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/raid1/www/Hosts/bankrupt/TCR_Public/131004.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, October 4, 2013, Vol. 17, No. 275 Headlines 10 WHITAKER STREET: Voluntary Chapter 11 Case Summary 3616 ASSOCIATES: Case Summary & 3 Largest Unsecured Creditors AGFEED INDUSTRIES: Equity Committee Can Employ Gavin/Solmonese AIRTRONIC USA: Bankruptcy Court Confirms Amended Ch. 11 Plan ALLIANT TECHSYSTEMS: Fitch Affirms 'BB+' Long-Term Ratings ALLY FINANCIAL: Christopher Halmy Named New CFO ALLY FINANCIAL: Moody's Reviews Ratings for Possible Upgrade AMERICAN AIRLINES: AFA Calls on Cuccinelli to Withdraw From Merger BANK OF AMERICA: Significantly Shrinks Delinquent Loan Portfolio BEAZER HOMES: Sells $200 Million Senior Notes BELLMONT TERRACE: Case Summary & 20 Largest Unsecured Creditors BOART LONGYEAR: Moody's Confirms 'B2' Corp. Family Rating BONTEN MEDIA: Moody's Assigns Caa1 CFR & B1 1st Lien Loans Rating BUILDING MATERIALS: S&P Assigns 'B' CCR & Rates $250MM Notes 'B-' BY INVITATION ONLY: Voluntary Chapter 11 Case Summary CAESARS ENTERTAINMENT: Credit Suisse Buys 10MM Shares for $194MM CANCER GENETICS: Provides Business Updates to Shareholders CHINA GINSENG: Delays Form 10-K for Fiscal 2013 COSTA BONITA: Court Denies Motion to Dismiss Case DESIGNLINE CORPORATION: Hires Nelson Mullins as Counsel DETROIT, MI: Risks Remain for Future Payment of Water/Sewage Debt DETROIT, MI: S&P Lowers Tax General Oligation Bonds to 'D' DIGERATI TECHNOLOGIES: LBB & Assoc. Denied as Accountants DTF CORP: Files First Amended Disclosure Statement ECO BUILDING: Authorized Common Shares Hiked to 2 Billion ECOTALITY INC: Can Employ Parker Schwartz as Bankruptcy Counsel EL POLLO LOCO: Moody's Cuts New 2nd Lien Term Loan Rating to Caa2 EL POLLO LOCO: S&P Lowers Rating on New $205MM Loan to 'B-' ENOVA SYSTEMS: Settles Lawsuit with Arens Controls EXCEL MARITIME: Sec. 341 Meeting Rescheduled to Oct. 15 FIRST SOUND: Released From Regulatory Consent Order FLUX POWER: Delays Form 10-K for Fiscal 2013 FURNITURE BRANDS: Enters Into Purchase Agreement with KPS Capital FURNITURE BRANDS: Hires Paul Hastings as Lead Counsel FURNITURE BRANDS: Can Employ Young Conaway as Delaware Counsel FURNITURE BRANDS: Can Employ Epiq as Administrative Advisor FURNITURE BRANDS: Files Schedules of Assets and Liabilities GAMING & LEISURE: S&P Assigns 'BB+' CCR; Outlook Stable GASTON STREET: Voluntary Chapter 11 Case Summary GENESIS CHRISTIAN: Case Summary & 20 Largest Unsecured Creditors GMX RESOURCES: Enters Into Plan Support Agreement GROEB FARMS: Case Summary & 20 Largest Unsecured Creditors HERFF JONES: S&P Assigns 'B+' Corp. Credit Rating; Outlook Stable HOSTESS BRANDS: Hilco Real Estate Completes Sale of Old HB Assets HOWARD DALE: Court Puts Injunction, Receivership on Properties IMPLANT SCIENCES: Incurs $27.3 Million Net Loss in Fiscal 2013 INFINIA CORP: Seeks Authority to Obtain $6-Mil. in DIP Loans INFINIA CORP: Needs to Use Cash to Continue Operations INFINIA CORP: Seeks to Sell Assets to Lender INFINIA CORP: Employs Parsons Kinghorn as Bankruptcy Counsel INFINIA CORP: Taps Rocky Mountain Advisory as Accountants INFINIA CORP: Taps Hamilton Clark as Financial Advisor & Banker INFINIA CORP: Hires Fenwick & West as Special Counsel ISAACSON STEEL: Files Plan to Incorporate Global Settlement J.C. PENNEY: Fitch Cuts Issuer Default Ratings to 'CCC' JEFFREY A PROSSER: Dist. Ct. Dismisses FirstBank Foreclosure Suit K-V PHARMACEUTICAL: Appoints Joe Mahady as Chairman of the Board KEOWEE FALLS: Oct. 24 Hearing on Final Decree Closing Ch.11 Case KEYUAN PETROCHEMICALS: Incurs $497,000 Net Loss in Second Quarter LANDAUER HEALTHCARE: Court Extends Deadline to Use Cash Collateral LIBERATOR INC: Incurs $288,000 Net Loss in Fiscal 2013 LIGHTSQUARED INC: Bankruptcy Judge Approves Bidding Procedures LONGVIEW POWER: Cash Collateral Hearing Adjourned to Oct. 21 LONGVIEW POWER: Can Hire Denton US as Counsel in Kvaerner Matter LONGVIEW POWER: Ernst & Young Approved as Tax Advisor LONGVIEW POWER: Has Until Oct. 29 to File Schedules and Statements MARANI BRANDS: Suspending Filing of Reports with SEC MICHAEL BAKER: Moody's Assigns 'B2' CFR, Outlook Stable MISSION NEW ENERGY: Financial Results Update MOMENTIVE SPECIALTY: Geoffrey Manna Elected to Board NIRVANIX INC: Case Summary & 20 Largest Unsecured Creditors NUTRIOM LLC: Case Summary & 20 Largest Unsecured Creditors OCEAN 4660: Ch.11 Trustee's Right to Use Cash to Expire Oct. 4 ODYSSEY PICTURES: Delays Form 10-K for Fiscal 2013 OGX PETROLEO: Missed Crucial $44.5-Mil. Bond Payment PARKWAY ACQUISITION: Files Chapter 11 Plan to Sell Assets PENN NATIONAL: S&P Lowers Corp. Credit Rating to 'BB-' PHARMACEUTICAL RESEARCH: Moody's Corrects Text on Aug. 30 Release PLANDAI BIOTECHNOLOGY: Incurs $2.9 Million Net Loss in 2013 PMC MARKETING: PREPA Not Entitled to Prepetition Expense PRECISION OPTICS: Swings to $1.8 Million Net Loss in Fiscal 2013 PRESSURE BIOSCIENCES: Richard Thomley Named Acting CFO PROGRESSIVE SOLUTIONS: Moody's Assigns 'B2' Corp. Family Rating RAINBOW SPRINGS: Case Summary & 6 Unsecured Creditors REDHILL PLAZA: Case Summary & 12 Unsecured Creditors REVLON CONSUMER: CEO Transition No Effect on Moody's Rating RICEBRAN TECHNOLOGIES: To Issue $15 Million Common Shares RITE AID: Green Equity Held 4.4% Equity Stake at Oct. 1 SAINT ANNE RETIREMENT: Fitch Affirms 'BB+' Rating on $20.4MM Bonds SPENCER NADLAN: Voluntary Chapter 11 Case Summary STELERA WIRELESS: Auction For FCC Licenses Set on Nov. 20 TENET HEALTHCARE: Fitch Affirms 'B' Issuer Default Rating TRANS ENERGY: Amends Annual Reports in Response to Comments TRANS ENERGY: Presented at IPAA Investment Symposium TRANSGENOMIC INC: P. Kinnon Named President, CEO and Director TRIBUNE CO: Former Executive Sentenced to 2 Years for Theft TSC SIEBER: Judgment in Escana Interpleader Suit Affirmed TUOMEY HEALTHCARE: S&P Lowers Rating on Revenue Bonds to 'CCC' UNI-PIXEL INC: UniBoss Sensor Film Rebranded as InTouch Sensors UNITED AMERICAN: Delays Form 10-K for Fiscal 2013 USG CORP: Modine Manufacturing CEO Elected to Board USMART MOBILE: Chief Operating Officer Quits VALENCE TECHNOLOGY: Hearing on Amended Plan Approval on Oct. 30 VHGI HOLDINGS: Unit Files for Chapter 11 in Indiana VIGGLE INC: Draws Down $2 Million Under New Credit Facility VIGGLE INC: R. Sillerman Held 82.6% Equity Stake at Sept. 16 VILLAGE AT KNAPP'S: Wants to Hire John Huizinga as Accountants VILLAGE AT KNAPP'S: First Community Bank Denied Stay Relief VISCOUNT SYSTEMS: Issues 21.654 Series A Conv. Preferred Shares VISUALANT INC: Obtains Favorable Decision vs. Ascendiant WA INVESTMENTS: Voluntary Chapter 11 Case Summary WASHINGTON MUTUAL: Receiver Fights Golden Parachutes WATERFRONT OFFICE: Can Access Cash Collateral Until Oct. 31 WATERFRONT OFFICE: Files Second Amended Plan of Reorganization WATERFRONT OFFICE: DG-Hyp Files 2nd Amended Plan of Reorganization WAVE HOUSE: Court Confirms 1st Amended Plan WM SIX FORKS: Court Pegs 2nd Quarter Fee at $30,000 WORLD SURVEILLANCE: Chairman of the Board Quits WOUND MANAGEMENT: Inks Shipping Agreement with WellDyne WPCS INTERNATIONAL: Unit to Sell Pride Group for $1.4 Million WPCS INTERNATIONAL: To Sell Australia Operations for $1.4-Mil. YANGAROO INC: Completes Financing and Debt Restructuring YNOT LLC: Vantage South Bank Wins Ch.7 Conversion Bid ZALE CORP: Files Form 10-K, Posts $10MM Net Earnings in 2013 ZBB ENERGY: Incurs $12.5-Mil. Net Loss in Fiscal 2013 Z TRIM HOLDINGS: Files Copy of Investor Presentation with SEC * U.S. Treasury Says Mere Prospect of Default Endangers Economy * BigLaw Braces for Revenue Hit in Federal Shutdown * CFTC Enforcement Chief to Leave * Citi to Pay Freddie Mac $395 Million Over Mortgages * Fannie Mae Bond Deal in the Works * Government Shuts Down as Congress Misses Deadline * JPMorgan Talks Said to See Possible $11 Billion Settlement * JPMorgan, Citigroup Lose Bid to Throw Out FDIC Lawsuit * JPMorgan Employee Said to Be Cooperating in RMBS Probe * Lindquist Snags Former Wells Fargo Atty, Bankruptcy Pro * SEC Official Says Pension Disclosures Remain Under Scrutiny * Treasury Loses Big on TARP Investments in Bankruptcy * U.S. Government Heads Toward Shutdown * U.S. Loan Delinquency Rate Down 34% in August, LPS Report Shows * Volcker Rule Costs Tallied as U.S. Regulators Press Deadline * Wells Fargo in $869 Million Settlement with Freddie Mac * Student-Loan Defaults Rise in U.S. as Borrowers Struggle * Rising Rates May Affect Interest Expense of Lower-Rated Cos. * Energy Future, OGX May Push 4Q High Yield Default Rate to 3.5% * AlixPartners Congratulates Koch Induction Into TMA Hall of Fame * Lorie Beers Joins Conway MacKenzie as Senior Managing Director * BOOK REVIEW: The ITT Wars: An Insider's View of Hostile Takeovers ********* 10 WHITAKER STREET: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: 10 Whitaker Street, LLC 10 Whitaker Street Savannah, GA 31401 Case No.: 13-41833 Chapter 11 Petition Date: October 1, 2013 Court: United States Bankruptcy Court Southern District of Georgia (Savannah) Debtor's Counsel: James McCallar, Jr., Esq. MCCALLAR LAW FIRM P. O. Box 9026 Savannah, GA 31412 Tel: 912-234-1215 Fax: 912-236-7549 Email: mccallar@mccallarlawfirm.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Jeff Notrica, managing member. The Debtor did not file its list of largest unsecured creditors when it filed its petition. 3616 ASSOCIATES: Case Summary & 3 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: 3616 Associates, LLC 14577 Big Basin, Suite 2A Saratoga, CA 95070 Case No.: 13-55244 Chapter 11 Petition Date: October 2, 2013 Court: United States Bankruptcy Court Northern District of California (San Jose) Judge: Hon. Arthur S. Weissbrodt Debtor's Counsel: David S. Henshaw, Esq. HENSHAW LAW OFFICE 1871 The Alameda #333 San Jose, CA 95126 Tel: (408) 533-1075 Email: david@henshawlaw.com Total Assets: $1.46 million Total Liabilities: $2.45 million The petition was signed by Jeff Wyatt, managing member. A list of the Debtor's three largest unsecured creditors is available for free at http://bankrupt.com/misc/canb13-55244.pdf AGFEED INDUSTRIES: Equity Committee Can Employ Gavin/Solmonese -------------------------------------------------------------- The Official Committee of Equity Security Holders appointed in the Chapter 11 cases of AgFeed USA, LLC, et al., sought and obtained authority from the U.S. Bankruptcy Court for the District of Delaware to retain Gavin/Solmonese LLC as financial advisor. The current hourly rates of the primary members of the firm are: Edward T. Gavin, CTP $600 Wayne P. Weitz $475 Ross B. Waetzman $375 The firm will also be reimbursed for any necessary out-of-pocket expenses. Mr. Gavin, a managing director and founding partner of Gavin/Solmonese LLC, 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 Equity Committee's. About AgFeed Industries AgFeed Industries, Inc., and its affiliates filed voluntary petitions under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 13-11761) on July 15, 2013, with a deal to sell most of its subsidiaries to The Maschhoffs, LLC, for cash proceeds of $79 million, absent higher and better offers. The Debtors estimated assets of at least $100 million and debts of at least $50 million. Keith A. Maib signed the petition as chief restructuring officer. Hon. Brendan Linehan Shannon presides over the case. Donald J. Bowman, Jr., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, serve as the Debtors' counsel. BDA Advisors Inc. acts as the Debtors' financial advisor. The Debtors' claims and noticing agent is BMC Group, Inc. The U.S. Trustee has appointed a five-member official committee of unsecured creditors to the Chapter 11 cases. The Creditors' Committee tapped Lowenstein Sandler as lead bankruptcy counsel and Greenberg Traurig, LLP, as co-counsel. CohnReznick LLP serves as the Creditors' Committee's financial advisor. A three-member official committee of equity security holders was also appointed to the Chapter 11 cases. The Equity Committee tapped Sugar Felsenthal Grais & Hammer LLP and Elliott Greenleaf as co-counsel. AIRTRONIC USA: Bankruptcy Court Confirms Amended Ch. 11 Plan ------------------------------------------------------------ Global Digital Solutions, Inc. on Oct. 3 disclosed that on October 2, 2013, the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division, confirmed the amended chapter 11 bankruptcy reorganization plan submitted by the company's planned merger partner, Airtronic USA, Inc. A strong majority of Airtronic's creditors voted in favor of the Plan. "We're very pleased about the court's ruling and we congratulate the Airtronic team for reaching this important milestone," said GDSI's President and CEO Richard J. Sullivan. "This ruling signals a major turning point in the evolution of both GDSI and Airtronic. It's been a long process getting to this point, but we think the wait will prove to be worthwhile. We're eager to complete the merger process in the near future and to move forward in implementing our global growth strategy." Now that the Plan has been confirmed by the court, GDSI will be able to complete its acquisition of Airtronic. Airtronic's bankruptcy case will be dismissed upon the consummation of the Plan -- which includes completion of the merger with GDSI -- and Airtronic will be capitalized with adequate working capital to compete effectively as an innovative leader in small arms manufacturing. "We're very grateful that the court has confirmed our reorganization Plan and that we can now proceed to finalize the merger and have the bankruptcy case dismissed," said Dr. Merriellyn Kett, Airtronic's President and CEO who will continue serving as the company's CEO after the merger between GDSI and Airtronic is finalized. "This is a major step forward that will allow the talented Airtronic team to focus on serving customer needs and growing the company." About Global Digital Solutions, Inc. Global Digital Solutions -- http://www.gdsi.co-- is positioning itself as a leader in providing small arms manufacturing, complementary security and technology solutions and knowledge- based, cyber-related, culturally attuned social consulting in unsettled areas. About Airtronic USA, Inc. Airtronic -- http://www.Airtronic.net-- is an electro-mechanical engineering design and manufacturing company. It provides small arms and small arms spare parts to the U.S. Department of Defense, foreign militaries, and the law enforcement market. The company's products include grenade launchers, rocket propelled grenade launchers, grenade launcher guns, flex machine guns, grenade machine guns, rifles, and magazines. Founded in 1990, the company is based in Elk Grove Village, Illinois. On May 16, 2012, the voluntary petition of Airtronic, Inc. for liquidation under Chapter 7 was converted to a Chapter 11 reorganization. The company had filed for chapter 7 bankruptcy on March 13, 2012. ALLIANT TECHSYSTEMS: Fitch Affirms 'BB+' Long-Term Ratings ---------------------------------------------------------- Fitch Ratings has removed the ratings for Alliant Techsystems, Inc. (ATK) from Rating Watch Negative and affirmed the long-term ratings at 'BB+'. The ratings were placed on Negative Watch on Sept. 5 2013 following the company's announcement that it had agreed to acquire Bushnell Group Holdings, Inc. (Bushnell) from MidOcean Partners for approximately $1 billion. The Rating Outlook is Stable. The Bushnell transaction is expected to close sometime in the third or fourth quarter of fiscal 2014 ending March 30, 2014, subject to regulatory approval. ATK plans to fund the acquisition cost almost entirely with debt. Fitch's ratings currently cover approximately $1.3 billion of debt and will cover approximately $2.3 billion of long- and short-term borrowings, giving effect to indebtedness expected to be incurred in connection with the Bushnell acquisition. The ratings affirmations reflect Fitch's view that ATK has the cash-generating ability to reduce post- acquisition leverage to levels consistent with a 'BB+' rating within 12-15 months of the closing of the acquisition. Key Rating Drivers Fitch's primary credit concern is the timing of ATK's return to stronger financial metrics, which could be negatively affected by the risk of sequestration and an economic downturn in the sporting goods industry constraining the company's ability to reduce leverage as anticipated. This concern is mitigated by ATK's solid margins and strong cash flow. Fitch expects ATK to continue making significant pension plan cash contributions and deploy its cash toward moderate share repurchases and dividends, while deploying all remaining free cash toward reducing the debt incurred in connection with the Bushnell acquisition. Fitch is also concerned with the integration risk of the Bushnell acquisition. The integration risk is heightened by an on-going integration of Savage Sports Corporation (Savage), a $315 million acquisition in the first quarter of fiscal 2014. Fitch estimates the issuance of debt associated with the acquisition will increase ATK's debt/EBITDA to approximately 3.8x immediately following the issuance and not taking into account Bushnell's and Savage's pro forma financials. At June 30, 2013, ATK's debt/EBITDA was 2.3x, up from 1.8x at the end of fiscal 2013 due to the $200 million draw on its revolving facility to fund the Savage acquisition and on-going operations. Including the pro forma EBITDA impact from the acquisitions and some debt reduction, Fitch expects ATK could reduce its