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/raid1/www/Hosts/bankrupt/TCR_Public/130906.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, September 6, 2013, Vol. 17, No. 247 Headlines 10717 LLC: Court Dismisses Chapter 11 Case 1ST FINANCIAL: Former CFO to Serve as Consultant 250 AZ: CWCapital Asset Asks Judge to Deny Plan Outline ABSORBENT TECHNOLOGIES: Bid to Extend Plan Filing Deadline Denied ABSORBENT TECHNOLOGIES: Files Revised Application to Hire Stoel ACE ALLIANCE: Federal Judge Dismisses Bankruptcy Petition ALLIED IRISH: AIB Mortgage OKs EUR500 Million Bond Issue ALL STATE ASSET: Lawsuit v. IRS & Drury Remanded to State Court AMC ENTERTAINMENT: Parent Proposed IPO No Impact on Fitch Ratings AMERICAN DENTAL: Moody's Lowers CFR to 'B3'; Outlook Negative AMES DEPARTMENT STORES: Second Amended Plan Filed AMERICAN ROADS: Sheds $830-Million Debt in Bankruptcy AMINCOR INC: Grants 120,000 Options to Executives, Employees AMREP CORP: Settles with PBGC, to Pay $3.2MM to Pension Plan B.L. MCCANDLESS: Dist. Ct. Rules on Bid to Dismiss Wal-Mart Suit BEST BUY: Fitch Affirms 'BB-' Issuer Default Rating BIOMET INC: Moody's Rates $865MM Term Loan 'B1'; Outlook Stable BIOMET INC: S&P Assigns 'BB-' Rating to $865MM Secured Term Loan BMB MUNAI: Director Troy Nilson Resigns BOREAL WATER: Inks $900,000 ABL Facility with Woodbridge CASA CASUARINA: Owners Settle Rothstein Trustee Dispute CATHEDRAL CITY RDA SUCCESSOR: Moody's Cuts 2007 TAB Rating to Ba3 CENGAGE LEARNING: Second Lien Trustee's Statement, Objection Filed CHAMPION INDUSTRIES: Amends Credit Agreement with Fifth Third CHAMPION INDUSTRIES: Sr. VP Jeff Straub Quits CHINA FRUITS: Reports $19,550 Net Income in Second Quarter CHINA SHIANYUN: New OTCBB Symbol is "SAYC" CITIGROUP INC: DBRS Rates Preferred Shares Rating at 'BB(high)' CORD BLOOD: Sues Tonaquint, et al., Over Convertible Note CUMULUS MEDIA: Dial Global Buyout Plan No Moody's Rating Impact DAYBREAK OIL: Acquires Interest in Shallow Oil Play in Kentucky DESIGNLINE CORP: Loses Bid to Keep Ch. 11 in Delaware DETROIT, MI: Steps Up Push to Raze Thousands of Derelict Buildings DICKINSON COUNTY: Fitch Affirms 'BB-' Rating on $22.81MM Bonds DOW CORNING: 6th Cir. Vacates Allowance of 4 Opt-Out Claims E*TRADE FINANCIAL: S&P Affirms 'B-' Senior Unsecured Debt Ratings EASTMAN KODAK: Registers New Class of Securities EMPRESAS INTEREX: Oct. 2 Hearing on Adequacy of Plan Outline ENGLOBAL CORP: Closes Sale of Gulf Coast Operations for $20-Mil. ENVISION ACQUISITION: S&P Assigns 'B' Corp. Credit Rating ENVISION PHARMACEUTICAL: Moody's Assigns B3 CFR; Outlook Positive FAIRMONT GENERAL: Hospital Saddled With $14.7 Million in Bonds FRISIA FARMS: Owner Obliged to Give Domestic Support to Ex-Wife FURNITURE BRANDS: Voluntarily Delists Securities GELT PROPERTIES: Has Deal to Use Bucks County Bank's Cash GENVEC INC: Ditches Liquidation Plan for Novartis Partnership GREEN FIELD: S&P Lowers Corporate Credit Rating to 'D' HAWAII OUTDOOR: Trustee Can Hire Colliers International as Broker HERON LAKE: Amendment 1 to Loan Agreement with AgStar HIGHWAY TECHNOLOGIES: Panel Withdraws Motion to Convert to Ch. 7 HIGHLAND CONSTRUCTION: Guyant's Claim is Secured, Bankr. Ct. Says HILLTOP FARMS: Gets Final Confirmation Order on Plan HOWREY LLP: Morgan Lewis Settles With Bankrupt Firm for $1MM HUSTAD INVESTMENT: Cases Converted to Chapter 7 INTERNATIONAL LEASE: Fitch Affirms 'BB' LT Issuer Default Rating IOWORLDMEDIA INC: Names Two New Board Members KHAN FAMILY: Wants Plan Filing Period Extended Until Oct. 21 KINDER MORGAN: DBRS Confirms Issuer Rating at 'BB' LAKE PLEASANT: Sept. 17 Hearing on Final Decree Closing Case LANDAUER HEALTHCARE: U.S. Trustee Balks at Timeline of Asset Sale LIBERTY INTERACTIVE: Fitch Rates Sr. Unsecured Notes Due 2043 'BB' LIBERTY INTERACTIVE: Moody's Rates New $350MM Notes Due 2043 'B2' LIBERTY INTERACTIVE: S&P Assigns 'BB' Rating to $350MM Debentures LIVEDEAL INC: Incurs $511K Net Loss in June 30 Quarter LOOP CORP: Banco Panamerico No Standing to Appeal, 7th Cir. Says MEI CONLUX: S&P Assigns 'B' Corp. Credit Rating; Outlook Stable MERIDIAN SUNRISE: Inks 2nd Stipulation to Use Cash Until Sept. 30 MILLER HEIMAN: S&P Assigns Preliminary 'B' CCR; Outlook Stable MONTREAL MAINE: U.S., Canadian Judges Coordinate to Pay Victims MOTORCAR PARTS: Wanxiang to Sell 516,000 Common Shares MOTORCAR PARTS: Amends 1.9 Million Shares Resale Prospectus MORGANS HOTEL: Chief Executive Officer Resigns MORGANS HOTEL: Ronald Burkle Complains Over "Observation Rights" NEONODE INC: Mulls Possible Sale of Licensing Unit NEWPAGE CORP: Trustee Leads Clawback Blitz Seeking $71MM NORSE ENERGY: Judge Clears Creditors to Sue Leaders NNN 3500: Section 341(a) Meeting Scheduled for October 8 NSG HOLDINGS: S&P Affirms 'BB' Corporate Credit Rating OCEANSIDE CDC SUCCESSOR: Moody's Affirms Ba1 Rating on 2003 Bonds ORCKIT COMMUNICATIONS: Incurs $1.2-Mil. Net Loss in 2nd Quarter PARKWAY ACQUISITIONS: Oct. 2 Hearing on Case Dismissal PATRIOT COAL: Debtor, Peabody in Yet Another Discovery Dispute PROGUARD ACQUISITION: Provides Business Update to Shareholders QBEX ELECTRONICS: Sept. 10 Hearing on Exclusivity Extensions REGENCY ENERGY: Fitch Rates New $500MM Senior Notes Due 2020 'BB' REGENCY ENERGY: Moody's Rates New $500MM Sr. Unsecured Notes 'B1' REGENCY ENERGY: S&P Assigns 'BB' Rating to $500MM Sr. Unsec. Notes REGIONAL EMPLOYERS: Court Dismisses Chapter 11 Case RESIDENTIAL CAPITAL: Bid to Halt FHFA Suit Goes to Appeals Court RESOURCES IN HEALTHCARE: Files for Bankruptcy, Lawsuit Halted REVOLUTION DAIRY: Makes More Disclosures Under Revised Plan REVOLUTION DAIRY: Claims Treatment Favors Insiders, Committee Says REVSTONE INDUSTRIES: Parties Disagree on Corporate Governance ROBERTS HOTELS: Consents to Dismissal of 3 Bankruptcy Cases SAN BERNARDINO, CA: Commits to Plan 'Outline' for Mediation SILGAN HOLDINGS: Moody's Rates New Notes Ba2 & Affirms Ba1 CFR SILGAN HOLDINGS: S&P Rates $300MM Sr. Unsecured Notes 'BB-' SOURCEGAS LLC: Fitch Affirms 'BB+' LT Issuer Default Rating SPECIALTY PRODUCTS: Opposes Asbestos Claimants' Plan Disclosures SPRINT CORP: Moody's Rates New Senior Unsecured Notes 'B1' SPRINT CORP: S&P Assigns 'BB-' Corporate Credit Rating SPRINT NEXTEL: Fitch Assigns 'B+' New Issuer Default Rating SR REAL ESTATE: Seeks Transfer of Venue to Southern California SR REAL ESTATE: Taps Foley & Lardner as Bankruptcy Counsel SR REAL ESTATE: Files Schedules of Assets and Liabilities STATE LINE: Court Rules on Bid to Dismiss Smith Estate Tax Suit STELERA WIRELESS: Sept. 19 Hearing on Bidding Procedures STEREOTAXIS INC: Renews Silicon Valley Bank Credit Facility STOCKTON PUBLIC: S&P Lowers Rating on 2004 & 2009A Bonds to 'D' T-L BRYWOOD: Court OKs Shepard Schwartz as Accountants TRAINOR GLASS: Wants Plan Filing Period Extended Until Sept. 9 TRIPLE POINT: S&P Withdraws 'B' CCR Following Acquisition by ION TRIUS THERAPEUTICS: M. Bemis Amends Complaint on Cubist Merger TUSA OFFICE: Cannot Avoid Payments & Transfers to Knoll, Ct. Says VANN'S INC: Trustee Files Lawsuit against Former CEO, CFO W.R. GRACE: Canada, Montana and Anderson Memorial Lose in Appeals WALNUT CREEK RDA SUCCESSOR: Moody's Cuts Rating on TABs to 'Ba3' * Punitive Damages Permitted on Fraudulent Transfers * Cross & Simon Says Malpractice Suit Is Bid to Skip Legal Bill * Fitch Says Prime U.S. Credit Card ABS Hit New Milestone * Fitch Publishes Wynn-Focused Bankruptcy Case Study Report * Moody's Says Global Auto Manufacturers' Industry Outlook Stable * Moody's Says Global Reinsurance Industry's Stable Outlook * Argentina Senate Votes to Re-Open Debt Swap Offer * CFTC Moves to Safeguard Customer Funds * Huron Consulting Named 2013 TMA Turnaround of the Year Winner * Gavin/Solmonese Bags 2013 TMA Transaction of the Year Award * BOOK REVIEW: The Phoenix Effect: Nine Revitalizing Strategies No Business Can Do Without ********* 10717 LLC: Court Dismisses Chapter 11 Case ------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of New York dismissed the chapter 11 case of 10717 LLC. Bowery LLC, a creditor of 10717 LLC, commenced an adversary proceeding against the Debtor and others claiming, inter alia, that Bowery is the equitable owner of the 18 acre-parcel of land listed on Schedule A of the Debtor's Bankruptcy Petition situated in Sullivan County, New York. The Debtor; 135 Bowery LLC; Creditor Galster Funding; Creditor Ronald Larsen; and, the Creditors Committee had agreed in principle to a settlement which provides for the sale of the 18 Acre Property as well as the sale of property owned by 135 Bowery LLC; located in Sullivan County, New York, referenced as Section 32, Block 2, Lot 8.2. The sale of the 135 Bowery Property was integral to the Debtor's ability to consummate the sale of the 18 Acre Property; and the Parties entered into a Stipulation, which was so ordered by the Court on June 13, 2013, that stated that the Debtor had located a purchaser, Positive Design & Development, LLC, to purchase both the 18 Acre Property and the 135 Bowery Property, and the Parties agreed that contracts of sale for the respective properties would be fully executed by June 14, 2013 or the within bankruptcy case would be dismissed. The So-Ordered Stipulation provided that in the event of a dismissal, the Order of Dismissal would provide for in-rem relief, attaching to the 18 Acre Property and preventing the imposition of the automatic stay in any future bankruptcy filings, within one year, by the Debtor, its principal or any related entity, and before the automatic stay may be imposed against the 18 Acre Property, in a subsequent filing within one year, the Debtor, its principal or any related entity would be required to move for relief from the in-rem provision based upon changed circumstances that would support a determination that the Debtor had reasonable likelihood of reorganization within a reasonable time, or for good cause shown, after notice and a hearing. At a hearing on July 17, 2013, the Court allowed the Debtor final opportunity to obtain the Contracts, and stated that in the event the Contracts were not drafted and circulated to the Parties by July 31, 2013, an Order of Dismissal would issue. The Debtor has failed to provide the Contracts for either the 18 Acre Property or the 135 Bowery Property. Brooklyn, New York-based 10717 LLC filed a Chapter 11 bankruptcy petition (Banrk. E.D.N.Y. Case No. 12-41998) on March 21, 2012. 10717 LLC says it has total assets of $14.0 million and total debts of $14.35 million. It owns 18 acres of land in the town of Thompson, Sullivan County, New York. The property secures a $1.3 million debt. Charles Petri, the managing member of 10717 LLC, runs the Debtor's day to day operations. The Debtor is represented by Bruce Weiner, Esq., at Rosenberg Musso & Weiner LLP, in Brooklyn. The U.S. Trustee has appointed Henry Fulton, Elizabeth Van Oss and Isiah Milian to the Official Committee of Unsecured Creditors. The Committee is represented by the law office of Ira R. Abel, Esq. 1ST FINANCIAL: Former CFO to Serve as Consultant ------------------------------------------------ Holly L. Schreiber, 1st Financial Services Corporation's former executive vice president, chief financial officer and treasurer, will continue to provide assistance to the Company on a consultancy basis, as provided in an independent contractor consulting agreement dated Aug. 14, 2013. Ms. Schreiber resigned from her positions effective Sept. 4, 2013. The Company will pay Ms. Schreiber an hourly rate of $100, not to exceed $40,000 in the aggregate, and reimburse her for documented out-of-pocket expenses. A copy of the Consulting Agreement is available for free at: http://is.gd/HKNJOr About First Financial Elizabethtown, Kentucky-based First Financial Service Corporation is the parent bank holding company of First Federal Savings Bank of Elizabethtown, which was chartered in 1923. The Bank serves six contiguous counties encompassing central Kentucky and the Louisville metropolitan area, through its 17 full-service banking centers and a commercial private banking center. In its 2012 Consent Order, the Bank agreed to achieve and maintain a Tier 1 capital ratio of 9.0 percent and a total risk-based capital ratio of 12.0 percent by June 30, 2012. "At December 31, 2012, the Bank's Tier 1 capital ratio was 6.53% and the total risk-based capital ratio was 12.21%. We notified the bank regulatory agencies that one of the two capital ratios would not be achieved and are continuing our efforts to meet and maintain the required regulatory capital levels and all of the other consent order issues for the Bank," the Company said in its annual report for the year ended Dec. 31, 2012. First Financial disclosed a net loss attributable to common shareholders of $9.44 million in 2012, a net loss attributable to common shareholders of $24.21 million in 2011 and a net loss attributable to common shareholders of $10.45 million in 2010. The Company's balance sheet at June 30, 2013, showed $692.08 million in total assets, $673.09 million in total liabilities and $18.98 million in total stockholders' equity. Crowe Horwath LLP, in Louisville, Kentucky, said in its report on the consolidated financial statements for the year ended Dec. 31, 2012, "[T]he Company has recently incurred substantial losses, largely as a result of elevated provisions for loan losses and other credit related costs. In addition, both the Company and its bank subsidiary, First Federal Savings Bank, are under regulatory enforcement orders issued by their primary regulators. First Federal Savings Bank is not in compliance with its regulatory enforcement order which requires, among other things, increased minimum regulatory capital ratios. First Federal Savings Bank's continued non-compliance with its regulatory enforcement order may result in additional adverse regulatory action." 250 AZ: CWCapital Asset Asks Judge to Deny Plan Outline ------------------------------------------------------- CWCapital Asset Management LLC asked Judge Eileen Hollowell to deny approval of 250 AZ LLC's disclosure statement, saying it does not contain "adequate information" for creditors to decide on whether to support its restructuring plan. CWCapital criticized in particular 250 AZ's failure to advise creditors about a previous bankruptcy court ruling that the company doesn't have ownership interest in the Chiquita Center. "The majority of the debtor's disclosure statement and plan is based on the erroneous assumption that the debtor is the rightful owner of the Chiquita Center," CWCapital said in a court filing. According to CWCapital, such false assumptions "permeate all aspects of the debtor's disclosure statement and plan, including projections that erroneously assume that the debtor will be entitled to rents from the Chiquita Center for the purposes of funding its plan." 250 AZ on July 5 filed its disclosure statement, which explains in detail the company's proposed reorganization plan. According to the disclosure statement, 250 AZ proposes a 10-year or 120-month plan. The plan recognizes the reality of the market and the need to restructure debt on the company's rental properties, among other things. The plan proposes to pay the secured claim of the first mortgage holder on each rental property and on the development parcels. 250 AZ's personal property, which is secured collateral for the first mortgage holder, primarily consists of furniture fixtures and equipment located at the Chiquita Center. The plan, meanwhile, proposes to pay unsecured creditors in Class 15 a pro rata share of the funds paid to that class. 250 AZ would pay a minimum of $100,000 to the Class 15 general unsecured creditors per year over the 10-year period of the plan. These creditors would also receive an additional $250,000 per year for the years six through 10 provided the gross revenues for those years exceeded $11 million. 250 AZ will fund its restructuring plan from ongoing business operations, rents, property development, sale or lease of land and buildings, and from equity capital until sufficient disposable income can be generated. CWCapital Asset is represented by: Keith C. Owens, Esq. Jennifer L. Nassiri, Esq. Venable LLP 2049 Century Park East, Suite 2100 Los Angeles, CA 90067 Tel: (310) 229-9900 Fax: (310) 229-9901 E-mail: kowens@Venable.com jlnassiri@Venable.com -- and -- Lori L. Winkelman, Esq. QUARLES & BRADY LLP One Renaissance Square Two North Central Avenue Phoenix, Arizona 85004-2391 Tel: (602) 229-5452 Fax: (602) 420-5033 E-mail: lori.winkelman@quarles.com About 250 AZ, LLC 250 AZ, LLC, filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 13-00851) in Tucson, Arizona, on Jan. 22, 2013. In its schedules, the Debtor disclosed $25 million in assets and $70.8 million in liabilities. 250 AZ owns an 84.70818% tenant in common interest in a 29-story office building located at 250 East Fifth Street, in Cincinnati, Ohio. The Debtor is represented by Dennis M. Breen, III, Esq., at Breen Olson & Trenton, LLP as counsel. The U.S. Trustee said an official committee of unsecured creditors has not been appointed because an insufficient number of persons holding unsecured claims against the company have expressed interest in serving on a committee. ABSORBENT TECHNOLOGIES: Bid to Extend Plan Filing Deadline Denied ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Oregon denied a request by Absorbent Technologies, Inc. for another 60-day extension to file a Chapter 11 plan and solicit votes from creditors. The deadline for ATI to exclusively file a plan expired on Sept. 4, and with the court's decision, creditors and other parties can now file a rival plan for the company. Absorbent Technologies Absorbent Technologies, Inc., filed a Chapter 11 petition (Bankr. D. Ore. Case No. 13-31286) on March 8, 2013, without citing a reason. David C. Moffenbeier signed the petition as CEO. Judge Trish M. Brown presides over the case. The Law Office of Gary U. Scharff serves as the Debtor's counsel. The Debtor is also represented by Heather A. Brann, Esq., at Heather A. Brann, PC, in Portland, Oregon. The Beaverton, Oregon-based company develops, produces, and markets starch-based superabsorbent products and ingredients in the United States and internationally. It offers Zeba, a corn starch-based polymer that helps farmers grow bigger crops with less water. Placed near a plant's roots, Zeba serves as a Grape Nut-sized sponge that holds and distributes water as a plant needs it. The Debtor estimated assets and debts of at least $10 million. The Debtor has a manufacturing facility at 140 Queen Avenue SW, Albany, Oregon. Fluffco LLC and Ephesians Equity Group LLC own equity interests in privately held Absorbent Technologies. The Debtor is seeking a buyer for its assets and property. The U.S. Trustee formed a four-member committee of unsecured creditors. Green & Markley, P.C. represents the Committee. ABSORBENT TECHNOLOGIES: Files Revised Application to Hire Stoel --------------------------------------------------------------- Absorbent Technologies Inc. filed with the U.S. Bankruptcy Court for the District of Oregon a revised application to hire Stoel Rives LLP as special counsel nunc pro tunc to May 1, 2013. The amended application contains additional explanations why Stoel Rives' approval as special counsel under section 327(e) of the Bankruptcy Code requires an order entered nunc pro tunc. In the court filing, ATI argued that the services rendered by Stoel Rives since May 1 provided benefit to its bankruptcy estate, which is one important requirement "for allowing entry of a nunc pro tunc employment authorization order." ATI said the company, through Stoel Rives' assistance, was able to meet the deadlines for filing materials required to preserve its patent and trademark rights. "Had the filings not been made when they were in and after May 1, the property rights would have lapsed and a crucial part of debtor's asset base would have disappeared," ATI said in the court filing. ATI tapped the firm to handle "time-sensitive" patent matters before the U.S. Patent & Trademark Office and in foreign jurisdictions to preserve the company's patent rights and assets during bankruptcy proceedings. Absorbent Technologies Absorbent Technologies, Inc., filed a Chapter 11 petition (Bankr. D. Ore. Case No. 13-31286) on March 8, 2013, without citing a reason. David C. Moffenbeier signed the petition as CEO. Judge Trish M. Brown presides over the case. The Law Office of Gary U. Scharff serves as the Debtor's counsel. The Debtor is also represented by Heather A. Brann, Esq., at Heather A. Brann, PC, in Portland, Oregon. The Beaverton, Oregon-based company develops, produces, and markets starch-based superabsorbent products and ingredients in the United States and internationally. It offers Zeba, a corn starch-based polymer that helps farmers grow bigger crops with less water. Placed near a plant's roots, Zeba serves as a Grape Nut-sized sponge that holds and distributes water as a plant needs it. The Debtor estimated assets and debts of at least $10 million. The Debtor has a manufacturing facility at 140 Queen Avenue SW, Albany, Oregon. Fluffco LLC and Ephesians Equity Group LLC own equity interests in privately held Absorbent Technologies. The Debtor is seeking a buyer for its assets and property. The U.S. Trustee formed a four-member committee of unsecured creditors. Green & Markley, P.C. represents the Committee. ACE ALLIANCE: Federal Judge Dismisses Bankruptcy Petition --------------------------------------------------------- Jessica Calefati, writing for The Star-Ledger, reported that a federal judge has dismissed a bankruptcy petition filed several weeks ago by Women in Support of the Million Man March, a non- profit group run by longtime Newark activist Fredrica Bey. According to the report, the best interests of young, low-income children enrolled in a pre-school run by the group were central to the dismissal, U.S. Bankruptcy Judge Rosemary Gambardella said during a hearing on Sept. 4 in Newark. The non-profit group no longer has any money to run the pre-school or pay its employees, according to court documents, the report related. A trustee appointed by the court to oversee the bankruptcy said he would have been forced to close the school if the case moved forward. "As a fiduciary, the trustee would be required to consider a shut- down if this case continued," Gambardella said, the report cited. "The trustee has recommended this case be dismissed, and the court agrees with the trustee's business judgment." The pre-school is set to open Sept. 4 for 60 children but it may not be open for long, the report added. Women In Support of the Million Man March Inc., a non-profit organization based in Newark, New Jersey, sought protection under Chapter 11 of the Bankruptcy Code on July 14, 2013, under the name of its affiliate, ACE Alliance Inc. (Bankr. D.N.J. Case No. 13- 25376). The organization filed for bankruptcy after federal authorities accused its leader, activist Fredrica Bey, of misspending a $345,325 federal grant. In 2012, attorneys for the U.S. Department of Justice sued Ms. Bey and the nonprofit, accusing them of fraud, of improperly spending the money and then of attempting to "cover up their actions" during a subsequent investigation. Nonprofit officials have denied the allegations in court papers. Bankruptcy-court papers listed an $8.2 million debt to Wells Fargo related to a piece of real estate but gave few other details about the group's finances. The bankruptcy petition was signed by Ms. Bey's daughter, Amina Bey, who identified herself as president of the group. The Debtor is represented by: Donald Troy Bonomo, Esq. DONALD T. BONOMO ATTORNEY AT LAW 185 James Street, First Floor Hackensack, NJ 07601 Tel: (201) 396-9037 Fax: (201) 917-1366 ALLIED IRISH: AIB Mortgage OKs EUR500 Million Bond Issue -------------------------------------------------------- AIB Mortgage Bank (AIBMB) agreed a EUR500 million 5-year secured ACS bond issue under its EUR20 billion Mortgage Covered Securities Programme. AIBMB is a wholly owned subsidiary of AIB. This 5 year deal was priced at a spread over mid-swaps of 180 basis points. The deal was well placed across c.90 international investors and supports AIB's stated objective to engage with the market in a balanced and measured manner. About Allied Irish Banks Allied Irish Banks, p.l.c. -- http://www.aibgroup.com/-- is a major commercial bank based in Ireland. It has an extensive branch network across the country, a head office in Dublin and a capital markets operation based in the International Financial Services Centre in Dublin. AIB also has retail and corporate businesses in the UK, offices in Europe and a subsidiary company in the Isle of Man and Jersey (Channel Islands). Since the onset of the global and Irish financial crisis, AIB's relationship with the Irish Government has changed significantly. As at Dec. 31, 2010, the Government, through the National Pension Reserve Fund Commission ("NPRFC"), held 49.9% of the ordinary shares of the Company (the share of the voting rights at shareholders' general meetings), 10,489,899,564 convertible non- voting ("CNV") shares and 3.5 billion 2009 Preference Shares. On April 8, 2011, the NPRFC converted the total outstanding amount of CNV shares into 10,489,899,564 ordinary shares of AIB, thereby increasing its holding to 92.8% of the ordinary share capital. In addition to its shareholders' interests, the Government's relationship with AIB is reflected through formal and informal oversight by the Minister and the Department of Finance and the Central Bank of Ireland, representation on the Board of Directors (three non-executive directors are Government nominees), participation in NAMA, and otherwise. The Company reported a loss of EUR2.29 billion in 2011, a loss of EUR10.16 billion in 2010, and a loss of EUR2.33 billion in 2009. Allied Irish's consolidated statement of financial position for the year ended Dec. 31, 2011, showed EUR136.65 billion in total assets, EUR122.18 billion in total liabilities and EUR14.46 billion in shareholders' equity. Allied Irish's balance sheet at June 30, 2012, showed EUR129.85 billion in total assets, EUR116.59 billion in total liabilities and EUR13.26 billion in total shareholders' equity. ALL STATE ASSET: Lawsuit v. IRS & Drury Remanded to State Court --------------------------------------------------------------- The action ALL STATE ASSET MANAGEMENT, LLC, Plaintiff v. INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY, MARY ELLEN DRURY, POCONO ADVANTAGE REAL ESTATE, LLC, ROBERT RAZZAN AND VIRGINIA RAZZAN, Defendants, Case No. 4:11-CV-1009 (D. M.D.Pa.) was filed to bar and enjoin, Mary Ellan Drury from attacking the validity of All State Asset's title in a real property located at Lot 28, Commanche Pines Road, Chestnuthill Township, Monroe County, Pennsylvania. The action was commenced in a Pennsylvania state court and was later moved to the district court. Ms. Drury was the previous owner of the Property. At the time it was sold, the Property was subject to three liens. Defendant United States held one lien for assessed, unpaid federal taxes. Defendants Pocono Advantage Real Estate, LLC, and Robert and Virginia Razzan each also held liens in their favor against the Property. Defendant United States brought counterclaims in the action, and sought that the Property be foreclosed upon, sold, and the proceeds applied to the outstanding tax liabilities. The Court entered judgment in favor of the United States. However, the case was stayed for several months on account of All State Asset's Chapter 11 bankruptcy proceedings (Bankr. M.D.Pa., Case No. 12- 03633) commenced in June 2012. The Case was reopened on October 2, 2012, and the United States immediately filed a motion to vacate the Court's Order to sell the Property, explaining that Plaintiff and Defendant had reached an agreement to settle the tax liabilities and the federal tax lien had been released from the Property. The United States also filed a motion to dismiss all the claims against it and to remand the case to state court. In an Aug. 6, 2013 Order available at http://is.gd/l8HlM8from Leagle.com, District Judge Matthew Brann granted the United States' Motion to Vacate Order of Sale of Real Property and Motion to Dismiss and to Remand to State Court. The United States is dismissed from the action with prejudice and the matter shall be remanded to the Court of Common Pleas of Monroe County, Pennsylvania. Plaintiff's Motion to Strike Default Judgment is also granted as moot. All State Asset Management, LLC is represented by Edward J. Kaushas, Esq. -- ekaushas@kaushaslaw.com -- of the Law Offices of Edward J. Kaushas. AMC ENTERTAINMENT: Parent Proposed IPO No Impact on Fitch Ratings ----------------------------------------------------------------- AMC Entertainment Holdings, Inc.'s (parent of AMC Entertainment, Inc. [AMC]) registration filing relating to an initial public offering of common stock has no current impact on AMC's ratings, according to Fitch Ratings. AMC is nearly 100% owned by Dalian Wanda Group (Wanda), who purchased AMC in 2012 (management/executives hold a small ownership percentage). Fitch viewed the change of ownership to Wanda as a credit positive due its commitment to invest $500 million in additional capital ($100 million has been contributed), which Fitch expects to be used over the next 3-5 years. The contribution made in 2012 included $50 million used to reduce debt. Fitch expects the remaining funds to go toward theater circuit improvements. According to the filing, AMC intends to offer $400 million of common stock, which will be used for general corporate purposes, which may include capital expenditures and retirement of outstanding debt. Fitch expects AMC's investment in theater improvements over the next few years to offset most of the company's expected growth in cash from operations. Fitch has modeled capital expenditure spending of $240 million and $290 million in 2013 and 2014, respectively. The increased capital expenditures will drive Fitch's calculated FCF to range from negative $25 million to positive $25 million over the next few years. LTM free cash flow (FCF) at June 30, 2013 was $67 million. Key Rating Drivers -- AMC's ratings reflect Fitch's belief that movie exhibition will continue to be a key promotion window for the movie studios' biggest/most profitable releases. -- The ratings continue to reflect AMC's scale as the second largest domestic movie exhibitor, with 343 theaters and 4,937 screens. Fitch believes large scale provides for geographic diversity and benefits when negotiating with vendors and movie studios. -- For the long term, Fitch continues to expect that the movie exhibitor industry will be challenged in growing attendance and any potential attendance declines will offset some of the growth in average ticket prices. The ratings factor in the intermediate-/long-term risks associated with increased competition from at-home entertainment media, limited control over revenue trends, pressure on film distribution windows, and increasing indirect competition from other distribution channels (such as VOD and other OTT services). AMC and its peers rely on the quality, quantity, and timing of movie product, all factors out of management's control. -- Industry fundamentals have benefitted from a strong film slate that produced midsingle-digit growth in 2012 and roughly flat performance to date in 2013. The 2013 film slate has been solid and has included some highly anticipated movies such as 'Iron Man 3,' 'Despicable Me 2', 'Man of Steel' and 'Monsters University.' The film slate for the remainder of 2013 includes 'Thor: The Dark World'', 'The Hunger Games: Catching Fire,' and 'The Hobbit: The Desolation of Smaug.' The 2014 film slate includes movies from highly successful franchises such as The Hunger Games, The Hobbit, X-Men, Spider-Man, Transformers, 300, and Fast & Furious. Fitch recognizes the hit-driven nature of the industry that could influence attendance growth year-over- year. Leverage and Liquidity Fitch calculates June 30, 2013 LTM EBITDA margins of 15.1% (excludes NCM distribution), an improvement from 12.8% at June 30, 2012. Recognizing the hit cyclical nature of the industry, and the volatility this can cause to revenues and EBITDA, Fitch expects AMC to hold EBITDA margins at or above 12% for the 'B' rating. EBITDA growth and debt reduction has reduced gross unadjusted leverage to 4.9x (EBITDA includes NCM distribution and debt is based on face value) Fitch's base case incorporates AMC managing leverage under 5.0x. AMC's liquidity is supported by $134 million of cash on hand, $150 million of availability on its revolving credit facility, and the additional investment from Wanda to fund capital improvements. The company has a manageable maturity schedule, which consists of: -- Revolver due in 2018; -- $600 million in senior unsecured notes due in 2019; -- $775 million term loan and $600 million in subordinated notes due 2020. Recovery Ratings AMC's Recovery Ratings reflect Fitch's expectation that the enterprise value of the company and, hence, recovery rates for its creditors, will be maximized in a restructuring scenario (as a going concern) rather than a liquidation. Fitch estimates an adjusted, distressed enterprise valuation of $1.4 billion using a 5 times (x) multiple and including an estimate for AMC's 16% stake in National CineMedia LLC (NCM) of approximately $150 million. The 'RR1' Recovery Rating for the company's secured bank facilities reflects Fitch's belief that 91% to 100% expected recovery is reasonable. While Fitch does not assign Recovery Ratings for the company's operating lease obligations, it is assumed the company rejects only 30% of its remaining $2.3 billion (calculated at a net present value) in operating lease commitments due to their significance to the operations in a going-concern scenario and is liable for 15% of those rejected values. The 'RR4' Recovery Ratings for AMC's senior unsecured notes (equal in ranking to the rejected operating leases) reflect an expectation of average recovery (31% - 50%). In Fitch's recovery rating analysis, Fitch assumes a nominal concession payment is made to the subordinate debt holders in order to secure their support of a reorganization plan. The 'CCC+/RR6' rating for AMC's senior subordinated notes reflects Fitch's expectation for nominal recovery. Rating Sensitivities Positive Trigger: Positive momentum in the rating could be triggered if AMC further reduced debt levels and demonstrated sustained interest coverage above 3.0x and leverage below 4.5x. In strong-performing box office years, metrics may be higher in order to provide a cushion for weaker box office years. Negative Trigger: Secular events that lead Fitch to believe there would be a significant long-term downward trend in the industry. In the shorter term, interest coverage below 2.0x could lead to a negative rating action. Fitch currently rates AMC as follows: AMC -- IDR 'B'; -- Senior secured credit facilities 'BB/RR1'; -- Senior unsecured notes 'B/RR4'; -- Senior subordinated notes 'CCC+/RR6'. The Rating Outlook is Stable. AMERICAN DENTAL: Moody's Lowers CFR to 'B3'; Outlook Negative ------------------------------------------------------------- Moody's Investors Service downgraded American Dental Partners, Inc.'s ("ADPI") Corporate Family Rating to B3 from B2, and its senior secured credit facilities, including its $205 million senior secured term loan and $36 million revolving credit facility, to B2 from B1. The rating outlook is negative. The rating action reflects the recent deterioration in the company's internal and external liquidity sources, as well as reduced headroom under the company's credit facility financial covenants due to the deterioration in the company's EBITDA, combined with approaching step-downs over the next several quarters. The downgrade reflects Moody's view that ADPI's liquidity and key credit metrics have weakened materially, and are unlikely to improve to levels appropriate for a B2 over the near term. Moody's believes the company's continued aggressive de novo growth strategy and the challenging consumer spending environment are the prevailing factors that will continue to constrain ADPI's earnings and cash flow over the next 12 to 18 months. Following is a summary of Moody's rating actions. Ratings downgraded: American Dental Partners, Inc. Corporate Family Rating to B3 from B2 Probability of Default Rating to B3-PD from B2-PD $36 million senior secured first lien revolving credit facility to B2 (LGD 3, 42%) from B1 (LGD 3, 42%) $205 million senior secured first lien term loan to B2 (LGD 3, 42%) from B1 (LGD 3, 42%) The rating outlook is negative. Ratings Rationale ADPI's B3 Corporate Family Rating reflects the company's small absolute size based on revenue and earnings, high financial leverage, and modest interest coverage relative to other single-B rated companies. Also constraining the rating is the limited availability under the company's external liquidity sources and weak cushion under credit facility financial covenants. In addition, ADPI's rating is constrained by legal proceedings with certain affiliated practices, which present underlying risks and uncertainty to the company's future operating performance. However, ADPI's credit profile benefits from its solid market presence within the growing dental practice management ("DPM") industry. Moody's expects the company to continue to pursue an aggressive de novo growth and acquisition strategy over the intermediate-term. Although Moody's expects this strategy to constrain near-term profit margins and free cash flow, the rating is supported by the company's flexibility to reduce de novo growth if desired, and its ability to then deploy free cash flow toward debt reduction. The negative rating outlook reflects Moody's expectation that the company's key credit metrics will remain weak, that the consumer spending environment will remain challenging, and availability under the company's liquidity sources will remain limited over the next 12 to 18 months. The ratings could be downgraded if the company's key credit metrics or liquidity profile further deteriorate. In addition, the ratings could be downgraded if the company faces a material adverse litigation outcome, or if the company engages in any debt- financed acquisitions. Given ADPI's weak credit metrics and constrained liquidity, a rating upgrade over the near-term is unlikely. Over the longer- term, the ratings could be upgraded if the company can demonstrate revenue and EBITDA growth such that debt to EBITDA declines below 5.0 times, free cash flow to debt is sustained above 4%, and availability under liquidity sources and covenant headroom improves. The principal methodology used in this rating was the Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Wakefield, Massachusetts, American Dental Partners, Inc. ("ADPI") is a leading provider of dental practice management ("DPM") services in the United States. The company provides dental facilities, support staff and comprehensive business support functions under management services agreements ("MSA") to its affiliated dental groups. ADPI provides all services necessary for the administration of the non-clinical aspects of the dental operations (e.g. organizational planning, IT support, and financial reporting) while the affiliated practices are responsible for providing dental care to patients. American Dental Partners is privately-owned by financial sponsor JLL Partners, Inc. During the twelve months ended June 30, 2013, the company generated net revenues of approximately $287 million. AMES DEPARTMENT STORES: Second Amended Plan Filed ------------------------------------------------- BankruptcyData reported that Ames Department Stores filed with the U.S. Bankruptcy Court Second Amended Chapter 11 Plan and related Disclosure Statement. According to the Disclosure Statement, "The Plan is a straightforward mechanism for liquidating the Debtors' assets. Under the Plan, an initial Distribution will occur on the Effective Date or as soon as practicable thereafter to satisfy Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Priority Non-Tax Claims, and Indenture Trustee Fees, i.e., the reasonable and documented compensation, fees, expenses, disbursements, and indemnity claims of the Indenture Trustees and their attorneys, advisors, and agents (up to $125,000 per Indenture Trustee). Additional Distributions will be made to holders of Allowed Note and General Unsecured Claims to the extent the Debtors have sufficient available cash to make Distributions to such Claimholders. If the Debtors do not have sufficient available cash to make Distributions to such Claimholders, the balance of the Debtors' Assets, once Professional Fee Claims are paid, will be distributed to one or more reputable charitable organization(s) pursuant to the Plan." About Ames Department Stores Rocky Hill, Connecticut-based Ames Department Stores was founded in 1958. At its peak, Ames operated 700 stores in 20 states, including the Northeast, Upper South, Midwest and the District of Columbia. In April 1990, Ames filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. In Ames I, the retailer closed 370 stores and emerged from chapter 11 on Dec. 30, 1992. Ames filed a second bankruptcy petition under Chapter 11 (Bankr. S.D.N.Y. Case No. 01-42217) on Aug. 20, 2001. Togut, Segal & Segal LLP; Weil, Gotshal & Manges; and Storch Amini Munves PC; Cadwalader, Wickersham & Taft LLP. When the Company filed for protection from their creditors, they reported $1,901,573,000 in assets and $1,558,410,000 in liabilities. The Company closed all of its 327 department stores in 2002. AMERICAN ROADS: Sheds $830-Million Debt in Bankruptcy ----------------------------------------------------- Bloomberg News reported that American Roads LLC, operator of the mile-long Detroit-Windsor Tunnel linking the U.S. to Canada, won court approval of a turnaround plan to shed $830 million in debt from swaps and bonds issued after a private-equity buyout. According to the report, U.S. Bankruptcy Judge Burton R. Lifland confirmed the plan in Manhattan. The deal transfers ownership of Detroit-based American Roads from the investment company Alinda Capital Partners LLC, which holds stakes in London's Heathrow Airport and other infrastructure projects, to the financial insurer Syncora Guarantee Inc. in exchange for $334 million in swap liability. Under the plan, holders of $496 million in bonds due in 2026 will receive nothing, though their rights to insurance claims will remain intact, the report related. Lifland ruled Aug. 28 that an ad-hoc group of the bondholders didn't have legal standing in the case and couldn't object to the reorganization. The ruling was issued about a month after American Roads sought court protection from creditors, blaming the city's falling population, reduced traffic, natural disasters, increased federal regulations and lower-than-forecast revenue from four toll roads in Alabama, the report noted. American Roads filed the July 25 bankruptcy petition because it couldn't meet obligations under the swaps and bonds, which were issued in 2006 as part of a financial restructuring after the acquisition by Alinda, court filings show, the report recalled. Alinda, based in Greenwich, Conn., owns infrastructure projects in North America and Europe that serve about 100 million people a day, according to its website. 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. AMINCOR INC: Grants 120,000 Options to Executives, Employees ------------------------------------------------------------ Pursuant to a unanimous written consent, dated as of Aug. 19, 2013, the Board of Directors of Amincor, Inc., approved the grant of options to purchase common stock to John R. Rice, III, president, Joseph F. Ingrassia, vice-president and Robert L. Olson, director and certain management and employees of the Company and certain officers and employees of its subsidiary companies. Messrs. Rice, Ingrassia and Olson were each granted 120,000 options. The options granted have an exercise price of $1.00, based on the estimated fair market value of the Company's share price on the date of the grant. Fifty percent of the options vest and are exercisable on the first anniversary of the grant date and 100 percent of the options vest and are exercisable on the second anniversary of the grant date, so long as certain optionees are still employed by the Company or its subsidiaries. The options are valid for five years from the grant date and will expire thereafter. Each optionee will sign a Non-Qualified Stock Option Agreement with the Company which more fully details the terms and conditions of the grant. About Amincor Inc. New York, N.Y.