The Company is also operating under formal supervisory agreements with the Federal Reserve Bank of Atlanta and the Office of the Comptroller of the Currency and is not in compliance with all provisions of the Agreements. Failure to achieve all of the Agreements' requirements may lead to additional regulatory actions. The Company reported a net loss of $23.06 million in 2011, a net loss of $44.34 million in 2010, and a net loss of $33.45 million in 2009. The Company's balance sheet at March 31, 2013, showed $1.04 billion in total assets, $1.01 billion in total liabilities and $20.99 million in total shareholders' equity. FLORIDA GAMING: Can Use Cash Collateral; Court Keeps Receiver ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Miami Jai-Alai, the owner of a jai-alai fronton and casino, can continue operating by using secured lenders' cash collateral, although the receiver installed by the lenders before bankruptcy stays in place. Formally named Florida Gaming Centers Inc., the Miami-based company won approval to continue using cash representing collateral for secured lenders' claims. There will be another hearing on Sept. 11 for continued right to use cash. According to the report, the state-court receiver appointed before bankruptcy continues operating the properties, as provided in the August 28 order by the bankruptcy judge. However, the receiver has "no authority with respect to directing the debtor's strategy in connection with the Chapter 11 case," the judge said in his order. Continuation of the receiver doesn't alter the casino's exclusive plan-filing rights. Although the receiver can be paid, the company can't use cash to pay any other professionals. About Florida Gaming Florida Gaming Centers Inc. filed for Chapter 11 bankruptcy (Bankr. S.D. Fla. Case No. 13-29597) in Miami on Aug. 19, 2013. Florida Gaming Centers operates a casino and jai-alai frontons in Miami. The Company listed debt of $138.3 million and assets of $180 million in its petition. Its parent, Florida Gaming Corp. (FGMG:US), and two other affiliates also sought court protection. Florida Gaming previously negotiated a sale of virtually all its assets to casino operator Silvermark LLC for $115 million in cash and $14 million in assumed liabilities. A provision in the financing agreement required Florida Gaming to make an additional payment to the lender -- ABC Funding -- if the assets are sold to third party. Jefferies LLC was hired to determine that amount, about $26.8 million, and valued the company at more than $180 million. Luis Salazar, Esq., Esq., at Salazar Jackson in Miami, represents Florida Gaming. FLORIDA GAMING: Prepetition Lenders Object to Cash Collateral Use ----------------------------------------------------------------- ABC Funding, LLC, as Administrative Agent for Summit Partners Subordinated Debt Fund IV-A, L.P., Summit Partners Subordinated Debt Fund IV-B, L.P., JPMorgan Chase Bank, N.A., Locust Street Funding LLC, Canyon Value Realization Fund, L.P., Canyon Value Realization Master Fund, L.P., Canyon Distressed Opportunity Master Fund, L.P., and Canyon-GRF Master Fund II, L.P., object to Florida Gaming Centers, Inc., et al.'s proposed use of the cash collateral securing their prepetition indebtedness. The Prepetition Lenders, owed more than $127 million by the Debtors, complain that "the purported adequate protection offered by the Debtors is illusory and is almost completely devoid of typical protections afforded secured lenders. The Debtors rely almost completely on a valuation by Jefferies -- which was conducted at the Lenders' demand pursuant to the Warrant Agreement (as defined in the Motion) -- to argue that there is a significant equity cushion to protect the Lenders. Yet the Debtors have been pursuing for months, including for two months since the issuance of the Jefferies valuation, a transaction with Silvermark that would yield materially less than the $180 million valuation amount. The Debtors also do not account for the secured debt of Miami-Dade County or the continuing accrual of interest on the Lenders' claim in calculating the alleged equity cushion. Nor do the replacement liens proposed by the Debtors provide any protection to the Lenders. Those proposed liens are limited to 'post-petition assets to the extent that the post-petition assets are the same as the applicable pre-petition collateral' that is encumbered by the Lenders' existing liens. It is not clear what, if any, value such liens provide." The Prepetition Lenders are represented by Dennis Twomey, Esq. -- dtwomey@sidley.com -- and Andrew F. O'Neill, Esq. -- aoneill@sidley.com -- at SIDLEY AUSTIN LLP, in Chicago, Illinois; and Drew M. Dillworth, Esq. -- ddillworth@stearnsweaver.com -- and Marissa D. Kelley, Esq. -- mkelley@stearnsweaver.com -- at STEARNS WEAVER MILLER WEISSLER ALHADEFF & SITTERSON, P.A., in Miami, Florida. Douglas Hanks, writing for the Miami Herald, reported that Judge Robert A. Mark at an afternoon hearing on Aug. 21 allowed Florida Gaming to continue spending its cash on operations while owners, bankers and a potential buyer of the business fight it out in bankruptcy court. About Florida Gaming Florida Gaming Centers Inc. filed for Chapter 11 bankruptcy (Bankr. S.D. Fla. Case No. 13-29597) in Miami on Aug. 19, 2013. Florida Gaming Centers operates a casino and jai-alai frontons in Miami. The Company listed debt of $138.3 million and assets of $180 million in its petition. Its parent, Florida Gaming Corp. (FGMG:US), and two other affiliates also sought court protection. Florida Gaming previously negotiated a sale of virtually all its assets to casino operator Silvermark LLC for $115 million in cash and $14 million in assumed liabilities. A provision in the financing agreement required Florida Gaming to make an additional payment to the lender -- ABC Funding -- if the assets are sold to third party. Jefferies LLC was hired to determine that amount, about $26.8 million, and valued the company at more than $180 million. Luis Salazar, Esq., Esq., at Salazar Jackson in Miami, represents Florida Gaming. FOUR OAKS: Incurs $104,000 Net Loss in Second Quarter ----------------------------------------------------- Four Oaks Fincorp, Inc., reported a net loss for the second quarter ended June 30, 2013, of $104,000 as compared with net income of $29,000 for the same period last year. The Company reported a net loss $27,000 for the six months ended June 30, 2013, as compared with net income of $581,000 for the same period of 2012. The provision for loan losses for the six months ended June 30, 2013, of $35,000 was greater than the negative provision of $286,000 for the same period in 2012. The Company had $2.5 million in net charge-offs recognized during the six months ended June 30, 2013, as compared to $2.4 million in net charge-offs recognized for the same period in 2012. Nonaccrual loans were $34.0 million at June 30, 2013, a decrease of $2.0 million from $36.0 million at Dec. 31, 2012. The Bank was well capitalized at June 30, 2013, with total risk based capital of 10.95 percent, tier 1 risk based capital of 9.68 percent, and leverage ratio of 5.58 percent. At June 30, 2012, the Bank had total risk based capital of 10.95 percent, tier 1 risk based capital of 9.68 percent, and leverage ratio of 5.53 percent. The Company had total risk based capital of 10.82 percent, tier 1 risk based capital of 6.38 percent, and leverage ratio of 3.68 percent at June 30, 2013, as compared to 11.49 percent, 7.92 percent, and 4.52 percent, respectively, at June 30, 2012. Non-interest income for the three and six months ended June 30, 2013, increased $0.3 million and $0.6 million, respectively, to $1.7 million and $3.8 million from $2.0 million and $3.2 million for the same periods in 2012. This increase was the result of the gain from the sale of two branches to First Bank in the amount of $0.6 million, and non-interest income generated by the mortgage services division of $0.3 million, offset by a decrease in the gain on available for sale securities of $0.3 million. Total assets of $828.9 million at June 30, 2013, declined 4.23 percent from $865.5 million at Dec. 31, 2012. Net cash, cash equivalents, and investments of $301.2 million at June 30, 2013, decreased 0.81 percent compared to $303.7 million at Dec. 31, 2012. Chairman, President, and Chief Executive Officer, Ayden R. Lee, Jr. states, "We have made significant improvements in asset quality in the past four quarters. As we continue to reduce nonperforming assets, our earnings are expected to improve due to improved net interest margins and reductions in the cost of carrying nonperforming assets. We remain vigilant in looking for opportunities to cut costs of operations and increase revenues while providing our customers with the exceptional service that they expect and deserve from their hometown community bank." A copy of the press release is available for free at: http://is.gd/4FHgcd About Four Oaks Based in Four Oaks, North Carolina, Four Oaks Fincorp, Inc., is the bank holding company for Four Oaks Bank & Trust Company. The Company has no significant assets other than cash, the capital stock of the bank and its membership interest in Four Oaks Mortgage Services, L.L.C., as well as $1,241,000 in securities available for sale as of Dec. 31, 2011. Four Oaks disclosed a net loss of $6.96 million in 2012, as compared with a net loss of $9.09 million in 2011. The Company's balance sheet at March 31, 2013, showed $803.44 million in total assets, $780.69 million in total liabilities and $22.74 million in total shareholders' equity. "The Company and the Bank entered into a formal written agreement (the "Written Agreement") with the Federal Reserve Bank of Richmond ("FRB") and the North Carolina Office of the Commissioner of Banks ("NCCOB") that imposes certain restrictions on the Company and the Bank, as described in Notes H - Trust Preferred Securities and Note K - Regulatory Restrictions. A material failure to comply with the Written Agreement's terms could subject the Company to additional regulatory actions and further restrictions on its business, which may have a material adverse effect on the Company's future results of operations and financial condition. "In order for the Company and the Bank to maintain its well capitalized position under federal banking agencies' guidelines, management believes that the Company may need to raise additional capital to absorb the potential future credit losses associated with the disposition of its nonperforming assets. Management is in the process of evaluating various alternatives to increase tangible common equity and regulatory capital through the issuance of additional equity. The Company is also working to reduce its balance sheet to improve capital ratios and is actively evaluating a number of capital sources, asset reductions and other balance sheet management strategies to ensure that the projected level of regulatory capital can support its balance sheet long-term. There can be no assurance as to whether these efforts will be successful, either on a short-term or long-term basis. Should these efforts be unsuccessful, the Company may be unable to discharge its liabilities in the normal course of business. There can be no assurance that the Company will be successful in any efforts to raise additional capital during 2013," according to the Company's annual report for the period ended Dec. 31, 2012. GARLOCK SEALING: Bankruptcy Trial Concludes in N.C. --------------------------------------------------- T.K. Kim, writing for Legal Newsline, reported that after more than three weeks of testimony with expert witnesses and lawyers flown in from across the country, the bankruptcy trial for Garlock Sealing Technologies concluded on Aug. 22 with one glaring question left unanswered -- just how much money the company sued for making asbestos-containing products decades ago will need to put in a trust to escape bankruptcy. According to the report, Garlock has proposed a figure of about $270 million. Lawyers representing asbestos claimants want a billion dollars more than that. According to the report, during the Aug. 22 hearing, Judge George Hodges closed the courtroom to anyone who had not signed confidentiality agreements during the testimony of David Glaspy, a California lawyer who has defended Garlock on more than 25,000 asbestos claims. The trial began in July at the U.S. Bankruptcy Court for the Western District of North Carolina. Judge Hodges will now determine the estimated liability of the company for current and future asbestos claims. The report notes that attorneys for Legal Newsline have appealed Judge Hodge's decision to close off testimony and portions of the record of several witnesses. Legal Newsline filed its motion earlier this month. Judge Hodges previously denied a Garlock motion to remove confidentiality designations from evidence relating to the trust claim in addition to a Legal Newsline motion filed shortly after the judge closed his courtroom during the testimony of a law professor speaking about fraud and abuse on the part of claimants. According to the report, in a written order explaining his decision denying the Legal Newsline motion, Judge Hodges stated several factors including the circumstances of certain asbestos plaintiffs' cases, plaintiffs' particular exposures, "how the law firms responded to discovery, the questions they asked their clients in so responding, and how the law firms approached settlement negotiations," amounted to "trade secrets, confidential business information, and attorney-client privileged information about which the parties involved have significant privacy rights. The court has concluded that those rights outweigh the public's interest in those matters." About Garlock Sealing Headquartered in Palmyra, New York, Garlock Sealing Technologies LLC is a unit of EnPro Industries, Inc. (NYSE: NPO). For more than a century, Garlock has been helping customers efficiently seal the toughest process fluids in the most demanding applications. On June 5, 2010, Garlock filed a voluntary Chapter 11 petition (Bankr. W.D.N.C. Case No. 10-31607) in Charlotte, North Carolina, to establish a trust to resolve all current and future asbestos claims against Garlock under Section 524(g) of the U.S. Bankruptcy Code. The Debtor estimated $500 million to $1 billion in assets and up to $500 million in debts as of the Petition Date. Affiliates The Anchor Packing Company and Garrison Litigation Management Group, Ltd., also filed for bankruptcy. Albert F. Durham, Esq., at Rayburn Cooper & Durham, P.A., represents the Debtor in their Chapter 11 effort. Garland S. Cassada, Esq., at Robinson Bradshaw & Hinson, serves as counsel for asbestos matters. The Official Committee of Asbestos Personal Injury Claimants in the Chapter 11 cases is represented by Travis W. Moon, Esq., at Hamilton Moon Stephens Steele & Martin, PLLC, in Charlotte, NC, Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, in New York, and Trevor W. Swett III, Esq., Leslie M. Kelleher, Esq., and Jeanna Rickards Koski, Esq., in Washington, D.C. 20005. Joseph W. Grier, III, the Court-appointed legal representative for future asbestos claimants, has retained A. Cotten Wright, Esq., at Grier Furr & Crisp, PA, and Richard H. Wyron, Esq., and Jonathan P. Guy, Esq., at Orrick, Herrington & Sutcliffe LLP, as his co- counsel. About 124,000 asbestos claims are pending against Garlock in state and federal courts across the country. The Company says majority of pending asbestos actions against it is stale and dormant -- almost 110,000 or 88% were filed more than four years ago and more than 44,000 or 35% were filed more than 10 years ago. Garlock said in the Disclosure Statement that all asbestos claims must be paid in full. Full payment enables the plan to allow continued ownership by parent EnPro Industries Inc. The Plan will create a trust to fund payment to present and future asbestos claimants. For currently existing claims, the trust will have insurance proceeds plus cash from Garlock together with a promise from EnPro to provide up to $30 million over time. For future claims, the trust will receive $60 million from Garlock plus a secured promise by Garlock to supply an additional $140 million. The promise will be secured by 51% of Garlock's stock. GELT PROPERTIES: Cash Collateral Hearing Continued to Oct. 29 ------------------------------------------------------------- The U.S. Bankruptcy Court will convene a hearing on Sept. 10, 2013, at 11 a.m. to consider the request of Gelt Financial Corporation, et al. for continued use of cash collateral. Objections, if any, are due Aug. 30. The Court entered a 13th interim order authorizing use of Vist Bank's cash collateral until Sept. 13, 2013. As adequate protection from any diminution in value of the lender's collateral, the Debtors will grant Vist Bank replacement liens on all now owned or hereafter acquired property and assets. In the event the Debtors default or violate the order, the Debtors' right to use cash collateral will automatically cease until further Court order. The Debtors will also pay the lender $6,732 in September 2013. About Gelt Properties Based in Huntington Valley, Pennsylvania, Gelt Properties, LLC, and affiliate Gelt Financial Corporation borrow money from traditional lenders and make loans to commercial borrowers. They also acquire and manage real estate. Gelt Properties and Gelt Financial filed for (Bankr. E.D. Pa. Case Nos. 11-15826 and 11-15826) on July 25, 2011. Judge Magdeline D. Coleman presides over the cases. William John Baldini, Esq., Albert A. Ciardi, III, Esq., Jennifer E. Cranston, Esq., and Daniel S. Siedman, Esq., at Ciardi Ciardi & Astin, in Philadelphia, Pa.; Thomas Daniel Bielli, Esq., at O'Kelly Ernst & Bielli, LLC, in Philadelphia, Pa.; Janet L. Gold, Esq., at Eisenberg, Gold & Cettei, P.C., in Cherry Hill, N.J.; David A. Huber, Esq., at Benjamin Legal Services, in Philadelphia, Pa.; Alan L. Nochumson, Esq., at Nochumson PC, in Philadelphia, Pa.; Axel A. Shield, II, Esq., of Huntington Valley, Pa., serve as counsel for Debtor Gelt Properties, LLC. Ciardi Ciardi & Astin also represents Debtor Gelt Financial Corporation as counsel. Gelt Properties disclosed $4.73 million in assets and $4.84 million in liabilities as of the Chapter 11 filing. Its affiliate, Gelt Financial has scheduled $20.3 million in assets and $17.05 million in liabilities as of the Chapter 11 filing. Paul J. Schoff, Esq., and Francis X. Gorman, Esq., at Schoff McCabe, P.C., represent the Unsecured Creditors' Committee. Craig Howe, CPA, and Howe, Keller & Hunter, P.C., serve as the Committee's accountants. GENERAL PROPERTIES: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: General Properties Inc. 297 Latrobe Avenue Northfield, IL 60093 Bankruptcy Case No.: 13-33992 Chapter 11 Petition Date: August 27, 2013 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Donald R. Cassling Debtor's Counsel: William L. Needler, Esq. WILLIAM L. NEEDLER AND ASSOCIATES 555 Skokie Blvd. Ste 500 Northbrook, IL 60062 Tel: (847) 559-8330 Fax: (847) 559-8331 E-mail: williamlneedler@aol.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Cynthia Lee Marin, president. GEYMONT CONSTRUCTION: Case Summary & 20 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Geymont Construction Company, Inc. 2361 Ben Yount Lane Vale, NC 28168 Bankruptcy Case No.: 13-40466 Chapter 11 Petition Date: August 27, 2013 Court: United States Bankruptcy Court Western District of North Carolina (Shelby) Judge: J. Craig Whitley Debtor's Counsel: Richard S. Wright, Esq. MOON WRIGHT & HOUSTON, PLLC 227 W. Trade Street, Suite 1800 Charlotte, NC 28202 Tel: (704) 944-6564 Fax: (704) 944-0380 E-mail: rwright@mwhattorneys.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/ncwb13-40466.pdf The petition was signed by Jerry Geymont, president. GINGER BEEF: Applies for Temporary Management Cease Trade Order --------------------------------------------------------------- Ginger Beef Corporation on Aug. 29 disclosed that it has made an application to the Alberta Securities Commission to approve a temporary management cease trade order under National Policy 12- 203 Cease Trade Orders for Continuous Disclosure Defaults, which, if granted, will prohibit trading in securities of the Corporation by certain insiders of the Corporation, whether direct or indirect. If approved, it is anticipated that the MCTO will be issued effective August 30, 2013. The Corporation is unable to file its unaudited interim financial statements, management's discussion and analysis and related Chief Executive Officer and Chief Financial Officer certificates for its six-month period ended June 30, 2013 before the August 29, 2013 filing deadline. During the process of completing the Required Filings, Michael Poon, the Chief Financial Officer of the Corporation, passed away and accordingly the Corporation will not be able to meet the Filing Deadline. The Corporation anticipates that it will be a position to remedy the default by filing the Required Filings by September 30, 2013. The MCTO will be in effect until the Required Filings are filed. The Corporation intends to satisfy the provisions of the alternative information guidelines set out in section 4.3 and 4.5 of NP 12-203 so long as the Required Filings are outstanding. The Corporation has not taken any steps towards any insolvency proceeding and the Corporation has no material information to release to the public. Ginger Beef Corporation -- http://www.gingerbeefcorp.com/-- is a Canada-based food company. The Company operates through two wholly-owned subsidiaries, Ginger Beef Express Ltd., Ginger Beef Choice Ltd. and 1379915 Alberta Ltd. Ginger Beef Express Ltd. is a franchiser of Chinese food restaurants located in Calgary, Alberta and is the holding company for Ginger Beef Choice Ltd and 1379915 Alberta Ltd. Ginger Beef Choice Ltd. is a manufacturer of fresh and frozen Chinese food items for wholesalers in Western Canada and Ontario. 1379915 Alberta Ltd. is one of the franchisees of Ginger Beef Express Ltd. operating a Ginger Beef Express takeout and delivery outlet in Calgary. The Corporation has been actively engaged in the development of new food products, as well as in the improvement of its existing product lines. During the year ended December 31, 2011, the Company acquired new equipment to streamline existing operations and to accommodate the new product line. GLYECO INC: Sells $2.6 Million Units ------------------------------------ GlyEco, Inc., conducted an initial closing of a private placement offering to accredited investors of units of the Company's securities at a price of $1.00 per Unit, with each Unit consisting of (i) one share of the Company's common stock, par value $0.0001 per share, and (ii) one-half of a warrant to purchase one share of Common Stock at an exercise price of $1.50 per share for a period of five years. The Company may hold subsequent closings of the Offering. In connection with the Initial Closing of the Offering, the Company entered into subscription and warrant agreements with 23 accredited investors, pursuant to which the Company sold to the Investors, for an aggregate purchase price of $2,650,000, a total of 2,650,000 Units, consisting of 2,650,000 shares of common stock and warrants to purchase up to 1,325,000 shares of common stock. The Warrants may be exercised at any time until the fifth anniversary of the date of issuance by surrendering a properly executed notice of exercise and the appropriate payment to the Company. The Company utilized the services of FINRA registered placement agents for the Offering. In connection with the Initial Closing, the Company paid an aggregate cash fee of $182,000 to the Placement Agents and shall issue to the Placement Agents warrants or options to purchase up to 182,000 shares of Common Stock at an exercise price of $1.50 per share. The net proceeds to the Company from the Initial Closing, after deducting the foregoing cash fee and other expenses related to the Offering, are expected to be approximately $2,455,500. 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. GMX RESOURCES: Lenders Prevail on Make-Whole Premium Dispute ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that according to an Aug. 27 ruling by U.S. Bankruptcy Judge Sarah A. Hall in Oklahoma City, GMX Resources Inc. owes secured lenders a total of $402.4 million as of April 1. The report relates that Judge Hall issued her ruling in court this week resolving a dispute raised by the creditors' committee contending bankruptcy law doesn't permit the lenders to have a so- called make-whole premium. The company announced that first-lien lenders won the Aug. 28 auction to buy the assets in exchange for $338 million in secured debt. According to the report, Judge Hall said that the lenders are entitled to the $66.1 million premium. In a partial victory for unsecured creditors, the judge concluded that the lenders are entitled to interest at the lower contract rate, not a higher rate associated with pay-in-kind interest. The principal amount of the debt is $337.3 million. Mr. Rochelle relates that a make-whole premium compensates a lender for early repayment of debt when interest rates have fallen and the principal would be invested for a lower return. In the GMX case, the situation was different because the documents called for payment of the premium automatically on a Chapter 11 filing. The hearing to approve the sale to the first-lien lenders in exchange for debt is set for September 10. GMX said it couldn't propose a plan until the results of auction were known. About GMX Resources GMX Resources Inc. -- http://www.gmxresources.com/-- is an independent natural gas production company headquartered in Oklahoma City, Oklahoma. GMXR has 53 producing wells in Texas & Louisiana, 24 proved developed non-producing reservoirs, 48 proved undeveloped locations and several hundred other development locations. GMXR has 9,000 net acres on the Sabine Uplift of East Texas. GMXR has 7 producing wells in New Mexico. The Company's strategy is to significantly increase production, revenues and reinvest in increasing production. GMXR's goal is to grow and build shareholder value every day. The Company reported net losses of $206.44 million in 2011, $138.29 million in 2010, and $181.08 million in 2009. GMX filed a Chapter 11 petition in its hometown (Bankr. W.D. Okla. Case No. 13-11456) on April 1, 2013, so secured lenders can buy the business in exchange for $324.3 million in first-lien notes. David A. Zdunkewicz, Esq., at Andrews Kurth LLP, represented the Debtors as counsel. GMX missed a payment due in March 2013 on $51.5 million in second- lien notes. Other principal liabilities include $48.3 million in unsecured convertible senior notes. The DIP financing provided by senior noteholders requires court approval of a sale within 75 days following approval of sale procedures. The lenders and principal senior noteholders include Chatham Asset Management LLC, GSO Capital Partners, Omega Advisors Inc. and Whitebox Advisors LLC. Looper Reed is substituted as counsel for the Official Committee of Unsecured Creditors in place of Winston & Strawn LLP, effective as of April 25, 2013. The Committee tapped Conway MacKenzie, Inc., as financial advisor. GREEN GOLD: Herb Farm Files Chapter 12 Bankruptcy ------------------------------------------------- Jane Meinhardt, writing for Tampa Bay Business Journal, reports that Green Gold Fresh Herbs Inc. has filed for Chapter 12 bankruptcy, a type of bankruptcy designed for family farms or "family fishermen." According to the report, Green Gold Fresh Herbs listed assets of $8,600 and liabilities of $113,000, court records show. Among the assets are 7,200 "culinary pots" valued at 40 cents each, or $2,888, and a greenhouse valued at $1,000. Garry Cohen, who is listed as the owner and president, could not be reached. HARLAN LABORATORIES: Default Risk Cues Moody's to Cut CFR to Caa2 ----------------------------------------------------------------- Moody's Investors Service downgraded the Corporate Family Rating of Harlan Laboratories, Inc. to Caa2 from Caa1 and the Probability of Default Rating to Caa3-PD from Caa2-PD. Moody's also lowered the rating on the senior secured term loan due 2014 to Caa2 from Caa1. The rating outlook is negative. The downgrade of the ratings reflects Harlan's heightened probability of a default or debt restructuring event given continued deterioration in revenue and EBITDA over the last several quarters. As a result, there is increased likelihood of a covenant breach within the next 3-6 months and the company's ability to refinance its term loan, which matures in July 2014, is highly questionable. Ratings Downgraded: Harlan Laboratories: Corporate Family Rating, to Caa2 from Caa1 Probability of Default Rating, to Caa3-PD from Caa2-PD Senior Secured Term Loan, to Caa2 (LGD3, 30%) from Caa1 (LGD3, 32%) The outlook is negative. Ratings Rationale: The Caa2 Corporate Family Rating balances the heightened probability of default with Moody's view that recovery for creditors in the senior secured term loan would be higher than average, in the roughly 70-90% range. Moody's expectation for higher than average recovery stems from:1) valuation analysis including current trading multiples of peer companies; and 2) the on-going value of the research models and services (RMS) business, as Harlan is the second largest providers of animals worldwide for scientific research, a necessary and high barrier-to-entry business. However, a challenging industry environment, along with operational missteps, have resulted in stagnant revenue and earnings over the past several years and Moody's expects a number of these challenges to persist, thereby limiting near-term growth and deleveraging opportunities. If Harlan successfully refinances its debt at terms that allow for at least break-even free cash flow, Moody's could upgrade the ratings. Further deterioration in revenue and EBITDA which reduces the company's prospects to refinance its debt as well as the likely recovery for lenders could lead to a downgrade. Harlan Laboratories, headquartered in Indianapolis, Indiana, is a global provider of products and services used in discovery and development research in the pharmaceutical, biotechnology, agrochemical, industrial chemical, and food industries. The company's businesses include research models and services, including laboratory diets and bedding, and biomedical products and pre-clinical contract research services, including toxicology, environmental chemistry and pharmanalytics. For the twelve months ended June 30, 2013, Harlan generated net sales approximating $326 million. Harlan is privately held with majority ownership by Genstar Capital. The principal methodology used in this rating was the Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. HERCULES OFFSHORE: Files Fleet Status Report as of August 21 ------------------------------------------------------------ Hercules Offshore, Inc., posted on its Web site at www.herculesoffshore.com a report entitled "Hercules Offshore Fleet Status Report". The Fleet Status Report includes the Hercules Offshore Rig Fleet Status (as of Aug. 21, 2013), which contains information for each of the Company's drilling rigs, including contract dayrate and duration. The Fleet Status Report also includes the Hercules Offshore Liftboat Fleet Status Report, which contains information by liftboat class for July 2013, including revenue per day and operating days. The Fleet Status Report is available for free at http://is.gd/TIiTU6 About Hercules Offshore Hercules Offshore Inc. (NASDAQ: HERO) -- http://www.herculesoffshore.com/-- provides shallow-water drilling and marine services to the oil and natural gas exploration and production industry in the United States, Gulf of Mexico and internationally. The Company provides these services to integrated energy companies, independent oil and natural gas operators and national oil companies. The Company operates in six business segments: Domestic Offshore, International Offshore, Inland, Domestic Liftboats, International Liftboats and Delta Towing. Hercules incurred a net loss of $127 million in 2012, a net loss of $76.12 million in 2011, and a net loss of $134.59 million in 2010. As of June 30, 2013, the Company had $2.15 billion in total assets, $1.23 billion in total liabilities and $917.27 million in total equity. * * * The Troubled Company Reporter said on April 11, 2013, that Moody's Investors Service upgraded Hercules Offshore, Inc.'s Corporate Family Rating to B2 from B3. Hercules' B2 CFR is supported by its improved cash flow and lower leverage on the back of increased drilling activity and higher day-rates in the Gulf of Mexico (GOM) As reported by the TCR on Nov. 6, 2012, Standard & Poor's Ratings Services raised its corporate credit rating on Houston-based Hercules Offshore Inc. to 'B' from 'B-'. "The upgrade reflects the improving market conditions in the Gulf of Mexico and our expectations that Hercules' fleet will continue to benefit," said Standard & Poor's credit analyst Stephen Scovotti. HORNE INTERNATIONAL: Incurs $215,000 Net Loss in Second Quarter --------------------------------------------------------------- Horne International, Inc., separately filed with the U.S. Securities and Exchange Commission its quarterly reports for the periods ended March 31 and June 30, 2013. The Company reported a net loss of $215,000 on $25,000 of revenues for the three months ended June 30, 2013, as compared with a net loss of $506,000 on $974,000 of revenues for the three months ended June 24, 2012. For the six months ended June 30, 2013, the Company reported a net loss of $531,000 on $50,000 of revenues, as compared with a net loss of $842,000 on $2.40 million of revenues for the six months ended June 24, 2012. The Company reported a net loss of $316,000 on $25,000 of revenue for the three months ended March 31, 2013, as compared with a net loss of $336,000 on $1.43 million of revenue for the three months ended March 25, 2012. The Company reported a net loss of $1.6 million on $4.1 million of revenue in 2012, compared with a net loss of $121,000 on $5.7 million of revenue in 2011. The Company's balance sheet at June 30, 2013, showed $1.07 million in total assets, $3.58 million in total liabilities and a $2.50 million total stockholders' deficit. The Company's independent registered public accountants, Stegman & Company, in Baltimore, Maryland, stated in their report on the consolidated financial statements of the Company for the years ended Dec. 31, 2012, and Dec. 25, 2011, that the Company has had recurring operating losses that raise substantial doubt about its ability to continue as a going concern. A copy of the Q1 Form 10-Q is available for free at: http://is.gd/mJVo3m A copy of the Q2 Form 10-Q is available for free at: http://is.gd/Qx2Xod About Horne International Fairfax, Va.-based Horne International, Inc., is an engineering services company focused on provision of integrated, systems approach based solutions to the energy and environmental sectors. HOSTESS BRANDS: Properties Are Sold to Hackman Capital ------------------------------------------------------ Maura Webber Sadovi, writing for The Wall Street Journal, reported that real-estate investment firm Hackman Capital Partners LLC is betting it can turn a sweet profit by acquiring out of bankruptcy proceedings property and other assets from the former Hostess Brands Inc. empire. According to the report, under the terms of the deal authorized by a U.S. bankruptcy court in New York, an affiliate of Los Angeles- based Hackman will pay the newly renamed Old HB Inc. $62.5 million for 140 vacant properties. The portfolio of equipment and real estate in 34 states includes about 3,400 vehicles and bread- delivery vans, seven factories as well as warehouses and storefronts that once sold the trademark Twinkies and Wonder Bread. Hackman, which specializes in turning around distressed industrial properties, expects to resell most of the real estate in the next 12 months to companies such as bakeries and manufacturers that will own and occupy them, the report related. Residential developers also have been looking at some of the sites, said Michael Hackman, the company's founder. The deal is the latest sign that the improving economy is giving investors confidence they will be able to flip even the riskiest properties for higher prices, a practice that was common before the financial crisis, the report said. "Businesses are doing much better and they're opting to own rather than rent," said Mr. Hackman, who said interest in the properties will "skyrocket" once Hackman takes title and the ownership is no longer embroiled in bankruptcy proceedings, the report further related. About Hostess Brands Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known for iconic brands such as Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution centers and 570 outlets in 49 states. Hostess filed for Chapter 11 bankruptcy protection early morning on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through 12-22056) in White Plains, New York. Hostess Brands disclosed assets of $982 million and liabilities of $1.43 billion as of the Chapter 11 filing. The bankruptcy filing was made two years after predecessors Interstate Bakeries Corp. and its affiliates emerged from bankruptcy (Bankr. W.D. Mo. Case No. 04-45814). In the new Chapter 11 case, Hostess has hired Jones Day as bankruptcy counsel; Stinson Morrison Hecker LLP as general corporate counsel and conflicts counsel; Perella Weinberg Partners LP as investment bankers, FTI Consulting, Inc. to provide an interim treasurer and additional personnel for the Debtors, and Kurtzman Carson Consultants LLC as administrative agent. Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry Wilson, the head of turnaround and restructuring firm MAEVA Advisors, are representing the Teamsters union. Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and Bakery & Confectionery Union & Industry International Pension Fund are Jeffrey R. Freund, Esq., at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright & Jaworski L.L.P. The official committee of unsecured creditors selected New York law firm Kramer Levin Naftalis & Frankel LLP as its counsel. Tom Mayer and Ken Eckstein head the legal team for the committee. Hostess Brands in mid-November 2012 opted to pursue the orderly wind down of its business and sale of its assets after the Bakery, Confectionery, Tobacco and Grain Millers Union (BCTGM) commenced a nationwide strike. The Debtor failed to reach an agreement with BCTGM on contract changes. Hostess Brands sold its businesses and most of the plants to five different buyers for an aggregate of $860 million. Hostess still has some plants, depots and other facilities the buyers didn't acquire. The bankruptcy estate has changed its name to Old HB Inc. HRK HOLDINGS: Can Borrow $1.2 Million From Regions Bank ------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida has entered a final order, as amended, authorizing HRK Holdings, LLC, and HRK Industries, LLC, to obtain additional $1.17 million post- petition financing from Regions Bank. Regions is granted a superpriority administrative expense claim pursuant to Section 364(c) of the Bankruptcy Code. The Court had previously allowed the Debtors to obtain $3.48 million from Regions. The additional borrowing advances will bear interest at nine percent per annum. Regions will not be entitled to any default interest in conjunction with the Second DIP Loan. A copy of the Final DIP Order is available for free at: http://bankrupt.com/misc/HRK_FINALDIPORD.pdf About HRK Holdings Based in Palmetto, Florida, HRK Holdings LLC owns roughly 675 contiguous acres of real property in Manatee County, Florida. Roughly 350 acres of the property accommodates a phosphogypsum stack system, called Gypstaks, a portion of which was used as an alternate disposal area for the management of dredge materials pursuant to a contract with Port Manatee and as authorized under an administrative agreement with the Florida Department of Environmental Protection. The remaining acres of usable land are either leased to various tenants or available for sale. HRK Industries holds various contracts and leases associated with the Debtors' property. HRK Holdings and HRK Industries LLC filed for Chapter 11 protection (Bankr. M.D. Fla. Case Nos. 12-09868 and 12-09869) on June 27, 2012. Judge K. Rodney May oversees the case. Barbara A. Hart, Esq., at Stichter, Riedel, Blain & Prosser, P.A., represents the Debtors. HRK Holdings disclosed $33,366,529 in assets and $26,092,559 in liabilities in its revised schedules. According to the Debtors, the bankruptcy filing was necessitated by the immediate need to sell a portion of the remaining property to create liquidity for (a) funding the urgent management of the site-related environmental concerns; the benefit of creditors; funding a litigation filed by the Debtors; and funding of expenses related to additional sales of the remaining property. HRK HOLDINGS: Wants to Borrow Add'l $2.5MM From Regions Bank ------------------------------------------------------------ HRK Holdings, LLC, and HRK Industries, LLC, filed with the Bankruptcy Court their fourth motion seeking authority to obtain up to $2.5 million post-petition financing from Regions Bank, N.A. Pursuant to the procedures approved by the Court, the Debtors conducted auctions with respect to three parcels of real property. The Debtors have agreed to establish the Line of Credit Facility, the proceeds of which would be available to be deposited into the Long Term Care Trust. Funds would be available upon each closing of a sale as all net proceeds are received by Regions so that the entire $2.5 million would be available once all the three sales closed. The non-default rate of interest for the Line of Credit will be nine percent per annum. The Line of Credit Documents will consist of a promissory note, mortgage, and a security agreement, together with any other documents reasonably requested by Regions. The Debtors will reimburse Regions for the cost of preparing the Line of Credit Documents. The Debtors may repay the Loan in whole or in part from excess cash. Unless extended by agreement of the parties, the termination date for the Line of Credit will be Dec. 31, 2013, unless terminated earlier pursuant to the occurrence of an Event of Default or renewed with the consent of Regions. A hearing will be held on Sept. 4, 2013, at 1:30 p.m. to consider approval of the request. About HRK Holdings Based in Palmetto, Florida, HRK Holdings LLC owns roughly 675 contiguous acres of real property in Manatee County, Florida. Roughly 350 acres of the property accommodates a phosphogypsum stack system, called Gypstaks, a portion of which was used as an alternate disposal area for the management of dredge materials pursuant to a contract with Port Manatee and as authorized under an administrative agreement with the Florida Department of Environmental Protection. The remaining acres of usable land are either leased to various tenants or available for sale. HRK Industries holds various contracts and leases associated with the Debtors' property. HRK Holdings and HRK Industries LLC filed for Chapter 11 protection (Bankr. M.D. Fla. Case Nos. 12-09868 and 12-09869) on June 27, 2012. Judge K. Rodney May oversees the case. Barbara A. Hart, Esq., at Stichter, Riedel, Blain & Prosser, P.A., represents the Debtors. HRK Holdings disclosed $33,366,529 in assets and $26,092,559 in liabilities in its revised schedules. According to the Debtors, the bankruptcy filing was necessitated by the immediate need to sell a portion of the remaining property to create liquidity for (a) funding the urgent management of the site-related environmental concerns; the benefit of creditors; funding a litigation filed by the Debtors; and funding of expenses related to additional sales of the remaining property. INTERFAITH MEDICAL: Seeks to Obtain $15-Mil. DIP Loan from DASNY ---------------------------------------------------------------- Interfaith Medical Center, Inc., seeks authority from the U.S. Bankruptcy Court for the Eastern District of New York to obtain from The Dormitory Authority of the State of New York a $15 million delayed-draw term loan to, among other things, fund working capital requirements and operating expenses of the Debtor. The DIP Obligations will bear interest at the rate of 1% per annum payable quarterly in arrears. The DIP Obligations will be backed by (i) an allowed superpriority administrative claim, (ii) a first priority, priming security interest in and lien on all encumbered property of the Debtor and its estate, (iii) a first priority security interest in and lien on all unencumbered property of the Debtor and its estate except for, among others, avoidance actions and proceeds from those actions; and (iv) a junior security interest and lien on all of the Debtor's property that is subject to a permitted prior senior lien. The DIP Superpriority Claim and Liens are subject to a carve-out which means the fees and expenses paid to retained professionals in an aggregate amount not exceeding $1.5 million, and unpaid fees payable to the U.S. Trustee and Clerk of the Bankruptcy Court. Under the DIP Documents, the Debtor is required to complete the implementation of its closure plan on or before Oct. 31, 2013. According to Alan J. Lipkin, Esq., at Willie Farr & Gallagher LLP, in New York, interruption of IMC's cash flow would severely impede the Debtor's ability to maintain the value of its estate for the benefit of stakeholders and to confirm a Chapter 11 plan. He asserts that the Debtor's access to the DIP Facility are necessary now: (a) to assure third parties, like the Debtor's vendors, patients, and employees, regarding the Debtor's ability to meet its administrative liabilities; (b) to provide the Debtor with additional liquidity as and when needed; and (c) to assist the Debtor in implementing its Closure Plan. A hearing on the motion will be held on Sept. 11, 2013 at 10:00 a.m. (prevailing Eastern Time). Objections are due Sept. 3. Shaunna D. Jones, Esq., and Anna C. Burns, Esq., at WILLKIE FARR & GALLAGHER LLP, in New York, also represent the Debtor. DASNY is represented by David Neier, Esq., at Winston & Strawn LLP, in New York. About Interfaith Medical Center Headquartered in Brooklyn, New York, Interfaith Medical Center, Inc., operates a 287-bed hospital on Atlantic Avenue in Bedford- Stuyvesant and an ambulatory care network of eight clinics in central Brooklyn, in Crown Heights and Bedford-Stuyvesant. The Company filed for Chapter 11 protection (Bankr. E.D. N.Y. Case No. 12-48226) on Dec. 2, 2012. The Debtor disclosed $111,872,972 in assets and $193,540,998 in liabilities as of the Chapter 11 filing. Liabilities include $117.9 million owing to the New York State Dormitory Authority on bonds secured by the assets. Alan J. Lipkin, Esq., at Willkie Farr & Gallagher LLP, serves as bankruptcy counsel to the Debtor. Nixon Peabody LLP is the special corporate and healthcare counsel. CohnReznick LLP serves as financial advisor. Donlin, Recano & Company, Inc. serves as administrative agent. The Official Committee of Unsecured Creditors tapped Alston & Bird LLP as its counsel, and CBIZ Accounting, Tax & Advisory of New York, LLC as its financial advisor. Eric M. Huebscher, the patient care ombudsman, tapped the law firm of DiConza Traurig LLP, as his counsel. INTERFAITH MEDICAL: Can Access Cash Collateral Until Sept. 13 ------------------------------------------------------------- Interfaith Medical Center, Inc., obtained authority from the U.S. Bankruptcy Court for the Eastern District of New York to continue to use until Sept. 13, 2013, the cash collateral securing their prepetition indebtedness from The Dormitory Authority of the State of New York. In a hearing to be held on Sept. 11, the Debtor will ask the Court for final authority to access DASNY's Cash Collateral. In partial exchange for the Authority's consent to the Debtor using Cash Collateral, the Debtor has agreed to grant the Authority (i) perfected security interests in and replacements liens on all property of the Debtor and an administrative expense claim with priority over all other administrative expenses. The replacement liens and administrative claim are subject to the Carve-Out. Objections to the final approval of the Cash Collateral request are due Sept. 3. Alan J. Lipkin, Esq., Shaunna D. Jones, Esq., and Anna C. Burns, Esq., at WILLKIE FARR & GALLAGHER LLP, in New York, represent the Debtor. DASNY is represented by David Neier, Esq., at Winston & Strawn LLP, in New York. About Interfaith Medical Center Headquartered in Brooklyn, New York, Interfaith Medical Center, Inc., operates a 287-bed hospital on Atlantic Avenue in Bedford- Stuyvesant and an ambulatory care network of eight clinics in central Brooklyn, in Crown Heights and Bedford-Stuyvesant. The Company filed for Chapter 11 protection (Bankr. E.D. N.Y. Case No. 12-48226) on Dec. 2, 2012. The Debtor disclosed $111,872,972 in assets and $193,540,998 in liabilities as of the Chapter 11 filing. Liabilities include $117.9 million owing to the New York State Dormitory Authority on bonds secured by the assets. Alan J. Lipkin, Esq., at Willkie Farr & Gallagher LLP, serves as bankruptcy counsel to the Debtor. Nixon Peabody LLP is the special corporate and healthcare counsel. CohnReznick LLP serves as financial advisor. Donlin, Recano & Company, Inc. serves as administrative agent. The Official Committee of Unsecured Creditors tapped Alston & Bird LLP as its counsel, and CBIZ Accounting, Tax & Advisory of New York, LLC as its financial advisor. Eric M. Huebscher, the patient care ombudsman, tapped the law firm of DiConza Traurig LLP, as his counsel. INTERFAITH MEDICAL: Inks Deal to Settle DASNY's $125-Mil. Claims ---------------------------------------------------------------- Interfaith Medical Center, Inc., and The Dormitory Authority of the State of New York agreed to resolve certain claims and issues between them. Under a proposed settlement, the Authority would release all of its claims against the Debtor as well as the related liens on substantially all of the Debtor's assets in exchange for only a portion of the Debtor's assets covered by those liens. The Authority has more than $125 million of uncontested prepetition claims against the Debtor of which $112.7 million are secured and $12.2 million are unsecured. The proposed settlement, according to the Debtor's counsel, Alan J. Lipkin, Esq., at Willkie Farr & Gallagher LLP, in New York, would free up assets, rights, and interests worth not less than $35.7 million, and potentially much more, for the Debtor's estate, its creditors, and all parties-in-interest. Subject to approval by the U.S. Bankruptcy Court for the Eastern District of New York, the parties agreed that the Debtor would fully implement the Closure Plan. Under the DIP Documents, the implementation of the Closure Plan must be on or before Oct. 31, 2013. The parties also mutually release each other from all claims and obligations from, among other things, any claims by the DIP Lender for repayment of the DIP Facility and from any challenge with respect to any prepetition lien. Shaunna D. Jones, Esq., and Anna C. Burns, Esq., at WILLKIE FARR & GALLAGHER LLP, in New York, also represent the Debtor. DASNY is represented by David Neier, Esq., at Winston & Strawn LLP, in New York. About Interfaith Medical Center Headquartered in Brooklyn, New York, Interfaith Medical Center, Inc., operates a 287-bed hospital on Atlantic Avenue in Bedford- Stuyvesant and an ambulatory care network of eight clinics in central Brooklyn, in Crown Heights and Bedford-Stuyvesant. The Company filed for Chapter 11 protection (Bankr. E.D. N.Y. Case No. 12-48226) on Dec. 2, 2012. The Debtor disclosed $111,872,972 in assets and $193,540,998 in liabilities as of the Chapter 11 filing. Liabilities include $117.9 million owing to the New York State Dormitory Authority on bonds secured by the assets. Alan J. Lipkin, Esq., at Willkie Farr & Gallagher LLP, serves as bankruptcy counsel to the Debtor. Nixon Peabody LLP is the special corporate and healthcare counsel. CohnReznick LLP serves as financial advisor. Donlin, Recano & Company, Inc. serves as administrative agent. The Official Committee of Unsecured Creditors tapped Alston & Bird LLP as its counsel, and CBIZ Accounting, Tax & Advisory of New York, LLC as its financial advisor. Eric M. Huebscher, the patient care ombudsman, tapped the law firm of DiConza Traurig LLP, as his counsel. INQUEST TECHNOLOGY: App. Ct. Affirms $2MM Award for Peter Reilly ---------------------------------------------------------------- The Court of Appeals of California, Fourth District, upheld a jury verdict awarding Peter Reilly $2,065,702 on commissions owed by Inquest Technology, Inc., et al. Mr. Reilly agreed to use his experience and connections in the high-tech electronic industry to help grow Inquest, owned by David Singhal and Pradeep Sethia. Mr. Reilly prepared a written document outlining his business relationship with Inquest, which included his understanding he would receive 50% of the net profits from all sales resulting from his efforts and contacts. The parties did not execute this document as a written contract, but the jury ultimately determined Inquest accepted the terms due to Inquest's owners' conduct. The case is PETER REILLY, Plaintiff and Respondent, v. INQUEST TECHNOLOGY, INC., et al., Defendants and Appellants, Case No. G046291. A copy of the Appeals Court's July 31, 2013 Opinion is available at http://is.gd/1pUbIAfrom Leagle.com. GORDEE, NOWICKI & AUGUSTINI's Bryan Arnold Esq. -- barnold@gna- law.com -- represents Inquest Technology, et al. LAW OFFICE of ANTHONY KORNARENS and Anthony Kornarens, Esq. -- kornarens@gmail.com -- represents Peter Reilly. Based in Laguna Hills, California, Inquest Technology makes electronic parts, such as printed circuit boards, subcontracting the work to Asian factories then sells to major Orange County manufacturers. The Company filed for Chapter 11 protection on Oct. 14, 2011 (Bankr. C.D. Calif. Case No. 11-24318). Judge Erithe A. Smith presides over the case. Robert P. Goe, Esq., at Goe & Forsythe LLP, represents the Debtor. The Debtor estimated both assets and debts of between $1 million and $10 million. IZEA INC: Sells $2.3 Million Units ---------------------------------- IZEA, Inc., entered into a Securities Purchase Agreement with certain investors, pursuant to which the Company privately placed approximately $2,302,000 of units, at a price of $25,000 per Unit, paid in cash and conversion of notes payable. Each Unit consisted of 100,000 shares of the Company's common stock, together with two warrants. The Warrants were composed of one Warrant to purchase 50,000 shares of Common Stock at an exercise price of $0.25 per share and another Warrant to purchase 50,000 shares of common stock at an exercise price of $0.50 per share, in each case exercisable for cash at any time during the five years following the date of issuance. As a result of the Private Placement, the Company issued 9,206,472 shares of its common stock and issued fully-exercisable warrants to purchase up to additional 9,206,472 shares of the Company's common stock. Brian W. Brady, a director of the Company company, converted $1,270,000 in principal (plus $19,252 in accrued interest) that the Company owed to him pursuant to several unsecured promissory notes issued between April and August 2013, into Units on the same terms and conditions as were applicable to the other Investors in the Private Placement. Two other existing stockholders converted a total of $75,000 in principal (plus $12,366 in accrued interest) that the Company owed to them pursuant to an unsecured promissory note originally issued in May 2012, into Units on the same terms and conditions as other Investors in the Private Placement. Net cash proceeds as of Aug. 15, 2013, after the note conversions and before expenses totaled $925,000. These proceeds will be used for general working capital purposes. The Company's total number of outstanding shares of common stock after the Private Placement is 16,482,453 shares. On Aug. 15, 2013, pursuant to an extension and conversion agreement dated May 31, 2013, between the Company and Mr. Brady, the Company issued to Mr. Brady a warrant to purchase 3,187,500 shares of its common stock at $0.25 per share for a period of five years and 1,687,500 restricted stock units which vest upon the earlier of two years after issuance or completion of a transaction resulting in a change of control of the company. About IZEA, Inc. IZEA, Inc., headquartered in Orlando, Fla., believes it is a world leader in social media sponsorships ("SMS"), a rapidly growing segment within social media where a company compensates a social media publisher to share sponsored content within their social network. The Company accomplishes this by operating multiple marketplaces that include its platforms SocialSpark, SponsoredTweets and WeReward, as well as its legacy platforms PayPerPost and InPostLinks. The Company has incurred significant losses from operations since inception and has an accumulated deficit of $20.9 million as of June 30, 2012. Cross, Fernandez & Riley, LLP, in Orlando, Florida, expressed substantial doubt about IZEA'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 incurred recurring operating losses and had an accumulated deficit at Dec. 31, 2011, of $18.1 million. The Company's balance sheet at March 31, 2013, showed $1.01 million in total assets, $2.96 million in total liabilities and a $1.94 million total stockholders' deficit. J.C. PENNEY: Incurs $586 Million Net Loss in Second Quarter ----------------------------------------------------------- J. C. Penney Company, Inc., reported a net loss of $586 million on $2.66 billion of total net sales for the three months ended Aug. 3, 2013, as compared with a net loss of $147 million on $3.02 billion of total net sales for the three months ended July 28, 2012. For the six months ended Aug. 3, 2013, the Company reported a net loss of $934 million on $5.29 billion of total net sales, as compared with a net loss of $310 million on $6.17 billion of total net sales for the six months ended July 28, 2012. J.C. Penney disclosed a net loss of $985 million in 2012, as compared with a net loss of $152 million in 2011. The Company's balance sheet at Aug. 3, 2013, showed $11.65 billion in total assets, $9.33 billion in total liabilities and $2.32 billion stockholders' equity. Myron E. (Mike) Ullman, III, chief executive officer of jcpenney, said, "Since I returned to jcpenney four months ago, we have moved quickly to stabilize our business -- both financially and operationally -- and we have made meaningful progress in important areas of the business. There are no quick fixes to correct the errors of the past. That said, we have identified the challenges, put solid plans in place to address them and have experienced and capable people in key roles to do so." Ullman continued, "Moving forward, we're focusing our efforts on regaining customer loyalty by offering trusted brands, award winning service and affordability that families can depend on. We are encouraged by our early performance this Back to School season, which reflects customers' growing confidence in the brands and styles we offer. Our associates across the country are working tirelessly to serve our customers and I am proud of their efforts." A copy of the press release is available for free at: http://is.gd/4DgFbL About J.C. Penney Plano, Texas-based J.C. Penney Company, Inc. is one of the U.S.'s largest department store operators with about 1,100 locations in the United States and Puerto Rico. * * * The Company carries Moody's Investors Service's B3 Corporate Family Rating with negative outlook. Early in March 2013, Standard & Poor's Ratings Services lowered its corporate credit rating on Penney to 'CCC+' from 'B-'. The outlook is negative. At the same time, S&P lowered the issue- level rating on the company's unsecured debt to 'CCC+' from 'B-' and maintained its '3' recovery rating on this debt, indicating S&P's expectation of meaningful (50% to 70%) recovery for debtholders in the event of a payment default. "The downgrade reflects the performance erosion that has accelerated throughout the previous year and seems likely to persist over the next 12 months," explained Standard & Poor's credit analyst David Kuntz. At the same time, Fitch Ratings downgraded the Company's Issuer Default Ratings to 'B-' from 'B'. The Rating Outlook is Negative. The rating downgrades reflect Fitch's concerns that there is a lack of visibility in terms of the Company's ability to stabilize its business in 2013 and beyond after a precipitous decline in revenues leading to negative EBITDA of $270 million in 2012. Penney, Fitch said, will need to tap into additional funding to cover a projected FCF shortfall of $1.3 billion to $1.5 billion in 2013, which could begin to strain its existing sources of liquidity. In February 2013, Penney received a notice of default from a law firm representing more than 50% of its 7.4% Debentures due 2037. The Company has filed a lawsuit in Delaware Chancery Court seeking to block efforts by the bondholder group to declare a default on the 2037 bonds. Penney also asked lawyers at Brown Rudnick LLP to identify the investors they represent. In March 2013, Penney received a letter from bondholders withdrawing and rescinding the Notice of Default. On April 12, 2013, Penney borrowed $850 million out of its $1.85 billion committed revolving credit facility with JPMorgan Chase Bank, N.A., as Administrative Agent, and Wells Fargo Bank, National Association, as LC Agent. Penney said the move was to enhance the Company's financial flexibility and position. JONESBORO HOSPITALITY: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Jonesboro Hospitality, LLC fka Fairbridge Inns & Suites fka Jonesboro Holiday Inn 8001 LBJ Freeway Dallas, TX 75251 Bankruptcy Case No.: 13-34324 Chapter 11 Petition Date: August 27, 2013 Court: United States Bankruptcy Court Northern District of Texas (Dallas) Judge: Harlin DeWayne Debtor's Counsel: Arthur I. Ungerman, Esq. One Glen Lakes Tower 8140 Walnut Hill Ln., No. 301 Dallas, TX 75231 Tel: (972) 239-9055 Fax: (972) 239-9886 E-mail: arthur@arthurungerman.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Atul Nanda, managing member. JRL PROPERTIES: Case Summary & Unsecured Creditor ------------------------------------------------- Debtor: JRL Properties, Inc. 912 Constantinople Street New Orleans, LA 70115 Bankruptcy Case No.: 13-12338 Chapter 11 Petition Date: August 27, 2013 Court: United States Bankruptcy Court Eastern District of Louisiana (New Orleans) Judge: Jerry A. Brown Debtor's Counsel: Phillip K. Wallace, Esq. PHILLIP K. WALLACE, PLC 2027 Jefferson Street Mandeville, LA 70448 Tel: (985) 624-2824 Fax: (985) 624-2823 E-mail: PhilKWall@aol.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 In its list of 20 largest unsecured creditors, the Company placed only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ St. Tammany Parish $44,479 Assessor's Office 701 North Columbia Street Covington, LA 70434 The petition was signed by John R. Lee, president. K-V PHARMACEUTICAL: Plan Confirmed; Lenders Lose $33-Mil. --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that senior secured lenders to K-V Pharmaceutical Co. lost $33 million even before they walked into court Aug. 28 for a confirmation hearing where the judge approved the company's Chapter 11 reorganization plan. Removing what might have been a hindrance to plan approval, K-V agreed with the government on a $42.2 million program to pay off fines and penalties, according to the Bloomberg report. The report relates that there was a trial last week in New York bankruptcy court to decide whether senior noteholders, owed $225 million, are entitled to recover about $33 million in post- bankruptcy interest before holders of convertible notes begin recovering on their subordinated claims. U.S. Bankruptcy Judge Allan L. Gropper ruled on Aug. 27 in favor of the junior lenders by concluding that the subordination provisions in the loan documents only subordinate the junior noteholders to post- bankruptcy interest owing to bank lenders, not also senior secured noteholders. The report relates that Judge Gropper ruled for the junior noteholders on two separate theories. Based only on the loan documents, he found no ambiguity and ruled that non-standard language meant subordination only to bank lenders' post-bankruptcy interest. Because Judge Gropper also held a trial with witnesses, he found from the disputed facts that the language was added by the junior noteholders and intended to limit subordination. Judge Gropper therefore didn't need to reach a thorny question -- on which courts are divided -- about the survival of the rule of explicitness following adoption of Section 510 of the Bankruptcy Code in 1978. The rule means there is no subordination unless spelled out explicitly in loan documents. K-V's reorganization plan, which Judge Gropper approved Aug. 28, is based on a compromise where junior creditors can buy the lion's share of the reorganized business. In November the U.S. Attorney in Manhattan started a lawsuit in bankruptcy court for a declaration that fines and penalties would not be wiped out in bankruptcy. Before bankruptcy K-V still had $18.8 million owing in settlement of a False Claims Act suit with the government. In addition, K-V subsidiary Ethex Corp. had pleaded guilty to two felonies and was obligated to pay $23.4 million when bankruptcy began. In the settlement filed in bankruptcy court on Aug. 28, K-V will pay the government $5.4 million toward the criminal fine. The remainder of the fine will be paid in full in installments beginning in December and concluding in June 2018. The False Claims settlement will be paid in installments during the same period of time. Originally, the plan called for holders of $225 million in first- lien notes to become the new owners in exchange for debt. The revised plan provides for holders of $200 million in convertible notes to be the new owners in large part. The senior noteholders are to be paid in full. Judge Gropper's subordination opinion means that the senior noteholders' post-bankruptcy interest in substance ranks along with the junior noteholders' claim. In exchange for the $200 million in convertible debt, holders will receive 7 percent of the reorganized company's stock, for a predicted recovery of 10.9 percent, according to the revised disclosure statement. General unsecured creditors with claims ranging between $13.9 million and $18.3 million will share a pot of $10.25 million cash, for a recovery of 56.2 percent to 73.6 percent. The convertible noteholder group and Silver Point Finance LLC, one of the senior noteholders, help finance the plan by purchasing 1.85 million shares for $20 a share. An additional 72.2 percent of the new stock will be sold to convertible noteholders in a rights offering for $20 a share. The offering is backstopped by the same investor group and Silver Point. As a fee for the backstop, the investors and Silver Point will be given 5 percent of the new stock. The interest dispute saw Silver Point and other senior noteholders facing off against the convertible noteholder group including Capital Ventures International; Greywolf Capital Overseas Master Fund and an affiliate, and Kingdon Capital Management LLC. 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. K-V PHARMACEUTICAL: Judge Greenlights Reorganization Plan --------------------------------------------------------- Law360 reported that K-V Pharmaceutical Co. received a bankruptcy judge's approval of its reorganization plan that will allow it to exit the Chapter 11 process and continue its business following a competitive bidding process. According to the report, U.S. Bankruptcy Judge Allan L. Gropper commended K-V and its counsel for producing a workable plan within a year of its tumble into bankruptcy. The health care company sought Chapter 11 protection after it was unable to make a $45 million payment due to Hologic Inc. under a rights agreement, the report recalled. 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. K-V PHARMACEUTICAL: Medicaid Settlement Approved ------------------------------------------------ BankruptcyData reported that the U.S. Bankruptcy Court approved K- V Pharmaceutical's stipulation of settlement and dismissal by and among the Debtors, the United States of America and certain other parties. The report related that under the settlement, K-V Pharmaceutical (KV) shall pay to the United States the sum of $5,395,214.6. Such payments shall be in full satisfaction of that portion of the U.S. proof of claim that arises from the criminal case. Further, K-V Pharmaceutical shall pay the United States and the Medicaid participating states $18,404,785.33 (the settlement amount) as set forth : KV shall pay to the United States the additional sum of $10,998,153.34 (the federal settlement amount) and KV shall pay to the Medicaid participating states the total sum of $7,406,631.99 (the Medicaid state settlement amount) .The payments set forth shall be in full satisfaction of that portion of the U.S. proof of claim that arises from the settlement agreement as well as in full satisfaction of the state proofs of claim. 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. LEO MOTORS: Incurs $188,000 Net Loss in Second Quarter ------------------------------------------------------ Leo Motors, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $188,240 on $0 of revenues for the three months ended June 30, 2013, as compared with net income of $777,265 on $18,603 of revenues for the same period last year. For the six months ended June 30, 2013, the Company reported a net loss of $369,127 on $0 of revenues, as compared with net income of $625,139 on $24,386 of revenues for the same period during the prior year. The Company's balance sheet at June 30, 2013, showed $1.51 million in total assets, $1.87 million in total liabilities and a $353,800 total deficit. A copy of the Form 10-Q is available for free at: http://is.gd/7demIJ About Leo Motors Headquartered in Hanam City, Gyeonggi-do, Republic of Korea, Leo Motors, Inc., a Nevada corporation, is currently engaged in the research and development of multiple products, prototypes and conceptualizations based on proprietary, patented and patent pending electric power generation, drive train and storage technologies. In 2011, the Company determined its investment in Leo B&T Inc. an investment account was impaired and recorded an expense of $4.5 million. During the 2012 year the Company had a net non operating income largely from the result of the forgiveness of debt for $1.3 million. The Company reported a net loss of $1.9 million on $25,605 of revenues in 2012, compared with a net loss of $5.4 million on $920,587 of revenues in 2011. In its audit report on the consolidated financial statements for the year ended Dec. 31, 2012, John Scrudato CPA, in Califon, New Jersey, expressed substantial doubt about Leo Motors' ability to continue as a going concern, citing the Company's significant losses since inception of $16.2 million and working capital deficit of $632,161. LIGHTSQUARED INC: Lenders Seek Court Approval to Sell 'LP' Assets ----------------------------------------------------------------- A group of LightSquared's lenders is seeking court approval to auction off the company's so-called "LP" assets, a move that would end Philip Falcone's control of the company. In an August 28 filing, the group asked U.S. Bankruptcy Judge Shelley Chapman for green light to hold an auction, with an offer from Dish Network Corp.'s subsidiary serving as the lead bid. The move is part of the Chapter 11 plan proposed by the lenders for LightSquared LP and its nine affiliates. LightSquared Inc., the holding company largely owned by Mr. Falcone and his investment company Harbinger Capital Partners LLC, is not included in the plan. The assets will be sold through a competitive bidding process, with L-Band Acquisition Corp.'s $2.22 billion offer serving as the stalking horse bid. An auction will be conducted on Dec. 4 at the New York offices of White & Case LLP, the lenders group's legal counsel, if it receives other offers for the assets. Interested buyers have until Nov. 27 to submit their bids. A copy of the document detailing the bidding procedures can be accessed for free at http://is.gd/vhFSQd L-Band's $2.22 billion bid is worth more because it includes assumption of obligations under the company's contracts with Inmarsat Plc and Boeing Co., according to the lenders group. The transaction, it said, is worth $3.5 billion. The lenders, which own $1.3 billion of LightSquared's $1.7 billion secured debt, want to take control of the auction, saying LightSquared Inc. or any of its affiliates cannot run the auction because of conflict of interest. The group noted that the majority of LightSquared's directors also worked for Harbinger and that its management is controlled by the investment company, which wants to maintain its ownership and is opposed to a sale. "The party that is opposing the sale of LP assets and intends instead to file a competing plan cannot conduct the sale auction," said the group's lawyer, Glenn Kurtz, Esq., at White & Case LLP, in New York. The lenders proposed that a committee composed of LightSquared's independent directors should be appointed by the company to run the auction in case they are not permitted by the court. The group also suggested the appointment of a bankruptcy trustee for LightSquared units whose assets are included in the sale block should the company refuse to appoint an independent committee. Judge Chapman will hold a hearing on Sept. 24 to consider approval of the request. Objections are due by Sept. 17. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. LIGHTSQUARED INC: Facing Two Major September Hearings ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that LightSquared Inc., having lost the exclusive right in July to submit a reorganization plan, faces two pivotal hearings in September that may determine if majority shareholder Harbinger Capital Partners LLC loses control or ownership. The report recounts that with so-called exclusivity lost, an ad hoc group of secured creditors filed a competing Chapter 11 plan in July to sell the business. The opening bid would come from Dish Networks Corp. Originally, Dish was offering about $2 billion. The lenders say Dish raised the cash price to $2.22 billion and agreed to assume additional debt and contracts. Consequently, the offer is now worth $3.5 billion, according to the lenders. A sale to Dish would pay almost all creditors in full, the lenders say. Meanwhile, LightSquared received court permission to hire an investment bank to locate financing to pay all creditors in full. According to the report, the bankruptcy court scheduled a hearing on Sept. 24 to approve auction and sale procedures. On Sept. 30, there will be a hearing to approve disclosure materials so creditors can begin voting on the competing plans. The report relates that the auction is to occur Dec. 6, followed by a Dec. 10 confirmation hearing to approve one of the plans. The lenders continue to accuse LightSquared of stalling the bankruptcy for the benefit of Harbinger. If LightSquared can pay creditors in full, Philip Falcone's Harbinger could retain ownership. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented the Company from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. M P M INC: Case Summary & Unsecured Creditor -------------------------------------------- Debtor: M P M Inc. P.O. Box 6066 San Juan, PR 00936 Bankruptcy Case No.: 13-06975 Chapter 11 Petition Date: August 27, 2013 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Judge: Brian K. Tester Debtor's Counsel: Jesus Santiago Malavet, Esq. SANTIAGO MALAVET AND SANTIAGO LAW OFFICE 473 Sagrado Corazon Street San Juan, PR 00915 Tel: (787) 727-3058 Fax: (787) 726-5906 E-mail: jsantiago.smslopsc@gmail.com Scheduled Assets: $2,893,000 Scheduled Liabilities: $1,204,102 In its list of 20 largest unsecured creditors, the Company placed only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ Antonio Nicolas Advances for $500,102 Moreda Toledo development GPO Box 6066 San Juan, PR 00936 The petition was signed by Antonio Nicolas Moreda Toledo, president. MACROSOLVE INC: Names MaloneBailey LLP as New Accountants --------------------------------------------------------- MacroSolve, Inc., appointed MaloneBailey LLP as its new independent registered public accounting firm effective Aug. 19, 2013. The decision to engage MaloneBailey was recommended and approved by the Company's audit committee. During the two most recent fiscal years and through the date of the Company's engagement of MaloneBailey, the Company did not consult with MaloneBailey regarding either (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, and either a written report was provided to the Company or oral advice was provided that MaloneBailey concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (2) any matter that was either the subject of a disagreement (as defined in Regulation S-K Item 304(a)(1)(iv)) or a reportable event (as described in Regulation S-K Item 304(a)(1)(v)). About MacroSolve, Inc. Tulsa, Okla.