leverage to 3.0x or slightly lower by the end of its fiscal 2014. Fitch's other concerns include risks to core defense spending during and after fiscal 2014, including sequestration risk, an anticipated decline in small-caliber ammunition demand and lower contract rates which resulted from the renewal of the Lake City operating contract in fiscal 2013, and lower modernization activities at Lake City. Fitch is also concerned with the low funded status of ATK's pension (77% funded); NASA funding priorities after fiscal 2013; and exposure to significant margin fluctuations in ATK's Sporting Group. Following the Bushnell acquisition, ATK will be highly exposed to a downturn in the sporting goods industry as the Sporting Group will account for more than 40% of its revenues. Fitch does not expect ATK to make other large acquisitions in the near future, and possible debt-funded acquisitions would represent a rating risk and are likely to result in negative rating action. ATK's ratings and Stable Outlook are supported by Fitch's expectations that the company will be able to de-lever rapidly and reach approximately 2.5x - 2.7x leverage by the end of fiscal 2015. The ratings are also supported by positive free cash flow (FCF; cash from operations less capital expenditures and dividends); an increase in higher margin commercial sales; an expected diversification of revenue sources from the Bushnell and Savage acquisitions; steady margins which are projected to increase slightly in fiscal 2014 driven by the strength of Sporting Group; adequate liquidity; and ATK's role as a sole source provider for many of its products to the U.S. The Bushnell and Savage acquisitions complement ATK's strong position within the sporting goods industry by enabling the company to diversify into different product types. Savage offers ATK an opportunity to enter the firearm manufacturing segment, providing the company with opportunities to leverage its accessories business and with strong distribution channels. The Bushnell acquisition diversifies ATK's current portfolio of sporting goods accessories and sports optics. It also provides an entry to the performance and safety eyewear market. Additionally, the acquisitions will decrease ATK's exposure to U.S. government spending and will increase its commercial and international presence. Rating Sensitivities Fitch does not expect to take positive rating actions over the next several years, as ATK will gradually reduce its leverage. Fitch may take a negative rating action if ATK's debt reduction pace is significantly slower than currently anticipated due to insufficient cash generation to reduce leverage to the 2.5x - 2.7x range by the end of fiscal 2015. Further negative rating actions could be expected if the company completes another debt-funded acquisition. Fitch removes ATK's ratings from Rating Watch Negative and affirms the ratings as follows: -- Long-term IDR at 'BB+'; -- Senior secured bank facility at 'BBB-'; -- Convertible senior subordinated notes at 'BB'; -- Senior subordinated notes at 'BB'. The Rating Outlook is Stable. ALLY FINANCIAL: Christopher Halmy Named New CFO ----------------------------------------------- Chief Financial Officer James Mackey notified Ally Financial Inc. that he would depart the company for another career opportunity, effective Nov. 8, 2013. Ally subsequently appointed Christopher Halmy, corporate treasurer, as chief financial officer, effective Nov. 8, 2013. Mr. Halmy will report to Jeffrey Brown, senior executive vice president of finance and corporate planning, and have responsibility for the oversight of the finance and treasury activities at the company. Mr. Halmy, 45, joined Ally in 2009 as the structured funding executive and was named corporate treasurer in 2011. In that role, Mr. Halmy had responsibility for the oversight of all treasury activities, including funding and balance sheet management. Prior to joining Ally, Mr. Halmy served in a number of treasury positions at Bank of America, and prior to that, he held treasury, finance and accounting positions at MBNA America, N.A., Merrill Lynch & Co., JP Morgan & Co. and Deloitte & Touche. Mr. Halmy is also a certified public accountant. About Ally Financial Ally Financial Inc., formerly GMAC Inc. -- http://www.ally.com/-- is one of the world's largest automotive financial services companies. The Company offers a full suite of automotive financing products and services in key markets around the world. Ally's other business units include mortgage operations and commercial finance, and the company's subsidiary, Ally Bank, offers online retail banking products. Ally operates as a bank holding company. GMAC obtained a $17 billion bailout from the U.S. government in exchange for a 56.3 percent stake. Private equity firm Cerberus Capital Management LP keeps 14.9 percent, while General Motors Co. owns 6.7 percent. Ally Financial Inc. reported net income of $1.19 billion for the year ended Dec. 31, 2012, as compared with a net loss of $157 million during the prior year. As of June 30, 2013, the Company had $150.62 billion in total assets, $131.46 billion in total liabilities and $19.16 billion in total equity. ALLY FINANCIAL: Moody's Reviews Ratings for Possible Upgrade ------------------------------------------------------------ Moody's Investors Service is reviewing the long-term ratings of Ally Financial Inc. and its subsidiaries for possible upgrade, including Ally's B1 corporate family and senior unsecured ratings. Moody's affirmed the Not Prime short term ratings of Ally and its subsidiaries. Rationale Moody's review of Ally's long-term ratings is based on reduced uncertainty regarding the extent of Ally's contingent exposures relating to bankrupt subsidiary Residential Capital LLC (ResCap), expected improvement in the quality of Ally's capital, and Ally's efforts to strengthen financial performance. Moody's will also consider Ally's continued transition to deposit funding through its subsidiary Ally Bank, including the positive effects of this on funding and liquidity as well as the negative structural subordination implications for senior creditors at the Ally parent level. Ally has made significant progress distancing itself from ResCap's obligations, including reaching a settlement with ResCap and its creditors that would eliminate most of Ally's ResCap-related contingent liabilities in consideration for a $2.1 billion payment to the creditors. The settlement is a central component of ResCap's bankruptcy plan, which is currently pending creditor approval. The bankruptcy court is due to review and potentially confirm the plan on November 19. A conclusion of the ResCap bankruptcy without meaningful additional cost to Ally would be a positive for the firm's credit profile, as Ally's exposure to ResCap has been a key rating constraint. With respect to the quality of its capital, Ally plans to issue $1 billion shares of common stock in a private placement and repurchase $5.7 billion of mandatorily convertible preferred (MCP) securities held by the US Treasury. The transactions would improve the quality of Ally's capital by replacing the MCP's hybrid equity (25% under Moody's methodology), which regulators don't consider as Tier 1 common capital, with common shares. The repurchase would also eliminate the MCP's 9% dividend, an annual outlay of $530 million based on the MCP's $5.9 billion par value, thereby increasing Ally's retained earnings and reducing its total cost of capital. To proceed, Ally must obtain the Federal Reserve's approval, which includes a review of its recently resubmitted capital plan, and conclude the transactions by November 30. Ally has also steadily improved operating performance in its core auto finance business over the past several quarters. The firm's net interest margin has increased, primarily reflecting declines in cost of funds. Ally's liability management actions and further transition to deposit funding should continue to reduce funding costs, but growing competition for auto loans is pressuring loan yields. During the rating review, Moody's will assess Ally's prospects for improved risk-adjusted profitability, considering the firm's beneficial actions to further reduce funding costs and operating expenses, the increased competitive pricing landscape, and trends in the mix and risk characteristics of Ally's loan and lease originations. Ally has continued to expand and strengthen its bank subsidiary, Ally Bank, which at June 30 comprised over 60% of Ally's consolidated total assets of $151 billion. Ally Bank has achieved good brand recognition, established a relatively stable online deposit base, and expanded its suite of product offerings. While growth of the bank has diversified and lowered the cost of Ally's funding, the transition of earning assets into the bank structurally subordinates senior unsecured creditors of the parent to the depositors of the bank. As a partial offset, the parent company has reduced leverage and maintains a solid liquidity profile. During the ratings review, Moody's will assess the degree of structural subordination of Ally's parent senior unsecured creditors relative to creditors and depositors of Ally Bank, taking into consideration continued growth of the bank, the relative priority of parent and bank obligations, and asset coverage and alternate liquidity at both the bank and parent levels. Ally Financial Inc. is a provider of automotive financial services with $151 billion in total assets at June 30, 2013. Ally Bank, with total assets of $92 billion, offers a variety of savings and checking account products. The principal methodology used in this rating was Finance Company Global Rating Methodology published in March 2012. On review for possible upgrade: Ally Financial Inc.: Corporate family rating, placed on review for possible upgrade, currently B1 Issuer rating, placed on review for possible upgrade, currently B1 Senior unsecured, placed on review for possible upgrade, currently B1 Senior unsecured Medium-Term Note program, placed on review for possible upgrade, currently (P)B1 Senior unsecured shelf, placed on review for possible upgrade, currently (P)B1 Subordinate debt, placed on review for possible upgrade, currently B2 Preferred stock, placed on review for possible upgrade, currently a range of Caa1 to B3 GMAC Capital Trust I: Preferred Stock, placed on review for possible upgrade, currently B3 GMAC International Finance B.V.: Senior Unsecured, placed on review for possible upgrade, currently B1 Senior unsecured Medium-Term Note program, placed on review for possible upgrade, currently a range of (P)NP to (P)B1 AMERICAN AIRLINES: AFA Calls on Cuccinelli to Withdraw From Merger ------------------------------------------------------------------ Association of Professional Flight Attendants on Oct. 3 disclosed that in the wake of Tuesday's announcement by Texas Attorney General Greg Abbott that he would withdraw from the lawsuit to block the merger of American Airlines and US Airways, the flight attendants at American are calling on Ken Cuccinelli and attorneys general from five other states to do the same. "Anyone standing in the way of the merger is also standing in the way of hard-working Virginians. Ken Cuccinelli is trying to kill this deal at the expense of thousands of airline workers in his state," said APFA President Laura Glading. "I'm not sure why he joined the suit in the first place. If he had given it more careful consideration he would have arrived at a different decision. He didn't do his homework. On behalf of Virginia's flight attendants and their families, I'm calling on General Cuccinelli to rectify his mistake." Unable to compete with United and Delta, which had recently merged with Continental and Northwest, respectively, American Airlines was forced into Chapter 11 bankruptcy in November of 2011. It is clear that in order for American to be competitive, it needs to merge with US Airways. The merger plan has had the strong support of employees at both companies since its inception. Unfortunately, the US Department of Justice and attorneys general from seven states and the District of Columbia filed an eleventh- hour lawsuit to block the merger in August of this year. The new American Airlines will offer consumers more destinations and a better product. It will also give flyers a third choice -- in addition to Delta and United -- for their travel needs. The merger will also provide job security for approximately 100,000 employees nationwide, many of whom live in Virginia. "There are thousands of Virginians depending on this merger. For them, finalizing the deal could mean the difference between good middle class job security and layoffs," Ms. Glading said. "General Cuccinelli should be on the side of Virginia jobs, not the Holder Justice Department." About APFA The Association of Professional Flight Attendants, founded in 1977, represents the more than 16,000 active flight attendants at American Airlines. Laura Glading is serving her second four-year terms as president. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. The Retiree Committee is represented by Jenner & Block LLP's Catherine L. Steege, Esq., Charles B. Sklarsky, Esq., and Marc B. Hankin, Esq. AMR and US Airways Group, Inc., on Feb. 14, 2013, announced a definitive merger agreement under which the companies will combine to create a premier global carrier, which will have an implied combined equity value of approximately $11 billion. The bankruptcy judge on Sept. 12, 2013, confirmed AMR Corp.'s plan to exit bankruptcy through a merger with US Airways. By distributing stock in the merged airlines, the plan is designed to pay all creditors in full, with interest. Judge Sean Lane confirmed the Plan despite the lawsuit filed by the U.S. Department of Justice and several states' attorney general complaining that the merger violates antitrust laws. The plan confirmation order means that if AMR and US Airways win the Justice Department lawsuit or settle with the government, the merger plan can go into effect. The antitrust suit is U.S. v. US Airways Group Inc., 13-cv-1236, U.S. District Court, District of Columbia (Washington). Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) BANK OF AMERICA: Significantly Shrinks Delinquent Loan Portfolio ---------------------------------------------------------------- Bank of America has reduced its loan servicing portfolio by almost half since 2010 through the use of sub-servicing arrangements and sales of mortgage servicing rights, says Moody's Investors Service in a Servicer Report published on Oct. 2, 2013. Bank of America in 2010 decided to shed its portfolio of high-risk loans. At the end of 2010 it identified 6.5 million of the 13 million mortgage loans in its servicing portfolio as high risk and targeted these loans for sale and subservicing. "This strategy significantly changes Bank of America's servicing operations," said Moody's Assistant Vice President and author of the report Gene Berman. "It involves cutting staff levels and closing or consolidating servicing sites." As of August 31, the servicing portfolio totaled around 6.7 million loans with an unpaid principal balance of approximately $910.1 billion, a significant decline from the last review when it serviced around 10.5 million loans with an unpaid principal balance of $1.5 trillion as of 31 August 2012. It has already significantly reduced its employee roster (full-time, contract and vendor) to 42,000, down from its peak of 59,000 employees. Bank of America has 33 servicing locations, including 8 vendor sites, in 13 states, down from 51 locations in our last review, and may eliminate other sites or transition them to origination platforms. Vendor relationships have not escaped the cuts either; the bank now outsources 25% of its primarily early-stage collections activity, down from a peak of 70%. Its use of single point of contacts to coordinate loss mitigation activities has also fallen to just under 2,000, from 9,000 in November 2012. "Bank of America has executed on its strategy thus far, and if it continues its efforts, will no longer be a major servicer of delinquent loans," said Mr. Berman. BEAZER HOMES: Sells $200 Million Senior Notes --------------------------------------------- Beazer Homes USA, Inc., issued and sold $200 million aggregate principal amount of its 7.500 Percent Senior Notes due 2021 through a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, and outside the United States pursuant to Regulation S under the Securities Act. The Notes were initially sold pursuant to a purchase agreement, dated Sept. 25, 2013, among the Company, the wholly-owned subsidiaries named as guarantors therein and Credit Suisse Securities (USA) LLC. Interest on the Notes is payable semi-annually in cash in arrears on March 15 and September 15 of each year, commencing March 15, 2014. The Notes will mature on Sept. 15, 2021. The Notes were issued under an Indenture, dated as Sept. 30, 2013, among the Company, the Guarantors and U.S. Bank National Association, as trustee. The Indenture contains covenants which, subject to certain exceptions, limit the ability of the Company and its restricted subsidiaries to, among other things, incur additional indebtedness, including secured indebtedness, and make certain types of restricted payments. The Indenture contains customary events of default. Upon the occurrence of an event of default, payments on the Notes may be accelerated and become immediately due and payable. A copy of the Form 8-K is available for free at: http://is.gd/cWPN8l About Beazer Homes Beazer Homes USA, Inc. (NYSE: BZH) -- http://www.beazer.com/-- headquartered in Atlanta, is one of the country's 10 largest single-family homebuilders with continuing operations in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, New Jersey, New Mexico, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia. Beazer Homes is listed on the New York Stock Exchange under the ticker symbol "BZH." Beazer Homes incurred a net loss of $145.32 million for the fiscal year ended Sept. 30, 2012, a net loss of $204.85 million for the fiscal year ended Sept. 30, 2011, and a net loss of $34.04 million for the fiscal year ended Sept. 30, 2010. As of June 30, 2013, the Company had $1.94 billion in total assets, $1.71 billion in total liabilities and $227.98 million in total stockholders' equity. * * * Beazer carries a 'B-' issuer credit rating, with "negative" outlook, from Standard & Poor's. In the Jan. 30, 2013 edition of the TCR, Moody's Investors Service raised Beazer Homes USA, Inc.'s corporate family rating to 'Caa1' from 'Caa2' and probability of default rating to 'Caa1-PD' from 'Caa2-PD'. The ratings upgrade reflects Moody's increasing confidence that Beazer's credit metrics, buoyed by a stregthening housing market, will gradually improve for at least the next two years and that the company may be able to return to a modestly profitable position as early as fiscal 2014. As reported by the TCR on Sept. 10, 2012, Fitch Ratings has upgraded the Issuer Default Rating (IDR) of Beazer Homes USA, Inc. (NYSE: BZH) to 'B-' from 'CCC'. The upgrade and the stable outlook reflect Beazer's operating performance so far this year, its robust cash position, and moderately better prospects for the housing sector during the remainder of this year and in 2013. The rating is also supported by the company's execution of its business model, land policies, and geographic diversity. BELLMONT TERRACE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Bellmont Terrace, LLC PO Box 2039 Bellingham, WA 98227 Case No.: 13-18797 Chapter 11 Petition Date: October 2, 2013 Court: United States Bankruptcy Court Western District of Washington (Seattle) Debtor's Counsel: Mark B Moburg, Esq. LAW OFFICE OF MARK B MOBURG, PLLC 2135 112th Avenue NE Bellevue, WA 98004 Tel: 425-818-4828 Email: mark@moburglaw.com Total Assets: $4.92 million Total Liabilities: $4.42 million The petition was signed by Derek Stebner, managing member. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/wawb13-18797.pdf BOART LONGYEAR: Moody's Confirms 'B2' Corp. Family Rating --------------------------------------------------------- Moody's Investors Service confirmed Boart Longyear Limited's B2 corporate family rating and B2-PD probability of default rating as well as Boart Longyear Management Pty Limited's B1 senior secured notes rating and the B3 senior unsecured notes rating. The Speculative Grade Liquidity rating was upgraded to a SGL-3 from a SGL-4. The rating outlook is negative. This concludes the review for possible downgrade initiated on August 29, 2013. Upgrades: Issuer: Boart Longyear Limited Speculative Grade Liquidity Rating, Upgraded to SGL-3 from SGL-4 Outlook Actions: Issuer: Boart Longyear Limited Outlook, Changed To Negative From Rating Under Review Issuer: Boart Longyear Management Pty Limited Outlook, Changed To Negative From Rating Under Review Confirmations: Issuer: Boart Longyear Limited Probability of Default Rating, Confirmed at B2-PD Corporate Family Rating, Confirmed at B2 Issuer: Boart Longyear Management Pty Limited Senior Secured Regular Bond/Debenture Oct 1, 2018, Confirmed at B1, LGD3 - 33% Senior Unsecured Regular Bond/Debenture Apr 1, 2021, Confirmed at B3, LGD5- 72% The upgrade in the Speculative Grade Liquidity rating to SGL-3 acknowledges the company's improved liquidity and debt maturity profile as well as the more manageable covenant requirements under the company's recently concluded amendment to its revolving credit facility and the issuance of $300 million in senior secured notes. Proceeds from the note issue were used to reduce outstandings under the revolving credit facility. The amendment reduces the revolver size to a total of $140 million from $450 million, eliminates the maximum debt-to-EBITDA covenant, adjusts the minimum interest coverage ratio to 1.55x from 3x and adds a minimum $30 million liquidity covenant (unrestricted cash plus revolver availability) and a minimum asset coverage ratio covenant of 1.25x. The amended revolver is secured up to $120 million and provides a first priority security interest in working capital assets (including accounts receivables and inventory) of the issuer and its guarantor subsidiaries, and a second priority interest in the secured notes' collateral. The remaining $20 million revolver commitment will be unsecured and reserved for the issuance of letters of credit. We expect Boart to be able to reduce its current excess inventory position and generate positive working capital over the next twelve months. This together with the company's focus on cost reduction and more modest capital expenditures is expected to result in breakeven to modestly negative free cash flow generation, which can be accommodated under the amended revolving credit facility. Ratings Rationale The B2 Corporate Family Rating reflects the contraction in the company's core business evidenced by the sharp pull back in exploration and drilling expenditures as well as new capital investments by Boart's principal end user market - the mining industry. This is a result of the downward trend to date in 2013 in metal prices, particularly for gold and copper. These metals accounted for roughly 42% and 20% of Boart's revenues, respectively, during the first half of 2013. The B2 rating recognizes the company's position as a leading global supplier of drilling services and complementary drilling products, principally to the mineral mining industry but also to the environmental and infrastructure end markets. Other rating considerations include the company's relatively small size, and its need to invest in drilling equipment and inventory in more robust market conditions. Although Boart's performance through the first half of 2013 was reasonably in line with expectations, the risk of further downward pressure on rig utilization and backlog levels remains elevated, likely resulting in a weaker second half of 2013 and continued pressure on 2014 performance . We anticipate that debt-to-EBITDA will further deteriorate over the next 12 to 18 months and will likely exceed 7.0 times while (EBITDA minus CAPEX)-to-interest will remain below 1.0 time, respectively. Downside risk remains given the ongoing weakness in metal prices and likely further rationalization by the mining industry on expenditure levels over the intermediate term. The rating also contemplates that the company will be able to achieve cost savings to mitigate a portion of the negative impact on performance from the retreat in drilling activity with its implementation of announced cost reductions, including work force reductions, and rationalization of planned CAPEX. The negative outlook reflects the continued headwinds facing Boart's business given continued weakness in the mining industry and scale back of exploration and development activity, particularly in the gold sector, in the face of lower prices. The outlook considers as well the ongoing review of Boart's income tax returns for the years 2005 through 2009 by the Canada Revenue Agency. Given the weakness expected in Boart's key markets over the next twelve to eighteen months, a rating upgrade is unlikely. Downward pressure could result should the company's fundamentals, operating performance and liquidity position further deteriorate, debt/EBITDA be sustained above 6x, and the company have sustained negative free cash flow. 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. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies. Headquartered in South Jordan, Utah, Boart Longyear is incorporated in Australia and listed on the Australian Securities Exchange Limited. The company provides drilling services, and complimentary drilling products and equipment principally for the mining and metals industries. Revenues for the twelve months ended June 30, 2013 were $1.6 billion. Revenues in fiscal 2012 were $2 billion. BONTEN MEDIA: Moody's Assigns Caa1 CFR & B1 1st Lien Loans Rating ----------------------------------------------------------------- Moody's Investors Service assigned a Caa1 Corporate Family Rating (CFR) and a Caa1-PD Probability of Default Rating (PDR) to Bonten Media Group, Inc.'s. Moody's also assigned B1 to the company's 1st lien senior secured revolver and 1st lien senior secured term loan and assigned Caa2 to the 2nd lien senior secured term loan. Proceeds from the issuance of these instruments in May 2013 were used to refinance senior secured credit facilities and subordinated notes. The rating outlook is positive. Assignments: Issuer: Bonten Media Group, Inc. Corporate Family Rating: Assigned Caa1 Probability of Default Rating: Assigned Caa1-PD $10 million 1st Lien Senior Secured Revolver due 2018 ($6 million outstanding): Assigned B1, LGD2 -- 21% $60 million 1st Lien Senior Secured Term Loan due 2018: Assigned B1, LGD2 -- 21% $80 million 2nd Lien Senior Secured Term Loan due 2019: Assigned Caa2, LGD5 -- 76% Outlook Actions: Issuer: Bonten Media Group, Inc. Outlook is Positive Ratings Rationale Bonten's Caa1 corporate family rating reflects a very high, 2-year average debt-to-EBITDA ratio of 7.2x as of June 30, 2013 (including Moody's standard adjustments, 6.3x on a one year basis) and geographic concentration. Although high, leverage has improved with 2-year average debt-to-EBITDA ratios reducing from 11.4x at FYE2011 and 12.9x at FYE2010 supported by a 70% increase in 2012 annual EBITDA compared to 2011 and 2010 due to strong growth in core revenues, greater than expected political ad demand in Montana and the Tri-Cities region, and renewed retransmission agreements. Although improved, leverage remains high and poses challenges for managing a business vulnerable to advertising spending cycles. Moody's believes Bonten's lack of national scale with less than $70 million of annual net revenues magnifies both financial and cyclical risk as well as exposure to a disproportionate impact from the loss of a large advertiser or a region specific downturn, particularly in the Tri-Cities and Eastern North Carolina markets representing 70% to 80% of cash flow. Debt ratings are supported by the company's leading audience and revenue share rankings in six of eight markets across diverse network affiliations. Looking forward, we expect 2-year average debt-to-EBITDA ratios to improve to less than 7.0x by FYE2013 and remain under 7.0x through FYE2014, with 12 month revenues to decrease in the low to mid single digit percentage range in 2013 given the absence of significant political revenues partially offset by an increase in retransmission revenues. Although EBITDA should remain above 2011 levels, we expect 2-year average margins to decrease through the end of 2014 reflecting the impact of increasing reverse compensation as network affiliations are renewed. The refinancing of debt in May 2013 resulted in higher pricing contributing to 2-yr average free cash flow remaining less than 2% of debt balances over the next 12 months. The company has adequate liquidity with cash balance of $3.4 million as of June 30, 2013, $4 million availability under the $10 million revolver, and no maturities until 2018 when the 1st lien senior secured credit facilities mature. The positive outlook incorporates Moody's expectations that Bonten will repay advances under the revolver over the next 12-18 months and that core ad demand will remain steady over the next 12 months supported by continued strength in certain sectors including automobile and services. Total revenues will decline in FY2013 due to the absence of significant political advertising, followed by the return of heightened political ad demand in 2014. Moody's believes improved operating performance will result in 2-year average debt-to-EBITDA leverage remaining under 7.0x (including Moody's standard adjustments) through FYE2014. The outlook incorporates Moody's view that Bonten will generate minimal free cash flow over the next 12 months followed by improving free cash flow generation due to expected revenue and EBITDA growth. The outlook does not incorporate debt financed acquisitions that would meaningfully increase leverage ratios or distributions. Although not likely, the positive outlook could be changed to stable or ratings could be downgraded based on expectations for weak liquidity or deterioration in EBITDA due to increased competition or weak ad demand in key markets resulting in 2-year average debt- to-EBITDA leverage being sustained above 7.0x. An upgrade in ratings could be considered if further improvement in operating performance or debt repayment leads to expectations for 2-year average leverage being sustained comfortably below 6.75x (including Moody's standard adjustments). An upgrade would also require expectations for improved liquidity including 100% revolver availability after existing advances are repaid in full. The principal methodology used in this rating was the Global Broadcast and Advertising Related Industries Methodology published in May 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Formed in 2006 by Diamond Castle Holdings, LLC, to acquire and operate local television stations in the US, Bonten Media Group, Inc. owns or has joint sales agreements and shared services agreements with 14 primary and 28 digital multicast stations (5 ABC affiliates, 4 NBC, 5 FOX, 3 Univision/UniMas, and 3 CW among others). Stations are located in eight small and mid-sized US markets in DMAs ranked between #96 and #196 and include those operated via JSA/SSA agreements with Esteem Broadcasting. Headquartered in New York, NY, net revenues for the 12 months ended June 30, 2013 totaled $67 million. BUILDING MATERIALS: S&P Assigns 'B' CCR & Rates $250MM Notes 'B-' ----------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'B' corporate credit rating to Building Materials Holding Corp. The outlook is stable. At the same time, S&P assigned a 'B-' issue-level rating (one notch lower than the corporate credit rating) to BMC's $250 million of senior secured notes due 2018. The recovery rating is '5', indicating S&P's expectation of modest (10% to 30%) recovery for lenders in the event of a payment default. The proceeds of the notes were used to refinance its prior term loan debt, to repay outstanding borrowings under its $125 million asset based (ABL) revolving credit facility, and to provide cash backing to about $44 million of standby letters of credit, as well as to pay accrued interest and transaction fees. "We expect end-market demand for BMC's products and services to experience strong growth in each of the next two years due to the expected improvement in housing starts. As a result, we expect credit measures will improve by the end of this year to levels consistent with an aggressive financial risk profile. Due to the strong growth in housing construction, we expect the company to rely on its $125 million ABL facility to fund working capital growth and capital spending requirements over the next two years. Still, we expect liquidity will remain adequate," said Standard & Poor's credit analyst Thomas Nadramia. Although S&P do not expect a positive rating action in the near term given expected leverage measures and BMC's continued working capital requirements, it could consider raising the ratings if BMC's operating prospects during the next several quarters exceed our current expectations, resulting in sustained maintenance of credit measures in line with a "significant" financial risk profile, that is, debt leverage of 3x-4x and FFO to debt greater than 20%. This could occur if sales increased an additional 15% higher than S&P's expectations and profit margins increased 50 basis points from expected 2013 levels. A downgrade would be likely to occur if BMC's liquidity were to become constrained, due to an unexpected reversal in housing starts (due to recessionary pressures or a large increase in mortgage interest rates) or a material decrease in profit margins due to increased price competition or volatile material costs that would cause leverage to exceed 6x. BY INVITATION ONLY: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: By Invitation Only LP 215 W. College Grapevine, Tx 76051 Case No.: 13-44575 Chapter 11 Petition Date: October 1, 2013 Court: United States Bankruptcy Court Northern District of Texas (Ft. Worth) Judge: Hon. Russell F. Nelms Debtor's Counsel: John J. Gitlin, Esq. 5323 Spring Valley Road, Suite 150 Dallas, TX 75254 Tel: (972) 385-8450 Fax: (972) 385-8460 Email: johngitlin@gmail.com Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million The petition was signed by Thomas Crown, president and general counsel. The Debtor did not file its list of largest unsecured creditors when it filed its petition. CAESARS ENTERTAINMENT: Credit Suisse Buys 10MM Shares for $194MM ---------------------------------------------------------------- Caesars Entertainment Corporation entered into an Underwriting Agreement with Credit Suisse Securities (USA) LLC, for the sale of 10 million shares of