-based Amincor, Inc., is a holding company operating through its operating subsidiaries Baker's Pride, Inc., Environmental Holdings Corp. and Tyree Holdings Corp., and Amincor Other Assets, Inc. BPI is a producer of bakery goods. Tyree performs maintenance, repair and construction services to customers with underground petroleum storage tanks and petroleum product dispensing equipment. Through its wholly owned subsidiaries, Environmental Quality Services, Inc., and Advanced Waste & Water Technology, Inc., EHC provides environmental and hazardous waste testing and water remediation services in the Northeastern United States. Other Assets, Inc., was incorporated to hold real estate, equipment and loan receivables. As of March 31, 2013, all of Other Assets' real estate and equipment are classified as held for sale. As reported in the TCR on April 24, 2013, Rosen Seymour Shapss Martin & Company, in New York, expressed substantial doubt about Amincor's ability to continue as a going concern, citing the Company's recurring net losses from operations and working capital deficit of $21.2 million as of Dec. 31, 2012. The Company's balance sheet at June 30, 2013, showed $33.75 million in total assets, $36.03 million in total liabilities and a $2.27 million total deficit. AMREP CORP: Settles with PBGC, to Pay $3.2MM to Pension Plan ------------------------------------------------------------ AMREP Corporation entered into a settlement agreement with the Pension Benefit Guaranty Corporation. The PBGC is a wholly-owned United States government corporation established under the Employee Retirement Income Security Act of 1974, as amended, to administer the pension plan termination insurance program created by ERISA. The Company has a defined benefit retirement plan for which accumulated benefits were frozen and future service credits were curtailed as of March 1, 2004. Due to the closing of certain facilities in connection with the consolidation of the Company's Subscription Fulfillment Services business and the associated work force reduction, ERISA has given the PBGC the right to require the Company to accelerate the funding of approximately $11,688,000 of accrued pension-related obligations to the Company's defined benefit pension plan. In August 2012, the Company and the PBGC entered into an agreement pursuant to which the Company made a $3,000,000 cash contribution to the pension plan on Aug. 16, 2012. In the Settlement Agreement, the PBGC has agreed to forbear from asserting certain rights to obtain payment of the remaining $8,688,000 accelerated funding liability granted to it by ERISA, and the Company has agreed (a) to pay $3,243,000 of the accelerated funding liability as a cash contribution to its pension plan not later than Sept. 9, 2013, and (b) to provide first lien mortgages on certain real property with a current aggregate appraised value of $10,039,000 in favor of the PBGC to secure the unpaid amount of the accelerated funding liability. In addition, the PBGC has agreed to credit the $426,000 of contributions made by the Company to the pension plan in excess of the 2012 minimum funding requirements towards the accelerated funding liability, so that, after the $3,243,000 payment, the remaining accelerated funding liability is $5,019,000. On an annual basis, the Company is required to provide updated appraisals on each mortgaged property and, if the appraised value of the mortgaged properties is less than two times the amount of the accelerated funding liability then outstanding, the Company is required to make a payment to its pension plan in an amount equal to one-half of the amount of the shortfall. The mortgages in favor of the PBGC will be discharged following the termination date of the Settlement Agreement. In connection with the Settlement Agreement, the Company has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other requirements, including making all required minimum funding contributions to its pension plan. The Company's failure to comply with its obligations under the Settlement Agreement may result in an event of default, which would permit the PBGC to repossess, sell or foreclose on the properties that have been mortgaged in favor of the PBGC. If the Company complies with the terms of the Settlement Agreement, including making all required minimum funding contributions to its pension plan and any payments required due to any shortfall in the appraised value of the mortgages, the Company will not be required to make any further cash payments to its pension plan with respect to the remaining accelerated funding liability. The Settlement Agreement is scheduled to terminate on the earlier of the date the accelerated funding liability has been paid in full or on Aug. 30, 2018. Effective on the termination date of the Settlement Agreement, the PBGC will be deemed to have released and discharged the Company and any other members of its controlled group from any claims in connection with such member's liability or obligations with respect to the accelerated funding liability. The Settlement Agreement does not address any future events that may accelerate any other accrued pension plan obligations. The Company may become subject to additional acceleration of its remaining accrued obligations to the pension plan if the Company closes other facilities and further reduces its work force. A copy of the Settlement Agreement is available for free at: http://is.gd/nWrEl9 About Amrep Corp. AMREP Corporation's Media Services business, conducted by its Kable Media Services, Inc., and Palm Coast Data LLC subsidiaries, distributes magazines to wholesalers and provides subscription and product fulfillment and related services to publishers and others, and its AMREP Southwest Inc. subsidiary is a major landholder and leading developer of real estate in New Mexico. Amrep Corp. reported a net loss of $1.14 million for the year ended April 30, 2012, a net loss of $7.56 million for the year ended April 30, 2011, and a net loss of $9.48 million for the fiscal year ended April 30, 2010. The Company's balance sheet at April 30, 2012, showed $203.03 million in total assets, $128.39 million in total liabilities and $74.64 million in total shareholders' equity. B.L. MCCANDLESS: Dist. Ct. Rules on Bid to Dismiss Wal-Mart Suit ---------------------------------------------------------------- The action LINDA LANDAN, HOLLY AND LINDSEY, LLC, JEFFREY J. KIKIRICA, Trustee for B.L. McCANDLESS, LP., B.L. McCANDLESS, LP, BROAD LAND PA, LLC, BLAZIER DRIVE, LLC, Plaintiffs, v. WAL-MART REAL ESTATE BUSINESS TRUST, WAL-MART STORES EAST, LP, WAL-MART STORES, INC., S. ROBSON WALTON, President, BRIAN CORNELL, President Wal-Mart Real Estate, MICHAEL T. DUKE, EVP, CHARLES M. HOLLEY, JR., CFO, Walmart Realty, Defendants, Case No. 2:12CV926 (D. Penn.) is seeking damages arising from a land development agreement that contemplated the construction of a "225 prototype" Wal-Mart supercenter. The parties dispute the degree to which they were bound to complete their mutual undertaking. The Defendants moved to dismiss the action. District Judge David Stewart Cercone granted in part and denied in part the Motion to Dismiss. The motion is granted as to plaintiffs' claim for fraud (Count IV) and all claims against the individual defendants (Counts I-IV). Plaintiffs' claims for promissory estoppel (Count II) is dismissed without prejudice to renew in the event the record demonstrates that its reinstatement is the only way to avoid injustice. The allegations advanced at Count III are deemed to be incorporated into Count I. Count III will be dismissed as an independent cause of action. Ms. Landan's claims in her individual capacity will be dismissed as to Count I, II and IV and dismissed as to Count II without prejudice to its reinstatement in the event that further proceedings become warranted on Count II. The motion is denied in all other aspects. A copy of the District Court's August 5, 2013 Opinion is available at http://is.gd/udiVCTfrom Leagle.com. On Aug. 8, 2009, B.L. McCandless filed for bankruptcy due to demands within its agreement relating to the Wal-Mart supercenter Wal-Mart's failure to close on the transaction; and plaintiffs' lenders' refusal to extend or refinance the loans on the properties. Jeffrey J. Sikirica was appointed trustee of the B.L. McCandless' estate. Linda Landan is a managing member of B.L. McCandless. Plaintiffs LINDA LANDAN, HOLLY AND LINDSAY, L.L.C., JEFFREY J. SIKIRICA, B.L. MCCANDLESS, L.P., BROAD LAND PA, L.L.C., and BLAZIER DRIVE, L.L.C., are represented by Marvin Leibowitz, Esq. - - marvleibo@yahoo.com -- of Marvin Leibowitz & Associates, at One Bigelow Square, #619, Pittsburgh, PA 15219. Defendants WAL-MART REAL ESTATE BUSINESS TRUST, WAL-MART STORES EAST, L.P., WAL-MART STORES, INC, S. ROBSON WALTON, BRIAN CORNELL, MICHAEL T. DUKE, and CHARLES M. HOLLEY, JR, are represented by Ronald W. Crouch, Esq. -- rcrouch@mcguirewoods.com -- and Kevin S. Batik, Esq. -- kbatik@mcquirewoods -- of McGuire Woods. BEST BUY: Fitch Affirms 'BB-' Issuer Default Rating --------------------------------------------------- Fitch Ratings has affirmed its long-term Issuer Default Rating (IDR) on Best Buy Co., Inc. (Best Buy) at 'BB-'. The Rating Outlook has been revised to Stable from Negative. Key Rating Drivers The ratings reflect Fitch's expectation that top line and EBITDA will remain under pressure through 2013. While Best Buy has dominant market shares in many categories, Fitch estimates that the majority of product categories in which Best Buy operates are in a secular decline, and the only bright spots are mobile, tablets, and appliances. However, Fitch has increasing conviction that management's investments in sharper pricing funded by cutting excess costs and changing the revenue mix towards these higher growth and higher margined products could stem losses both in the top line and EBITDA over the next 24 to 36 months. Managing the Business Model Risk: Best Buy has been struggling to defend its share against the onslaught of competitive pressure from e-tailers and discounters. Moreover, the online channel has grown faster, and taken share away from, the bricks and mortar channel. As such, Best Buy has seen negative comparable store sales (comps) for the past seven of nine quarters. EBITDA declined 20% in 2012 and 38% in the first quarter of 2013, excluding discontinued operations related to Best Buy Europe. Second quarter results point towards some stabilization with domestic comps down slightly at 0.4% (the domestic business accounts for 84% of sales and close to 90% of EBITDA). Online domestic comps increased 10.5% and Fitch estimates store level comps at around negative 1%. Overall EBITDA was essentially flat in the second quarter as gross profit decline (due to greater investment in price competitiveness, higher inventory shrinkage, and increased product warranty-related costs) was offset by lower SG&A costs. While Best Buy has dominant market shares in many categories, Fitch estimates that the majority of product categories in which Best Buy operates are in a secular decline and presents a significant headwind to the overall mix of the business. Fitch estimates that these categories - mainly computing ex-tablets, entertainment and consumer electronics - will decline in the high single digits over the next three years, given the lack of new product introductions, price deflation, and shift towards digital products. The only growth areas are mobile, tablets, and appliances. Fitch expects these three categories in aggregate carry higher gross margins than the company average and expects these businesses in total to grow in the low double digits over the next three years. Management is making concerted efforts to reduce square footage dedicated to negative growth and very low margin areas such as entertainment (physical media) and to shift mix towards the higher growth and more profitable categories. In addition, these initiatives are being supported by dedicating more space to strategic partners such as Samsung and Microsoft. Based on the current mix of the business and assuming no active management of the product offering, Fitch expects that sales will continue to decline in the low single digit range and gross margins will gravitate towards the 22%-23% range over the next 24- 36 months. However, changing the product mix towards higher growth categories could stabilize the business over the intermediate term. Leverage Expected to Increase: Fitch expects EBITDA to be around $2 billion in 2013, versus $2.4 billion in 2012 and $3 billion in 2011 (excluding Best Buy Europe). As a result, adjusted debt/EBITDAR is expected to increase to 3.0x in 2013 versus 2.7x in 2012 and 2.9x for the LTM period. Fitch expects leverage could creep up to the mid-3.0x range over the next 24 months on modest top line decline, some gross margin decline due to continued price investments offset by some cost reduction. However, should sales stabilize or turn slightly positive, EBITDA could return to 2012 level of $2.4 billion. Strong Liquidity Position: Best Buy had $1.9 billion of cash and unused domestic revolver capacity of over $2.0 billion at Aug. 3, 2013. This reflects the company's new $500 million 364-day domestic senior unsecured RCF that replaced the previous $1 billion facility due August 2013. The downsize in the facility was offset by approximately $650 million in cash proceeds from Best Buy's sale of its 50% interest in Best Buy Europe to Carphone Warehouse Group plc during second quarter 2013. Best Buy has suspended its share repurchase program since first quarter 2012 to preserve liquidity. The company still pays regular dividend annualized at $220 million -$230 million. Fitch expects free cash flow (FCF; after dividends) to be around $300 million in 2013 assuming a negative working capital swing of $350 million. The company can sustain FCF in this range assuming working capital swings are neutral in 2014 and 2015 based on Fitch's EBITDA expectations. In July 2013, Best Buy issued $500 million of 5% notes due in August 2018 and used the net proceeds to repay the $500 million of 6.75% notes due July 15, 2013. The next maturity of unsecured notes is March 2016. Rating Sensitivities Negative Rating Action: A downgrade could be caused by the following factors, individually or collectively: worse-than- expected sales declines in the mid-single-digit range versus Fitch's low single-digit-range projections; significant gross margin declines, without any significant offset from cost savings, thereby putting further pressure on EBITDA; or adjusted leverage above the low-4x range. Positive Rating Action: Fitch would need to see stabilization in comps trends and EBITDA on a sustainable basis to consider a positive rating action. Fitch has affirmed its ratings on Best Buy as follows: -- Long-term IDR at 'BB-'; -- Bank credit facilities at 'BB-'; -- Senior unsecured at 'BB-'. The Rating Outlook has been revised to Stable from Negative. BIOMET INC: Moody's Rates $865MM Term Loan 'B1'; Outlook Stable --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Biomet, Inc.'s new $865 million US dollar denominated term loan, due 2017. This new US term loan will refinance the company's Euro denominated term loan due July 2017. At close of this transaction, the rating for the Euro term loan will be withdrawn. The rating outlook is stable. At the same time, the company's other ratings (including its B2 Corporate Family Rating) remain unchanged. Ratings assigned: Biomet, Inc. $865 million US Term Loan due 2017 at B1 (LGD 3, 35%) Ratings Rationale "This tax efficient transaction does not involve additional debt for Biomet," said Diana Lee, a Moody's Senior Credit Officer. Biomet's B2 Corporate Family Rating largely reflects its very high financial leverage and overall weak financial strength ratios. However, the rating also reflects the company's relatively large size compared to other B2 companies and its solid presence in reconstructive implants. Biomet competes with better capitalized players including Johnson & Johnson (Aaa), Stryker (A3) and Zimmer (Baa1). While an aging population will help support long term demand, the sector will see ongoing volume and pricing pressure because of weakness in the global economy, as well as hospital cost savings initiatives, a transition to new value based reimbursement models and high competition. The reconstructive market will continue to evolve to one where product innovation is more critical and thus Moody's anticipates higher R&D spending and potentially greater movement of market share over time. The stable outlook reflects Moody's expectation that, although financial leverage remains very high and reconstructive use rates and pricing pressures continue, top-line growth rates will remain at least at market levels, supported by new product launches. The ratings could be upgraded if the company is able to demonstrate its ability to sustain at or above-market growth rates in core hips and knees and continue deleveraging such that debt/EBITDA and FCF/debt approach 5.0 times and 5%, respectively, and appear sustainable, the ratings could be upgraded. The ratings could be downgraded if a large debt financed transaction, a recall action or material loss in market share that results in higher leverage or declining cash flow such that EBITA/interest approaches 1.0 time or debt/EBITDA exceeds 7.0 times, could result in a downgrade. A change in Biomet's capital structure, such as a reduction in the amount of junior subordinated debt or an increase in the amount of secured debt, could result in a downgrade of the B3 senior unsecured notes to Caa1, even in the absence of a change in the CFR. Biomet's SGL-2 Speculative Grade Liquidity Rating reflects the company's good liquidity position, characterized by modest free cash flow, declining but still adequate cash levels, and the presence of two external liquidity facilities. Biomet should be able to fund all basic cash requirements through internal sources during the next twelve months. Biomet had cash of about $356 million at May 31, 2013. The principal methodology used in rating Biomet, Inc. was the Global Medical Product and Device Industry Methodology published in October 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the US, Canada and EMEA published in June 2009. Biomet, Inc., headquartered in Warsaw, Indiana, is a global manufacturer of orthopedic products and is among the leaders in the U.S. reconstructive market. Biomet is owned by a private equity consortium, consisting of the Blackstone Group, Goldman Sachs Capital Partners, and Kohlberg Kravis Roberts. BIOMET INC: S&P Assigns 'BB-' Rating to $865MM Secured Term Loan ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' debt rating and '2' recovery rating to Biomet Inc.'s proposed $865 million secured term loan maturing in July 2017. The ratings reflect expectations of substantial (70%-90%) recovery in the event of default. Proceeds of the loan will be used to retire the company's EUR659 million loan. The ratings on Warsaw, Ind.-based medical products manufacturer Biomet Inc., including the 'B+' corporate credit rating, reflect the company's "satisfactory" business risk profile and "highly leveraged" financial risk profile, according to S&P's criteria. Biomet's satisfactory business risk profile reflects the relatively stable nature of its industry, its relatively full orthopedic product offerings, and favorable long-term volume trends. These strengths are offset by the company's somewhat narrow focus in the orthopedic industry and pricing pressure. Biomet's "highly leveraged" financial risk profile reflects S&P's expectations for minimal debt reduction, a ratio of funds from operations to total debt between 5% and 10%, and debt to EBITDA to remain more than 5x. RATING LIST Biomet Inc. Corporate credit rating B+/Stable/-- Ratings Assigned Biomet Inc. $865 million term loan due 2017 BB- Recovery rating 2 BMB MUNAI: Director Troy Nilson Resigns --------------------------------------- Troy Nilson resigned from the board of directors of BMB Munai, Inc., on Aug. 29, 2013. Mr. Nilson also resigned from the Audit, Compensation and Corporate Governance and Nominating Committees of the Company's board of directors. To the knowledge of the Company and its executive officers, Mr. Nilson's resignation was not the result of any disagreement with the Company on any matter relating to the Company's operations, policies or practices. The Company expresses its gratitude and recognition to Mr. Nilson for his valuable service to the board of directors and our Company. About BMB Munai Based in Almaty, Kazakhstan, BMB Munai, Inc., is a Nevada corporation that originally incorporated in the State of Utah in 1981. Since 2003, its business activities have focused on oil and natural gas exploration and production in the Republic of Kazakhstan through its wholly-owned operating subsidiary Emir Oil LLP. Emir Oil holds an exploration contract that allows the Company to conduct exploration drilling and oil production in the Mangistau Province in the southwestern region of Kazakhstan until January 2013. The exploration territory of its contract area is approximately 850 square kilometers and is comprised of three areas, referred to herein as the ADE Block, the Southeast Block and the Northwest Block. BMB Munai incurred a net loss of $3.08 million for the year ended March 31, 2013, as compared with a net loss of $139.21 million for the year ended March 31, 2012. The Company's balance sheet at June 30, 2013, showed $10.08 million in total assets, $9.08 million in total liabilities, all current, and $1 million in total shareholders' equity. Hansen, Barnett & MAaxwell, P.C., in Salt Lake City, Utah, issued a "going concern" qualification on the consolidated financial statements for the year ended March 31, 2013. The independent auditors noted that BMB Munai has no continuing operations that result in positive cash flow. This situation raises substantial doubt about its ability to continue as a going concern. BOREAL WATER: Inks $900,000 ABL Facility with Woodbridge -------------------------------------------------------- Boreal Water Collection, Inc., has entered into a $900,000 asset- based loan with Riverdale Funding, LLC, an affiliate of Woodbridge Structured Funding LLC. The "Commercial Real Estate Mortgage Note" is effective as of Aug. 27, 2013, and has a maturity date of Aug. 26, 2014. The interest rate is 12 percent per annum, computed daily on a 360 day year. The Noteholder is Woodbridge Mortgage Investment Fund 1, LLC. According to the terms of the Note, the Company made an interest payment of $1,500 on the effective date of the Note. Thereafter, payments of $9,000 are due on the first day of each successive month commencing with October, 2013, through August of 2014. All remaining unpaid interest and the Note principal are due on the maturity date. If the Company has met all its obligations under the Note, it may extend the term of the Note for one year upon notice and the payment of a commitment fee of $54,000. The Note is personally guaranteed by Company President, Treasurer, Chief Executive Officer, Chief Financial Officer and sole member of the Board of Directors Mrs. Francine Lavoie; as well as by Christopher Umecki, Company vice president of operations. The Note is secured by the "Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing," on the Company's Bottling Plant and Executive Offices located at 4494-4496 State Road 42 North, Kiamesha, NY 12751. The Mortgage is also dated Aug. 27, 2013. Woodbridge is the mortgagee. About Boreal Water Kiamesha Lake, N.Y.-based Boreal Water Collection, Inc., is a personalized bottled water company specializing in premium custom bottled water. The Company reported a net loss of $822,902 on $2.7 million of sales in 2012, compared with a net loss of $1.3 million on $2.7 million of sales in 2011. The Company's balance sheet at June 30, 2013, showed $3.50 million in total assets, $3.94 million in total liabilities and a $437,292 total stockholders' deficiency. In the auditors's report accompanying the consolidated financial statements for the year ended Dec. 31, 2012, Patrick Rodgers, CPA, PA, in Altamonte Springs, Florida, expressed substantial doubt about Boreal Water's ability to continue as a going concern. Mr. Rodgers noted that the Company has a minimum cash balance available for payment of ongoing operating expenses, has experienced losses operations since inception, and it does not have a source of revenue sufficient to cover its operating costs. CASA CASUARINA: Owners Settle Rothstein Trustee Dispute ------------------------------------------------------- Law360 reported that the owners of Gianni Versace's former South Beach mansion on Sept. 3 asked a Florida bankruptcy court to sign off on a settlement giving the estate of Ponzi schemer Scott Rothstein's law firm 10 percent of the proceeds of an upcoming auction of the property. According to the report, Casa Casuarina LLC, which owns the opulent mansion where the fashion designer was gunned down in 1997, filed a motion to approve a prepetition settlement with the trustee for Rothstein Rosenfeldt Adler PA, who had alleged a $4.92 million secured claim. About Casa Casuarina Casa Casuarina, LLC, filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 13-25645) in Miami on July 1, 2013. Peter Loftin signed the petition as manager. Judge Laurel M. Isicoff presides over the case. The Debtor estimated assets of at least $50 million and debts of at lease $10 million. Joe M. Grant, Esq., at Marshall Socarras Grant, P.L., serves as the Debtor's counsel. CATHEDRAL CITY RDA SUCCESSOR: Moody's Cuts 2007 TAB Rating to Ba3 ----------------------------------------------------------------- Moody's Investors Service has downgraded to Ba3 from Ba1 the rating on the Successor Agency of Cathedral City Redevelopment Agency's (CA) Series 2007A and 2007B Tax Allocation Bonds. The bonds are secured by a pledge of tax increment revenues from the Agency's Merged Redevelopment Project Area. Rating Rationale The downgrade and Ba3 rating primarily reflect the very narrow coverage on an annual and semiannual basis. The weak coverage is due to a decline in assessed value and the dissolution of redevelopment agencies (now known as successor agencies), which shifts pledged revenue cash flow to a semiannual basis. However, possible revenue shortfalls could be offset by additional cash reserves from unspent bond proceeds. Additionally, the bonds benefit from their senior pledge, which adds a layer of credit strength if cash flows prove insufficient on a combined basis. In the long-term, Moody's expects eventual steady assessed value growth to return coverage to sum-sufficient levels. Strengths - Additional cash reserves of unspent bond proceeds can pay debt service if needed - Senior legal pledge on rated bonds Challenges - Very narrow annual coverage of all debt - Low wealth levels of city residents What Could Move The Rating - UP - Sustained coverage levels above one times - Substantial improvement in wealth levels What Could Move The Rating - DOWN - Use of reserves without significantly improved coverage levels - Ongoing assessed value decline The principal methodology used in this rating was Moody's Analytic Approach To Rating California Tax Allocation Bonds published in December 2003. CENGAGE LEARNING: Second Lien Trustee's Statement, Objection Filed ------------------------------------------------------------------ BankruptcyData reported that multiple parties -- including Cengage Learning's ad hoc group of first lien lenders, JPMorgan Chase Bank and Wilmington Trust, National Association -- filed with the U.S. Bankruptcy Court statements in connection with Cengage Learning's official committee of unsecured creditors motion seeking an order continuing the hearings concerning approval of the Debtors' Disclosure statement and confirmation of the Plan of Reorganization to dates no earlier than October 25, 2013 and December 10, 2013, respectively. The ad hoc group states, "The Debtors previously have stated that a swift exit from bankruptcy is critical to maximizing the value of the Debtors' businesses, particularly in light of the high 'selling' season at the beginning of calendar year 2014. Accordingly, the Debtors have moved quickly and efficiently to file their Plan (as is the Debtors' exclusive right) and schedule related hearings to consider the adequacy of the Disclosure Statement and confirmation of the Plan (the 'Hearings') that would permit the Debtors to emerge by year end, a view which the First Lien Group shares." BankruptcyData reported that Cengage Learning's Second Lien Trustees filed with the U.S. Bankruptcy Court a statement in support of the motion seeking an order continuing the hearings. The trustees state, "By this Joinder and Preliminary Objection, the Second Lien Trustee joins the Committee's request to continue the hearing on approval of the Disclosure Statement for Debtors' Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code and objects to approval of the Disclosure Statement, which lacks information fundamental to the confirmation of any chapter 11 plan in these cases. As the Continuation Motion notes, the Disclosure Statement is a mere shell document filed solely to ensure the Debtors' compliance with the Restructuring Support Agreement and the arbitrary self-serving timeframe that the Debtors' first lien creditors have attempted to impose on the Debtors, the Debtors' other creditors and this Court. In their haste to comply with the first lien creditors' schedule, the Debtors have filed a patently unconfirmable Plan and related Disclosure Statement...Indeed, the Plan described in the Disclosure Statement is so lacking in fundamental information that it contains one single conclusory statement on the valuation that purportedly will dictate creditor recoveries and does not contain a liquidation analysis or sufficient descriptions of how material litigation will be addressed to enable any impaired class of creditors to make an informed judgment on how to vote on the Plan or evaluate the Plan's compliance with many provisions of Bankruptcy Code section 1129.3 The reason why the Disclosure Statement is lacking in this vital information is apparent - the information does not exist -- thus rendering consideration of the Disclosure Statement premature at best." 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. CHAMPION INDUSTRIES: Amends Credit Agreement with Fifth Third ------------------------------------------------------------- Fifth Third Bank, as administrative agent, the lenders, Champion, all its subsidiaries and Marshall T. Reynolds entered into a First Amendment to First Limited Forbearance and Waiver and Second Amendment to Amended and Restated Credit Agreement dated Aug. 28, 2013. The August 2013 Forbearance Amendment provides for a decrease of the Revolving Credit Commitments from $10,000,000 in aggregate to $8,000,000 in the aggregate, modifies certain financial covenants and consents to sale of certain assets of the Champion Industries. A copy of the First Amendment is available for free at http://is.gd/rtelo0 About Champion Industries Champion Industries, Inc., is engaged in the commercial printing and office products and furniture supply business in regional markets east of the Mississippi River. The Company also publishes The Herald-Dispatch daily newspaper in Huntington, West Virginia with a total daily and Sunday circulation of approximately 23,000 and 28,000. Arnett Foster Toothman PLLC, in Charleston, West Virginia, expressed substantial doubt about Champion Industries' ability to continue as a going concern following the fiscal 2012 annual results. The independent auditors noted that the Company has suffered recurring losses from operations and has been unable to obtain a longer term financing solution with its lenders. The Company reported a net loss of $22.9 million in fiscal year ended Oct. 31, 2012, compared with a net loss of $4.0 million in fiscal 2011. Champion reported a $3.5 million net loss for the quarter ended Jan. 31 on revenue of $22.6 million. As of April 30, 2013, the Company had $41.96 million in total assets, $47.70 million in total liabilities and a $5.74 million total shareholders' deficit. CHAMPION INDUSTRIES: Sr. VP Jeff Straub Quits --------------------------------------------- Jeffery J. Straub resigned as senior vice president of Champion Industries, Inc., effective Aug. 30, 2013, according to a regulatory filing. About Champion Industries Champion Industries, Inc., is engaged in the commercial printing and office products and furniture supply business in regional markets east of the Mississippi River. The Company also publishes The Herald-Dispatch daily newspaper in Huntington, West Virginia with a total daily and Sunday circulation of approximately 23,000 and 28,000. Arnett Foster Toothman PLLC, in Charleston, West Virginia, expressed substantial doubt about Champion Industries' ability to continue as a going concern following the fiscal 2012 annual results. The independent auditors noted that the Company has suffered recurring losses from operations and has been unable to obtain a longer term financing solution with its lenders. The Company reported a net loss of $22.9 million in fiscal year ended Oct. 31, 2012, compared with a net loss of $4.0 million in fiscal 2011. Champion reported a $3.5 million net loss for the quarter ended Jan. 31 on revenue of $22.6 million. As of April 30, 2013, the Company had $41.96 million in total assets, $47.70 million in total liabilities and a $5.74 million total shareholders' deficit. CHINA FRUITS: Reports $19,550 Net Income in Second Quarter ---------------------------------------------------------- China Fruits Corp. filed its quarterly report on Form 10-Q, reporting net income of $19,550 on $854,553 of sales for the three months ended June 30, 2013, compared with a net loss of $168,198 on $598,827 of sales for the same period last year. The Company reported a net loss of $242,196 on $1.59 million of sales for the six months ended June 30, 2013, compared with a net loss of $248,647 on $1.63 million of sales for the corresponding period of 2012. "The net income during the second quarter of 2013 was due primarily to the grant from government in amount of $197,478, which was to encourage our contribution in modern agriculture. We had loss from operation without the government grant." "The net loss during the six months ended June 30, 2013, was about the same as the comparative period in 2012, indicating the benefits from expansion in domestic market were offset by the sales decrease in oversea markets." The Company's balance sheet at June 30, 2013, showed $5.52 million in total assets, $3.23 million in total liabilities, and stockholders' equity of $2.29 million. As of June 30, 2013, the Company had an accumulated deficit of $2.15 million. A copy of the Form 10-Q is available at http://is.gd/f8pqws Headquartered in Nan Feng County, Jiang Xi Province, P.R.C., China Fruits Corp. was incorporated in the State of Delaware on Jan. 6, 1993 as Vaxcel, Inc. On Dec. 19, 2000, CHFR changed its name to eLocity Networks Corporation. On Aug. 6, 2002, CHFR further changed its name to Diversified Financial Resources Corporation. The principal activities of CHFR at that time was seeking and consummating a merger or acquisition opportunity with a business entity. On May 12, 2006, CHFR was re-domiciled to the State of Nevada. On May 31, 2006, CHFR completed a stock exchange transaction with Jiangxi Taina Guo Ye Yon Xian Gong Si ("Tai Na"). Tai Na was incorporated as a limited liability company in the P.R.C. on Oct. 28, 2005, with its principal place of business in Nanfeng Town, Jiangxi Province, the P.R.C. Tai Na is principally engaged in manufacturing, trading, and distributing of Nanfeng tangerine, and operating franchise retail stores for fresh fruits through its wholly-owned subsidiary, Tai Na International Fruits (Beijing) Co. Ltd. * * * As reported in the TCR on April 19, 2013, Lake & Associates CPA's LLC, in Schaumburg, Ill., in its report on China Fruits Corp.'s consolidated financial statements for the fiscal year ended Dec. 31, 2012, said that the Company's accumulated deficit and negative cash flow from operations raise substantial doubt about the Company's ability to continue as a going concern. CHINA SHIANYUN: New OTCBB Symbol is "SAYC" ------------------------------------------ China Shianyun Group Corp., Ltd., formerly known as China Green Creative, Inc., disclosed that its new OTCBB symbol was changed to "SAYC", effective Aug. 30, 2013. China Shianyun was merged with and into China Green effective as of July 26, 2013. As a result of the merger, the Company's corporate name was changed to "China Shianyun Group Corp., Ltd." About China Shianyun China Shianyun Group Corp., Ltd., a Nevada Corporation, was incorporated on Aug. 17, 2006, under the name of Glance, Inc. On Jan. 21, 2009, the Company changed its name to China Green Creative, Inc. CGC and its subsidiaries are principally engaged in the distribution of consumer goods in the People's Republic of China. China Green disclosed net income of $635,873 on $6.87 million of revenues for the year ended Dec. 31, 2012, as compared with a net loss of $344,901 on $1.92 million of revenue during the prior year. The Company's balance sheet at June 30, 2013, showed $6.60 million in total assets, $7.44 million in total liabilities and a $838,903 total stockholders' deficit. Madsen & Associates CPA's, Inc., in Salt Lake City, Utah, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company does not have the necessary working capital to service its debt and for its planned activity, which raises substantial doubt about its ability to continue as a going concern. CITIGROUP INC: DBRS Rates Preferred Shares Rating at 'BB(high)' --------------------------------------------------------------- DBRS Inc. has placed the long and short-term ratings of Citigroup Inc., including its Issuer & Senior Debt Rating of "A", its R-1 (middle) Short-Term Instruments Rating and Citibank, N.A.'s A (high) Deposits & Senior Debt and its R-1 (middle) Short-Term Instruments Rating Under Review with Negative Implications. This rating action follows DBRS's announcement that it has removed the Bank Holding Company "A" rating floor, and the related A (high) operating bank rating floor, for banks that were designated as critically important banking organizations (CIBs) in the United States. With the removal of the rating floor, DBRS will review the Company's fundamentals and intrinsic rating level. DBRS's review will also incorporate any improvements at Citigroup and its subsidiaries in its assessment. Previously, DBRS has indicated that both Citigroup's final debt ratings as well as the final debt ratings of its primary banking subsidiaries each incorporated one notch of uplift from DBRS' intrinsic assessments due to the application of the rating floor in the U.S. The review is expected to be completed within 90 days. Issuer Debt Rated Rating Action Rating ------ ---------- ------------- ------ Citigroup Inc. Issuer & Senior UR-Neg. A Debt Citigroup Inc. Subordinated Debt UR-Neg. A(low) Citigroup Inc. Short-Term UR-Neg. R-1 Instruments (middle) Citigroup Inc. Preferred Shares UR-Neg. BB(high) Citibank, N.A. Deposits & Senior UR-Neg. A(high) Debt Citibank, N.A. Short-Term UR-Neg. R-1 Instruments (middle) Associates Corporation Issuer & Senior UR-Neg. A of North America Debt Associates Corporation Subordinated Debt UR-Neg. A(low) of North America Associates Corporation Short-Term UR-Neg. R-1 of North America Instruments (middle) Associates First Issuer & Senior UR-Neg. A Capital Corporation Debt Associates First Subordinated Debt UR-Neg. A(low) Capital Corporation Associates First Short-Term UR-Neg. R-1 Capital Corporation Instruments (middle) Citibank Canada Deposits & Senior UR-Neg. A(high) Debt Citibank Canada Short-Term UR-Neg. R-1 Instruments (middle) Citigroup Finance Issuer & Senior UR-Neg. A Canada Inc. Debt Citigroup Finance Short-Term UR-Neg. R-1 Canada Inc. Instruments (middle) Citigroup Global Issuer & Senior UR-Neg. A Markets Holdings Inc. Debt Adam Capital Trust III Trust Preferred UR-Neg. A(low) Securities Adam Statutory Trust Trust Preferred UR-Neg. A(low) III Securities Adam Statutory Trust Trust Preferred UR-Neg. A(low) IV Securities Adam Statutory Trust Trust Preferred UR-Neg. A(low) V Securities Citibank International Deposits & Senior UR-Neg. A(high) plc Debt Citibank International Short-Term UR-Neg. R-1 plc Instruments (middle) CitiFinancial Credit Issuer & Senior UR-Neg. A Company Debt Citigroup Capital III Trust Preferred UR-Neg. A(low) Securities Citigroup Capital IX Trust Preferred UR-Neg. A(low) Securities Citigroup Capital X Trust Preferred UR-Neg. A(low) Securities Citigroup Capital XI Trust Preferred UR-Neg. A(low) Securities CORD BLOOD: Sues Tonaquint, et al., Over Convertible Note --------------------------------------------------------- Cord Blood America, Inc., filed a complaint in the United States District Court for the District of Utah, Central Division, against Tonaquint, Inc., and St. George Investments, LLC, for fraud in inducement, breach of agreement, breach of implied covenant of good faith and fair dealing and unjust enrichment. In 2011, Cord Blood entered into a Note and Warrant Purchase Agreement with SGI. Pursuant to the 2011 SGI Agreement, SGI paid the Company $250,000 and executed and delivered six secured buyer notes to the Company. Each of the six secured buyer notes was in the amount of $125,000, for a total of $750,000. In return, the Company granted SGI (a) a secured convertible promissory note in the principal amount of $1,105,500 and (b) a warrant to purchase Cord Blood common stock. Consequently, Cord Blood was concerned about the dilutive effect its Convertible Stock Debt had on its share price and its many shareholders. Additionally and among other concerns, Cord Blood was also concerned about being in default under the existing promissory notes if the note holders sought to convert debt into common stock and Cord Blood could not satisfy the requests because it had already issued the maximum amount of common stock authorized by the Company's shareholders. Accordingly, Cord Blood resolved to take steps to eliminate all or a significant portion of its Convertible Stock Debt over time. In furtherance of this goal, Cord Blood took steps to become "cash flow positive," eliminating any need for the Company to take on any additional Convertible Stock Debt in its current form, to fund operations. Based on these and other representations, Cord Blood agreed to execute a Convertible Stock Elimination Agreement in the two phases. "Despite repeated representations to the contrary, after Phase One was completed, Defendants have failed to complete Phase Two as agreed. Additionally, contrary to Defendants repeated representations, (a) SGI has failed to execute the Amended SGI Note; (b) Defendants have not allowed CBAI to amortize the Notes consecutively, instead demanding that CBAI perform under the Notes simultaneously; and (c) Defendants have conspired to prevent CBAI from prepaying both notes," the Company states in the Complaint. Accordingly, Cord Blood asks the Court to enter an order rescinding the Second SGI Note, SGI Note, Warrant and their related documents. Cord Blood also seeks to enjoin the Defendants from foreclosing on the Notes or seeking to seize or sell the Company's assets. Morever, Cord Blood seeks to recover from the Defendants not less than $75,000 exclusive of interest and costs. A full-text copy of the complaint is available for free at: http://is.gd/4PwK7x About Cord Blood America Based in Las Vegas, Nevada, Cord Blood America, Inc., is primarily a holding company whose subsidiaries include Cord Partners, Inc., CorCell Co. Inc., CorCell Ltd.; CBA Professional Services, Inc. D/B/A BodyCells, Inc.; CBA Properties, Inc.; and Career Channel Inc, D/B/A Rainmakers International. Cord specializes in providing private cord blood stem cell preservation services to families. BodyCells is a developmental stage company and intends to be in the business of collecting, processing and preserving peripheral blood and adipose tissue stem cells allowing individuals to privately preserve their stem cells for potential future use in stem cell therapy. Properties was formed to hold the corporate trademarks and other intellectual property of CBAI. Rain specializes in creating direct response television and radio advertising campaigns, including media placement and commercial production. Cord Blood disclosed a net loss of $3.49 million on $5.99 million of revenue for the year ended Dec. 31, 2012, as compared with a net loss of $6.51 million on $5.07 million of revenue during the prior year. The Company's balance sheet at March 31, 2013, showed $6.37 million in total assets, $5.76 million in total liabilities and $606,561 in total stockholders' equity. Rose, Snyder & Jacobs, LLP, in Encino, California, 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 operating losses and has an accumulated deficit at Dec. 31, 2012. These conditions raise substantial doubt about the Company's ability to continue as a going concern. CUMULUS MEDIA: Dial Global Buyout Plan No Moody's Rating Impact --------------------------------------------------------------- Moody's Investors Service said Cumulus Media Inc. (B2 stable) recently announced it would acquire Dial Global, Inc. (not rated) for $260 million (10.1x EBITDA pre-synergies, or 3.9x EBITDA after planned synergies). Dial Global is the second largest radio network programmer with revenues of $217 million and provides news, sports, prep, talk and music programming among other services. Financing for the cash purchase will come largely from the announced sale of 53 stations in 12 small to mid-sized markets to Townsquare Radio LLC (B2 stable) for roughly $238 million (7.3x EBITDA, including working capital adjustments). In addition, Cumulus plans to exchange another 15 of its stations in two small and mid-sized markets for five stations in Fresno, CA (market rank #68) from Townsquare Radio. The acquisition of Dial Global adds to Cumulus' existing radio network operations and results in no immediate change in ratings given debt-to-EBITDA ratios remain high (7.2x as of June 30, 2013, pro forma for the transaction, including Moody's standard adjustments). Headquartered in Atlanta, GA, Cumulus Media Inc. is the largest pure-play radio broadcaster in the U.S. with approximately 460 stations (including under LMAs) in 95 markets pro forma for the announced transactions. Cumulus will also operate the 2nd largest radio network serving roughly 10,000 U.S. radio stations. The company is publicly traded with Crestview Radio Investors, LLC owning an estimated 27.5% interest adjusted for the exercise of penny warrants. The Dickey family owns 8.2% with Canyon Capital Advisors LLC owning roughly 11% of common shares, and the remainder being widely held. Net revenues pro forma for acquisitions and divestitures totaled roughly $1.2 billion for LTM June 30, 2013. DAYBREAK OIL: Acquires Interest in Shallow Oil Play in Kentucky --------------------------------------------------------------- Daybreak Oil and Gas, Inc., has acquired a 25 percent working interest in approximately 6,100 acres in two large contiguous acreage blocks in the Twin Bottoms Field in Lawrence County, Kentucky. App Energy, LLC, is the operator of the project and owns the remaining 75 percent working interest. Pursuant to a joint operating agreement between App and Daybreak, the two companies have committed to drill three shallow horizontal oil wells in the Berea Oil Sand, which is at approximately 1,500 feet with over 50 drilling locations identified on the leases. Vertical gas wells currently on the leases have penetrated the Berea Oil Sand with log and other data indicating potential proved oil reserves are present in these reservoirs. In this same area of Lawrence County, Kentucky, over 40 horizontal oil wells have been drilled in the Berea Sand in the past year with substantial initial oil production rates along with associated natural gas. Oil reserves per well are expected to have an estimated ultimate recovery of 50,000 barrels of oil with estimated well cost of approximately $800,000 per completed well depending on the length of the lateral production leg of the well. The first well in the initial three well program is expected to spud on Sept. 3, 2013. The Company has also favorably amended its credit facility with Maximilian Investors LLC as part of this transaction. Under the terms of the amended and restated credit facility, the Company's initial credit line has increased from $20 million to $50 million and its interest rate decreased from 18 percent to 12 percent per annum. The amended and restated credit facility also provides for Maximilian to loan funds to the Company under a separate $40 million credit line to be loaned by the Company to App, primarily to fund its drilling operations. The funds initially loaned to App will accrue interest at 16.8 percent per annum and subsequent advances will accrue interest at 12 percent per annum. App's obligations to the Company are secured by a lien on and security interest in substantially all of App's property, including substantially all of its oil and gas interests in Kentucky. As a result of Maximilian introducing the Kentucky transaction with App to the Company, Maximilian was issued 6.1 million shares of the Company's common stock on a fully-diluted basis and a warrant to purchase 6.1 million shares of the Company's common stock on a fully-diluted basis at $.10 per share. The Company has also granted to Maximilian a net profits interest of 50 percent of its net profits after the Company has recovered its costs from its Kentucky drilling operations with App. James. F. Westmoreland, president and chief executive officer, commented, "This transaction is a perfect complement to our California operations with similar characteristics; such as shallow oil, low risk, and moderate cost to drill and complete. A major benefit to Daybreak is that the Kentucky wells have initial production rates that are substantially higher than our California wells. We anticipate the production rates will level out to approximately the same rates as our California wells within a year of being brought into production With the addition of these new Kentucky properties to our California properties, the Company expects to see a significant improvement in its cash flow and earnings. We are also pleased to team up with App, an operation that has personnel experienced in oil and gas operations in the Appalachian Basin of Kentucky. Their expertise brings significant value to the operation and we look forward to a long working relationship with them. We are also pleased that Maximilian brought this transaction to us, and as a result we were able to favorably amend our credit facility. This will allow us to not only participate in the Kentucky project while continuing our development of our California project, but it will also give us the opportunity to seek other projects with similar characteristics that will complement our ongoing operations in California and Kentucky." Additional information is available for free at: http://is.gd/KwNtW2 About Daybreak Oil Daybreak Oil and Gas, Inc. is an independent oil and natural gas exploration, development and production company. The Company is headquartered in Spokane, Washington and has an operations office in Friendswood, Texas. The Company's common stock is quoted on the OTC Bulletin Board market under the symbol DBRM.OB. Daybreak has over 20,000 acres under lease in the San Joaquin Valley of California. Daybreak Oil incurred a net loss of $2.23 million on $974,680 of revenue for the year ended Feb. 28, 2013, as compared with a net loss of $1.43 million on $1.31 million of revenue for the year ended Feb. 29, 2012. As of May 31, 2013, the Company had $3.68 million in total assets $7.68 million in total liabilities and a $4 million total stockholders' deficit. MaloneBailey, LLP, in Houston, Texas, issued a "going concern" qualification on the consolidated financial statements for the year ended Feb. 28, 2013. The independent auditors noted that Daybreak Oil suffered losses from operations and has negative operating cash flows, which raises substantial doubt about its ability to continue as a going concern. DESIGNLINE CORP: Loses Bid to Keep Ch. 11 in Delaware ----------------------------------------------------- Law360 reported that a Delaware bankruptcy judge ruled on Sept. 4 that the Chapter 11 proceeding for alternative fuel bus manufacturer DesignLine Corp. should be moved from the First State to North Carolina, where the company is headquartered, agreeing with an argument from unsecured creditors that it would make more sense for the case. According to the report, U.S. Bankruptcy Judge Mary F. Walrath noted that all of the company's physical assets are in North Carolina and many of the key players are within traveling distance of the Tar Heel State. DesignLine Corporation and DesignLine USA LLC sought Chapter 11 protection (Bankr. D. Del. Lead Case Nos. 13-12089 and 13-12090) on Aug. 15, 2013. Katie Goodman signed the petitions as chief restructuring officer. Mark D. Collins, Esq., and Michael Joseph Merchant, Esq., at Richards, Layton & Finger, P.A., serve as the Debtors' counsel. Nelson Mullins Riley & Scarborough, LLP, is the Debtors' general bankruptcy counsel. The Debtors' financial advisor is GGG Partners LLC. The Debtors estimated assets and debts of at least $10 million. DETROIT, MI: Steps Up Push to Raze Thousands of Derelict Buildings ------------------------------------------------------------------ Matthew Dolan, writing for Daily Bankruptcy Review, reported that at a sprawling, abandoned public-housing complex that once was home to Motown music legends, a backhoe clawed into a wall Wednesday to mark the city's renewed campaign against blight. According to the report, Detroit Mayor Dave Bing stood next to U.S. Department of Housing and Urban Development Secretary Shaun Donovan to oversee the beginning of the demolition the 78-year-old Frederick Douglass Homes complex, which officials said had become a haven for criminals, a drain on police and firefighting resources, and a drag on property values. 