-based MacroSolve, Inc. (OTC BB: MCVE) -- http://www.macrosolve.com/-- is a technology and services company that develops mobile solutions for businesses and government. A mobile solution is typically the combination of mobile handheld devices, wireless connectivity, and software that streamlines business operations resulting in improved efficiencies and cost savings. Macrosolve incurred a net loss of $1.77 million in 2012, as compared with a net loss of $2.53 million in 2011. The Company's balance sheet at March 31, 2013, showed $1.91 million in total assets, $1.07 million in total liabilities and $846,954 in total stockholders' equity. MUSCLEPHARM CORP: Marine MP to Resell 780,000 Common Shares ----------------------------------------------------------- MusclePharm Corporation registered an aggregate of 780,000 shares of common stock, $0.001 par value per share, for resale by Marine MP, LLC, all of which were issued to Marine MP pursuant to an Endorsement Licensing and Co-Branding Agreement. Marine MP will receive all of the net proceeds from the offering of its shares. The Company's common stock is presently quoted on the OTCBB under the symbol "MSLP.OB". On Aug. 19, 2013, the last reported sale price for the Company's common stock on the OTC BB was $11.05 per share. A copy of the Form S-1 prospectus is available for free at: http://is.gd/T3Ld5R About MusclePharm Headquartered in Denver, Colorado, MusclePharm Corporation (OTC BB: MSLP) -- http://www.muslepharm.com/-- is a healthy life- style company that develops and manufactures a full line of National Science Foundation approved nutritional supplements that are 100 percent free of banned substances. MusclePharm is sold in over 120 countries and available in over 5,000 U.S. retail outlets, including GNC and Vitamin Shoppe. MusclePharm products are also sold in over 100 online stores, including bodybuilding.com, Amazon.com and Vitacost.com. The Company reported a net loss of $23.28 million in 2011, compared with a net loss of $19.56 million in 2010. The Company's balance sheet at March 31, 2013, showed $20.53 million in total assets, $13.31 million in total liabilities and $7.22 million in total stockholders' equity. In the auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Berman & Company, P.A., in Boca Raton, Florida, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has a net loss of $23,280,950 and net cash used in operations of $5,801,761 for the year ended Dec. 31, 2011; and has a working capital deficit of $13,693,267, and a stockholders' deficit of $12,971,212 at Dec. 31, 2011. MYCO PROPERTY: Case Summary & 18 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: MYCO Property, L.P. 400-410 Unity Street Latrobe, PA 15650 Bankruptcy Case No.: 13-23630 Chapter 11 Petition Date: August 27, 2013 Court: United States Bankruptcy Court Western District of Pennsylvania (Pittsburgh) Judge: Gregory L. Taddonio Debtor's Counsel: Robert O. Lampl, Esq. 960 Penn Avenue, Suite 1200 Pittsburgh, PA 15222 Tel: (412) 392-0330 Fax: (412) 392-0335 E-mail: rol@lampllaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 18 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/pawb13-23630.pdf The petition was signed by Timothy Myers, managing partner. NATIONAL ENVELOPE: R.R. Donnelley Resigns from Creditors Committee ----------------------------------------------------------------- Roberta A. DeAngelis, U.S. Trustee for Region 3, filed on Aug. 2,3 2013, a second amended notice of the appointment of the Committee of Unsecured Creditors in the Chapter 11 case of NE Opco, Inc., et al. The Amendment reflects the resignation of R.R. Donnelley & Sons Company as of Aug. 22, 2013. Thus, from five members as appointed on June 21, the Committee now consists of four members: 1. Plastic Suppliers, Inc. Attn: Peter E. Driscoll One Centennial Square Haddonfield, NJ 08033 Tel: (856) 354-3103 Fax: (856) 673-7103 2. United Steelworkers Attn: David Jury Five Gateway Center, Room 807 Pittsburgh, PA 15222 Tel: (412) 562-2545 Fax: (412) 562-2574 3. Precise Rotary Die, Inc. Attn: Wanda Barak 9250 Ivanhoe Street Schiller Park, IL 60176 Tel: (847) 678-0001 Fax: (847) 678-0082 4. Gadge USA Inc. Attn: Glenn Weiser 3000 Marcus Avenue, Suite 3E03 Lake Success, NY 11042 Tel: (516) 302-9009 Fax: (516) 437-6553 The Notice was signed by Benjamin Hackman, Esq. for T. Patrick Tinker, Assistant United States Trustee. About National Envelope National Envelope is the largest privately-held manufacturer of envelopes in North America. Headquartered in Frisco, Texas, National Envelope has eight plants and 15 percent of the envelope market. Revenue of $427 million in 2012 resulted in a $60.1 million net loss, continuing an unbroken string of losses since 2007. NE OPCO, Inc., doing business as National Envelope, along with affiliate NEV Credit Holdings, Inc., filed petitions seeking relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 13-11483) on June 10, 2013. The company disclosed liabilities including $148.4 million in secured debt, with $37.5 million owing on a revolving credit and $15.6 million on a secured term loan. There is a $55.7 million second-lien debt 82 percent held by a Gores Group LLC affiliate. National Envelope, then known as NEC Holdings Corp., first sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 10-11890) on June 10, 2010. The business was bought by Gores Group LLC for $208 million in a bankruptcy sale. National Envelope, through NE OPCO, has returned to bankruptcy to pursue a plan of reorganization or sell the assets as a going concern via 11 U.S.C. Sec. 363. The Debtor plans to facilitate a sale of the business with publicly traded competitor Cenveo Inc. In the new Chapter 11 case, the company has tapped the law firm Richards, Layton & Finger as counsel, PricewaterhouseCoopers LLP as financial adviser, and Epiq Bankruptcy Solutions as claims and notice agent. The Gores Group is represented by Weil, Gotshal and Manges LLP and Lowenstein Landler LLP. Salus Capital Partners, the DIP agent, is represented by Choate, Hall & Stewart LLP and Morris Nichols Arsht & Tunnell LLP. Wells Fargo Capital Finance, LLC, the prepetition senior agent, is represented by Goldberg Kohn Ltd and DLA Piper. The Official Committee of Unsecured Creditors is represented by Pachulski Stang Ziehl & Jones LLP's Laura Davis Jones, Esq., Bradford J. Sandier, Esq., Robert J. Feinstein, Esq., and Peter J. Keane, Esq. Guggenheim Securities, LLC, serves as its investment banker and financial advisor. As reported in the TCR on July 25, National Envelope won court approval on July 19 for a global settlement permitting a sale of the company without objection from the official unsecured creditors' committee. The settlement ensures some recovery for unsecured creditors. The Company also won final approval for $67.5 million in bankruptcy financing being supplied by Salus Capital Partners LLC. The settlement will create a trust for unsecured creditors funded with $250,000 over 10 weeks. If a sale pays off the $67.5 million of bankruptcy financing, the creditors' trust will receive another $500,000. From the first $4 million surplus after repaying bankruptcy financing, secured lenders will receive 75 percent, with the other 25 percent for unsecured creditors. Secured lenders will give 3 percent of additional sale proceeds to unsecured creditors, all in return for the committee's agreement to withhold objection to a sale. The settlement creates a separate $790,000 fund to be used in winding down the Chapter 11 case. As reported in the TCR on August 26, NE Opco Inc., which does business as National Envelope, struck a $65 million sales trifecta Wednesday as the bankrupt envelope maker announced a series of deals to parcel out its assets among three separate buyers. The proposed transactions would see Connecticut-based printer Cenveo Inc. acquire National Envelope's operating assets for $25 million, Hilco Receivables LLC pick up accounts receivable for $25 million and Southern Paper LLC take on its inventory for $15 million, according to a sale motion filed in Delaware bankruptcy court. NATIONAL ENVELOPE: Committee Can Retain Guggenheim as Advisor ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized the Official Committee of Unsecured Creditors of N.E. Opco, Inc., et al., to retain Guggenheim Securities LLC as Investment Banker and Financial Advisor to the Committee, nunc pro tunc to June 26, 2013. As reported in the TCR on August 16, The firm will be paid a non- refundable cash fee of $75,000 per month during the term of its engagement, whether or not any transaction has taken place or will take place. The firm will also be reimbursed for any necessary out-of-pocket expenses. About National Envelope National Envelope is the largest privately-held manufacturer of envelopes in North America. Headquartered in Frisco, Texas, National Envelope has eight plants and 15 percent of the envelope market. Revenue of $427 million in 2012 resulted in a $60.1 million net loss, continuing an unbroken string of losses since 2007. NE OPCO, Inc., doing business as National Envelope, along with affiliate NEV Credit Holdings, Inc., filed petitions seeking relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 13-11483) on June 10, 2013. The company disclosed liabilities including $148.4 million in secured debt, with $37.5 million owing on a revolving credit and $15.6 million on a secured term loan. There is a $55.7 million second-lien debt 82 percent held by a Gores Group LLC affiliate. National Envelope, then known as NEC Holdings Corp., first sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 10-11890) on June 10, 2010. The business was bought by Gores Group LLC for $208 million in a bankruptcy sale. National Envelope, through NE OPCO, has returned to bankruptcy to pursue a plan of reorganization or sell the assets as a going concern via 11 U.S.C. Sec. 363. The Debtor plans to facilitate a sale of the business with publicly traded competitor Cenveo Inc. In the new Chapter 11 case, the company has tapped the law firm Richards, Layton & Finger as counsel, PricewaterhouseCoopers LLP as financial adviser, and Epiq Bankruptcy Solutions as claims and notice agent. The Gores Group is represented by Weil, Gotshal and Manges LLP and Lowenstein Landler LLP. Salus Capital Partners, the DIP agent, is represented by Choate, Hall & Stewart LLP and Morris Nichols Arsht & Tunnell LLP. Wells Fargo Capital Finance, LLC, the prepetition senior agent, is represented by Goldberg Kohn Ltd and DLA Piper. The Official Committee of Unsecured Creditors is represented by Pachulski Stang Ziehl & Jones LLP's Laura Davis Jones, Esq., Bradford J. Sandier, Esq., Robert J. Feinstein, Esq., and Peter J. Keane, Esq. Guggenheim Securities, LLC, serves as its investment banker and financial advisor. As reported in the TCR on July 25, National Envelope won court approval on July 19 for a global settlement permitting a sale of the company without objection from the official unsecured creditors' committee. The settlement ensures some recovery for unsecured creditors. The Company also won final approval for $67.5 million in bankruptcy financing being supplied by Salus Capital Partners LLC. The settlement will create a trust for unsecured creditors funded with $250,000 over 10 weeks. If a sale pays off the $67.5 million of bankruptcy financing, the creditors' trust will receive another $500,000. From the first $4 million surplus after repaying bankruptcy financing, secured lenders will receive 75 percent, with the other 25 percent for unsecured creditors. Secured lenders will give 3 percent of additional sale proceeds to unsecured creditors, all in return for the committee's agreement to withhold objection to a sale. The settlement creates a separate $790,000 fund to be used in winding down the Chapter 11 case. As reported in the TCR on August 26, NE Opco Inc., which does business as National Envelope, struck a $65 million sales trifecta Wednesday as the bankrupt envelope maker announced a series of deals to parcel out its assets among three separate buyers. The proposed transactions would see Connecticut-based printer Cenveo Inc. acquire National Envelope's operating assets for $25 million, Hilco Receivables LLC pick up accounts receivable for $25 million and Southern Paper LLC take on its inventory for $15 million, according to a sale motion filed in Delaware bankruptcy court. NATIONAL ENVELOPE: Committee Can Retain Pachulski Stang as Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware authorized the Official Committee of Unsecured Creditors of NE Opco, Inc., et al., to retain Pachulski Stang Ziehl & Jones LLP as counsel to the Committee, nun pro tunc to June 21, 2013. As reported in the TCR on July 31, 2013, PSCJ will provide these services: a. Assisting, advising and representing the Committee in its consultations with the Debtors regarding the administration of these cases; b. Assisting, advising and representing the Committee with respect to the Debtors' retention of professionals and advisors with respect to the Debtors' business and these cases; c. Assisting, advising and representing the Committee in analyzing the Debtors' assets and liabilities, investigating the extent and validity of liens and participating in and reviewing any proposed asset sales, any asset dispositions, financing arrangements and cash collateral stipulations or proceedings; d. Assisting, advising and representing the Committee in any manner relevant to reviewing and determining the Debtors' rights and obligations under leases and other executory contracts; e. Assisting, advising and representing the Committee in investigating the acts, conduct, assets, liabilities and financial condition of the Debtors, the Debtors' operations and the desirability of the continuance of any portion of those operations, and any other matters relevant to the cases or to the formulation of a plan; f. Assisting, advising and representing the Committee in connection with any sale of the Debtors' assets; g. Assisting, advising and representing the Committee in its participation in the negotiation, formulation, or objection to any plan of liquidation or reorganization; h. Assisting, advising and representing the Committee in understanding its powers and its duties under the Bankruptcy Code and the Bankruptcy Rules and in performing other services as are in the interests of those represented by the Committee; i. Assisting, advising and representing the Committee in the evaluation of claims and on any litigation matters, including avoidance actions; and j. Providing such other services to the Committee as may be necessary in these cases. The professionals and paralegals presently designated to represent the Committee and their current standard hourly rates are: Laura Davis Jones $975 Robert J. Feinstein $975 Bradford J. Sandier $750 Shirley S. Cho $695 Peter J. Keane $425 Lynzy McGee $295 About National Envelope National Envelope is the largest privately-held manufacturer of envelopes in North America. Headquartered in Frisco, Texas, National Envelope has eight plants and 15 percent of the envelope market. Revenue of $427 million in 2012 resulted in a $60.1 million net loss, continuing an unbroken string of losses since 2007. NE OPCO, Inc., doing business as National Envelope, along with affiliate NEV Credit Holdings, Inc., filed petitions seeking relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 13-11483) on June 10, 2013. The company disclosed liabilities including $148.4 million in secured debt, with $37.5 million owing on a revolving credit and $15.6 million on a secured term loan. There is a $55.7 million second-lien debt 82 percent held by a Gores Group LLC affiliate. National Envelope, then known as NEC Holdings Corp., first sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 10-11890) on June 10, 2010. The business was bought by Gores Group LLC for $208 million in a bankruptcy sale. National Envelope, through NE OPCO, has returned to bankruptcy to pursue a plan of reorganization or sell the assets as a going concern via 11 U.S.C. Sec. 363. The Debtor plans to facilitate a sale of the business with publicly traded competitor Cenveo Inc. In the new Chapter 11 case, the company has tapped the law firm Richards, Layton & Finger as counsel, PricewaterhouseCoopers LLP as financial adviser, and Epiq Bankruptcy Solutions as claims and notice agent. The Gores Group is represented by Weil, Gotshal and Manges LLP and Lowenstein Landler LLP. Salus Capital Partners, the DIP agent, is represented by Choate, Hall & Stewart LLP and Morris Nichols Arsht & Tunnell LLP. Wells Fargo Capital Finance, LLC, the prepetition senior agent, is represented by Goldberg Kohn Ltd and DLA Piper. The Official Committee of Unsecured Creditors is represented by Pachulski Stang Ziehl & Jones LLP's Laura Davis Jones, Esq., Bradford J. Sandier, Esq., Robert J. Feinstein, Esq., and Peter J. Keane, Esq. Guggenheim Securities, LLC, serves as its investment banker and financial advisor. As reported in the TCR on July 25, National Envelope won court approval on July 19 for a global settlement permitting a sale of the company without objection from the official unsecured creditors' committee. The settlement ensures some recovery for unsecured creditors. The Company also won final approval for $67.5 million in bankruptcy financing being supplied by Salus Capital Partners LLC. The settlement will create a trust for unsecured creditors funded with $250,000 over 10 weeks. If a sale pays off the $67.5 million of bankruptcy financing, the creditors' trust will receive another $500,000. From the first $4 million surplus after repaying bankruptcy financing, secured lenders will receive 75 percent, with the other 25 percent for unsecured creditors. Secured lenders will give 3 percent of additional sale proceeds to unsecured creditors, all in return for the committee's agreement to withhold objection to a sale. The settlement creates a separate $790,000 fund to be used in winding down the Chapter 11 case. As reported in the TCR on August 26, NE Opco Inc., which does business as National Envelope, struck a $65 million sales trifecta Wednesday as the bankrupt envelope maker announced a series of deals to parcel out its assets among three separate buyers. The proposed transactions would see Connecticut-based printer Cenveo Inc. acquire National Envelope's operating assets for $25 million, Hilco Receivables LLC pick up accounts receivable for $25 million and Southern Paper LLC take on its inventory for $15 million, according to a sale motion filed in Delaware bankruptcy court. NATIONAL ENVELOPE: Wants Lease Decision Period Extended to Jan. 6 ----------------------------------------------------------------- NE Opco, Inc., et al., ask the U.S. Bankruptcy Court for the District of Delaware to extend the 120-day period for the Debtors to assume or to reject unexpired non-residential real property leases for 90 days, through and including Jan. 6, 2014. According to papers filed with the Court on August 21, the Debtors have a number of non-residential real property leases with various third-party landlords, which leases cover most of the Debtors' locations in the United States, including the Debtors' corporate headquarters and a number of their plant, factory and warehouse locations. The Debtors tell the Court that are in the process of selling their assets to multiple buyers, but such sale has not yet been approved by the Court. Thus, the Debtors say they must wait until the conclusion of the sale process to determine the Purchasers' intentions will be with respect to any leases relating to the Debtors' business. "Additionally, the complexity of the proposed sales of the Debtors' assets to multiple purchasers has made it virtually impossible for the Debtors to determine which leases will be assumed or rejected," the Debtors add. The hearing to consider the Motion will be held on Sept. 11, 2013, at 12:00 p.m. The Objection Deadline is Sept. 6, 2013, at 4:00 p.m. The Motion was submitted by: Tyler D. Semmelman, Esq. Mark D. Collins, Esq. John H. Knight, Esq. Michael J. Merchant, Esq. Paul N. Heath, Esq. RICHARDS, LAYTON & FINGER, P.A. 920 N. King Street Wilmington, Delaware 19801 Tel: (302) 651-7700 Fax: (302) 651-7701 Counsel for Debtors and Debtors in Possession About National Envelope National Envelope is the largest privately-held manufacturer of envelopes in North America. Headquartered in Frisco, Texas, National Envelope has eight plants and 15 percent of the envelope market. Revenue of $427 million in 2012 resulted in a $60.1 million net loss, continuing an unbroken string of losses since 2007. NE OPCO, Inc., doing business as National Envelope, along with affiliate NEV Credit Holdings, Inc., filed petitions seeking relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 13-11483) on June 10, 2013. The company disclosed liabilities including $148.4 million in secured debt, with $37.5 million owing on a revolving credit and $15.6 million on a secured term loan. There is a $55.7 million second-lien debt 82 percent held by a Gores Group LLC affiliate. National Envelope, then known as NEC Holdings Corp., first sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 10-11890) on June 10, 2010. The business was bought by Gores Group LLC for $208 million in a bankruptcy sale. National Envelope, through NE OPCO, has returned to bankruptcy to pursue a plan of reorganization or sell the assets as a going concern via 11 U.S.C. Sec. 363. The Debtor plans to facilitate a sale of the business with publicly traded competitor Cenveo Inc. In the new Chapter 11 case, the company has tapped the law firm Richards, Layton & Finger as counsel, PricewaterhouseCoopers LLP as financial adviser, and Epiq Bankruptcy Solutions as claims and notice agent. The Gores Group is represented by Weil, Gotshal and Manges LLP and Lowenstein Landler LLP. Salus Capital Partners, the DIP agent, is represented by Choate, Hall & Stewart LLP and Morris Nichols Arsht & Tunnell LLP. Wells Fargo Capital Finance, LLC, the prepetition senior agent, is represented by Goldberg Kohn Ltd and DLA Piper. The Official Committee of Unsecured Creditors is represented by Pachulski Stang Ziehl & Jones LLP's Laura Davis Jones, Esq., Bradford J. Sandier, Esq., Robert J. Feinstein, Esq., and Peter J. Keane, Esq. Guggenheim Securities, LLC, serves as its investment banker and financial advisor. As reported in the TCR on July 25, National Envelope won court approval on July 19 for a global settlement permitting a sale of the company without objection from the official unsecured creditors' committee. The settlement ensures some recovery for unsecured creditors. The Company also won final approval for $67.5 million in bankruptcy financing being supplied by Salus Capital Partners LLC. The settlement will create a trust for unsecured creditors funded with $250,000 over 10 weeks. If a sale pays off the $67.5 million of bankruptcy financing, the creditors' trust will receive another $500,000. From the first $4 million surplus after repaying bankruptcy financing, secured lenders will receive 75 percent, with the other 25 percent for unsecured creditors. Secured lenders will give 3 percent of additional sale proceeds to unsecured creditors, all in return for the committee's agreement to withhold objection to a sale. The settlement creates a separate $790,000 fund to be used in winding down the Chapter 11 case. As reported in the TCR on August 26, NE Opco Inc., which does business as National Envelope, struck a $65 million sales trifecta Wednesday as the bankrupt envelope maker announced a series of deals to parcel out its assets among three separate buyers. The proposed transactions would see Connecticut-based printer Cenveo Inc. acquire National Envelope's operating assets for $25 million, Hilco Receivables LLC pick up accounts receivable for $25 million and Southern Paper LLC take on its inventory for $15 million, according to a sale motion filed in Delaware bankruptcy court. NEW CENTURY FIN'L: Longos' Unsecured Claim Reduced to $1,850 ------------------------------------------------------------ The Trustee for the Liquidating Trust of New Century TRS Holdings, Inc., objected to Janet and Alfonso Longo's Unsecured Claim No. 3801 for $2,816,854. On review, Judge Kevin Carey sustained, in part, and denied, in part, the Trustee's objection. The Longos' Claim will be allowed in the amount of $1,850. A copy of Judge Carey's July 29, 2013 Memorandum is available at http://is.gd/5uUkl5from Leagle.com. About New Century Founded in 1995, Irvine, Calif.-based New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/-- was a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The Company was among firms hit by the collapse of the subprime mortgage business industry in 2006. The company and its debtor-affiliates filed for Chapter 11 protection on April 2, 2007 (Bankr. D. Del. Lead Case No. 07-10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins, Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. The Official Committee of Unsecured Creditors selected Hahn & Hessen as its bankruptcy counsel and Blank Rome LLP as its co-counsel. When the Debtors filed for bankruptcy, they disclosed total assets of $36,276,815 and total debts of $102,503,950. The Company sold its assets in transactions approved by the Bankruptcy Court. The Bankruptcy Court confirmed the Second Amended Joint Chapter 11 Plan of Liquidation of the Debtors and the Official Committee of Unsecured Creditors on July 15, 2008, which became effective on Aug. 1, 2008. An appeal was taken and, on July 16, 2009, District Judge Sue Robinson issued a Memorandum Opinion reversing the Confirmation Order. On July 27, 2009, the Bankruptcy Court entered an Order Granting Motion of the Trustee for an Order Preserving the Status Quo Including Maintenance of Alan M. Jacobs as Liquidating Trustee, Plan Administrator and Sole Officer and Director of the Debtors, Pending Entry of a Final Order Consistent with the District Court's Memorandum Opinion. On Nov. 20, 2009, the Court entered an Order confirming the Modified Second Amended Joint Chapter 11 Plan of Liquidation. The Modified Plan adopted, ratified and confirmed the New Century Liquidating Trust Agreement, dated as of Aug. 1, 2008, which created the New Century Liquidating Trust and appointed Alan M. Jacobs as Liquidating Trustee of New Century Liquidating Trust and Plan Administrator of New Century Warehouse Corporation. NESBITT PORTLAND: Seeks to Tap Jones Lang as Real Estate Broker --------------------------------------------------------------- Nesbitt Portland Property, LLC, et al., seek permission from the U.S. Bankruptcy Court for the Central District of California to employ Jones Lang Lasalle Americas, Inc. as real estate broker, nunc pro tunc to July 2, 2013. The Debtors' proposed Chapter 11 Plan provides for, among other things, a sale, either collectively or individually, of the hotels owned by each of the Debtors led by their Chief Restructuring Officer. In line with this, Jones Lang will provide services in connection with the marketing and disposition of the Hotels and the sale of the Hotels to either a single purchaser or to multiple purchasers. Specifically, its duties and responsibilities include, but are not limited to: -- determining marketing strategy; -- preparing marketing presentation materials; -- creating and implementing a marketing plan; -- preparing due diligence information; -- conducting negotiations among potential purchasers; and -- closing a sale transaction. Jones Lang will be paid a Transaction Fee payable by the applicable Debtor or Debtors from the sale proceeds equal to an amount determined in accordance with this schedule: If the Transaction is a sale to a third party, including the Nesbitt Bidder: Total Sales Proceeds Fee as a % of Total Sales Proceeds -------------------- ---------------------------------- Up to $150,000,000 0.40% of entire amount Greater than $150,000,000 0.45% of entire amount Greater than $160,000,000 0.50% of entire amount Greater than $170,000,000 0.55% of entire amount Greater than $175,000,000 0.60% of entire amount Greater than $180,000,000 2.00% of an incremental amount plus 0.60% on entire amount up to $180,000,000 If the Hotels are acquired by any purchaser of the secured loan, the Transaction Fee will be a flat fee of $400,000 pro-rated by applicable percentages in Schedule A-1 to the Term Sheet of the purchaser of the secured loan does not acquire all of the Hotels. If the Secured Lender acquires the Hotels pursuant to a credit bid: Credit Bid Fee ---------- --- Up to $150,000,000 $250,000 From $150,000,001 - $160,000,000 $300,00 From $160,000,001 - $175,000,000 $350,00 Greater than $175,000,000 0.60% of credit bid amount Jones Lang will be reimbursed for all direct out-of-pocket costs and expenses. Jeffrey Davis, managing director of the Hotels and Hospitality Group of Jones Lang, assures the Court that his firm is a "disinterested person" as defined in Section 327(a) of the Bankruptcy Code. The Secured Lender certified through its counsel that it has no objection to the application. Counsel for the Debtors are: Peter Susi, Esq. Jonathan Gura, Esq. SUSI GURA, P.C. Seven West Figueroa Street, Second Floor Santa Barbara, CA 93101 Tel: (805) 965-1011 Fax: (805) 965-7351 - and - Joseph Sholder, Esq. GRIFFITH & THORNBURGH LLP Eight East Figueroa Street, Third Floor Santa Barbara, CA 93101 Tel: (805) 965-5131 Fax: (805) 965-6751 Counsel for the Secured Lender are: Michelle McMahon, Esq. Lawrence P. Gottesman, Esq. Kerry Moynihan, Esq. BRYAN CAVE LLP About Nesbitt Portland Property et al. Windsor Capital Group Inc. CEO Patrick M. Nesbitt sent hotel- companies to Chapter 11 bankruptcy to stop a receiver named by U.S. Bank National Association from taking over eight hotels, seven of which are operated as Embassy Suites brand hotels. The eighth hotel, located in El Paso, Texas, was previously operated as an Embassy Suites hotel, but lost its franchise agreement. The eight hotels were pledged by the Debtors as collateral for the loans with U.S. Bank. According to http://www.wcghotels.com/Santa Monica-based Windsor Capital owns and/or operates 23 branded hotels in 11 states across the U.S. Windsor Capital is the largest private owner and operator of Embassy Suites hotels. In the case U.S. Bank vs. Nesbitt Bellevue Property LLC, et al. (S.D.N.Y. 12 Civ. 423), U.S. Bank obtained approval from the district judge in June to name Alan Tantleff of FTI Consulting, Inc., as receiver for: * Embassy Suites Colorado Springs in Colorado; * Embassy Suites Denver Southeast in Colorado; * Embassy Suites Cincinnati - Northeast in Blue Ash, Ohio; * Embassy Suites Portland - Washington Square in Tigard, Oregon; * Embassy Suites Detroit - Livornia/Novi in Michigan; * Embassy Suites El Paso in Texas; * Embassy Suites Seattle - North/Lynwood in Washington; and * Embassy Suites Seattle - Bellevue in Washington The receiver obtained district court permission to engage Crescent Hotels and Resorts LLC to manage the eight hotels. But before Mr. Adam could take physical possession of the properties and take control of the Hotels, the eight borrowers filed Chapter 11 petitions (Bankr. C.D. Cal. Lead Case No. 12-12883) on July 31, 2012, in Santa Barbara, California. The debtor-entities are Nesbitt Portland Property LLC; Nesbitt Bellevue Property LLC; Nesbitt El Paso Property, L.P.; Nesbitt Denver Property LLC; Nesbitt Lynnwood Property LLC; Nesbitt Colorado Springs Property LLC; Nesbitt Livonia Property LLC; and Nesbitt Blue Ash Property LLC. Bankruptcy Judge Robin Riblet presides over the cases. The Jonathan Gura, Esq., and Peter Susi, Esq., at Susi & Gura, PC; and Joseph M. Sholder, Esq., at Griffith & Thornburgh LLP, represent the Debtor as counsel. Alvarez & Marsal North American, LLC, serves as financial advisors. Attorneys at Kilpatrick Townsend & Stockton LLP represented the Debtors in the receivership case. U.S. Bank National Association, as Trustee and Successor in Interest to Bank of America, N.A., as Trustee for Registered Holders of GS Mortgage Securities Corporation II, Commercial Mortgage Passthrough Certificates, Series 2006-GG6, acting by and through Torchlight Loan Services, LLC, as special servicer, are represented in the case by David Weinstein, Esq., and Lawrence P. Gottesman, Esq., at Bryan Cave LLP. On Sept. 5, 2012, the Debtors filed with the Court their schedules of assets and liabilities. Nesbitt Portland scheduled $29.4 million in assets and $192.3 million in liabilities. Nesbitt Portland's hotel property is valued at $27.19 million, and secures a $191.9 million debt to U.S. Bank. NXT ENERGY: Incurs C$1.15-Mil. Net Loss in Second Quarter --------------------------------------------------------- NXT Energy Solutions Inc. reported a net loss of C$1.15 million on C$nil survey revenue for the three months ended June 30, 2013, compared with net income of C$30,660 on C$2.39 million of survey revenue for the same period last year. No survey operations were conducted in the Q2-13 period. The Company reported a net loss of $1.19 million on C$2.68 million of survey revenue for the six months ended June 30, 2013, compared with net income of C$368,588 on C$5.21 million of survey revenue for the corresponding period of 2012. The Company said: "The 2013 YTD period reflects solely the completion in Q1-13 of the survey contract that was conducted in Pakistan. The Q2-12 comparative period reflects completion of survey projects flown in Argentina ($1.6 million) and Guatemala ($0.7 million), and the 2012 YTD period also includes completion in Q1-12 of a survey which was flown in Colombia ($2.9 million). The Company's balance sheet at June 30, 2013, showed C$5.04 million in total assets, C$820,501 in total liabilities, and stockholders' equity of $4.22 million. The Company said: "There is substantial doubt about the appropriateness of the use of the going concern assumption, primarily due to current uncertainty about the timing and magnitude of future SFD(R) survey revenues. NXT recognizes that it has limited ability to support operations significantly beyond 2013 without generating sufficient new revenue sources or securing additional financing if required." A copy of the Consolidated Financial Statements for the three months ended June 30, 2013 is available at http://is.gd/mn260S A copy of the Management's Discussion and Analysis for the three months ended June 30, 2013, is available at http://is.gd/nV0FsF NXT Energy Solutions Inc. (TSX-V: SFD; OTC: NSFDF) is a Calgary based company that provides a unique aerial survey service to the oil and natural gas exploration industry. NXT's proprietary Stress Field Detection ("SFD(R)") survey technology is based on detecting subtle changes in earth's gravitational field from an airborne platform. OM GROUP: Moody's Withdraws Ba2 Ratings Following Debt Repayment ---------------------------------------------------------------- Moody's Investors Service has withdrawn all ratings for OM Group, Inc., (Ba2 stable) and its subsidiary Harko CV (Netherlands) following the company's full repayment of its term loans. The following ratings have been withdrawn: OM Group, Inc. - Corporate Family Rating, Ba2 - Probability of Default, Ba2-PD - $200 million senior secured revolving credit facility due 2016, Ba2 (LGD3-39%) - $100 million senior secured term loan A due 2016, Ba2 (LGD3-39%) - Speculative Grade Liquidity Rating, SGL-1 - Outlook, Stable Harko CV (Netherlands) - $350 million senior secured term loan B due 2017, Ba2 (LGD3-39%) - EUR175 million senior secured term loan B due 2017, Ba2 (LGD3-39%) - Outlook, Stable Ratings Rationale: OM Group, Inc. is a Cleveland, Ohio-based vertically integrated producer of specialty chemicals, advanced materials, magnetic materials and components, and batteries. OM Group had 2012 revenues of $1.6 billion. ORCHARD BRANDS: Moody's Withdraws 'B2' Ratings ---------------------------------------------- Moody's Investors Service withdrew all debt ratings of Orchard Brands Corporation, including the B2 Corporate Family Rating and B2-PD Probability of Default Rating, as the proposed debt financing was cancelled. The following ratings have been withdrawn: Issuer: Orchard Brands Corporation Corporate Family Rating at B2; Probability-of-Default Rating at B2-PD; $180 million First Lien Term Loan due 2019 at B1 (LGD3, 43%). $50 million Second Lien Term Loan due 2019 at Caa1 (LGD5,80%). ORCKIT COMMUNICATIONS: May Ink $4.5MM License Pact with ECI ----------------------------------------------------------- Orckit Communications Ltd. reached a non-binding understanding with ECI Telecom Ltd. with respect to the terms of a proposed transaction pursuant to which Orckit would grant an exclusive license to ECI to develop, manufacture and sell products comprising Orckit's Packet Transport technology. If a definitive agreement is signed, Orckit would be entitled to receive $4.5 million over a period of approximately four years on the account of royalties payable on the sales arising from said license and in consideration for the sale of inventory and research and development equipment to ECI. The royalty rate would be set forth in the definitive agreement, with the rate with respect to existing customers of Orckit being higher than the rate with respect to other customers. As a condition to the transaction, ECI would hire certain present and former employees of Orckit (including key employees and one officer), on terms to be agreed between them. Orckit would not be entitled to hire those employees for a period of 18 months. There can be no assurance that a definitive agreement will be signed. About Orckit Tel-Aviv, Israel-based Orckit Communications Ltd. (TASE: ORCT) engages in the design, development, manufacture and marketing of advanced telecom equipment to telecommunication service providers in metropolitan areas. The Company's products are transport telecommunication equipment targeting high capacity packetized metropolitan networks. ORCKIT Communications disclosed a net loss of $6.46 million on $11.19 million of revenues for the year ended Dec. 31, 2012, as compared with a net loss of $17.38 million on $15.58 million of revenues for the year ended Dec. 31, 2011. The Company's balance sheet at March 31, 2013, showed US$14.93 million in total assets, US$25.28 million in total liabilities and a US$10.35 million total capital deficiency. Kesselman & Kesselman, 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 capital deficiency, recurring losses, negative cash flows from operating activities and has significant future commitments to repay its convertible subordinated notes. These facts raise substantial doubt as to the Company's ability to continue as a going concern. PATRIOT COAL: Peabody Must Complete Rule 2004 Documents by Oct. 31 ------------------------------------------------------------------ Patriot Coal Corporation, et al., and the Official Committee of Unsecured Creditors (the "Fiduciaries") jointly move the U.S. Bankruptcy Court for the Eastern District of Missouri to compel Peabody Energy Corporation to complete its production of documents in compliance with this Court's order authorizing discovery pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure by Oct. 1, 2013. The Fiduciaries tell the Court: 1. The Fiduciaries seek the Court's intervention - again - to set a reasonable deadline for Peabody to complete its production in response to the Rule 2004 subpoena that the Court authorized the Fiduciaries to serve on Peabody. Although the Fiduciaries provided Peabody with a form of document request in January 2013, almost eight months ago, to date Peabody has only produced 3,428 documents and states that its production will not be complete until next year. 2. This is not the first time this matter has been before the Court. As the Court is aware, the Fiduciaries are investigating potential claims arising out of Peabody's spinoff of Patriot. In April 2013, after 14 weeks of negotiations had failed to produce an agreement on the terms of discovery, this Court granted the Fiduciaries' motion to conduct Rule 2004 discovery. 