the Company's common stock, par value $0.01 per share. The Underwriter has agreed to purchase the common stock from Caesars at a price of $19.40 per share, which resulted in $194 million of proceeds to Caesars before expenses. The Underwriter may offer the shares of common stock from time to time for sale in one or more transactions on the Nasdaq Global Select Market, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. The common shares were offered pursuant to an effective shelf registration statement on Form S-3. The offering closed Oct. 1, 2013. Pursuant to the terms of the Underwriting Agreement, Caesars has agreed to indemnify the Underwriter against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments the Underwriter may be required to make because of any of those liabilities. The Underwriter also has an option to purchase up to an additional 1.5 million shares of common stock on the same terms for 30 days from the date of the prospectus supplement to the Registration Statement. On Sept. 27, 2013, the underwriter exercised that option with respect to 340,418 shares of common stock, which were delivered on Oct. 1, 2013, and resulted in $6.6 million of proceeds to Caesars before expenses. A copy of the Form 8-K is available for free at: http://is.gd/9Dh9bJ About Caesars Entertainment Caesars Entertainment Corp., formerly Harrah's Entertainment Inc. -- http://www.caesars.com/-- is one of the world's largest casino companies, with annual revenue of $4.2 billion, 20 properties on three continents, more than 25,000 hotel rooms, two million square feet of casino space and 50,000 employees. Caesars casino resorts operate under the Caesars, Bally's, Flamingo, Grand Casinos, Hilton and Paris brand names. The Company has its corporate headquarters in Las Vegas. Harrah's announced its re-branding to Caesar's on mid-November 2010. The Company incurred a net loss of $1.49 billion on $8.58 billion of net revenues for the year ended Dec. 31, 2012, as compared with a net loss of $666.70 million on $8.57 billion of net revenues during the prior year. As of June 30, 2013, the Company had $26.84 billion in total assets, $27.58 billion in total liabilities and a $738.1 million total deficit. * * * Caesars Entertainment carries a 'CCC' long-term issuer default rating, with negative outlook, from Fitch and a 'Caa1' corporate family rating with negative outlook from Moody's Investors Service. As reported in the TCR on Feb. 5, 2013, Moody's Investors Service lowered the Speculative Grade Liquidity rating of Caesars Entertainment Corporation to SGL-3 from SGL-2, reflecting declining revolver availability and Moody's concerns that Caesars' earnings and cash flow will remain under pressure causing the company's negative cash flow to worsen. In the May 7, 2013, edition of the TCR, Standard & Poor's Ratings Services said that it lowered its corporate credit ratings on Las Vegas-based Caesars Entertainment Corp. (CEC) and wholly owned subsidiary Caesars Entertainment Operating Co. (CEOC) to 'CCC+' from 'B-'. "The downgrade reflects weaker-than-expected operating performance in the first quarter, and our view that Caesars' capital structure may be unsustainable over the next two years based on our EBITDA forecast for the company," said Standard & Poor's credit analyst Melissa Long. CANCER GENETICS: Provides Business Updates to Shareholders ---------------------------------------------------------- Cancer Genetics, Inc., provided its shareholders with a letter summarizing business developments. Among other things, the Company disclosed the listing of the Company's common stock on the NASDAQ stock exchange. The Company also raised $23 million in the capital markets from recent offering. The letter is available for free at http://is.gd/T8UhOd About Cancer Genetics Rutherford, N.J.-based Cancer Genetics, Inc., is an early-stage diagnostics company focused on developing and commercializing proprietary genomic tests and services to improve and personalize the diagnosis, prognosis and response to treatment (theranosis) of cancer. The Company's balance sheet at June 30, 2013, showed $6.4 million in total assets, $13.3 million in total liabilities, and a stockholders' deficit of $6.9 million. "The Company has suffered recurring losses from operations, has negative working capital and a net capital deficiency that raise substantial doubt about its ability to continue as a going concern," according to the Company's quarterly report for the period ended March 31, 2013. CHINA GINSENG: Delays Form 10-K for Fiscal 2013 ----------------------------------------------- China Ginseng Holdings Inc. was unable to file its Form 10-K for the year ended June 30, 2013, in a timely manner because the Company was not able to complete its financial statements without unreasonable effort or expense. About China Ginseng Changchun City, China-based China Ginseng Holdings, Inc., conducts business through its four wholly-owned subsidiaries located in China. The Company has been granted 20-year land use rights to 3,705 acres of lands by the Chinese government for ginseng planting and it controls, through lease, approximately 750 acres of grape vineyards. However, recent harvests of grapes showed poor quality for wine production which indicates that the vineyards are no longer suitable for planting grapes for wine production. Therefore, the Company has decided not to renew its lease for the vineyards with the Chinese government upon expiration in 2013 and, going forward, it intends to purchase grapes from the open market in order to produce grape juice and wine. The Company reported a net loss of $3.1 million on $2.7 million of revenues for the nine months ended March 31, 2013, compared with a net loss of $1.1 million on $3.1 million of sales for the nine months ended March 31, 2012. "The net loss was primarily due to the decreased whole sales and increased cost of sales as a percentage of revenue and the inventory impairment," the Company said. The Company's balance sheet at March 31, 2013, showed $6.3 million in total assets, $6.8 million in total liabilities, and a stockholders' deficit of $462,148. COSTA BONITA: Court Denies Motion to Dismiss Case ------------------------------------------------- U.S. Bankruptcy Judge Enrique S. Lamoutte has denied Asociacion de Codomines de Costa Bonita's motion to dismiss the chapter 11 case of Costa Bonita Beach Resort, Inc. Judge Lamoutte said: "the overdue fees have been paid, the motion to dismiss is hereby denied. The court admonishes parties to discuss differences and concerns prior to moving the court." Patricia Varela, Esq. and Jose M. Prieto Carballo, Esq. appeared in court during the hearing. About Costa Bonita Costa Bonita Beach Resort, Inc., owns 50 apartments at the Costa Bonita Beach Resort in Culebra, Puerto Rico. It filed a bankruptcy petition under Chapter 11 of the Bankruptcy Code for the first time (Bankr. D.P.R. Case No. 09-00699) on Feb. 3, 2009. During this case, the Court entered an Opinion and Order finding that the Debtor satisfied all three (3) prongs of the Single Asset Real Estate, and, as such is a SARE case subject to 11 U.S.C. Sec. 362(d)(3). The Court also entered an Order modifying the automatic stay to allow creditor DEV, S.E., to continue in state court proceedings for the removal of the illegal easement and the restoration of DEV, S.E.'s land to its original condition by the Debtor. The first bankruptcy petition was dismissed on May 10, 2011 on the grounds that the Debtor failed to comply with an April 21, 2011 Order and the Debtor's failure to maintain adequate insurance. The case was subsequently closed on Oct. 11, 2011. Costa Bonita Beach Resort filed a second bankruptcy petition (Bankr. D.P.R. Case No. 12-00778) on Feb. 2, 2012, in Old San Juan, Puerto Rico. In the 2012 petition, the Debtor said assets are worth $15.1 million with debt totaling $14.2 million, including secured debt of $7.8 million. The apartments are valued at $9.6 million while a restaurant and some commercial spaces at the resort are valued at $3.67 million. The apartments serve as collateral for the $7.8 million while the commercial property is unencumbered. Bankruptcy Judge Enrique S. Lamoutte presides over the 2012 case. Charles Alfred Cuprill, Esq., serves as counsel in the 2012 case. The petition was signed by Carlos Escribano Miro, president. DESIGNLINE CORPORATION: Hires Nelson Mullins as Counsel ------------------------------------------------------- DesignLine Corporation asks the U.S. Bankruptcy Court for permission to employ Nelson Mullins Riley & Scarborough LLP as bankruptcy counsel. The firm will, among other things, provide these services: a) prepare all necessary petitions, motions, applications, orders, reports, and papers necessary to commence the chapter 11 cases; b) advise the Debtors of their rights, powers, and duties as debtors and debtors in possession under chapter 11 of the Bankruptcy Code; c) prepare on behalf of the Debtors all motions, applications, answers, orders, reports, and papers in connection with the administration of the Debtors' estates. The Debtor attests that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The Debtors propose to pay NMRS its customary hourly rates in effect from time to time. Prior to the Petition Date, NMRS has not received any retainer or advance payment to act as counsel in these chapter 11 cases. About DesignLine DesignLine Corporation is a manufacturer of coach, electric and range-extended electric (hybrid) buses founded in Ashburton, New Zealand in 1985. It was acquired by American interests in 2006, and DesignLine Corporations' headquarters was relocated to Charlotte, North Carolina. DesignLine Corporation is no longer affiliated with the DesignLine operations in New Zealand, which was placed in liquidation in 2011 DesignLine Corporation and DesignLine USA LLC originally sought Chapter 11 protection with the U.S. Bankruptcy Court for the District of Delaware, with Lead Case Nos. 13-12089 and 13-12090, on Aug. 15, 2013. Katie Goodman signed the petitions as chief restructuring officer. The Debtors estimated assets and debts of at least $10 million. On Sept. 5, 2013, the case was transferred to the U.S. Bankruptcy Court for the Western District of North Carolina, under Case Nos. 13-31943 and 13-31944. Mark D. Collins, Esq., and Michael Joseph Merchant, Esq., at Richards, Layton & Finger, P.A., serve as the Debtors' counsel. Terri L. Gardner, Esq., at Nelson Mullins Riley & Scarborough, LLP, is the Debtors' general bankruptcy counsel. The Debtors' financial advisor is GGG Partners LLC. A five-member unsecured creditors panel has been appointed in the Debtors' cases. Moon Wright & Houston PLLC and Benesch, Friedlander, Coplan & Aronoff LLP are co-counsel to the Committee. DETROIT, MI: Risks Remain for Future Payment of Water/Sewage Debt ----------------------------------------------------------------- Moody's Investors Service says the City of Detroit acted as the rating agency expected when on October 1 it defaulted on its general obligations and continued to make full and timely payment on its Department of Water and Sewage revenue bonds. Moody's says the full payment of the water and sewage debt does not remove all risks to future full and timely repayment, but does signal that the system's debt will likely not be captured in the automatic stay that has disrupted payment to other creditors since the city filed for Chapter 9 bankruptcy protection in July. "The actions by the city on October 1 are consistent with our expectations and the Emergency Manager's proposal to creditors that controversially split creditors into two classes -- secured and unsecured," says Genevieve Nolan, a Moody's Assistant Vice President and Analyst in the issuer comment on Detroit "Risks remain for future payment of Detroit water and sewage debt, despite October 1 full payment." "The GO bonds that missed payment were proposed to be treated as unsecured, while water and sewage disposal revenue bonds were proposed in the secured class. The default on the city's GO and pension obligation certificates was widely anticipated and incorporated in our ratings," says Moody's Nolan. Moody's says risks remain for water and sewage revenue backed debt despite the legal protections and implicit exemption from the automatic stay. Ongoing risks to bondholders include the EM's assertion in the June proposal that water and sewage revenue bonds were subject to negotiation with bondholders, raising the prospects of a distressed exchange or haircuts for bondholders. The EM's plan called for the potential creation of a new separate authority to operate the water supply and sewage disposal systems and restructuring of the system's water and sewer bond debt, creating new classes of creditors. The potential creation of a new class of creditors increases the probability of default relative to Moody's expectations prior to the release of the proposal. Further, the new authority could result in an annual payment in lieu of taxes (PILOT payment) that may be senior to debt service payments, potentially straining an already narrow debt service coverage ratio. Moody's rates the water and sewer revenue bonds B1 for senior lien bonds and B2 for second lien bonds. The City of Detroit's general obligation debt is rated Caa3, and general obligation limited tax debt and certificates of participation are rated Ca. The city's Distributable State Aid bonds are rated Aa3 for the senior lien, A1 for the second lien and A3 for the third lien. Moody's placed all of the city's outstanding ratings on review for possible downgrade on June 17, 2013. The review for downgrade continues as Moody's evaluates the potential risks to creditors. DETROIT, MI: S&P Lowers Tax General Oligation Bonds to 'D' ---------------------------------------------------------- Standard & Poor's Ratings Services has lowered its long-term and underlying ratings (SPURs) to 'D' from 'C' on the city of Detroit, Mich.'s limited- and unlimited-tax general obligation bonds. "The downgrade reflects the nonpayment of debt service to the paying agent for the scheduled principal and interest payment date of Oct. 1," said Standard & Poor's credit analyst Jane Hudson Ridley. DIGERATI TECHNOLOGIES: LBB & Assoc. Denied as Accountants --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas denied Digerati Technologies, Inc.'s application to employ Carlos Lopez and LBB & Associates, Ltd., LLP as public accountant for a limited purpose of completing fiscal year 2011 and 2012 audits of the Debtor's subsidiaries Hurley Enterprises, Inc. and Dishon Disposal, Inc., well as preparation of subsequent quarterly reviews and SEC filing as needed. According to the order, neither Mr. Lopez nor any other representative of LBB appeared at the hearing to give testimony in support of the application. As reported in the Troubled Company Reporter on Aug. 1, 2013, the firm's personnel hourly rates range from $130 to $285. To the best of the Debtor's knowledge, the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. In a separate order, the Court also entered an order dismissing as moot the Debtor's motion in limine. At the hearing held Aug. 21, 2013, the Court found that the Debtor's motion in limine must be dismissed for reasons of mootness. About Digerati Technologies Digerati Technologies, Inc., filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 13-33264) in Houston, on May 30, 2013. Digerati -- http://www.digerati-inc.com-- is a diversified holding company which owns operating subsidiaries in the oil field services and the cloud communications industry. Digerati and its subsidiaries maintain Texas Offices in San Antonio and Houston. The Debtor has no independent operations apart from its subsidiaries. The Debtor's subsidiaries include Shift 8 Networks, a cloud communication service, Hurley Enterprises, Inc., and Dishon Disposal, Inc., both oil field services companies. The Debtor disclosed $60 million in assets and $62.5 million in liabilities as of May 29, 2013. Bankruptcy Judge Jeff Bohm oversees the case. Deirdre Carey Brown, Esq., Annie E. Catmull, Esq., Melissa Anne Haselden, Esq., Mazelle Sara Krasoff, Esq., and Edward L Rothberg, at Hoover Slovacek, LLP, in Houston, represent the Debtor as counsel. The Debtor tapped Gilbert A. Herrera and Herrera Partners as the investment banker. DTF CORP: Files First Amended Disclosure Statement -------------------------------------------------- DTF Corporation filed a first amended disclosure statement in support of its first amended plan of reorganization dated Sept. 25, 2013. For many years, International Hospital Corporation Holding, N.V. (Parent Company) had sought to recapitalize and refinance the debts and operations of the Debtor and Parent Company's other subsidiary or affiliated companies through debt and equity offerings in the capital markets. The crisis occurring in the global economy that began in late 2007 and continued for several years thereafter substantially impeded its efforts to find new capital or refinancing, however. During the past 22 months, the Parent Company has engaged in extensive efforts and negotiations to obtain recapitalization and refinancing through the capital markets and now believes that it will be able to close a transaction with Grupo Angeles Servicios de Salud, S.A. de C.V., a Mexican corporation that is not affiliated with Debtor, Parent Company, or any of their affiliates, that will enable it to pay and satisfy substantially all of the