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. A nine-member official committee of retired workers was appointed in the case. The Retirees' Committee is represented by Dentons US LLP. DICKINSON COUNTY: Fitch Affirms 'BB-' Rating on $22.81MM Bonds -------------------------------------------------------------- Fitch Ratings has affirmed the 'BB-' rating on the $22,815,000 fixed rate bonds, series 1999, issued by Dickinson County Healthcare System (DCHS). The Rating Outlook is revised to Negative from Stable. Security The bonds are secured by a pledge of net revenues, investment income, and bond funds under the indenture agreement. Key Rating Drivers Continued Financial Weakening: The Negative Outlook reflects a considerable decline in DCHS's overall financial profile through the seven-month interim period ended July 31, 2013, after posting better than historical results in the fiscal year ended (FYE) Dec. 31, 2012. Operating Losses In Interim Period: Impacted by challenged inpatient utilization, profitability took a sharp turn in 2013 as DCHS posted operating losses of $3.8 million through the interim period. Management is implementing various financial initiatives to stem losses, and has begun to see signs of recovery in the month of July. Very Low Liquidity: Unrestricted cash and investments declined further to $11.2 million at July 31, 2013 from $14.8 million at FYE 2012 due to continued capital investments and low operating cash flow. Liquidity metrics are weak compared to Fitch's below investment-grade medians. Insufficient Mads Coverage: Coverage of maximum annual debt service (MADS) was 0.1x in the interim period, compared to 1.5x in fiscal 2012. However, DCHS has postponed the issuance of a $9 million USDA loan, which was anticipated in 2012 and was incorporated in Fitch's last review. While cash flow is expected to improve with the receipt of meaningful use funds in September, DCHS may be in danger of violating its debt service coverage covenant in fiscal 2013. Leading Market Position: DCHS continues to maintain its dominant market position of 76% in its primary service area (PSA), which is an improvement over the last few years. Rating Sensitivities New Debt Postponed: A downgrade is precluded at this time as Fitch's 2012 rating downgrade to 'BB-' from BB+' incorporated an additional $9 million of debt that has been postponed indefinitely, allowing some room for negative variance at the 'BB-' rating. Financial Improvement Expected: Fitch expects DCHS to continue realizing benefits from its expense reduction programs, and improve profitability by year-end. Inability to curb losses or further deterioration in liquidity levels would lead to negative rating action. Credit Profile DCHS is a 96-bed acute care hospital providing primary and secondary services located in Iron Mountain, on Michigan's Upper Peninsula. In fiscal 2012, DCHS generated total revenues of $84.3 million. Improved Profitability in 2012 Followed By Losses in 2013 Profitability improved in fiscal 2012, supported by favorable reimbursement increases, participation in the 340b pharmacy program, and expense management. Operating margin of -1.0% in fiscal 2012 was improved from -3.8% in 2011, and operating EBITDA margin of 6.6% in 2012 was better than 4.4% in 2011. However, the seven-month interim period ended July 31, 2013 showed significantly weakened profitability with operating and operating EBITDA margins of -7.7% and 0%, respectively. Management attributes the decline in volume to the general economy, plans with higher deductible and co-pays, and regional and national trend of declining inpatient utilization. To manage lower volumes, management is in the process of implementing numerous financial initiatives including outsourcing certain services, self-pay assistance, and staffing reductions. The target is to reduce expenses by $4.7 million in 2013, which would translate to a full-year impact of $8.8 million in 2014. Also, DCHS expects to receive $1.5 million in Medicare meaningful use funds in September, which should provide a considerable boost to operating income and cash flow. DCHS is beginning to see evidence of recovery, and the month of July saw improvement in both inpatient and outpatient volumes at above budgeted levels. Leading Provider As a Sole Community Hospital DCHS is designated as a sole community provider, as its closest competitor is approximately 43 miles away. Given its geographic location, DCHS continues to hold a dominant market position, with 76% of inpatient market share in 2012. Outpatient market share was similarly strong at 78% in 2012. DCHS continued to enhance its service offerings in the last year, opening a wound care clinic and adding physicians in cardiology, urology and ENT. Very Low Liquidity Liquidity declined further in 2013, with $11.2 million of unrestricted cash and investments at July 31, 2013 compared to $14.8 million at FYE 2012 and $19.9 million at FYE 2010. Liquidity metrics of 46.9 days cash on hand, 2.7x cushion ratio, and 39.9% cash to debt compare unfavorably against Fitch's below investment- grade medians of 73.2 days, 5.4x and 53.0%, respectively, and is a key credit concern. Weak Debt Service Coverage Due to weak profitability and EBITDA generation, coverage of MADS was very low through the interim period at 0.1x, compared to 1.5x in fiscal 2012. MADS of $4.17 million declines steadily over the next 11 years, and drops to $374,000 in 2025. MADS coverage is expected to improve significantly in September, when $1.5 million in meaningful use funds are received. However, DCHS remains at risk of violating its debt service coverage covenant in fiscal 2013, which would require a consultant call-in. Debt and Capital Plans On Hold At the time of Fitch's last review, DCHS had received approval for a $9 million USDA financing to build a new medical office building to support its collaborations with Marquette General Hospital. Fitch incorporated this new issue into the last analysis. However, the plans are currently on hold as DCHS updates its strategic direction. Management indicated the medical office building is not essential to the continued operations of DCHS, and will be reconsidered at a later time. There is a capital freeze across the organization and only $3.8 million of the $13.3 million capital budget for 2013 is expected to be spent. Capital spending for the following years will also be limited to essential projects until financial condition improves. At June 30, 2013, DCHS had $28 million of debt outstanding, consisting of series 1999 fixed-rate bonds and 2004 fixed-rate loan with First National Bank. DCHS does not have any swaps outstanding. Disclosure DCHS provides annual and quarterly disclosure to the Municipal Securities Rulemaking Board's EMMA System. Disclosure to Fitch has been timely and extremely thorough. DOW CORNING: 6th Cir. Vacates Allowance of 4 Opt-Out Claims ----------------------------------------------------------- The U.S. Court of Appeals for the Sixth Circuit reversed and remanded for further proceedings a district court opinion that involves allowance of claims related to implants manufactured by Dow Corning Corporation. The appeals case is DOW CORNING CORPORATION, Appellant, v. SHEILA CAFFREY; CHRISTINA GIBSON; HILDA McANDREW; REBECCA YOUNG, Appellees, No. 12-1253 (6th Cir.). Claimants on appeal are four women who alleged they were injury by silicone breast implants made by the Debtor. They opted out of a court-approved global settlement and instead participated in an alternative dispute resolution process (ADR) -- where the mediator would use a protocol and award damages binding on the Debtor but not on the claimant. The Claimants on appeal submitted to mediation and were awarded substantial damages. But those awards were never paid as the Debtor went on to file for bankruptcy protection. So the claimants eventually filed claims in the bankruptcy court. In 2012, the district court allowed the claims. In a July 29, 2013 Opinion, the Sixth Circuit concluded that the counsel for the Claimants did not take the ministerial steps necessary to render the Claimants' agreements enforceable under the language of Texas Rule of Civil Procedure 11. A copy of the Sixth Circuit's Opinion is available at http://is.gd/TYBxc8from Leagle.com. About Dow Corning Dow Corning Corp. -- http://www.dowcorning.com/-- produces and supplies more than 7,000 silicon-based products and services to more than 25,000 customers worldwide. Dow Corning is equally owned by The Dow Chemical Company and Corning Incorporated. The Company filed for Chapter 11 protection on May 15, 1995 (Bankr. E.D. Mich. Case No. 95-20512) to resolve silicone implant- related tort liability. The Company owed its commercial creditors more than $1 billion at that time. A consensual Joint Plan of Reorganization, amended on February 4, 1999, offering to pay commercial creditors in full with post-petition interest, establish a multi-billion-dollar settlement trust for tort claims, and leave Dow Corning's shareholders unimpaired, took effect on June 30, 2004. E*TRADE FINANCIAL: S&P Affirms 'B-' Senior Unsecured Debt Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its ratings on E*TRADE Financial Corp. (E*TRADE), including its 'B-' counterparty credit rating and 'B-' senior unsecured debt ratings. S&P also affirmed its ratings on E*TRADE Bank, including its 'B+/B' counterparty credit ratings and certificate of deposit ratings. At the same time, S&P revised the outlook on both entities to positive from stable. The outlook revision to positive reflects E*TRADE Bank receiving regulatory approval from the Office of the Comptroller of the Currency (OCC) to upstream $100 million of dividends in third- quarter 2013 to the holding company. "This approval reflects, in our opinion, a vote of confidence from the OCC, E*TRADE Bank's primary regulator, that the company has made significant progress on its strategy and capital plan," said Standard & Poor's credit analyst Charles Rauch. E*TRADE intends to seek approval to upstream $100 million of dividends per quarter. If the holding company receives dividends for several quarters, it will be in a stronger financial position, in our opinion, to pay down outstanding debt and potentially achieve a higher rating. The ratings on E*TRADE reflect its well-recognized brand name but weak market position in the cyclical retail-brokerage space. Lingering asset-quality problems in the bank's large residential mortgage loan portfolio, which is in run-off mode, and the large amount of debt at the holding company also weigh on the ratings. The holding company had $1.8 billion of long-term debt as of mid-year 2013--a high amount that limits the rating. E*TRADE's next large debt maturity is the $435 million 6.75% notes due 2016. The $505 million 6% notes due 2017 are callable in late 2014. A key component of the strategy and capital plan submitted to the OCC is E*TRADE Bank exceeding a 9.5% Tier 1 leverage ratio, primarily through a deleveraging of the balance sheet. As of June 30, 2013, the bank met this financial target, but the company is still working on other components of its strategy and capital plan, such as improving enterprise risk management and strengthening its retail brokerage franchise. Asset-quality problems at E*TRADE Bank's residential mortgage loan portfolios, which had been a primary factor behind the company's weak profitability during the past five years, are no longer as much of a constraint on the ratings. Although these portfolios are still sizable, they are in rapid run-off mode. One-to-four family residential first-lien mortgage loans totaled $5.0 billion as of mid-year 2013, down from $6.0 billion as of mid-year 2012. Home equity lines totaled $3.8 billion and $4.7 billion at the same respective periods. As the residential mortgage loan book continues in run-off mode, employment improves, and the national housing market recovers, S&P expects the quality of the remaining portfolio will gradually improve. "The positive outlook reflects our view that, if E*TRADE continues to obtain regulatory approval over the next several quarters to upstream dividends to the holding company and the holding company accumulates cash dividends that we expect it will use to pay down a material amount of debt by this time next year, we could upgrade the company," said Mr. Rauch. Alternatively, if fundamental performance were to slide and the regulators deny E*TRADE Bank permission to upstream dividends to the holding company through 2014 or the holding company squanders any dividends it receives (for example, share buybacks), S&P could lower the ratings. EASTMAN KODAK: Registers New Class of Securities ------------------------------------------------ Eastman Kodak Company registered a new class of common stock, par value $0.01 per share, initially issued pursuant to the Plan upon its effectiveness, warrants to purchase shares of common stock at an exercise price of $14.93 and warrants to purchase shares of common stock at an exercise price of $16.12. All previously issued and outstanding shares of the Company's common stock and all other previously issued and outstanding equity interests in the Debtors were cancelled upon the effectiveness of the Plan. In a separate filing, Eastman Kodak registered 4.79 million shares of common stock issuable under the 2013 Omnibus Incentive Plan for a proposed maximum aggregate offering price of $57.22 million. A copy of the Form S-8 prospectus is available for free at http://is.gd/UlZvnD On Jan. 19, 2012, Eastman Kodak and its certain of its subsidiaries filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York, Case No. 12-10202. On Aug. 23, 2013, the Bankruptcy Court confirmed the revised First Amended Joint Chapter 11 Plan of Reorganization of Eastman Kodak Company and its Debtor Affiliates. 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. EMPRESAS INTEREX: Oct. 2 Hearing on Adequacy of Plan Outline ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Puerto Rico will convene a hearing on Oct. 2, 2013, at 9 a.m., to consider the adequacy of the First Amended Disclosure Statement explaining Empresas Interex, Inc.'s Chapter 11 Plan. As reported in the Troubled Company Reporter on Aug. 26, 2013, the first amended disclosure statement provide for these treatment of claims: * The claim of DF Services, LLC, the Plan sponsor, estimated to amount to $7,547,006, is impaired. DF's claim will be satisfied through the transfer of the Debtor's residential project on the effective date of the Plan. In consideration of the transfer of the Property, DF's claim will be reduced to $6,870,728, and DF will fund the 50% payment to be made to Holders of Allowed General Unsecured Claims. * The claim of the Debtor's shareholder, Universidad Interamericana de Puerto Rico, estimated to amount to $360,440, is impaired, but is estimated to recover 100% of the allowed amount. The Allowed Claim of the University, bearing an annual interest at 2% over the prime rate, with a floor of 6%, collateralized by a parcel of land of 1,598 square meters at PR-830, Bayamon, Puerto Rico, will be paid on the basis of $1,953 per month, including principal and interest at 4.25% per annum, over a period of 25 years. * Allowed General Unsecured Claims, estimated to total $175,694, are impaired and are estimated to recover 50% of the total allowed amount. Holders of Allowed General Unsecured Claims will be paid pro-rata from the $87,847 to be provided by DF. A full-text copy of the First Amended Disclosure Statement, dated Aug. 19, 2013, is available for free at: http://bankrupt.com/misc/EMPRESAS_ds0819.pdf The Debtor is represented by Charles A. Cuprill, Esq. -- ccuprill@cuprill.com -- at CHARLES A. CUPRILL P.S.C. LAW OFFICES, in San Juan, Puerto Rico. About Empresas Interex Inc. San Juan, Puerto Rico-based Empresas Interex Inc. is engaged in the development, construction, and lease of real estate. One of the Debtor's construction project is known as Ciudad Atlantis at Hato Bajo Ward, Arecibo, Puerto Rico. Empresas Interex filed for Chapter 11 bankruptcy (Bankr. D.P.R. Case No. 11-10475) on Dec. 7, 2011. Bankruptcy Judge Mildred Caban Flores presides over the case. The company disclosed $11,412,500 in assets and $9,335,561 in liabilities. The Debtor is represented by Charles A. Cuprill P.S.C. Law Offices. ENGLOBAL CORP: Closes Sale of Gulf Coast Operations for $20-Mil. ---------------------------------------------------------------- ENGlobal Corporation successfully completed the sale of its Gulf Coast engineering and in-plant operations to Furmanite America, Inc., a subsidiary of Furmanite Corporation. The total consideration of the transaction to ENGlobal was approximately $20 million, consisting primarily of cash funded at closing. The Company will use the cash proceeds from the transaction to repay its outstanding debt under its existing credit facility and for working capital purposes. Further terms of the transaction were not disclosed. ENGlobal will retain its Engineering operations and the entirety of its Automation operations located in Houston, TX, Tulsa, OK, Mobile, AL, Denver, CO, and Chicago, IL, which perform project execution services primarily to the energy industry. The Company previously announced that it intended to concentrate on its core Engineering and Automation segments in these markets and target specific engineered solutions, utilizing both in-house and third party intellectual property. ENGlobal also announced that it has entered into a one year, $10 million credit facility with its lender, which will be used for working capital purposes, as needed, and will allow the Company additional time to analyze its long-term capital needs. "The completion of this transaction with Furmanite is a significant milestone for ENGlobal," said Mr. William A. Coskey, P.E., chairman and chief executive officer of ENGlobal. "Now, as a stronger company, we plan to return our attention to strategic growth. I would like to personally thank all of our employees, especially those in our Gulf Coast operations, for their patience throughout this process and commend the transition team for their efforts." Mr. Coskey, continued, "I have great respect for Furmanite's management team and have no doubt that our Gulf Coast employees are in good hands. We look forward to working with Furmanite on future projects." About ENGlobal Headquartered in Houston, Texas, ENGlobal -- http://www.ENGlobal.com-- is a provider of engineering and related project services principally to the energy sector throughout the United States and internationally. ENGlobal operates through two business segments: Automation and Engineering & Construction. ENGlobal's Automation segment provides services related to the design, fabrication and implementation of process distributed control and analyzer systems, advanced automation, and related information technology. The Engineering & Construction segment provides consulting services relating to the development, management and execution of projects requiring professional engineering as well as inspection, construction management, mechanical integrity, field support, quality assurance and plant asset management. ENGlobal currently has approximately 1,400 employees in 11 offices and 9 cities. The Company's balance sheet at March 30, 2013, showed $70.79 million in total assets, $43.51 million in total liabilities, all current, and $27.28 million in total stockholders' equity. Going Concern "The Company has been operating under difficult circumstances since the beginning of 2012. For the year ended December 29, 2012, the Company reported a net loss of approximately $33.6 million that included a non-cash charge of approximately $16.9 million relating to a goodwill impairment and a non-cash charge of approximately $6.8 million relating to a valuation allowance established in connection with the Company's deferred tax assets. During 2012, our net borrowings under our revolving credit facilities increased approximately $10.5 million to fund our operations. Due to challenging market conditions, our revenues and profitability declined during 2012 and continued to weaken through the first quarter of 2013. As a result, we have failed to comply with several financial covenants under our credit facilities resulting in defaults. Although we have sold assets, reduced debt and decreased personnel in an attempt to improve our liquidity position, we cannot assure you that we will be successful in obtaining the cure or waiver of the defaults under our credit facilities. If we fail to obtain the cure or waiver of the defaults under the facilities, the lenders may exercise any and all rights and remedies available to them under their respective agreements, including demanding immediate repayment of all amounts then outstanding or initiating foreclosure or insolvency proceedings. In such event and if we are unable to obtain alternative financing, our business will be materially and adversely affected, and we may be forced to sharply curtail or cease our operations. As a part of our efforts to improve our cash flow and restore our financial relationship with our lenders under the PNC Credit Facility, we engaged an investment banking firm to pursue strategic alternatives on behalf of the Company and a consulting firm to assist the Company with cost cutting efforts. These circumstances raise substantial doubt about the Company's ability to continue as a going concern," according to the Company's quarterly report for the period ended March 30, 2013. ENVISION ACQUISITION: S&P Assigns 'B' Corp. Credit Rating --------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Twinsburg, Ohio-based pharmacy benefit manager (PBM) Envision Acquisition Co. LLC. The outlook is stable. At the same time, S&P assigned the company's proposed $470 million first-lien credit facility (consisting of a $65 million revolver and $405 million term loan) its 'B' issue-level rating with a recovery rating of '3', indicating S&P's expectation for meaningful (50%-70%) recovery in the event of payment default. S&P also assigned the company's proposed $175 million second-lien term loan its 'CCC+' issue-level rating and '6' recovery rating, indicating its expectation for negligible (0%-10%) recovery in the event of payment default. S&P's rating on Envision reflects the company's "highly leveraged" financial risk profile, with pro forma leverage of over 6x and its expectation that leverage will remain over 5x over the next two years. The rating also reflects S&P's view of Envision's business risk profile as "weak," reflecting the company's small scale in an industry that is dominated by larger players, and its slim margins relative to peers. These factors are only partially offset by Envision's relatively diversified customer base and differentiated business strategy. S&P's stable rating outlook reflects its expectation that industry growth and new business wins will allow Envision to generate low double-digit EBITDA growth, which should result in $40 million to $50 million in annual discretionary cash flow. "We are unlikely to consider an upgrade over the next two years because we believe EBITDA growth alone will be insufficient to reduce leverage below 5x, and we expect financial policies to limit prospects for debt repayment," said Standard & Poor's credit analyst Cheryl Richer. "We could consider lowering our rating if Envision experiences significant contract losses." ENVISION PHARMACEUTICAL: Moody's Assigns B3 CFR; Outlook Positive ----------------------------------------------------------------- Moody's Investors Service assigned a B3 Corporate Family Rating and a B3-PD Probability of Default Rating to Envision Pharmaceutical Holdings, Inc. At the same time, Moody's assigned a B2 to Envision's new first lien term loan and secured revolver and a Caa2 to its second lien term loan. These are first time ratings for this middle-market pharmacy benefit manager. The rating outlook is positive. Proceeds will be used to partially finance a leveraged buy-out by TPG Capital (for a total of $885 million), refinance existing bank debt and fund a potential acquisition for $35 million. Ratings assigned: Envision Pharmaceutical Holdings, Inc. Corporate Family Rating at B3 Probability of default of B3-PD $405 million First Lien Senior Secured Term Loan at B2, (LGD-3, 35%) $65 million Senior Secured Revolver at B2, (LGD-3, 35%) $175 million Second Lien Senior Secured Term Loan at Caa2, (LGD-5, 88%) Ratings Rationale "Envision's very high leverage and its relatively small size in a consolidating PBM market are key contributors to its rating," said Diana Lee, a Moody's Senior Credit Officer. Envision's B3 CFR reflects the company's very high proforma leverage, which, following its leveraged buy-out by TPG Capital, coupled with a potential strategic acquisition funded with $35 million of the new debt, will rise to about 6.5x based on estimated EBITDA (including LTM EBITDA for the potential acquisition) for the twelve months ended June 30, 2013. The CFR also reflects the company's small size in a rapidly consolidating pharmacy benefit management industry. The company competes with both mid-sized players, such as Catamaran (Ba2 stable) and much larger players, including Express Scripts (Baa3 stable) and CVS Caremark (Baa2 positive) which dominate the PBM landscape and offer more services. Despite the company's focus on transparency as well as its pure "pass through" pricing model, the company's growth has been limited by its smaller size and offerings. In addition, the company's insurance segment is exposed to capitated risk from Medicare Part D patients. That said, Envision will have expansion opportunities in the Medicaid space, as well as its drug discount business -- focused on marketing one specialty drug to a niche population -- and still small, but growing mail order and specialty business. The positive outlook reflects Moody's expectation that the company will deleverage through a combination of debt repayment and improved EBITDA. Moody's expects the company to continue to generate positive free cash flow and good liquidity, aided in part by expanded membership in Medicaid lives. Absent additional large acquisitions, Moody's expects debt/EBITDA will likely be under 5.0 times within the next 12-18 months, with a debt/EBITDA target of 4.0-4.5x over the longer term. If Envision realizes improved sales and profitability so that debt/EBITDA is sustained below 5.0 times, the ratings could be upgraded. In addition, Moody's would need to see RCF/debt that is sustained above 10%. If operating results (associated with loss of members or pricing constraints) deteriorate, the ratings could be downgraded. A need to borrow for additional large acquisitions or weakened liquidity could also result in a rating downgrade. Debt/EBITDA sustained around 7.0 times could also result in a ratings downgrade. The principal methodology used in this rating was the Global Distribution & Supply Chain Services published in November 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. FAIRMONT GENERAL: Hospital Saddled With $14.7 Million in Bonds -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Fairmont General Hospital Inc. intends to operate the 207-bed acute-care facility in Fairmont, West Virginia, by using $27 million in accounts receivable representing collateral for two bond issues. The two municipal bond issues, sold in 2007 and 2008, have $14.7 million in principal outstanding. Both issues have accounts receivable as collateral. The fourth-largest employer in Marion County, West Virginia scheduled a hearing Sept. 5 for interim authority to use cash for payment of expenses, including payroll. Revenue in 2013 will be about $83 million, according to a court filing. Assets and debt both exceed $10 million, as shown in the petition. About Fairmont General Fairmont General Hospital sought Chapter 11 bankruptcy protection (Bankr. N.D. W.Va. Case No. 13-01054) on Sept. 3, 2013, listing between $10 million and $50 million in both assets and debts. Fairmont General Hospital filed for bankruptcy as it looks to partner with another hospital or health system. FRISIA FARMS: Owner Obliged to Give Domestic Support to Ex-Wife --------------------------------------------------------------- Klaas Talsma's domestic support obligation to former wife, Willemina Jacoba Boer is not dischargeable, the U.S. Bankruptcy Court for the Northern District of Texas concluded in an August 5, 2013 Memorandum Opinion available at http://is.gd/STm3hMfrom Leagle.com. The couple divorced in 2006. The complaint is WILLEMINA JACOBA DE BOER, PLAINTIFF, v. KLAAS TALSMA, DEFENDANT, Adv. No. 12-4059 (Bankr. N.D. Tx.). Mr. Talsma, Frisia Farms, Inc., Frisia Hartley, LLC and Frisia West, LLC are four related entities engaged in dairy farming. Frisia Farms owns dairy cows, Frisia Hartley raises heifers in Hartley County, Texas, and Frisia West owns real property and equipment. Mr. Talsma cares for and milks the grown cows in Hico, Texas. Each entity of the Debtor filed a separate petition seeking relief under Chapter 11 of the Code in 2010 and 2011. The cases are jointly administered. FURNITURE BRANDS: Voluntarily Delists Securities ------------------------------------------------ Furniture Brands International Inc. filed a Form 25 with the U.S. Securities and Exchange Commission regarding the voluntary removal of its common stock, no par value, $1.00 stated value, from the New York Stock Exchange. About Furniture Brands Furniture Brands International (NYSE: FBN) is a world leader in designing, manufacturing, sourcing and retailing home furnishings. Furniture Brands markets products through a wide range of channels, including company owned Thomasville retail stores and through interior designers, multi-line/ independent retailers and mass merchant stores. Furniture Brands serves its customers through some of the best known and most respected brands in the furniture industry, including Thomasville, Broyhill, Lane, Drexel Heritage, Henredon, Pearson, Hickory Chair, Lane Venture, Maitland-Smith and LaBarge. To learn more about the company, visit www.furniturebrands.com. Furniture Brands' balance sheet at June 29, 2013, showed $546.73 million in total assets, $550.13 million in total liabilities and a $3.40 million total shareholders' deficit. GELT PROPERTIES: Has Deal to Use Bucks County Bank's Cash --------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Pennsylvania will convene a hearing on Sept. 24, 2013 at 11 a.m., to consider approval of a stipulation regarding Gelt Properties, LLC, et al.'s use of cash collateral. The stipulation was entered between the Debtor and secured creditor Bucks County Bank to resolve outstanding matters with BCB. The stipulation provides for, among other things, (i) BCB's consent to the use of cash collateral; and (ii) the Debtor's filing of an amended plan providing, inter alia, the terms and conditions as to the satisfaction of the indebtedness. The parties related that neither the Debtor's plan nor the disclosure statement has been approved. On Feb. 27, 2012, BCB filed a motion for relief from the automatic stay and to prohibit use of cash collateral. BCB asserts, as of June 26, 2013, the unpaid principal balance of the loan is $1,169,339 together with the accrued interest and other charges. 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. GENVEC INC: Ditches Liquidation Plan for Novartis Partnership ------------------------------------------------------------- Law360 reported that flagging biotech firm GenVec Inc. has scrapped plans to dissolve and liquidate assets amid encouraging prospects for a program to develop new hearing loss treatments in partnership with Novartis AG and successful efforts to trim costs, its board said on Sept. 4. According to the report, as part of its new operating strategy, an about-face from the liquidation plan unveiled in late May, the Maryland company also announced a leadership shakeup. GenVec President and CEO Cynthia Collins resigned and gave up her board seat, making way for Douglas Swirsky, the report related. GenVec, Inc. -- http://www.genvec.com/-- operates as a biopharmaceutical company that uses differentiated, proprietary technologies to create therapeutics and vaccines. GenVec is working with various companies and organizations, such as Novartis, Merial, and the U.S. Government to support a portfolio of product programs that address the prevention and treatment of human and animal health concerns. Founded in 1992, the Company is based in Gaithersburg, Maryland. GREEN FIELD: S&P Lowers Corporate Credit Rating to 'D' ------------------------------------------------------ Standard & Poor's Ratings Services said it lowered its corporate credit rating on Green Field Energy Services Inc. to 'D' from 'CCC', reflecting a default on its credit facility with Shell Western Exploration and Production Inc. At the same time S&P lowered the issue-level rating on Green Field's $250 million senior notes due 2016 to 'CC' from 'CCC'. The recovery rating remains '4', indicating S&P's expectation of average recovery (30% to 50%) in the event of a payment default. "The downgrade to 'D' follows Green Field's announcement that it failed to make $6 million of scheduled principle payments on its credit facility with Shell, reflecting Green Field's continued struggle to maintain sufficient liquidity, in the face of its very high debt burden and weak operating cash flows," said Standard & Poor's credit analyst Paul Harvey. The rating on the $250 million senior notes, under which Green Field is in technical default, was lowered to 'CC' to reflect S&P's view that the notes will need to be restructured to ease current principle and interest payment terms. Any such restructuring could be viewed as a distressed exchange under S&P's criteria. Green Field has stated its intention to pursue options including amendments and/or waivers to the Shell facility and senior notes, entering a new debt facility, and raising additional capital. HAWAII OUTDOOR: Trustee Can Hire Colliers International as Broker ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Hawaii authorized Hawaii Outdoor Tours, Inc., to employ Colliers International HI, LLC, as the Chapter 11 trustee's real estate broker, effective Aug. 27, 2013, with respect to the real property at Naniloa Volcanoes Resort and Golf Course as well as related property located at 93 Banyan Drive, in Hilo, Hawaii. Compensation and reimbursement for expenses are subject to further court approval under 11 U.S.C. sec. 330 and applicable local rules and guidelines. About Hawaii Outdoor Tours Hawaii Outdoor Tours, Inc., operator of the Naniloa Volcanoes Resort in Hilo, Hawaii, filed a Chapter 11 petition (Bankr. D. Haw. Case No. 12-02279) in Honolulu on Nov. 20, 2012. Naniloa Volcanoes is a 382-room hotel with a nine-hole golf course. The 64-acre property is subject to a 65-year lease, commencing Feb. 1, 2006, and provides for a total ground rent for the first 10 years of $500,000 annually. The Debtor used a $10 million loan from First Regional Bank and $10 million of its own cash to invest in the property. First-Citizens Bank & Trust Company, which acquired the First Regional note from the Federal Deposit Insurance Corp., commenced foreclosure proceedings in August. First-Citizens Bank asserts a claim of $9.95 million. The Debtor believes that the value of the hotel property exceeds the amount of the First-Citizens Bank note. Just the bricks and mortar alone was valued in excess of $35 million by First Regional's appraiser and the insurance company. Bankruptcy Judge Robert J. Faris oversees the case. Ramon J. Ferrer, Esq., represents the Debtor as counsel. In its schedules, the Debtor disclosed $52,492,891 in assets and $11,756,697 in liabilities. The petition was signed by CEO Kenneth Fujiyama. Ted N. Petitt, Esq., represents secured creditor First-Citizens Bank as counsel. Cynthia M. Johiro, Esq., represents the State of Hawaii Department of Taxation as counsel. Timothy J. Hogan, Esq., represents David C. Farmer, the Chapter 11 Trustee, as counsel. Christopher J. Muzzi, Esq., at Tsugawa Biehl Lau & Muzzi, LLLC, represents the Official Committee of Unsecured Creditors as counsel. HERON LAKE: Amendment 1 to Loan Agreement with AgStar ----------------------------------------------------- Heron Lake BioEnergy, LLC, finalized Amendment No. 1 to Sixth Amended and Restated Master Loan Agreement with AgStar Financial Services, PCA. The Amendment amends certain provisions of the Sixth Amended and Restated Master Loan Agreement dated May 17, 2013, by and between the Company and AgStar. The Amendment is effective as of July 31, 2013, which is the same date on which Granite Falls Energy, LLC, indirectly, through Project Viking, L.L.C., acquired a majority of the Company's outstanding membership units and the same date on which GFE and the Company entered into a Management Services Agreement, under which GFE supplies its personnel to act as part-time officers and managers of the Company for the positions of Chief Executive Officer, Chief Financial Officer and Commodity Risk Manager. The following material amendments to the MLA are set forth in the Amendment: (i) The power of Project Viking or its affiliates to appoint a majority of the Company's governors is not defined as a "change of control" of the Company. (ii) Revolving advances under the Company's term revolving loan may be used for the purchase of corn inventory. (iii) The remaining amounts raised by the Company in its offering of a maximum of $12 million in aggregate principal amount of promissory notes titled "7.25% Secured Subordinated Notes due 2018" will be paid to AgStar on or before Oct. 1, 2013, whether subscribers in the Offering confirm their subscriptions for notes or instead elect to convert the principal amount of their subscription into a subscription for the Company's membership units. Under this provision, if the Offering is fully subscribed, the Company would pay AgStar a total of $3,670,500 on or before Oct. 1, 2013. (iv) In light of the Management Services Agreement by and between GFE and the Company, the requirements to identify and hire an interim and permanent Chief Executive Officer reasonably acceptable to AgStar by specified dates have been removed. A copy of the Amendment No.1 is available for free at: http://is.gd/PbbMYq About Heron Lake Heron Lake BioEnergy, LLC, operated a dry mill, coal fired ethanol plant in Heron Lake, Minnesota. After completing a conversion in November 2011, the Company is now a natural gas fired ethanol plant. Its subsidiary, HLBE Pipeline Company, LLC, owns 73 percent of Agrinatural Gas, LLC, the pipeline company formed to construct, own, and operate a natural gas pipeline that provides natural gas to the Company's ethanol production facility through a connection with the natural gas pipeline facilities of Northern Border Pipeline Company in Cottonwood County, Minnesota. Its subsidiary, Lakefield Farmers Elevator, LLC, has grain facilities at Lakefield and Wilder, Minnesota. At nameplate, the Company's ethanol plant has the capacity to process approximately 18.0 million bushels of corn each year, producing approximately 50 million gallons per year of fuel-grade ethanol and approximately 160,000 tons of distillers' grains with soluble. In its report on the Company's financial statements for the fiscal year ended Oct. 31, 2012, Boulay, Heutmaker, Zibell & Co. P.L.L.P., in Minneapolis, Minnesota, expressed substantial doubt about Heron Lake BioEnergy's ability to continue as a going concern. The independent auditors noted that the Company has incurred losses due to difficult market conditions and the impairment of long-lived assets. "The Company is out of compliance with its master loan agreement and is operating under a forbearance agreement whereby the Company agreed to sell substantially all of its assets." The Company reported a net loss of $32.35 million for the year ended Oct. 31, 2012, as compared with net income of $543,017 for the year ended Oct. 31, 2011. As of April 30, 2013, the Company had $59.78 million in total assets, $44.05 million in total liabilities and $15.72 million in total members' equity. Bankruptcy Warning At Jan. 31, 