3. That ruling, however, has failed to accelerate Peabody's production. The four months since have predominantly been consumed with additional preliminary matters - the negotiation of the forms of the Rule 2004 Order and a confidentiality agreement, the identification of the specific backup tapes to be restored and searched, and the negotiation of search terms that minimize the need to review electronic information. Peabody's very leisurely cooperation has further delayed discovery, and, as a result, Peabody has produced only a small amount of hardcopy documents and virtually no electronic materials. 4. At the same time it has failed to provide much actual discovery, Peabody has refused to provide the Fiduciaries with updates on the status of its review of electronic documents or the mechanics of its document review. Only when the Fiduciaries brought this issue before the Court, at a conference on Aug. 20, 2013, did Peabody outline the status of its production, astonishingly estimating that it could not complete production before an unspecified date in the "early part of next year." 5. The schedule that Peabody suggests - which would provide it with a year or more after the Rule 2004 process began to complete production - is outlandish. Not only has Peabody known the scope of the relevant documents requests since January, but a drastically quicker process is readily achievable, given the scope of the materials it has identified, the sophisticated search terms agreed by the parties, a protective order that provides for a Rule 502(d) privilege clawback, the availability of automated e-discovery review analytics that substantially streamline production, and the substantial manpower (if needed) that Peabody's counsel can bring to bear. Accordingly, the Court should direct that Peabody complete its production in response to the Fiduciaries' Rule 2004 subpoena by Oct. 1, 2013, a date that is eminently reasonable in light of the scope of potentially responsive materials it has identified, the resources available to it, and the time that has elapsed since Peabody was informed of the Fiduciaries' requests. To ensure that the matter proceeds smoothly towards that date, the Fiduciaries respectfully request that the Court also schedule regular telephonic status conferences to allow Peabody to update the parties concerning any matters relevant to the completion of its production. A copy of the Rule 2004 Order is available at: http://bankrupt.com/misc/patriot.doc4114.pdf About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP serves as lead restructuring counsel. Bryan Cave LLP serves as local counsel to the Debtors. Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The U.S. Trustee appointed a seven-member creditors committee. Kramer Levin Naftalis & Frankel LLP serves as its counsel. HoulihanLokey Capital, Inc., serves as its financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as its information agent. On Nov. 27, 2012, the New York bankruptcy judge moved Patriot's bankruptcy case to St. Louis. The order formally sending the reorganization to Missouri was signed December 19 by the bankruptcy judge. The New York Judge in a Jan. 23, 2013 order denied motions to transfer the venue to the U.S. Bankruptcy Court for the Southern District of West Virginia. PATRIOT COAL: EY LLP to Provide Union Retirement Plan Audit Svcs. ----------------------------------------------------------------- Patriot Coal Corporation, et al., in a third supplemental application dated Aug. 29, 2013, asks the U.S. Bankruptcy Court for the Eastern District of Missouri to enter an order expanding the scope of the Debtors' employment and retention of Ernst & Young LLP to provide, in addition to the previously authorized audit services, certain union retirement plan audit services pursuant to the terms and conditions of the additional engagement letter dated as of Aug. 14, 2013, nunc pro tunc to Aug. 14, 2013. In the Original Order dated Aug. 2, 2012, the Bankruptcy Court authorized the Debtors to employ EY LLP to audit and report on Patriot's consolidated financial statements and internal control of financial reporting as of Dec. 31, 2012. In the First Expansion Order dated March 15, 2013, the Bankruptcy Court authorized the expansion of the scope of employment of EY LLP to include auditing and reporting on Patriot's consolidated financial statements and internal control of financial reporting for the year ending Dec. 31, 2013. In the Second Expansion Order dated April 22, 2013, the Bankruptcy Court authorized Patriot to expand the employment of EY LLP to include auditing and reporting on Patriot's 401(k) Retirement Plan. Pursuant to the terms of the Additional Engagement Letter, EY LLP will provide these Union Retirement Plan Audit Services: * Auditing and reporting on the financial statements and supplemental schedules of the Patriot Coal Corporation 401(k) Union Savings Plan (the "Plan") for the years ended Dec. 31, 2011, and Dec. 31, 2012, which are to be included in the Plan's Form 5500 filing with the Employee Benefits Security Administration of the Department of Labor (the "Plan Audit Services"); and * Any special audit-related projects that are integral to and necessary for the performance of the Plan Audit Services, such as research and/or consultation on special Plan business or financial issues (i.e., plan amendments, plan suspensions, etc.) (the "Special Plan Audit-Related Services"). Pursuant to the terms and conditions of the Additional Engagement Letter, the Debtors have agreed to pay EY LLP a fixed fee of $35,000 for the Plan Audit Services. In addition, fees for the Special Plan Audit-Related Services will be billed on an hourly basis, separately from, and in addition to, the Fee described above. The hourly fees for any Special Plan Audit-Related Services are: National Partner/Principal $600 Partner/Principal/Executive Director $525 Senior Manager $430 Manager $375 Senior $275 Staff $190 In addition to the fees set forth above, the Debtors and EY LLP have agreed that the Debtors will reimburse EY LLP for any direct expenses incurred in connection with EY LLP's retention in the Debtors' Chapter 11 cases and the performance of the Union Retirement Plan Audit Services. About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP serves as lead restructuring counsel. Bryan Cave LLP serves as local counsel to the Debtors. Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The U.S. Trustee appointed a seven-member creditors committee. Kramer Levin Naftalis & Frankel LLP serves as its counsel. HoulihanLokey Capital, Inc., serves as its financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as its information agent. On Nov. 27, 2012, the New York bankruptcy judge moved Patriot's bankruptcy case to St. Louis. The order formally sending the reorganization to Missouri was signed December 19 by the bankruptcy judge. The New York Judge in a Jan. 23, 2013 order denied motions to transfer the venue to the U.S. Bankruptcy Court for the Southern District of West Virginia. PENNSYLVANIA HIGHER: Fitch Keeps 'B' Ratings on 9 Note Classes -------------------------------------------------------------- Fitch Ratings currently maintains ratings on the student loan revenue bonds issued from the Pennsylvania Higher Education Assistance Agency (PHEAA) trust indenture dated as of Aug. 1, 1997, as amended and supplemented (the 1997 Trust). PHEAA has requested that Fitch confirm the existing ratings assigned to the bonds issued under the 1997 Trust in connection with an increase in the Auction Agent fee. Fitch is treating this request as a notification. The Auction Agent fee is expected to increase from 1bps or 1.15bps per annum depending on the bond series to 2bps per annum with a minimum fee of $1,500 per CUSIP per annum. Based on the information provided, Fitch has performed cash flow analysis and determined that the increase in the fee will not have a material impact on the existing ratings at this time. This determination only addresses the effect of the proposed fee increase on the current ratings assigned by Fitch to the securities listed below. This determination does not address whether the fee increase is permitted by the terms of the transaction documents. It does not address whether the fee increase is in the best interests of, or prejudicial to, some or all of the holders of the securities listed. The current ratings of the bonds are as follows: Pennsylvania Higher Education Assistance Agency 1997 Trust Indenture Senior Class Notes -- 2000-1 class F-1 'BBBsf'; Outlook Stable; -- 2000-2 class H 'BBBsf'; Outlook Stable; -- 2000-3 class J-3 'BBBsf'; Outlook Stable; -- 2000-3 class J-4 'BBBsf'; Outlook Stable; -- 2001 class L-1 'BBBsf'; Outlook Stable; -- 2001 class L-2 'BBBsf'; Outlook Stable; -- 2002-1 class N-1 'BBBsf'; Outlook Stable; -- 2002-1 class N-2 'BBBsf'; Outlook Stable; -- 2002-3 class R-1 'BBBsf'; Outlook Stable; -- 2002-4 class T-1 'BBBsf'; Outlook Stable; -- 2002-4 class T-2 'BBBsf'; Outlook Stable; -- 2002-4 class T-3 'BBBsf'; Outlook Stable; -- 2002-4 class T-4 'BBBsf'; Outlook Stable; -- 2002-4 class T-5 'BBBsf'; Outlook Stable; -- 2002-5 class V-1 'BBBsf'; Outlook Stable; -- 2002-5 class V-2 'BBBsf'; Outlook Stable; -- 2002-5 class V-3 'BBBsf'; Outlook Stable; -- 2002-5 class V-4 'BBBsf'; Outlook Stable; -- 2003-1 class W-1 'BBBsf'; Outlook Stable; -- 2003-1 class W-2 'BBBsf'; Outlook Stable; -- 2003-2 class Y-1 'BBBsf'; Outlook Stable; -- 2003-2 class Y-2 'BBBsf'; Outlook Stable; -- 2003-2 class Y-3 'BBBsf'; Outlook Stable; -- 2003-2 class Y-4 'BBBsf'; Outlook Stable; -- 2004-1 class Z-1 'BBBsf'; Outlook Stable; -- 2004-1 class Z-3 'BBBsf'; Outlook Stable; -- 2004-1 class Z-4 'BBBsf'; Outlook Stable; -- 2004-2 class AA-1 'BBBsf'; Outlook Stable; -- 2004-2 class AA-2 'BBBsf'; Outlook Stable; -- 2004-3 class BB-1 'BBBsf'; Outlook Stable; -- 2004-3 class BB-2 'BBBsf'; Outlook Stable; -- 2004-3 class BB-3 'BBBsf'; Outlook Stable; -- 2004-3 class BB-4 'BBBsf'; Outlook Stable; -- 2005-1 class CC-2 'BBBsf'; Outlook Stable; -- 2005-2 class DD-1 'BBBsf'; Outlook Stable; -- 2005-2 class DD-2 'BBBsf'; Outlook Stable; -- 2005-3 class EE-1 'BBBsf'; Outlook Stable; -- 2005-3 class EE-2 'BBBsf'; Outlook Stable; -- 2005-3 class EE-3 'BBBsf'; Outlook Stable; -- 2005-3 class EE-4 'BBBsf'; Outlook Stable; -- 2005-4 class GG-1 'BBBsf'; Outlook Stable; -- 2005-4 class GG-2 'BBBsf'; Outlook Stable; -- 2005-4 class GG-3 'BBBsf'; Outlook Stable; -- 2005-4 class GG-4 'BBBsf'; Outlook Stable; -- 2005-4 class GG-5 'BBBsf'; Outlook Stable; -- 2006-1 class HH-1 'BBBsf'; Outlook Stable; -- 2006-1 class HH-2 'BBBsf'; Outlook Stable; -- 2006-1 class HH-3 'BBBsf'; Outlook Stable; -- 2006-1 class HH-4 'BBBsf'; Outlook Stable; -- 2006-1 class HH-5 'BBBsf'; Outlook Stable; -- 2006-1 class HH-6 'BBBsf'; Outlook Stable; -- 2006-1 class HH-7 'BBBsf'; Outlook Stable; -- 2006-1 class HH-8 'BBBsf'; Outlook Stable; -- 2006-1 class HH-9 'BBBsf'; Outlook Stable; -- 2006-1 class HH-10 'BBBsf'; Outlook Stable; -- 2006-2 class JJ-1 'BBBsf'; Outlook Stable; -- 2006-2 class JJ-2 'BBBsf'; Outlook Stable; -- 2006-2 class JJ-3 'BBBsf'; Outlook Stable; -- 2006-2 class JJ-4 'BBBsf'; Outlook Stable; -- 2006-2 class JJ-5 'BBBsf'; Outlook Stable; -- 2006-2 class JJ-6 'BBBsf'; Outlook Stable; -- 2006-2 class JJ-8 'BBBsf'; Outlook Stable; -- 2006-2 class JJ-9 'BBBsf'; Outlook Stable; -- 2006-2 class JJ-10 'BBBsf'; Outlook Stable; -- 2007 class LL-2 'BBBsf'; Outlook Stable; -- 2007 class LL-3 'BBBsf'; Outlook Stable; -- 2007 class LL-4 'BBBsf'; Outlook Stable; -- 2007 class LL-5 'BBBsf'; Outlook Stable; -- 2007 class LL-6 'BBBsf'; Outlook Stable; -- 2007 class LL-7 'BBBsf'; Outlook Stable; -- 2007 class LL-8 'BBBsf'; Outlook Stable; -- 2007 class LL-9 'BBBsf'; Outlook Stable; -- 2007 class LL-10 'BBBsf'; Outlook Stable; -- 2007 class MM-1 'BBBsf'; Outlook Stable; -- 2007 class MM-2 'BBBsf'; Outlook Stable; -- 2007 class MM-3 'BBBsf'; Outlook Stable; -- 2007 class MM-4 'BBBsf'; Outlook Stable; -- 2007 class MM-5 'BBBsf'; Outlook Stable; -- 2007 class MM-6 'BBBsf'; Outlook Stable. Pennsylvania Higher Education Assistance Agency 1997 Trust Indenture Subordinate Class Notes -- 2000-1 class G 'Bsf'; Outlook Stable; -- 2000-3 class K 'Bsf'; Outlook Stable; -- 2001 class M 'Bsf'; Outlook Stable; -- 2002-4 class U 'Bsf'; Outlook Stable; -- 2003-1 class X 'Bsf'; Outlook Stable; -- 2005-3 class FF 'Bsf'; Outlook Stable; -- 2006-1 class II 'Bsf'; Outlook Stable; -- 2006 class KK 'Bsf'; Outlook Stable; -- 2007 class NN 'Bsf'; Outlook Stable. PERSONAL COMMUNICATIONS: Seeks to Sell Assets for $105-Mil. ----------------------------------------------------------- Personal Communications Devices, LLC, and Personal Communications Devices Holdings, LLC, seek permission from the U.S. Bankruptcy Court for the Eastern District of New York to sell substantially all of their assets to Quality One Wireless, LLC, and Q1W Newco, LLC, for $105,250,000. In recognition of the stalking horse's substantial expenditure of time, energy and resources, and the benefits to the Debtors' estates of securing a "stalking horse" or guaranteed minimum bid, the Debtors seek to pay a break-up fee of $4,250,000 and an expense reimbursement not to exceed $1,000,000. The Debtors propose to conduct a competitive bidding process that will result in the highest or best offer for the assets, while affording appropriate protection for the stalking horse. Accordingly, the Debtors ask the Court to approve procedures to govern the bidding and sale of the assets. The Debtors propose that the deadline for submitting bids will be no later than Sept. 28. If two or more qualified bids are received, the Debtors propose to conduct an auction no later than Oct. 3. A hearing to consider approval of the sale will be conducted on Oct. 8. The Debtors are represented by Emanuel C. Grillo, Esq., Matthew L. Curro, Esq., and Christopher Newcomb, Esq., at GOODWIN PROCTER LLP, in New York; and Frank A. Oswald, Esq., David A. Paul, Esq., and Leo Muchnik, Esq., at TOGUT, SEGAL & SEGAL LLP, in New York. About Personal Communications Personal Communications Devices LLC and an affiliate, Personal Communications Devices Holdings, LLC, filed for Chapter 11 bankruptcy (Bankr. E.D.N.Y. Case No. 13-74303) on Aug. 19, 2013, in Central Islip, N.Y., estimating between $100 million and $500 million in both assets and liabilities. Bankruptcy Judge Alan S. Trust oversees the case. The petitions were signed by Raymond F. Kunzmann as chief financial officer. Attorneys at Goodwin Procter, LLP and Togut, Segal & Segal, LLP serve as counsel to the Debtors. Epiq Bankruptcy Solutions, LLC, is the claims and notice agent. BG Strategic Advisors, LLC, is the financial advisor. Richter Consulting, Inc., is the investment banker. PCD is advised in the sale transaction by Richter Consulting Inc., BG Strategic Advisors, and Goodwin Procter LLP. Q1W is advised by Raymond James and Associates, Inc. and Munsch Hardt Kopf & Harr, P.C. PCD -- http://www.pcdphones.com-- provides both carriers and manufacturers an array of product life cycle management services that includes planning and development; inventory; technical testing; quality control; forward and reverse logistics; sell-in and sell-thru, marketing & warranty support. Its extensive portfolio of high-quality and versatile wireless devices includes feature phones, smartphones, tablets, mobile hotspots, modems, routers, fixed wireless, M2M, GPS, and other innovative wireless connectivity devices and accessories. PCD is based in Hauppauge, New York; and maintains operations facilities in Brea, California; and Toronto, CA. PERSONAL COMMUNICATIONS: Can Tap $40-Mil. of JPMorgan DIP Loan -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York gave interim authority for Personal Communications Devices, LLC, and Personal Communications Devices Holdings, LLC, to borrow $40 million of the $46 million under a senior secured debtor-in- possession credit agreement with JPMorgan Chase Bank, N.A., as administrative agent for a consortium of lenders. The DIP Lenders will be granted first priority lien on all DIP Collateral that is not otherwise subject to a lien, a perfected first priority, senior priming lien on all DIP Collateral is is senior to the replacement liens granted to prepetition lenders, and a perfected junior lien on all property of the Debtors that is subject to non-avoidable liens. All of the DIP Obligations will constitute allowed superpriority administrative claims. The DIP Liens and DIP Claims are subject to a carve-out, which means (x) allowed and unpaid professional fees and expenses and (y) fees to the U.S. Trustee and the Clerk of Bankruptcy Court, in an amount not exceeding $300,000. The hearing to consider entry of a final DIP order is scheduled for Sept. 4, 2013, at 10:00 a.m. Charles L. Glerum, Esq. -- cglerum@edwardswildman.com -- at Edwards Wildman Palmer LLP, in Boston, Massachusetts, as counsel to JPMorgan Chase. Keith Simon, Esq. -- keith.simon@lw.com -- at Latham & Watkins LLP, as counsel to DLJ Investment Partners, L.P., DLJ Investment Partners III and L.P. IP III Plan Investors, L.P., as Second Lien Lenders. Mark Salzberg, Esq. -- msalzberg@pattonboggs.com -- at Patton Boggs LLP, as counsel to PineBridge Investments, Inc. and its Affiliates. William G. Rock, Esq. -- wrock@goodwin.com -- and Kathleen M. LaManna, Esq. -- klamanna@goodwin.com -- at Shipman & Goodwin LLP, as counsel to U.S. Bank National Association, as Second Lien Agent. About Personal Communications Personal Communications Devices LLC and an affiliate, Personal Communications Devices Holdings, LLC, filed for Chapter 11 bankruptcy (Bankr. E.D.N.Y. Case No. 13-74303) on Aug. 19, 2013, in Central Islip, N.Y., estimating between $100 million and $500 million in both assets and liabilities. Bankruptcy Judge Alan S. Trust oversees the case. The petitions were signed by Raymond F. Kunzmann as chief financial officer. Attorneys at Goodwin Procter, LLP and Togut, Segal & Segal, LLP serve as counsel to the Debtors. Epiq Bankruptcy Solutions, LLC, is the claims and notice agent. BG Strategic Advisors, LLC, is the financial advisor. Richter Consulting, Inc., is the investment banker. PCD has a proposal in place to sell itself to Quality One Wireless LLC for $105.3 million, subject to higher bids. The Company is asking the Court to approve guidelines to govern the bidding and sale process. PCD is advised in this transaction by Richter Consulting Inc., BG Strategic Advisors, and Goodwin Procter LLP. Q1W is advised by Raymond James and Associates, Inc. and Munsch Hardt Kopf & Harr, P.C. PCD -- http://www.pcdphones.com-- provides both carriers and manufacturers an array of product life cycle management services that includes planning and development; inventory; technical testing; quality control; forward and reverse logistics; sell-in and sell-thru, marketing & warranty support. Its extensive portfolio of high-quality and versatile wireless devices includes feature phones, smartphones, tablets, mobile hotspots, modems, routers, fixed wireless, M2M, GPS, and other innovative wireless connectivity devices and accessories. PCD is based in Hauppauge, New York; and maintains operations facilities in Brea, California; and Toronto, CA. PERSONAL COMMUNICATIONS: Can Use Cash Collateral Until Sept. 4 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York gave interim authority for Personal Communications Devices, LLC, and Personal Communications Devices Holdings, LLC, to use until Sept. 4, 2013, the cash collateral securing their prepetition indebtedness. As adequate protection, prepetition lenders will be granted replacement liens and superpriority administrative claims subject to a carve out in an amount not exceeding $300,000. The hearing to consider entry of a final Cash Collateral order is scheduled for Sept. 4, 2013, at 10:00 a.m. About Personal Communications Personal Communications Devices LLC and an affiliate, Personal Communications Devices Holdings, LLC, filed for Chapter 11 bankruptcy (Bankr. E.D.N.Y. Case No. 13-74303) on Aug. 19, 2013, in Central Islip, N.Y., estimating between $100 million and $500 million in both assets and liabilities. Bankruptcy Judge Alan S. Trust oversees the case. The petitions were signed by Raymond F. Kunzmann as chief financial officer. Attorneys at Goodwin Procter, LLP and Togut, Segal & Segal, LLP serve as counsel to the Debtors. Epiq Bankruptcy Solutions, LLC, is the claims and notice agent. BG Strategic Advisors, LLC, is the financial advisor. Richter Consulting, Inc., is the investment banker. PCD has a proposal in place to sell itself to Quality One Wireless LLC for $105.3 million, subject to higher bids. The Company is asking the Court to approve guidelines to govern the bidding and sale process. PCD is advised in this transaction by Richter Consulting Inc., BG Strategic Advisors, and Goodwin Procter LLP. Q1W is advised by Raymond James and Associates, Inc. and Munsch Hardt Kopf & Harr, P.C. PCD -- http://www.pcdphones.com-- provides both carriers and manufacturers an array of product life cycle management services that includes planning and development; inventory; technical testing; quality control; forward and reverse logistics; sell-in and sell-thru, marketing & warranty support. Its extensive portfolio of high-quality and versatile wireless devices includes feature phones, smartphones, tablets, mobile hotspots, modems, routers, fixed wireless, M2M, GPS, and other innovative wireless connectivity devices and accessories. PCD is based in Hauppauge, New York; and maintains operations facilities in Brea, California; and Toronto, CA. PERSONAL COMMUNICATIONS: Seeks to Pay Non-Insider Employee Bonuses ------------------------------------------------------------------ Personal Communications Devices, LLC, and Personal Communications Devices Holdings, LLC, seek authority from the U.S. Bankruptcy Court for the Eastern District of New York to make payments to non-insider employees pursuant to their prepetition retention bonus program. In September 2012, the Debtors implemented the Retention Program to induce the their employees to remain with the company. Under the Retention Program, the Debtors offered each of their employees an increase in their base pay, along with two additional payments, made in six-month intervals, provided that the employee remained with the company through September 1, 2013. The additional payments ranged from a total of 40% to 100% of that employee's annual base pay, with the first payment due and paid in March 2013. The Board subsequently modified the Retention Program to divide the second installment into three periods, paying the amount payable for the first period from March 1 to June 13 on June 14, 2013 and paying the amount payable for the second period from June 14 to July 29 on July 29, 2013. The remaining amounts due under the Retention Program will vest on September 1, 2013 and be payable on September 2, 2013. However, if an employee is terminated other than "for cause," the remaining amounts due under that employee's Retention Agreement vest, and become payable upon termination. The Debtors state that if all non-insider employees who executed a retention agreement remain employed for the full term of the agreement, approximately $461,564 will be due and owing. Emanuel C. Grillo, Esq., Matthew L. Curro, Esq., and Christopher Newcomb, Esq., at GOODWIN PROCTER LLP, in New York; and Frank A. Oswald, Esq., David A. Paul, Esq., and Leo Muchnik, Esq., at TOGUT, SEGAL & SEGAL LLP, in New York. About Personal Communications Personal Communications Devices LLC and an affiliate, Personal Communications Devices Holdings, LLC, filed for Chapter 11 bankruptcy (Bankr. E.D.N.Y. Case No. 13-74303) on Aug. 19, 2013, in Central Islip, N.Y., estimating between $100 million and $500 million in both assets and liabilities. Bankruptcy Judge Alan S. Trust oversees the case. The petitions were signed by Raymond F. Kunzmann as chief financial officer. Attorneys at Goodwin Procter, LLP and Togut, Segal & Segal, LLP serve as counsel to the Debtors. Epiq Bankruptcy Solutions, LLC, is the claims and notice agent. BG Strategic Advisors, LLC, is the financial advisor. Richter Consulting, Inc., is the investment banker. PCD has a proposal in place to sell itself to Quality One Wireless LLC for $105.3 million, subject to higher bids. The Company is asking the Court to approve guidelines to govern the bidding and sale process. PCD is advised in this transaction by Richter Consulting Inc., BG Strategic Advisors, and Goodwin Procter LLP. Q1W is advised by Raymond James and Associates, Inc. and Munsch Hardt Kopf & Harr, P.C. PCD -- http://www.pcdphones.com-- provides both carriers and manufacturers an array of product life cycle management services that includes planning and development; inventory; technical testing; quality control; forward and reverse logistics; sell-in and sell-thru, marketing & warranty support. Its extensive portfolio of high-quality and versatile wireless devices includes feature phones, smartphones, tablets, mobile hotspots, modems, routers, fixed wireless, M2M, GPS, and other innovative wireless connectivity devices and accessories. PCD is based in Hauppauge, New York; and maintains operations facilities in Brea, California; and Toronto, CA. PETTERS GROUP: Fundraiser Seeking Shorter Sentence -------------------------------------------------- Jacqueline Palank, writing for The Wall Street Journal, reports that Frank E. Vennes Jr., a fundraiser for convicted Ponzi-scheme operator Tom Petters, is asking a federal judge to issue him a shorter sentence, one that includes periods of home confinement and community system. Mr. Vennes says his lack of knowledge of the multibillion-dollar fraud entitle him to a reduced prison sentence, as do his long history of charitable work, "fragile health" and cooperation with prosecutors. Mr. Vennes faces up to 15 years in prison after pleading guilty in February to fraudulently raising money from individuals and hedge funds to invest in Mr. Petters's Ponzi scheme. The report says the plea agreement, which covers one count of securities fraud and one count of money laundering, carries a maximum sentence of 15 years. (Mr. Petters is serving 50 years, though he is trying to cut his sentence down to 30 years.) According to the report, should he face time behind bars, Mr. Vennes has asked that he be sent to a federal prison in Florida, "near his support system and in weather favorable to his medical condition." The report notes Mr. Vennes not only has a pacemaker but also suffers from hypertension, osteopenia, psoriasis, and psoriatic arthritis. About Petters Company, Inc. Based in Minnetonka, Minn., Petters Group Worldwide LLC is a collection of some 20 companies, most of which make and market consumer products. It also works with existing brands through licensing agreements to further extend those brands into new product lines and markets. Holdings include Fingerhut (consumer products via its catalog and Web site), SoniqCast (maker of portable, WiFi MP3 devices), leading instant film and camera company Polaroid (purchased for $426 million in 2005), Sun Country Airlines (acquired in 2006), and Enable Holdings (online marketplace and auction for consumers and manufacturers' overstock inventory). Founder and chairman Tom Petters formed the company in 1988. Petters Company, Inc., is the financing and capital-raising unit of Petters Group Worldwide. Thomas Petters, the founder and former CEO of Petters Group, has been indicted and a criminal proceeding against him is proceeding in the U.S. District Court for the District of Minnesota. Petters Company, Petters Group Worldwide and eight other affiliates filed separate petitions for Chapter 11 protection (Bankr. D. Minn. Lead Case No. 08-45257) on Oct. 11, 2008. In its petition, Petters Company estimated its debts at $500 million and $1 billion. Parent Petters Group Worldwide estimated its debts at not more than $50,000. Fruth, Jamison & Elsass, PLLC, represents Douglas Kelley, the duly appointed Chapter 11 Trustee of Petters Company, Inc., et al. The trustee tapped Haynes and Boone, LLP as special counsel, and Martin J. McKinley as his financial advisor. Petters Aviation, LLC, and affiliates MN Airlines, LLC, doing business as Sun Country Airlines, Inc., and MN Airline Holdings, Inc., filed separate petitions for Chapter 11 bankruptcy protection (Bankr. D. Minn. Case Nos. 08-45136, 08-35197 and 08-35198) on Oct. 6, 2008. Petters Aviation is a wholly owned unit of Thomas Petters Inc. and owner of MN Airline Holdings, Sun Country's parent company. PETRON ENERGY: To Issue 3 Million Shares Under Incentive Plan ------------------------------------------------------------- Petron Energy II, Inc., registered 3 million shares of common stock issuable under the Company's 2013 Equity Incentive Plan for a proposed maximum aggregate offering price of $150,000. A copy of the Form S-8 prospectus is available at http://is.gd/G3lqEU About Petron Energy Dallas-based Petron Energy II, Inc., is engaged primarily in the acquisition, development, production, exploration for and the sale of oil, gas and gas liquids in the United States. As of Dec. 31, 2011, the Company is operating in the states of Texas and Oklahoma. In addition, the Company operates two gas gathering systems located in Tulsa, Wagoner, Rogers and Mayes counties of Oklahoma. The pipeline consists of approximately 132 miles of steel and poly pipe, a gas processing plant and other ancillary equipment. The Company sells its oil and gas products primarily to a domestic pipeline and to another oil company. The Company's balance sheet at March 31, 2013, showed $2.24 million in total assets, $3.47 million in total liabilities, and a stockholders' deficit of $1.23 million Petron Energy incurred a net loss of $8.32 million on $326,343 of total revenue for the year ended Dec. 31, 2012, as compared with a net loss of $3.12 million on $199,387 of total revenue for the year ended Dec. 31, 2011. KWCO, PC, in Odessa, TX, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company's significant operating losses since inception raise substantial doubt about its ability to continue as a going concern. PHOENIX COMPANIES: A.M. Best Cuts Fin. Strength Rating to B(fair) ----------------------------------------------------------------- A.M. Best Co. has downgraded the financial strength ratings (FSR) to B (Fair) from B+ (Good) and issuer credit ratings (ICR) to "bb+" from "bbb-" of the subsidiaries of The Phoenix Companies, Inc. (Phoenix) [NYSE: PNX]. Concurrently, A.M. Best has downgraded the ICR and senior debt rating to "b" from "b+" of Phoenix. Additionally, A.M. Best has downgraded the debt rating to "bb-" from "bb" of the existing surplus notes of Phoenix Life Insurance Company. The FSRs have been removed from under review with negative implications and assigned a stable outlook, and the ICRs have been removed from under review with negative implications and assigned a negative outlook. All companies are headquartered in Hartford, CT. The rating downgrades follow Phoenix's recent announcement of its second quarter statutory results and estimated operating metrics as well as the continued delay in the filing of its audited GAAP and statutory statements. Due to its stated complexity and expanded scope, the restatement process has been extended beyond A.M. Best's original expectations. A.M. Best has become concerned with the increased potential for material and adverse adjustments to be reported during the course of the restatement process, and the ultimate impact on Phoenix's reported GAAP and statutory results. In addition, while Phoenix has provided quarterly unaudited statutory results for its life subsidiaries since the restatement period began, the organization is currently unable to provide year-end 2012 audited statutory results due to the delay of its GAAP filings. Although statutory capital and surplus had been steadily increasing through year-end 2012, the operating subsidiaries have reported a sizeable decline in capital and surplus in 2013, due to a dividend payment to the holding company, negative net prior year adjustments to surplus and a tax payment to the holding company as a result of interest rate hedges instituted in the life companies earlier this year. A.M. Best notes that in addition to the unfavorable financial impacts related to the restatement process, Phoenix has acknowledged that its management believes it has identified multiple material weaknesses in its accounting controls, which A.M. Best views as an ongoing distraction and evidence of the need for a more robust risk management process. Positive rating actions may occur upon the filing of up-to-date audited GAAP and statutory filings if the errors identified in the aggregate are not materially adverse with respect to the group's capitalization. Additionally, A.M. Best would need to be comfortable that any and all identified material control weaknesses in accounting or operations have been remediated. Conversely, if A.M. Best notes uneven or poor trends in earnings, sales, risk-adjusted capital or investment portfolio losses, negative rating actions are probable. Negative rating actions also may result if materially adverse adjustments to the financial statements are ultimately reported. The FSRs have been downgraded to B (Fair) from B+ (Good) and the ICRs to "bb+" from "bbb-" for the following subsidiaries of The Phoenix Companies, Inc.: Phoenix Life Insurance Company PHL Variable Insurance Company Phoenix Life and Annuity Company American Phoenix Life and Reassurance Company The following debt ratings have been downgraded: The Phoenix Companies, Inc. -- to "b" from "b+" on $300 million 7.45% senior unsecured notes, due 2032 ($253 million outstanding) Phoenix Life Insurance Company -- to "bb-" from "bb" on $175 million 7.15% surplus notes, due 2034 ($126 million outstanding) PLC SYSTEMS: Gregory Mann Assumes Unit Managing Director Role ------------------------------------------------------------- PLC Systems Inc. terminated the employment of Vincent Puglisi, the Managing Director, International of the Company's subsidiary, PLC Medical Systems, Inc. Mr. Puglisi will receive severance compensation equal to $83,281. Mr. Gregory W. Mann, the Company's chief financial officer, will assume the duties of Managing Director, International, while also serving as the Comany's CFO. As part of a series of cost-cutting measures, the annual base salary of Mark Tauscher, the Company's chief executive officer, was reduced from $325,461 to $225,000. In addition, Mr. Tauscher's employment agreement provides for the payment to Mr. Tauscher of 150 percent of the sum of his highest annualized base salary during the preceding three-year period and his previous calendar year's bonus if Mr. Tauscher's employment is terminated by the Company without cause or, within 12 months after a sale or change in control of PLC (including without limitation the approval of a liquidation or dissolution of PLC), by Mr. Tauscher following a reduction in his position, authority or responsibilities, a material reduction in salary or benefits or his relocation more than 100 miles from Milford, MA. This agreement has now been modified to provide that if Mr. Tauscher's employment is terminated by the Company within 12 months after a sale or change in control of PLC (including without limitation the approval of a liquidation or dissolution of PLC), Mr. Tauscher's base salary for determining the amount of any severance benefit shall remain at the greater of Mr. Tauscher's previous base salary of $325,461 or his base salary as then in effect. If Mr. Tauscher's employment is terminated following a change in control, the severance benefit will be payable as follows: (i) $300,000 of the severance payment will be payable in cash, and (ii) any amount of the severance benefit in excess of $300,000 will be payable in the common stock of PLC, or if PLC is not the surviving corporation, the successor business following that change in control based upon the closing price of that common stock on the date of the change in control. All other terms of Mr. Tauscher's employment agreement remain unchanged. About PLC Systems Milford, Massachusetts-based PLC Systems Inc. is a medical device company specializing in innovative technologies for the cardiac and vascular markets. The Company's key strategic growth initiative is its newest marketable product, RenalGuard(R). RenalGuard is designed to reduce the potentially toxic effects that contrast media can have on the kidneys when it is administered to patients during certain medical imaging procedures. PLC Systems disclosed a net loss of $8.38 million on $1.08 million of revenue for the year ended Dec. 31, 2012, as compared with a net loss of $5.75 million on $671,000 of revenue in 2011. The Company's balance sheet at March 31, 2013, showed $3.56 million in total assets, $22.87 million in total liabilities and a $19.30 million total stockholders' deficit. McGladrey LLP, in Boston, Massachusetts, 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 sustained recurring net losses and negative cash flows from continuing operations, which raises substantial doubt about its ability to continue as a going concern. PRIME TIME: Case Summary & 7 Unsecured Creditors ------------------------------------------------ Debtor: Prime Time Properties, LLC P.O. Box 2665 Olathe, KS 66063 Bankruptcy Case No.: 13-22231 Chapter 11 Petition Date: August 27, 2013 Court: United States Bankruptcy Court District of Kansas (Kansas City) Debtor's Counsel: Richard C. Wallace, Esq. EVANS & MULLINIX, P.A. 7225 Renner Road-Ste. 200 Shawnee, KS 66217 Tel: (913) 962-8700 Fax: (913) 962-8701 E-mail: richard@evans-mullinix.com Scheduled Assets: $1,983,121 Scheduled Liabilities: $791,257 A copy of the Company's list of its largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/ksb13-22231.pdf The petition was signed by Eli R. Nitz, member. Affiliate that simultaneously filed separate Chapter 11 petition: Debtor Case No. ------ -------- ERN, LLC 13-22230 PRM FAMILY: Can Hire Landegger Baron as Immigration Counsel ----------------------------------------------------------- PRM Family Holding Company, L.L.C. and its debtor-affiliates sought and obtained authority from the U.S. Bankruptcy Court for the District of Arizona to employ Landegger, Baron, Lavenant & Ingber - a law corporation, as special counsel, to represent them in employment and immigration related cases pending before administrative agencies and civil courts. The Cases involve the Debtors' present and former employees and the Debtors' company operations. Landegger has represented the Debtors since 1992 and continues to represent the Debtors. The Debtors assure the Court that Landegger does not represent or hold any interest adverse to the Debtors or to its estates with respect to the matter on which the firm is to be employed. Although Landegger holds a prepetition claim against the Debtors, Landegger has specialized knowledge and familiarity with the Cases to justify their employment. Their employment is authorized by 11 U.S.C. Section 327(e) and applicable case law. Attorneys for Debtors may be reached at: Isaac D. Rothschild, Esq. Michael McGrath, Esq. Fredrick J. Petersen, Esq. MESCH, CLARK & ROTHSCHILD, P.C. 259 North Meyer Avenue Tucson, AZ 85701 Tel: (520) 624-8886 Fax: (520) 798-1037 E-mail: mmcgrath@mcrazlaw.com fpetersen@mcrazlaw.com About PRM Family PRM Family Holding Company, L.L.C., operator of 11 Pro's Ranch Markets grocery stores in Arizona and Texas and New Mexico, sought Chapter 11 protection (Bankr. D. Ariz. Case No. 13-09026) on May 28, 2013. As of the bankruptcy filing, PRM Family Holding operates seven grocery stores in Phoenix, two in El Paso, Texas, and two in New Mexico. Its corporate office is in California and it has warehouses and distribution facilities in California and Phoenix. Its Pro's Ranch Markets feature produce, baked goods and other general grocery items with a Hispanic flair and theme. The company has more than 2,200 employees. PRM Family blamed its woes on, among other things, the adverse effect of the perception in Arizona towards immigrants including the passage of SB 1070 and an immigration audit to which no other competitor was subjected. It also blamed a decline in the U.S. economy and an increase competition from other grocery store chains. Bank of America, the secured lender, declared a default in February 2013. PRM Family estimated liabilities in excess of $10 million. Judge Sarah Sharer Curley oversees the case. Michael McGrath, Esq., Scott H. Gan, Esq., Frederick J. Petersen, Esq., Kasey C. Nye, Esq., David J. Hindman, Esq., and Isaac D. Rothschild, Esq., at Mesch, Clark & Rothschild, P.C., serve as the Debtor's counsel. HG Capital Partners' Jim Ameduri serves as financial advisor. Attorneys at Freeborn & Peters LLP, in Chicago, Ill., represent the Official Committee of Unsecured Creditors as lead counsel. Attorneys at Schian Walker, P.L.C., in Phoenix, Arizona, represent the Committee as local counsel. O'Keefe & Associates Consulting, LLC, serves as financial advisor to the Committee. Robert J. Miller, Esq., Bryce A. Suzuki, Esq., and Justin A. Sabin, Esq., at Bryan Cave LLP, in Phoenix, serve as counsel for Bank of America, N.A., as administrative agent and a lender under an amended and restated credit agreement dated July 1, 2011. PRM FAMILY: Wants to Employ Gursey Schneider as Accountants ----------------------------------------------------------- PRM Family Holding Company, L.L.C. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Arizona to employ Gursey, Schneider LLP by Nazfar Afshar, CPA/CFF as accountants to prepare tax returns and perform a 401k audit for tax year 2012. Counsel for the Debtors, Michael McGrath, Esq. and Fredrick J. Petersen, Esq., at Mesch, Clark & Rothschild, P.C., tell the Court that the proposed budget for these services is estimated in the amount of $140,710.00. The Debtors will pay the firm its regular hourly rates which are $375 per hour for partners, $310 per hour for supervisors, and $215 per hour for Staff members. The Debtors assure the Court that Gursey Schneider by Nazfar Afshar is a "disinterested person" as that term is defined in Section 101(13) of the Bankruptcy Code. About PRM Family PRM Family Holding Company, L.L.C., operator of 11 Pro's Ranch Markets grocery stores in Arizona and Texas and New Mexico, sought Chapter 11 protection (Bankr. D. Ariz. Case No. 13-09026) on May 28, 2013. As of the bankruptcy filing, PRM Family Holding operates seven grocery stores in Phoenix, two in El Paso, Texas, and two in New Mexico. Its corporate office is in California and it has warehouses and distribution facilities in California and Phoenix. Its Pro's Ranch Markets feature produce, baked goods and other general grocery items with a Hispanic flair and theme. The company has more than 2,200 employees. PRM Family blamed its woes on, among other things, the adverse effect of the perception in Arizona towards immigrants including the passage of SB 1070 and an immigration audit to which no other competitor was subjected. It also blamed a decline in the U.S. economy and an increase competition from other grocery store chains. Bank of America, the secured lender, declared a default in February 2013. PRM Family estimated liabilities in excess of $10 million. Judge Sarah Sharer Curley oversees the case. Michael McGrath, Esq., Scott H. Gan, Esq., Frederick J. Petersen, Esq., Kasey C. Nye, Esq., David J. Hindman, Esq., and Isaac D. Rothschild, Esq., at Mesch, Clark & Rothschild, P.C., serve as the Debtor's counsel. HG Capital Partners' Jim Ameduri serves as financial advisor. Attorneys at Freeborn & Peters LLP, in Chicago, Ill., represent the Official Committee of Unsecured Creditors as lead counsel. Attorneys at Schian Walker, P.L.C., in Phoenix, Arizona, represent the Committee as local counsel. O'Keefe & Associates Consulting, LLC, serves as financial advisor to the Committee. Robert J. Miller, Esq., Bryce A. Suzuki, Esq., and Justin A. Sabin, Esq., at Bryan Cave LLP, in Phoenix, serve as counsel for Bank of America, N.A., as administrative agent and a lender under an amended and restated credit agreement dated July 1, 2011. PTM TECHNOLOGIES: Court Rejects Debtor's, Lender's Rival Plans -------------------------------------------------------------- Bankruptcy Judge William L. Stocks declined to accept both the competing chapter 11 plans proposed by: -- debtor PTM Technologies, a wholly owned subsidiary of Renegade Holdings, Inc., which filed a Modified Plan dated August 31, 2012 and modified November 12, 2012; and -- General Electric Capital Corporation, which filed a Third Amended Chapter 11 Plan dated Nov. 14, 2012 and modified Nov. 27, 2012. GE Capital holds a claim in the amount of $5,046,953 based on GE Capital having refinanced indebtedness that was incurred by PTM for the purchase of various equipment and machinery. A hearing on the competing Plans were held Feb. 26, 2013. Charles M. Ivey, III, Esq., appeared as attorney for the Debtor PTM; John A. Northen appeared as special counsel for Peter L. Tourtellot, the Chapter 11 Trustee for Renegade Holdings, Inc., Alternative Brands, Inc. and Renegade Tobacco Co, Inc.; Alexander Terras and Rebecca A. Leigh appeared on behalf of GE Capital; Paul A. Fanning appeared on behalf of Bank of the Carolinas; James C. Lanik appeared on behalf of Seacap Leasing Associates, successor to Maxus Capital Group; and Robyn C. Whitman appeared on behalf of the United States Bankruptcy Attorney. PTM Plan The Debtor's Plan contemplates that the Debtor will continue in business following confirmation. Under the Plan, funds for the payment of creditors will be derived from three sources: funds on hand, payment of lease payments from the ABI Lease, and recovery of the PTM Administrative Expense Claim in the Renegade case. The Debtor's Plan adopts the lease agreement agreed to by the Debtor and ABI. Under the proposed terms, the lease is for a period of six years. During the first 12 months of the lease, the lease payment is $70,000 per month and increases to $95,000 per month during months 13 through month 72. The Plan further contemplates the appointment of a Plan Administrator with authority to collect and distribute proceeds and enforce the ABI Lease. A Plan Committee will be formed only upon the removal, death, or incapacity of the Plan Administrator, or notification to creditors of the default and failure to cure default of the Equipment Lease. The Debtor's Plan classifies the claims of creditors and equity security into the following five classes: Class 1 consists of the secured claim of Huntington Bank. This claim was previously paid in full pursuant to the court's June 27, 2012 order approving settlement of the claim in the amount of $367,713.95. Class 2 consists of all government entities who are owed priority tax claims under 11 U.S.C. Sec. 507(a)(8). Under the Plan, these claims will be paid in cash, in full from available cash as generated on the Effective Date of the Plan or immediately following the entry of a final order liquidating and allowing the priority tax claim. Class 3 consists of the guaranty claim held by Bank of the Carolinas ("BofC"). BofC holds a secured claim in the Renegade Debtors' proceeding, secured by assets in that proceeding. Under the Renegade Debtors' plan, the guaranty debt is scheduled to be paid in full. If the claim is not paid under the Renegade Plan, the Debtor's Plan provides that the claim shall be set in the amount of $300,000 as an allowed unsecured claim recognized under Class 4 of the Plan. Class 4 consists of general unsecured claims. Under the Plan, all general unsecured claims shall be paid in full over a period of six years on a pro rata basis from funds received under the Equipment Lease, and following confirmation will bear interest at an annual rate of 5.25 percent until paid in full. The Debtor anticipates that the funds received from the Equipment Lease will be insufficient to pay all Allowed General Unsecured creditor Claims in full after six years; therefore, the final payment to be paid by the post-confirmation Debtor shall equal the amount which is required to pay off the claims in full. Class 5 consists of equity interests in the Debtor. This class shall receive no distribution under the Plan. After payment in full of all claims, all rights of corporate governance shall be restored to the existing ownership interests. Under the Plan, if Classes 1 through 4 have been paid in full with interest and funds remain, the Plan Administrator shall turn over the funds to holders of Class 5 Interests. The only claimant voting against the Debtor's Plan was GE Capital who filed a negative vote in Class 4. As a result of the GE ballot, the Plan was rejected by that class because the size of the GE Claim prevented compliance with the requirement under section 1126(c) that acceptance by at least two-thirds of the amount of the claims in a class is required in order to have acceptance by that class. The Plan was accepted by all other classes except for Class 1, which was deemed to have rejected the Plan as a result of no ballot having been filed. GE objected to the confirmation of the Debtor's plan on the basis that the Debtor's Plan is not in the best interest of creditors. GE further contends that the Debtor's plan is not fair and equitable with regard to Class 4 claims because it omits the accrual and payment of interest on unsecured claims during the pendency of the bankruptcy case. Additionally, GE asserts that the Debtor's Plan violates the absolute priority rule because it allows equity interest holders to retain their interests in the reorganized Debtor while paying unsecured creditors less than their contractual right to payment. Finally, GE asserts that the Debtor's Plan is not proposed in good faith. Seacap Leasing, successor to Maxus Capital, also objected to the Debtor's Plan on the grounds that it is not in the best interest of creditors as required by section 1129(a)(7), and that the Plan fails to meet the requirements of section 1129(b) in that the Plan is not fair and equitable with respect to Class 4. GE Plan GE's competing Plan differs from PTM's plan in four significant ways. First, the GE Plan categorizes the unsecured claim of Carolina Bank into a separate class from the other unsecured claims. Second, the GE Plan provides general unsecured creditors post petition interest at the rate of four percent per annum from the petition date until the effective date of the Plan. Third, the GE Plan provides accrual and payment of post-confirmation interest from the effective date of the Plan forward at the rate of seven percent per annum, compared to 5.25 percent under the Debtor's Plan. Finally, the GE Plan provides for the immediate appointment of a Plan Committee, and gives the Committee substantial authority over the day-to-day operations of the post-confirmation Debtor. The GE Plan classifies the claims of creditors and equity security holders into these six classes: Class 1 consists of the secured claim of Huntington Bank. Under the GE Plan, the claim is deemed satisfied in full as a result of having been paid pursuant to an order of the court. Class 2 consists of all unsecured priority claims. Under the GE Plan, if any such claims exist, they will be paid in full on the Effective Date of the Plan, with interest from the Petition Date to the Effective Date paid at the rate of four percent per annum. Class 3 consists only of the unsecured claim of Carolina Bank. Under the GE Plan, Class 3 claims allowed as of the date of the Plan will accrue interest from the Petition Date to the Effective Date at the rate of four percent per annum, and from and after the Effective Date at the rate of seven percent per annum over the course of the Plan. Class 3 claim holders may elect to serve on the Plan Committee. Class 4 consists of the unsecured claim of BofC. Under the GE Plan, Class 4 claims will be allowed in an amount not to exceed $300,000 and will accrue interest from the Petition Date to the Effective Date at the rate of four percent per annum, and from and after the Effective Date at the rate of seven percent per annum over the course of the Plan. BofC will be required to marshal its other collateral in favor of the other Creditors in the Debtor's case in order to satisfy its claim. Class 5 consists of the other unsecured claims. The treatment for claims in Class 5 is the same as provided for Carolina Bank in Class 3. Under the GE Plan, the Class 5 creditors will receive payment of up to 100 percent of their allowed claim, plus interest accruing from the Petition Date to the Effective Date at the rate of four percent per annum, and from and after the Effective Date at the rate of seven percent per annum over the course of the Plan. Class 5 claim holders may elect to serve on the Plan Committee. Class 6 consists of equity interests in the Debtor. Under the GE Plan, Class 6 claims will be disallowed and holders of the equity interest will receive no distributions. After payment in full of all claims, all rights of corporate governance shall be restored to the existing ownership interests. Only Class 5 voted for the GE Plan. The Plan was rejected by all other classes. The Renegade Trustee submitted a ballot with respect to the Class 6 Equity Interests to reject the GE Plan. The Renegade Trustee objects to confirmation of the GE Plan on three grounds. The Renegade Trustee argues that the GE Plan cannot be confirmed because it improperly classifies separately the claim of Carolina Bank, the sole creditor in Class 3, from the other unsecured claims in Class 5. Second, the GE Plan provides that unsecured claims shall be paid post-petition interest in contravention of 11 U.S.C. Sec. 506 because the Debtor is, and always has been, insolvent. Third, the Trustee argues that the GE Plan is not proposed in good faith because it deprives RHI, the Debtor's sole shareholder, of all rights of corporate governance. PTM also objected to the GE Plan, echoing the arguments raised by the Renegade Trustee. PTM also said the authority delegated to the Plan Committee and Plan Administrator under the GE Plan will unduly interfere with the Reorganized Debtor's operations and substantially increase the cost of operations. According to Judge Stocks, the GE Plan is not confirmable because it provides that allowed unsecured claims shall be paid post- petition interest from the Petition Date to the Effective Date. This provision is contrary to section 502(b)(2) and the GE Plan therefore does satisfy the requirement under section 1129(a)(1) that a plan must comply with the applicable provisions of the Bankruptcy Code. Judge Stocks said GE's Plan relies on the solvent debtor exception to section 502(b)(2). GE argues that the Debtor is cash-flow solvent because of the Plan proposal to pay 100 percent of allowed claims. Therefore, GE asserts that in order to be confirmable, a plan of reorganization in the present case must pay post-petition interest. GE's argument follows from a flawed premise: the Bankruptcy Code defines insolvency using the balance sheet test, not cash flow. The test for whether a debtor is solvent is whether the debts of such entity are less than its assets, at fair valuation. Judge Stocks meanwhile said PTM's plan cannot be confirmed because it does not satisfy the feasibility requirement under section 1129(a)(11). The Plan is dependent upon the Debtor entering into a lease of its equipment with Alternative Brands, Inc. It is undisputed that Alternative Brands is not engaged in ongoing manufacturing and does not have the financial ability to make the payments that would be required under the proposed lease. Without the proposed lease with Alternative Brands, PTM has no cash flow and no other means of making the payments proposed under the Plan and hence the Plan is not feasible. Feasibility under section 1129(a)(11) is a dispositive hurdle which, if not surmounted, precludes confirmation of a plan. A copy of Judge Stocks' Aug. 26, 2013 Memorandum Opinion is available at http://is.gd/IS5sOifrom Leagle.com. About Renegade Holdings Renegade Holdings and two subsidiaries -- Alternative Brands, Inc. and Renegade Tobacco Company -- filed for Chapter 11 protection (Bankr. M.D.N.C. Lead Case No. 09-50140) on Jan. 28, 2009, and exited bankruptcy on June 1, 2010. They were put back into bankruptcy July 19, 2010, when Judge William L. Stocks vacated the reorganization plan, in part because of a criminal investigation of owner Calvin Phelps and the companies regarding what authorities called "unlawful trafficking of cigarettes." Alternative Brands is a federally licensed manufacturer of tobacco products consisting primarily of cigarettes and cigars. Renegade Tobacco distributes the tobacco products produced by ABI through wholesalers and retailers in 19 states and for export. ABI also is a contract fabricator for private label brands of cigarettes and cigars which are produced for other licensed tobacco manufacturers. The stock of RHI is owned indirectly by Calvin A. Phelps through his ownership of the stock of Compliant Tobacco, LLC which, in turn, owns all of the stock of RHI which in turn owns all of the stock of RTC and ABI. Mr. Phelps was the chief executive officer of all three companies. All three of the Debtors' have their offices and production facilities in Mocksville, North Carolina. In August 2010, the Bankruptcy Court approved the appointment of Peter Tourtellot, managing director of turnaround-management company Anderson Bauman Tourtellot Vos & Co., as Chapter 11 trustee. Gene Tarr also has been appointed as bankruptcy examiner. About PTM Technologies PTM Technologies Inc. is a wholly owned subsidiary of Renegade Holdings, and an affiliate of Alternative Brands, Inc. and Renegade Tobacco Company, which also are wholly owned subsidiaries of Renegade Holdings. The Mocksville, North Carolina-based company filed for bankruptcy (Bankr. M.D.N.C. Case No. 10-50980) on May 26, 2010. Judge William L. Stocks presides over the case. Charles M. Ivey III, Esq. -- jlh@imgt-law.com -- at Ivey, McClellan, Gatton, & Talcott, LLP, serves as bankruptcy counsel. According to its schedules, the Company has $3,953,216 in assets and $7,199,424 in debts. PYRAMIDS CHILD: Dist. Ct. Dismisses Suit vs. Clinton County, et al ------------------------------------------------------------------ A New York district court entered a ruling on the motion to dismiss filed by county defendants in the three-count lawsuit DORSETT-FELICELLI, INC., d/b/a PYRAMIDS; PYRAMIDS PRE-SCHOOL, INC.; and MELISSA DORSETT-FELICELLI, Plaintiffs, v. COUNTY OF CLINTON; PAULA CALKINS LACOMBE, individually and in her capacity as Director of the County of Clinton Department of Public Health; KATHERINE O'CONNOR, individually and in her official capacity as Early Intervention Official and Pre-School Related Service Coordinator; NORTH COUNTRY KIDS, INC.; STEPHANIE GIRARD; KELLY McCAULEY; and MELISSA PUCHALSKI, Defendants, NO. 1:04-CV-1141. District Judge Lawrence E. Kahn granted the County Defendants' Motion to Dismiss the Amended Complaint as to Corporate Plaintiffs' first and second causes of action. The Amended Complaint is thus dismissed with prejudice as to Corporate Plaintiffs' first and second causes of action. The Amended Complaint is sua sponte dismissed prejudice as to Dorsett- Felicelli's first and second causes of action for failure to prosecute, the District held. The District Court further ordered that North Country Kids, Inc.'s Motions for entry of partial final judgment are denied as moot. Dorsett-Felicelli, Inc. and Pyramids Pre-School -- as Corporate Plaintiffs -- were providers of pre-school services under a written agreement with the County Defendants. The parties' dispute stems from the Corporate Plaintiffs' complaint that County Defendants had given independent-contractor status to individual service providers unlawfully. A copy of the District Court's July 29, 2013 Decision and Order is available at http://is.gd/TZ4DV4from Leagle.com. The Defendants are represented by Christopher R. Lyons, Esq., of AIM Services, Inc., at 4227 Route 50, Saratoga Springs, NY 12866; Sarah I. Goldman, Esq. -- sgoldman@tdaklaw.com -- of Donnellan, Knussman Law Firm; and Claudia A. Ryan, Esq., of Towne, Ryan Law Firm. About Pyramids Child Based in Morrisonville, New York, Pyramids Child Development Center -- http://pyramidscdc.org/-- provides child care, early intervention and education for preschool & special children. The Debtor and its affiliate, Dorsett-Felicelli, Inc., filed for Chapter 11 protection on December 5, 2007 (Bankr. N.D.N.Y. Case No. 07-13344 and 07-13345). Richard L. Weisz, Esq., at Hodgson Russ, LLP, represented the Debtors in their restructuring efforts. When the Center filed for protection from its creditors, it listed $1,947,021 in total assets and $1,154,664 in total liabilities. Affiliate Dorsett-Felicelli, Inc., listed total assets of $120,000 and $986,797 in total liabilities. RADIAN GROUP: Mortgage Unit Enters Into Agreement with Freddie Mac ------------------------------------------------------------------ Radian Guaranty Inc., the mortgage insurance subsidiary of Radian Group Inc., on Aug. 29 disclosed that it entered into a Master Transaction Agreement with Freddie Mac on August 29, 2013. The Agreement relates to a group of 25,760 first-lien mortgage loans held by Freddie Mac that were insured by Radian Guaranty, and were delinquent as of December 31, 2011. The Agreement provides for the future treatment of these loans including claim payments, loss mitigation activity and insurance coverage, and eliminates Radian Guaranty's claim exposure on 9,756 loans that were delinquent and 4,586 loans that were re-performing as of July 31, 2013. "One of our top priorities for our mortgage insurance business is to actively reduce our legacy exposure," said Radian's Chief Executive Officer S.A. Ibrahim. "This agreement is an important step in resolving our remaining legacy risk, and reduces our total number of primary delinquent loans by 12.6 percent." The Agreement caps Radian Guaranty's total exposure on this group of loans, including loans that are currently re-performing, to $840 million. Radian Guaranty paid approximately $255 million to Freddie Mac to cover claim exposure on these loans, and had previously paid $370 million of claims on these loans. Radian Guaranty also deposited $205 million in a collateral account to cover loss mitigation activity on these loans. Amounts in the collateral account will be released to Radian Guaranty to the extent that Radian Guaranty rescinds, denies, or curtails these loans and such amounts become final under the Agreement. As of July 31, 2013, the amount of insurance rescissions, claim denials or claim curtailments that had become final in accordance with the Agreement was approximately $10 million. In addition, as of July 31, 2013, another $140 million of submitted claims had been rescinded, denied or curtailed but were not considered final under the Agreement. If the loss mitigation activities do not accumulate to $205 million, any remaining funds will be paid to Freddie Mac. Radian Guaranty will administer all claims submitted with respect to these loans in accordance with its insurance policy for these loans and in a manner consistent with its normal claims handling practices. Radian expects to record an incurred loss of approximately $20 million in the third quarter in connection with the transaction, which is expected to be fully offset by a reduction of incurred losses in future periods. This future reduction of incurred losses will result from the elimination of exposure to re- performing loans covered by the transaction that may redefault in the future and ultimately become claims. About Radian Group Headquartered in Philadelphia, Radian Group Inc. -- http://www.radian.biz-- provides private mortgage insurance and related risk mitigation products and services to mortgage lenders nationwide through its principal operating subsidiary, Radian Guaranty Inc. These services help promote and preserve homeownership opportunities for homebuyers, while protecting lenders from default-related losses on residential first mortgages and facilitating the sale of low-downpayment mortgages in the secondary market. * * * As reported by the Troubled Company Reporter on March 4, 2013, Standard & Poor's Ratings Services said that it has affirmed all of its ratings on Radian Group Inc. At the same time, S&P revised the outlook to stable from negative. S&P also assigned its 'CCC+' senior unsecured debt rating to the company's proposed $350 million convertible senior notes. As reported by the Troubled Company Reporter on Oct. 17, 2012, Standard & Poor's Rating Services raised its long-term issuer credit ratings on Radian Group Inc. (RDN) to 'CCC+' from 'CCC-' and MGIC Investment Corp. (MTG) to 'CCC+' from 'CCC'. The financial strength ratings for both RDN's and MTG's respective operating companies are unchanged. The outlook on both companies is negative. "The outlook for each company is negative, reflecting the continuing risk of significant adverse reserve development; the current trajectory of operating performance; and the expected impact ongoing losses will have on their capital positions," S&P said in October 2012. "We expect operating performance to deteriorate for the rest of the year for both companies, reflecting the affect of normal adverse seasonality on new notices of delinquency and cure rates, and the lack of greater improvement in the job markets." REFCO INC: Grant Thornton Settles With Funds Over Collapse ---------------------------------------------------------- Law360 reported that a New York federal judge signed off on a settlement between investment funds and auditing firm Grant Thornton LLP, which joined Mayer Brown LLP in putting to rest allegations it helped now-defunct Refco Inc. carry out its $1.5 billion securities fraud scheme. According to the report, the terms of the settlement approved by U.S. District Judge Jed S. Rakoff weren't disclosed, and attorneys involved in the case didn't immediately respond to requests for comment. On Aug. 16, Judge Rakoff also signed off another settlement of undisclosed terms, the report related. The case is Krys et al v. Sugrue et al., Case No. 1:08-cv-03086 (S.D.N.Y.) before Judge Jed S. Rakoff. About Refco Inc. Headquartered in New York, Refco Inc. -- http://www.refco.com/-- was a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries were members of principal U.S. and international exchanges, and were among the most active members of futures exchanges in Chicago, New York, London and Singapore. Refco was also a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco was one of the largest global clearing firms for derivatives. The Company had operations in Bermuda. The Company and 23 of its affiliates filed for Chapter 11 protection on October 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represented the Debtors in their restructuring efforts. Milbank, Tweed, Hadley & McCloy LLP, represented the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its Chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on December 15, 2006. That Plan became effective on Dec. 26, 2006. Pursuant to the plan, RJM, LLC, was named plan administrator to reorganized Refco, Inc., and its affiliates, and Marc S. Kirschner as plan administrator to Refco Capital Markets, Ltd. RESIDENTIAL CAPITAL: Seeks to Assume, Assign Impac Servicing Deals ------------------------------------------------------------------ Residential Capital LLC and its affiliates seek the Court's authority to assume certain servicing related agreements with Impac Funding Corporation and Impac Mortgage Holdings, Inc. The Debtors also seek authority to assign the agreements to Ocwen Loan Servicing, LLC, pursuant to the sale of the Debtors' servicing platform to Ocwen. The Debtors also ask the Court to deem Impac's Claim No. 4086 in the face amount of $8 million as expunged upon the payment of the cure amount, which the Debtors estimate to be approximately $287,740. A hearing on the Debtors' request will be held on Sept. 11, 2013 at 10:00 a.m. (ET). Objections are due Aug. 29. Gary S. Lee, Esq., Norman S. Rosenbaum, Esq., Alexandra Steinberg Barrage, Esq., and Jonathan Petts, Esq., at MORRISON & FOERSTER LLP, in New York, represent the Debtors. 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 at 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: Objects to Gilbert Claims ---------------------------------------------- Residential Capital LLC and its affiliates object to and expunge and disallow Claim No. 1984 filed against Debtor GMAC Mortgage, LLC, by Katherine Parker-Lowe, and Claim No. 1991 filed by Rex and Daniela Gilbert against GMACM (collectively, "Gilbert Claims"), on the grounds that the Gilbert Claims are without merit and do not include colorable claims against GMACM. Mr. and Mrs. Gilbert filed a general unsecured claim for nearly $6 million predicated on multiple state and federal causes of action pending in the federal courts of North Carolina for which no final judgment has been entered against GMACM; and their counsel, Katherine Parker-Lowe, filed a general unsecured claim for more than $83,000 for attorneys' fees related to causes of action that are a part of the pending federal litigation, which have not yet been resolved. A hearing on the claims objection will be held on Sept. 24, 2013 at 10:00 a.m. (Prevailing Eastern Time). Responses are due Sept. 11. The Debtors are represented by Gary S. Lee, Esq., Norman S. Rosenbaum, Esq., and Jordan A. Wishnew, Esq., at MORRISON & FOERSTER LLP, in New York; and Christy W. Hancock, Esq. -- chancock@babc.com -- at BRADLEY ARANT BOULT CUMMINGS LLP, in Charlotte, North Carolina. 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 at 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: Objects to G. Valeeva & E. Okouneva's Claim ---------------------------------------------------------------- Residential Capital LLC and its affiliates object to, and ask the Court to expunge and disallow, Claim No. 5677 filed by Galina Valeeva and Evelina Okouneva. The Claim -- asserting more than $3 million in unsecured and secured claims based upon a "Mortgage Note" and a purported $3.7 million reclamation claim pursuant to Section 503(b)(9) f the Bankruptcy Code -- is wholly lacking in sufficient documentation, Gary S. Lee, Esq., at Morrison & Foerster LLP, in New York, asserts. By failing to attach: (a) the mortgage note evidencing the debt, and (b) invoices or other documentation indicating that Ms. Valeeva provided goods to the Debtors within 20 days of the Petition Date, Ms. Valeeva has failed to meet her burden of establishing the validity of the Claim, Mr. Lee further asserts. Moreover, after a diligent search of their books and records, the Debtors have determined that they have no liability to Ms. Valeeva, Mr. Lee adds. A hearing on the claims objection will be on Sept. 24, 2013 at 10:00 a.m. (ET). Objections are due Sept. 5. The Debtors are also represented by Norman S. Rosenbaum, Esq., and Jordan A. Wishnew, Esq., at Morrison & Foerster 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 at 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: Can Hire Fox Rothschild as Special ERISA Counsel ----------------------------------------------------------------- Rhythm and Hues, Inc. et al., sought and obtained permission from 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. -- jpelphrey@foxrothschild.com -- 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. 