debts of the Debtor in accordance with the terms of this Plan should it be confirmed by the Bankruptcy Court. In addition, the Debtor, Parent Company, and certain of their Affiliates have entered into settlement agreements with the Jordan Parties and the Minerva Claimants (as such terms are defined in this Plan) resolving all disputes and treatment regarding the Claims of such parties. If the pending transactions with Angeles close and fund as expected, the Parent Company intends to use a portion of the proceeds of such transactions to fund this Plan by arranging for the following: First, Parent Company will cause up to $9,049,996.95 (the "Creditor Fund") to be made available for payment of Allowed Administrative Claims (including Allowed Professional Fee Claims) and Allowed Claims, if any, in Class 1, Class 2, Class 4, Class 5, Class 6, and Class 7 through (a) the payment by Debtor's affiliated companies of a portion of the net amount of their respective notes and accounts receivable to Debtor, and (b) if and to the extent necessary, making new capital contributions to Debtor in an amount necessary to fund any shortfall in the Creditor Fund after repayment of the notes and receivables due Debtor from its affiliates. Additionally, the Debtor's Affiliate guarantors or co-obligors as to the claims of ViewPoint Bank, NA (formerly Highlands Bank of Texas) and Plains Capital Bank will pay the claims of those respective creditors in full pursuant to the terms of this Plan through funds provided through the refinancing and recapitalization. In addition, Privado will issue new common stock to Angeles (or its assigns or designees) in exchange for an amount sufficient to pay in full the agreed upon amount (estimated to exceed $20,000,000 as of the date of this Plan) of the claims of the Minerva Claimants. Debtor believes that the foregoing treatment and transactions will satisfy all or substantially all of the allowable claims against the Debtor, provide for 100% payment to Debtor's secured creditors, and payments to Debtor's unsecured creditors ranging from 90% to 100%. Accordingly, this Plan is proposed to internally recapitalize and reorganize the Debtor's financial affairs and operations and to preserve and maximize the value of the Debtor's properties for the benefit of all creditors possessing allowed claims and to thereby provide the greatest potential recovery to all creditors. The classification and treatment of claims under the plan are: A. Class 1 (Secured Tax Claims) will be paid with interest on effective date. B. Class 2 (Priority Non-Tax Claims) will be paid on the effective date or in ordinary course of business. C. Class 3 (Claims of Minerva Partners, Ltd. and Affiliated Entities) will be paid $20,126,148.93 (plus continuing interest accruals on $15,250,000.00 principal amount included in such claim) in accordance with Minerva settlement by Privado from proceeds of stock offering to Angeles. D. Class 4 (Secured Claims of Plains Capital Bank) Will be paid on the closing date with interest by affiliate co-obligors or guarantors from proceeds of Angeles transaction. E. Class 5 (Secured Claim of View Point Bank) will be paid on the Angeles Closing with interest by affiliate co- obligors or guarantors from proceeds of Angeles Transaction. F. Class 6 (Secured Claim of the Jordan Estate) will be paid in full on effective date without interest from proceeds of the Angeles transaction. G. Class 7 (Other Unsecured Claims) will be paid without interest through pro rata share of balance of creditor fund in the amount of $9,049,996.95 remaining after payments for administrative claims (including professional fee claims) and to any Class 1, Class 2, Class 4, Class 5, and Class 6 claimants. H. Class 8 (Unsecured Claims of Affiliates) will receive no distribution other than through offset and recoupment against notes and accounts payable to the Debtor. I. Class 9 (Equity Interests) will be retained following confirmation of plan. The Parent Corporation will contribute new capital to the Debtor to fund shortfall, if any, in creditor fund. The hearing on the disclosure statement will be held on Nov. 7, 2013, at 9:30 A.M. A copy of the disclosure statement is available for free at: http://bankrupt.com/misc/DTF_1ds.pdf About DTF Corporation DTF Corporation, f/k/a International Hospital Corporation, filed for Chapter 11 bankruptcy (Bankr. N.D. Tex. Case No. 11-37362) on Nov. 21, 2011. In its schedules, the Debtor disclosed $28,692,980 in assets and $38,947,695 in liabilities. The petition was signed by Gary B. Wood, CEO and director. Judge Stacey G. Jernigan presides the case. John P. Lewis, Jr., Esq., at the Law Office of John P. Lewis, Jr., in Dallas, represents the Debtor as counsel. The Debtor proposed a Plan that depends entirely on the consummation of a recapitalization transaction involving its parents and its corporation group. The Estate of Michael H. Jordan filed an alternative plan of reorganization to the plan of reorganization which provide a resolution to the Debtor's bankruptcy case even if the proposed recapitalization transaction does not close. Under the Jordan Estate Plan, if the refinancing transactions close and fund as expected, the Parent Company will use a portion of the proceeds of those transactions to fund the Jordan Estate Plan in an amount sufficient to pay all Allowed Claims in full, including the claims filed by Minerva Partners, Ltd.; Walter O'Cheskey, as Trustee of the AHF Liquidating Trust; the Jordan Estate; ViewPoint Bank, NA; Plains Capital Bank, BOKF, N.A. d/b/a Bank of Texas, NA; and all creditors holding Allowed Priority Claims. No trustee or creditors committee has been appointed in the case. ECO BUILDING: Authorized Common Shares Hiked to 2 Billion --------------------------------------------------------- Eco Building Products, Inc., held a special meeting on Sept. 24, 2013, at which the stockholders approved and adopted an amendment to the Company's Articles of Incorporation to increase the Company's authorized shares of common stock from 500,000,000 to 2,000,000,000 and approved and adopted an amendment to the Company's Articles of Incorporation to authorize a class of undesignated or "blank check" preferred stock, consisting of up to 500,000,000 authorized shares. The stockholders also approved and adopted an amendment to the Company's Articles of Incorporation to effect a reverse stock split of the outstanding shares of the Company's common stock, at a reverse split ratio of up to 1-for-20. On Sept. 19, 2013, Eco Building filed a certificate of amendment with the Colorado Secretary of State, amending the Company's Articles of Incorporation to increase the number of authorized shares of common stock from 500,000,000 shares to 2,000,000,000 shares. Delays 2013 Annual Report The Company said its annual report could not be filed within the prescribed time period due to the Company requiring additional time to prepare and review the annual report for the year ended June 30, 2013. That delay could not be eliminated by the Company without unreasonable effort and expense. In accordance with Rule 12b-25 of the Securities Exchange Act of 1934, the Company will file its Form 10-K no later than 15 calendar days following the prescribed due date. About Eco Building Vista, Calif.-based Eco Building Products is a manufacturer of proprietary wood products treated with an eco-friendly proprietary chemistry that protects against mold, rot, decay, termites and fire. Sam Kan & Company, in Alameda, Calif., expressed substantial doubt about Eco's ability to continue as a going concern following the fiscal 2012 financial results. The independent auditors noted that the Company has generated minimal operating revenues, losses from operations, significant cash used in operating activities and its viability is dependent upon its ability to obtain future financing and successful operations. For the nine months ended March 31, 2013, the Company incurred a net loss of $9.03 million on $4.14 million of total revenue, as compared with a net loss of $3.68 million on $2.08 million of total revenue for the nine months ended March 31, 2012. The Company's balance sheet at March 31, 2013, showed $3.19 million in total assets, $11.85 million in total liabilities and a $8.66 million total stockholders' deficit. ECOTALITY INC: Can Employ Parker Schwartz as Bankruptcy Counsel --------------------------------------------------------------- ECOtality, Inc., et al., sought and obtained authority from Judge Randolph J. Haines of the U.S. Bankruptcy Court for the District of Arizona to employ Parker Schwartz, PLLC, as local bankruptcy counsel on the following terms and conditions: -- a minimum advance deposit payable to the firm of $35,000, including $9,000 for services rendered prepetition, plus an additional $7,278 for filing fees of the six debtor affiliates' cases; -- payment of hourly fees for the following attorneys: Jared G. Parker, Esq., at $465 per hour; Lawrence D. Hirsch, Esq., at $450 per hour; and Iva S. Hirsch, Esq., at $300 per hour; and -- payment of paralegal services will be billed at the following rates: Elizabeth Kiss at $125 per hour, Linda Miernik at $180 per hour, and Andrea Marshall at $160 per hour. The firm assures the Court that it 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. About Ecotality Inc. Headquartered in San Francisco, California, Ecotality, Inc. (Nasdaq: ECTY) -- http://www.ecotality.com-- is a provider of electric transportation and storage technologies. Ecotality Inc. along with affiliates including lead debtor Electric Transportation Engineering Corp. sought Chapter 11 protection (Bankr. D. Ariz. Lead Case No. 13-16126) on Sept. 16, 2013, with plans to sell the business at an auction the following month. The cases are assigned to Chief Judge Randolph J. Haines. The Debtors' lead counsel are Charles R. Gibbs, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Dallas, Texas; and David P. Simonds, Esq., and Arun Kurichety, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Los Angeles, California. The Debtors' local counsel is Jared G. Parker, Esq., at Parker Schwartz, PLLC, in Phoenix, Arizona. The Debtors' claims & noticing agent is Kurtzman Carson Consultants LLC. Electric Transportation estimated assets of $10 million to $50 million and debt of $100 million to $500 million. Unlike most companies in bankruptcy, Ecotality has no secured debt. It simply ran out of money. There's $5 million owing on convertible notes, plus liability on leases. Part of pre-bankruptcy financing took the form of a $100 million cost-sharing grant from the U.S. Energy Department. In view of the San Francisco-based company's financial problems, the government cut off the grant when $84.8 million had been drawn. EL POLLO LOCO: Moody's Cuts New 2nd Lien Term Loan Rating to Caa2 ----------------------------------------------------------------- Moody's Investors Service downgraded El Pollo Loco's ("EPL") proposed senior secured second lien 5.5-year term loan to Caa2 from Caa1. EPL's other ratings, including its B3 Corporate Family Rating, were unchanged. The rating outlook is stable. Ratings Rationale The downgrade of the proposed senior secured second lien debt was prompted by the company's announcement that it was increasing the amount of the senior secured first lien debt to $205 million from $190 million and reducing the second lien debt to $100 million from $115 million. This change in the mix of first lien and second lien debt has reduced the cushion for the second lien debt holders, and per Moody's Loss Given Default Methodology, results in the second lien debt being downgraded by one notch. The B1 rating on the proposed $15 million senior secured first lien revolver and $190 million senior secured first lien term loan -- two notches above the CFR -- reflects its first lien on substantially all of the company's assets and the material amount of junior debt below it in the capital structure. The Caa2 rating on the proposed $100 million senior secured second lien term loan reflects its effective subordination to all first lien senior secured creditors, an all asset pledge on a second lien basis, and full guarantees of existing and future subsidiaries. The B3 Corporate Family Rating reflects EPL's thin interest coverage and high leverage relative as well as its small size in terms of total revenue and its geographic concentration in California. Pro forma for the recently announced proposed refinancing, debt/EBITDA and EBITDA less capex/cash interest is 6.2 times and about 1.2 times, respectively. Positive rating consideration is given to the company's improved earnings, attractive niche QSR chicken market position, established concept and adequate liquidity profile. EPL's stable rating outlook reflects our expectation that the company's earnings will continue to grow over the next 12 to 18 months as it grows the number of new/remodeled stores, so that debt/EBITDA and EBITDA less capex/cash interest expense will approximate 6.0 times and 1.3 times, respectively. The stable rating outlook also reflects our expectation that EPL will maintain a healthy liquidity profile during a period in which it plans to ramp up its spending on new/remodeled stores. EPL's ratings could be upgraded if the company maintains positive same store sales growth -- including growth in both traffic and average check -- maintains good returns on new store openings and is able to sustain debt/EBITDA below 5.5 times and EBITDA less capex/cash interest expense above 1.5 times. Successful expansion of its geographic foot print would also be viewed as a credit positive. Ratings could be downgraded if EPL's operating results or liquidity weakened, if the company experiences a period of negative same store sales growth, or if debt/EBITDA rises to above 6.5 times or EBITDA less capex/cash interest dropped below 1.0 times. Independent of any change in the Corporate Family Rating, the ratings on the first lien debt could be downgraded if the company further increases the amount of its first lien debt versus second lien debt, per Moody's Loss Given Default Methodology. Rating downgraded: $100 million senior secured second lien 5.5-year term loan to Caa2 (LGD 5, 81%) from Caa1 (LGD 5, 78%) Ratings unchanged (LGD assessments revised where noted): Corporate Family Rating at B3 Probability of Default Rating at B3-PD $15 million senior secured first lien 5-year revolver at B1 (LGD 2, 29% from LGD 2, 27%) $190 million senior secured first lien 5-year term loan at B1 (LGD 2, 29% from LGD 2, 27%) Ratings unchanged and to be withdrawn when transaction closes: $12.5 million first lien first-out senior secured revolver due 2016 at B1 (LGD 1, 1%) $163 million first lien senior secured term loan due 2017 at B2 (LGD 2, 28%) $105 million second lien senior secured notes due 2018 at Caa2 (LGD 5, 78%) El Pollo Loco, Inc. ("EPL") headquartered in Costa Mesa, California, is a quick-service restaurant chain specializing in flame-grilled chicken and other Mexican-inspired entrees. As of June 26, 2013, the company operated and franchised 398 restaurants primarily around Los Angeles and throughout the Southwestern United States, generating total revenues of approximately $307 million in the last twelve months ended June 26, 2013. El Pollo is owned by two private equity firms, Trimaran Capital Partners and FS Equity Partners. As a private company, El Pollo does not file public financials. The principal methodology used in this rating was the Global Restaurant 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. EL POLLO LOCO: S&P Lowers Rating on New $205MM Loan to 'B-' ----------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'B-' corporate credit rating on Costa Mesa, Calif.