2013, the Company's total indebtedness to AgStar was approximately $41.1 million. All of the Company's assets and real property are subject to security interests and mortgages in favor of AgStar as security for the obligations of the master loan agreement. The Company's failure to pay any required installment of principal or interest or any other amounts payable under the Company's Term Loan or Term Revolving Loan or the Company's failure to perform or observe any covenant under the Sixth Amended and Restated Master Loan Agreement would result in an event of default, entitling AgStar to accelerate and declare due all amounts outstanding under the Company's Term Loan and its Term Revolving Loan. "Upon the occurrence of any one or more Events of Default, as defined under the Sixth Amended and Restated Forbearance Agreement, including failure to observe any of the financial or affirmative covenants...AgStar may accelerate all of our indebtedness and may seize the assets that secure our indebtedness, causing us to lose control of our business. We may also be forced to sell our assets, restructure our indebtedness, submit to foreclosure proceedings, cease operations or seek bankruptcy or reorganization protection," according to the Company's quarterly report for the three months ended Jan. 31, 2013. HIGHWAY TECHNOLOGIES: Panel Withdraws Motion to Convert to Ch. 7 ---------------------------------------------------------------- On Aug. 29, 2013, the Official Committee of Unsecured Creditors of Highway Technologies, Inc., et al., withdrew its motion to convert the Debtors' Chapter 11 cases to Chapter 7. Counsel for the Committee can be reached at: Mark D. Collins, Esq. Russell C. Silberglied, Esq. L. Katherine Good, Esq. Amanda R. Steele, Esq. RICHARDS, LAYTON & FINGER, P.A. As reported in the TCR on June 11, 2013, Highway Technologies Inc.'s creditors committee urged a Delaware bankruptcy judge to convert its case to Chapter 7, saying a piecemeal liquidation in Chapter 11 offers little for the shuttered traffic-safety company or its unsecured creditors. The usual benefits of Chapter 11 are lost on a company that has ceased operations and terminated most of its staff, while the added costs of the process threaten to swallow up the few unencumbered assets that might go to unsecured creditors, according to the committee's conversion motion. About Highway Technologies Highway Technologies Inc. and affiliate HTS Acquisition Inc. sought Chapter 11 protection (Bankr. D. Del. Case Nos. 13-11325 to 13-11326) on May 22, 2013, to conduct an orderly liquidation. Richard M. Pachuiski, Esq., Debra I. Grassgreen, Esq., Bruce Grohsgal, Esq., Maria A. Bove, Esq., and John W. Lucas, Esq., at Pachulski Stang Ziehl & Jones LLP, serve as counsel to the Debtors. Kurtzman Carson Consultants LLC is the claims and notice agent. The prepetition lenders are represented by David M. Hilllman, Esq., at Schulte Roth & Zabel, in New York. The Company's balance sheet as of March 31, 2013, showed $55 million in total assets and $102 million in liabilities. In its amended schedules, Highway Technologies disclosed $41,350,616 in assets and $91,780,181 in liabilities. Mark D. Collins, Esq., at Richards, Layton & Finger, P.A. represents the Official Unsecured Creditors' Committee as counsel. Gavin/Solmonese LLC serves as its financial advisor. HIGHLAND CONSTRUCTION: Guyant's Claim is Secured, Bankr. Ct. Says ----------------------------------------------------------------- A Virginia bankruptcy court vacated its prior order and allowed Jerome Guyant IRA's proof of claim as a secured claim in the bankruptcy case of Highland Construction Management Services, LP. The new order was entered by Judge Robert G. Mayer on July 30, 2013 on the motion of Wells Fargo, N.A., f/b/o Jerome Guyant IRA for reconsideration of the court's order sustaining the objection of Highland Construction to the secured status of Guyant's claim. Guyant loan the Debtor more than a million dollars in December 2005. Judge Robert Mayer held that Wells Fargo, f/b/o Jerome Guyant IRA continues to have a perfected security interest in the case, prior to the interests of the Debtor; and thus, the objection to its proof of claim is overruled. A copy of Judge Mayers' July 30 Memorandum of Opinion is available at http://is.gd/okpnUofrom Leagle.com. Based in Herndon, Virginia, Highland Construction Management Services, LP, filed for bankruptcy on Feb. 28, 2011 (Bankr. E.D. Va., Case No. 11-11413). The petition was signed by Joseph L. Bane, Jr., partner/trustee. The Company listed $7.51 million in assets and $9.98 million in debts. James P. Campbell, Esq. -- jcampbell@cmzlaw.com -- of CAMPBELL FLANNERY, P.C. assists the Company in its restructuring effots. HILLTOP FARMS: Gets Final Confirmation Order on Plan ---------------------------------------------------- Judge Charles L. Nail, Jr. issued a final order on Aug. 21, 2013, confirming Hilltop Farms, LLC's Modified Plan of Reorganization, with clarifications entered on the record and incorporated in the Plan. The modifications noted include the incorporation of settlement agreements with First Bank & Trust and CNH Capital America, LLC. The Troubled Company Reporter previously reported, citing the Debtor's case docket, that secured creditor First Bank has changed, on the record, its ballots to accepting the Plan. The Confirmed Plan provides that the Debtor will pay $98.11 per month to the priority creditor; $47,243.90 per month to impaired secured creditors under Claim Classes 1 through 3; and an estimated $835.00 per month to unsecured creditors under Claim Class 8 for the first year of the Plan, for a total of approximately $48,177.01 per month. This plan version notes an increase in monthly payments to impaired secured creditors of about $6,400. The previous plan version only provides $40,827.74 per month to impaired secured creditors. Moreover, the Confirmed Plan specifies that the parties acknowledge that the indebtedness due to CNH Capital America is oversecured. CNH will be paid attorney's fees and costs totaling $1,500. In addition to the attorney's costs, the creditor will be paid $2,220 per month. The Confirmed Plan also provides that the Debtor will pay $43,241 per month starting Oct. 1, 2013 to First Bank & Trust and Hilltop Dairy, LLP, will pay $33, 466.02 per month starting Sept. 17, 2013. A full-text copy of the Plan dated Aug. 9, 2013, as confirmed, is available for free at: http://bankrupt.com/misc/HILLTOPFARMS_PlanConfrmed.PDF About Hilltop Farms Elkton, South Dakota-based Hilltop Farms, LLC, owns properties in Brookings County, South Dakota. It filed a Chapter 11 petition (Bankr. D.S.D. Case No. 12-40768) on Nov. 2, 2012, in Sioux Falls, South Dakota. It disclosed assets of $13.1 million and $13.5 million in liabilities as of Nov. 2, 2012. Laura L. Kulm Ask, Esq., at Gerry & Kulm Ask, Prof LLC, serves as counsel to the Debtor. Judge Charles L. Nail, Jr., presides over the case. Daniel M. McDermott, U.S. Trustee for Region 12, was unable to form an official committee of unsecured creditors in the Debtor's case. HOWREY LLP: Morgan Lewis Settles With Bankrupt Firm for $1MM ------------------------------------------------------------ Law360 reported that the Chapter 11 trustee for collapsed law firm Howrey LLP on Sept. 4 asked a California bankruptcy judge to approve a $1.15 million settlement with Morgan Lewis & Bockius LLP that would resolve unfinished business claims former Howrey partners brought to the firm. According to the report, Howrey trustee Allan B. Diamond said in a motion that the settlement would resolve all claims against Morgan Lewis, where seven former Howrey partners landed in early 2011. Diamond asserted the agreement was well within the range of reasonableness and in the best interest of the estate, the report cited. About Howrey LLP Three creditors filed an involuntary Chapter 7 petition (Bankr. N.D. Cal. Case No. 11-31376) on April 11, 2011, against the remnants of the Washington-based law firm Howrey LLP. The filing was in San Francisco, where the firm had an office. The firm previously was known as Howrey & Simon and Howrey Simon Arnold & White LLP. The firm at one time had more than 700 lawyers in 17 offices. The partners voted to dissolve in March 2011. The firm specialized in antitrust and intellectual-property matters. The three creditors filing the involuntary petition together have $36,600 in claims, according to their petition. The involuntary chapter 7 petition was converted to a chapter 11 case in June 2011 at the request of the firm. In its schedules filed in July, the Debtor disclosed assets of $138.7 million and liabilities of $107.0 million. Representing Citibank, the firm's largest creditor, is Kelley Cornish, Esq., a partner at Paul, Weiss, Rifkind, Wharton & Garrison. Representing Howrey is H. Jason Gold, Esq., a partner at Wiley Rein. The Official Committee of Unsecured Creditors is represented in the case by Bradford F. Englander, Esq., at Whiteford, Taylor And Preston LLP. In September 2011, Citibank sought conversion of the Debtor's case to Chapter 7 or, in the alternative, appointment of a Chapter 11 Trustee. The Court entered an order appointing a Chapter 11 Trustee. In October 2011, Allan B. Diamond was named as Trustee. HUSTAD INVESTMENT: Cases Converted to Chapter 7 ----------------------------------------------- At the behest of the U.S. Trustee, the U.S. Bankruptcy Court ordered that these substantively consolidated chapter 11 cases are converted to cases under chapter 7: Company Case Number ------- ----------- Hustad Investment Corporation BKY 13-40789 Hustad Real Estate Company BKY 13-40786 Hustad Investments, LP BKY 13-40788 A plan has been filed in the Debtors' cases providing that the Debtors will continue to operate their business in the ordinary course. Payments required by the Plan will be made from the cash flow generated by sales of the Debtors' real property and from the proceeds of the investor loan. In its request, the U.S. Trustee asked the Court to either dismiss or convert those cases. About Hustad Investment Hustad Investment Corp., Hustad Investments LP, and Hustad Real Estate Company sought Chapter 11 protection (Bankr. D. Minn. Lead Case No. 13-40789) in Minneapolis on Feb. 20, 2013. The Debtors are engaged in the business of real estate investment. The Debtors own, among others, a commercial development consisting of 8 acres in Eden Prairie, Minnesota, called Bluff Country Village, and a mixed-use development consisting of 110+/- acres in Maple Grove, Minnesota. The majority of Bluff Country Village is owned by HIC, but some of that property is owned by HRE. The Maple Grove Property is owned by HILP. Both Bluff Country Village and the Maple Grove Property are subject to a first mortgage in favor of BMO Harris Bank, N.A. securing a debt of approximately $12.4 million. The Chapter 11 cases were filed on the eve of a sheriff's sale scheduled by BMO in connection with foreclosure of its mortgage. HILP estimated less than $50 million in assets and liabilities. HRE estimated less than $10 million in assets and less than $50 million in liabilities. HIC disclosed $12,941,736 in assets and $15,022,204 in liabilities as of the Chapter 11 filing. The Debtors are represented by Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath Nauman, in Minneapolis. INTERNATIONAL LEASE: Fitch Affirms 'BB' LT Issuer Default Rating ---------------------------------------------------------------- Fitch Ratings has completed a peer review of four rated aircraft lessors, resulting in the affirmation of the long-term Issuer Default Ratings (IDRs) of International Lease Finance Corp. (ILFC, 'BB'), AerCap Holdings N.V. (AER, 'BBB-'), Aviation Capital Group (ACG, 'BBB-') and BOC Aviation Pte Ltd (BOC Aviation, 'A-'). The Rating Outlook for ILFC has been revised to Negative from Stable reflecting continued ownership uncertainty, and the unsecured debt rating of AER has been downgraded to 'BB+' from 'BBB-', reflecting the company's predominantly secured funding profile. The Outlooks for AER, ACG and BOC Aviation remain Stable. Company-specific rating rationales are described below, and a full list of rating actions is provided at the end of this release. The recent cyclical improvement in aviation has supported fundamentals in the leasing sector and allowed a number of lessors to expand their global footprint. Profitability in the airline industry has continued to improve this year, which has resulted in a lack of significant credit issues among the lessors. Aircraft financing has become more plentiful with increasing investor appetite and the securitization market re-emerging. Operating lease penetration of the global fleet has recently crossed 40% and is expected to reach 50% by the end of the decade, according to numerous industry estimates. Fitch believes these positive long term trends are supported by growth in global air travel demand, capital constraints among the world's airlines, and the aircraft technology replacement cycle. The aviation cycle has the tendency to change direction rapidly and remains highly sensitive to exogenous shocks. While lessors have proven to be more resilient than airlines due to their ability to redeploy aircraft, Fitch's ratings on the sector are constrained by its singular focus on aircraft assets and reliance on wholesale funding markets. The lack of price transparency for aircraft makes it more difficult to analyze the residual values of lessors' fleets. Therefore, shareholders' equity is susceptible to impairments, particularly for lessors with older and less frequently traded portfolios. Most aircraft lessors have reported flat lease yields over the past several quarters as market values and lease rates on some aircraft models (such as A320s) have stabilized, but still remain soft. Fitch believes many lessors are positioned to benefit from a rise in interest rates if it is underpinned by improved economic activity. Higher funding costs will be passed onto customers via lease rates, albeit with some lag. If rates rise sharply, that lag may temporarily pressure earnings for those lessors with high levels of near-term debt maturities and/or variable-rate debt, as funding costs would rise faster than lease yields. Proposed lease accounting changes outlined in the most recent FASB/IASB exposure draft will significantly alter financial reporting standards for aircraft lessors. The proposed standards would generally make lessor accounting more complex; both income statements and balance sheets will likely require numerous adjustments to analyze the true economics of the business. While lessors will have to incur higher costs to implement the new rules, Fitch does not expect the economic fundamentals of the business to change significantly. The industry should have sufficient time to adjust to the new standards, which are not expected to take effect before 2017. International Lease Finance Corporation: Key Rating Drivers The Outlook revision to Negative from Stable results from continued uncertainty surrounding the ultimate ownership of ILFC. Fitch believes that failure to complete the contemplated sale to a consortium of Chinese financial institutions would result in greater uncertainty regarding the company's future strategic direction. While a successful IPO would be viewed as a long-term credit positive event, Fitch believes there is a relatively high level of execution risk in a public floatation. Fitch will assess any near-term actions or longer-term strategic changes undertaken by ILFC or American International Group (AIG) as part of the sale process and incorporate them into its ratings. Over the last three years, ILFC has made significant improvements to its stand-alone funding and liquidity profile, which support the current 'BB' rating. At the same time, however, AIG has clearly stated its intention to sell the aircraft leasing unit as expeditiously as possible. Absent the closing of the current transaction, there is the potential that AIG may take steps to otherwise facilitate the sale of all or part of the unit, which may not necessarily be in the best interests of ILFC's bondholders. Despite the ownership uncertainty, ILFC has been able to maintain an attractive funding profile. This is characterized by reduced balance sheet leverage and laddered debt maturities. Debt to tangible equity has continued to decline modestly and stood at 2.7x as of June 30, 2013, down from 3.0x at YE12. Fitch notes that leverage may temporarily increase upon completion of any potential sale, as equity is marked down. The company maintains sufficient liquidity to service approximately 18-20 months of ongoing principal & interest obligations, which is viewed positively by Fitch. ILFC's operating performance has stabilized since the company took large impairment charges in 2010 and 2011. However profitability continues to lag industry averages as a result of elevated depreciation, SG&A and interest expenses. The performance of the aircraft fleet remains adequate and generated cash flow from operations of $1.2 billion in the first six months of 2013, compared to $1.4 billion during the same period in 2012. On aggregate, ILFC's lease yields have remained fairly consistent, even as some of its peers have experienced some weakness. Fitch expects operating performance and operating cash flow to remain adequate to support ongoing funding and capital expenditure requirements. ILFC's external funding needs will start to increase in 2014, as new aircraft deliveries ramp up, and additional debt issuance is likely to follow. The company continues to implement a long-term aircraft portfolio strategy that incorporates acquiring new aircraft, managing the overall fleet via aircraft sales, and maximizing the value of the aircraft throughout its life cycle. Over the past year, ILFC has placed a number of sizeable orders with Boeing, Airbus and Embraer in order to support its future fleeting strategy. The order book, which currently stands at 346 aircraft is the largest in the leasing sector. Rating Drivers and Sensitivities As discussed above, uncertainty around long-term ownership will be the most immediate rating driver for the company. Fitch expects to resolve the Negative Outlook once there is more clarity around this issue. A considerable amount of time has passed since AIG first indicated its desire to sell ILFC in 2011 and the timeframe remains unclear. Once the new ownership structure is clearer, Fitch will assess any potential changes to ILFC's corporate governance and long-term strategy. A meaningful change in ILFC's growth plans may influence Fitch's long-term view of the ratings. Furthermore, any adverse impact on ILFC's current funding facilities or future availability of credit may have a negative impact on its ratings. Additionally, ILFC's ratings are constrained by relatively weak profitability and the residual value risk in the company's older aircraft. Negative momentum for the ratings could also result from inability to access capital markets to fund debt maturities or purchase commitments, deterioration in operating cash flows or a permanent increase in balance sheet leverage (excluding any purchase accounting adjustments). While positive rating momentum is not likely in the near term, over a longer-term time horizon, positive drivers would include consistently stronger profitability, continued funding flexibility, commitment to reduced leverage levels and a robust corporate governance structure. AerCap Holdings N.V. Key Rating Drivers The affirmations of AER's IDR and secured debt ratings and the maintenance of the Stable Outlook reflect the company's attractive aircraft fleet, modest balance sheet leverage, diverse customer base, consistent operating performance, strong competitive positioning, and solid management team. The downgrade of AerCap Aviation Solutions B.V.'s unsecured debt rating to 'BB+' from 'BBB-' reflects the structurally subordinated nature of the debt relative to the company's predominantly secured funding profile. AER's ratings are constrained by exposure to the highly cyclical aviation industry, and the company's wholesale funding profile and largely secured funding structure. Positive rating momentum is not expected in the foreseeable future. Profitability trends have remained strong, supported by a young fleet, reduced debt load and gains on aircraft sales during the first six months of 2013. Net income for 1H13 was $144 million, up 55% from the same period in the prior year. The improvement was primarily driven by reduced depreciation and interest expenses as well as gains on aircraft sales. These were partially offset by lower lease revenues resulting from recent aircraft sales. Fitch expects a positive long-term impact from rising interest rates, although modest negative earnings pressure is possible in the near term. Lease yields have trended down in recent quarters, as the company has refreshed its fleet. The company's higher exposure to the A320 family has also pressured lease yields over the past 2-3 years. Lease rates on newer A320 models have started to firm over the past several months, which should support AER's lease yields. AER's ability to maintain an attractive cost of funding through the use of interest rate hedges has served to offset some of the decrease in asset yields. The company's opportunistic and active approach to fleet management was evident in recent transactions. In November 2012, AER sold its equity interest in the ALS portfolio to Guggenheim, reducing the average age of its fleet and freeing up capital for newer aircraft. In May 2013, the company deployed some of this capital in a large $2.6 billion sale-leaseback deal with LATAM Airlines Group. The LATAM transaction will further diversify AER's fleet into a variety of popular widebody aircraft, including 787s and A350s, as the aircraft deliver through 2017. However, the lessor will need to maintain its focus on managing customer concentrations, which tend to increase with large sale-leasebacks. AER's funding profile has continued to broaden over the past year, but remains primarily reliant on secured debt. As of June 30, 2013, unsecured debt comprised only 9% of total debt, which is lower than other Fitch-rated peers. While the company has demonstrated robust access to funding throughout various market environments, the limited size of the senior unsecured debt class creates structural risks for bondholders. Furthermore, AER has not built up a long-term pool of unencumbered aircraft to support future unsecured issuance. As a result, Fitch has downgraded the senior unsecured debt rating to 'BB+' from 'BBB-' in order to reflect these continued risks. Cash and contingent liquidity sources have decreased over the past year, primarily as a result of aircraft purchases. According to Fitch's calculations, AER currently has approximately 12 months of liquidity available to cover principal & interest obligations (excluding non-recourse debt and restricted cash). Fitch views this with caution, but expects the liquidity level to improve during the second half of 2013. During 4Q12, the company obtained a three-year $290 million senior unsecured revolving credit facility, $220 million of which has been drawn to purchase aircraft from LATAM. Once these aircraft are financed on a permanent basis, the revolver availability is expected increase. Over the past year, Cerberus has sold its entire stake in AER. Approximately 25% of the shares are currently held by Waha Capital PJSC (Waha), with the rest publicly floated. Fitch believes ownership uncertainty, which had been a negative driver, has been reduced. Rating Drivers and Sensitivities Negative rating actions could result if Fitch comes to view AER's capital management as becoming more aggressive or if the company fails to maintain its debt-to-equity ratio at or below 3.0x over the long term. Continued weakness in the liquidity position, deteriorating operating performance and/or lower quality of the aircraft fleet could also lead to negative rating actions. Conversely, further diversification of funding sources, including a meaningful unsecured component, would be viewed positively. Given AER's exposure to the cyclical aviation sector and wholesale funding profile, Fitch does not expect any positive rating momentum over the foreseeable future. Aviation Capital Group: Key Rating Drivers Fitch's rating affirmations and the maintenance of the Stable Outlook reflect ACG's consistent operating cash flow generation, attractive aircraft portfolio, diverse funding profile and appropriate capitalization. Fitch believes ACG maintains sufficient liquidity to support the increased number of aircraft deliveries it is scheduled to take over the next several years. While operating performance at ACG was generally weaker in 2012, lease revenues grew nearly 9% due to portfolio growth, offset by increased depreciation and higher interest expense, which resulted in lower pre-tax operating income in 2012 compared to 2011. Net income was 11% higher in 2012 compared to the year prior, benefitting from a basis adjustment to ACG's deferred tax allowance, which subsequently created a large, one-time tax benefit in 2012. Absent this adjustment, net income in 2012 would have been 41% lower compared to 2011 as higher overall expenses, more than offset incremental lease revenues generated due to portfolio growth. Fitch expects near-term profitability to improve along with net margins, as the new aircraft portfolio seasons. ACG's aircraft portfolio remains attractive and broadly used by airlines, which provides a stable stream of cash flow that minimizes market volatility throughout economic and sector cycles. Currently, the portfolio is evenly split between the B737 and A320 families, with a weighted average age of approximately six years. Approximately 75% of the aircraft is younger than 10 years, by net book value. Currently, ACG has 157 aircraft on order with deliveries scheduled through 2021. Given ACG's strategy of investing in young, primarily narrowbody aircraft with broad customer appeal, Fitch expects the portfolio will remain relatively consistent in the near- to medium-term. Fitch believes ACG is well positioned to support ongoing aircraft funding requirements with nearly $1.3 billion, in aggregate, of available liquidity from its various credit facilities as of March 31, 2013, and approximately $400 million of annual operating cash flows. The company's debt profile is well laddered, with only 15% of maturing within the next five years. In addition, ACG continues to make progress on diversifying its overall capital structure and broadening its capital markets access and other funding sources. During the first quarter of 2013, ACG accessed the unsecured debt market and completed a five-year, $300 million 144A bond transaction at reasonable terms. Currently, the proportion of unsecured debt has grown to represent 51% of the overall debt mix, which is viewed favorably by Fitch. Balance sheet leverage, as measured by total debt-to-equity was 4.22x as of March 31, 2013. Fitch believes ACG's leverage is modestly higher relative to other aircraft lessors rated by Fitch. Over the last several years, leverage has remained relatively stable as incremental earnings have offset an increase in overall debt levels to fund aircraft purchases. Fitch expects ACG's leverage to remain within 4x to 5x in the near term, which is consistent with its current ratings. Fitch considers ACG's standalone profile to be reflective of a 'BB+' rating, without institutional support. Based on the 'Rating FI Subsidiaries and Holding Companies' criteria, Fitch views ACG's business as having limited importance to Pacific LifeCorp's (PCL) overall operations due to limited operational and financial synergies, as well as lack of common branding. This suggests that future support may be uncertain, particularly in a stress scenario. That said, Fitch believes PCL maintains a high level of commitment to ACG, as evidenced by Pacific Life Insurance Company's (PLIC) ownership of 100% of ACG's equity, which amounted to $1.2 billion of invested capital to date, representing a meaningful portion of the insurance company's equity base. Consequently, ACG's long-term IDR receives a one-notch uplift from the standalone rating due to PCL's direct ownership and demonstrated financial support. Rating Drivers and Sensitivities Fitch believes positive rating momentum is limited based on ACG's current capitalization on a standalone basis. In addition, a further uplift in ACG's current ratings is not envisioned unless balance sheet leverage is reduced to below 3.5x or more explicit forms of parental support are incorporated. Conversely, negative rating actions could result from an unwillingness or inability of PCL to provide timely support to ACG. Significant deterioration in operating performance and a material decline in operating cash flow resulting from a significant weakening of sector or economic conditions, or a meaningful increase in balance sheet leverage could also generate negative rating momentum. BOC Aviation Pte Ltd: Key Rating Drivers The affirmation of BOC Aviation's 'A-' IDR and senior unsecured debt rating and maintenance of the Stable Outlook primarily reflect Fitch's view of a very high probability of support from Bank of China (BOC; 'A'/Stable), if needed. This Fitch's view with respect to parent support is premised on BOC Aviation's strategic importance to and strong links with BOC, as evident in the name- sharing, full ownership and close board oversight by BOC, forthcoming resources, close reporting links and cross selling potential. This is despite BOC Aviation's small size relative to BOC and their different domicile. Fitch considers the company's stand-alone credit profile in its analysis, although it is not directly incorporated into the IDR. BOC provides BOC Aviation a direct committed line of USD2 billion, which is considerable relative to the latter's assets of USD9.9 billion at end-June 2013. This is on top of common equity of USD300 million injected by BOC since taking over BOC Aviation in 2006. Such firm parental backing underlines BOC Aviation's moderately high leverage appetite, with its debt/equity ratio managed to an internal target of 3.5x-4.0x. BOC Aviation is one of the few wholly owned subsidiaries within the BOC group that reports directly to BOC's management. Seven of BOC Aviation's nine board members are BOC representatives; with a high-ranking officer of BOC, Chen Siqing, appointed as chairman. These internal arrangements underline the strategic importance of BOC Aviation to BOC, despite the former accounting for less than 0.5% of BOC's consolidated assets. Cross-selling initiatives center on BOC Aviation assisting BOC in originating relationships with airlines and aircraft manufacturers. This supports BOC's aim of diversifying its non-interest income base and to move into non- commercial banking businesses. Fitch considers BOC Aviation's standalone profile to be reflective of a 'BB+' rating (i.e. without any institutional support). This reflects its consistent track record, young fleet age, solid lessee quality and a well-seasoned management team. The standalone profile is constrained by BOC Aviation's leverage appetite and reliance on secured bank borrowings. BOC Aviation has consistently reported one of the highest ROAs among its rated peers - thanks to its active fleet quality management, aircraft collections and procurement, combined with a low cost of funds. Fitch takes a positive view of BOC Aviation's demonstrated ability to trade aircraft through the cycle, which has allowed it to keep the average age of its portfolio at around four years. Changes in the agency's view concerning the standalone credit profile would be likely to take into account BOC Aviation's future leverage appetite, funding diversity and/or risk appetite in terms of lessee quality and growth ambitions. Rating Drivers and Sensitivities Any perceived changes in BOC's propensity and ability to provide support would impact BOC Aviation's IDR and senior unsecured debt ratings. BOC Aviation's ratings are also likely to be sensitive to changes in BOC's ratings. However, a change in BOC Aviation's standalone risk profile is unlikely to directly impact its IDR, unless support factors that drive its IDR were to change. Fitch has affirmed the following ratings: International Lease Finance Corp. -- Long-term IDR at 'BB'; Outlook revised to Negative from Stable; -- $3.9 billion senior secured notes at 'BBB-'; -- Senior unsecured debt at 'BB'; -- Preferred stock at 'B'. Flying Fortress Inc. -- Senior secured debt at 'BB'. ILFC E-Capital Trust I -- Preferred stock at 'B'. ILFC E-Capital Trust II -- Preferred stock at 'B'. AerCap Holdings N.V. -- Long-term IDR at 'BBB-'; Outlook Stable. AerCap B.V. AerCap Dutch Aircraft Leasing I B.V. AerCap Dutch Aircraft leasing IV B.V. AerCap Dutch Aircraft Leasing VII B.V. AerCap Engine Leasing Limited AerCap Ireland Limited AerCap Note Purchaser (IOM) Limited AerCap Partners I Limited AerCap Partners 767 Limited AerFunding 1 Limited Flotlease MSN 973 Limited Genesis Portfolio Funding 1 Limited GLS Atlantic Alpha Limited Harmonic Aircraft Leasing Limited Melodic Aircraft Leasing Limited Philharmonic Aircraft Leasing Limited Rouge Aircraft Leasing Limited Sapa Aircraft Leasing 2 BV Sapa Aircraft Leasing BV SkyFunding Limited Symphonic Aircraft Leasing Limited Triple Eight Aircraft Leasing Limited Wahaflot Leasing 3699 (Bermuda) Limited Westpark 1 Aircraft Leasing Limited -- Senior secured bank debt at 'BBB'. Aviation Capital Group: -- Long-term IDR at 'BBB-'; Outlook Stable; -- Senior unsecured debt rating at 'BBB-'. BOC Aviation Pte Ltd: -- Long-term IDR at 'A-', Outlook Stable; -- Senior unsecured debt rating at 'A-'. Fitch has downgraded the following rating: AerCap Aviation Solutions B.V. (subsidiary of AER) -- Senior unsecured debt rating to 'BB+' from 'BBB-'. Fitch has assigned ratings to senior secured debt obligations of the following AER subsidiaries: AerCap Ireland Funding I Limited AerCap Leasing 946 Limited Cielo Funding Limited Harmony Funding BV Parilease / Jasmine Aircraft Leasing Limited Worldwide Aircraft Leasing Limited Skyfunding II Limited -- Senior secured bank debt 'BBB'. IOWORLDMEDIA INC: Names Two New Board Members --------------------------------------------- ioWorldMedia, Inc., appointed Zachary McAdoo and Julia Miller to its Board of Directors. The Company also has appointed Mr. McAdoo to serve as the Company's chairman, president, chief executive officer and chief financial officer, and Julia Miller to serve as the Company's chief operating officer and secretary. Mr. McAdoo replaces Thomas J. Bean, who remains on the Company's Board of Directors. The Company believes that Mr. McAdoo's experience in advising and investing in small and microcap public companies will add valuable insight to the Company's senior management team, and Julia Miller's experience with technology, marketing and executive management functions will increase the capabilities of the senior management team. The new management team will focus on the further expansion of the Company's Internet radio content into the business to business and business to consumer markets. Mr. McAdoo, commented "ioWorldMedia has a tremendous opportunity to expand its quality digital Internet radio content into the marketplace. We believe that ioWorldMedia is the ideal solution to meet the streamed music and other needs of businesses and consumers with quality, cost beneficial, hand-curated music." Sells Convertible Debenture On Sept. 2, 2013, ioWorldMedia sold 10 percent Convertible Debentures to three accredited investors, including Big Red Investments Partnership, Ltd. (an affiliate of Thomas J. Bean, who is a member of the Company's board of directors and former chairman, president, chief executive officer and chief financial officer of the Company), Zanett Opportunity Fund, Ltd. (an affiliate of Zachary McAdoo, the current chairman, president, chief executive officer and chief financial officer of the Company), and an unaffiliated individual investor, in the aggregate principal amount of $350,000. The Company will use the proceeds from these transactions for general corporate and working capital purposes. On Aug. 28, 2013, the Company issued Convertible Debentures to each of Big Red Investments Partnership, Ltd., Bubba Radio Network, Inc., and Twin Management Group, Inc., in satisfaction of certain outstanding obligations owed by the Company to each of these parties for related party advances or past services rendered. The amounts of those obligations were $332,163 to Big Red Investments Partnership, Ltd., $80,311 to Bubba Radio Network, Inc. and $15,000 to Twin Management Group, Inc. The Company issued Convertible Debentures to each of Big Red Investments, Ltd., in the principal amount of $332,163, Bubba Radio Network, Inc., in the principal amount of $80,311 and Twin Management Group, Inc., in the principal amount of $15,000. Consulting Agreement On Aug. 31, 2013, the Company entered into a Consulting and Development Agreement with an unaffiliated consulting firm, for the provision of certain sales, marketing and media technology services, among other services. In addition to cash compensation, the Consulting Agreement provides for the issuance of 10,000,000 restricted shares of Common Stock. A full-text copy of the Form 8-K is available for free at: http://is.gd/LH4HHM About ioWorldMedia Tampa, Fla.-based ioWorldMedia, Incorporated, operates three primary internet media subsidiaries: Radioio, ioBusinessMusic, and RadioioLive. ioWorldMedia disclosed a net loss of $746,619 in 2012, as compared with a net loss of $954,652 in 2011. The Company's balance sheet at June 30, 2013, showed $1.73 million in total assets, $1.88 million in total liabilities, $5.77 million in preferred stock, and a $5.92 million total stockholders' deficit. Patrick Rodgers, CPA, PA, in Altamonte Springs, FL, 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 minimum cash balance available for payment of ongoing expenses, a negative working capital balance, has incurred losses and negative cash flow from operations for the past two years, and it does not have a source of revenue sufficient to cover its operating costs. These factors raise substantial doubt about the Company's ability to continue as a going concern. KHAN FAMILY: Wants Plan Filing Period Extended Until Oct. 21 ------------------------------------------------------------ Kahn Family, LLC, asks the U.S. Bankruptcy Court for the District of South Carolina to extend the Debtor's exclusive to file and obtain acceptances of a plan until Oct. 21, 2013. The Debtor also seeks an extension of the deadline set forth in SC LBR 3016-1 for the Debtor to file a plan and disclosure statement through and including Oct. 21, 2013. According to papers filed with the Court, the Bar Date in this Chapter 11 Case is Aug. 22, 2013. "Moreover, the Bar Date for governmental units is even later, Oct. 21, 2013," the Debtor said. "While every effort has been made to identify all claims and potential claims on the Schedules, it is quite likely that unanticipated claims and claim amounts may be filed before the Bar Date." Counsel for the Kahn Family, LLC can be reached at: R. Geoffrey Levy LEVY LAW FIRM, LLC 2300 Wayne Street Columbia, SC 29201 Tel: (803) 256-4693 Fax: (803) 799-5245 The hearing to consider the Motion is scheduled for Sept. 12, 2013, at 10:00 a.m. Objections are due on Sept. 9, 2013. Kahn Family, LLC, and Kahn Properties South, LLC, filed bare-bones Chapter 11 petitions (Bankr. D. S.C. Case Nos. 13-02354 and 13-02355) on April 22, 2013. Kahn Family disclosed $50 million to $100 million in assets and liabilities. R. Geoffrey Levy, Esq., at Levy Law Firm, LLC, serves as the Debtors' counsel. KINDER MORGAN: DBRS Confirms Issuer Rating at 'BB' -------------------------------------------------- DBRS Inc. has confirmed the Issuer Rating and the Medium-Term Notes & Unsecured Debentures of Kinder Morgan Energy Partners, L.P. (KMP) at BBB (high). Concurrently, DBRS has confirmed the Issuer Rating and the Senior Notes and Debentures of Kinder Morgan, Inc. (KMI) at BB and the recovery rating of RR4 for KMI's Senior Notes and Debentures. All ratings have Stable trends. KMP's ratings reflect its diversified energy infrastructure asset base that provides stable cash flows from regulated fee-based business with medium- to long-term contracts. KMP's financial profile has improved with prudent financing of recent acquisitions through issuance of equity, with DBRS-adjusted debt-to-capital falling to 58% at last 12 months June 2013 from 63% in 2011. All other credit metrics remained within the current DBRS rating category. KMI's ratings reflect its diversified sources of cash flow from investments. DBRS notes that the ratings are constrained by KMI's relatively high debt levels and the structural subordination of the debt at KMI to all debt at KMP and its subsidiaries. With a major drop down of assets to KMP and its subsidiaries in 2012 to 2013, debt levels at KMI have reduced and DBRS expects this trend to continue as KMI's drop-down strategy continues. KMP's $5 billion acquisition of Copano Energy LLC (Copano) closed on May 1, 2013. In February 2013, DBRS noted that while the acquisition adds scale to KMP's midstream operations, approximately 30% of Copano's cash flow is derived from commodity price sensitive contracts that moderately impacts KMP's business risk profile. LAKE PLEASANT: Sept. 17 Hearing on Final Decree Closing Case ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Arizona will convene a hearing on Sept. 17, 2013, at 1:30 p.m., to consider Lake Pleasant Group, LLP and DLGC II, LLC's motion for final decree closing the Debtors' Chapter 11 cases. According to the Debtors, on July 3, Johnson Bank conducted a trustee's sale of the Debtors' property -- approximately 444 acres of undeveloped real property located near State Route 74 and Old Lake Pleasant Road in Peoria, Arizona. In light of the foreclosure upon the property, and upon the Debtors' surrender of their other encumbered assets, the Debtors' estates will have been fully administered in accordance with the Plan filed in the cases. The Bank asserted a first-position lien against the property, to the extent of approximately $19,334,987. The order confirming the Plan was entered on April 23, 2012, and the order granting the Debtors' motion to approve post- confirmation clarification was entered on Nov. 6, 2012. About Lake Pleasant and DLGC II Lake Pleasant Group, LLP, and affiliate DLGC II, LLC, sought Chapter 11 protection (Bankr. D. Ariz. Case Nos. 13-09574 and 13-09576) in Phoenix on June 5, 2013. The Debtors have tapped Wesley Denton Ray, Esq., and Philip R. Rudd, Esq., at Polsinelli, P.C., as counsel. LPG estimated at least $10 million in assets and liabilities. DLGC II estimated at least $10 million in assets and liabilities of less than $10 million. LPG and DLGC II, LLC, first filed for Chapter 11 bankruptcy protection (Bankr. D. Ariz. Case No. 11-10170) on April 13, 2011, with Philip R. Rudd, Esq. -- prudd@polsinelli.com -- at Polsinelli PC on board as counsel. At the request of Johnson Bank, the Court consolidated for administrative purposes, the chapter 11 cases that Lake Pleasant Group, LLP, and affiliate DLGC II, LLC, commenced on June 5, 2013, with the cases the two Debtors commenced on April 13, 2011. Phoenix, Arizona-based LPG was formed for the purpose of purchasing and developing 244 acres of real property located near State Route 74 and Old Lake Pleasant Road in Peoria, Arizona. In the schedules filed in the original case, LPG disclosed assets of $15,780,263 and liabilities of $10,301,552. LANDAUER HEALTHCARE: U.S. Trustee Balks at Timeline of Asset Sale ----------------------------------------------------------------- Roberta A. DeAngelis, U.S. Trustee for Region 3, objected to the motion of Landauer Healthcare Holdings, Inc., et al. for approval of bidding procedures to govern the sale of the Debtors' assets. The U.S. Trustee objects to the motion to the extent that the time table set forth in the motion denies parties-in-interest an opportunity to effectively participate in the proposed sale process. In the motion, the Debtors propose a Sept. 18, 2013, auction date and a Sept. 20, 2013, sale hearing. According to the U.S. Trustee, the Debtors have alleged that the sale must be conducted on an expedited basis due to the requirements of their lender, well as the stalking horse purchaser. The Debtors' interim cash collateral order provides that the Debtors' right to use cash collateral terminates if a bidding procedures order in form and substance satisfactory to the lenders is not entered by Sept. 5. The asset purchase agreement provides that it may be terminated if, among other things, the bid procedures order (1) is not entered by Aug. 30, or (2) does not provide for the auction to be held by Sept. 18, and a sale hearing to be held by Sept. 20. It appears that the purchaser's own timetable allows at least some room to move these dates forward, however, as section 4.4 of the asset purchase agreement requires a closing by Oct. 14. Jane M. Leamy, Esq., represents the U.S. Trustee. About Landauer Healthcare Holdings Home medical equipment provider Landauer Healthcare Holdings, Inc., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-12098) on Aug. 16, 2013, with a deal to sell all assets to Quadrant Management Inc. for $22 million, absent higher and better offers. The Company has 32 operating locations, with 50% of inventory concentrated in Mount Vernon, New York; Great Neck, New York; Warwick, Rhode Island; and Philadelphia, Pennsylvania. Landauer, which derives revenues by reimbursement from insurers, Medicare and Medicaid, reported net revenues of $128.5 million in fiscal year ended March 31, 2013. Landauer estimated assets and debt of at least $50 million. The Debtors have tapped John A. Bicks, Esq. -- john.bicks@klgates.com -- at K&L Gates LLP as bankruptcy counsel, Michael R. Nestor, Esq. -- mnestor@ycst.com -- at Young Conaway Stargatt & Taylor LLP as Delaware counsel, Carl Marks Advisory Group as financial advisors, and Epiq Systems as claims and notice agent. LIBERTY INTERACTIVE: Fitch Rates Sr. Unsecured Notes Due 2043 'BB' ------------------------------------------------------------------ Fitch Ratings has assigned a 'BB' rating to Liberty Interactive LLC's (Liberty) proposed exchangeable senior unsecured debenture due 2043. The notes are exchangeable for HSN, Inc. (HSN) common stock. The notes will be issued under the indenture dated July 7, 1999. Proceeds are expected to be used for general corporate purposes. The new debentures will rank pari passu with Liberty's existing notes and debentures ($2.9 billion as of June 30, 2013) and will be structurally subordinated to QVC Inc.'s (QVC) debt ($3.9 billion as of June 30, 2013). QVC's debt benefits from a pledge of the capital stock of QVC and is guaranteed by QVC's material domestic subsidiaries. The transaction modestly increases leverage; however, the increased leverage is manageable within current ratings. For additional information regarding Liberty and QVC, please see Fitch's credit report published on March 4, 2013. The new debentures may be exchanged at the holder's option after March 2014 if the market price of the HSN shares equals or exceeds a defined level and on or after July 2016 through October 2016 and beginning in July 2043 regardless of the market price of the HSN shares. Holders may also exercise their option upon a fundamental change (as defined within the prospectus) or if the company calls the debentures for redemption. While Liberty may satisfy such redemption with either cash, delivering the applicable number of shares, or a combination of both, the delivery of reference shares is limited due to the terms of Liberty Interactive's agreement with HSN and its status as an affiliate of HSN. Any exchanges would likely be settled with cash. The debentures may be redeemed by Liberty on or after Oct. 5, 2016 at any time. Any dividend in excess of the quarterly dividend of $0.18, subject to adjustment, or distributions made by HSN will be distributed to the debenture holders as an additional distribution, except for common equity, which would become additional HSN Shares. The principal amount of the debentures will not be reduced by any additional distributions related to regular cash dividends. However, the debenture's principal amount would be reduced by any additional distributions made related to extraordinary distributions on or related to the HSN shares. Interest payments on the debentures will be calculated based on the original principal amount (regardless of any adjustments related to extraordinary distributions). Subsequent to such an extraordinary distribution, the principal amount will be further reduced on interest payment dates to the extent necessary so that the annualized yield on the debenture does not exceed the stated coupon rate. An extraordinary distribution includes any cash or asset consideration (other than common equity) that is distributed by HSN in connection with a merger, consolidation, share exchange, liquidation or dissolution involving a HSN. Similar to Liberty's existing debentures, there is no material covenant protection for debenture holders, but there are lien restrictions. Liens are not permitted under the debentures, unless a pari passu lien is granted. Standard carveouts exist, and there is also a general lien basket that limits liens to 15% of the total consolidated asset value of Liberty and its restricted subsidiaries. Key Rating Drivers Fitch's Issuer Default Ratings (IDRs) for Liberty and QVC reflect the consolidated legal entity/obligor credit profile, rather than the Liberty Interactive/Venture tracking stock structure. Based on Fitch's interpretation of the Liberty bond indentures, the company could not spin out QVC without consent of the bondholders, based on the current asset mix at Liberty. QVC generates 84% and 96% of Liberty's revenues and EBITDA, respectively. In addition, Fitch believes QVC makes up a meaningful portion of Liberty's equity value. Any spin off of QVC would likely trigger the 'substantially all' asset disposition restriction within the Liberty indentures. The consolidated legal/obligor credit view may change over time if the Liberty Ventures assets become a more meaningful portion of the consolidated Liberty asset mix/equity value. At that point, Fitch may adopt a more hybrid rating analysis, taking into consideration the attribution of assets and liabilities within each tracking stock. Fitch does not expect this to occur in the near or intermediate term. The ratings reflect Fitch's expectation that the company will continue to manage leverage on a Liberty consolidated basis. Fitch expects Liberty's gross unadjusted leverage to be managed at 4x and QVC unadjusted gross leverage to be managed at 2.5x. As of June 30, 2013, Fitch calculates QVC's unadjusted gross leverage at 2.1x and Liberty's unadjusted gross leverage at 3.6x (excludes Trip Advisor's debt and EBITDA). While Fitch expects EBITDA growth would lead to reduced leverage, Fitch expects Liberty to manage leverage closer to its target levels over the long term. Currently, there is financial flexibility for debt funded acquisition and/or share repurchases. Fitch rates both QVC's senior secured bank credit facility and the senior secured notes 'BBB-' (two notches higher than QVC's IDR). The secured issue ratings reflects what Fitch believes would be QVC's standalone ratings. The ratings incorporate the risk of continued acquisitions at Liberty Interactive. Fitch recognizes that there is a risk of an acquisition of HSN Inc. However, the ratings may remain unchanged depending on how the transaction is structured and on the company's commitment to returning QVC's or Liberty's leverage to 2.5x and 4x, respectively. Operating Performance The ratings reflect the solid operating performance at QVC with revenues and EBITDA for the LTM ending June 30, 2013 up 1.2% and 3.3%, respectively. During the same period, QVC Germany and Japan endured revenue declines of 6.3% and 4.9%, respectively. The geographic diversification of QVC provides the credit cushion to endure cyclical declines in the individual regions. The ratings incorporate the cyclicality inherent in QVC's business/retail industry. Fitch recognizes QVC's ability to manage product mix and adapt to its customers shopping preferences. QVC has managed to grow revenues over the last three years and manage Fitch calculated EBITDA margins in the 20% to 22% range over that same time frame. Fitch believes that QVC will be able to continue to grow revenues at least at GDP levels going forward. Fitch models low to mid- single digit revenue growth at both QVC and at Liberty consolidated. QVC EBITDA margin fluctuation is driven in part by the product mix and will likely fluctuate over time as the product mixes changes. However, Fitch believes, over the next few years, QVC's EBITDA margins will remain in this historical 20% to 22% range. Liberty's e-commerce companies continue to have healthy revenue growth with revenues up 12.3% in the LTM period ending June 30, 2013. However, EBITDA continues to be pressured, down 9.6% due to increased promotional activity to move seasonal inventory and increased spending on advertising and marketing. While margins and EBITDA levels have been negatively affected, they remain positive and contribute positive cash flows to the consolidated credit. These businesses are relatively small in size, accounting for approximately 5% of consolidated Liberty EBITDA. Fitch does not ascribe a material weight to the e-commerce businesses when assessing the consolidated credit profile. Liquidity and Maturities Fitch believes liquidity at Liberty Interactive will be sufficient to support operations and QVC's expansion into other markets. Acquisitions and share buybacks are expected to be a primary use of free cash flow (FCF). Fitch believes that there is sufficient liquidity and cash generation (from investment dividends and tax sharing between Liberty Interactive and Liberty Ventures) to support debt service and disciplined investment at Liberty Venture. Fitch recognizes that in the event of a liquidity strain at Liberty Ventures, Liberty Interactive could provide funding to support debt service to Liberty Ventures (via intercompany loans), or the tracking stock structure could be collapsed. Fitch notes that cash can travel throughout all entities relatively easily. Although the tracking stock structure adds a layer of complexity, Liberty LLC has in the past reattributed assets and liabilities. Fitch believes that resources at QVC would be used to support Liberty LLC, and vice versa, if ever needed. As of June 30, 2013, liquidity for Liberty (excluding Trip Advisor) included $1.2 billion in cash and $1 billion available under the QVC credit facility, which expires in March 2018. Fitch calculates FCF of $714 million in LTM period ending June 30, 2013. Based on Fitch's conservative projections, Fitch expects Liberty's FCF to be in the range of $750 million to $900 million. In addition, Fitch calculates $6.7 billion in public holdings. Fitch believes these assets could be liquidated in the event that Liberty needed additional liquidity. Liberty's next maturity is not until 2029. QVC's next maturity, other than its credit facility in 2018, is approximately $769 million in 7.5% senior secured notes due in 2019. Fitch believes Liberty has sufficient liquidity to handle these maturities. Rating Sensitivities Positive Rating Actions: Fitch believes that the current financial policy is consistent with the current ratings. If the company were to manage to more conservative leverage targets, ratings may be upgraded. Negative Rating Actions: Conversely, changes to financial policy (including more aggressive leverage targets) and asset mix changes that weakened bondholder protection, could pressure the ratings. While unexpected, revenue declines in excess of 10% that materially drove declines in EBITDA and FCF and resulted in QVC leverage exceeding 2.5x would likely pressure ratings. Fitch currently rates Liberty and QVC as follows: Liberty -- IDR 'BB'; -- Senior unsecured debt 'BB'. QVC -- IDR 'BB'; -- Senior secured debt 'BBB-'. The Rating Outlook is Stable. LIBERTY INTERACTIVE: Moody's Rates New $350MM Notes Due 2043 'B2' ----------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Liberty Interactive's ("LINTA") proposed offerring of $350 million Exchangeable Debentures due 2043. All other ratings, including Liberty Interactive's Ba3 Corporate Family Rating and its stable rating outlook, are unaffected. These notes are exchangeable, under certain circumstances, for shares of HSN, Inc. Net proceeds from the sale of the debentures are expected to be used for general corporate purposes, which may include capital expenditures, acquisitions, working capital, repayment or refinancing of debt and repurchases of common stock. The B2 rating assigned to the notes reflects that they are a senior unsecured obligation of Liberty Interactive, ranking pari- passu with other senior unsecured debt of Liberty Interactive, and that the notes are structurally junior to a significant amount of debt issued by Liberty Interactive's wholly owned subsidiary QVC, Inc., which comprises the significant majority of revenues and earnings on a consolidated basis. The following rating was assigned: Liberty Interactive LLC: $350 million Exchangeable Senior Debentures due 2043 at B2 (LGD 5, 85%) Ratings Rationale LINTA's Ba3 CFR reflects the good operating margins and cash flow generated from its portfolio of operating assets led by QVC, its moderate leverage with debt/EBITDA in the low four times range, and risk that its assets will be utilized in a manner that benefits shareholders more than bondholders. The rating also recognizes QVC's sizable position in the television shopping industry, its international expansion and strong capabilities in online shopping. The ratings also take into account the company's solid overall liquidity profile with its high cash balances and long term debt maturity profile. The stable rating outlook reflects Moody's expectation that LINTA will consider opportunistic transactions including share repurchases. Moody's also expects Liberty to retain a solid liquidity position and that the QVC business will continue to show stable performance, notwithstanding economic pressures in Europe where the company has a meaningful exposure. The stable rating outlook also reflects Moody's expectations that QVC will maintain debt/EBITDA within its target range of 2.0-2.5 times. In view of the company's history of aggressive financial policies, there is limited upward rating momentum in the near term. Over time maintaining balanced financial policies and continued meaningful debt reductions could lead to an upgrade. The ratings could be downgraded if liquidity weakens, the asset composition or risk profile meaningfully changes, QVC's operating performance deteriorates meaningfully, or debt-to-EBITDA is sustained above 5.25x. The principal methodology used in this rating was the Global Retail Industry Methodology published in June 2011. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. LIBERTY INTERACTIVE: S&P Assigns 'BB' Rating to $350MM Debentures ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned Liberty Interactive LLC's proposed $350 million exchangeable debentures due 2043 a 'BB' (at the same level as S&P's corporate credit rating on Liberty Interactive Corp.) issue-level rating, with a recovery rating of '4', indicating S&P's expectation for average (30% to 50%) recovery in the event of a payment default. The proposed notes will include a put/call option in year three. Liberty Interactive LLC is a subsidiary of Liberty Interactive Corp. S&P's 'BB' corporate credit rating on Liberty Interactive Corp. reflects its view of the consolidated entity, including QVC Inc., its principal operating subsidiary, Liberty Interactive LLC, and other subsidiaries. The rating outlook is stable. Each debenture is exchangeable into a combination of HSN Inc. shares or cash equal to the value of the shares. The company will use proceeds for general corporate purposes, including share repurchases. For 2013, S&P is expecting mid-single-digit percent revenue and EBITDA growth at Liberty Interactive Corp. S&P assumes moderate growth across most of QVC's markets, with some continuing softness in Germany. S&P expects that debt leverage will decrease modestly from the current level of 3.7x, below its leverage threshold of 4.5x for Liberty Interactive at a 'BB' rating. S&P's discretionary cash flow expectation in 2013 is more than $1 billion. RATINGS LIST Liberty Interactive Corp. Corporate Credit Rating BB/Stable/-- New Rating Liberty Interactive LLC $350M exchangeable debentures due 2043 BB Recovery Rating 4 LIVEDEAL INC: Incurs $511K Net Loss in June 30 Quarter ------------------------------------------------------ LiveDeal, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $511,169 on $606,867 of net revenues for the three months ended June 30, 2013, compared with a net loss of $281,770 on $777,857 of net revenues for the three months ended June 30, 2012. The Company reported a net loss of $4.79 million on $1.73 million of net revenues for the nine months ended June 30, 2013, compared with a net loss of $732,401 on $2.45 million of revenues for the nine months ended June 30, 2012. "Net revenues decreased in the third quarter and the first nine months of fiscal 2013 as compared to the third quarter and the first nine months of fiscal 2012 primarily due to the decrease in legacy revenues, which was slightly offset by increases in revenues for the online presence marketing product." During the first nine months of fiscal 2013, the Company recognized $3.29 million of interest expense relating to the issuance of debt and the conversion of the Company's unsecured Subordinated Convertible Notes to warrants in December 2012 and March 2013. The Company's balance sheet at June 30, 2013, showed $3.76 million in total assets, $897,393 in total liabilities, and stockholders' equity of $2.86 million. "For the three and nine months ended June 30, 2013, the Company had a net loss of $511,169 and $4,786,695 as compared to a net loss of $281,770 and $732,401 for the three and nine months ended June 30, 2012. These circumstances result in substantial doubt as to the Company's ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/OFn9XQ Las Vegas, Nev.-based LiveDeal, Inc., provides online customer acquisition services for small-to-medium sized local businesses, or "SMBs". LOOP CORP: Banco Panamerico No Standing to Appeal, 7th Cir. Says ---------------------------------------------------------------- WACHOVIA SECURITIES, LLC, Plaintiff-Appellee, and GOLF VENTURE, LLC, Intervenor-Appellee, v. LOOP CORPORATION, Defendant-Appellee, APPEAL OF: BANCO PANAMERICANO INCORPORATED, Case No. 11-3860 (7th Cir.) is an another appeal in the litigation saga surrounding the many companies owned by Leon A. Greenblatt. Earlier, in 2012, the U.S. Court of Appeals for the Seventh Circuit affirmed a district court's order piercing the corporate viel of one of Greenblatt's companies, Loop Corporation, and voiding a lien over that company's assets held by a second Greenblatt company, Banco Panamericano. In the current appeal case, Banco tries to fight the effect of the 2012 Seventh Circuit Court decision in the Wachovia I case. On appeal, Banco believes it retains an interest in what happens to Loop's assets. The district court previously ordered the sale of Loop's only valuable asset, EZ Links stock, in order to satisfy two other secured liens against Loop held by Golf Venture and Wachovia. Banco asserts that it has standing on appeal to contest the district court's decisions surrounding the sale. The Seventh Circuit disagrees with Banco's contention. "Our holding in Wachovia I makes Banco, at best, an unsecured creditor of Loop. Golf Venture and Wachovia are secured creditors and, thus, would always take ahead of Banco. No matter how many convoluted ways Banco tries to characterize its situation, Banco simply has no injury here. For that reason, we dismiss Banco's appeal for lack of standing, and we also grant Golf Venture's and Wachovia's Fed. R. App. P. 38 motions against Banco for bringing a frivolous appeal," the Seventh Circuit opined. A copy of the Seventh Circuit's August 8, 2013 Decision is available at http://is.gd/nUdk1lfrom Leagle.com. Loop Corp. in Chicago, Illinois, filed for Chapter 11 bankruptcy (Bankr. N.D. Ill. Case No. 11-17917) on April 27, 2011. John M. Holowach, Esq., at Holowach & Pukshansky LLC, served as bankruptcy counsel. The Debtor scheduled assets of $76,500,000 and debts of $33,030,231. Shortly after the filing, Judge Bruce Black dismissed the case, citing bad faith. MEI CONLUX: S&P Assigns 'B' Corp. Credit Rating; Outlook Stable --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Malvern, Pa.-based MEI Conlux Holdings Inc. (MEI). The outlook is stable. At the same time, S&P assigned its 'B' issue rating to the company's $455 million senior secured credit facilities, which comprise a $395 million senior secured first-lien term loan and a $60 million revolver. The recovery rating on the senior secured credit facilities is '3', which indicates S&P's expectation of meaningful (50%-70%) recovery in the event of a payment default. MEI Inc. is the borrower under the senior secured facilities. MEI is currently subject to an agreement to be purchased by Crane Co. S&P expects the acquisition to close by the end of the year. "Our ratings on MEI reflect our view of the company's business risk profile as "weak" and its financial risk profile as "highly leveraged," said credit analyst Svetlana Olsha. MEI provides unattended payment solutions for vending, transportation, gaming, retail, and service-payment industries. The company's weak business risk profile reflects S&P's assessment of its narrow scope of operations as a participant in a competitive niche market. However, the company's leading market position and technological expertise partly offset this narrow scope. S&P considers the company's management and governance to be "fair." "We expect MEI's 2013 revenue to decline by low-single digits due largely to reduced purchases from one of MEI's major customers, and to be partially offset by modest end-market improvement. We forecast total revenues will improve moderately in 2014 based on our expectation of a still-sluggish global economy combined with an increase in orders from key customers. We expect MEI will sustain good EBITDA margins in the low-20% area, supported by the company's low-cost sourcing and continuous investment in technology. We assume that MEI will continue to spend about 10% of revenue on research and development," S&P said. The unattended payment systems industry remains concentrated and S&P expects the company to maintain a dominant market position as the no. 1 player in its core markets. The company's geographic diversity is fair, with about 60% of revenues coming from outside of North America and close to 25% of total revenues derived from Japan. S&P believes that MEI has some customer concentration, with its top five customers accounting for about 28% of 2012 revenues. However, the company's long-standing customer relationships and large installed equipment base helps to reduce earnings and cash flow volatility, in S&P's view. "We view MEI's financial risk profile as "highly leveraged." We expect total debt to EBITDA to be about 5.5x and funds from operations (FFO) to total debt to be about 12% by year-end 2013. These measures incorporate our adjustments for operating leases and postretirement obligations, and include about $58 million in preferred stock owned by the private equity sponsors, which we consider to have minimal equity content under our hybrid capital criteria. However, we recognize that the absence of a maturity date on the preferred stock, its deep subordination, and the absence of any cash dividends provide the company with financial flexibility. We expect MEI to maintain total leverage of 5x-6x and FFO to debt of about 10% in the next 12-18 months," S&P said. The rating outlook is stable. S&P expects the company's good niche market position and EBITDA margins will help sustain credit measures that are commensurate with the ratings. S&P could raise the ratings if the company improves and sustains its credit measures--for instance, at a total leverage ratio of less than 5x. S&P believes MEI could achieve this through revenue growth, stable EBITDA margins, and debt reduction using free cash flow. To consider an upgrade, S&P would also need to believe the company would adhere to a financial policy consistent with a higher rating. S&P could lower the ratings if subpar operating performance weakens the company's credit measures, specifically if leverage exceeds 6x for an extended period. S&P believes this could occur, for instance, if key customers delay or reduce purchases from MEI or if an economic downturn reduces end-market demand. S&P could also lower the ratings if cash flow generation is weak. For instance, negative free operating cash flow or FFO to total debt of 5% or less could result in a downgrade. MERIDIAN SUNRISE: Inks 2nd Stipulation to Use Cash Until Sept. 30 ----------------------------------------------------------------- Meridian Sunrise Village, LLC, and U.S. Bank National Association, on its own behalf and in its capacity as administrative agent for itself and certain other lenders collectively holding an interest in (among other things) the Debtor's monthly lease income ("Cash Collateral") have entered into a second stipulation for order extending the Debtor's authority to use cash collateral through and including Sept. 30, 2013. Counsel for the Debtor may be reached at: James L. Day, Esq. Christine M. Tobin-Presser, Esq. BUSH STROUT & KORNFELD, LLP 5000 Two Union Square 601 Union Street Seattle, WA 98101-2373 Tel: (206) 292-2110 Fax: (206) 292-2104 Counsel for U.S. Bank National Association can be reached at: Alan D. Smith, Esq. Brian A. Jennings, Esq. PERKINS COIE LLP 1201 Third Avenue, Suite 4900 Seattle, WA 98101 Tel: (206) 359-8000 Fax: (206) 359-9000 About Meridian Sunrise Village LLC Meridian Sunrise Village LLC filed a Chapter 11 petition (Bankr. W.D. Wash. Case No. 13-40342) in Tacoma, Washington, on Jan. 18, 2013. The Debtor, a single asset real estate under 11 U.S.C. Sec. 101(51B), disclosed $70.6 million in total assets and $65.9 million in total liabilities in its schedules. James L. Day, Esq., and Christine M. Tobin-Presser, Esq., at Bush Strout & Kornfeld LLP represent the Debtor. The Debtor owns the property known as the New Meridian Sunrise Village in 10507 156th St. E. Puyallup, Washington. The Debtor has valued the property at $70 million, which property secures debt of $64.4 million to U.S. Bank, National Association. A copy of the schedules attached to the petition is available at http://bankrupt.com/misc/wawb13-40342.pdf Alan D. Smith -- ADSmith@perkinscoie.com -- and Brian A. Jennings, WSBA -- BJennings@perkinscoie.com -- at Perkins Coie, LLP represent U.S. Bank National Association, as administrative agent. James L. Day, Esq., and Christine M. Tobin-Presser, Esq., at Bush Strout & Kornfeld LLP, in Seattle, represent the Debtor in its restructuring effort. MILLER HEIMAN: S&P Assigns Preliminary 'B' CCR; Outlook Stable -------------------------------------------------------------- Standard & Poor's Ratings Services assigned Reno, Nevada-based corporate sales training provider Miller Heiman Inc. a preliminary 'B' corporate credit rating. The outlook is stable. At the same time, S&P assigned Miller Heiman's proposed $273 million senior secured credit facility our preliminary issue- level rating of 'B' (at the same level as the corporate credit rating), with a preliminary recovery rating of '3', indicating S&P's expectation for meaningful (50%-70%) recovery for lenders in the event of a payment default. The facility consists of a $233 million term loan due 2019 and a $40 million revolving credit facility due 2018. The company will use proceeds from the transaction, along with $65 million in unrated increasing rate pay-in-kind (PIK) subordinated notes due 2020, to fund Miller Heiman's $165 million acquisition of Informa Performance Improvement (IPI), the business training segment of Informa Plc and refinance existing debt. The debt was put in place in November 2012, when Miller Heiman was acquired by Providence Equity Partners for $205 million. The 'B' corporate credit rating on Miller Heiman reflects S&P's expectation that the company will be able to gradually reduce its heightened leverage and maintain an adequate cushion of covenant compliance over the intermediate term. S&P considers the company's business risk profile "weak" because of Miller Heiman's rapid acquisition-driven growth and the potential execution risk of effectively integrating and improving the operating performance of the underperforming acquisition of lower-margined IPI, which doubles the EBITDA of the company. S&P views Miller Heiman's financial risk profile as "highly leveraged" based on its private- equity ownership and substantial debt leverage. S&P assess the company's management and governance as "fair." MONTREAL MAINE: U.S., Canadian Judges Coordinate to Pay Victims --------------------------------------------------------------- Judy Harrison, writing for The Bangor Daily News, reported that the adoption of cross-border protocols by judges in Canada and the U.S. on Sept. 4 will allow the Montreal, Maine and Atlantic Railway bankruptcy to move forward so that the victims of the Lac- Megantic train disaster may receive compensation as quickly as possible, the trustee assigned to oversee the case said. "The U.S. case and the Canadian case are being administered primarily for the victims," Robert Keach, a Portland lawyer who was appointed Aug. 22 to serve as trustee during the bankruptcy proceeding, said after a hearing in Bangor, the report related. "Wrongful death litigants and any personal injury claims will be paid after any secured debt is paid," Keach said. According to the report, U.S. Bankruptcy Judge Louis Kornreich in Bangor and a Superior Court justice in Sherbrooke, Quebec, adopted in separate hearings the Cross-border Insolvency Protocol in order "to enhance coordination and harmonization" of the cases. The courts will be able to talk to each other and hold joint hearings, Keach said, the report further related. Kornreich also granted motions that will allow the Hermon-based railroad to continue operating and paying employees' salaries and benefits using a $6 million line of credit provided by Wheeling & Lake Erie Railway Co., based in Ohio, the report added. About Montreal Maine Montreal, Maine & Atlantic Railway Ltd., the railway company that operated the train that derailed and exploded in July 2013, killing 47 people and destroying part of Lac-Megantic, Quebec, sought bankruptcy protection in U.S. Bankruptcy Court in Bangor, Maine (Case No. 13-10670) on Aug. 7, 2013, with the aim of selling its business. Its Canadian counterpart, Montreal, Maine & Atlantic Canada Co., meanwhile, filed for protection from creditors in Superior Court of Quebec in Montreal. Robert J. Keach, Esq., at Bernstein Shur, has been named as chapter 11 trustee. U.S. Bankruptcy Judge Louis H. Kornreich has been assigned to the U.S. case. The Maine law firm of Verrill Dana serves as counsel to MM&A. Justice Martin Castonguay oversees the case in Canada. MOTORCAR PARTS: Wanxiang to Sell 516,000 Common Shares ------------------------------------------------------ Motorcar Parts of America, Inc., filed a Form S-1 registration statement with the U.S. Securities and Exchange Commission relating to the potential resale from time to time by Wanxiang American Corporation of some or all of 516,129 shares of the Company's common stock, $0.01 par value per share, which underlie common stock warrants pursuant to the Warrant to Purchase Common Stock, dated Aug. 22, 2012, issued by the Company to Wanxiang. The Company will receive no proceeds from any resale of the shares of common stock, but the Company has agreed to pay certain registration expenses. The Company's common stock is traded on the Nasdaq Global Market under the symbol "MPAA." On Aug. 30, 2013, the closing price of the Company's common stock was $9.23 per share. A copy of the Form S-1 prospectus is available for free at: http://is.gd/EE43pv About Motorcar Parts Torrance, California-based Motorcar Parts of America, Inc. (Nasdaq: MPAA) is a remanufacturer of alternators and starters utilized in imported and domestic passenger vehicles, light trucks and heavy duty applications. Motorcar Parts of America's products are sold to automotive retail outlets and the professional repair market throughout the United States and Canada, with remanufacturing facilities located in California, Mexico and Malaysia, and administrative offices located in California, Tennessee, Mexico, Singapore and Malaysia. The Company reported a net loss of $91.5 million on $406.3 million of sales in fiscal 2013, compared to a net loss of $48.5 million on $363.7 million of sales in fiscal 2012. The Company's balance sheet at March 31, 2013, showed $367.1 million in total assets, $370.6 million in total liabilities, and a stockholders' deficit of $3.5 million. Ernst & Young LLP, in Los Angeles, California, noted that the Company's wholly owned subsidiary Fenwick Automotive Products Limited has recurring operating losses since the date of acquisition and has a working capital and an equity deficiency. "In addition, Fenco has not complied with certain covenants of its loan agreements with its bank. These conditions relating to Fenco coupled with the significance of Fenco to the Consolidated Companies, raise substantial doubt about the Consolidated Companies' ability to continue as a going concern." MOTORCAR PARTS: Amends 1.9 Million Shares Resale Prospectus ----------------------------------------------------------- Motorcar Parts of America, Inc., filed a post-effective amendment to its registration statement on Form S-1 relating to potential resale from time to time by Wellington Trust Company, National Association Multiple Common Trust Funds Trust, Micro Cap Equity Portfolio, Prescott Group Aggressive Small Cap Master Fund G.P., Perritt Microcap Opportunities Fund, et al., of 1,941,975 shares of the Company's common stock. The Company will receive no proceeds from any resale of the shares of common stock, but the Company has agreed to pay certain registration expenses. The Company's common stock is traded on the Nasdaq Global Market under the symbol "MPAA." On Aug. 30, 2013, the closing price of the Company's common stock was $9.23 per share. A copy of the amended prospectus is available at: http://is.gd/EObT18 About Motorcar Parts Torrance, California-based Motorcar Parts of America, Inc. (Nasdaq: MPAA) is a remanufacturer of alternators and starters utilized in imported and domestic passenger vehicles, light trucks and heavy duty applications. Motorcar Parts of America's products are sold to automotive retail outlets and the professional repair market throughout the United States and Canada, with remanufacturing facilities located in California, Mexico and Malaysia, and administrative offices located in California, Tennessee, Mexico, Singapore and Malaysia. The Company reported a net loss of $91.5 million on $406.3 million of sales in fiscal 2013, compared to a net loss of $48.5 million on $363.7 million of sales in fiscal 2012. The Company's balance sheet at March 31, 2013, showed $367.1 million in total assets, $370.6 million in total liabilities, and a stockholders' deficit of $3.5 million. Ernst & Young LLP, in Los Angeles, California, noted that the Company's wholly owned subsidiary Fenwick Automotive Products Limited has recurring operating losses since the date of acquisition and has a working capital and an equity deficiency. "In addition, Fenco has not complied with certain covenants of its loan agreements with its bank. These conditions relating to Fenco coupled with the significance of Fenco to the Consolidated Companies, raise substantial doubt about the Consolidated Companies' ability to continue as a going concern." MORGANS HOTEL: Chief Executive Officer Resigns ---------------------------------------------- Michael Gross, who has served as chief executive officer of Morgans Hotel Group Co. since 2011, stepped down from that role to pursue new opportunities. Jason T. Kalisman, the Company's Chairman of the Board of Directors, has been named chief executive officer on an interim basis, effective as of the same date. Mr. Kalisman will receive annual compensation of $1. Mr. Kalisman has been one of the Company's directors since March 2011. Mr. Kalisman, age 34, is the founder and chief executive officer of The Talisman Group, LLC, an investment firm. Mr. Kalisman is also a Founding Member of OTK Associates, LLC, which is the Company's largest stockholder. Prior to founding The Talisman Group, LLC, in 2012, Mr. Kalisman was at GEM Realty Capital, Inc., an integrated global real estate investment firm focusing on publicly traded real estate securities and private- market real estate assets, serving as a Vice President from 2010 to 2012 and a Financial Analyst in 2009. From 2008 to 2010, Mr. Kalisman attended Stanford Graduate School of Business. Prior to co-founding OTK Associates in 2008, Mr. Kalisman worked at The Goldman Sachs Group, Inc., a global investment banking and management firm, from 2001 to 2007. Mr. Kalisman received a Bachelor of Arts in Economics from Harvard College and a Masters of Business Administration from the Stanford Graduate School of Business, where he was also a recipient of their Certificate in Global Management, and has earned the right to use the Chartered Financial Analyst designation. The Company has entered into a letter agreement with Mr. Gross in connection with his separation from the Company effective as of Aug. 30, 2013. Pursuant to the Separation Agreement, in lieu of severance benefits payable under Mr. Gross's Employment Agreement, dated March 20, 2011, between Mr. Gross and the Company, as amended on Feb. 28, 2013, and in addition to the payment of accrued but unpaid base salary, the Company will (i) make a lump sum payment of $500,000, (ii) grant 58,334 restricted stock units pursuant to the Company's Amended and Restated 2007 Omnibus Incentive Plan, as amended, which will vest immediately on the Separation Date, (iii) grant 25,000 restricted stock units which will vest on the first anniversary of the Separation Date, and (iv) accelerate the vesting of any unvested long-term incentive plan units and stock options as of the Separation Date, with all stock options exercisable for a period of one year following the Separation Date. All other equity awards that remain unvested as of the Separation Date will expire and be forfeited. In addition, the Company agreed that effective as of the day following the Separation Date, it will waive the non-competition obligations of Section 7(a) of the Gross Employment Agreement, provided, however, that Mr. Gross is prohibited from pursuing certain prospective business opportunities as agreed to between the Company and Mr. Gross for a period of one year following the Separation Date. Mr. Gross has agreed to make himself reasonably available to the Company in connection with the leadership transition and otherwise cooperate with the Company on related matters. Mr. Gross and the Company continue to be bound by, among other things, the confidentiality, non-solicitation and standstill provisions of the Gross Employment Agreement. The Company and Mr. Gross have each agreed that the Separation Agreement will be in complete and final settlement of and to release each other from any and all causes of action, rights and claims arising out of Mr. Gross's employment, board service or role as investor or the termination of the foregoing, with limited exceptions. About Morgans Hotel Group Based in New York, Morgans Hotel Group Co. (Nasdaq: MHGC) -- http://www.morganshotelgroup.com/-- is widely credited as the creator of the first "boutique" hotel and a continuing leader of the hotel industry's boutique sector. Morgans Hotel Group operates and owns, or has an ownership interest in, Morgans, Royalton and Hudson in New York, Delano and Shore Club in South Beach, Mondrian in Los Angeles and South Beach, Clift in San Francisco, Ames in Boston, and Sanderson and St Martins Lane in London. Morgans Hotel Group and an equity partner also own the Hard Rock Hotel & Casino in Las Vegas and related assets. Morgans Hotel Group also manages hotels in Isla Verde, Puerto Rico and Playa del Carmen, Mexico. Morgans Hotel Group has other property transactions in various stages of completion, including projects in SoHo, New York and Palm Springs, California. The Company incurred a net loss attributable to common stockholders of $66.81 million in 2012, a net loss attributable to common stockholders of $95.34 million in 2011, and a net loss attributable to common stockholders of $89.96 million in 2010. The Company's balance sheet at June 30, 2013, showed $580.67 million in total assets, $744.32 million in total liabilities, $6.04 million in redeemable noncontrolling interest and a $169.70 million total stockholders' deficit. MORGANS HOTEL: Ronald Burkle Complains Over "Observation Rights" ---------------------------------------------------------------- Ronald W. Burkle, Yucaipa American Management, LLC, et al., sent a letter to Jason Kalisman, the interim chief executive officer of Morgans Hotel Group Co. relating to the board observation rights granted pursuant to a purchase agreement. "Since you took over you have not given one update as to any sales process or inquiries," states Ron Burkle. "I believe you are in breach of your obligation to provide us with observation rights as well as your fiduciary duties to the stockholders of the company." Mr. Burkle suggests that the Company be sold on the market for the benefit of all stockholders. As of Aug. 30, 2013, Mr. Burkle and his affiliates beneficially owned 12,522,367 shares of common stock of Morgans Hotel representing 27.7 percent of the shares outstanding. A copy of the letter is available for free at: http://is.gd/BBgo4t About Morgans Hotel Group Based in New York, Morgans Hotel Group Co. (Nasdaq: MHGC) -- http://www.morganshotelgroup.com/-- is widely credited as the creator of the first "boutique" hotel and a continuing leader of the hotel industry's boutique sector. Morgans Hotel Group operates and owns, or has an ownership interest in, Morgans, Royalton and Hudson in New York, Delano and Shore Club in South Beach, Mondrian in Los Angeles and South Beach, Clift in San Francisco, Ames in Boston, and Sanderson and St Martins Lane in London. Morgans Hotel Group and an equity partner also own the Hard Rock Hotel & Casino in Las Vegas and related assets. Morgans Hotel Group also manages hotels in Isla Verde, Puerto Rico and Playa del Carmen, Mexico. Morgans Hotel Group has other property transactions in various stages of completion, including projects in SoHo, New York and Palm Springs, California. The Company incurred a net loss attributable to common stockholders of $66.81 million in 2012, a net loss attributable to common stockholders of $95.34 million in 2011, and a net loss attributable to common stockholders of $89.96 million in 2010. The Company's balance sheet at June 30, 2013, showed $580.67 million in total assets, $744.32 million in total liabilities, $6.04 million in redeemable noncontrolling interest and a $169.70 million total stockholders' deficit. NEONODE INC: Mulls Possible Sale of Licensing Unit -------------------------------------------------- Neonode Inc. said that its Board of Directors has authorized the exploration of strategic alternatives with respect to its user- interface patent and licensing subsidiary. This unit's intellectual property portfolio principally relates to user-interface gestures utilized in a touchscreen. The Board intends to consider a broad range of alternatives including, but not limited to, a merger, sale, or spin-off. There can be no assurance that the Board's evaluation process will result in any transaction, or that any transaction, if pursued, will be consummated. About Neonode Inc. Lafayette, Calif.-based Neonode Inc. (OTC BB: NEON) -- http://www.neonode.com/-- provides optical touch screen solutions for hand-held and small to midsize devices. The Company incurred a net loss of $9.28 million in 2012, a net loss of $17.14 million in 2011 and a $31.62 million net loss in 2010. As of June 30, 2013, the Company had $7.31 million in total assets, $4.14 million in total liabilities and $3.16 million in total stockholders' equity. NEWPAGE CORP: Trustee Leads Clawback Blitz Seeking $71MM -------------------------------------------------------- Law360 reported that the litigation trustee for NewPage Corp. let loose another wave of lawsuits, swelling a host of avoidance actions that seek to claw back some $71 million for the benefit of the reorganized paper maker's unsecured creditors. According to the report, litigation trustee Pirinate Consulting Group LLC launched more than 150 suits in Delaware bankruptcy court on Sept. 4 aimed at recovering allegedly preferential payments made during the run-up to company's Chapter 11 filing. The cases are part of a complement of 776 complaints brought in the past week, the report added. About NewPage Corp Headquartered in Miamisburg, Ohio, NewPage Corporation was the leading producer of printing and specialty papers in North America, based on production capacity, with $3.6 billion in net sales for the year ended Dec. 31, 2010. NewPage owns paper mills in Kentucky, Maine, Maryland, Michigan, Minnesota, Wisconsin and Nova Scotia, Canada. NewPage Group, NewPage Holding, NewPage, and certain of their U.S. subsidiaries commenced Chapter 11 voluntary cases (Bankr. D. Del. Case Nos. 11-12804 through 11-12817) on Sept. 7, 2011. Its subsidiary, Consolidated Water Power Company, is not a part of the Chapter 11 proceedings. Separately, on Sept. 6, 2011, its Canadian subsidiary, NewPage Port Hawkesbury Corp., brought a motion before the Supreme Court of Nova Scotia to commence proceedings to seek creditor protection under the Companies' Creditors Arrangement Act of Canada. NPPH is under the jurisdiction of the Canadian court and the court- appointed Monitor, Ernst & Young in the CCAA Proceedings. Initial orders were issued by the Supreme Court of Nova Scotia on Sept. 9, 2011 commencing the CCAA Proceedings and approving a settlement and transition agreement transferring certain current assets to NewPage against a settlement payment of $25 million and in exchange for being relieved of all liability associated with NPPH. On Sept. 16, 2011, production ceased at NPPH. NewPage originally engaged Dewey & LeBoeuf LLP as general bankruptcy counsel. In May 2012, Dewey dissolved and commenced its own Chapter 11 case. Dewey's restructuring group led by Martin J. Bienenstock, Esq., Judy G.Z. Liu, Esq., and Philip M. Abelson, Esq., moved to Proskauer Rose LLP. In June, NewPage sought to hire Proskauer as replacement counsel. NewPage is also represented by Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, as co-counsel. Lazard Freres & Co. LLC is the investment banker, and FTI Consulting Inc. is the financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. In its balance sheet, NewPage disclosed $3.4 billion in assets and $4.2 billion in total liabilities as of June 30, 2011. The Official Committee of Unsecured Creditors selected Paul Hastings LLP as its bankruptcy counsel and Young Conaway Stargatt & Taylor, LLP to act as its Delaware and conflicts counsel. An affiliate, Newpage Wisconsin System Inc., disclosed $509,180,203 in liabilities in its schedules. NewPage successfully completed its financial restructuring and has officially emerged from Chapter 11 bankruptcy protection pursuant to its Modified Fourth Amended Chapter 11 Plan, confirmed on Dec. 14, 2012, by the U.S. Bankruptcy Court for the District of Delaware in Wilmington. NORSE ENERGY: Judge Clears Creditors to Sue Leaders --------------------------------------------------- Katy Stech, writing for DBR Small Cap, reported that creditors of natural gas-driller Norse Energy Corp. USA were given the power to try to recover some portion of a $27 million payment that they say improperly flowed to investors in Norse Energy USA's owner as the company struggled to be profitable during New York state's drilling ban. About Norse Energy Norse Energy Corp. ASA's U.S. subsidiary holding company, Norse Energy Holdings, Inc., filed a voluntary petition for Chapter 11 bankruptcy protection (Bankr. W.D.N.Y. Case No. 12-13695) on Dec. 7, 2012, estimating less than $50,000 in assets and less than $100,000 in liabilities. The Debtor is represented by Janet G. Burhyte, Esq., at Gross, Shuman, Brizdle & Gilfillan, P.C., in Buffalo, New York. Judge Carl L. Bucki presides over the case. The Company has a significant land position of 130,000 net acres in New York State with certified 2C contingent resources of 951 MMBOE as of June 30, 2012. NNN 3500: Section 341(a) Meeting Scheduled for October 8 -------------------------------------------------------- A meeting of creditors in the bankruptcy case of NNN 3500 Maple 1, LLC, et al., is scheduled for Oct. 8, 2013, at 1:30 p.m. at Dallas, Room 976. Creditors have until Jan. 6, 2014, to submit their proofs of claim. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Joint Administration Sought The Debtors ask the Bankruptcy Court to jointly administer their cases with 3500 Maple 26, LLC, Case No.13-30402, for procedural purposes. Bankruptcy Rule 1015(b) provides that, if two or more petitions are pending in the same court by or against a debtor and an affiliate, the court may order a joint administration of the estates. The Debtors assert that joint administration of their cases will obviate the need for duplicative notices, motions, applications, hearings, and orders, and will therefore save considerable time and expense for the Debtors, their estates, and their investors and creditors. The Debtors propose that the following activities be joined for administrative purposes only: (a) one disclosure statement and plan of reorganization may be filed for the Debtors' cases by any plan proponent; (b) hearings in these Chapter 11 cases will be joint hearings unless otherwise specified; and (c) one consolidated docket, creditor matrix and master service list will be kept by the Clerk, although separate claims registers will be maintained for each of the Chapter 11 cases. About NNN 3500 Mapple NNN 3500 Maple 1, LLC, et al., filed Chapter 11 for protection (Bankr. N.D. Tex. Lead Case No. 13-30402) on Aug. 28, 2013. The petitions were signed by Mubeen Aliniazee as restructuring officer. The Debtors estimated assets and debts of at least $50 million. Michelle V. Larson, Esq., -- michellelarson@andrewskurth.com -- at Andrews Kurth LLP, in 1717 Main Street, Suite 3700 Dallas, Texas 75201 -- serves as the Debtors' counsel. NSG HOLDINGS: S&P Affirms 'BB' Corporate Credit Rating ------------------------------------------------------ Standard & Poor's Ratings Services said it affirmed its 'BB' corporate credit rating on NSG Holdings LLC. At the same time, S&P affirmed its 'BB+' issue rating on its $514 million senior secured notes due 2025 ($441 million outstanding) and the $146 million term loan facility maturing 2019, which it is expanding to $202 million. The '2' recovery rating indicates a substantial recovery (70% to 90%) if a default occurs. The outlook is stable. The ratings on NSGH reflect an "aggressive" financial risk profile marked by high debt balances following the dividend capitalization that NSGH carried out last year. Although the proposed additional debt will weaken performance for the current year and slow down the financial improvement anticipated over the next three years, amortization of project level debt and debt at NSGH together with improved margins from increased contractual capacity payments and reductions in fuel costs will likely strengthen measures in line with the "aggressive" financial risk profile in 2014 and 2015. NSGH plans to exercise its flexibility to issue an incremental senior secured term loan B of $56 million pursuant to the credit agreement that allows for incremental loans of up to $104 million. NSGH will distribute the proceeds to parent Northern Star Generation LLC (NSG), which will use proceeds to finance the acquisition of the remaining 50% interest in the Nevada Cogeneration Associates No. 1 (NCA) project from Chevron. NSGH currently owns 50% of NCA, a 90 megawatt (MW) gas-fired combined- cycle facility in Clark County, Nev. Current distributions from NCA account for 7% to 9% of NSG's cash flows, and S&P expects the contributions will reach 12% following the acquisition. "The stable outlook reflects our expectation of predictability and stability of cash flows from the projects' long-term power contracts and mitigation of gas price exposure through hedges, despite the additional debt incurred at the holding company," said Standard & Poor's credit analyst Trevor D'Olier Lees. "Under our base case, we expect the company to improve its current capital structure over the next two years, such that by 2014 it is below 5x, although we expect it to be above this level in 2013. This should be achievable with no further issuance of holding company debt and reflects the benefits of debt amortization at the project level. We also expect adjusted FFO to total debt, which is currently weak for an "aggressive" financial risk profile, to gradually improve to 18% by 2015," S&P added. OCEANSIDE CDC SUCCESSOR: Moody's Affirms Ba1 Rating on 2003 Bonds ----------------------------------------------------------------- Moody's Investors Service has confirmed the Ba1 rating of the Successor Agency to the Oceanside Community Development Commission Downtown Redevelopment Project's (CA) 2003 Refunding Tax Allocation Bonds, 2003 Subordinate Tax Allocation Bonds, and 2002 Subordinate Tax Allocation Bonds. The bonds are secured by a pledge of tax increment revenues from the agency's redevelopment project area. Rating Rationale The confirmation at Ba1 reflects the weak coverage in the second period on a combined coverage basis and the small project area, notwithstanding the diversity of the largest taxpayers, the strong total assessed value (AV) to incremental AV, and the large value of total AV. The project area's coverage for the first payment period on a combined basis in calendar year 2013 is a strong 4.05 times, though falls to a somewhat weak 1.61 times in the second payment period for the same calendar year. These coverage ratios will likely continue through maturity of the bonds. The project area is smaller than Moody's standard threshold of 1,000 acres at 375 acres. The project area's AV declined from fiscal 2010 through fiscal 2013, before a projected increase of 0.9% in fiscal 2014. Moody's expects the combined project area AV to increase in the near-term. Taxpayer concentration is diverse at 18% of incremental 2013 AV. The total AV to incremental AV is strong at 96% in fiscal 2013. The city's wealth indicators are comparable to national averages. Importantly, however, is the state legislature's willingness to modify the cash flows available for bond debt service as a considerable source of uncertainty and a major factor for not placing the rating in the A category. Under AB X1 26, the statutes that dissolved all California redevelopment agencies, tax increment revenue is placed in trust with the County auditor, who makes semi-annual distributions of funds sufficient to pay debt service on tax allocation bonds, including other obligations. Strengths - Strong first payment period debt service coverage - Assessed value expected to increase - Diversity of ten largest taxpayers Challenges - Below 2x coverage in the second payment period What could move the rating - UP - Significant and sustained increase in assessed valuation - Increased debt service coverage in the second payment period What could move the rating - DOWN - Erosion of semi-annual debt service coverage - Protracted assessed value decline The principal methodology used in this rating was Moody's Analytic Approach To Rating California Tax Allocation Bonds published in December 2003. ORCKIT COMMUNICATIONS: Incurs $1.2-Mil. Net Loss in 2nd Quarter --------------------------------------------------------------- Orckit Communications reported a net loss of $1.24 million on $2.39 million of revenues for the three months ended June 30, 2013, as compared with a net loss of $2.25 million on $3.52 million of revenues for the same period during the prior year. For the six months ended June 30, 2013, the Company reported a net loss of $3.40 million on $4.67 million of revenues, as compared with a net loss of $5.86 million on $6.76 million of revenues for the same period a year ago. The Company's balance sheet at June 30, 2013, showed $13.52 million in total assets, $25.02 million in total liabilities and a $11.50 million total capital deficiency. A copy of the Form 6-K Report is available for free at: http://is.gd/9mSucv 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. 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. PARKWAY ACQUISITIONS: Oct. 2 Hearing on Case Dismissal ------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York will convene a hearing on Oct. 2, 2013, at 10 a.m., to consider Auberge Grand Central, LLC's motion to dismiss the Chapter 11 case of Parkway Acquisitions, I, LLC or, alternatively, to vacate the automatic stay with respect to the Debtor's single asset -- a real property known as 70-36 113th Street, Forest Hills, New York City. Objections, if any, are due Sept. 25, 2013, at 4 p.m. The Debtor is borrower under the note and mortgage held by Auberge on the real property. As of June 28, 2013, the payoff amount of the mortgage was $17,207,632, exclusive of unpaid real estate taxes. Auberge -- a New York limited liability company, which, as assignee of Thomas A. Seaman, solely in his capacity as receiver, appointed by the U.S. District Court, for Medical Provider Financial Corporation III -- holds the note and mortgage on the premises, which is subject of a foreclosure action pending in the Supreme Court of the State of New York, county of Queens. On May 6, the Court issued a judgment of foreclosure and sale. According to Auberge, the case must be dismissed because, among other things: 1. the Debtor failed to maintain appropriate insurance that poses a risk to the estate or to the public; 2. the case involves a two-party dispute between Auberge and the Debtor; and 3. the Debtor will be unable to formulate a feasible plan of reorganization, as Auberge would dominate the unsecured class of creditors and will not vote in favor of any plan proposed by the Debtor. Auberge's counsel can be reached at: Richard J. McCord, Esq. Carol A. Glick, Esq. AUBERGE CERTILMAN BALIN ADLER & HYMAN, LLP 90 Merrick Avenue East Meadow, NY 11554 Tel: (516) 296-7000 Fax: (516) 296-7111 About Parkway Acquisitions, I, LLC Parkway Acquisition I, LLC, filed a Chapter 11 petition (Bankr. S.D.N.Y. Case NO. 13-12015) in Manhattan on June 17, 2013. Robert G. Aquino, Sr., signed the petition as sole manager and member. Judge Shelley C. Chapman presides over the case. The Debtor estimated assets and debts of at least $10 million. Kevin J. Nash, Esq., at Goldberg Weprin Finkel Goldstein LLP, serves as counsel. The Debtor owns the real property located at 70-35 113th Street, Forest Hills, New York. The property formerly housed the Parkway Hospital but the property has essentially laid vacant since the closure of the hospital in 2008 and the bankruptcy filing of the hospital. On March 2, 2012, the Court appointed Ismael Rubin, Esq., as receiver of the premises. No trustee, examiner or official committee of unsecured creditors has been appointed in the case. PATRIOT COAL: Debtor, Peabody in Yet Another Discovery Dispute -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Patriot Coal Corp. and former parent Peabody Energy Corp. are in another dispute over turning over voluminous documents. This time, it's Patriot who says Peabody is overreaching in demanding documents. According to the report, meanwhile, Patriot isn't bashful about asking third parties for documents and information in pursuit of finding someone to sue and blame for financial problems resulting in bankruptcy. In October, the mine workers' union and several retirees sued St. Louis-based Peabody, contending that spinning off Patriot in 2007 was intended to interfere with paying retirement benefits. The report relates that Peabody served a document-production request on Patriot, seeking information for use in defending the suit. This week Patriot sued Peabody in bankruptcy court in St. Louis, asking the judge to call a halt on document production until emergence from Chapter 11 reorganization. There is another discovery dispute already winding its way to the bankruptcy judge. As part of an investigation into the spinoff, Patriot requested documents from Peabody. Patriot will ask the judge at a Sept. 13 hearing for an order compelling Peabody to speed up document production. In the dispute over documents for the union suit, there will be a hearing in bankruptcy court on Sept. 24. Patriot says the document request comes at an inopportune time because there is month-end deadline for filing a reorganization plan. The court should put off document production until the Chapter 11 reorganization is completed, Patriot says. The union lawsuit "is without merit," Peabody spokesman Vic Svec said in an e-mailed statement. Svec said Peabody needs "comprehensive discovery in support of court proceedings." Patriot filed papers on Sept. 3 seeking bankruptcy court permission to demand turnover of documents and information from ArcLight Capital Partners LLC and Arch Coal Inc. for their roles in the 2008 acquisition of Magnum Coal Co. Patriot says it needs the documents to understand "potential causes of action," meaning lawsuits. 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. PROGUARD ACQUISITION: Provides Business Update to Shareholders -------------------------------------------------------------- Proguard Acquisition Corp. issued a letter to its shareholders from its Chief Executive Officer providing a general business update. Dear Shareholders: As we continue to navigate through 2013, I am proud of what our team at Proguard Acquisition Corp. has accomplished in the first half of the year. While we continue to grow and increase our market share in the business to business (B2B) office product industry, we believe we offer our business, government and educational customers a broad selection of office supplies at lower prices and improved efficiencies when compared to their existing suppliers. Our personalized service and our growth strategy will be used to leverage our existing customer relationships to grow internally by cross marketing our new products and services to our existing customer base. I believe that the accomplishments we have achieved will continue to exceed our expectations, and I am confident that as we begin to strategize and navigate the upcoming year, that these accomplishments will become great successes for our organization. Each of our three Proguard subsidiaries are beginning to contribute to the overall success of our company. Most recently, in June 2013, we were pleased to have been recognized as a leader in our market segment. Our previously announced contract with Jackson Health Systems began on August 1, 2013. Jackson Health Systems is one of the nation's largest hospitals. I am pleased to announce that our team has efficiently implemented the customized system, and we are now working with over 200 new purchasers at Jackson Health Systems. We hope to be able to capitalize on our exclusive business supply contract with Jackson Health Systems and secure other similar contracts with government, medical and educational agencies in the future. Our focus is centered on electronic infrastructure, currently our biggest project. While this project has taken much longer than originally anticipated, we are very excited about the scalability the new infrastructure may bring us and we are focused on completing this project as soon as possible. Once this is completed, it should open the door to many other vertical markets so that we can become a "one source" to our customers. We hope to use our commodity product so that we may drive traffic to our company and convert these leads into profitable products and services. We also remain focused on improving the bottom line. To date in 2013 we have increased our gross margins as a percentage of sales, while experiencing a decrease in top line revenue from the previous year increasing. We believe that with this focus on efficiencies, we run as a better company and as we grow and the expected increase in our revenues is realized, this focus should lead to more profitable years. My team continues to generate new prospects and ideas. As good as 2013 has been to date, I believe that as we complete the year and continue into 2014 and beyond, we can do even better. All of us at Proguard Acquisition Corp. appreciate the continued support of our shareholders. Be well and I look forward to updating you soon. Sincerely, David Kriegstein Chief Executive Officer About Proguard Acquisition Proguard Acquisition Corp. (OTC BB: PGRD), headquartered in Lauderdale, Florida, is a Business to Business (B2B) reseller of all general line office and business products. As reported in the TCR on April 11, 2013, Pruzansky, P.A., in Boca Raton, Florida, expressed substantial doubt about Proguard Acquisition's ability to continue as a going concern, citing the Company's net loss and net cash used in operations of $445,016 and $173,189, respectively, during the year ended Dec. 31, 2012, and stockholders' deficit and accumulated deficit of $49,314 and $1.42 million, respectively, at Dec. 31, 2012. The Company's balance sheet at June 30, 2013, showed $1.02 million in total assets, $1.28 million in total liabilities and a $257,568 total stockholders' deficit. QBEX ELECTRONICS: Sept. 10 Hearing on Exclusivity Extensions ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Florida will convene a hearing on Sept. 10, 2013, at 1:30 p.m., to consider Qbex Electronics Corporation, Inc., et al.'s fourth motion to extend their exclusivity period for filing a chapter 11 plan and disclosure statement. The Debtors seek an extension of their exclusive periods to file a chapter 11 plan from Aug. 28, 2013, until Oct. 28, and to solicit acceptances for that Plan until Nov. 27. The Debtors said they need additional time because they, with the assistance of their financial advisors, CBIZ MHM, LLC, are negotiating with various lenders and investors regarding a potential exit financing facility or equity investment in the Debtors to facilitate a plan of reorganization. About QBEX Electronics QBEX Electronics Corporation, Inc., based in Miami, Florida, and its affiliates, Qbex Colombia, S.A., and Comercializadora De Productos Tecnologicos CPT Colombia SAS, are manufacturers, assemblers and distributors of personal computers, notebooks, tablets and compatible accessories, marketed throughout Latin America under the QBEX brand. QBEX Electronics filed for Chapter 11 bankruptcy (Bankr. S.D. Fla. Case No. 12-37551) on Nov. 15, 2012. Judge Robert A. Mark oversees the case. Robert D. Peters, Esq., Robert A. Schatzman, Esq., and Steven J. Solomon, Esq., at GrayRobinson, P.A., serve as the Debtor's counsel. QBEX scheduled assets of $11,027,058 and liabilities of $8,246,385. The petitions were signed by Jorge E. Alfonso, president. Qbex Colombia, S.A., also sought Chapter 11 protection (Bankr. S.D. Fla. Case No. 12-37558) on Nov. 15, listing $433,627 in assets and $5,792,217 in liabilities. Glenn D. Moses, Esq., and Michael L. Schuster, Esq., at Genovese Joblove & Battista, P.A., represent the Official Committee of Unsecured Creditors. The Committee tapped Marcum, LLP, as its financial advisors. REGENCY ENERGY: Fitch Rates New $500MM Senior Notes Due 2020 'BB' ----------------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to Regency Energy Partners L.P.'s (RGP) proposed $500 million senior notes offering due 2020. Proceeds from the notes will be used to repay borrowings outstanding under RGP's revolving credit facility and for general partnership purposes. The Rating Outlook is Stable. Key Ratings Drivers Increased Size/Scale: RGP has been able to increase the size and scale of its gathering and processing operations, with a beneficial focus on the Permian basin. The recent acquisition of the Southern Union Gathering Company, LLC (SUGS) operations has helped increase RGP's presence in the Permian basin where production and the need for gathering and processing services is expected grow. Additionally, SUGS provides decent organic growth opportunities for RGP. General Partner Relationship: While Fitch's ratings are largely reflective of RGP's credit profile on a stand-alone basis, they also consider the company's relationship with Energy Transfer Equity, L.P. (ETE; IDR 'BB'), the owner of its general partner interest. ETE's general partner interest gives it significant control over the MLP's operations, including most major strategic decisions such as investment plans. The relationship has also provided investment opportunities that might otherwise be unavailable to RGP. Increased Leverage: Fitch expects RGP's debt-to-adjusted EBITDA to be high, roughly 5.9x, for 2013 driven by the SUGS acquisition and between 4.0x to 4.5x for 2014. Should leverage remain elevated for a sustained time period Fitch would consider a negative ratings action. Fitch typically adjusts EBITDA to exclude nonrecurring extraordinary items, and noncash mark-to-market earnings. Adjusted EBITDA excludes equity in earnings and includes dividends from unconsolidated affiliates. JV/Structural Subordination: RGP is the owner of several joint venture (JV) interests some of which have external debt. RGP is structurally subordinate to the cash operating and debt service needs of these JVs and reliant on JV distributions to fund its capital spending and its own distributions. Adequate Liquidity: Following the pay down of RGP's revolver borrowings with the notes proceeds, RGP's liquidity will have roughly $1.1B in availability under its $1.15 billion revolving credit facility. The revolving credit facility contains financial covenants requiring RGP and its subsidiaries to maintain debt to consolidated EBITDA ratio(as defined in the credit agreement - including JV and material projects pro forma EBITDA) of less than 5.5x, consolidated EBITDA to consolidated interest expense ratio greater than 2.50x and a secured debt to consolidated EBITDA ratio less than 3.25x. As of June 30, 2013 RGP was incompliance with all of its covenants, debt to EBITDA was 4.3x, interest coverage was 5.07x and senior secured leverage was 0.79x. Rating Sensitivities Negative: Future developments that may, individually or collectively, lead to a negative rating action include: -- Continued large-scale capital expenditures funded by higher than expected debt borrowings; -- A failure or reluctance to hedge open commodity price exposure. -- Significant and prolonged decline in demand/prices for NGLs, crude and natural gas; -- Aggressive growth of distributions at RGP. -- Debt/Adj. EBITDA above the 4.5x to 5.0x range and distribution coverage below 1.0x on a sustained basis. Positive: Future developments that may, individually or collectively, lead to a positive rating action include: -- A material improvement in credit metrics with sustained leverage at 4.0x or below. Fitch currently rates RGP as follows: -- Long-term Issuer Default Rating 'BB'; -- Senior secured revolver 'BB+'; -- Senior unsecured notes 'BB'; -- Series A preferred units 'B+'. The Rating Outlook is Stable. REGENCY ENERGY: Moody's Rates New $500MM Sr. Unsecured Notes 'B1' ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Regency Energy Partners LP (Regency) and co-issuer Regency Energy Finance Corp.'s senior unsecured notes due 2020. Note proceeds will be used to repay borrowings outstanding under Regency's revolving credit facility. The outlook is positive. Ratings assigned: Senior Unsecured Notes Rating, assigned B1, LGD4 (60%) Ratings Rationale "The notes offering will provide liquidity to further fund Regency's growth projects, notably the company's ongoing investments in increasingly fee-based midstream infrastructure," commented Andrew Brooks, Moody's Vice President. "While Regency's current debt leverage is elevated, incremental EBITDA accruing from recent growth projects and acquisitions is expected to begin stabilizing leverage in 2013, followed by reductions in 2014." Regency's B1 senior unsecured note rating reflects its overall probability of default, to which Moody's assigns a PDR of Ba3-PD, and a loss given default of LGD4 (60%). The size of the $1.2 billion secured revolving credit results in a single notching of the senior unsecured notes below the Ba3 CFR under Moody's Loss Given Default Methodology. Regency is a publicly traded master limited partnership (MLP) whose midstream operations consist of natural gas gathering and processing (G&P), gas pipeline transmission and natural gas liquids (NGLs) transportation, processing and fractionation. Regency's general partner is Energy Transfer Equity, L.P. (ETE, Ba2 stable), which also owns 12.5% of its limited partnership units. In April 2013, Regency acquired Southern Union Company's (SUG, Baa3 stable) Permian Basin natural gas G&P assets, Southern Union Gas Services, Ltd (SUGS), for $1.5 billion. Regency is fully integrating SUGS into its existing Permian Basin G&P operations, generating potentially significant upside to EBITDA through synergies, efficiencies and ongoing organic growth. The SUGS acquisition was funded by Regency with $600 million of debt and $900 million in Regency units issued to SUG, giving its owner, Energy Transfer Partners, L.P. (ETP, Baa3 stable), a 15% ownership position in Regency. Moody's expects Regency's debt leverage, which exceeded 6x as of June 30 largely reflecting the SUGS acquisition, to stabilize in 2013, before dropping below 5x as a result of anticipated EBITDA growth and moderating capital spending. Through growth capital spending and acquisitions, Moody's expects Regency's EBITDA to more than double over the period 2010 to 2013. Regency's Ba3 Corporate Family Rating (CFR) reflects its large size and scale, notwithstanding the financial constraints associated with its MLP organizational structure, its business and geographic diversification and high level of fee-based income derived from recent expansions and acquisitions. Its rating also recognizes Regency's rapid growth and evolving business mix profile, the execution risks associated with its growth projects, increased structural complexity and its elevated leverage. Growth capital spending and the acquisition of SUGS will cause leverage to remain above 5x EBITDA in 2013, although leverage is expected to decline as growth projects reach completion and integration efficiencies are achieved at SUGS. The rating is further supported by Regency's track record of issuing equity and its commitment to the balanced funding of growth capital spending. Moody's also takes into account ETE's control of Regency through its GP interest, recognizing that ETE also looks to Regency to help fund its own distributions and debt service obligations. Regency should have adequate liquidity into mid-2014, which is captured in its SGL-3 Speculative Grade Liquidity (SGL) rating. At August 30, Regency reported $725 million of borrowings outstanding under its $1.2 billion secured revolving credit facility. The revolver is scheduled to expire in May 2018. Regency should have sufficient cushion under its three financial covenants. Its leverage ratio (debt/EBITDA) is limited to 5.50x through March 2015 (5.25x thereafter), with secured debt/EBITDA limited to 3.25x. Covenant language is such that it permits Regency to employ an adjusted EBITDA for projects in construction to account for the lag in EBITDA attributable to growth capital spending. The minimum interest coverage ratio is set at 2.50x EBITDA. Its $1.2 billion revolving credit facility is secured by all assets, although Regency has an asset base significantly in excess of this amount, affording it the ability to raise additional liquidity through asset sales, if so required. Regency's positive outlook reflects Moody's expectation that elevated debt leverage will subside as the integration of SUGS and new growth projects begin to generate incremental EBITDA. Presuming Regency successfully integrates SUGS into its existing G&P asset base and executes on its growth initiatives, its rating could be upgraded. At the same time Moody's would expect Regency to restore debt to EBITDA to below 5x while maintaining operating margins from fee-based sources in the 70% range. Ratings could be downgraded should peak leverage not begin to trend down. Additionally, should the credit of ETE or ETP materially weaken, or should ETE or ETP aggressively pressure Regency for higher distribution payouts, a negative rating action could be considered. Regency Energy Partners LP is a midstream energy MLP headquartered in Dallas, Texas. ETE, also a publicly traded MLP, controls Regency through its 2% GP interest, and owns 26 million of Regency's common units and 100% of its incentive distribution rights. ETE is headquartered in Dallas, Texas. The principal methodology used in this rating was Global Midstream Energy 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. REGENCY ENERGY: S&P Assigns 'BB' Rating to $500MM Sr. Unsec. Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services said it assigned its 'BB' issue-level rating and '4' recovery rating to Regency Energy Partners L.P.'s and Regency Energy Finance Corp.'s issuance of up to $500 million of senior unsecured notes due 2020. The partnership intends to use note proceeds to repay borrowings outstanding under its revolving credit facility. As of June 30, 2013, Regency had about $2.9 billion of reported debt. Dallas- based Regency is a midsize master limited partnership in the U.S. midstream sector. RATINGS LIST Regency Energy Partners L.P. Corporate Credit Rating BB/Stable/- New Rating Regency Energy Partners L.P. Regency Energy Finance Corp. $500 mil sr unsecd notes due 2020 BB Recovery Rating 4 REGIONAL EMPLOYERS: Court Dismisses Chapter 11 Case --------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Pennsylvania has dismissed the chapter 11 case of Regional Employers Assurance Leagues Voluntary Employees' Beneficiary Association Trust. The Debtor has not filed a satisfactory application to retain counsel as required by the Court's Aug. 26 Order. Regional Employers Assurance Leagues Voluntary Employees' Beneficiary Association Trust and three related Debtors were seeking to retain a single law firm (Dilworth Paxson) -- a proposal specifically precluded by the Court's findings on the record of substantial and pervasive potential conflicts of interest among three of these related debtors at the hearings on August 9 and 19, 2013. The Debtor filed a motion to employ Matthew A. Hamermesh, Esq., at Hangley Aronchick Segal Pudlin & Schiller, in Philadelphia, as counsel, but the motion was denied by the Bankruptcy Court. The Court also ruled that the Debtor's request for a stay of the dismissal order is denied because the Debtor is unlikely to prevail on appeal and because the balance of the equities favors the plan beneficiaries as the Debtor's delay in this case has harmed them but benefitted the Debtor. About Regional Employers Assurance Leagues Voluntary Employees' Beneficiary Association Trust Regional Employers Assurance Leagues Voluntary Employees' Beneficiary Association Trust filed a Chapter 11 petition (Bankr. E.D. Pa. Case No. 13-16440) on July 23, 2013. Judge Jean K. FitzSimon presides over the case. The Debtor estimated assets at $50 million to $100 million and debts at $1 million to $10 million. The petition was signed by John J. Koresko, V, director of trustee and administrator. RESIDENTIAL CAPITAL: Bid to Halt FHFA Suit Goes to Appeals Court ---------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Residential Capital LLC's bid to halt the Federal Housing Finance Agency's lawsuit against its non-bankrupt parent, Ally Financial Inc., is back before a federal appeals court. The report recounts that ResCap and Ally have twice failed to get the U.S. District Court to halt the case. In its role as conservator of Freddie Mac, the FHFA sued ResCap, Ally and affiliates over allegedly false and misleading statements in documents related to residential-mortgage backed securities that Freddie Mac bought. After ResCap, Ally's mortgage-servicing unit, went Chapter 11 in May 2012, the FHFA dropped it from the suit to avoid violating the automatic stay prohibiting lawsuits outside bankruptcy court. ResCap, based in New York, started a lawsuit in bankruptcy court contending that continuing to sue Ally and other nonbankrupt affiliates also violated the automatic stay. U.S. District Judge Denise Cote took ResCap's suit out of bankruptcy court at the agency's request. She ruled in July 2012 that the lawsuit against Detroit-based Ally and non-bankrupt affiliates couldn't be halted because they weren't in Chapter 11. ResCap appealed. The U.S. Court of Appeals in Manhattan heard argument on June 12 and issued an unsigned, five-page opinion on July 15 sending the case back to Judge Cote for further findings on whether continuing the suit against Ally would have "immediate adverse economic consequences" for ResCap. On remand, Judge Cote rejected every one of ResCap's arguments, finding that the automatic doesn't apply. At the circuit court's request, ResCap and the agency each filed five-page letters on Sept. 3 explaining why Judge Cote's August decision was right or wrong. ResCap contended Cote made no factual findings, thus allowing the appeals court to rule as it sees fit without giving any deference to the lower court's opinion. The FHFA lauded Judge Cote for showing there would be no immediate adverse economic consequences from continuation of the suit. The appeal is Residential Capital LLC v. Federal Housing Finance Agency, 12-3342, U.S. Court of Appeals for the Second Circuit. The district court case is Residential Capital LLC v. Federal Housing Finance Agency, 12-cv-05116, U.S. District Court, Southern District of New York (Manhattan). 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. The bankruptcy court approved disclosure materials so creditors can vote on ResCap's reorganization plan. There will be a Nov. 19 confirmation hearing for approval of the plan, funded in part by a $2.1 billion settlement payment from Ally. The settlement gives Ally freedom from most lawsuits, although not from those brought by the FHFA. 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). RESOURCES IN HEALTHCARE: Files for Bankruptcy, Lawsuit Halted ------------------------------------------------------------- Jim Warren, writing for The Kentucky Herald Leader, reported that a business named as one of the defendants in a federal class- action lawsuit in Lexington has filed for federal bankruptcy protection. According to the report, the petition was filed on Sept. 4 in U.S. Bankruptcy Court in Lexington by Resources in Healthcare Management. The company said in the filing that it has estimated assets of up to $50,000 and estimated liabilities of $1 million to $10 million, the report related. The company said in the filing that it has estimated assets of up to $50,000 and estimated liabilities of $1 million to $10 million, the report further related. Resources in Healthcare Management estimated it has between 200 and 999 creditors, the report added. The petition, which includes nearly 100 pages of creditors' names, was signed by Lu Anne Wallace. Wallace and Resources in Healthcare Management are among the corporate and individual defendants named in the federal class- action suit in U.S. District Court in Lexington, the report said. REVOLUTION DAIRY: Makes More Disclosures Under Revised Plan ----------------------------------------------------------- Revolution Dairy, LLC, et al., filed with the U.S. Bankruptcy Court for the District of Utah a revised Joint Chapter 11 Plan and Disclosure Statement dated Aug. 14, 2013. The latest version of the Plan provides that Bliss LLC's non- exempt cash contribution at the Plan Effective Date is increased to $22,588.25 from $22,000. The Aug. 14 Disclosure Statement has attachments on cash flow projections, and additional information regarding budgets. It also reveals anticipated salaries for the post-confirmation management of the Debtors. Among other things, Bliss LLC will be managed by a general manager, Tim Bliss. More details are also disclosed on insider compensation. As previously reported by The Troubled Company Reporter, the Plan proposes that each of the Debtors transfer their dairy-and- farming-related assets to Bliss LLC (a new limited liability company) which will, in turn, assume the Debtors' secured and unsecured liabilities under the Plan. For Revolution and Highline (which only have dairy-and-farming-related assets and debts), the transfer of assets and assumption of liabilities is all- encompassing. Concerning Bliss, all assets will be transferred to Bliss LLC save the Bliss Personal Assets as identified in the Plan. Bliss LLC will, in turn, assume all Bliss Dairy Debts (i.e., all of Bliss' obligations save the Bliss Residence Mortgage). Bliss will also contribute non-exempt cash on the Effective Date to Bliss LLC and will pay Bliss LLC $50,000 (under a note) representing the liquidation value of the Bliss Personal Assets that Bliss will retain. Bliss LLC will continue the dairy operations of the Debtors and will maintain three milk production units that correspond with the pre-confirmation dairy operations of the Debtors (i.e., the Revolution Unit, the Highline Unit, and the Bliss Unit). Bliss LLC will also continue Highline's farming operations which include leasing farmland and entering into annual harvesting and purchasing agreements with local forage producers. Except for obligation owed under the Bliss Residence Mortgage, all payments to holders of Allowed Claims (Secured and Unsecured) will be paid by Bliss LLC. The Bliss Residence Mortgage will be paid by Bliss from post-Confirmation wages and social security benefits. A full-text copy of the Disclosure Statement dated Aug. 14, 2013 is available for free at: http://bankrupt.com/misc/REVOLUTIONDAIRY_DSAug14.PDF About Revolution Dairy Revolution Dairy LLC is one of the largest dairy farms in Utah. Revolution Dairy and affiliate Highline Dairy, LLC, filed bare- bones Chapter 11 petitions (Bankr. D. Utah Case Nos. 13-20770 and 13-20771) in Salt Lake City on Jan. 27, 2013. Each of the Debtors estimated $10 million to $50 million in assets and liabilities. Managers of Revolution and Highline -- Robert and Judith Bliss -- also sought Chapter 11 protection (Case No. 13-20772). Revolution Dairy, LLC, is represented by Michael N. Zundel, Esq., Adam S. Affleck, Esq., and T. Edward Cundick, Esq., at Prince, Yeates & Geldzahler. Highline Dairy, LLC, is represented by George B. Hoffman, Esq., at Parsons Kinghorn & Harris. Robert and Judith Bliss are represented by David T. Berry, Esq., at Berry & Tripp P.C. The Debtors' cases are jointly administered under Case No. 13-20770. The U.S. Trustee appointed five members to the official committee of unsecured creditors. The Committee tapped Snell and Wilmer L.L.P. as its counsel. Berkeley Research Group LLC serves as the panel's financial advisor. REVOLUTION DAIRY: Claims Treatment Favors Insiders, Committee Says ------------------------------------------------------------------ The Official Committee of Unsecured Creditors filed with the Court a limited objection to the adequacy of certain aspects of Revolution Dairy, LLC, et al.'s Disclosure Statement dated Aug. 14, 2013. On behalf of the Committee, David E. Leta, Esq., of Snell & Wilmer L.L.P., contends that the treatment provided in the Plan for Unsecured Creditors' Class U1 to U3 Claims shifts the risk of default to the backs of unsecured creditors while enabling the Debtors' insiders to: (1) receive, regular, substantial salaries and benefits commencing on the effective date; (2) have the unfettered use of substantial amounts of cash that otherwise belongs to and should be paid to unsecured creditors; and (3) retain their ownership interest in the enterprise. Moreover, Mr. Leta argues that the discussion of U1 Claims is misleading and inadequate. He specifies that it is inaccurate to to classify 503(b)(9) claims as "general unsecured claims." These creditors hold administrative expense claims and should be categorized and treated along with holders of other administrative claims. The Disclosure Statement, he adds, does not explain that, absent each creditor's consent, the holders of claims in this Class are legally entitled to be paid the full amount of their claims. Finally, Mr. Leta says, the Disclosure Statement suggests that the holders of these claims are receiving "full payment", when, in fact, the present value being paid to these creditors is less than the allowed amounts of their respective claims. Mr. Leta further asserts the Disclosure Statement does not explain the severe limitations placed on the efficacy and authority of the Oversight Committee. It does not explain that the Oversight Committee has no authority to augment or increase payments to unsecured creditors should the Debtor have sufficient ability to make additional payments. "This lack of effective control by the POC is a significant risk for unsecured creditors, which materially impacts their decision on whether to accept or reject this Plan," Mr. Leta says. About Revolution Dairy Revolution Dairy LLC is one of the largest dairy farms in Utah. Revolution Dairy and affiliate Highline Dairy, LLC, filed bare- bones Chapter 11 petitions (Bankr. D. Utah Case Nos. 13-20770 and 13-20771) in Salt Lake City on Jan. 27, 2013. Each of the Debtors estimated $10 million to $50 million in assets and liabilities. Managers of Revolution and Highline -- Robert and Judith Bliss -- also sought Chapter 11 protection (Case No. 13-20772). Revolution Dairy, LLC, is represented by Michael N. Zundel, Esq., Adam S. Affleck, Esq., and T. Edward Cundick, Esq., at Prince, Yeates & Geldzahler. Highline Dairy, LLC, is represented by George B. Hoffman, Esq., at Parsons Kinghorn & Harris. Robert and Judith Bliss are represented by David T. Berry, Esq., at Berry & Tripp P.C. The Debtors' cases are jointly administered under Case No. 13-20770. The U.S. Trustee appointed five members to the official committee of unsecured creditors. The Committee tapped Snell and Wilmer L.L.P. as its counsel. Berkeley Research Group LLC serves as the panel's financial advisor. REVSTONE INDUSTRIES: Parties Disagree on Corporate Governance ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Revstone Industries LLC is in an almost incomprehensively complex technical dispute on the question of whether newly bankrupt subsidiary Metavation LLC received proper authorization for filing in Chapter 11 and retaining professionals. According to the report, to the committee's way of thinking, Metavation didn't have proper authorization for being in bankruptcy and its petition should be dismissed, even though the bankruptcy court in Delaware already approved selling the business for $25.1 million to Dayco Products LLC, a unit of Mark IV LLC. The Revstone creditors posit that authorization for Metavation to go bankrupt could only be given by its direct parent, a company named Revstone Transportation. That company, according to the creditors, is managed by a two-person restructuring committee formed during bankruptcy. Because one of the two on the committee didn't vote on authorizing bankruptcy and retaining professionals, the committee says there was no quorum and the actions were void under a legal doctrine known as ultra vires. Revstone replied by describing how Delaware "largely abolished the ultra vires doctrine almost a half century ago." Both sides throw around arguments on corporate governance explaining why the actions were or weren't authorized. The latest round of papers were filed at the end of last week after the bankruptcy judge held a hearing and asked for more briefing on legal issues. Metavation's authorization is minor compared with other disputes between Revstone and the creditors. Each filed competing Chapter 11 plans. About Revstone Industries et al. Lexington, Kentucky-based Revstone Industries LLC, a maker of truck parts, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 12-13262) on Dec. 3, 2012. Judge Brendan Linehan Shannon oversees the case. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP represents Revstone. In its petition, Revstone estimated under $50 million in assets and debts. Affiliate Spara LLC filed its Chapter 11 petition (Bankr. D. Del. Case No. 12-13263) on Dec. 3, 2012. Lexington-based Greenwood Forgings, LLC (Bankr. D. Del. Case No. 13-10027) and US Tool & Engineering LLC (Bankr. D. Del. Case No. 13-10028) filed separate Chapter 11 petitions on Jan. 7, 2013. Judge Shannon also oversees the cases. Duane David Werb, Esq., at Werb & Sullivan, serves as bankruptcy counsel to Greenwood and US Tool. Greenwood estimated $1 million to $10 million in assets and $10 million to $50 million in debts. US Tool & Engineering estimated under $1 million in assets and $1 million to $10 million in debts. The petitions were signed by George S. Homeister, chairman. Metavation, also known as Hillsdale Automotive, LLC, joined parent Revstone in Chapter 11 on July 22, 2013 (Bankr. D. Del. Case No. 13-11831) to sell the bulk of its assets to industry rival Dayco for $25 million, absent higher and better offers. Metavation has tapped Pachulski as its counsel. Pachulski also serves as counsel to Revstone and Spara. Metavation also has tapped McDonald Hopkins PLC as special counsel, and Rust Consulting/Omni Bankruptcy as claims agent and to provide administrative services. Mark L. Desgrosseilliers, Esq., at Womble Carlyle Sandridge & Rice, LLP, represents the Official Committee of Unsecured Creditors in Revstone's case. ROBERTS HOTELS: Consents to Dismissal of 3 Bankruptcy Cases ----------------------------------------------------------- Roberts Hotels Atlanta, Roberts Hotels Dallas, and Roberts Hotels Tampa, by and through counsel, consent to Bank of America, N.A.'s Motion to Dismiss their Chapter 11 cases. In 2007, BofA made loans totaling $43 million to the six affiliated borrowers so that the borrowers could each purchase a hotel. The hotels were located in Houston, Dallas, Atlanta, Tampa, Shreveport, and Spartanburg. BofA took mortgage liens on each of the hotels to secure the outstanding loan. On various dates in 2012, each of the six affiliated borrowers filed for Chapter 11 protection. In particular, the entities that owned the hotels in Dallas, Atlanta, and Tampa filed their respective cases as: Hotel Filing Date Case Number ------------ ---- ----------- Roberts Hotels of Tampa, LLC May 7, 2012 Case No. 12-44391 Roberts Hotels of Atlanta, LLC May 9, 2013 Case No. 12-44493 Roberts Hotels of Dallas, LLC May 23, 2012 Case No. 12-45017 According to BofA, cause exists to dismiss each of the Dallas Case, the Atlanta Case, and the Tampa Case because all assets of those respective estates have been sold and the proceeds paid to BofA, which held a first priority lien on all of the estate's assets. There is no prospect of any distributions being made to creditors other than BofA as the bank also holds a lien on avoidance actions to secure the DIP loans made earlier in these cases, which loans remain outstanding. BofA said the Order dismissing the three cases should specifically provide that all Orders, Judgments, and Decrees entered in connection with such cases prior to the dismissal should be unaffected by the dismissal of the cases. Attorneys for the Debtor can be reached at: A. Thomas DeWoskin, Esq. Brant M. Feltner, Esq. DANNA McKITRICK, PC 7701 Forsyth Blvd., Suite 800 St. Louis, MO 63105 Tel: (314) 726-1000 (314) 725-6592 (fax) About Roberts Hotels Hotel portfolios owned by St. Louis, Mo.