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. ROCK POINTE: Sec. 341 Creditors' Meeting Set for Oct. 4 ------------------------------------------------------- The U.S. Trustee will convene a meeting of creditors pursuant to 11 U.S.C. 341(a) in the Chapter 11 case of Rock Pointe Holdings Company LLC on Oct. 4, 2013, at 9:00 a.m. The meeting will be held US Trustee Office, US Courthouse Room 561 N, 920 W Riverside Ave, Spokane, WA. Rock Pointe Holdings Company LLC owns the Rock Pointe Corporate Center in Spokane, Washington. The Company filed for Chapter 11 protection (Bankr. E.D. Wash. Case No.11-05811) on Dec. 2, 2011. The Debtor estimated both assets and debts of between $50 million and $100 million. Kenneth W. Gates is the counsel for the Debtor's Unsecured Creditors Committee. Southwell & O'Rourke, P.S., is the counsel for the Debtor. Ford Elsaesser served as mediator for of all issues regarding the treatment of the debt owed to DMARC. ROCK POINTE: John Munding Named as Chapter 11 Trustee ----------------------------------------------------- The United States Trustee sought and obtained permission from the U.S. Bankruptcy Court to appoint John Munding as chapter 11 trustee in the bankruptcy case of Rock Pointe Holdings Company LLC. To the best of the U.S. Trustee's knowledge, Mr. Munding has no connections with the debtor, any creditors, the U.S. Trustee's office, or any other parties in interest. Attorney for the United States Trustee can be reached at: James D. Perkins, Esq. Attorney for the United States Trustee United States Dept. of Justice 920 West Riverside, Room 593 Spokane, WA 99201 Rock Pointe Holdings Company LLC owns the Rock Pointe Corporate Center in Spokane, Washington. The Company filed for Chapter 11 protection (Bankr. E.D. Wash. Case No.11-05811) on Dec. 2, 2011. The Debtor estimated both assets and debts of between $50 million and $100 million. Kenneth W. Gates is the counsel for the Debtor's Unsecured Creditors Committee. Southwell & O'Rourke, P.S., is the counsel for the Debtor. Ford Elsaesser served as mediator for of all issues regarding the treatment of the debt owed to DMARC. ROTECH HEALTHCARE: Bankruptcy Court Approves Reorganization Plan ---------------------------------------------------------------- Rotech Healthcare Inc. on Aug. 29 disclosed that the U.S. Bankruptcy Court has approved the Second Amended Joint Plan of Reorganization of Rotech Healthcare Inc., along with $358 million of exit financing commitments received from Wells Fargo and certain existing holders of the 10.5% Senior Second Lien Secured Notes. The reorganization plan was confirmed at a court hearing in Delaware and was supported by the Statutory Committee of Unsecured Creditors. Creditors entitled to vote overwhelmingly voted in favor of the reorganization plan. At the time that the Company filed its reorganization cases on April 8, 2013, the Company said that it would reorganize its businesses and emerge from Chapter 11 within 90 to 150 days. The Company said that it expects to close on its exit financing commitment and formally emerge from Chapter 11 next month. "We said at the outset this would be a swift passage through the reorganization process and it has been," said Steven P. Alsene, Rotech's President and Chief Executive Officer. "We have successfully completed an important milestone in the financial restructuring that positions Rotech to operate successfully in today's very competitive environment. "We appreciate the strong support the Company has received from its lenders, creditors, suppliers, customers and especially its employees. With a restructured balance sheet, new long-term financing and a seasoned management team, Rotech is well- positioned for future leadership in the industry." Under the reorganization plan, the Company's existing common stock will be cancelled and substantially all of the new common stock of reorganized Rotech will be distributed to holders of the 10.5% Senior Second Lien Secured Notes. Proskauer Rose, LLP serves as the Company's legal advisor, Barclays as financial advisor and AlixPartners as restructuring advisor. Wachtell Lipton Rosen & Katz serves as legal advisor to each of the Consenting Noteholders holding Second Lien Secured Notes. About Rotech Healthcare Based in Orlando, Florida, Rotech Healthcare Inc. (NASDAQ: ROHI) -- http://www.rotech.com/-- provides home medical equipment and related products and services in the United States, with a comprehensive offering of respiratory therapy and durable home medical equipment and related services. The company provides equipment and services in 48 states through approximately 500 operating centers located primarily in non-urban markets. The Company reported a net loss of $14.76 million in 2011, a net loss of $4.20 million in 2010, and a net loss of $21.08 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $255.76 million in total assets, $601.98 million in total liabilities, and a $346.22 million total stockholders' deficiency. On April 8, 2013, Rotech Healthcare and 114 subsidiary companies filed petitions seeking relief under chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 13-10741) to implement a pre- arranged plan negotiated with secured lenders. Attorneys at Proskauer Rose LLP, and Young, Conaway, Stargatt & Taylor serve as counsel to the Debtors; Foley & Lardner LLP is the healthcare regulatory counsel; Akin Gump Strauss Hauer & Feld LLP is the special healthcare regulatory counsel; Barclays Capital Inc. is the financial advisor; Alix Partners, LLP is the restructuring advisor; and Epiq Bankruptcy Solutions LLC is the claims agent. Prepetition term loan lender and DIP lender Silver Point Capital and other consenting noteholders are represented by Wachtell, Lipton, Rosen & Katz, and Richards Layton & Finger PA. The U.S. Trustee at the end of April appointed an official committee of equity holders. Members include Alden Global Recovery Master Fund LP, Varana Capital Master LP, Wynnefield Partners Small Cap Value LP I, Bastogne Capital Partners, LP, and Kenneth S. Grossman P.C. Pension Plan. The Equity Panel is represented by Bayard, P.A. as Delaware counsel. The plan is supported by holders of a majority of the first- and second-lien secured notes. The $290 million in 10.5 percent second-lien notes are to be exchanged for the new equity. Trade suppliers are to be paid in full, if they agree to continue providing credit. The existing $23.5 million term loan would be paid in full, and the $230 million in 10.75 percent first-lien notes will be amended. The Official Committee of Unsecured Creditors tapped Otterbourg, Steindler, Houston & Rosen, P.C., as counsel; Buchanan Ingersoll & Rooney PC as Delaware counsel; and Grant Thornton LLP as financial advisor. SAN BERNARDINO, CA: Granted Chapter 9 Protection ------------------------------------------------ A U.S. federal judge granted bankruptcy protection to the California city of San Bernardino, paving the way for a precedent- setting battle between bondholders and California's giant public pension system. Tim Reid, writing for Reuters, reported that the case is being closely watched by other U.S. cities, including Detroit, which declared the biggest U.S. municipal bankruptcy last month, where budgets are burdened by soaring pension costs. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports thatthe only objection to eligibility was lodged by the California Public Employees' Retirement System. Judge Meredith Jury of the U.S. Bankruptcy Court for the Central District of California ruled that San Bernardino was eligible for Chapter 9 bankruptcy protection despite opposition by Calpers, the Reuters report related. The $260 billion pension fund is the city's biggest creditor and America's largest pension fund. "I am ruling as a matter of law that the city is eligible," Jury said, the Reuters report cited. "I don't think anyone in this courtroom seriously thought the city was anything but insolvent." A city must be insolvent and have proof to have negotiated in good faith with creditors to be eligible for Chapter 9 municipal bankruptcy, the report further related. About San Bernardino, Calif. San Bernardino, California, filed an emergency petition for municipal bankruptcy under Chapter 9 of the U.S. Bankruptcy Code (Bankr. C.D. Cal. Case No. 12-28006) on Aug. 1, 2012. San Bernardino, a city of about 210,000 residents roughly 65 miles (104 km) east of Los Angeles, estimated assets and debts of more than $1 billion in the bare-bones bankruptcy petition. The city council voted on July 10, 2012, to file for bankruptcy. The move lets San Bernardino bypass state-required mediation with creditors and proceed directly to U.S. Bankruptcy Court. The city is represented that Paul R. Glassman, Esq., at Stradling Yocca Carlson & Rauth. San Bernardino joined two other California cities in bankruptcy: Stockton, an agricultural center of 292,000 east of San Francisco, and Mammoth Lakes, a mountain resort town of 8,200 south of Yosemite National Park. SCOOTER STORE: Obtains Court Approval to Use Cash Collateral ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware entered a final order authorizing The Scooter Store Holdings, Inc., et al., to use cash collateral until the earliest to occur of: (i) the repayment in full of the Prepetition Second Lien Obligations and the Prepetition Third Lien Obligations; and (ii) the date such right to use cash collateral otherwise terminates as provided in the order. As adequate protection of the respective interests in the Prepetition Collateral of the Prepetition Second Lien Secured Parties and the Prepetition Third Lien Secured Parties, each of the Prepetition Second Lien Agent and the Prepetition Third Lien Agent is granted a separate allowed superpriority administrative expense claims in each of the Chapter 11 cases and, upon the conversion of the Chapter 11 cases to a case under Chapter 7 of the Bankruptcy Code. As further adequate protection of the Prepetition Second Lien Obligations and the Prepetition Third Lien Obligations, the Debtors are authorized and directed to provide adequate protection to the respective Prepetition Second Lien Secured Parties and the Prepetition Third Lien Secured Parties in the form of ongoing payment of those parties' reasonable fees, costs, and expenses including without limitation reasonable legal and other professionals' fees and expenses not to exceed $100,000 in the aggregate. Subject to the usage of cash permitted by the budget and to the extent the Debtors have a balance of at least $2 million in their primary cash operating account, the Debtors are authorized and directed to remit all products and proceeds of the Collateral and the Prepetition Collateral: (i) to the Prepetition Second Lien Agent for application to the Prepetition Second Lien Obligations outstanding pursuant to the Prepetition Second Lien Credit Documents; and (ii) thereafter, to the Prepetition Third Lien Agent for application to the Prepetition Third Lien Obligations outstanding pursuant to the Prepetition Third Lien Credit Documents. The Prepetition Second Lien Agent and the Prepetition Third Lien Agent will have the right to "credit bid" the allowed amount of their respective claims during any sale of all or substantially all of the Prepetition Collateral, including without limitation, sales occurring pursuant to Section 363 of the Bankruptcy Code or included as part of any reorganization plan subject to confirmation under Section 1129 of the Bankruptcy Code. With respect to the cash proceeds from the disposition of all or a portion of the Debtors' business, equity interests or other assets, whether by way of negotiated sale or otherwise, the Prepetition Third Lien Secured Parties agree that: (a) if the aggregate amount of those proceeds distributed to those secured parties equals or exceeds $10 million but is less than $15 million, the Debtors' estates will be entitled to retain $750,000 of those proceeds; (b) if the aggregate amount of those proceeds distributed to those secured parties equals or exceeds $15 million but is less than $20 million, the Debtors' estates will be entitled to retain $1.5 million from those proceeds; and (c) if the aggregate amount of those proceeds distributed to those secured parties equals or exceeds $20 million, the Debtors' estates will be entitled to retain 25 percent of those proceeds. In the event the sale proceeds are sufficient to satisfy the debt under both the Prepetition Second Lien Term Loan Facility and the Prepetition Third Lien Term Loan Facility, all additional proceeds will be remitted to the Debtors' estates. A full-text copy of the cash collateral order is available at: http://bankrupt.com/misc/SCOOTER_Aug19CashOrd.pdf About The Scooter Store The Scooter Store is a supplier of power mobility solutions, including power wheelchairs, scooters, lifts, ramps, and accessories. The Scooter Store's products and services provide today's seniors and disabled persons potential alternatives to living in nursing homes or other care facilities. Headquartered in New Braunfels, Texas, the Scooter Store has a nationwide network of distribution centers that service products owned or leased by the Company's customers. It has 57 distribution centers in 41 states. Scooter Store Holdings Inc., and 71 affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Lead Case No. 13-10904) in Wilmington. The closely held company listed assets of less than $10 million and debt of more than $50 million. Affiliates of private equity firm Sun Capital Partners, based in Boca Raton, Florida, purchased a majority voting interest in the debtors in 2011. Scooter Store is 66.8 percent owned by Sun Capital Partners Inc., owed $40 million on a third lien. In addition to Sun's debt and $25 million on a second lien owing to Crystal Financial LLC, there is a $25 million first-lien revolving credit owing to CIT Healthcare LLC as agent. Crystal is providing $10 million in financing for bankruptcy. SCOOTER STORE: Exclusive Period to File Plan Ends Nov. 11 --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware entered an order extending The Scooter Store Holdings, Inc., et al.'s exclusive period to file a Chapter 11 plan through Nov. 11, 2013. The Debtors' exclusive period to solicit acceptances of that Plan has been extended until Jan. 9, 2014. About The Scooter Store The Scooter Store is a supplier of power mobility solutions, including power wheelchairs, scooters, lifts, ramps, and accessories. The Scooter Store's products and services provide today's seniors and disabled persons potential alternatives to living in nursing homes or other care facilities. Headquartered in New Braunfels, Texas, the Scooter Store has a nationwide network of distribution centers that service products owned or leased by the Company's customers. It has 57 distribution centers in 41 states. Scooter Store Holdings Inc., and 71 affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Lead Case No. 13-10904) in Wilmington. The closely held company listed assets of less than $10 million and debt of more than $50 million. Affiliates of private equity firm Sun Capital Partners, based in Boca Raton, Florida, purchased a majority voting interest in the debtors in 2011. Scooter Store is 66.8 percent owned by Sun Capital Partners Inc., owed $40 million on a third lien. In addition to Sun's debt and $25 million on a second lien owing to Crystal Financial LLC, there is a $25 million first-lien revolving credit owing to CIT Healthcare LLC as agent. Crystal is providing $10 million in financing for bankruptcy. SCOOTER STORE: Obtains Court Approval to Use Cash Collateral ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware entered a final order authorizing The Scooter Store Holdings, Inc., et al., to use cash collateral until the earliest to occur of: (i) the repayment in full of the Prepetition Second Lien Obligations and the Prepetition Third Lien Obligations; and (ii) the date such right to use cash collateral otherwise terminates as provided in the order. As adequate protection of the respective interests in the Prepetition Collateral of the Prepetition Second Lien Secured Parties and the Prepetition Third Lien Secured Parties, each of the Prepetition Second Lien Agent and the Prepetition Third Lien Agent is granted a separate allowed superpriority administrative expense claims in each of the Chapter 11 cases and, upon the conversion of the Chapter 11 cases to a case under Chapter 7 of the Bankruptcy Code. As further adequate protection of the Prepetition Second Lien Obligations and the Prepetition Third Lien Obligations, the Debtors are authorized and directed to provide adequate protection to the respective Prepetition Second Lien Secured Parties and the Prepetition Third Lien Secured Parties in the form of ongoing payment of those parties' reasonable fees, costs, and expenses including without limitation reasonable legal and other professionals' fees and expenses not to exceed $100,000 in the aggregate. Subject to the usage of cash permitted by the budget and to the extent the Debtors have a balance of at least $2 million in their primary cash operating account, the Debtors are authorized and directed to remit all products and proceeds of the Collateral and the Prepetition Collateral: (i) to the Prepetition Second Lien Agent for application to the Prepetition Second Lien Obligations outstanding pursuant to the Prepetition Second Lien Credit Documents; and (ii) thereafter, to the Prepetition Third Lien Agent for application to the Prepetition Third Lien Obligations outstanding pursuant to the Prepetition Third Lien Credit Documents. The Prepetition Second Lien Agent and the Prepetition Third Lien Agent will have the right to "credit bid" the allowed amount of their respective claims during any sale of all or substantially all of the Prepetition Collateral, including without limitation, sales occurring pursuant to Section 363 of the Bankruptcy Code or included as part of any reorganization plan subject to confirmation under Section 1129 of the Bankruptcy Code. With respect to the cash proceeds from the disposition of all or a portion of the Debtors' business, equity interests or other assets, whether by way of negotiated sale or otherwise, the Prepetition Third Lien Secured Parties agree that: (a) if the aggregate amount of those proceeds distributed to those secured parties equals or exceeds $10 million but is less than $15 million, the Debtors' estates will be entitled to retain $750,000 of those proceeds; (b) if the aggregate amount of those proceeds distributed to those secured parties equals or exceeds $15 million but is less than $20 million, the Debtors' estates will be entitled to retain $1.5 million from those proceeds; and (c) if the aggregate amount of those proceeds distributed to those secured parties equals or exceeds $20 million, the Debtors' estates will be entitled to retain 25 percent of those proceeds. In the event the sale proceeds are sufficient to satisfy the debt under both the Prepetition Second Lien Term Loan Facility and the Prepetition Third Lien Term Loan Facility, all additional proceeds will be remitted to the Debtors' estates. A full-text copy of the cash collateral order is available at: http://bankrupt.com/misc/SCOOTER_Aug19CashOrd.pdf About The Scooter Store The Scooter Store is a supplier of power mobility solutions, including power wheelchairs, scooters, lifts, ramps, and accessories. The Scooter Store's products and services provide today's seniors and disabled persons potential alternatives to living in nursing homes or other care facilities. Headquartered in New Braunfels, Texas, the Scooter Store has a nationwide network of distribution centers that service products owned or leased by the Company's customers. It has 57 distribution centers in 41 states. Scooter Store Holdings Inc., and 71 affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Lead Case No. 13-10904) in Wilmington. The closely held company listed assets of less than $10 million and debt of more than $50 million. Affiliates of private equity firm Sun Capital Partners, based in Boca Raton, Florida, purchased a majority voting interest in the debtors in 2011. Scooter Store is 66.8 percent owned by Sun Capital Partners Inc., owed $40 million on a third lien. In addition to Sun's debt and $25 million on a second lien owing to Crystal Financial LLC, there is a $25 million first-lien revolving credit owing to CIT Healthcare LLC as agent. Crystal is providing $10 million in financing for bankruptcy. SCOOTER STORE: Exclusive Period to File Plan Ends Nov. 11 --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware entered an order extending The Scooter Store Holdings, Inc., et al.'s exclusive period to file a Chapter 11 plan through Nov. 11, 2013. The Debtors' exclusive period to solicit acceptances of that Plan has been extended until Jan. 9, 2014. About The Scooter Store The Scooter Store is a supplier of power mobility solutions, including power wheelchairs, scooters, lifts, ramps, and accessories. The Scooter Store's products and services provide today's seniors and disabled persons potential alternatives to living in nursing homes or other care facilities. Headquartered in New Braunfels, Texas, the Scooter Store has a nationwide network of distribution centers that service products owned or leased by the Company's customers. It has 57 distribution centers in 41 states. Scooter Store Holdings Inc., and 71 affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Lead Case No. 13-10904) in Wilmington. The closely held company listed assets of less than $10 million and debt of more than $50 million. Affiliates of private equity firm Sun Capital Partners, based in Boca Raton, Florida, purchased a majority voting interest in the debtors in 2011. Scooter Store is 66.8 percent owned by Sun Capital Partners Inc., owed $40 million on a third lien. In addition to Sun's debt and $25 million on a second lien owing to Crystal Financial LLC, there is a $25 million first-lien revolving credit owing to CIT Healthcare LLC as agent. Crystal is providing $10 million in financing for bankruptcy. SEMGROUP LP: 3rd Circuit Issues Key Ruling on Equitable Mootness ---------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Court of Appeals in Philadelphia issued an important ruling on a doctrine called equitable mootness. It remains to be seen whether the case will be confined to its facts or broader language in the opinion will give creditors more latitude in appealing bankruptcy confirmation orders approving Chapter 11 reorganization plans. The report relates that in addition to pronouncements that equitable mootness should be used rarely, the Aug. 27 opinion is important because it was authored by the appeals court that supervises Delaware, where some of the country's largest reorganizations are conducted. Before SemCrude LP emerged from reorganization, petroleum producers in Oklahoma filed a lawsuit in bankruptcy court contending state law gave them rights ahead of other creditors. The bankruptcy judge halted the suit while there was a collective litigation involving creditors in Oklahoma and several other states, all claiming rights greater than unsecured creditors. Producer lost the collective litigation, although a settlement followed where producers in all states were given $160 million through a Chapter 11 plan the bankruptcy court later confirmed. Four Oklahoma producers objected to the plan, claiming they were entitled to proceed with their lawsuit. The objection was denied, and they appealed from the confirmation order, without obtaining a stay pending appeal. In District Court in Delaware, the judge dismissed the appeal on the ground of equitable mootness. According to the report, writing a 24-page opinion for the Third Circuit in Philadelphia, Circuit Judge Thomas Ambro reversed, ruling that the producers were entitled to their appeal. Judge Ambro was a bankruptcy lawyer before appointment to the circuit bench. Mr. Rochelle discloses that Judge Ambro's opinion is an intellectual survey of equitable mootness, a judge-made rule that cuts off a right of appeal otherwise guaranteed by federal statutory law. He said the validity of the doctrine was established in by a Third Circuit 7-6 opinion in 1996 called Continental Airlines. The opinion contains numerous broad statements saying that equitable mootness should be used sparingly. Judge Ambro said a court must "proceed most carefully" and dismissal "should be the rare exception and not the rule." Judge Ambro summarized equitable mootness as allowing for dismissal of an appeal from confirmation if it would "fatally unscramble the plan" or "significantly harm third parties who have justifiably relied on plan confirmation." He said that the "only playground" for the doctrine is in confirmation appeals. Invoking the doctrine must be based on evidence, not speculation, Judge Ambro said. He said there was no actual evidence to support the company's contention that a reversal would "upset the delicate balance" of the settlement incorporated into the plan. Ambro also said there was only speculation to support the argument that new lenders would default the loan if confirmation were modified. Turning to the facts, Ambro noted that the four producers were claiming an additional $207,000 on top of about the same amount they would receive under the plan. He said the "minor amount" is less than 0.15 percent of the distribution to producers and "pales" compared with the $2 billion involved in the reorganization. Judge Ambro was careful to say at the end of the opinion that allowing the appeal doesn't mean the producers will have victory eventually. First, the producers must establish in district court that they were entitled to an appeal and couldn't have their claims extinguished by the settlement in the plan. The Third Circuit opinion was the second in a month from a federal appeals court ruling that a confirmation appeal was improperly dismissed using equitable mootness. The case is Samson Energy Resources Co. v. SemCrude LP (In re SemCrude LP), 12-2736, 3rd U.S. Circuit Court of Appeals (Philadelphia). About SemGroup, L.P. SemGroup, L.P. -- http://www.semgrouplp.com/-- is a midstream service company that provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids and refined products. Services include purchasing, selling, processing, transporting, terminalling and storing energy. SemGroup serves customers in the United States, Canada, Mexico and Wales. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection (Bankr. D. Del. Case No. 08-11525) on July 22, 2008. John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq., at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq., and Sherri L. Toub, Esq., at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq., and Sylvia A. Mayer, Esq., at Weil Gotshal & Manges LLP, represented the Debtors in their restructuring efforts. Kurtzman Carson Consultants L.L.C. served as the Debtors' claims agent. The Blackstone Group L.P. and A.P. Services LLC acted as the Debtors' financial advisors. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represented the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. SemGroup LP won confirmation from the Bankruptcy Court of its Fourth Amended Plan of Reorganization on Oct. 28, 2008. The Plan, which distributed more than $2.5 billion in value to stakeholders, was declared effective on Nov. 30, 2008. As part of the Plan, the Reorganized Debtors entered into two new credit facilities aggregating $625 million in financing; entered into a $300 million Second Lien Term Facility; created a new corporate structure, including issuing shares of common stock and warrants; and distributed approximately $500 million of cash and approximately $1 billion in value of new common stock and warrants to thousands of creditors in accordance with the Plan. SEQUA CORP: S&P Affirms 'B' CCR & Revises Outlook to Negative ------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Sequa Corp. to negative from stable. At the same time, S&P affirmed the 'B' corporate credit rating on Sequa. S&P is also affirming the 'B' issue-level rating and '3' recovery rating on the company's $1.5 billion senior secured credit facility, which consists of a $200 million revolver and a $1.3 billion term loan. The '3' recovery rating indicates meaningful recovery (50%-70%) in a payment default scenario. S&P is also affirming its 'CCC+' issue rating and '6' recovery rating on the senior unsecured notes. The '6' recovery rating indicates S&P's expectation of negligible (0%-10%) recovery. "Our outlook revision reflects our view that weakness in key markets will weaken the company's credit ratios in 2013 and that these ratios will only modestly improve in 2014," said credit analyst Tatiana Kleiman. Sales in the company's largest segment, Chromalloy (about two-thirds of sales), fell 15% in the first half of 2013 as a result of deferred engine maintenance from airline customers and competition from a surplus of engine spare parts as airlines retired old aircraft. In addition, the metal coating segment also declined 8% due to a weak nonresidential construction market. These declines have prompted the company to take a number of restructuring charges, including reducing headcount and consolidating facilities, with more possible in the remainder of 2013," S&P said. "We assess the company's financial risk profile as "highly leveraged" based on the company's high debt leverage and very aggressive financial policy. Although Sequa's credit measures have been gradually improving in recent years, recent setbacks in revenues and earnings and continued restructuring costs have weakened its credit metrics more than our previous expectations. For 2013, we expect debt to EBITDA to be higher than 8x and funds from operations (FFO) to debt to be less than 8%, compared to our previous expectations of 5.5x-6.5x and 9%-12%, respectively. We believe revenues and earnings should resume growth in 2014 as airlines schedule some of the previously deferred maintenance, inventory in the spares market starts to normalize from surplus levels, and demand picks up in the commercial aftermarket and energy markets. In addition, restructuring efforts to reduce costs and improve operating efficiency should improve margins. Therefore, we expect Sequa's credit metrics to improve modestly in 2014, with debt to EBITDA declining to less than 7x and FFO to debt increasing to 7%-10%," S&P added. S&P views Sequa's business risk profile as "fair," reflecting its major positions in cyclical and competitive niche markets, efficient operations, and limited customer and market diversity due to several divestitures in recent years. Sequa repairs and manufactures components for commercial and U.S. military jet aircraft. It also has a metal coating business through which it coats steel and aluminum coils used in commercial and residential construction. Chromalloy serves the airline industry as a leading independent supplier in the repair, manufacture, and coating of blades, vanes, and other components of gas turbine engines, particularly those for commercial aircraft. Good technological capabilities, a low- cost structure, several strategic partnerships and initiatives, and long-term customer relationships enhance Chromalloy's competitive position. Although the unit competes with original equipment manufacturers (OEMs) that focus on increasing market share and have greater financial resources than Chromalloy, the company has mitigated this risk somewhat by entering into partnerships with some of the OEMs. Precoat Metals applies protective and decorative coatings for steel and aluminum coils used primarily in the building products industry (industrial and commercial construction). The building products segment represents about 60% of Precoat's business and primarily serves the nonresidential construction market. Nonresidential construction in the U.S. has been weak for a number of years following the latest recession in 2009, but S&P expects it to recover in 2014-2015. S&P had previously expected a recovery to begin in 2013, but this did not materialize due to the weak domestic economy, as well as the impact from adverse weather conditions on construction activities, higher inventory levels, and reduced demand from the agriculture sector. The rating outlook is negative. S&P expects revenues and earnings to decline in 2013 due to weakness in key markets, continued restructuring charges, and no debt reduction because cash flow will be limited. S&P expects some modest improvement in 2014, but credit ratios will remain weak. S&P could lower the ratings if weakness in the commercial aerospace or nonresidential construction markets, higher-than- anticipated restructuring costs, or debt-financed acquisitions keep debt to EBITDA higher than 7x at the end of 2014. S&P could revise the outlook to stable if earnings and cash flow improve faster than it expects, which would reduce some of the company's debt and decrease debt to EBITDA to less than 6.5x. SIRIUS INT'L: Fitch Affirms 'BB+' $250MM Preference Shares Rating ----------------------------------------------------------------- Fitch has affirmed with a Stable Rating Outlook the Issuer Default Ratings (IDRs), debt and IFS ratings for White Mountains Insurance Group, Ltd. (White Mountains) and its holding company subsidiaries and property/casualty insurance and reinsurance subsidiaries, including OneBeacon Insurance Group, Ltd.'s (OneBeacon; 75.2% ownership by White Mountains) ongoing subsidiaries and Sirius International Insurance Group, Ltd.'s subsidiaries (Sirius Group; 100% ownership by White Mountains). Fitch Ratings has also maintained the 'A' Insurer Financial Strength (IFS) ratings of the runoff operating subsidiaries of OneBeacon on Rating Watch Negative pending the close of the previously announced sale of OneBeacon's runoff business and several entities to Armour Group Holdings Limited (Armour). Key Rating Drivers Fitch's Rating Negative Watch of the runoff operating subsidiaries of OneBeacon reflects the planned reduction in capital levels of the targeted runoff companies at the time of closing to just above regulatory minimums, at an NAIC risk-based capital (RBC) ratio (company action level) of 100%. Assuming the acquisition is completed as currently envisioned, Fitch would expect to downgrade the IFS ratings of the runoff entities to no higher than 'BB+' upon the sale to Armour, based on such weakened capital levels. Fitch does not rate Armour. Fitch expects that OneBeacon will retain a willingness and ability to provide reasonable support to the runoff entities up until the close of the sale, currently targeted to be completed in fourth quarter 2013, subject to regulatory approvals. Fitch will continue to review the progress of the transaction during the closing period. However, assuming no material changes to the credit of the entities being sold, Fitch may not take any additional rating action prior to the closing. Fitch's rating rationale for the affirmation of White Mountains' ratings reflects the company's low financial and operating leverage, opportunistic business approach and favorable financial flexibility. The ratings also reflect anticipated challenges in the overall competitive, but generally improving property/casualty market rate environment. White Mountains posted net income of $147 million through the first six months of 2013, improved from $120 million for the comparable prior year period. The company's annualized return on common equity was 7.9% for the first six months of 2013, improved from 5.3% for full year 2012 due to a lower level of catastrophe losses thus far in 2013, partially offset by slightly reduced favorable reserve development. Full year 2012 also included a $115 million net loss from discontinued operations, primarily from a $91 million loss on the sale of OneBeacon's run-off business. OneBeacon posted a favorable GAAP combined ratio of 91% for the first six months of 2013, following 98% in 2012. Sirius Group posted a GAAP combined ratio of 80% for the first six months of 2013, which included 9 points for catastrophe losses, mainly due to flood losses in Central Europe and tornado losses from the Midwestern U.S. This is improved from 90% for 2012, which had 13 points of catastrophe losses, primarily due to Hurricane Sandy. White Mountains' financial leverage ratio continues to be modest, at 13.9% at June 30, 2013. This is down from 15.2% at Dec. 31, 2012, due to the repayment of $75 million outstanding under its bank facility debt in January 2013. Total GAAP shareholders' equity declined slightly through the first half of 2013 to $4.2 billion at June 30, 2013, as earnings were more than offset by common share repurchases, dividends and unrealized losses from affiliates. GAAP operating earnings-based interest expense and preferred dividend coverage (excluding net gains and losses on investments) improved to 5.3x through the first half of 2013 from 3.4x in 2012. Fitch's ratings reflect White Mountains' disciplined underwriting and operating strategy as the company continually evaluates the best use of its financial resources and actively manages and deploys its capital opportunistically. This strategy includes selling those businesses that either do not fit within the core operations of the company or have value to other companies/buyers as entities or renewal rights in excess of White Mountains' assessment of their value. White Mountains' sale transactions over the last several years have freed up capital that previously supported the business writings and reserves. This provides financial flexibility that the company can use to support additional business writings, investment and acquisition opportunities or capital management alternatives. However, Fitch expects that White Mountains will continue to maintain a level of insurance company capitalization that is consistent with the current ratings. Rating Sensitivities Key rating triggers that could lead to an upgrade include improvement in operating results in line with higher rated peers, overall flat to favorable loss reserve development, financial leverage ratio maintained below 20%, run rate operating earnings- based interest and preferred dividend coverage of at least 8x, continued strong capitalization of the insurance subsidiaries and increased stability in longer term strategic operations and results. Key rating triggers that could lead to a downgrade include significant adverse loss reserve development, future earnings that are significantly below industry levels, sizable deterioration in insurance subsidiary capitalization that caused total company net written premiums to insurance segment GAAP equity to exceed 1.0x, financial leverage ratio maintained above 30%, run rate operating earnings-based interest and preferred dividend coverage of less than 5x and additional A&E losses for OneBeacon significantly above the remaining $198 million available limit under the $2.5 billion National Indemnity Company cover. Fitch affirms the following ratings with a Stable Outlook: White Mountains Insurance Group, Ltd. -- IDR at 'BBB+'. OneBeacon U.S. Holdings, Inc. -- IDR at 'BBB+'; -- $275 million 4.6% due Nov. 9, 2022 at 'BBB'. Sirius International Group, Ltd. -- IDR at 'BBB+'; -- $400 million 6.375% due March 20, 2017 at 'BBB'; -- $250 million perpetual non-cumulative preference shares at 'BB+'. OneBeacon ongoing insurance subsidiaries: Atlantic Specialty Insurance Company Homeland Insurance Company of New York Homeland Insurance Company of Delaware OBI National Insurance Company -- IFS at 'A'. Sirius International Insurance Corporation Sirius America Insurance Company -- IFS at 'A'. Fitch has maintained its Rating Watch Negative on the following ratings: OneBeacon Insurance Company OneBeacon America Insurance Company Employers' Fire Insurance Company (The) -- IFS 'A'. Fitch has withdrawn the following ratings as the entities have been merged into other companies and no longer exist: Camden Fire Insurance Association (The) Northern Assurance Company of America (The) OneBeacon Midwest Insurance Company Traders & General Insurance Company -- IFS 'A'. SKILLED HEALTHCARE: Moody's Lowers CFR to 'B2'; Outlook Stable -------------------------------------------------------------- Moody's Investors Service downgraded Skilled Healthcare Group, Inc.'s corporate family rating to B2 from B1, probability of default rating to B3-PD from B2-PD, and senior secured revolver and term loan ratings to B2 from B1. Concurrently, Moody's downgraded the company's speculative grade liquidity rating to SGL-3 from SGL-2. The outlook remains stable. The downgrade of the corporate family rating to B2 reflects Skilled Healthcare's weaker than anticipated operating performance and Moody's expectation that credit metrics are unlikely to improve materially given the challenges the company faces as an operator of post-acute care facilities. According to Moody's analyst Adam McLaren, "Margins have declined and leverage has increased because of an unfavorable change in payor mix, reduced length of stay, and lower occupancy rates." The company's speculative grade liquidity rating was downgraded to SGL-3 from SGL-2 based on the likelihood of a reduction in covenant compliance cushion as the company approaches year end and covenant levels tighten. The following rating actions were taken: Corporate family rating, downgraded to B2 from B1; Probability of default rating, downgraded to B3-PD from B2-PD; $100 million senior secured revolving credit facility due 2015, downgraded to B2 (LGD3, 33%) from B1, (LGD3, 34%); $460 million ($404 million outstanding) senior secured term loan due 2016, downgraded to B2 (LGD3, 33%) from B1, (LGD3, 34%); Speculative grade liquidity rating, downgraded to SGL-3 from SGL-2. Ratings Rationale: The downgrade of Skilled Healthcare's corporate family rating to B2 from B1 reflects the change in payor mix, shorter length of stay, and lower occupancy rates that have negatively impacted the company's margins and leverage metrics. The change in payor mix, which includes a shift from Medicare patients to managed care, has resulted in reduced reimbursement rates as well as a shorter length of stay, pressuring average daily census and occupancy levels. A reduction in the company's skilled mix and quality mix, as Medicaid now represents a larger portion of the business, has additionally pressured revenue per patient day and has led to a reduction in the company's profitability margins. EBITDA margins have fallen to under 12% from approximately 17% in 2011. Debt to EBITDA has increased to over 5 times from just under 4 times during the same time period (per Moody's standard adjustments). The stable outlook reflects Moody's expectation that the company will be successful in reducing revenue declines and work to stabilize unfavorable shifts in payor mix. The stable outlook also assumes that the company will be able to generate positive free cash flow and maintain an adequate liquidity profile. The ratings could be downgraded if the company's adjusted debt-to- EBITDA increases above 6.5 times on a sustained basis and/or free cash flow turned negative on a sustained basis. In addition, a deterioration in the company's liquidity profile, material negative developments in the reimbursement environment and a continued decline in skilled mix and occupancy could negatively pressure the rating. Although unlikely in the near term, the ratings could be upgraded if the company were to experience growth in adjusted EBITDA and/or repay debt such that adjusted debt leverage is sustained below 4.0 times and adjusted retained cash flow to net debt approached 20%. An upgrade would also require improvement in key operating metrics (skilled mix, quality mix, and occupancy), profitability, and revenue diversification. The principal methodology used in this rating was the Global Healthcare Service Providers published in December 2011. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Foothill Ranch, CA, Skilled Healthcare Group, Inc. operates long-term care facilities and provides a variety of post-acute care services. The company operates skilled nursing facilities, assisted living facilities, hospice and home health locations. Further, the company provides ancillary services such as physical, occupational and speech therapy in its facilities and unaffiliated facilities as well as is a member of a joint venture providing institutional pharmacy services in Texas. Skilled Healthcare recognized revenue of approximately $868 million for the last twelve month period ended June 30, 2013. SPECIALTY PRODUCTS: Agencies Slam Ch. 11 Disclosure for Plan ------------------------------------------------------------ Law360 reported that a pair of Ohio state agencies contended in Delaware bankruptcy court that the disclosure statement put forth by creditors of bankrupt Specialty Products Holding Corp. should be rejected because the Chapter 11 plan it supports is unconfirmable. The report related that Ohio's Department of Taxation and Bureau of Workers' Compensation said the disclosure statement failed to provide creditors with adequate information because it championed a Chapter 11 plan that contains a number of provisions that violate the Bankruptcy Code, according an objection filed in Delaware bankruptcy court. About Specialty Products Cleveland, Ohio-based Specialty Products Holdings Corp., aka RPM, Inc., is a wholly owned subsidiary of RPM International Inc. The Company is the holding company parent of Bondex International, Inc., and the direct or indirect parent of certain additional domestic and foreign subsidiaries. The Company claims to be a leading manufacturer, distributor and seller of various specialty chemical product lines, including exterior insulating finishing systems, powder coatings, fluorescent colorants and pigments, cleaning and protection products, fuel additives, wood treatments and coatings and sealants, in both the industrial and consumer markets. The Company filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 10-11780) on May 31, 2010. Gregory M. Gordon, Esq., Dan B. Prieto, Esq., and Robert J. Jud, Esq., at Jones Day, serve as bankruptcy counsel. Daniel J. DeFranceschi, Esq., and Zachary I. Shapiro, Esq., at Richards Layton & Finger, serve as co- counsel. Logan and Company is the Company's claims and notice agent. The Company estimated its assets and debts at $100 million to $500 million. The Company's affiliate, Bondex International, Inc., filed a separate Chapter 11 petition on May 31, 2010 (Case No. 10-11779), estimating its assets and debts at $100 million to $500 million. On May 20, 2013, the Bankruptcy Court entered an order estimating the amount of the Debtors' asbestos liabilities, and a related memorandum opinion in support of the estimation order. The Bankruptcy Court estimated the current and future asbestos claims associated with Bondex International, Inc. and Specialty Products Holding at approximately $1.17 billion. The estimation hearing represents one step in the legal process in helping to determine the amount of potential funding for a 524(g) asbestos trust. SPECTRUM BRANDS: Fitch Affirms 'BB-' Issuer Default Rating ---------------------------------------------------------- Fitch Ratings has affirmed Spectrum Brands, Inc.'s (Spectrum) Issuer Default Rating (IDR) at 'BB-'; Stable Outlook. The secured facilities are upgraded to 'BB+' from 'BB-', reflecting the strength of the underlying security package and the presence of a material amount of unsecured debt in the company's capital structure. Fitch also assigns ratings for Spectrum Brands Canada, Inc. (Spectrum Canada). Spectrum Canada is an obligor with a CDN$100 million tranche in the company's existing $800 million senior secured term loan maturing in December 2019. Key Rating Drivers: Declining Leverage Expectations Spectrum purchased Stanley Black & Decker's Hardware & Home Improvement Group (HHI) in a two-part transaction totaling $1.4 billion. This sizeable acquisition should catapult Spectrum's revenues from $3.3 billion in its fiscal year ended Sept. 30, 2012 (FYE 2012) to $4.2 billion in 2014. The acquisition was financed entirely with debt, with the largest portion of the transaction closing in December 2012. Debt increased to $3.2 billion at June 30, 2013 from $1.7 billion at FYE 2012. Leverage on a pro-forma basis was 4.8x through the last 12 months ended June 30, 2013. Spectrum is focused on reducing leverage to the 2.5x-3.5x range by calendar year-end (CYE) 2014. Fitch anticipates leverage of less than 3.5x by the end of 2014 to be a challenge. Nonetheless, leverage should decline materially to the 4x range by the end of CYE 2014 due to a combination of EBITDA growth and debt reduction. EBITDA will improve significantly from $487 million last year to the $640 million range this year. HHI's EBITDA margin is higher than legacy Spectrum by approximately 300 to 400 basis points. Spectrum's focus on cost controls had already contributed to sequential margin improvement, from 13.6% in FY2010 to 15% in FY2012. With HHI, Fitch expects Spectrum's margins to continue improving through 2014. The company has been focused on debt reduction and has historically made voluntary debt repayments in the $200 million range from free cash flow (FCF), which should continue. Improving FCF Spectrum's FCF after dividends should be in the $200 million range in 2013, and should improve to the $300 million range next year with a full year of HHI and lower interest expense. Spectrum is in the process of refinancing a $950 million 9.5% secured note with $1.15 billion in secured term loans at significantly lower interest rates. Interest costs should decline by approximately $50 million next year. In keeping with the company's de-leveraging goals, debt amortization on the new loans is markedly higher. Debt maturities, while increasing from less than $10 million to almost $75 million annually through 2016, remain moderate in relation to the company's FCF. As a result, there is some flexibility for the $200 million, two- year share repurchase authorization. Nonetheless, Fitch expects the bulk of the company's improving FCF to be directed towards debt reduction. Consistent Strategy The product portfolio and go-to-market strategy is focused on providing value-based brands with comparable performance to premium-priced brands; this matches well to a cautious economic environment. Corporate Governance Spectrum is a controlled company. Harbinger Group, Inc. (HRG; Fitch IDR rated 'B'; Outlook Stable) owns 59.3% of Spectrum. HRG itself is a controlled company majority owned by Harbinger Capital Partners, LLC, a hedge fund. Both companies directly or indirectly have pledged Spectrum shares as collateral. HRG uses the value of its portfolio investments as collateral for its own debt. HRG has pledged its Spectrum shares as part of the collateral for its 7.875%, $925 million notes. HRG is in compliance with its covenants with a comfortable collateral cushion. Fitch monitors HRG's cushion as part of Spectrum's rating. Harbinger Capital Partners Master Fund I, Ltd. (an affiliate of Harbinger Capital) owns 50.9% of HRG on a fully diluted basis and has also pledged all of its shares in HRG. If there was a foreclosure or sale of the HRG shares pledged as collateral, it would be a change of control of both HRG and Spectrum. The change could not only accelerate all of Spectrum's and HRG's debt and preferred stock, but could reduce the company's usage of its net operating losses. Spectrum would need a waiver on its term loan and revolver, and might also need a waiver on its notes, as it is required to offer to repurchase those instruments. Rating Sensitivities: Negative: Any change in financial strategy such that leverage is consistently and materially higher than mid-4x levels would be of concern and may have negative rating implications. Governance Implications Potentially Negative: A change of control due to issues with the majority owner could have negative rating implications. An event of default could occur if an entity or group, other than HRG and its affiliates, acquires more than 35% of Spectrum. If there is a change of control, it would most likely be due to foreclosure on the assets (i.e. Spectrum shares) collateralizing debt at the parent level. In this event, all of Spectrum's debt could accelerate unless the company obtains waivers. Fitch would address this event upon its occurrence. Positive: An upgrade is unlikely in the near term. Leverage is high and acquisition, integration and refinancing charges will dampen profitability this year. As credit protection measure improves with good business momentum, the potential for a positive rating action could increase. Fitch has taken the following rating actions on Spectrum: -- Long-term (IDR) affirmed at 'BB-'; -- Senior secured asset backed loan (ABL) upgraded to 'BB+' from 'BB-'; -- Senior secured term loans upgraded to 'BB+' from 'BB-'; -- Senior secured note upgraded to 'BB+' from 'BB-'; -- Senior unsecured notes affirmed at 'BB-'. Fitch has assigned the following ratings to Spectrum Canada: -- IDR 'BB-'; -- Senior secured term loan 'BB+'. Spectrum has received the requisite consents to call the $950 million, senior secured notes and have received replacement financing to repay these notes in September. These notes will be withdrawn at that time. SPIRE CORP: Guy Mayer Quits From Board -------------------------------------- Guy L. Mayer resigned from the Board of Directors of Spire Corporation effective Aug. 15, 2013. About Spire Corp Bedford, Massachusetts-based Spire Corporation currently develops, manufactures and markets customized turn-key solutions for the solar industry, including individual pieces of manufacturing equipment and full turn-key lines for cell and module production and testing. McGladrey LLP, in Boston, Massachusetts, expressed substantial doubt about Spire Corporation's ability to continue as a going concern. The independent auditors noted that during the year ended Dec. 31, 2012, the Company incurred a loss from continuing operations of $4.8 million and continuing operating cash flows used $6.9 million in cash. In addition, the independent auditors noted that the Company's credit agreements are due to expire on June 29, 2013. The Company reported a net loss of $1.9 million on total net sales and revenues of $22.1 million in 2012, compared with a net loss of $1.5 million on total net sales of $58.7 million in 2011. As of June 30, 2013, the Company had $13.46 million in total assets, $10.15 million in total liabilities and $3.31 million in total stockholders' equity. SWJ MANAGEMENT: Files Schedules of Assets and Liabilities --------------------------------------------------------- SWJ Management LLC filed with the Bankruptcy Court for the Southern District of New York its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $450,000,000 B. Personal Property $400 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $160,688,414 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $518,785 ----------- ----------- TOTAL $450,000,400 $161,207,200 New York-based SWJ Management LLC filed for Chapter 11 (Bankr. S.D.N.Y. Case No. 13-12123) on June 28, 2013. Judge Allan L. Gropper oversees the case. The Law Offices of David Carlebach, Esq., serves as the Debtor's counsel. In its petition, the Debtor estimated $50 million to $100 million in both assets and debts. The petition was signed by Richard Annunziata, managing member. An affiliate, Ridgewood Realty of LL, SK Mulberry Contract, filed a separate Chapter 11 petition (Case No. 12-14085) on Sept. 28, 2012. T-L BRYWOOD: RCG-KC Brywood Balks at Exclusivity Extension Bid -------------------------------------------------------------- Lender RCG-KC Brywood LLC asks the U.S. Bankruptcy Court for the Northern District of Illinois to deny T-L Brywood LLC's motion to extend the exclusive solicitation period. As reported in the Troubled Company Reporter on Aug. 15, 2013, the Debtor requested that the Court extend its exclusive period to solicit acceptances for the Plan of Reorganization until Jan. 31, 2014. The Debtor does not seek an extension of the time to file a Plan because it has already filed a Plan of Reorganization. RCG, by and through its attorney, Thomas M. Lombardo, Esq. -- tlombardo@ginsbergjacobs.com -- at Ginsberg Jacobs LLC, stated that, among other things: 1. the Debtor has not met its burden of showing cause because it has not provided any evidence; 2. the Debtor has not shown by a preponderance of the evidence that it is probable that the Court will confirm a plan within a reasonable period of time; and 3. the Debtor's motion consists of unsubstantiated allegations reciting, verbatim, the same references to "general overall economic concerns" and efforts "to seek refinancing sources" that it relied upon in delaying the filing of its Plan through four exclusive periods. About T-L Brywood T-L Brywood LLC filed for Chapter 11 bankruptcy (Bankr. N.D. Ill. Case No.12-09582) on March 12, 2012. T-L Brywood owns and operates a commercial shopping center known as the "Brywood Centre" -- http://www.brywoodcentre.com/-- in Kansas City, Missouri. The Property encompasses roughly 25.6 acres and comprises 183,159 square feet of retail space that is occupied by 12 operating tenants. The occupancy rate for the Property is approximately 80%. The Debtor and lender The PrivateBank and Trust Company reached an impasse over the terms and conditions of another extension of a mortgage loan on the Property. As a result, the Debtor filed the Chapter 11 case to protect the Property from foreclosure while the Debtor formulates an exit strategy from the reorganization case. As of the Petition Date, no foreclosure relating to the Property had been filed by the Lender. Judge Donald R. Cassling oversees the case. The Debtor is represented by David K. Welch, Esq., Arthur G. Simon, Esq., and Jeffrey C. Dan. Esq., at Crane, Heyman, Simon, Welch & Clar, in Chicago. The Debtor disclosed total assets of $16,666,257 and total liabilities of $13,970,622 in its schedules. The petition was signed by Richard Dube, president of Tri-Land Properties, Inc., manager. The Plan filed in the Debtors' cases is premised upon the deemed substantive consolidation of the Debtors solely for purposes of implementing the Plan, including for purposes of voting, confirmation, distributions to creditors and administration. PrivateBank is represented by William J. Connelly, Esq., at Hinshaw & Culbertson LLP. No committee of creditors was appointed by the U.S. Trustee. T-L BRYWOOD: Urges Court to Approve Plan Outline ------------------------------------------------ T-L Brywood LLC, asks the U.S. Bankruptcy Court for the Northern District of Illinois to overrule the limited objection of RCG-KC Brywood, LLC to the approval of the Disclosure Statement proposed in conjunction with the related Debtors. The Debtor explained that, among other things: 1. The Debtors are entitled to seek and obtain substantive consolidation of their estates pursuant to the Joint Plan. The substantive consolidation will not prejudice RCG and will benefit Brywood and its creditors, including RCG. 2. The use of substantive consolidation as a means for implementing the Joint Plan is permissible under Section 1123(a)(5)(C) of the Bankruptcy Code. As reported in the Troubled Company Reporter on Aug. 20, 2013, RCG-KC Brywood, successor by assignment to The PrivateBank & Trust Company, filed a limited objection asking the Bankruptcy Court to deny approval of the Joint Disclosure Statement explaining T-L Brywood LLC's Chapter 11 Plan. As reported in the TCR on June 26, 2013, the Debtor submitted a Joint Disclosure Statement explaining their proposed Plan of Reorganization. According to the Disclosure Statement, the Plan provides for full payment of Class 1 Claim of RCG-KC Brywood, Class 2 Claim of CT Bank, Class 6 Claim of JC Collector, and Class 7 Claim of The Conyers Tax Collectors. Classes 3 to 5 Claim of CT Bank will receive monthly interest payments until the claim is paid in full. Class 8 Claim of the Smyrna Tax Collectors will be paid in full in cash on the Effective Date or soon as practicable thereafter. The Plan is premised upon the deemed substantive consolidation of the Debtors solely for purposes of implementing the Plan, including for purposes of voting, confirmation, distributions to creditors and administration. On the Effective Date, and for Plan Implementation purposes only: 1. the assets and liabilities of each of the Debtors will be treated as though such assets and liabilities were assets and liabilities of a single entity; 2. the collective cash flow of all of the Debtors maybe utilized to pay for the operating expenses and the payments required under the plan for all Debtors; and 3. inter-Debtor claims as of the filing of the Chapter 11 cases, if any, are extinguished. A copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/T-L_BRYWOOD_ds.pdf About T-L Brywood T-L Brywood LLC filed for Chapter 11 bankruptcy (Bankr. N.D. Ill. Case No.12-09582) on March 12, 2012. T-L Brywood owns and operates a commercial shopping center known as the "Brywood Centre" -- http://www.brywoodcentre.com/-- in Kansas City, Missouri. The Property encompasses roughly 25.6 acres and comprises 183,159 square feet of retail space that is occupied by 12 operating tenants. The occupancy rate for the Property is approximately 80%. The Debtor and lender The PrivateBank and Trust Company reached an impasse over the terms and conditions of another extension of a mortgage loan on the Property. As a result, the Debtor filed the Chapter 11 case to protect the Property from foreclosure while the Debtor formulates an exit strategy from the reorganization case. As of the Petition Date, no foreclosure relating to the Property had been filed by the Lender. Judge Donald R. Cassling oversees the case. The Debtor is represented by David K. Welch, Esq., Arthur G. Simon, Esq., and Jeffrey C. Dan. Esq., at Crane, Heyman, Simon, Welch & Clar, in Chicago. The Debtor disclosed total assets of $16,666,257 and total liabilities of $13,970,622 in its schedules. The petition was signed by Richard Dube, president of Tri-Land Properties, Inc., manager. The Plan filed in the Debtors' cases is premised upon the deemed substantive consolidation of the Debtors solely for purposes of implementing the Plan, including for purposes of voting, confirmation, distributions to creditors and administration. PrivateBank is represented by William J. Connelly, Esq., at Hinshaw & Culbertson LLP. No committee of creditors was appointed by the U.S. Trustee. THEODORO BAKING: Files for Chapter 11 in St. Louis -------------------------------------------------- Candace Jarrett, writing for Hazelwood Patch, reports that Theodoro Baking Co. has sought Chapter 11 bankruptcy protection in St. Louis, but will continue to be operational. It listed $1 million to $10 million in both assets and liabilities. The report says Theodoro Baking will seek debtor-in-possession financing to be able to pay vendors, as it has local and national customers. According to the report, Bonnie Clair, Esq., Theodoro's attorney, said she was not at liberty to discuss the situation but did say a statement would soon be released about the bankruptcy. Theodoro has about 200 employees. It operates its own fleet of 40 trucks that deliver to area restaurants and supermarkets. TRIMJOIST CORP: Bankr. Ct. Abstains From Suit v. Company President ------------------------------------------------------------------ Bankruptcy Judge Jason D. Woodward abstains from hearing the breach of contract action captioned Trustmark National Bank, Plaintiff v. E. Barry Sanford, Defendant, Adv No. 13:01024 (Bankr. N.D. Miss.), and remands the case to the Circuit Court for Lowndes County, Mississippi. Trimjoist Corp. filed for Chapter 11 bankruptcy petition (Bankr. N.D. Miss. Case No. 12-15405) on Dec. 18, 2012. Barry Sanford is the Debtor's president and director. Trustmark sued Mr. Sanford for his personal guaranty of the Debtor's promissory note to Trustmark. The Debtor listed Mr. Sanford as a codebtor on its Trustmark debt. Judge Woodward holds that the present case is a purely state law dispute between two non-debtors that will have no adverse effect on the efficient administration of the Debtor's bankruptcy case. A copy of the Bankruptcy Court's July 30, 2013 Memorandum and Order is available at http://is.gd/zDeKnNfrom Leagle.com. UNIFIED 2020: Amends Application to Employ J. Slim as Co-Counsel ---------------------------------------------------------------- Unified 2020 Realty Partners, LP, filed on Aug. 13, 2013, an amended application to employ Jules Slim, Esq., as co-counsel to assist Arthur Ungerman, Esq., concerning litigation matters now pending before the U.S. Bankruptcy Court for the Northern District of Texas and those that may arise in connection with the plan and disclosure statement pending before the Court and any future litigation that may aries. Mr. Slim has agreed to represent the Debtor on an hourly basis at $275.00 per hour. According to papers filed with the Court, Co- Counsel will be paid by Pacific Bridge Corporation for his services. The hearing to consider the Amended Application of Jules Slim as attorney will be held on Sept. 12, 2013, at 9:30 a.m. The Amended Application was submitted by: Arthur I. Ungerman, Esq. 8140 Walnut Hill Lane, Suite 301 Dallas, TX 75231 Tel: (972) 239-9055 Fax: (972) 239-9886 Attorneys for Debtor About Unified 2020 Realty Unified 2020 Realty Partners, LP, filed a bare-bones petition under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No. 13-32425) in its home-town in Dallas on May 6, 2013. The petition was signed by Edward Roush as president of general partner. The Debtor disclosed $44.7 million in total assets and $31.6 million in liabilities as of the Chapter 11 filing. The Debtor says it owns and leases infrastructure critical to telecommunications companies and data center facilities. Judge Stacey G. Jernigan presides over the Chapter 11 case. Arthur I. Ungerman, Esq., and Kerry S. Alleyne-Simmons, Esq., at the Law Office of Arthur Ungerman, in Dallas, Texas, represent the Debtor. Peter C. Lewis, Esq., and Jacob W. Sparks, Esq., at Scheef & Stone, LLP, in Dallas, Texas, represent United Central Bank. In its schedules, the Debtor disclosed $280,178,409 in assets and $46,378,972 in liabilities. USA COMMERCIAL: Nev. Dist. Ct. Rules Against Compass & D. Blatt --------------------------------------------------------------- District Judge Robert C. Jones entered a memorandum and opinion regarding Compass Partners, LLC, Compass USA SPE, LLC, and David Blatt in the lawsuit captioned 3685 SAN FERNANDO LENDERS, LLC, et al., Plaintiffs, v. COMPASS USA SPE LLC, et al., Defendants, Case Nos. CASE NOS. 2:07-CV-892-RCJ-GWF-BASE, 3:07-CV-241-RCJ-GWF (D. Nev.). As reported in the May 6, 2013 edition of The Troubled Company Reporter, the lawsuit 3685 SAN FERNANDO LENDERS, LLC et al. v. COMPASS USA SPE LLC, et al. arose out of the attempts of certain direct lenders to terminate a bankrupt entity and its assigns -- one of whom is now itself bankrupt -- as loan servicers. USA Commercial Mortgage Co. was a loan servicing company that went bankrupt. At an auction pursuant to those bankruptcy proceedings, Compass USA SPE, LLC purchased USA Commercial's interest in thousands of Loan Servicing Agreements. Those LSAs were contracts between USA Commercial and various financial institutions and individuals -- Direct Lenders -- that had lent money for the purchase of commercial real estate. Certain Direct Lenders subsequently formed various companies, who sued Compass in a Nevada District Court to determine their rights and obligations under the LSAs and for various torts. On July 30, 2013, the District Court entered rulings against defendants Compass Partners, Compass USA and David Blatt. The District Court opined that substantial evidence supports Compass' and Blatt's liability for (1) conversion of USACM Loans, (2) tortious breach of the implied convenant of good faith and fair dealing, (3) breaching their fiduciary duties; (4) civil conspiracy; and (5) punitive damages. Accordingly, Judge Jones ruled that: -- the plaintiffs' motion for an award of prejudgment interest is granted; -- the plaintiffs' motion for an award of attorneys' fees, costs, and expenses is granted; -- the Court's order of civil contempt against a certain Ms. Cangelosi is stricken and expunged. Ms. Cangelosi is said to have testified regarding Compass's and Mr. Blatt's unabashed pursuit of their financial interests in the Loans; -- Compass's and Blatt's Fed.R.Civ.P. Rule 50(b) and Rule 59 motions are denied; -- The plaintiffs can recover from Compass and Blatt the amount of compensatory and punitive damages, prejudgment interest, post-judgment interest, attorneys' fees, and costs; and -- The Plaintiff LLCs shall take nothing against Compass and Mr. Blatt. Janet L. Chubb, Esq. -- jchubb@armstrongteasdale.com -- and Louis M. Bubala III, Esq. -- lbubala@armstrongteasdale.com -- of ARMSTRONG TEASDALE, in Reno, Nevada, as well as William A. Brewer III, Esq. -- wab@bickelbrewer.com , Michael J. Collins, Esq. -- mjc@bickelbrewer.com , and Robert M. Millimet, Esq. -- rrm@bickelbrewer.com -- of BICKEL & BREWER, in Dallas, Texas, serve as attorneys for the Plaintiffs. Daniel T. Hayward, Esq. -- dhayward@laxalt-nomura.com -- of LAXALT & NOMURA, LTD., serves as counsel for Defendants Compass Partners, LLC, Compass USA SPE, LLC, and David Blatt. A copy of Judge Jones' July 30, 2013 Memorandum and Opinion is available at http://is.gd/FC0SMtfrom Leagle.com. About USA Commercial Based in Las Vegas, Nevada, USA Commercial Mortgage Company, dba USA Capital -- http://www.usacapitalcorp.com/-- provided more than $1 billion in short-term and permanent financing to homebuilders, commercial developers, apartment owners and institutions nationwide. The Company and its debtor-affiliates filed for chapter 11 protection on April 13, 2006 (Bankr. D. Nev. Case Nos. 06-10725 to 06-10729). Lenard E. Schwartzer, Esq., at Schwartzer & Mcpherson Law Firm, and Annette W. Jarvis, Esq., at Ray Quinney & Nebeker, P.C., represented the Debtors in their restructuring efforts. Thomas J. Allison, a senior managing director at Mesirow Financial Interim Management LLC, served as Chief Restructuring Officer for the Debtors. Susan M. Freeman, Esq., and Rob Charles, Esq., at Lewis and Roca LLP represented the Official Committee of Unsecured Creditors of USA Commercial Mortgage Company. Edward M. Burr at Sierra Consulting Group, LLC, provided financial advice to the Creditors Committee of USA Mortgage. Marc A. Levinson, Esq., and Jeffery D. Hermann, Esq., at Orrick, Herrington & Sutcliffe LLP, and Bob L. Olson, Esq., and Anne M. Loraditch, Esq., at Beckley Singleton, Chartered, represented the Official Committee of Equity Security Holders of USA Capital Diversified Trust Deed Fund, LLC. FTI Consulting, Inc., provided financial advice to the Equity Committee of USA Diversified. Candace C. Carlyon, Esq., and Shawn w. Miller, Esq., at Shea & Carlyon, Ltd., and Jeffrey H. Davidson, Esq., Frank A. Merola, Esq., and Eve H. Karasik, Esq., at Stutman, Treister & Glatt, PC, represented the Official Committee of Equity Security Holders of USA Capital First Trust Deed Fund, LLC. Matthew A. Kvarda, at Alvarez & Marsal, LLC, provided financial advise to the Equity Committee of USA First. When the Debtors filed for protection from their creditors, they estimated assets of more than $100 million and debts between $10 million and $50 million. The Debtor's Chapter 11 plan of reorganization was confirmed on Jan. 8, 2007. USACM Liquidating Trust was created pursuant to the Debtors' Third Amended Joint Chapter 11 Plan of Reorganization, which became effective March 12, 2007. Under the Joint Plan, the Trust obtained the right to enforce USACM's causes of action. VAUGHN COLLEGE: S&P Lowers Rating on 2006 Revenue Bonds to 'BB' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term rating to 'BB' from 'BB+' on the New York City Industrial Development Agency's series 2006 revenue bonds, issued on behalf of Vaughn College of Aeronautics and Technology (VCAT or Vaughn). The outlook is stable. "The lower rating reflects our view of VCAT's currently limited capacity for enrollment growth, weaker financial resources for the rating category, and potential pressure on full accrual operating performance given the expectation of greater capital spending during the next one to two years," said Standard & Poor's credit analyst Charlene Butterfield. The rate of VCAT's enrollment growth has been constrained by its physical capacity. Management indicates the college is increasing its physical capacity and intends to accommodate future projected demand. As VCAT is highly dependent on student chargers for revenues, it is S&P's opinion that limited enrollment growth constrains future revenue growth as well. Financial resources are likely to be pressured further by $15 million of private placement debt, expected to be finalized in October 2013. S&P views favorably the college's slowly improving student demand profile, increasing full time equivalents (FTE), and lower endowment spending. While a portion of the college's planned capital projects may be funded by the city and state, as well as by an equity contribution from the school, S&P understands the college plans to issue approximately $15 million in additional debt during the outlook period to help finance the a new library, renovate administrative offices, and to acquire an 18,000 square foot building and renovate leased space for instructional purposes. Based on a $15 million debt issuance, S&P estimates that total pro forma debt could reach approximately $54 million with an estimated maximum annual debt service burden of 10% -- a level S&P considers high. VCAT, founded in 1932, is a specialized aviation and engineering college located adjacent to LaGuardia Airport in Queens, N.Y. When founded, Vaughn's primary mission was to train technicians in the design, construction, and service of aircraft. As the aviation industry evolved, however, so did the college. VCAT serves approximately 1,800 students pursuing undergraduate and graduate degrees in engineering, technology, management, and aviation. VILLAGE AT KNAPP'S: Files Schedules of Assets and Liabilities ------------------------------------------------------------- The Village At Knapp's Crossing, L.L.C. filed with the Bankruptcy Court for the Western District of Michigan its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $15,100,000 B. Personal Property $202,392,127 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $4,777,363 E. Creditors Holding Unsecured Priority Claims $3,050 F. Creditors Holding Unsecured Non-priority Claims $127,047 ----------- ----------- TOTAL $217,492,127 $4,907,461 About Village At Knapp's The Village At Knapp's Crossing, L.L.C. in Grand Rapids, Michigan, filed for Chapter 11 (Bankr. W.D. Mich. Case No. 13-06094) on July 25, 2013. Judge Scott W. Dales handles the case. On the Petition Date, the Debtor estimated its assets and debts at $10 million to $50 million. The petition was signed by Steven D. Benner, managing member on behalf of S.D. Benner, sole member. Tishkoff & Associates PLLC is the Debtor's counsel. VILLAGE AT KNAPP'S: Corrected List of Top Unsecured Creditors ------------------------------------------------------------- The Village At Knapp's Crossing, L.L.C. has submitted to the Bankruptcy Court a corrected list that identifies its top 20 unsecured creditors. Creditors with the three largest claims are: Entity Nature of Claim Claim Amount ------ --------------- ------------ International Bank of Mortgage $4,142,007 Chicago 5069 N. Broadway Chicago IL 60640 Comerica Bank Mortgage $468,242 150 W Jefferson Ave Ste Detroit MI 48226 First Community Bank Mortgage $167,113 200 East Main St. Harbor Springs MI 49740 A copy of the creditors' list is available for free at: http://is.gd/oeEfl0 About Village At Knapp's The Village At Knapp's Crossing, L.L.C. in Grand Rapids, Michigan, filed for Chapter 11 (Bankr. W.D. Mich. Case No. 13-06094) on July 25, 2013. Judge Scott W. Dales handles the case. On the Petition Date, the Debtor estimated its assets and debts at $10 million to $50 million. The petition was signed by Steven D. Benner, managing member on behalf of S.D. Benner, sole member. Tishkoff & Associates PLLC is the Debtor's counsel. VITAMINSPICE: Jehu Hand Obtains Judgment in Defamation Suit ----------------------------------------------------------- Securities lawyer Jehu Hand on Aug. 29 disclosed that after trial held in Orange County California Superior Court, he has obtained a judgment in case no. 30-2012-00567141 against VitaminSpice (VTMS.PK) and its Chief Executive Officer Ed Bukstel. The Complaint alleged that defendants VitaminSpice and Ed Bukstel libeled Jehu Hand in the press release issued by them on April 25, 2012. That widely-disseminated press release alleged that motions filed in the Federal Bankruptcy Court for the Eastern District of Pennsylvania included documents that allegedly demonstrated that Jehu Hand and others perpetrated forgeries. The Complaint further alleges that these and other statements in VitaminSpice's press release were untrue and defamatory and, furthermore, that the statements regarding purported forgeries were expressly contrary to the findings of the Bankruptcy Court. No evidence was presented by the defendants at trial to support any allegation of forgery nor to support their contention that the defendants made the defamatory statements with good faith belief in their truthfulness. The Court found that the Complaint was supported by the evidence and awarded the full amount sought of $74,000 against each of VitaminSpice and Ed Bukstel. This judgment follows the dismissal of VitaminSpice and Bukstel's Third Party Complaint against Mr. Hand which was pending in the Eastern District of Pennsylvania, Advanced Multilevel Concept, Inc. v VitaminSpice, et al., Case No. 11-CV-3718. That case was dismissed with prejudice. Mr. Hand stated, "I am pleased to have finally vindicated myself against the baseless defamation by Mr. Bukstel and VitaminSpice. I believe that the defamation and the Third Party Complaint, which was bereft of any factual support, were merely retaliation for myself and others providing information to the Securities and Exchange Commission, detailing a 'pump and dump' in VitaminSpice's stock engaged in by the company. This information resulted in enforcement action against VitaminSpice as set forth in SEC Release 34-68948." About VitaminSpice VitaminSpice makes vitamin- and antioxidant-infused spices as food and dietary supplements. Five creditors filed an involuntary Chapter 11 petition (Bankr. E.D. Pa. Case No. 16200) against Wayne, Pennsylvania-based VitaminSpice aka Qualsec on Aug. 5, 2011. The creditors, owed roughly $414,000 in the aggregate, are: John Robison in Philadelphia, Pennsylvania; IBT South Florida, LLC, in Fort Lauderdale, Florida; Learned J. Hand in Chapel Hill, North Carolina; and Jehu Hand in Dana Point, California; and Esthetics World in Cheyenne, Wyoming. Judge Magdeline D. Coleman presides over the case. Peter Edward Sheridan, Esq. -- sheridan.pete@gmail.com -- in Philadelphia, Pennsylvania, represents the petitioning creditors. In April 2012, the bankruptcy judge dismissed the involuntary case at the behest of the Debtor. Judge Magdeline D. Coleman in Philadelphia said the creditors failed to prove the company was generally not paying its debts as they mature. The company filed a motion to dismiss the petition, saying it was filed in bad faith to stop lawsuits where the VitaminSpice was targeting Mr. Hand or his companies. XTREME GREEN: Files Motion to Obtain $2-Mil. in DIP Financing ------------------------------------------------------------- BankruptcyData reported that Xtreme Green Products filed a motion seeking Court approval of $2 million ($650,000 in the interim) in debtor-in-possession financing from proposed lender the Georgiou Family Trust. The financing will be used to fund critical operating expenses and pay critical vendors and repay a pre- petition secured loan from the lender in the principal amount of $150,000. The Company explains, "If the Debtor is unable to obtain post- petition financing, it will be unable to carry on the operation of its business, including fulfilling existing orders, and thus be unable to reorganize. Conversely, by obtaining post-petition financing, Debtor will increase the value of its estate and of the collateral for its secured debt