-based El Pollo Loco Inc. The outlook is stable. At the same time, S&P lowered its issue-level rating on the proposed $205 million senior secured credit facility (which includes the new $15 million revolver and $190 million first-lien term loan) to 'B-' from 'B' and revised the recovery rating to '3' from '2'. The '3' recovery rating indicates S&P's expectation for meaningful (50% to 70%) recovery of principal in the event of a payment default. S&P also affirmed its 'CCC' issue-level rating and '6' recovery rating on the company's revised second-lien term loan. The '6' recovery rating indicates S&P's expectation for negligible (0% to 10%) recovery of principal in the event of a payment default. El Pollo Loco is refinancing its senior secured facility and second-lien debt to reduce interest costs, extend maturities, and fund other expenses related to the transaction. "The rating on El Pollo Loco Inc. reflects Standard & Poor's Ratings Services' assessment that the company's business risk profile will remain "vulnerable' and the financial risk profile will remain "highly leveraged" in the coming year," said credit analyst Diya Iyer. The outlook is stable, reflecting S&P's expectation for limited improvement in credit protection measures in the coming year. S&P could raise its rating if sales increase more than 15% and gross margin expands 400 bps above its expectations due to continued strong operational execution. This would result in a 30% increase in EBITDA, with leverage in the low-5x and interest coverage over 2x. S&P would also consider a higher rating if the company continues to address its capital structure, for instance reducing or eliminating its second-lien debt. S&P would consider lowering its rating if profitability falls below its expectations in the coming year because of sales pressure or higher costs associated with store expansion. This would lead to EBITDA declining 15%, with gross margin declining more than 100 bps. It would also lead to a decline in liquidity to fund operating requirements including interest expense and capital expenditure, with coverage falling below 1x and leverage increasing to more than 7x in the next year. ENOVA SYSTEMS: Settles Lawsuit with Arens Controls -------------------------------------------------- Enova Systems, Inc., and Arens Controls Company, L.L.C., entered into a Settlement Agreement and Mutual Release, pursuant to which the parties agreed to a mechanism to resolve their dispute with respect to certain claims made by Arens in connection with its action captioned Arens Controls Company, L.L.C. v. Enova Systems, Inc., filed in 2008 with the Northern District of Illinois, Eastern Division of the U.S. District Court, for breach of purchase orders that Enova submitted to Arens in 2007. As has been previously reported, in the Lawsuit, Arens asserted eight counts against Enova. On Jan. 5, 2011, Arens and Enova partially settled six of the eight claims. The two remaining counts concerned (i) anticipatory breach of contract by Enova for certain purchase orders that resulted in lost profit to Arens and (ii) reimbursement for engineering and capital equipment costs incurred by Arens exclusively for the fulfillment of certain purchase orders received from Enova. As was previously reported, on Dec. 12, 2012, a judgment was entered by the United States District Court Northern District of Illinois in favor of Arens Controls Company, L.L.C., in the amount of $2,014,169, as damages for the cost of manufacturing and test equipment, the cost of engineering drawings, and lost profits. The Company filed a notice of appeal of the Judgment with the United States Court of Appeals 7th Circuit on Jan. 15, 2013. On Sept. 24, 2013, and in order to avoid the risks and costs associated with the pending appeal, Enova and Arens entered into a Settlement Agreement and Mutual Release to resolve the remaining issues between them. Under the terms of the Settlement Agreement, Enova was required to file, and filed on Sept. 27, 2013, a motion to dismiss the pending appeal with prejudice. Arens agreed that, for a period of 120 calendar days from the date of the Settlement Agreement, Arens will not take any action to enforce the Judgment. Thereafter, Arens will be entitled, without further notice, to enforce the Judgment against Enova or otherwise exercise all available procedures and remedies for collection of the full amount of the Judgment; and Enova agrees that it will not contest the validity of the Judgment. However, notwithstanding the foregoing, if Enova pays Arens $300,000 at any time during that 120 day period, then within 3 business days after Arens receives confirmation of that payment, Arens will file a satisfaction of judgment stating that the Judgment has been satisfied. Upon receipt of that $300,000 payment, Arens will completely release and forever discharge Enova from any and all claims for damages whatsoever that occurred prior to the date of the Settlement Agreement. In exchange for Arens's release, Enova will completely release and forever discharge Arens from any and all claims for damages whatsoever that occurred prior to the date of the Settlement Agreement. A copy of the Settlement Agreement is available for free at: http://is.gd/lNegKf About Enova Systems Torrance, Calif.-based Enova Systems, Inc., engages in the development, design and production of proprietary, power train systems and related components for electric and hybrid electric buses and medium and heavy duty commercial vehicles. In its report on the consolidated financial statements for the year ended Dec. 31, 2012, PMB Helin Donovan, LLP, in San Francisco, California, expressed substantial doubt about Enova Systems' ability to continue as a going concern, citing the Company's significant recurring losses and accumulated deficit. The Company reported a net loss of $8.2 million on $1.1 million of revenues in 2012, compared with a net loss of $7.0 million on $6.6 million of revenues in 2011. The Company's balance sheet at March 31, 2013, showed $2.88 million in total assets, $5.92 million in total liabilities and a $3.03 million total stockholders' deficit. Bankruptcy warning On Dec. 12, 2012, a judgment was entered by the United States District Court Northern District of Illinois in favor of Arens Controls Company, L.L.C., in the amount of $2,014,169 regarding claims for two counts. In 2008, Arens Controls Company, L.L.C. filed claims against Enova with the United States District Court Northern District of Illinois. A Partial Settlement Agreement, as amended on Jan. 14, 2011, resolved certain claims made by Arens. However, the claims were preserved under two remaining counts concerning (i) anticipatory breach of contract by Enova for certain purchase orders that resulted in lost profit to Arens and (ii) reimbursement for engineering and capital equipment costs incurred by Arens exclusively for the fulfillment of certain purchase orders received from Enova. The Company filed a notice of appeal on Jan. 15, 2013. The Company believes the court committed errors leading to the verdict and judgment, and the Company is evaluating its options on appeal. "However, there can be no assurance that the appeal will be successful or a negotiated settlement can be attained or that Arens will assert its claim in the state of California, and thereby cause the Company to go into bankruptcy," the Company said in its quarterly report for the period ended March 31, 2013. EXCEL MARITIME: Sec. 341 Meeting Rescheduled to Oct. 15 ------------------------------------------------------- Excel Maritime Carriers Ltd. has filed a notice that the meeting of creditors, pursuant to Section 341(a) of the Bankruptcy Code, which was scheduled for Oct. 1, 2013, has been adjourned to Oct. 15, 2013 at 3:30 p.m. (Prevailing Eastern Time). The meeting will be held at 80 Broad Street, 4th Floor, New York, New York 10004. The Debtors' representative, as specified in Rule 9001(5) of the Federal Rules of Bankruptcy Procedure, is required to appear at the meeting of creditors for the purpose of being examined under oath. Attendance by creditors at the 341 Meeting is welcomed, but not required. At the 341 Meeting, the creditors may examine the Debtors' representative and transact such other business as may properly come before the meeting. The 341 Meeting may be continued or adjourned from time to time by notice at the meeting, without further written notice to the creditors. About Excel Maritime Based in Athens, Greece, Excel Maritime Carriers Ltd. -- http://www.excelmaritime.com/-- is an owner and operator of dry bulk carriers and a provider of worldwide seaborne transportation services for dry bulk cargoes, such as iron ore, coal and grains, as well as bauxite, fertilizers and steel products. Excel owns a fleet of 40 vessels and, together with 7 Panamax vessels under bareboat charters, operates 47 vessels (5 Capesize, 14 Kamsarmax, 21 Panamax, 2 Supramax and 5 Handymax vessels) with a total carrying capacity of approximately 3.9 million DWT. Excel Class A common shares have been listed since Sept. 15, 2005, on the New York Stock Exchange (NYSE) under the symbol EXM and, prior to that date, were listed on the American Stock Exchange (AMEX) since 1998. The company blamed financial problems on low charter rates. The balance sheet for December 2011 had assets of $2.72 billion and liabilities totaling $1.16 billion. Excel owes $771 million to secured lenders with liens on almost all assets. There is $150 million owing on 1.875 percent unsecured convertible notes. Excel Maritime, filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 13-bk- 23060) on July 1, 2013, in New York after signing an agreement where secured lenders owed $771 million support a reorganization plan filed alongside the petition. Excel, which sought bankruptcy with a number of affiliates, has tapped Skadden, Arps, Slate, Meagher & Flom LLP, as counsel; Miller Buckfire & Co. LLC, as investment banker; and Global Maritime Partners Inc., as financial advisor. A five-member official committee of unsecured creditors was appointed by the U.S. Trustee. The Creditors' Committee is represented by Michael S. Stamer, Esq., Sean E. O'Donnell, Esq., and Sunish Gulati, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York; and Sarah Link Schultz, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Dallas, Texas. FIRST SOUND: Released From Regulatory Consent Order --------------------------------------------------- First Sound Bank on Oct. 3 disclosed that it is no longer operating under a consent order issued by the FDIC and the Washington State Department of Financial Institutions in early 2010. The Bank, which had incurred significant losses in an acquired leasing company and its commercial real estate loan portfolio during the economic downturn, had become significantly undercapitalized by the end of 2011. According to Patrick Fahey, who joined First Sound Bank as CEO in January 2012, the Bank's capital ratios now exceed the regulatory thresholds of a well-capitalized institution, and its credit quality has improved dramatically to well within regulatory guidelines. In February 2013 First Sound Bank reported that it had raised $7.9 million in new capital and repurchased from the U.S. Treasury, at a negotiated discount, the preferred stock that had been issued under the Troubled Asset Relief Program (TARP) in 2008. "Our progress in restoring First Sound Bank to a strong financial condition is due to the efforts of a dedicated and determined staff and board of directors, our very loyal customers and shareholders, and the support we received from state and federal regulators," Mr. Fahey said. "This achievement is a major milestone as First Sound Bank has moved from shrinking in size and resolving troubled assets to adding new customers and making new loans to local businesses." Reflecting on how some had written the Bank off 18 months ago, Mr. Fahey added, "We are grateful for the support we have had and look forward to contributing to the economic vitality of the region." About First Sound Bank Seattle-based First Sound Bank -- http://www.firstsoundbank.com-- offers customized banking for small- to medium-sized businesses, organizations, not-for-profits and professionals in the Puget Sound region. FLUX POWER: Delays Form 10-K for Fiscal 2013 -------------------------------------------- Flux Power Holdings, Inc., was unable to file its Form 10-K for the 12 months ended June 30, 2013, within the prescribed time period. The Company expects to complete and file the Form 10-K by Oct. 15, 2013. During the last six months ended June 30, 2013, the Company has undertaken a significant effort to realign its sales and marketing of the Company's new customer target market. The Company has experienced unexpected delays in anticipated capital from investors for operational expense funding. During the Company's fourth quarter of fiscal year ended June 30, 2013, the Company's chief executive officer resigned and the Company's chief financial officer assumed the added duties as interim CEO. For the year ended June 30, 2013, the Company anticipates reporting a decrease in revenues of approximately $5,158,000, or 87 percent, compared to the year ended June 30, 2012. This large decrease in sales was primarily attributable to three major customers that ultimately did not meet their production expectations. As a result of decrease in revenues, the Company anticipates reporting a decrease in gross profits of approximately $1,145,000 or 99 percent, for the fiscal year ended June 30, 2013, compared to the fiscal year ended June 30, 2012. The Company also anticipates reporting an increase in operating expenses and operating loss primarily as a result of expenses relating to the amortization of prepaid advisory fees of approximately $1,720,000, for the fiscal year ended June 30, 2013. There were no prepaid advisory fees in fiscal 2012. The prepaid advisory fees are related to the fair value of the warrants issued under an advisory agreement with Baytree Capital dated June 14, 2012, and to value of the shares of the Company's common stock issued pursuant to the same agreement where Baytree Capital agreed to provide business and advisory services to the Company. Based on Company's experience during the last six months ending June 30, 2013, the Company realigned its business strategy to achieve higher longer-term revenue by focusing on a smaller number of products and selling to customers that do not require extensive and lengthy product development and negotiation periods. The Company now targets product segments including "lift equipment" and "micro-grid energy storage". About Flux Power Escondido, California-based Flux Power Holdings, Inc., designs, develops and sells rechargeable advanced energy storage systems. The Company reported a net loss of $231,000 on $700,000 of net revenue for the nine months ended March 31, 2013, compared with a net loss of $1.1 million on $3.0 million of revenue for the nine months ended March 31, 2012. The Company's balance sheet at March 31, 2013, showed $2.5 million in total assets, $4.7 million in total liabilities, and a stockholders' deficit of $2.1 million. According to the quarterly report for the period ended March 31, 2013, there are certain conditions which raise substantial doubt about the Company's ability to continue as a going concern. "We have a history of losses and have experienced a lack of revenue due to the time to launch the Company's revised business strategy. Our operations have primarily been funded by the issuance of common stock. Our continued operations are dependent on our ability to complete equity financings, increase credit lines, or generate profitable operations in the future." FURNITURE BRANDS: Enters Into Purchase Agreement with KPS Capital ----------------------------------------------------------------- Furniture Brands International on Oct. 3 disclosed that it has entered into an asset purchase agreement with KPS Capital Partners L.P. to acquire substantially all of the Company's assets for $280 million, including the Company's Lane business. In addition, Furniture Brands has filed a motion seeking authorization from the U.S. Bankruptcy Court for the District of Delaware the Honorable Judge Christopher S. Sontchi presiding, to conduct an auction process for the Company. Under Section 363 of the U.S. Bankruptcy Code, KPS would serve as the "stalking horse" bidder in the proposed auction, establishing a minimum value of the Company's assets. The Court entered an interim order under which KPS will replace Oaktree Capital Management L.P. as the DIP lender to ensure its operations will continue uninterrupted and to set a final hearing for October 11, 2013. KPS has committed to fund up to approximately $190 million as the DIP lender. In order to maximize the asset price of the Company's brands, the acquisition agreement would allow for additional qualified prospective bidders to enter an auction process with KPS, in accordance with procedures established by the Court. The Court authorized the Company to proceed with an auction of the Company's assets on or before December 10, 2013, subject to the approved bidding procedures, and set December 5, 2013 as the deadline for any bids. Ralph Scozzafava, Chairman of the Board and CEO of Furniture Brands commented: "The KPS bid for our business establishes a solid foundation as we move toward a successful emergence from Chapter 11. The KPS bid also enhances our creditors' return with a higher total price as well as enhanced DIP financing terms. We are also pleased that KPS has extended an offer of employment to substantially all of our current employees." Scozzafava concluded: "The continued interest in the Company and brands demonstrates their significant value. We will continue to work diligently through this reorganization process to serve the best interest of our stakeholders including our customers, dealers, employees and partners. We believe this enhanced bid illustrates the long term merits of our future as a healthy, standalone business and our ability to emerge from this process as a strong standalone business going forward." Based on the current stalking horse bid, shareholders will not receive any distribution or recovery on account of their common stock. Raquel Vargas Palmer, a Partner of KPS, said: "We are pleased to reach this agreement to acquire substantially all of the assets of Furniture Brands. We believe there is exceptional value in the Furniture Brands businesses that can be realized through considerable operational improvements and focused investments behind all of the company's brands. The KPS transaction is fundamentally and structurally different than the proposed transaction entered into by the debtor at the time of its Chapter 11 filing as it keeps all of Furniture Brands' businesses together and positions the Company for long-term success in its markets." Ralph Scozzafava, Chairman of the Board and CEO of Furniture Brands, added: "KPS provides us the financial flexibility and operational expertise to emerge from this process a strong standalone business positioned for future growth. We look forward to working with the KPS team to return our business to leadership positions