-based Roberts Cos. have filed separate Chapter 11 bankruptcy petitions. The hotels are among those involved in a lawsuit Bank of America filed against Roberts Cos. in April 2012. BofA alleges Roberts Cos. defaulted on a loan to renovate six hotels it owns outside of Missouri and owes more than $34 million. The hotels are located in Tampa, Atlanta, Dallas, Houston, Shreveport, La., and Spartanburg, S.C. Roberts Hotels Dallas LLC, which operates as a Courtyard by Marriott at 2383 Stemmons Trail in Dallas, filed for Chapter 11 bankruptcy (Bankr. E.D. Mo. Case No. 12-45017) on May 23, 2012, estimating $1 million to $10 million in assets, and $10 million to $50 million in debts. Roberts Hotels Atlanta LLC, dba Clarion Hotel Atlanta, filed for Chapter 11 (Bankr. E.D. Mo. Case No. 12-44493) on May 9, 2012, estimating $1 million to $10 million in assets, and $10 million to $50 million in debts. Roberts Hotels Shreveport LLC, also under the Clarion flag, sought Chapter 11 bankruptcy protection (Bankr. E.D. Mo. Case No. 12- 44495) on May 9, estimating under $10 million in assets and between $10 million and $50 million in debts. Roberts Hotels Spartanburg LLC, which owns the Clarion Hotel, formerly named Radisson Hotel & Suites Spartanburg, filed a Chapter 11 petition (Bankr. E.D. Mo. Case No. 12-43756) on April 19, 2012. It scheduled $3,028,820 in assets and $34,775,209 in debts. Roberts Hotels Houston LLC, dba Holiday Inn Houston, filed for Chapter 11 (Bankr. E.D. Mo. Case No. 12-43590) on April 16, 2012, listing under $50,000 in assets and up to $50 million in debts. Roberts Hotels Tampa LLC, which owns the Comfort Inn hotel at 820 East Busch Blvd. in Tampa, filed for Chapter 11 Bankr. E.D. Mo. Case No. 12-44391) on May 7, estimating assets between $1 million and $10 million and debts between $10 million and $50 million. A. Thomas DeWoskin, Esq., at Danna McKitrick, PC, serves as the Debtors' counsel. The petitions were signed by Mike Kirtley, chief operating officer. On Dec. 15, 2011, Roberts Hotels Jackson LLC, which owns Roberts Walthall Hotel, filed for Chapter 11 protection (Bankr. S.D. Miss. Case No. 11-04341), estimating both assets and debts of between $1 million and $10 million. John D. Moore, P.A., represents the Debtor. In August 2012, the Bankruptcy Court dismissed the case. The cases are jointly administered. Three of the Hotels were sold in an online auction March 19, 2013, for a combined $5.2 million: Location of Hotel Buyer Purchase Price ----------------- ----- -------------- Tampa, Fla. Harishyan Singh $1.14 million Spartanburg, S.C. Sumitra Arora $2.5 million Marietta, Ga. Edgar Olivares, $1.6 million SAN BERNARDINO, CA: Commits to Plan 'Outline' for Mediation ----------------------------------------------------------- Ryan Hagen, writing for The San Bernardino Sun, reported that San Bernardino city officials committed in U.S. Bankruptcy Court on Sept. 4 to having an "outline" by Oct. 15 to guide discussions with creditors and a mediator, saying they understood and would adjust to the judge's impatience with earlier estimates. "The council is fully supportive of whatever date the court sets," said the city's bankruptcy attorney, Paul Glassman of Stradling Yocca Carlson Rauth, the report related. "The city got the message, so they're fully on board." The mediation is intended to streamline the city's bankruptcy, so it can more quickly put together a plan to restructure its debt, the report added. Bankruptcy Judge Meredith Jury set the hearing for Sept. 4 after the city -- minutes after winning a significant battle over eligibility despite objections that it was purposefully stalling in bankruptcy court -- proposed a timeline that she said seemed unreasonably slow. "The primary purpose (of Wednesday's hearing) was because the answers that I was getting from the city about when it might have some kind of draft, terms sheet ... were not satisfactory to the court," Jury said, the report cited. "I was hoping to move quicker." 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. The City was granted Chapter 9 protection on Aug. 28, 2013. SILGAN HOLDINGS: Moody's Rates New Notes Ba2 & Affirms Ba1 CFR -------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to the proposed $300 million senior unsecured notes of Silgan Holdings Inc. and affirmed the company's Ba1 Corporate Family and Probability of Default ratings. The ratings outlook remains stable. The proceeds from the new $300 million notes due 2022 will be used to pay down revolver borrowings. Silgan will use a combination of cash and revolver borrowings to fund the acquisition of Portola Packaging, Inc. Portola is a manufacturer of plastic closures, operates eight manufacturing facilities in North America and Europe and had sales of approximately $200 million in 2012. Silgan agreed to acquire Portola for a cash purchase price of $266 million on a debt-free basis. The transaction is expected to close as early as September 2013 subject to certain customary conditions and regulatory approvals. Moody's took the following actions for Silgan Holdings Inc.: Assigned $300 million senior unsecured notes due 2022, Ba2 (LGD 5, 85%) Affirmed Corporate Family Rating at Ba1 Affirmed Probability of Default rating at Ba1-PD Affirmed $800 million multicurrency revolving credit facility due July 2016, Ba1 (LGD 3, 33% from 38%) Affirmed $520 million term loan A due July 2017, Ba1 (LGD 3, 33% from 38%) Affirmed EUR335 million term loan A due July 2017, Ba1 (LGD 3, 33% from 38%) Affirmed $500 million senior unsecured notes due April 2020, Ba2 (LGD 5, 85% from 87%) Moody's took the following actions for Silgan Plastics Canada Inc. Affirmed CAD 81 million term loan A due July 2017, Ba1 (LGD 3, 33% from 38%) The ratings outlook is stable. The ratings are subject to the receipt and review of the final documentation. Ratings Rationale The Ba1 Corporate Family rating reflects the consolidated industry structure in the company's metals segment (food can and closures) and strong market shares and contract structures in food cans. The rating also reflects the significant onsite presence with customers in the food can segment and the significant percentage of custom products in the plastics segment. The company remains focused on cost cutting and productivity and is expanding into higher growth markets. Silgan also maintains good liquidity. The Corporate Family rating is constrained by the company's acquisitiveness, primarily commoditized product line and concentration of sales. The rating is also constrained by the low growth in the food can market and the potential for increased business, operating and ratings risk over time stemming from the company's acquisition strategy. Contract terms in the plastic vacuum closures and plastics segments have relatively weaker terms than the food can segment (including a lack of cost pass-throughs for costs other than raw materials) and resin prices have been volatile historically. Moreover, the industry structures for both plastic segments are fragmented with significant competitive pressures. Silgan's leverage is high for the rating category and a failure to reduce it would pressure ratings. Additionally, continued acquisitions that alter the company's business profile or significant debt financed acquisitions may also prompt a downgrade. The ratings could also be downgraded if there is deterioration in the operating and competitive environment, deterioration in credit metrics and/or change in financial policies to the detriment of debt holders. Specifically, the ratings could be downgraded if adjusted debt to EBITDA remains above 3.5 times, free cash flow to debt remains below 9.5%, EBIT to interest expense declines to below 4.0 times, and/or the EBIT margin remains below 9.5%. The rating could be upgraded if Silgan commits to investment grade financial policies and sustainably improves credit metrics within the context of continued stability in the operating and competitive environment. Specifically, the ratings could be upgraded if the EBIT margin improves to the mid-teens, debt to EBITDA improves to below 2.8 times, EBIT to interest expense improves to over 4.5 times, and free cash flow to debt improves to the mid teens. The principal methodology used in this rating was the Global Packaging Manufacturers: Metal, Glass, and Plastic Containers Industry Methodology published in June 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. SILGAN HOLDINGS: S&P Rates $300MM Sr. Unsecured Notes 'BB-' ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' (two notches below the corporate credit rating) senior unsecured debt rating to Silgan Holdings Inc.'s proposed $300 million senior unsecured notes due 2022. S&P assigned a '6' recovery rating to this debt, indicating its expectation of negligible (0% to 10%) recovery in the event of a payment default. Silgan will use proceeds of the notes offering to pay down outstanding borrowings under its revolving credit facility. The existing ratings on Silgan, including the 'BB+' corporate credit rating, are unchanged. The outlook is stable. The stable outlook reflects steady cash flow generation and S&P's expectation that credit measures will remain appropriate for the ratings. RATINGS LIST Silgan Holdings Inc. Corporate Credit Rating BB+/Stable/-- New Rating Silgan Holdings Inc. $300 Mil. Senior Unsec. Notes Due 2022 BB- Recovery Rating 6 SOURCEGAS LLC: Fitch Affirms 'BB+' LT Issuer Default Rating ----------------------------------------------------------- Fitch Ratings has affirmed SourceGas LLC's (SGL) 'BB+' long-term Issuer Default Rating (IDR) and 'BBB-' senior unsecured debt rating. The Rating Outlook remains Stable. Approximately $325 million of senior notes is affected by today's rating action. Key Rating Drivers: Leveraged Holding Company Structure: SGL is a wholly-owned subsidiary of SourceGas Holding LLC (SGH, not rated by Fitch) the ownership vehicle created by joint owners General Electric (through various subsidiaries) and Alinda Investments LLC to execute the leveraged buyout of the regulated natural gas business from Kinder Morgan in 2007. Proceeds from debt issued at SGH are down-streamed to SGL as equity, creating a servicing burden to SGL in the form of up-streamed dividends. Low-Risk Utility Business: SGL conducts its regulated natural gas distribution businesses in four states: Arkansas, Colorado, Nebraska, and Wyoming. Regulated activities account for over 90% of gross margin. Commodity costs are a straight pass-through to customers via recovery mechanisms. Fixed service charges and base load represent over 50% of revenues and SGL has weather normalization in Arkansas, further reducing earnings and cash flow volatility. Elevated Capital Investment Program: SGL's capital investment budget is expected to remain elevated over the five-year forecast period with meter growth approximating 2% annually. In 2013, SGH injected $50 million of equity into SGL in order for the utility to maintain its capital structure of around 47% to 50% equity. SGH incurred additional debt to make the equity infusion. SGH maintains a capital structure managed to a level of approximately 70% debt. Stable Credit Metrics: SGL profitability and interest coverage metrics are generally strong for the ratings category, while leverage metrics are modestly below peers. The infusion of $50 million in new equity provides sufficient capital at the utility to finance the capital investment program and maintain its capital structure with debt to total capital averaging 52% over the forecast period. Over the same time period, Fitch expects EBITDA to interest to average slightly above 4.0x while debt to EBITDA will approximate 5.0x. Cashflows reflect some lag from growth capex until such investments are added to rate base. Financial Flexibility: Fitch considers SGL's financial flexibility to be somewhat constrained as a private company, which limits capital access, and by a relatively short-dated debt maturity structure. SGL's debt maturities, consisting primarily of $150 million of term debt due in 2016 and $325 million of notes due in 2017 present a degree of market risk at the time of refinancing. Liquidity Fitch considers SGL's liquidity to be adequate, supported by a $175 million revolving credit facility due in 2016 to fund cyclical working capital needs, fund capital investments not met by internally generated funds, and general corporate purposes. Covenants include a debt to capital limit of 65%. Liquidity is bolstered by the recent $50 million equity infusion from SGH and the revolver is largely undrawn. Rating Sensitivities Positive: A positive rating action is considered unlikely given existing leverage and financial policies regarding consolidated SGH capital levels. Negative: Future, developments that may, individually or collectively lead to a negative rating action include: -- A meaningful increase in leverage at either SGL or SGH; -- Higher up-stream dividends from SGL to SGH; -- Deterioration in operating performance from regulatory outcomes that prevent timely and adequate recovery of invested capital. Fitch has affirmed the following ratings with a Stable Outlook: SourceGas LLC -- Long-term IDR at 'BB+'; -- Senior unsecured notes at 'BBB-'. SPECIALTY PRODUCTS: Opposes Asbestos Claimants' Plan Disclosures ---------------------------------------------------------------- Specialty Products Holding Corp., et al., object to the disclosure statement for the second amended Chapter 11 Plan filed by the Official Committee of Asbestos Personal Injury Claimants and the Future Claimants' Representative of Specialty Products Holding Corp. and Bondex International, Inc. The Debtors contended that: 1) the plan of reorganization is unconfirmable on its face; 2) the proposed disclosure statement does not contain adequate information; and 3) there is no basis on which the Court can grant the Movants' request to temporarily estimate asbestos personal injury claims for voting purposes. Counsel for the Debtors can be reached at: Daniel J. DeFranceschi, Esq. Paul N. Heath, Esq. Zachary I. Shapiro, Esq. RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 North King Street Wilmington, DE 19801 Tel: (302) 651-7700 Fax: (302) 651-7701 - and - Gregory M. Gordon, Esq. Dan B. Prieto, Esq. JONES DAY 2727 N. Harwood Street Dallas, TX 75201 Tel: (214) 220-3939 Fax: (214) 969-5100 As reported in the TCR on Aug. 8, 2013, a second amended Chapter 11 plan was filed by the Official Committee of Asbestos Personal Injury Claimants and the Future Claimants' Representative for Specialty Products Holding Corp. and Bondex International, Inc. The Plan provides that Bondex, SPHC, and the Reorganized SPHC Companies will be separated from their non-Debtor direct or indirect parent. An asbestos personal injury trust will be created and SPHC, Reorganized SPHC and the Reorganized SPHC Companies will be the only entities to receive the benefits of injunction under Section 524(g) of the Bankruptcy Code. The Asbestos Trust will be funded with 100% of the New SPHC Stock and any claims or cause of action held against third parties. Reorganized SPHC will be managed and/or sold for the benefit of holders of all claims that are not paid in Cash, subordinated, cancelled or otherwise treated pursuant to the Plan. Current SPHC Equity Interests will be cancelled, annulled, and extinguished and new SPHC stock will be issued. Under the Plan, the holders of Allowed General Unsecured Claims against SPHC (Class 3) and Allowed Intercompany Claims against SPHC (Class 5) will receive: (i) Pro Rata share of Cash equal to the Allowed amount of the claim; or (ii) other treatment as the Plan Proponents and the claim holder will agree. A full-text copy of the Disclosure Statement dated Aug. 2, 2013, is available for free at: http://bankrupt.com/misc/SPECIALTYPRODUCTSds0802.pdf 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. Attorneys at Montgomery, McCracken, Walker & Rhoads, LLP, in Wilmington, Delaware, represent the Official Committee of Asbestos Personal Injury Claimants as counsel. Attorneys at Young Conaway Stargatee & Taylor, LLP, in Wilmington, Delaware represent the Future Claimants Representative as counsel. 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. SPRINT CORP: Moody's Rates New Senior Unsecured Notes 'B1' ---------------------------------------------------------- Moody's Investors Service assigned B1 ratings to Sprint Corporation's proposed offerings of Senior Unsecured Notes due 2021 and Senior Unsecured Notes due 2023. The proceeds will be used for general corporate purposes, which may include, among other things, redemptions or service requirements of outstanding debt, network expansion and modernization. Sprint Corporation is the parent company of Sprint Communications, Inc., f/k/a Sprint Nextel Corporation. Existing senior unsecured notes at Sprint Communications, Inc. and the proposed offering of senior unsecured notes at Sprint Corporation will rank pari passu through cross- guarantees. Moody's has also moved the Corporate Family Rating ("CFR"), Ba3, the Probability of Default Rating ("PDR"), Ba3-PD, and the Speculative Grade Liquidity ("SGL") Rating, SGL-1, from Sprint Communications, Inc. to Sprint Corporation, which is now the corporate family's ultimate parent. Ratings Assigned: Issuer: Sprint Corporation Corporate Family Rating -- Ba3 Probability of Default Rating -- Ba3-PD Speculative Grade Liquidity Rating -- SGL-1 Outlook -- Stable Senior Unsecured Notes due 2021 -- B1, LGD5 (74%) Senior Unsecured Notes due 2023 -- B1, LGD5 (74%) Ratings Withdrawn: Issuer: Sprint Communications, Inc. Corporate Family Rating -- Ba3 Probability of Default Rating -- Ba3-PD Speculative Grade Liquidity Rating -- SGL-1 Ratings Rationale Sprint's underlying Ba3 Corporate Family Rating recognizes its large scale, its valuable spectrum assets, slowly improving operating profile, substantial liquidity, and the implicit support from Sprint's parent company and majority shareholder, SoftBank. Offsetting these strengths are high leverage, weak margins, and Moody's projection for negative free cash flow through 2015. Near flawless execution across all aspects of the business, including the requirement to quickly redesign and modernize its entire network will be necessary before Sprint can hope to grow its market share in the brutally competitive US wireless industry. Sprint's ratings could be raised if its turnaround accelerates. Specifically, if leverage were likely to drop below 4.0x, and free cash flow were to turn positive upward rating pressure would ensue (note that all cited financial metrics are referenced on a Moody's adjusted basis). Sprint's ratings could be lowered if the network upgrade falls behind schedule or doesn't yield the financial and operational benefits promised or if Sprint's competitive position deteriorates as evidenced by postpaid CDMA churn rising (outside of normal quarterly variances) or overall market share declines. Also, if the company allows its liquidity position to weaken significantly, negative rating pressure will ensue. Specifically, if leverage was likely to exceed 6.0x (Moody's adjusted) on a sustained basis, the ratings could be downgraded. The principal methodology used in this rating was the Global Telecommunications Industry published in December 2010. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. SPRINT CORP: S&P Assigns 'BB-' Corporate Credit Rating ------------------------------------------------------ Standard & Poor's Ratings Services said it assigned its 'BB-' corporate credit rating to Sprint Corp., a newly formed parent entity of the Overland Park, Kan.-based wireless telecommunications carrier. At the same time, S&P affirmed the 'BB-' corporate credit rating on Sprint Nextel Corp., which was renamed Sprint Communications Inc. and is a wholly owned subsidiary of Sprint Corp. The outlook is stable. S&P also affirmed all issue-level ratings at Sprint Communications as well as at subsidiaries Sprint Capital Corp., iPCS, and Clearwire Corp. Additionally, S&P assigned a 'BB-' issue-level rating and '3' recovery rating to Sprint Corp.'s proposed senior notes due 2021 and 2023 (undetermined amount). The '3' recovery rating indicates S&P's expectation for meaningful (50%-70%) recovery in the event of payment default. S&P expects proceeds from the new debt will be used to fund the company's network upgrade and to refinance existing debt at Clearwire. "The ratings on Sprint reflect what we consider a fair business risk profile and a highly leveraged financial risk profile, a combination that supports a stand-alone credit profile of 'b+' for the company," said Standard & Poor's credit analyst Allyn Arden. S&P also impute one notch of support from parent company SoftBank Corp. (BB+/Stable/--), which leads to the 'BB-' corporate credit rating on Sprint. The outlook is stable. Despite S&P's expectation for improving operating trends, including higher postpaid ARPU and modest subscriber growth, S&P believes the company will be challenged to improve leverage in the near term due to its substantial FOCF deficits over the next two years, which will likely result in higher levels of debt. Moreover, S&P believes the company's subpar profitability relative to its peer group and high capital expenditures over the next couple of years leave little room for execution missteps as it upgrades its network. An upgrade is unlikely in the near term unless Sprint performs better than S&P has incorporated in its base-case scenario. This includes customer growth, margin expansion to the high-20% area or better, and leverage below 5x on a sustained basis. S&P could also raise the ratings if SoftBank were to provide Sprint with additional capital, and Sprint used that to fund FOCF deficits and reduce debt below the 5x leverage level. Conversely, S&P could lower the ratings if maturing industry conditions and increased competition result in higher churn, pricing pressure, and accelerating postpaid subscriber losses, resulting in leverage rising to the 7x area. Also, given Sprint's less-than-adequate liquidity, S&P could also lower the ratings if the company is not able to address upcoming maturities and fund FOCF deficits by early 2014, leading to a liquidity assessment of "weak". In the latter scenario a multi-notch downgrade to 'B-' is possible depending upon any mitigating actions by SoftBank to bolster Sprint's liquidity. SPRINT NEXTEL: Fitch Assigns 'B+' New Issuer Default Rating ----------------------------------------------------------- Fitch Ratings has assigned a new Issuer Default Rating (IDR) to Sprint Corporation of 'B+' and a 'B+/RR4' rating to Sprint's benchmark-sized offering of senior unsecured notes due 2021 and 2023. The proceeds from the offering will be used for general corporate purposes, which may include redemptions or service requirements of outstanding debt, network expansion, and modernization. The Rating Outlook is Stable. The senior notes will be fully and unconditionally guaranteed on a senior unsecured basis by Sprint's wholly owned subsidiary, Sprint Communications, Inc. Concurrently with this offering, Sprint will fully and unconditionally guarantee on a senior basis the outstanding securities issuances of Sprint Communications Inc., Sprint Capital Corporation and iPCS, Inc. Consequently, Fitch believes Sprint has created a guarantee structure such that the senior notes issued at Sprint Capital Corp., Sprint Communications Inc. and Sprint are pari passu. Key Rating Drivers The rating affirmation reflects Fitch's view that Sprint's financial profile will remain weak through 2014 due to the significant cash deficit during the next two years and the associated debt borrowing that will increase leverage. Sprint estimated this deficit at approximately $10 billion in its June 2013 proxy filing driven by $16 billion in capital investment to keep pace with growing industry demand and the competitive environment. Fitch believes the cumulative $28 billion in capital spending the next four years also reflects the underinvestment in Sprint's network and the need to accelerate the deployment of capital to improve Sprint's competitive position. Additionally, DISH's pursuit of Sprint and Clearwire had a negative impact on Sprint's available liquidity for other strategic initiatives of $4.7 billion. Looking forward, as Sprint leverages it cost reduction efforts, substantial margin expansion should occur in the 2014 and 2015 timeframe. Cost reduction efforts could drive up to $2 billion in savings. The improved cash generation when coupled with reduced capital investment should allow for the company to strengthen its financial profile, including the potential to generate free cash flow (FCF) by 2015. Leverage is expected to approach 5.5x by the end of 2013 before declining in 2014. Operational Trends Sprint also faces material execution risk across the numerous strategic objectives that the company is pursuing. Fitch remains concerned with Sprint platform gross additions trends which, when adjusted for Nextel subscriber recapture, declined in excess of 20% for the past four quarters. Consequently, postpaid revenue growth which had increased to approximately 6% during late 2011 to mid-2012, declined modestly year-over-year for the first half of 2013. During this time, Sprint prioritized its marketing spend for the recapture of its iDEN subscribers and Verizon Wireless took share by leveraging its 4G LTE leadership position across its national footprint. Sprint will continue to face postpaid subscriber headwinds for the remainder of 2013 due to the continued negative impact from mixed accounts (iDEN and Sprint platform), network vision-related churn and lack of density with its long-term evolution (LTE) footprint. As such, postpaid revenue will remain pressured and Sprint will need to find ways to reinvigorate growth in 2014 as competitive intensity remains high among the national and wholesale providers for postpaid subscribers. The accelerated network investment to improve capacity, data bandwidth and customer experience is a key strategic component of Sprint plans. The company hopes that the improved network when combined with its differentiated unlimited plan and Softbank's expertise will increase its share of industry gross additions. Fitch believes Verizon and AT&T Wireless are currently much better positioned to leverage their scale, capital investment, subscriber bases and spectrum portfolios to capture additional share and future growth, particularly through the share data plans. These plans will likely result in even stickier subscribers as consumers attach more devices, creating further barriers to churn. Consequently, Sprint's challenge is magnified, as industry postpaid and prepaid additions are expected to contract further as the industry matures. Additional avenues for incremental revenue growth include mobile broadband/tablet devices and machine-to- machine opportunities. Spectrum Softbank's cash infusion materially strengthened Sprint's flexibility to pursue key consolidation and spectrum opportunities. Fitch views Clearwire's network and spectrum assets as integral to Sprint's LTE plans to deploy high-band spectrum in high-capacity areas, particularly within the urban cores under Sprint's control. This strengthens Sprint's long-term competitive position and ability to offer a differentiated unlimited wireless broadband plan versus its national peers. Given Sprint's deep 2.5 GHz spectrum position and unbalanced spectrum portfolio, Fitch believes Sprint could pursue opportunities to swap/sell 2.5 GHz spectrum and increase its holdings of other spectrum bands including the sub 1 GHz band through the 600 MHz broadcast auction. This would enhance Sprint's financial flexibility and allow for an expanded 2.5 GHz device ecosystem. An H-block auction in the 2014 timeframe could also increase Sprint's expected deficit if the company materially participates in the auction. Liquidity, Maturities & Financial Covenants Sprint's liquidity position is supported by $6.4 billion of cash and $2.1 billion borrowing capacity under a revolving credit facility. Softbank contributed an additional $1.9 billion of cash at closing and Sprint paid $3.8 billion related to the Clearwire transaction. Sprint closed a new five-year $3 billion credit agreement earlier this year. As of June 30, 2013, $913 million in letters of credit were outstanding. Sprint also maintains a second tranche of a $500 million vendor financing facility that became available for borrowing on April 1, 2013. Fitch expects Sprint will maintain at least $2 billion of cash going forward to maintain adequate liquidity for its strategic plans. As such, given the high cash requirements to fund the operating deficit related to the capital investment, the Clearwire acquisition and potential spectrum auction, Fitch expects Sprint will substantially increase debt during the next year. Debt refinancing and redemptions have significantly reduced Sprint's maturity profile (excluding Clearwire) from previous years. During the next four years, $56 million, $292 million, $611 million and $2,111 million comes due, respectively. Sprint will consider opportunities to refinance Clearwire's high-coupon debt. Clearwire has $2.95 billion of 12% first-priority secured notes due December 2015. The secured notes currently have optional redemption rights at 106%. This will reduce to 103% in December 2013. The $500 million 12% second priority notes are due in 2017 with optional redemption rights beginning December 2014 at 106%. The $300 million 14.75% first priority secured notes mature in the fourth quarter of 2016 and contain a make-whole premium, thus limiting refinancing options. Financial covenants with the new credit facility have significant cushion against the expected leverage increase with current total leverage ratio not to exceed 6.25 through June 30, 2014. As of March 31, 2013, the leverage ratio was 4.25. The unsecured credit facilities at Sprint benefit from upstream unsecured guarantees from all material subsidiaries. The credit agreement allows carve-outs for indebtedness composed of unsecured guarantees that are expressly subordinated to the credit facility. The unsecured junior guaranteed debt is senior to the unsecured notes at Sprint Nextel and Sprint Capital Corporation. The unsecured senior notes at these entities are not supported by an upstream guarantee from the operating subsidiaries. The $1 billion vendor financing facility is jointly and severally borrowed by all of the Sprint subsidiaries that guarantee the Sprint credit facility, Export Development Canada loan and junior guaranteed notes. The facility additionally benefits from a parent guarantee and first priority lien on certain network equipment. This places the vendor facility structurally ahead of the unsecured notes. Rating Sensitivities/Drivers Positive: Future developments that may, individually or collectively, lead to a positive rating action include: -- Execution on cost reduction opportunities leading to expansion in operating EBITDA margins approaching 20%; -- Improvement in cash generation such that FCF prospects for the year are approaching breakeven to positive; -- Improved FFO interest coverage approaching 4x; -- Improved FFO adjusted leverage approaching 4x; -- Additional infusions of capital by Softbank; -- Improvement in postpaid churn by at least 10-20 basis points; -- Positive trends in gross addition share. Negative: Future developments that may, individually or collectively, lead to negative rating action include: -- Lack of an expected turn-around in FCF generation with persistent negative trends; -- Aggressive spectrum purchases that would raise leverage over 5.5x on a sustained basis; -- Postpaid subscriber trends materially weaken; -- Gross addition share gains fail to materialize; -- Additional material acquisitions. Fitch affirms the ratings of Sprint Corporation and its subsidiaries as follows: Sprint Communications Inc.; -- IDR at 'B+'; -- $3 billion senior unsecured credit facility at 'BB/RR2'; -- Junior guaranteed unsecured notes at 'BB/RR2'; -- Senior unsecured notes at 'B+/RR4'. Sprint Capital Corporation; -- IDR at 'B+'; -- Senior unsecured notes at 'B+/RR4'. Fitch assigned the following new ratings: Sprint Corporation; -- IDR at 'B+'; -- Senior unsecured notes at 'B+/RR4'. SR REAL ESTATE: Seeks Transfer of Venue to Southern California -------------------------------------------------------------- SR Real Estate Holdings, LLC, and its secured creditors DACA2010L L.P. and Sargent Ranch Management Company, LLC, jointly ask the U.S. Bankruptcy Court for the Northern District of California, San Jose Division, to enter an order transferring venue of the bankruptcy case to the U.S. Bankruptcy Court for the Southern District of California. According to the Debtor's proposed counsel, Victor A. Vilaplana, Esq., at Foley & Lardner LLP, in San Diego, California, this is the third bankruptcy case filed with respect to the property owned by the Debtor. The prior bankruptcy cases were filed in the Southern District of California. DACA has demanded that the Debtor transfer venue to the Southern District of California due to that Court's intimate knowledge of the property and the parties-in-interest. Mr. Vilaplana says the Debtor has no opposition to venue in the Southern District of California. A hearing on the joint motion is scheduled for Sept. 13, 2013, at 10:00 AM. The Debtor is also proposes to employ as counsel Matthew J. Riopelle, Esq. -- mriopelle@foley.com -- at Foley & Lardner LLP, in San Diego, California. DACA is represented by William M. Rathbone, Esq. -- wrathbone@gordonrees.com -- at GORDON & REES LLP, in San Diego, California. SR Real Estate Holdings, LLC, owner of 14 parcels of real property totaling 6,400 acres straddling Santa Cruz and Santa Clara counties, filed a Chapter 11 petition (Bankr. N.D. Cal. Case No. 13-54471) in San Jose, California, on Aug. 20, 2013. The Debtor estimated that its assets total at least $10 million and liabilities are at least $500 million. Victor A. Vilaplana, Esq., at Foley and Lardner, serves as counsel to the Debtor. This is the third bankruptcy filed with respect to the property. The prior owner, Sargent Ranch, LLC, filed Chapter 11 cases in January 2010 (Bankr. S.D. Cal. Case No. 10-00046-PB) and November 2011 (Bankr. S.D. Cal. Case No. 11-18853). The second bankruptcy case was dismissed in February 2012. SR REAL ESTATE: Taps Foley & Lardner as Bankruptcy Counsel ---------------------------------------------------------- SR Real Estate Holdings, LLC, seeks authority from the U.S. Bankruptcy Court for the Northern District of California, San Jose Division, to employ Foley & Lardner LLP as general bankruptcy counsel, nunc pro tunc to the Petition Date. As of Sept. 3, 2013, the rates for some of the attorneys and paraprofessionals expected to be primarily involved in this case are as follows: Victor A. Vilaplana, Esq. $700.00 Dawn Messick, Esq. $510.00 Jennifer Pinder, Esq. $495.00 Matthew Riopelle, Esq. $455.00 Marshall Hogan, Esq. $335.00 Kerry Farrar, Paraprofessional $225.00 The firm will also be reimbursed for any necessary out-of-pocket expenses. Victor A. Vilaplana, Esq., a member at Foley & Lardner LLP, assures the Court that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. Prior to the Petition Date, the Debtor provided the firm a retainer in the amount of $350,000. On the Petition Date, the firm had on deposit a retainer in the amount of $316,287. SR Real Estate Holdings, LLC, owner of 14 parcels of real property totaling 6,400 acres straddling Santa Cruz and Santa Clara counties, filed a Chapter 11 petition (Bankr. N.D. Cal. Case No. 13-54471) in San Jose, California, on Aug. 20, 2013. The Debtor estimated that its assets total at least $10 million and liabilities are at least $500 million. Victor A. Vilaplana, Esq., at Foley and Lardner, serves as counsel to the Debtor. This is the third bankruptcy filed with respect to the property. The prior owner, Sargent Ranch, LLC, filed Chapter 11 cases in January 2010 (Bankr. S.D. Cal. Case No. 10-00046-PB) and November 2011 (Bankr. S.D. Cal. Case No. 11-18853). The second bankruptcy case was dismissed in February 2012. SR REAL ESTATE: Files Schedules of Assets and Liabilities --------------------------------------------------------- SR Real Estate Holdings, LLC, filed with the U.S. Bankruptcy Court for the Northern District of California, San Jose Division, schedules of assets and liabilities disclosing the following: Assets Liabilities ----------- ------------ A. Real Property $15,000,000 B. Personal Property 16,593 C. Property Claimed as Exempt N/A D. Creditors Holding Secured Claims $548,891,454 E. Creditors Holding Unsecured Priority Claims 0 F. Creditors Holding Unsecured Nonpriority Claims 16,484 ----------- ------------ Total $15,016,593 $548,907,938 Full-text copies of the Schedules are available for free at: http://bankrupt.com/misc/SRREALsal0903.pdf SR Real Estate Holdings, LLC, owner of 14 parcels of real property totaling 6,400 acres straddling Santa Cruz and Santa Clara counties, filed a Chapter 11 petition (Bankr. N.D. Cal. Case No. 13-54471) in San Jose, California, on Aug. 20, 2013. The Debtor estimated that its assets total at least $10 million and liabilities are at least $500 million. Victor A. Vilaplana, Esq., at Foley and Lardner, serves as counsel to the Debtor. This is the third bankruptcy filed with respect to the property. The prior owner, Sargent Ranch, LLC, filed Chapter 11 cases in January 2010 (Bankr. S.D. Cal. Case No. 10-00046-PB) and November 2011 (Bankr. S.D. Cal. Case No. 11-18853). The second bankruptcy case was dismissed in February 2012. STATE LINE: Court Rules on Bid to Dismiss Smith Estate Tax Suit --------------------------------------------------------------- UNITED STATES OF AMERICA, Plaintiff, v. MARY CAROL S. JOHNSON; JAMES W. SMITH; MARIAN S. BARNWELL; BILLIE ANN S. DEVINE; and EVE H. SMITH, Defendants, Case No. 2:11-CV-00087 (D. Utah) is an action for the collection of an estate tax deficiency owed by the estate of Anna S. Smith. Anna Smith died in 1991 and her surviving children are the defendants in the action. The bulk of Anna's Estate consisted of 9,994 shares of stock in State Line Hotel, Inc., who filed for bankruptcy in Nevada in January 2002 (Case No. 02-50081). Defendants moved to dismiss the action, arguing that the Government failed to state a claim on which relief can be granted. In an Amended Memorandum Decision dated July 29, 2013, District Judge Clark Waddoups granted in part and denied in part Defendants' Motion to Dismiss. The Court dismisses Eve H. Smith, wife of James Smith, as defendant without prejudice. The Court also dismisses any action against the remaining Defendants as transferees or trust beneficiaries under section 6324(a)(2). The Court, however, denies the motion to dismiss the first cause of action against the Trustees and against the life insurance beneficiaries to the extent of the value they received under the insurance policies. The court also denies the motion to dismiss the second cause of action. A copy of Judge Waddoups's Amended Memorandum is available at http://is.gd/sgUS0dfrom Leagle.com. STELERA WIRELESS: Sept. 19 Hearing on Bidding Procedures -------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Oklahoma will convene a hearing on Sept. 19, 2013, at 10 a.m., to consider Stelera Wireless, LLC's motion for order approving bidding procedures to govern the sale of its assets. The Debtor related that it terminated its broadband services and cannot continue in its business or rehabilitate its operations. The only way for the Debtor to realize any value for its assets is to sell the FCC Licenses. Prior to filing bankruptcy, the Debtor entered into a License Purchase Agreement with Atlantic Tele-Network, Inc., under which stalking horse purchaser will acquire certain of the FCC Licenses for the purchase price of $3,850,000 subject to certain adjustments and carve-outs upon Bankruptcy Court approval of the transaction. The bidding procedures include, among other things: Auction: Nov. 15, at 9 a.m. at the offices of Christensen Law Group, PLLC, 210 Park Avenue, Suite 700, Oklahoma City, Oklahoma Bid Deadline: 4 p.m. on Nov. 8 Objections: on or before 21 days from the date the sale motion is filed The Debtor also seeks approval to pay a breakup fee to the stalking horse purchaser in the amount of $115,000, and payment of up to $50,000 in reimbursement of legal and due diligence expenses in the event that the Court approves the purchase agreement with stalking horse purchaser and the FCC Licenses are then sold to another purchaser for a higher price. About Stelera Wireless, LLC Stelera Wireless, LLC, specialized in providing broadband services to consumers and businesses in rural markets in the United States. The Company filed a Chapter 11 petition (Bankr. W.D. Okla. Case No. 13-13267) on July 18, 2013. Tim Duffy signed the petition as chief technology officer/manager. Judge Niles L. Jackson presides over the case. The Debtor disclosed $18,005,000 in assets and $30,809,314 in liabilities as of the Chapter 11 filing. J. Clay Christensen, Esq., at Christensen Law Group, PLLC, serves as the Debtor's primary counsel. Mulinix Ogden Hall & Ludlam, PLLC, serves as additional bankruptcy counsel. American Legal Claim Services, LLC serves as the official noticing agent. U.S. Trustee Richard A. Wieland appointed three members to the official committee of unsecured creditors. STEREOTAXIS INC: Renews Silicon Valley Bank Credit Facility ----------------------------------------------------------- Stereotaxis, Inc., has completed the renewal of its revolving credit facility with Silicon Valley Bank. Under an amended credit agreement, Stereotaxis will extend its $3 million asset based revolving line of credit with SVB through March 31, 2014. The amended credit agreement eliminates the $3 million of available advances guaranteed by Alafi Capital Company and an affiliate of Sanderling Venture Partners, and the guarantees have been terminated. Furthermore, the prepayment premium on its term note was eliminated from the agreement, allowing the Company to repay the outstanding amount under this facility prior to its maturity date of December 2013, without penalty. The facility renewal follows recently announced transactions involving the exercise of warrants by the Company's convertible subordinated note holders, as well as by certain other equity investors, which yielded Stereotaxis gross proceeds of approximately $11.7 million in additional capital. Additional information is available for free at: http://is.gd/lS0UU1 About Stereotaxis Based in St. Louis, Mo., Stereotaxis, Inc., designs, manufactures and markets the Epoch Solution, which is an advanced remote robotic navigation system for use in a hospital's interventional surgical suite, or "interventional lab", that the Company believes revolutionizes the treatment of arrhythmias and coronary artery disease by enabling enhanced safety, efficiency and efficacy for catheter-based, or interventional, procedures. For the year ended Dec. 31, 2011, Ernst & Young LLP, in St. Louis, Missouri, expressed substantial doubt about Stereotaxis' ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring operating losses and has a working capital deficiency. The Company's balance sheet at June 30, 2013, showed $23.99 million in total assets, $49.63 million in total liabilities and a $25.63 million total stockholders' deficit. STOCKTON PUBLIC: S&P Lowers Rating on 2004 & 2009A Bonds to 'D' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its underlying rating (SPUR) to 'D' from 'C' on Stockton Public Financing Authority, Calif.'s series 2004 (parking and capital projects) lease revenue bonds and its long-term rating to 'D' from 'C' on the authority's series 2009A lease revenue bonds. Both series are appropriation obligations of Stockton. The 'A' long-term rating on the series 2004 is unchanged, reflecting a financial commitment by National Public Finance Guarantee Corp. (A/Stable/--). "The rating actions reflect our view of the city's nonpayment of $3.3 million of principal and interest on both series, due Sept. 3, 2013, the first business day subsequent to the scheduled Sept. 1, 2013 payment, said Standard & Poor's credit analyst Chris Morgan. "These nonpayments are consistent with city's fiscal 2014 pendency plan while it operates under protection from its creditors under Chapter 9 of the U.S. Bankruptcy Code and with the lack of sufficient debt service reserve fund balances to meet the Sept. 3 payment," added Mr. Morgan. T-L BRYWOOD: Court OKs Shepard Schwartz as Accountants ------------------------------------------------------ T-L Brywood, LLC, sought and obtained permission from the U.S. Bankruptcy Court for the Northern District of Indiana to employ Mary Fuller, and the accounting firm of Shepard Schwartz & Harris, LLP as accountants for its sole member, Tri-Land Kansas City Investors, LLC, for the tax year of 2012 and for other related matters. Shepard Schwartz does not believe that it holds a prepetition claim against the estate of the Debtor. To the extent that such a claim does exist, Shepard Schwartz agrees to waive that claim in the event that the motion is granted. Shepard Schwartz estimates that the total amount of billings for the preparation of the tax returns will be approximately $5,400. 