to Lender." The U.S. Trustee assigned to the case scheduled a September 26, 2013 341-Meeting of Creditors. Xtreme Green Products filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Nevada, case number 13- 17266. The Company, which manufactures specialty electric vehicles, is represented by Lenar E. Schwartzer of Schwartzer & McPherson Law Firm. XTREME IRON: Chap. 11 Trustee Files Joint Plan of Liquidation ------------------------------------------------------------- Areya Holder, Chapter 11 trustee for the estates of Xtreme Iron Holdings, LLC, and Xtreme Iron, LLC, filed with the U.S. Bankruptcy Court for the Northern District of Texas a Joint Plan of Liquidation of the Debtors. The Plan is predicated on substantive consolidation of the Debtors into a single entity. In addition, the Plan resolves, settles, and compromises all claims against the Debtors or property of their estates. The cash necessary for confirmation and to make the distributions to allowed claims against and equity interests in the Debtors will come from the cash in the Chapter 11 Trustee's possession at confirmation and the cash acquired by the Liquidating Trustee after liquidation of the assets. The balance of that cash will be transferred to the liquidating trust. Prior to the filing of the Plan, the Chapter 11 Trustee liquidated substantially all of the Estates' Assets. Pursuant to the terms of the Plan, the Chapter 11 Trustee will transfer all of the Estates' Assets, including the proceeds from her earlier liquidation, to the Liquidating Trust. The Liquidating Trustee will liquidate the Liquidating Trust Assets and distribute the net proceeds of that liquidation to creditors holding Allowed Claims pursuant to the terms and provisions of the Plan and Liquidating Trust Agreement. Under the Plan, holders of Allowed Priority Non-Tax Claims and Allowed Secured Tax Claims will receive 100 percent recovery of their claims. Pursuant to the CAT Financial Settlement, CAT Financial was awarded an Allowed Secured Claim equal to approximately $8,200,000. On account of that Allowed Class 3 Claim, and in full satisfaction, release, and discharge of and exchange for that Claim, and the release of all Liens against the Estates' assets, as well as additional consideration, CAT Financial received $3,291,500 in cash from the Chapter 11 Trustee on or around May 20, 2013. Pursuant to the CAT Financial Settlement, CAT Financial retained an Allowed Subordinated Claim equal to approximately $8,100,000. Holders of Allowed General Unsecured Claims will receive a pro rata share of distributions from the Trust Assets after liquidation and payment in full of secured claims. Estimated recovery for this class is 20 percent to 40 percent. All equity interests will be cancelled and terminated as of the Effective Date. A full-text copy of the Disclosure Statement is available at: http://bankrupt.com/misc/XTREME_IRON_ds.pdf A hearing will be held on Sept. 30, 2013, at 1:30 p.m. to consider approval of the Disclosure Statement. About Xtreme Iron Xtreme Iron Holdings, LLC, filed a bare-bones Chapter 11 petition (Bankr. N.D. Tex. Case No. 12-33832) in Dallas on June 13, 2012. Lake Dallas-based Xtreme Iron Holdings estimated assets and liabilities of $10 million to $50 million. Xtreme Iron Holdings is the holding company for Xtreme Iron LLC -- http://www.xtreme-iron.com-- which claims to own one of the largest heavy equipment rental fleets in the state of Texas. Their fleet is comprised of late model, low hour Caterpillar and John Deere equipment. Holdings said an estimated 90% of the business assets are located in North Texas counties. Xtreme Iron Hickory Creek LLC filed its own petition (Bankr. E.D. Tex. Case No. 12-41750) on June 29, listing under $1 million in both assets and debts. Xtreme Iron LLC commenced Chapter 11 proceedings (Bankr. N.D. Tex. Case No. 12-34540) almost a month later, on July 11, estimating assets and debts of $10 million to $50 million. Judge Harlin DeWayne Hale oversees the Chapter 11 cases of Holdings and Iron LLC. Gregory Wayne Mitchell, Esq., at The Mitchell Law Firm, L.P., serves as bankruptcy counsel to all three Debtors. On Sept. 14, 2012, Areya Holder was appointed Chapter 11 Trustee of the estates of Xtreme Iron Holdings, LLC, and Xtreme Iron, LLC. Gardere Wynne Sewell LLP serves as counsel for Areya Holder. Beta Capital LLC, a creditor, has asked the Bankruptcy Court in Dallas to transfer the venue of Holdings' Chapter 11 case to the Bankruptcy Court for the Eastern District of Texas, saying the company's domicile, residence, principal place of business, and the location of its principal assets are all in the Eastern District; and venue is not proper in the Northern District of Texas. YRC WORLDWIDE: Amends $350 Million Securities Prospectus --------------------------------------------------------- YRC Worldwide Inc. has amended its registration statement on Form S-3 relating to the offer and sale of up to an aggregate of $350,000,000, from time to time, in one or more offerings, of any combination of the following types of securities: * debt securities, in one or more series, which may be senior debt securities or subordinated debt securities and secured debt securities or unsecured debt securities, in each case consisting of notes or other evidences of indebtedness; * warrants to purchase debt securities; * shares of the Company's common stock; * warrants to purchase common stock; * shares of our preferred stock; * depositary shares; * purchase contracts; * units; * subscription rights; or * any combination of these securities. Some or all of the Company's subsidiaries may guarantee some or all of its debt securities. The securities may be offered separately or together in any combination and as separate series. The Company's common stock is traded on the Nasdaq Global Select Market under the symbol "YRCW." The Company amended the registration statement to delay its effective date until the Company will file a further amendment which specifically states that this registration statement will thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement will become effective on that date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. A copy of the amended Form S-3 prospectus is available at: http://is.gd/J8hS5N About YRC Worldwide Headquartered in Overland Park, Kan., YRC Worldwide Inc. (NASDAQ: YRCW) -- http://www.yrcw.com/-- is a holding company that offers its customers a wide range of transportation services. These services include global, national and regional transportation as well as logistics. After auditing the 2011 results, the Company's independent auditors expressed substantial doubt about the Company's ability to continue as a going concern. KPMG LLP, in Kansas City, Missouri, noted that the Company has experienced recurring net losses from continuing operations and operating cash flow deficits and forecasts that it will not be able to comply with certain debt covenants through 2012. For the year ended Dec. 31, 2012, the Company incurred a net loss of $136.5 million on $4.85 billion of operating revenue, as compared with a net loss of $354.4 million on $4.86 billion of operating revenue during the prior year. As of June 30, 2013, the Company had $2.17 billion in total assets, $2.81 billion in total liabilities and a $641.5 million total shareholders' deficit. * * * As reported by the TCR on Aug. 2, 2013, Moody's Investors Service affirmed the rating of YRC Worldwide, Inc., corporate family rating at Caa3. The ratings outlook is has been changed to positive from stable. "The positive ratings outlook recognizes the important progress that YRCW has made in restoring positive operating margins through implementation of yield management initiatives, during a period of stabilizing demand in the less than truckload ('LTL') segment," the report stated. In August 2011, Standard & Poor's Ratings Services raised its corporate credit rating on YRC Worldwide Inc. to 'CCC' from 'SD' (selective default), after YRC completed a financial restructuring. Outlook is stable. "The ratings on Overland Park, Kan.-based YRCW reflect its participation in the competitive, capital-intensive, and cyclical trucking industry," said Ms. Ogbara, "as well as its meaningful off-balance-sheet contingent obligations related to multiemployer pension plans." "YRCW's substantial market position in the less- than-truckload (LTL) sector, which has fairly high barriers to entry, partially offsets these risk factors. We categorize YRCW's business profile as vulnerable, financial profile as highly leveraged, and liquidity as less than adequate." Z TRIM HOLDINGS: Edward Smith Held 69.9% Equity Stake at Aug. 20 ---------------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Edward B. Smith, III, and his affiliates disclosed that as of Aug. 20, 2013, they beneficially owned 32,448,427 shares of common stock of Z Trim Holdings, Inc., representing 69.9 percent of the shares outstanding. Mr. Smith previously reported beneficial ownership of 32,902,218 common shares or 77.5 percent equity stake as of March 18, 2013. A copy of the regulatory filing is available for free at: http://is.gd/A218tD About Z Trim Mundelein, Ill.-based Z Trim Holdings, Inc., is a functional food ingredient company which provides custom product solutions that help answer the food industry's problems. Z Trim's revolutionary technology provides value-added ingredients across virtually all food industry categories. Z Trim's all-natural products, among other things, help to reduce fat and calories, add fiber, provide shelf-stability, prevent oil migration, and add binding capacity -- all without degrading the taste and texture of the final food products. Z Trim Holdings disclosed a net loss of $9.58 million in 2012 following a net loss of $6.94 million in 2011. The Company's balance sheet at March 31, 2013, showed $5.60 million in total assets, $8.85 million in total liabilities and a $3.25 million total stockholders' deficit. M&K CPAS, PLLC, in Houston, Texas, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company had a working capital deficit and reoccurring losses as of Dec. 31, 2012. These conditions raise substantial doubt about its ability to continue as a going concern. ZUERCHER TRUST: Case Trustee Can Employ Grobstein as Fin'l Advisor ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of California approved the second amended application by Peter S. Kravitz, Chapter 11 trustee for The Zuercher Trust of 1999, asking for permission to employ Grobstein Teeple Financial Advisory Services, LLP, as his financial advisor. Grobstein Teeple will review and analyze the Debtor's financial records. According to the Debtor, Grobstein Teeple was not paid a monetary retainer. The hourly rates of the firm's personnel are: Partners $325 - $400 Senior Consultants $150 - $200 Consultant $125 Paraprofessionals $95 To the best of the trustee's knowledge, GTFAS neither holds nor represents a claim against the Debtor or the estate. As reported in the Troubled Company Reporter on July 24, 2013, GTFAS served as the trustee's financial advisors, nunc pro tunc to March 5, 2013. GTFAS will perform these specified acts: a. Obtain and evaluate financial records; b. Evaluate assets and liabilities of Debtor; c. Reconstruct accounting and financial records related to the Debtor; d. Assist with compiling information for United States Trustee and Court compliance; e. Provide litigation consulting if required; and f. Provide accounting and consulting services requested by the Trustee and his counsel. About The Zuercher Trust of 1999 San Mateo, California-based The Zuercher Trust of 1999 filed for Chapter 11 bankruptcy (Bankr. N.D. Cal. Case No. 12-32747) on Sept. 26, 2012. Bankruptcy Judge Hannah L. Blumenstiel presides over the case. Derrick F. Coleman, Esq., at Coleman Frost LLP, serves as the Debtor's counsel. The Debtor, a business trust, estimated assets and debts of $10 million to $50 million. The Debtor owns property in 621 S. Union Avenue, in Los Angeles. The property is currently in REAP for alleged city health code violations. In its schedules, the Debtor disclosed $28,450,000 in total assets and $12,084,015 in total liabilities. The petition was signed by Monica H. Hujazi, trustee. As reported in the TCR on March 22, 2013, August B. Landis, Acting U.S. Trustee for Region 17, obtained authorization from the U.S. Bankruptcy Court to appoint Peter S. Kravitz as Chapter 11 Trustee for The Zuercher Trust of 1999. Steven T. Gubner, Esq., and Richard D. Burstein, Esq., at Ezra Brutzkus Gubner LLP, represent Peter S. Kravitz, Chapter 11 Trustee for The Zuercher Trust of 1999, as bankruptcy counsel. * BlackRock Wins Dismissal of Securities Lending Suit ----------------------------------------------------- Andrew Zajac, writing for Bloomberg News, reported that BlackRock Inc., the world's biggest money manager, won dismissal of a lawsuit brought by two pension funds that accused the company of collecting "grossly excessive" compensation from securities- lending returns linked to iShares Inc. According to the report, U.S. District Judge Aleta Trauger in Nashville, Tennessee, said the law governing securities lending doesn't authorize investors, like the pension funds, to sue. "Without congressional intent expressed in a statute, a cause of action does not exist and the courts may not create one," Trauger wrote, the report cited. The suit was filed in January by Laborers Local 265 Pension Fund, based in Cincinnati, and Plumbers and Pipefitters Local No. 572 Pension Fund, of Nashville, the report related. Investment funds with holdings in stocks or other securities can earn more by lending out their holdings to borrowers, including short sellers, those betting the value of a security will fall. Investors who lend out the securities divide the proceeds with a securities lending agent, the report said. Some funds, including BlackRock, use their own securities-lending operation. The case is Laborers Local 265 Pension Fund v. iShares Trust, 13- cv-00046, U.S. District Court, Middle District of Tennessee (Nashville). * JPMorgan FERC-Probe Records Sought by Senate Investigators ------------------------------------------------------------ Keri Geiger & Cheyenne Hopkins, writing for Bloomberg News, reported that the U.S. Senate Permanent Subcommittee on Investigations asked energy-market regulators to hand over "key documents" from a probe of JPMorgan Chase & Co. as lawmakers examine banks' roles in commodities markets. Carl Levin, the Michigan Democrat who leads the panel, and John McCain of Arizona, its ranking Republican, sent a letter to the Federal Energy Regulatory Commission seeking records from the agency's inquiry and settlement with JPMorgan, according to a copy of the Aug. 2 request obtained by Bloomberg News. According to the report, the lawmakers asked the FERC to include a 70-page document outlining investigators' findings, which was cited in articles by the New York Times. The regulator kept that document private when announcing a $410 million accord with JPMorgan last month. The committee has repeatedly investigated Wall Street firms in the wake of 2008's credit crisis, chronicling Goldman Sachs Group Inc.'s sales of mortgage-linked instruments and JPMorgan's handling of botched derivatives bets, the report said. In an interview last month, Levin said lawmakers would use subpoena power to examine banks' dealings in physical commodities. "We have been into this issue for a long time and it's a very, very significant issue," Levin said July 23 of his panel's look at banks' businesses tied to energy and natural resources, the report recalled. The potential for conflicts of interest or price manipulation "is huge," he said. * CoreLogic Reports 49,000 Completed Foreclosures in July --------------------------------------------------------- CoreLogic(R) on Aug. 29 released its July National Foreclosure Report which provides data on completed U.S. foreclosures and the national foreclosure inventory. According to CoreLogic, there were 49,000 completed foreclosures in the U.S. in July 2013, down from 65,000 in July 2012, a year-over-year decrease of 25 percent. On a month-over-month basis, completed foreclosures decreased 8.6 percent from the 53,000* reported in June. As a basis of comparison, prior to the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006. Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 4.5 million completed foreclosures across the country. As of July 2013, approximately 949,000 homes in the U.S. were in some stage of foreclosure, known as the foreclosure inventory, compared to 1.4 million in July 2012, a year-over-year decrease of 32 percent. Month over month, the foreclosure inventory was down 4.4 percent from June 2013 to July 2013. The foreclosure inventory as of July 2013 represented 2.4 percent of all homes with a mortgage compared to 3.4 percent in July 2012. "As the housing market continues to recover, the foreclosure inventory is declining quickly, down by 32 percent from a year ago," said Mark Fleming, chief economist for CoreLogic. "Continued strength in the housing market will contribute to our outlook for ongoing improvement in the stock of distressed assets through the end of this year." "Completed foreclosures and delinquency rates continued their rapid descent in July. Every state posted a year-over-year decline in foreclosures and serious delinquencies fell to the lowest level since December 2008," said Anand Nallathambi, president and CEO of CoreLogic. "Not surprisingly, non-judicial states have come the farthest the fastest in reducing shadow inventory and lowering delinquency rates." Highlights as of July 2013: -- The five states with the highest number of completed foreclosures for the 12 months ending in July 2013 were: Florida (110,000),California (65,000), Michigan (61,000), Texas (45,000) and Georgia (41,000). These five states account for almost half of all completed foreclosures nationally. -- The five states with the lowest number of completed foreclosures for the 12 months ending in July 2013 were: District of Columbia (141), North Dakota (484), West Virginia (505), Hawaii (512) and Maine (754). -- The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: Florida (8.1 percent), New Jersey (5.9 percent), New York (4.7 percent), Connecticut (4.0 percent) and Maine (4.0 percent). -- The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Wyoming (0.4 percent), Alaska (0.6 percent), North Dakota (0.7 percent), Nebraska (0.7 percent) and Colorado (0.8 percent). *June data was revised. Revisions are standard, and to ensure accuracy, CoreLogic incorporates newly released data to provide updated results. Table 1: Judicial Foreclosure States Foreclosure Ranking (Ranked by Completed Foreclosures Table 2: Non-Judicial Foreclosure States Foreclosure Ranking (Ranked by Completed Foreclosures) Table 3: Foreclosure Data for the Largest Core Based Statistical Areas (CBSAs) (Ranked by Completed Foreclosures) Figure 1: Number of Mortgaged Homes per Completed Foreclosure Figure 2: Foreclosure Inventory as of July 2013 Figure 3 (is a map): Foreclosure Inventory by State Map Methodology The data in this report represents foreclosure activity reported through July 2013. This report separates state data into judicial vs. non-judicial foreclosure state categories. In judicial foreclosure states, lenders must provide evidence to the courts of delinquency in order to move a borrower into foreclosure. In non-judicial foreclosure states, lenders can issue notices of default directly to the borrower without court intervention. This is an important distinction since judicial states, as a rule, have longer foreclosure timelines, thus affecting foreclosure statistics. A completed foreclosure occurs when a property is auctioned and results in the purchase of the home at auction by either a third party, such as an investor, or by the lender. If the home is purchased by the lender, it is moved into the lender's real estate owned (REO) inventory. In "foreclosure by advertisement" states, a redemption period begins after the auction and runs for a statutory period, e.g., six months. During that period, the borrower may regain the foreclosed home by paying all amounts due as calculated under the statute. For purposes of this Foreclosure Report, because so few homes are actually redeemed following an auction, it is assumed that the foreclosure process ends in "foreclosure by advertisement" states at the completion of the auction. The foreclosure inventory represents the number and share of mortgaged homes that have been placed into the process of foreclosure by the mortgage servicer. Mortgage servicers start the foreclosure process when the mortgage reaches a specific level of serious delinquency as dictated by the investor for the mortgage loan. Once a foreclosure is "started," and absent the borrower paying all amounts necessary to halt the foreclosure, the home remains in foreclosure until the completed foreclosure results in the sale to a third party at auction or the home enters the lender's REO inventory. The data in this report accounts for only first liens against a property and does not include secondary liens. The foreclosure inventory is measured only against homes that have an outstanding mortgage. Homes with no mortgage liens can never be in foreclosure and are, therefore, excluded from the analysis. Approximately one-third of homes nationally are owned outright and do not have a mortgage. CoreLogic has approximately 85 percent coverage of U.S. foreclosure data. About CoreLogic CoreLogic -- http://www.corelogic.com-- is a property information, analytics and services provider in the United States and Australia. The company's combined data from public, contributory and proprietary sources includes over 3.3 billion records spanning more than 40 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, transportation and government. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in seven countries. * Fitch Says U.S. High Yield Sensitive to Emerging Market Defaults ------------------------------------------------------------------ Emerging market (EM) issuer defaults could contribute more meaningfully to U.S. high yield default trends if EM growth sputters as a consequence of the Federal Reserve's plan to scale back monetary stimulus, Fitch Ratings says. Default activity in July was notable in that it included dollar- denominated high yield bond defaults from two Mexican companies - Desarrolladora Homex (homebuilding) and Maxcom Telecomunicaciones. These joined defaults earlier in the year from another Mexican construction company, Urbi Desarrollos Urbanos, and telecommunication peer Axtel SAB. While defaults remain low overall, the EM related default tally of $2.8 billion through July is already the highest since 2009. The year-to-date default rate for this group is 2.5% versus 0.8% for the rest of the market. EM dollar denominated issues total $116.5 billion, or close to 10% of U.S. high yield market volume. The EM total is up from just $65 billion at the end of 2010 with $43.3 billion issued since January 2012. The $116.5 billion includes some large issuers that are in distress, including Brazilian oil company OGX (Issuer Default Rating CCC, Negative Outlook, $3.6 billion in bonds). The largest country concentration in this group is Brazil ($30 billion), followed by Mexico ($16.3 billion) and China ($14.4 billion). The industry makeup of these issues befits their EM source with infrastructure-related and financial bonds representing most outstanding volume. The top sectors include energy ($27.7 billion), banking and finance ($18.0 billion), telecommunication ($11.2 billion), real estate ($11.1 billion) and building and materials ($8.5 billion). The cyclical nature of the industry mix adds to their vulnerability if growth stalls. The par weighted average recovery rate on the EM issues has been 36.9% of par to date. With the exception of one bond, the affected issues were all unsecured. Of the $116.5 billion in EM bonds currently outstanding, an estimated $95.2 billion is unsecured. The trailing 12-month U.S. high yield default rate rose to 1.9% in July from 1.7% in June. Four issuers defaulted on $3.0 billion in bonds, bringing the year-to-date volume tally to $11.4 billion and the defaulted issuer count to 23 - versus $10.2 billion and 20 issuers in the first seven months of 2012. * Regulators Back Away From Tougher Mortgage Rules -------------------------------------------------- Alan Zibel and Nick Timiraos, writing for The Wall Street Journal, reported that federal regulators retreated from a proposal that would have toughened rules for the mortgage securities market, a defeat for advocates of tighter standards and a victory for the housing lobby. According to the report, six regulators -- including the Federal Reserve, Federal Deposit Insurance Corp. and Securities and Exchange Commission -- on Aug. 28 issued new proposed rules that would require banks and other issuers of mortgage-backed securities to retain 5% of the credit risk of the bonds on their books, as mandated by the 2010 Dodd-Frank financial-overhaul law. However, the proposal carries an exemption so broad it wouldn't apply to securities containing most mortgages made under today's stricter lending standards, which are of relatively low risk, the report related. Rather, the rule would apply to the types of higher-risk loans that were popular before the 2008 financial crisis. The rule effectively sets boundaries for what kind of loans might be offered, and on what terms, once lending standards relax. Had the rule been in effect last year, at least 98% of loans would have been covered by the exemption, according to Mark Zandi, chief economist at Moody's Analytics, the report said. The decision by regulators represented a major concession to the real-estate industry and consumer groups that had worried the 5% requirement would hurt the housing recovery by limiting credit, the report further related. * S&P Raises Rating on 3 US Wireless Tower Operators After Review ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on three U.S. wireless tower operators following a sector review. S&P upgraded all three companies it rates in the sector: American Tower Corp., Crown Castle International Inc., and SBA Communications Inc. -- S&P has raised the corporate credit rating and senior unsecured debt rating on American Tower Corp. to 'BBB-' from 'BB+', withdrew the '3' recovery rating, and removed the ratings from CreditWatch positive. -- S&P has raised the corporate credit rating on Crown Castle International Corp. to 'BB-' from 'B+' and raised all other ratings by one notch. S&P removed the ratings from CreditWatch positive. -- S&P has raised the corporate credit rating on SBA Communications Corp. to 'BB-' from 'B+' and raised all other ratings by one notch. S&P removed the ratings from CreditWatch positive. The outlooks are stable. "As part of our sector review of wireless tower operators, we have revised our assessment of the business risk profiles on each of these companies to 'excellent' from 'strong' based on key fundamentals that have prevailed over the past several years," said Standard & Poor's credit analyst Catherine Cosentino. They include: -- Very healthy leasing gross profit and overall reported EBITDA margins of at least 70% and 60%, respectively; -- Low volatility and cyclicality of the business, leading to high predictability of cash flows; -- Long-term contracts and high renewal rates with large telecom carrier customers; and -- Very high barriers to entry, especially in the U.S. market but also in most of the company's growing non-U.S. markets. Upgrade potential for the companies has previously been constrained by their aggressive financial policies, with much of their free operating cash flow used for stock repurchases, real estate investment trust (REIT) distributions, or acquisitions rather than for debt repayment, and their proclivity to use debt funding for some of their larger acquisitions in recent years. This has translated into aggressive to highly leveraged financial risk profiles. However, despite these policies and actions, all three companies have had relatively stable pro forma leverage levels over the past few years, given the strong profitability of acquired properties and on-going growth in overall operating cash flows, albeit at relatively modest levels in the mid- to high- single-digit area. S&P believes the improvement in the group's business risk profiles, coupled with the stability of their financial risk profiles, supports the upgrades. * AlixPartners Bags TMA's "Turnaround of the Year" Award -------------------------------------------------------- AlixPartners, the global business advisory firm, has once again been honored by the Turnaround Management Association (TMA), receiving the association's "Turnaround of the Year: Large Company" award for its work on behalf of Nebraska Book Company, Inc. The AlixPartners team was led by Alan Holtz, managing director in the firm's Turnaround & Restructuring Services group and co-lead of that group's Transformation & Restructuring Advisory Practice, and Robb McWilliams, a director in the firm's Informational Management Services group. AlixPartners worked in tandem with company management and representatives from Kirkland & Ellis LLP and Rothschild Group on a consensual resolution that reduced Nebraska Book Company's indebtedness by $240 million and equitized over $100 million of secured debt. Along the way, according to the TMA's citation, the turnaround saved jobs for approximately 2,700 workers, including 1,100 full-time and 700 part-time employees and 900 temporary workers. Said Holtz: "We've very proud of the fact that a company with such a rich history as Nebraska Book Company, and one that ultimately benefits millions of college students, was saved, along with thousands of jobs in the process. It took hard work and collaboration on all fronts -- including company management and other outside professionals -- to arrive at this outcome, but it proves that good things can happen if the right approaches are taken." Said Lisa Donahue, managing director at AlixPartners and global leader of the firm's Turnaround & Restructuring Services group: "The book industry is indicative of the challenges companies in many industries face today: an overall economy that may never be what it once was, coupled with big challenges such as technology upheaval. At AlixPartners, we're proud to be recognized for helping Nebraska Book Company move to overcome its challenges, and we believe its success shows that, if proactive steps are taken, other companies can do the same." Case Study Founded in 1915 with a single bookstore near the University of Nebraska campus, Nebraska Book Company played a key role in the earliest years of the used-textbook industry when it recognized that the supply of new textbooks could not meet the demand created by returning World War II soldiers attending college. Prior to its restructuring, the company sold textbooks through a retail and wholesale distribution network, including 280 on- and off-campus stores, located on or near college campuses, as well as through its wholesale division to third-party distributors and on the Internet. As of December 31, 2010, the company reported $657.2 million in assets and $564 million in liabilities, with annual revenues of approximately $605.5 million. Nebraska Book Company commenced its Chapter 11 cases on June 27, 2011 to effectuate an expedited balance-sheet restructuring through a prearranged plan of reorganization, precipitated by an upheaval in the textbook industry similar to that in the book industry in general. Among other first-day relief, the company obtained $200 million in secured post-petition financing and the use of cash collateral. This relief, coupled with AlixPartners' and other professionals' continued advice to the company's management team, enabled the company to continue operating its business in bankruptcy with minimal disruption and little effect on its customers. Within months, though, the company realized the need for a more thorough operational restructuring due to the continuing decline in the financial performance of its off-campus bookstores and the evolving price war from online textbook-distribution channels. The company and involved parties worked diligently over the next nine months to retool its business plan, focusing on more profitable on-campus book stores and closing approximately 48 unprofitable off-campus book stores. The company's operational restructuring enabled it to negotiate a consensual resolution with its secured and unsecured debt-holders as well as the official committee of unsecured creditors, including obtaining an $80 million investment from its largest secured creditor. On June 29, 2012, Nebraska Book Company emerged from Chapter 11. Also recognized by the TMA for their work on the Nebraska Book Company engagement were: Chad Husnick and Marc Kieselstein of Kirkland & Ellis; and Dustin L. Mondell and Todd R. Snyder of Rothschild. The award will be presented at the TMA's 25 Annual Conference, held October 3-5 at the Marriott Wardman Park in Washington, D.C. About AlixPartners AlixPartners, LLP -- http://www.alixpartners.com-- is a global business advisory firm offering comprehensive services in four major areas: enterprise improvement, turnaround and restructuring, financial-advisory services and information-management services. About the Turnaround Management Association The Chicago-based Turnaround Management Association -- http://www.turnaround.org-- has more than 9,000 members in 48 regional chapters worldwide who comprise a professional community of turnaround practitioners, attorneys, accountants, investors, lenders, venture capitalists, appraisers, liquidators, executive recruiters and consultants. * 4th Cir. Appoints Keith L. Phillips as E.D. Va. Bankruptcy Judge ------------------------------------------------------------------ The Fourth Circuit Court of Appeals appointed Bankruptcy Judge Keith L. Phillips to a fourteen-year term of office in the Eastern District of Virginia, effective August 26, 2013 (vice, Tice). Honorable Keith L. Phillips United States Bankruptcy Court Spottswood W. Robinson III & Robert R. Merhige, Jr., U.S. Courthouse 701 East Broad Street, 5th Floor Richmond, VA 23219-1888 Telephone: 804-916-2460 Fax: 804-916-2469 Judicial Assistant Debra Weekley Telephone: 804-916-2461 Law Clerk Laurie Ross Telephone: 804-916-2463 Term expiration: August 25, 2027 * BOOK REVIEW: A Legal History of Money in the United States, 1774-1970 ------------------------------------------------------------- Author: James Willard Hurst Publisher: Beard Books Paperback: US$34.95 Review by Gail Owens Hoelscher Order your personal copy today and one for a colleague at http://is.gd/x8Gesf This book chronicles the legal elements of the history of the system of money in the United States from 1774 to 1970. It originated as a series of lectures given by James Hurst at the University of Nebraska in 1973. Mr. Hurst is quick to say that he , as a historian of the law, took care in this book not to make his own judgments on matters outside the law. Rather, he conducted an exhaustive literature review of economics, economic history, and banking to recount the development of law over the operations of money. He attempted to "borrow the opinions of qualified specialists outside the law in order to provide a meaningful context in which to appraise what the law has done or failed to do." Mr. Hurst define money, for the purposes of this books, as "a distinct institutional instrument employed primarily in allocating scarce economic resources, mainly through government and market processes," and not shorthand for economic, social, or political power held through command of economic assets." From the beginning, public and legal policy in the U.S. centered on the definition of legitimate uses of both law affecting money, and allocation of power over money among official agencies, both federal and state. The foundations of monetary policy were laid between 1774 and 1788. Initially, individual state legislatures and the Continental Congress issued paper currency in the form of bills of credit. The Constitutional Convention later determined that ultimate control of the money supply should be at the federal level. Other issues were not clearly defined and were left to be determined by events. The author describes how law was used to create and maintain a system of money capable of servicing the flow of resource allocations in an economy of broadly dispersed public and private decision making. Law defined standard money units and made those units acceptable for use in conducting transactions. Over time, adjustment of the money supply was recognized as a legitimate concern of law. Private banks were delegated expansive monetary action powers throughout the 1900s and private markets for gold and silver were allowed to affect the money supply until 1933-34. Although the Federal Reserve Act was not aimed clearly at managing money for goals of major economic adjustment, it set precedents by devaluing the dollar and restricting the use of gold. Mr. Hurst devotes a large part of his book to key issues of monetary policy involving the distribution of power over money between the nation and the states, between legal and market processes, and among major agencies of the government. Until about 1860, all major branches of government shared in making monetary policy, with states playing a large role. Between 1908 and 1970, monetary policy became firmly centralized at the national level, and separation or powers questions arose between the Federal Reserve Board, the White House (The Council of Economic Advisors), and the Treasury. The book was an enormous undertaking and its research exhaustive. It includes 18 pages of sources cited and 90 pages of footnotes. Each era of American legal history is treated comprehensively. The book makes fascinating reading for those interested in the cause and effect relationship between legal processes and economic processes and t hose concerned with public administration and the separation of powers. James Willard Hurst (1910-1997) is widely regarded as the grandfather of American legal history. He graduated from Harvard Law School in 1935 and taught at the University of Wisconsin-Madison for 44 years. ********* 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, Valerie Udtuhan, 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 ***