in our targeted markets for the benefit of our employees, customers, suppliers and business partners." Proskauer Rose LLP is acting as legal counsel to KPS with respect to the transaction. About Furniture Brands Furniture Brands International (NYSE:FBN) -- http://www.furniturebrands.com-- engages in the 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. On Sept. 9, 2013, Furniture Brands International, Inc. and 18 affiliated companies sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-12329). Attorneys at Paul Hastings LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. Alvarez and Marsal North America, LLC, is the restructuring advisors. Miller Buckfire & Co., LLC is the investment Banker. Epiq Systems Inc. dba Epiq Bankruptcy Solutions is the claims and notice agent. Furniture Brands' balance sheet at June 29, 2013, showed $546.73 million in total assets against $550.13 million in total liabilities. The company has an official creditor's committee with seven members. The creditors' panel includes the Pension Benefit Guaranty Corp., Milberg Factors Inc. and five suppliers. FURNITURE BRANDS: Hires Paul Hastings as Lead Counsel ----------------------------------------------------- Furniture Brands International, Inc., et al., sought and obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ Paul Hastings LLP as counsel. The firm's attorneys will be paid $440 to $1,100 per hour, while their paralegals will be paid $255 to $320 per hour. The firm will also be reimbursed for any necessary out-of-pocket expenses. Luc A. Despins, Esq., Leslie A. Plaskon, Esq., James T. Grogan, Esq., and will take lead roles in representing the Debtors. The firm assures the Court that it 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. About Furniture Brands Furniture Brands International (NYSE:FBN) -- http://www.furniturebrands.com-- engages in the 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. On Sept. 9, 2013, Furniture Brands International, Inc. and 18 affiliated companies sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-12329). Attorneys at Paul Hastings LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. Alvarez and Marsal North America, LLC, is the restructuring advisors. Miller Buckfire & Co., LLC is the investment Banker. Epiq Systems Inc. dba Epiq Bankruptcy Solutions is the claims and notice agent. Furniture Brands' balance sheet at June 29, 2013, showed $546.73 million in total assets against $550.13 million in total liabilities. The company has an official creditor's committee with seven members. The creditors' panel includes the Pension Benefit Guaranty Corp., Milberg Factors Inc. and five suppliers. FURNITURE BRANDS: Can Employ Young Conaway as Delaware Counsel -------------------------------------------------------------- Furniture Brands International, Inc., et al., sought and obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ Young Conaway Stargatt & Taylor, LLP, as their local Delaware counsel. The principal attorneys and paralegal presently designated to represent the Debtors, and their current standard hourly rates, are: M. Blake Cleary $650 Jaime Luton Chapman $375 Andrew L. Magaziner $325 Ian J. Bambrick $300 Melissa Romano, paralegal $190 The firm will also be reimbursed for any necessary out-of-pocket expenses. The firm assures the Court that it 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. Young Conaway received a retainer in the amount of $50,000 plus $30,000 for anticipated expenses and filing fees in connection with the planning and preparation of initial documents and its proposed postpetition representation of the Debtors. A portion of the Retainer and advance for anticipated expenses and filing fees will be applied to outstanding balances existing as of the Petition Date. The remainder will constitute a general retainer as security for postpetition services and expenses. About Furniture Brands Furniture Brands International (NYSE:FBN) -- http://www.furniturebrands.com-- engages in the 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. On Sept. 9, 2013, Furniture Brands International, Inc. and 18 affiliated companies sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-12329). Attorneys at Paul Hastings LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. Alvarez and Marsal North America, LLC, is the restructuring advisors. Miller Buckfire & Co., LLC is the investment Banker. Epiq Systems Inc. dba Epiq Bankruptcy Solutions is the claims and notice agent. Furniture Brands' balance sheet at June 29, 2013, showed $546.73 million in total assets against $550.13 million in total liabilities. The company has an official creditor's committee with seven members. The creditors' panel includes the Pension Benefit Guaranty Corp., Milberg Factors Inc. and five suppliers. FURNITURE BRANDS: Can Employ Epiq as Administrative Advisor ----------------------------------------------------------- Furniture Brands International, Inc., et al., sought and obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ Epiq Bankruptcy Solutions, LLC, as administrative advisor, to, among other things, assist with solicitation, balloting and tabulation and calculation of votes, as required in furtherance of confirmation of any plan of reorganization. The firm assures the Court that it is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. The Debtors also sought and obtained the Court's authority to employ Epiq as claims and noticing agent. About Furniture Brands Furniture Brands International (NYSE:FBN) -- http://www.furniturebrands.com-- engages in the 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. On Sept. 9, 2013, Furniture Brands International, Inc. and 18 affiliated companies sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-12329). Attorneys at Paul Hastings LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. Alvarez and Marsal North America, LLC, is the restructuring advisors. Miller Buckfire & Co., LLC is the investment Banker. Epiq Systems Inc. dba Epiq Bankruptcy Solutions is the claims and notice agent. Furniture Brands' balance sheet at June 29, 2013, showed $546.73 million in total assets against $550.13 million in total liabilities. The company has an official creditor's committee with seven members. The creditors' panel includes the Pension Benefit Guaranty Corp., Milberg Factors Inc. and five suppliers. FURNITURE BRANDS: Files Schedules of Assets and Liabilities ----------------------------------------------------------- Furniture Brands International filed with the Bankruptcy Court for the District of Delaware its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $176,458,854 +undetermined amount C. Property Claimed as Exempt D. Creditors Holding Secured Claims $138,845,746 +undetermined amount E. Creditors Holding Unsecured Priority Claims $392,000 +undetermined amount F. Creditors Holding Unsecured Non-priority Claims $141,713,260 +undetermined amount ------------ -------------- TOTAL $176,458,854 $280,951,007 + Undetermined + Undetermined Amounts Amounts About Furniture Brands Furniture Brands International (NYSE:FBN) -- http://www.furniturebrands.com-- engages in the 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. On Sept. 9, 2013, Furniture Brands International, Inc. and 18 affiliated companies sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-12329). Attorneys at Paul Hastings LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. Alvarez and Marsal North America, LLC, is the restructuring advisors. Miller Buckfire & Co., LLC is the investment Banker. Epiq Systems Inc. dba Epiq Bankruptcy Solutions is the claims and notice agent. Furniture Brands' balance sheet at June 29, 2013, showed $546.73 million in total assets against $550.13 million in total liabilities. The company has an official creditor's committee with seven members. The creditors' panel includes the Pension Benefit Guaranty Corp., Milberg Factors Inc. and five suppliers. GAMING & LEISURE: S&P Assigns 'BB+' CCR; Outlook Stable ------------------------------------------------------- Standard & Poor's Ratings Services assigned Gaming & Leisure Properties Inc. (GLPI) a 'BB+' corporate credit rating. The outlook is stable. At the same time, S&P assigned the company's proposed $1.15 billion senior unsecured credit facility its 'BBB-' issue- level rating (one notch above the corporate credit rating), with a recovery rating of '2', indicating S&P's expectation for substantial (70% to 90%) recovery for lenders in the event of a payment default. The credit facility will consist of an $850 million revolving credit facility (which will be reduced to $700 million at or about the time of the spin-off) and a $300 million term loan facility, both due 2018. In addition, S&P assigned the company's proposed aggregate $2.05 billion senior unsecured notes its 'BBB-' issue-level rating (one notch above the corporate credit rating), with a recovery rating of '2' (70% to 90% recovery expectation). S&P anticipates the company will issue the notes in five-year, seven-year, and 10-year tranches. S&P generally caps its recovery ratings on unsecured debt at '3' (50% to 70% recovery expectation) for corporate entities with a corporate credit rating in the 'BB' category, to account for the greater risk of recovery prospects being impaired by the issuance of additional secured or pari passu debt prior to default. However, for REITs with unsecured debt recovery prospects of 70% or more and with more restrictive REIT financial covenants in their unsecured loan documents, S&P caps its unsecured debt recovery ratings at '2'. These covenants include a maximum unsecured debt-to-unencumbered assets ratio or a minimum unencumbered assets-to-unsecured debt ratio. S&P believes these covenants would help preserve value for unsecured lenders in the event of a default because they would restrict the amount of additional debt the company can incur. S&P assumes GLPI will have financial covenants in its credit agreement and senior notes indenture similar to those at other Standard & Poor's rated REITs with unsecured debt with a recovery rating of '2'. GLPI plans to use the proceeds to make a distribution to Penn National Gaming Inc. in connection with the spin-off of Penn's real estate assets to GLPI; make a distribution of accumulated earnings and profits in connection with its election to become a REIT; and pay transaction fees and expenses. S&P's corporate credit rating on GLPI reflects its view of its business risk profile as "satisfactory" and its financial risk profile as "significant." GASTON STREET: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: 209 E. Gaston Street, LLC 209 E. Gaston Street Savannah, GA 31401 Case No.: 13-41832 Chapter 11 Petition Date: October 1, 2013 Court: United States Bankruptcy Court Southern District of Georgia (Savannah) Debtor's Counsel: James McCallar, Jr, Esq. MCCALLAR LAW FIRM P. O. Box 9026 Savannah, GA 31412 Tel: 912-234-1215 Fax: 912-236-7549 Email: mccallar@mccallarlawfirm.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Jeff Notrica, managing member. The Debtor did not file its list of largest unsecured creditors when it filed its petition. GENESIS CHRISTIAN: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Genesis Christian Center, Inc. 5493 Wiles Road Pompano Beach, FL 33073 Case No.: 13-33654 Chapter 11 Petition Date: October 1, 2013 Court: United States Bankruptcy Court Southern District of Florida (Fort Lauderdale) Judge: Hon. John K Olson Debtor's Counsel: Peter E. Shapiro, Esq. 1351 Sawgrass Corporate Parkway, Suite 101 Fort Lauderdale, FL 33323 Tel: 954-317-0133 Fax: 954-742-9971 Email: pshapiro@shapirolawpa.com Total Assets: $7.32 million Total Liabilities: $3.67 million The petition was signed by John Simpson, vice president. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/flsb13-33654.pdf GMX RESOURCES: Enters Into Plan Support Agreement ------------------------------------------------ GMX Resources Inc. is an oil and gas exploration and production Company with assets in the Williston Basin, Denver Julesburg Basin and East Texas Basin. As previously reported, on April 1, 2013, the Company filed a voluntary petition the Bankruptcy Court for the Western District of Oklahoma. Two of the Company's subsidiaries, Diamond Blue Drilling Co. and Endeavor Pipeline Inc., also filed related petitions with the Bankruptcy Court (Case Nos. 13-11457 and 13- 11458, respectively). Plan Support Agreement The Company disclosed that, subject to approval by the Bankruptcy Court, it has entered into a Plan Support Agreement, dated as of September 30, 2013, among the Debtors, certain of the holders of the Company's Senior Secured Notes Series A due 2017 and Senior Secured Notes Series B due 2017 party thereto, and the Official Committee of Unsecured Creditors. The Plan Support Agreement requires the Consenting Holders to vote in favor of and support a proposed plan of reorganization of the Company and its subsidiaries consistent with the terms and conditions set forth in the term sheet attached as an exhibit to the Plan Support Agreement. On October 2, 2013, the Company filed a Motion to Approve the Plan Support Agreement with the Bankruptcy Court seeking authority to enter into the Plan Support Agreement. A hearing on such motion is scheduled for October 29, 2013 at 9:30 a.m. before the Bankruptcy Court. Under the plan of reorganization contemplated by the Plan Support Agreement, the current debtor-in-possession financing facility will be extended so that the Company may continue operating in Chapter 11 as it seeks confirmation of the proposed plan or reorganization. Further, in exchange for the secured portion of their claims in the approximate amount of $338 million, the holders of the Senior Secured Notes would receive 100% of the equity in the reorganized Company upon its emergence from bankruptcy and/or equity in an affiliate of the reorganized GMXR. Holders of the Company's Senior Secured Second-Priority Notes due 2018 shall be treated as general unsecured creditors. Under the proposed plan of reorganization, if the general unsecured creditors' class votes to accept the plan or reorganization, holders of allowed general unsecured claims would receive interests in a trust funded with (i) $1.5 million in cash; and (ii) the Debtors' potential causes of action listed on Schedule A to the Restructuring Term Sheet. Further, if the class of holders of general unsecured claims vote to accept the plan or reorganization, the holders of Senior Secured Notes will waive recovery on their unsecured deficiency claim. If the class of holders of general unsecured claims does not vote to accept the plan of reorganization, the $1.5 million in cash will not be funded in the Litigation Trust and, the holders of Senior Secured Notes and debtor in possession lenders will participate in recovery from the Litigation Trust on account of their DIP loan claims, superpriority adequate protection claims and deficiency claim. Any equity interest in the Company, of any kind, existing prior to the consummation of the restructuring will be cancelled under the terms of the plan of reorganization. The Consenting Senior Secured Noteholders may terminate the Plan Support Agreement under certain circumstances, including, but not limited to, if (i) the Debtors breach any of their undertakings, representations, warranties or covenants under the Plan Support Agreement which remains uncured, (ii) any ruling or order enjoining the consummation of a material portion of the plan, (iii) the Debtors lose the exclusive right to file and solicit acceptance of a chapter 11 plan, (iv) an examiner with expanded powers is appointed in the Debtors' cases, a chapter 11 trustee is appointed in the Debtors' cases, or the Debtors' cases shall have been converted into a chapter 7 case or cases, (v) the Debtors or the Creditors' Committee file any motion or pleading materially inconsistent with the Plan Support Agreement, which is not withdrawn, (vi) the Bankruptcy Court grants relief that is materially inconsistent with the Plan Support Agreement, (vii) the Bankruptcy Court grants relief terminating, annulling or modifying the automatic stay with regard to any material assets of the Debtors, (viii) the Debtors fail to file the plan of reorganization and disclosure statement with the Bankruptcy Court within 10 business days of the execution of the Plan Support Agreement, (ix) the disclosure statement is not approved within 50 days of the execution of the Plan Support Agreement, (x) if the plan of reorganization shall not have been approved within 95 days of the execution of the Plan Support Agreement or (xi) if all of the transactions contemplated by the Plan Support Agreement have not been consummated within 120 days of the execution of the Plan Support Agreement. The plan of reorganization is subject to confirmation by the Bankruptcy Court. The Company expects the Bankruptcy court to enter a ruling on confirmation of the plan of reorganization prior to January 15, 2014. Upon the effective date of the plan of reorganization, reorganized GMXR will be a private company. About GMX Resources GMX Resources Inc. -- http://www.gmxresources.com/-- is an independent natural gas production company headquartered in Oklahoma City, Oklahoma. GMXR has 53 producing wells in Texas & Louisiana, 24 proved developed non-producing reservoirs, 48 proved undeveloped locations and several hundred other development locations. GMXR has 9,000 net acres on the Sabine Uplift of East