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. TRAINOR GLASS: Wants Plan Filing Period Extended Until Sept. 9 -------------------------------------------------------------- Trainor Glass Company asks the U.S. Bankruptcy Court for the Northern District of Illinois to further extend its exclusive periods to file and obtain acceptances of a plan through and including Sept. 9, 2013, and Nov. 9, 2013, respectively. According to papers filed with the Court, substantially all of the Debtor's physical assets have been liquidated. Further, the Debtor has been continuing to work closely with the Official Committee of Unsecured Creditors and First Midwest Bank to discuss the structure of plan. Drafts of such plan, jointly sponsored by the Debtor and the Committee, have been prepared. The Debtors intend to continue this process. The Debtor says the Committee and First Midwest Bank support the relief requested in the Motion. About Trainor Glass Trainor Glass Company, doing business as Trainor Modular Walls, Trainor Solar, and Trainor Florida, filed for Chapter 11 bankruptcy (Bankr. N.D. Ill. Case No. 12-09458) on March 9, 2012. Trainor was founded in 1953 by Robert J. Trainor Sr. to pursue a residential glass business in Chicago, Illinois. Trainor's business model was focused on quality fabrication, design, engineering, and installation of glass products and framing systems in virtually every architectural application, including (a) new construction, (b) green-building solutions, (c) building rehabilitation, (d) storefronts and entrances, (e) tenant interiors, and (f) custom-specialty work. The Hon. Carol A. Doyle oversees the Chapter 11 case. George P. Apostolides, Barry A. Chatz, Esq., Michael L. Gesas, Esq., David A. Golin, Esq., Kevin H. Morse, Esq., and Michelle G. Novick, Esq., at Arnstein & Lehr LLP, serve as the Debtor's counsel. Thomas, Feldman & Wilshusen LLC serves as the Debtor's local Texas counsel. The Police Law Group serves as local Michigan counsel. Arnold & Arnold, LLP, serves as local Colorado counsel. Thompson Hine LLP serves as local Maryland counsel. Kasimer & Annino, P.C., serves as local Virginia counsel. High Ridge Partners, Inc., serves as the Debtor's financial consultant. The Debtor has tapped Cole, Martin & Co., Ltd., to render certain auditing services related to the Debtor's 401(k) and profit sharing plan. The Debtor scheduled $14,276,745 in assets and $64,840,672 in liabilities. A three-member official committee of unsecured creditors has been appointed in the case. The committee retained Sugar Felsenthal Grais & Hammer LLP as counsel. TRIPLE POINT: S&P Withdraws 'B' CCR Following Acquisition by ION ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B' corporate credit rating on Triple Point Technology Inc. and the 'B+' issue- level and '2' recovery ratings on the company's $165 million term loan and $20 million revolving credit facility, which were refinanced as part of the acquisition. The rating action follows ION Investment Group's acquisition of the company. S&P has assigned new ratings to Triple Point Group Holdings Inc., which is the borrower of the credit facilities issued to support the acquisition. TRIUS THERAPEUTICS: M. Bemis Amends Complaint on Cubist Merger -------------------------------------------------------------- Michael Bemis, who claims to be a stockholder of Trius, filed an amended complaint with the Superior Court of California, County of San Diego, against among other defendants, Trius Therapeutics and Cubist Pharmaceuticals, Inc., to include additional allegations about a purportedly flawed sales process and supposed conflicts of interest, and new allegations that the Solicitation/Recommendation Statement on Schedule 14D-9 omits certain material information. Cubist has commenced its tender offer for all outstanding shares of the common stock of Trius for $13.50 per share in cash, plus one Contingent Value Right, entitling the holder to receive an additional cash payment of up to $2.00 for each share they tender if certain sales milestones are achieved. The tender offer is being made by BRGO Corporation, a wholly-owned subsidiary of Cubist, pursuant to the previously announced Agreement and Plan of Merger, dated July 30, 2013, for Cubist to acquire Trius. Mr. Bemis filed the lawsuit on Aug. 1, 2013, seeking certification as a class action on behalf of all of Trius' stockholders. The complaint alleges that the defendants breached their fiduciary duties, and aided and abetted the breach of fiduciary duties, owed to Trius' stockholders in connection with the Offer and the Merger. The complaint seeks injunctive relief enjoining the Offer and the Merger, or, in the event the Offer or the Merger has been consummated prior to the court's entry of final judgment, rescinding the Offer and the Merger. The complaint also seeks an accounting for all damages and an award of costs, including a reasonable allowance for attorneys' and experts' fees and expenses. About Trius Therapeutics San Diego, Calif.-based Trius Therapeutics, Inc. (Nasdaq: TSRX) -- http://www.triusrx.com/-- is a biopharmaceutical company focused on the discovery, development and commercialization of innovative antibiotics for serious, life-threatening infections. The Company's first product candidate, torezolid phosphate, is an IV and orally administered second generation oxazolidinone being developed for the treatment of serious gram-positive infections, including those caused by MRSA. In addition to the company's torezolid phosphate clinical program, it is currently conducting two preclinical programs using its proprietary discovery platform to develop antibiotics to treat infections caused by gram-negative bacteria. Trius Therapeutics incurred a net loss of $53.92 million in 2012, a net loss of $18.25 million in 2011 and a $23.86 million net loss in 2010. As of June 30, 2013, the Company had $74.05 million in total assets, $19.37 million in total liabilities and $54.68 million in total stockholders' equity. TUSA OFFICE: Cannot Avoid Payments & Transfers to Knoll, Ct. Says ----------------------------------------------------------------- The complaint MARILYN D. GARNER, CHAPTER 7 TRUSTEE FOR TUSA OFFICE SOLUTIONS, INC., PLAINTIFF, v. KNOLL, INC. DEFENDANT, Adv. No. 10- 04271 (Bankr. N.D. Tx.) seeks to avoid as preferential transfers payments made by Tusa Office to Knoll relating to pre-bankruptcy invoices totaling $4.59 million. It also seeks to avoid as preferential transfer assignments of receivables Tusa Office made to Knoll totaling $1.61 million. Tusa and Knoll, an office furniture manufacturer and seller, are parties to an agreement where Tusa became a certified dealer of Knoll products. In an August 5, 2013 Memorandum Opinion, Bankruptcy Judge D. Michael Lynn concluded that: -- Knoll's receipt of the Preference Period Payments did not result in a voidable preference; and -- the Preference Period Receivables are not preferential transfers because Knoll did not receive a transfer of them on or within 90 days of the bankruptcy filing date. A copy of Judge Lynn's August 5, 2013 Memorandum Opinion is available at http://is.gd/y7uxNhfrom Leagle.com. Tusa Office Solutions, Inc., and its affiliates are full service furniture dealer. On October 31, 2008, Office Expo, Inc. and Tusa-Expo Holdings, Inc., filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. On November 5, 2008, Tusa Office filed its own Chapter 11 voluntary petition. The U.S. Bankruptcy Court for the Northern District of Texas directed the consolidation and joint administration of the bankruptcy cases of under Case No. 08-45057. Shortly thereafter, on January 30, 2009, Knoll filed its proof of claim for $6,929,783. On July 16, 2009, upon the Debtors' motion, the court converted the Bankruptcy Case from a case under chapter 11 to one under chapter 7. VANN'S INC: Trustee Files Lawsuit against Former CEO, CFO --------------------------------------------------------- The Associated Press reported that the trustee overseeing the Chapter 7 bankruptcy of a Montana-based appliance and electronics store has filed a lawsuit against the company's former CEO and CFO, arguing their actions drove "a moderately successful company into financial ruin" and caused its employee stockholders to lose $9.2 million. According to the report, Trustee Richard Samson filed the lawsuit in U.S. District Court in Missoula on Aug. 30. The lawsuit also lists 10 unnamed defendants. The lawsuit alleges CEO George Manlove of Park City, Utah, and CFO Paul Nisbet of Missoula caused Vann's Inc. to pay $600,000 per year above market prices in rent for four properties that housed Vann's stores and were owned by LLCs of which Nisbet and Manlove were members, the report said. The secretary of state's website lists Nisbet as the registered agent for the LLC that owns properties in Bozeman, Missoula and Lolo and lists Manlove as the registered agent for a property in Helena. The Helena Vann's store closed in early 2012 and the building remains empty. The lawsuit also alleges Vann's paid more than $350,000 in personal expenses for Manlove, including at least $97,000 for tuition and other expenses, for Manlove to receive a master's in business administration while he intended "to use his new degree to depart from Vann's and pursue other opportunities," the report further related. Other personal expenses include interior decorating costs, iTunes purchases, Apple Store purchases, casino trips and nearly $50,000 in credit card charges. The lawsuit alleges Manlove and Nisbet depleted Vann's cash flow and prevented it from holding adequate reserves, the report added. About Vann's Inc. Vann's Inc. -- http://www.vanns.com/-- a retailer of appliances and consumer electronics with five stores in Montana, filed for Chapter 11 protection (Bankr. D. Mont. Case No. 12-61281) in Butte, Montana, on Aug. 5, 2012. Founded in 1961, Vann's also owned outdoor clothing and sports products at http://www.bigskycountry.com/ Vann's was owned by an employee stock ownership plan trust. By the Chapter 11 bankruptcy petition date, Vann's employed 160 persons in 5 retail stores, and Apple designed mobile store in Missoula (OnStore), a warehouse in Lolo and a call center in Missoula. Vann's sold appliances, consumer goods and related products together with outdoor equipment, and clothing, footwear for outdoor activities. E-Commerce sales represented one half of total company sales. In 2011, Vann's generated a total of $100.8 million in sales, but suffered a net loss of $1.3 million. Substantial losses began in 2008. Vann's Inc. disclosed assets of $17.6 million and liabilities of $14.4 million. Assets include $12.2 million cost-value of inventory plus $1 million in current accounts receivable. The Company owes $4 million to First Interstate Bank. It also owes $4.8 million on an inventory loan from GE Commercial Distribution Finance Corp. Bankruptcy Judge John L. Peterson presides over the case. Vann's hired Perkins Coie LLP's Alan D. Smith, Esq., and Brian A. Jennings, Esq., as counsel; and Hamstreet & Associates, LLC, as turnaround and restructuring advisors. Prepetition lender GE Commercial Distribution Finance Corporation is represented by Gary Vincent, Esq., at Husch Blackwell LLP, and the Law Offices of John P. Paul, PLLC. First Interstate Bank, the DIP Lender, is represented by Benjamin P. Hursh, Esq., at Crowley Fleck PLLP. The U.S. Trustee formed a seven-member creditors committee. The Committee is represented by Halperin Battagia Raicht, LLP, and Ross Richardson. The Court appointed Montana lawyer Richard J. Samson as trustee for Vann's on Oct. 3, 2012. On Oct. 26, the Court approved the stipulation between the Chapter 11 Trustee, First Interstate Bank, GE, the Creditors' Committee and U.S. Trustee to convert the case to Chapter 7. In November, the Court approved the sale of five Vann's retail stores to Texas-based McMagic Partners LP. Pursuant to the $4.5 million deal, McMagic acquired the retail electronic and appliance stores in Missoula, Hamilton, the Flathead Valley, Billings and Bozeman. McMagic is owned by a Florida-based company that runs a chain of electronics stores in the Southwest. W.R. GRACE: Canada, Montana and Anderson Memorial Lose in Appeals ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that W.R. Grace & Co. prevailed in two of several appeals that must be decided before the company can exit the asbestos- driven Chapter 11 reorganization it began almost 13 years ago. Grace's plan, which creates trusts to take care of existing and future asbestos claims, was approved by the bankruptcy court in January 2011. The plan was upheld in January and June 2012 in U.S. District Court, prompting challenges before the U.S. Court of Appeals in Philadelphia. According to the report, in opinions dated Sept. 4 totaling 88 pages, Grace won two of the appeals. The appeals were all argued on June 17. Losers in the Sept. 4 opinions were Canada, the state of Montana and Anderson Memorial Hospital. The opinions, by two different circuit judges, affirm the breadth of Section 524(g), added to the U.S. Bankruptcy Code to facilitate reorganization plans dealing with existing and future asbestos claims. Montana and Canada both have claims against Grace because they were sued for failing to warn citizens about the hazards of asbestos. The Philadelphia court said Section 524(g) "broadly encompasses asbestos-related" claims, thus allowing direct and indirect claims in the same class. The appellate court also rejected government arguments that Section 524(g) only addresses direct claims such as personal injury and wrongful death. The court said the government's arguments, although "creative," were ultimately unpersuasive. The hospital had a property damage claim caused by products containing asbestos. A different circuit judge upheld the plan and the breadth of Section 524(g). Grace's Chapter 11 plan is based on a settlement from April 2008 resolving all present and future asbestos personal-injury and property-damage claims. Still waiting for decisions are banks that contend they are entitled to $185 million in interest on their claims because shareholders are retaining stock worth $4.9 billion. Banks filing the appeals include Bank of America NA, Barclays Bank Plc, and JPMorgan Chase Bank NA. The appeals decided Sept. 4 were In re W.R. Grace & Co., 12-1521, 12-2904, 12-2923, and 12-3143, Third U.S. Circuit Court of Appeals (Philadelphia). About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. Roger Frankel serves as legal representative for victims of asbestos exposure who may file claims against W.R. Grace. Mr. Frankel, a partner at Orrick Herrington & Sutcliffe LLP, replaces David Austern, who was appointed to that role in 2004. Mr. Frankel has served as legal counsel for Mr. Austern who passed away in May 2013. Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. W.R. Grace obtained confirmation of a plan co-proposed with the Official Committee of Asbestos Personal Injury Claimants, the Official Committee of Equity Security Holders, and the Asbestos Future Claimants Representative. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Implementation of the Plan has been held up by appeals in District Court from various parties, including a group of prepetition bank lenders and the Official Committee of Unsecured Creditors. District Judge Ronald Buckwalter on Jan. 31, 2012, entered an order affirming the bankruptcy court's confirmation of the Plan. Bankruptcy Judge Judith Fitzgerald had approved the Plan on Jan. 31, 2011. The plan can't be implemented because pre-bankruptcy secured bank lenders filed an appeal currently pending in the U.S. Court of Appeals in Philadelphia. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). WALNUT CREEK RDA SUCCESSOR: Moody's Cuts Rating on TABs to 'Ba3' ---------------------------------------------------------------- Moody's Investors Service has downgraded to Ba3 from Ba1 the rating on the Successor Agency to the Walnut Creek (CA) Redevelopment Agency's Series 2000, 2003A and 2003B Tax Allocation Bonds. The rating outlook is negative. The bonds are secured by a pledge of tax increment revenues from the Merged project areas. Rating Rationale The downgrade to Ba3 from Ba1 primarily reflects the narrow debt service coverage on an annual and semi-annual basis. Debt service coverage for 2013 was a weak 1.12x on an annual basis with less than 1x in the July to December 2013 period. The coverage was negatively impacted by one of the two project areas, Mt. Diablo, reaching its tax increment revenue cap in fiscal 2011. The Ba3 rating and negative outlook also reflects the risk that the existing project area, South Broadway, supporting the bonds will reach its tax increment cap prior to the maturity of the bonds. Under the new legislation it is unclear whether tax increment limits are still applicable. The negative outlook also incorporates the the risk that the City will not be able to retain excess tax increment revenues they have previously accumulated that could be utilized to pay debt service in the event of a shortfall due to tax increment cap. Favorable credit factors incorporated into the rating are the high wealth levels of the city, the high increment to total AV ratio and potential growth in the AV in 2014. Strengths - High increment to total AV - Projected growth in AV in 2014 - Cash funded debt service reserve fund - High wealth levels Challenges - Very narrow annual debt service coverage and Less than sum sufficient coverage in one period each year - Tax increment revenue limits - Uncertainty over reserves - Very small project area Outlook The negative outlook reflects the uncertainty and risks associated with the tax revenue increment cap for the South Broadway project area. The outlook also takes into account the potential for the City to lose some or all of their accumulated reserves. What Could Move The Rating - UP - Sustained improvement in debt service coverage levels - A determination that the tax revenue cap is not applicable What Could Move The Rating - DOWN - Narrowing of debt service coverage - Erosion of reserves The principal methodology used in this rating was Moody's Analytic Approach To Rating California Tax Allocation Bonds published in December 2003. * Punitive Damages Permitted on Fraudulent Transfers ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that according to a Sept. 3 opinion by the U.S. Court of Appeals in Philadelphia, punitive damages are available to rectify commission of a fraudulent transfer under Pennsylvania's version of the uniform law. According to the report, the case involved a dispute between a divorced couple. Owing about $550,000 in child support and maintenance to the former wife, the husband transferred real property and his business to himself and his new wife as tenants by the entireties. After the former wife sued, the federal district judge ruled that the transfers were voidable both as constructive fraudulent transfers and as transfers with actual intent to hinder, delay or defraud. The District Court made its ruling on summary judgment based on undisputed facts. On top of ordering the new wife to retransfer the properties to the husband, the district judge granted $550,000 in punitive damages against the former husband. The husband appealed without success. Writing a 37-page opinion for the Third U.S. Circuit Court of Appeals, Circuit Judge Robert E. Cowen easily concluded that there were sufficient undisputed facts to support the fraudulent transfer judgments. The husband's statements that the former wife would never recover a dime were sufficient to support a finding of actual fraudulent transfer, Judge Cowen said. According to the report, Judge Cowen devoted most of the opinion to the question of whether the Pennsylvania Supreme Court would make punitive damages available for fraudulent transfers. Although courts are split, Judge Cowen said that five states hold they are available. The outcome was complicated in Pennsylvania because that state's Supreme Court held that punitive damages can't be awarded for violation of state anti-discrimination law. Judge Cowen said that fraudulent transfer and discrimination laws contain different language regarding remedies and were designed to achieve different purposes. He said punitive damages can be granted for common law fraud. The opinion concludes that the Pennsylvania Supreme Court would reach the same result as five states allowing punitive damages on fraudulent transfers. The case is Klein v. Weidner, 10-3218, Third U.S. Circuit Court of Appeals (Philadelphia). * Cross & Simon Says Malpractice Suit Is Bid to Skip Legal Bill --------------------------------------------------------------- Law360 reported that Delaware law firm Cross & Simon LLC called malpractice accusations against one of its attorneys "baseless and meritless" in a court filing made public on Sept. 4, arguing the real estate firm that sued it is using the case as leverage to skip out on the bill for its bankruptcy case. According to the report, in a response filed in the Delaware Court of Chancery, the firm and attorney Joseph Grey vigorously deny CCC Atlantic LLC's claims alleging the lawyer mishandled the company's bankruptcy case. * Fitch Says Prime U.S. Credit Card ABS Hit New Milestone --------------------------------------------------------- The credit quality of the U.S. consumer continues to rebound as credit card ABS performance registered positive gains across the board this past month, according to the latest monthly index results from Fitch Ratings. All major variables improved, including chargeoffs, delinquencies, yield, monthly payment rate (MPR) and excess spread. Additionally, several of these metrics managed to break record levels in August. Fitch's 60+ Day Delinquency Index for August (covering the July collection period) registered yet another record low in dropping four basis points (bps). Late stage delinquencies, which measure the percentage of receivables associated with accounts that are delinquent in excess of 60 days, fell to 1.30%, a fifth consecutive monthly decline. Chargeoffs also improved for the fourth straight month and registered another 25 basis point (bps) drop to 3.37%. Current loss levels have plunged to levels not seen in over seven years and are 29% lower year-over-year. Excess spread measures continue to gradually rise and are still reaping the benefits of improved loss performance and steady yields. Excess spread on a three-month average basis increased 37 bps in August to 12.32%, an all-time high. The robust excess spread levels provide ample cushion for the trusts and their investors. Another record-breaker in August was MPR, which outperformed all other variables during the month. MPR increased almost 2% from last month to 26.05%, registering an all-time high after falling the previous month. Current MPR levels remain well above Fitch's long term index average of 16.86%. Fitch's Prime Credit Card index was established in 1991 and tracks more than $113 billion of prime credit card ABS backed by approximately $239 billion of principal receivables. The index is primarily comprised of general purpose portfolios originated by institutions such as Bank of America, Citibank, Chase, Capital One, Discover, etc. Unlike the prime index, Fitch's Retail Credit Card Index results were mixed in August. Retail chargeoffs declined for the third consecutive month, dropping further 27 bps to 6.08%. Losses have declined 11.88% since the same period last year. On the other hand, late stage delinquencies have remained relatively flat and averaged 2.30% for the last three months, possibly indicating an end to declining levels of chargeoffs for the remainder of the year. Late payments have decreased 12.45% over the past year. Both gross yield and excess spread worsened this month. Gross yield declined 34 bps month over month at around 27%, while three month average excess spread levels also fell 95 bps to 16.10%. Three month average excess spread has increased approximately 10% over the past year. Fitch's Retail Credit Card index tracks more than $20 billion of retail or private label credit card ABS backed by approximately $32 billion of principal receivables. The index is primarily comprised of private label portfolios originated and serviced by Citibank (South Dakota) N.A., GE Money Bank and World Financial Network National Bank. More than 165 retailers are incorporated including Wal-Mart, Sears, Home Depot, Federated, Loews, J.C. Penney, Limited Brands, Best Buy, Lane Bryant and Dillard's, among others. ABS ratings on both prime and retail credit card trusts are expected to remain stable given available credit enhancement, loss coverage multiples, and structural protections afforded investors. * Fitch Publishes Wynn-Focused Bankruptcy Case Study Report ----------------------------------------------------------- Fitch Ratings has published two reports on September 4: a spotlight report on Wynn Resorts, Ltd., and a bankruptcy case study special report focusing on the gaming, lodging and restaurants sector. The Wynn Resorts spotlight provides analysis on the company's dispute with Okada; the funding of the Cotai project; its license pursuits in Pennsylvania and Massachusetts; impact from Genting's Las Vegas project; Macau concession expirations, and recovery prospects of the debt issued at the U.S. subsidiary. The Wynn spotlight report also examines Fitch's outlook for the Las Vegas and Macau markets, and the rating and economic relationships between the parent company and the subsidiaries, supplemented with a Sources and Uses by Subsidiary table. Additional resources and analysis include FCF scenarios, a detailed maturity schedule, an organizational chart, covenant summaries and a corporate governance summary. The bankruptcy case study report summarizes 21 cases in the gaming, lodging and restaurant (GLR) sector, including creditor recoveries and reorganization enterprise values. The median EBITDA-to-enterprise valuation multiple for the 16 GLR reorganizations that had multiples available was 6.6x. This was marginally higher than the 6.2x median cross-sector U.S. corporate reorganization multiple for the 77 cases with reorganization multiples in Fitch's U.S. corporate ultimate recovery database. There was a median EBITDA to enterprise valuation of 7.1x for the 11 gaming cases with multiples available, which is similar to the long-term historic average transaction multiple of around 7.0x for the gaming industry. While the petition dates for all 21 cases fell between 2006 -2012, 13 of those companies filed for bankruptcy between 2008 -2010 at the height of the recession and credit crisis. A recurrent cause of defaults included cuts in consumer discretionary spending that led to lower revenues and cash flows. The study reinforces the cyclical nature of the GLR sector, discusses key drivers of the bankruptcies, regulatory considerations, and provides a screen of issuers with significant default risk. * Moody's Says Global Auto Manufacturers' Industry Outlook Stable ----------------------------------------------------------------- Stronger-than-expected demand from China is likely to boost sales for car manufacturers to 4.8% in 2014, keeping the global sector outlook stable over the next 12-18 months, says Moody's Investors Service in its latest Industry Outlook on the sector published on Sept. 4. The global automotive manufacturers' industry outlook has been stable since September 2011. The new report, titled "Global Automotive Manufacturers: Chinese Demand Fuels Uptick in Sales Growth Forecast", is available on www.moodys.com. "We anticipate a mild increase in sales growth to 4.8% for 2014 from our newly revised forecast of 3.2% for 2013, mainly because of higher-than-expected demand in China," said Falk Frey, Moody's Senior Vice President and author of the report. "As Chinese car market growth continues to be above GDP growth rates, we have revised upward our forecast for light vehicle demand growth to 10% from our January expectation of 7% growth for both 2013 and 2014." European light vehicle sales expectations are unchanged, although individual country performance varies. Moody's continues to forecast that European light vehicles sales will decline 5.0% year on year in 2013. Moody's lower expectations for France and Italy are offset by stronger-than-expected sales volumes in the UK. According to the report, western European light vehicle demand will have reached a trough in 2013 and will rebound by 3% in 2014, which is lower than Moody's previous forecast of a 5% increase in demand. However, Moody's does not anticipating this signalling an upward trend. Outside Europe, Moody's notes rising risks for light vehicle demand, especially in Brazil and Russia. Light vehicle demand in Brazil is losing momentum in the face of rising interest rates, high inflation and an increasing indebtedness of private households. European Original Equipment Manufacturers (OEMs) need these markets in order to mitigate losses in Western Europe. Manufacturers' profit margins continue to diverge. The margins of Renault S.A. (Ba1 stable), Peugeot S.A., or PSA (B1 negative) and Fiat S.p.A. (Ba3 negative) will remain under pressure because of overcapacity and low demand in Western Europe. This will also continue to weigh on German OEMs' margins, although their margins remain more solid. Japanese manufacturers' margins will continue to recover from their lows after the 2011 earthquake and tsunami, supported by a weakening yen that should also fuel market share gains. Moody's expects US manufacturers will retain similar margins in the next 12-18 months but tougher competition, slower US growth and continued, albeit reduced, losses in Europe may cause them to erode slightly. Moody's would consider revising the outlook to positive if the rating agency's global light vehicle growth forecast exceeds 5% in the next two years. This assumes that capacity would not outgrow demand and that utilisation rates and pricing remained firm, especially in Europe. Moody's would revise the outlook to negative if global volume growth falls below 2%, net pricing declines and capacity utilisation rates deteriorate. * Moody's Says Global Reinsurance Industry's Stable Outlook ----------------------------------------------------------- The global reinsurance industry's stable outlook reflects its resilience in the face of a challenging operating environment, says Moody's Investors Service in a new Industry Outlook published on Sept. 4. It also reflects continued underwriting discipline and improvements in risk management, as well as firmer pricing in some primary insurance markets. The report, "Global Reinsurance Outlook" is available on www.moodys.com. Moody's notes, however, that the industry faces a number of challenges, including: continued low interest rates, tepid demand given sluggish economic conditions in North America and Europe, and, above all, increased competition from alternative markets. Over the past year, an estimated $10 billion of new alternative capital has entered the industry, raising the total amount to approximately $44 billion. This influx of capital has had a major impact on current reinsurance market dynamics and pressured property cat pricing, with June/July renewals in the US down 10%- 20%. On balance however, Moody's believes that the adverse effect of any headwinds should remain fairly contained as reinsurers navigate the currently challenging environment and adapt to the evolving marketplace for insurance risk transfer. "Key strengths of the sector are its resilience and underwriting discipline. Despite immense insured catastrophe losses in 2011 and 2012, and a low interest rate environment that has slashed investment income, the reinsurance sector remained profitable and increased its equity capital", states James Eck, Vice President -- Senior Credit Officer at Moody's . "While a continued inflow of alternative capital has the potential to alter the core business model of reinsurers, many firms in the sector have been preparing for this eventuality for years through their participation in sidecars and the insurance-linked securities market", adds Mr. Eck. Moody's expects that reinsurers with large capital bases, a high degree of diversification and an ability to leverage both traditional and third-party capital will be best positioned going forward. * Argentina Senate Votes to Re-Open Debt Swap Offer --------------------------------------------------- Shane Romig, writing for Daily Bankruptcy Review, reported that Argentina's Senate overwhelmingly approved a bill to re-open a debt swap offer to holdout creditors, sending the legislation to the lower chamber where it is expected to be swiftly passed. According to the report, the new swap aims to show the country's willingness to make good on its debts and sway the U.S. Supreme Court to overturn a ruling forcing the country to pay holdout creditors the full value of their defaulted bonds. Few of the holdout creditors are expected to take the new swap due to the haircut of about two-thirds of face value, the report said. * CFTC Moves to Safeguard Customer Funds ---------------------------------------- Jamila Trindle, writing for The Wall Street Journal, reported that the Commodity Futures Trading Commission is closing in on rules designed to make the futures market safer in the wake of implosions at MF Global Holdings Ltd. and Peregrine Financial Group Inc. According to the report, CFTC staff is expected to recommend as early as this week the agency approve a package of rules, including a provision that could require futures brokers to put aside about twice as much collateral that firms currently must hold, according to people familiar with the matter. The Futures Industry Association, a trade group, has estimated the proposal could require brokers or their customers to put aside roughly $100 billion more in collateral. A CFTC spokesman declined to comment. The agency is also expected to approve rules giving regulators electronic oversight of customer accounts and a new requirement, dubbed the "Corzine rule" for former MF Global Chief Executive Jon Corzine, which requires CEOs to sign off on any significant transfer of customer money, the report related. Previously, there was no requirement for executives to sign off on the transfers. The CFTC is trying to strengthen rules for brokers after more than $1 billion was taken out of MF Global customer accounts to keep the firm afloat as it spiraled toward bankruptcy and in the wake of the July 2012 disclosure by the founder of futures broker Peregrine that he stole $215 million in customer funds, the report said. Many of the rules the CFTC is considering are aimed at protecting the money financial firms, commercial companies and agribusiness companies post to brokers as collateral to back their futures trades. Most of the rules have garnered broad support from the industry and have already been implemented by the National Futures Association, the industry's self-regulatory body. But one rule has sent ripples across the industry because it is expected to increase the amount of money firms have to set aside as collateral, the report further related. The rule, initially proposed last year, would require brokers such as those operated by big banks like J.P. Morgan Chase & Co. and Bank of America Corp. BAC +0.98% and smaller firms to put aside extra funds to ensure money isn't borrowed from one customer to back another client's trades. * Huron Consulting Named 2013 TMA Turnaround of the Year Winner --------------------------------------------------------------- Huron Consulting Group on Sept. 5 disclosed that the Turnaround Management Association (TMA) has recognized the Company as one of the winners of the 2013 TMA Turnaround and Transaction of the Year Awards. Huron Financial was honored for its turnaround of Bancroft Bag, Inc. "We are very pleased to have been selected as one of this year's TMA Turnaround of the Year Award winners," said John DiDonato, managing director and Huron Financial practice leader. "Our work with Bancroft Bag is an excellent example of an engagement that has benefited multiple stakeholders while preserving and enhancing the value of the client company." Founded in 1924, Bancroft Bag, Inc. operates the single largest diversified multiwall bag plant in the U.S. and serves a variety of markets. Coming out of the recession, Bancroft faced a number of serious strategic, financial and leadership challenges affecting its existence and the livelihoods of approximately 400 employees. These challenges resulted in the company hiring Huron to lead the turnaround of its operations. Ray Anderson, managing director with Huron Financial, acted as the company's interim president resulting in the successful turnaround of the company Hugh Sawyer, managing director with Huron Financial, advised the company's board during the turnaround. Bancroft returned to profitability and remains a key employer in West Monroe, Louisiana. "Leading the transformation of Bancroft was one of the most gratifying results of my career, and is a testament to the hard work and dedication of the management team, employees, board and the Bancroft family," said Mr. Anderson. Since 1993, TMA has honored excellence through its annual awards program, which recognizes the most successful turnarounds and impactful transactions. The TMA noted that this year's winners saved countless jobs and made a significant economic impact, both locally and globally. The 2013 TMA Turnaround and Transaction of the Year Awards will be presented at the 25th TMA Annual Conference to be held in Washington, D.C. on October 3-5, 2013. About Huron Financial Huron Financial -- http://www.huronconsultinggroup.com-- provides financial advisory, restructuring and turnaround, interim management, valuation, forensic and litigation, and operational improvement consulting services to companies in transition, boards of directors and investors and lenders. About Huron Consulting Group Huron Consulting Group -- http://www.huronconsultinggroup.com-- provides consulting services to a wide variety of both financially sound and distressed organizations, including healthcare organizations, leading academic institutions, Fortune 500 companies, governmental entities and law firms. Huron has worked with more than 95 of the top 100 research universities, more than 400 corporate general counsel, and more than 385 hospitals and academic medical centers. About the Turnaround Management Association The Turnaround Management Association -- http://turnaround.org-- is the leading organization dedicated to turnaround management, corporate restructuring, and distressed investing. Established in 1988, TMA celebrates its 25th anniversary with more than 9,000 members in 48 chapters worldwide, including 31 in North America. Members include turnaround practitioners, attorneys, accountants, investors, lenders, venture capitalists, appraisers, liquidators, and executive recruiters, as well as academic, government, and judicial employees. * Gavin/Solmonese Bags 2013 TMA Transaction of the Year Award ------------------------------------------------------------- Corporate restructuring and public affairs strategies firm Gavin/Solmonese on Sept. 5 disclosed that it is the recipient of Turnaround Management Association's (TMA) 2013 Transaction of the Year Award in the small company category. The award is presented to theindividual or firm that, together with a team of turnaround professionals, has orchestrated one of the most successful and impactful transactions for, in this case, a small business (a company whose revenue at the onset of the engagement was $50 million USD or less). Winners of this prestigious award are additionally recognized for saving countless jobs and making a significant economic impact, both locally and globally. Gavin/Solmonese received this award for its distinctive work as financial advisor to the Chapter 7 Trustee in the bankruptcy case of North American Specialty Glass (NASG), one of the largest domestic producers of safety and security glass in the United States. At the time of the Chapter 7 bankruptcy filing, NASG listed $3.5 million in assets and more than $14.6 million in debts. The company was forced to shut down and terminate all of its employees. In an emergency 363-sale filing, the Chapter 7 Trustee was able to convince the bankruptcy judge that the private equityfirm Grey Mountain was the highest and best bidder. The successful and quick sale of the company's assets to Grey Mountain enabled the business to reopen and remain in business with a better capital structure, while continuing U.S. manufacturing operations and also the rehiring of nearly every employee. "This is a case where the entire team warrants recognition -- especially the Chapter 7 trustee Robert Holber, his counsel at Flaster/Greenberg and the purchaser's advisors," said Managing Director and Founding Partner, Ted Gavin. "Everyone worked hard to protect operations and to ensure a swift sale that would reposition the company for growth and preserve jobs. We are proud to have contributed in the triumphant recovery of this once- struggling company." Gavin/Solmonese, along with 51 other professionals, will receive its 2013 TMA Transaction of the Year Award on October 5 during a special Awards Brunch taking place at 8:30 a.m. at the TMA's 25th anniversary annual conference (October 3-5) being held at the Marriott Wardman Park in Washington, D.C. About the Turnaround Management Association The Turnaround Management Association -- http://www.turnaround.org -- is the leading organization dedicated to turnaround management, corporate restructuring, and distressed investing. Established in 1988, TMA celebrates its 25th anniversary with more than 9,000 members in 48 chapters worldwide, including 31 in North America. Members include turnaround practitioners, attorneys, accountants, investors, lenders, venture capitalists, appraisers, liquidators, and executive recruiters, as well as academic, government, and judicial employees. About Gavin/Solmonese Named one of the country's Outstanding Turnaround Firms by Turnarounds & Workouts for 17 years, the Gavin/Solmonese Corporate Restructuring Group (formerly NHB Advisors) -- http://www.gavinsolmonese.com-- provides leadership for underperforming and troubled companies and their stakeholders, helping businesses maximize value for owners, investors, creditors and employees. * BOOK REVIEW: The Phoenix Effect: Nine Revitalizing Strategies No Business Can Do Without --------------------------------------------------------------- Authors: Carter Pate and Harlann Platt Publisher: John Wiley & Sons, Inc. Softcover: 244 Pages List Price: $27.95 Review by Gail Owens Hoelscher Buy a copy for yourself and one for a colleague on-line at http://amazon.com/exec/obidos/ASIN/0471062626/internetbankrupt Think of all the managers of faltering companies who dream of watching those companies rise from the ashes all around them! With a record number of companies failing in 2001, and another record-setting year expected for 2002, there are a lot of ashes from which to rise these days. Carter Pate and Harlan Platt highly value strong leadership able to sharpen a company's focus and show the way to the future. They believe that all too often, appropriate actions required to improve organizations are overlooked because upper management either isn't aware of the seriousness of the issues they face or they don't know where to turn for accurate information to best address their concerns. In the Phoenix Effect, the authors present their ideas to "confront, comprehend, and conquer a company's ills, big and small." These ideas are grouped into nine steps: (i) Find out whether the company needs a tune-up, a turnaround, or crisis management. Locate the source of "the pain." (ii) Analyze the true scope of the company's operations. Decide whether to stay in the same businesses, withdraw from existing businesses, or enter new ones. (iii) Hold the company to its mission statement. If it strives to be "the most environmentally friendly." Figure out how. (iv) Manage scale. Should the company grow, stay the same size, or shrink? (v) Determine debt obligations and work toward debt relief. (vi) Get the most from the company's assets. Eliminate superfluous assets and evaluate underused assets. (vii) Get the most from the company's employees. Increase output and lower workforce costs. (viii) Get the most from the company's products. Turn out products that are developed and marketed to fill actual, current customer needs. (ix) Produce the product. Search for alternate ways to create the product: owning or leasing facilities, outsourcing, etc. The authors believe that "how you're doing is where you're going." They assert that the "one fundamental source of life in companies, as in people,.is the capacity for self-renewal, the ability to excite your team for game after game. to go for broke season after season." This ability can come from "(g)enetics, charisma, sheer luck, stock options - all crucial, yes, but the best renewal insurance is a leader who always knows exactly how his or her company is doing." There are a lot of books written on this topic. Pate and Platt successfully bridge the gap between overgeneralization and too detail. They are equally adept at advising on how to go about determining a business's scope and arguing for Monday rather than Friday for implementing layoffs. They don't dwell on sappy motivational techniques. They don't condescend to the reader or depend too much on folksy vernacular and clich,. Their message is clear: your company's phoenix, too, can rise from its ashes. * Carter Pate is a well known turnaround expert at PricewaterhouseCoopers with more than 20 years experience providing strategic consulting and implementation strategies. * Harlan Platt is a professor of finance at Northeastern University and author of the book Principles of Corporate Renewal. ********* 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 ***