Texas. GMXR has 7 producing wells in New Mexico. The Company's strategy is to significantly increase production, revenues and reinvest in increasing production. GMXR's goal is to grow and build shareholder value every day. The Company reported net losses of $206.44 million in 2011, $138.29 million in 2010, and $181.08 million in 2009. GMX filed a Chapter 11 petition in its hometown (Bankr. W.D. Okla. Case No. 13-11456) on April 1, 2013, so secured lenders can buy the business in exchange for $324.3 million in first-lien notes. David A. Zdunkewicz, Esq., at Andrews Kurth LLP, represented the Debtors as counsel. GMX missed a payment due in March 2013 on $51.5 million in second- lien notes. Other principal liabilities include $48.3 million in unsecured convertible senior notes. The DIP financing provided by senior noteholders requires court approval of a sale within 75 days following approval of sale procedures. The lenders and principal senior noteholders include Chatham Asset Management LLC, GSO Capital Partners, Omega Advisors Inc. and Whitebox Advisors LLC. Looper Reed is substituted as counsel for the Official Committee of Unsecured Creditors in place of Winston & Strawn LLP, effective as of April 25, 2013. The Committee tapped Conway MacKenzie, Inc., as financial advisor. GROEB FARMS: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Groeb Farms, Inc. 10464 Bryan Highway Onsted, MI 48265 Case No.: 13-58200 Chapter 11 Petition Date: October 1, 2013 Court: United States Bankruptcy Court Eastern District of Michigan (Detroit) Judge: Hon. Walter Shapero.Detroit Debtor's Counsel: Judy A. O'Neill, Esq. 500 Woodward Avenue, Suite 2700 Detroit, MI 48226 Tel: 313-234-7113 Email: joneill@foley.com John A. Simon, Esq. 500 Woodward Avenue, Suite 2700 Detroit, MI 48226 Tel: (313) 234-7100 Email: jsimon@foley.com Estimated Assets: $50 million to $100 million Estimated Liabilities: $50 million to $100 million Debtor's List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 1. Bees Brothers LLC Trade $1,982,593 9130 S. Dadeland Blvd., Suite 1600 Miami, FL 33156 2. Little Bee Impex - $1,785,000 G.T.Road, Doraha-141421 Distt. Ludhiana (Punjab) INDIA Kashmir Apiaries Exports NH 1 Doraha, PB 141421, India Ergogenic Nutrition 133 Nanterre St, Suite #101 Danville, CA 94506 World Food Basket Inc. 2711 Centerville Road # 120 Wilmington, DE 19808 3. Sunland Trading, Inc. Trade $1,723,931 21 Locast Ave. New Canaan, CT 06840 4. JET Subdebt $1,553,353 9707 Sheeler Road Onsted, MI 49265 5. Delta Food International Inc. Trade $1,443,443 7056 Archibald Ave, Suite 102-158 Corona, CA 92880 6. Lamex Trade $1,422,657 8500 Normandale Lake Blvd. Suite 1150 Bloomington, MN 55437 7. Buoye Honey - $786,205 11575 Walnut Road Redlands, CA 92374 8. Naiman Foods Trade $659,308 Jose Ubach Y Roca 1153 Parque Industrial General Belgrano E3106GDA Parana - Entre Rios Argentina 9. Citrofruit Trade $534,497 Constitucion 405 PTE Monterrey, Nuevo Leon 64000 Mexico 10. Resurgance Corp. d/b/a - $533,803 E.F. Lane and Son (Olesanik Family Living Trust) 5100 Baggins Hill Rd. Templeton, CA 93485 11. Conex Trading Company, Inc. Trade $328,455 585C Rio Grande Drive Grand Junction, CO 81501 12. Natural Honey Importers Trade $326,286 4806 North Oaks Blvd. North Brunswick, NJ 08902 13. Vicentin Saic Sucursal Trade $311,580 Uruguay Zonamerica Ruta 8 KM 17.500 EDIF. @3/OF. 105 91600 14. Sarahimpex Trade $279,337 969 Revere Dr. Hill Side, NJ 07205 15. BWB Honey Trade $258,372 1298 Garnet Ave. Mentone, CA 92359 16. Tony Lalonde Sales Prt Trade $179,176 17. Beelogic Enterprises - $178,675 18. Unipro Foodservice, Inc. - $170,596 19. Tricorbraun - $154,084 20. Grupo Berhfer, S.A. De C.V. Trade $153,084 HERFF JONES: S&P Assigns 'B+' Corp. Credit Rating; Outlook Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned Herff Jones Inc. a corporate credit rating of 'B+'. The outlook is stable. At the same time, S&P assigned both the company's $525 million senior secured term loan and its $200 million senior secured revolver an issue-level rating of 'BB-', with a recovery rating of '2', indicating S&P's expectation for substantial (70%-90%) recovery for lenders in the event of a payment default. The 'B+' corporate credit rating reflects Herff Jones' leadership position, albeit in fragmented and competitive markets, as well as the company's aggressive financial profile. S&P views the company's business risk profile as "weak" due to its acquisitive growth strategy and integration risks related to recent large acquisitions. S&P views Herff Jones' financial risk profile as "aggressive" based on the company's lease-adjusted debt-to-EBITDA ratio, which is consistent with the indicative 4x and 5x range that S&P associates with an "aggressive" financial risk profile. Pro forma for the acquisition and debt transaction, lease-adjusted leverage is approximately 4.5x and EBITDA interest coverage is 4x, based on the 12-month period ended June 30, 2013. S&P views the company's management and governance as "fair." Herff Jones is an employee-owned firm that publishes school yearbooks and manufactures and sells school class rings along with other graduation-related merchandise, together known as "school affinity products." The company is also a leader in the niche business of cheerleading products and services, and provides instructional materials for the education market. BSN Sports is the largest distributor of sports apparel and equipment in the U.S. The acquisition of BSN has created a firm diversified across several K-12 and college niches. Despite this diversity, a major portion of the company's revenues and EBITDA are seasonal and highly dependent on the North American academic cycle. Based on S&P's forecast of 1.7% U.S. GDP growth in 2013 and 2.8% in 2014, it views the tentative state of the economy as a potential threat to the school affinity products and sports apparel businesses due to these products' discretionary nature and the possibility of recurring school budget cuts. HOSTESS BRANDS: Hilco Real Estate Completes Sale of Old HB Assets ----------------------------------------------------------------- Hilco Real Estate announced the completion of the Old HB, Inc. (f/k/a/ Hostess Brands, Inc.) asset sale which the company was awarded in December 2012. The completed transaction yielded $62.5 million for 140 properties, machinery and equipment, and thousands of trucks. The real estate, consisting of bakeries, depots, distribution buildings, and retail outlet locations spread across 34 states was sold to investment firm, Hackman Capital Partners, LLC based out of Los Angeles. Hilco Real Estate was the exclusive national disposition agent for the sale. Greg Apter, President of Hilco Real Estate, said the company received hundreds of bids for individual properties. "We conducted a pre-auction process that allowed individual bidders to compete on an even plain with interested bulk bidders. After comparing the individual bids against the portfolio bids, including taking into consideration holding costs and likely residual real estate values, Hilco and Old HB, Inc. concluded that a bulk sale, inclusive of real estate and equipment, would yield the best result for our client." The 140 properties Hackman purchased include former bakery plants in Los Angeles and Oakland, California, Wayne, N.J., St. Louis, Philadelphia, Cincinnati and Defiance, Ohio and specifically include 3,400 trucks and delivery vans, as well as distribution and retail buildings that once sold the trademark Twinkies and Wonder Bread products. "Hilco Real Estate used a highly innovative and effective marketing campaign to successfully close this deal," said Joel Schneider, the team lead for the sale. "Within approximately 90-days, Hilco Real Estate attracted over 6,000 prospective buyers which led to over 400 offers which is nearly unheard of in this short amount of time." The national and local marketing campaign consisted of print advertising, web site listings, electronic media, public relations and signage, all of which steered potential buyers to a dedicated Hostess real estate website and call center staffed by the Hilco sales team. This single point of entry drove all inquiries directly to Hilco wherein Hilco and its local broker network could communicate with and track all prospective bidders. Hilco utilized an electronic data room to quickly and securely disseminate property due diligence information to potential buyers. Key highlights of this campaign include: -- Over 30,000 downloads of due diligence documentation -- Over 6,000 signed confidentiality agreements -- 430 + offers received prior to the bid deadline -- 400+ on-site inspections "Hilco Real Estate was able to pull together a rare, yet very attractive opportunity to acquire quality real estate and equipment in one shot," said Michael Hackman, Chief Executive Officer of Hackman Capital Partners. "We were impressed with the Hilco Real Estate Team and their focus on both the commitment to their client, as well as to our needs as we moved through their sale process." As Old HB's exclusive real estate advisor, Hilco was involved early on in the sale process, valuing all 260 owned locations. Approximately 120 of the properties were purchased by Metropoulos & Co./Apollo Global Management LLC, Flowers Foods, and U.S. Bakery, Inc. as part of their respective combined brand/asset purchases of specific Old HB brands, including Wonder Bread and Twinkies. The company, formerly known as Hostess Brands Inc., announced last year that it was shutting down its business and selling all of its assets in a bankruptcy and liquidation. In December 2012, Hilco Real Estate was appointed as the exclusive real estate advisor to Old HB, Inc. with approval from the United States Bankruptcy Court. About Hostess Brands Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known for iconic brands such as Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution centers and 570 outlets in 49 states. Hostess filed for Chapter 11 bankruptcy protection early morning on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through 12-22056) in White Plains, New York. Hostess Brands disclosed assets of $982 million and liabilities of $1.43 billion as of the Chapter 11 filing. The bankruptcy filing was made two years after predecessors Interstate Bakeries Corp. and its affiliates emerged from bankruptcy (Bankr. W.D. Mo. Case No. 04-45814). In the new Chapter 11 case, Hostess has hired Jones Day as bankruptcy counsel; Stinson Morrison Hecker LLP as general corporate counsel and conflicts counsel; Perella Weinberg Partners LP as investment bankers, FTI Consulting, Inc. to provide an interim treasurer and additional personnel for the Debtors, and Kurtzman Carson Consultants LLC as administrative agent. Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry Wilson, the head of turnaround and restructuring firm MAEVA Advisors, are representing the Teamsters union. Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and Bakery & Confectionery Union & Industry International Pension Fund are Jeffrey R. Freund, Esq., at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright & Jaworski L.L.P. The official committee of unsecured creditors selected New York law firm Kramer Levin Naftalis & Frankel LLP as its counsel. Tom Mayer and Ken Eckstein head the legal team for the committee. Hostess Brands in mid-November 2012 opted to pursue the orderly wind down of its business and sale of its assets after the Bakery, Confectionery, Tobacco and Grain Millers Union (BCTGM) commenced a nationwide strike. The Debtor failed to reach an agreement with BCTGM on contract changes. Hostess Brands sold its businesses and most of the plants to five different buyers for an aggregate of $860 million. Hostess still has some plants, depots and other facilities the buyers didn't acquire. The bankruptcy estate has changed its name to Old HB Inc. HOWARD DALE: Court Puts Injunction, Receivership on Properties -------------------------------------------------------------- Jack Barnwell at RIDGECRESTCA.COM reports that a Kern County Superior Court judge granted a request by the city of Ridgecrest to place a temporary injunction on the properties owned by William Dale Howard. The report notes that according to records, the court also appointed a receiver for Howard's properties, a move that the city has fought to obtain in a civil case that has lasted just over a year. According to the report, Ridgecrest Police Capt. Paul Wheeler confirmed the ruling on Sept. 26. "The judge agreed with the city of Ridgecrest that Mr. Howard's properties are dangerous, unsafe and a public nuisance, and appointed a receiver over the properties," the report quoted Mr. Wheeler as saying. The report relates that however, Mr. Wheeler said that the case is still not over. A jury trial is set for April 22, 2014 at the Kern County Superior Court, Metropolitan Division in Bakersfield. The report relays that Mr. Howard said on Sept. 27 that the ruling made by the judge was dumbfounding, disappointing and crushing. "It's really shocking that I have never been afforded a hearing based on the merits of the case, and yet they are successfully taking away the properties and destroying me. . . . On its face, it seems to be unconstitutional," Mr. Howard said, the report discloses. The report relays that Mr. Howard said that the legal battles have cost him more than US$280,000 to date, and he expressed doubt that he would be able to afford legal counsel in the future. The report notes that Mr. Howard added that it appeared it was never the city's intention to allow Howard the ability for a jury trial before a receivership act has been taken. The report relates that "The judge accepted outright lies from the captain of the police department," Mr. Howard said. Mr. Howard said said that the sea cargo containers placed on his properties had all been done in one move, but that Wheeler's testimony told a different story, the report says. IMPLANT SCIENCES: Incurs $27.3 Million Net Loss in Fiscal 2013 -------------------------------------------------------------- Implant Sciences Corporation filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $27.35 million on $12.01 million of revenues for the year ended June 30, 2013, as compared with a net loss of $14.63 million on $3.40 million of revenues during the prior fiscal year. As of June 30, 2013, the Company had $5.09 million in total assets, $49.64 million in total liabilities and a $44.54 million total stockholders' deficit. Marcum LLP, in Boston, Massachusetts, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2013. The independent auditors noted the Company has had recurring net losses and continues to experience negative cash flows from operations. As of Sept. 23, 2013, the Company's principal obligation to its primary lender was approximately $42,297,000 and accrued interest of approximately $6,562,000. The Company is required to repay all borrowings and accrued interest to this lender on March 31, 2014. These conditions raise substantial doubt about its ability to continue as a going concern. Bankruptcy Warning "Our ability to comply with our debt covenants in the future depends on our ability to generate sufficient sales and to control expenses, and will require that we seek additional capital through private financing sources. There can be no assurances that we will achieve our forecasted financial results or that we will be able to raise additional capital to operate our business. Any such failure would have a material adverse impact on our liquidity and financial condition and could force us to curtail or discontinue operations entirely. Further, upon the occurrence of an event of default under certain provisions of our agreements with DMRJ, we could be required to pay default rate interest equal to the lesser of 2.5% per month and the maximum applicable legal rate per annum on the outstanding principal balance outstanding. The failure to refinance or otherwise negotiate further extensions of our obligations to DMRJ would have a material adverse impact on our liquidity and financial condition and could force us to curtail or discontinue operations entirely and/or file for protection under bankruptcy laws," the Company said in the Report. A copy of the Form 10-K is available for free at: http://is.gd/u9Jhma About Implant Sciences Implant Sciences Corporation (OBB: IMSC.OB) -- http://www.implantsciences.com/-- develops, manufactures and sells sensors and systems for the security, safety and defense (SS&D) industries. INFINIA CORP: Seeks Authority to Obtain $6-Mil. in DIP Loans ------------------------------------------------------------ Infinia Corporation and Powerplay Solar I, LLC, seek authority from the U.S. Bankruptcy Court for the District of Utah, Central Division, to obtain postpetition debtor-in-possession financing from Atlas Global Investment Management LLP, as Administrative Agent and Collateral Agent for various Lenders. The Lenders have agreed to make available to the Debtors a total of approximately $6,000,000, the actual amount of which reflects the payoff of principal and accrued interest and fees the Debtotrs' Prepetition Debt, plus another $3,000,000 of additional funding. The amount borrowed is to be treated as a super-priority claim secured by a first position lien against substantially all property of the Debtors' estates other than Avoidance Actions (except for solely the proceeds of Avoidance Actions brought pursuant to Section 549 of the Bankruptcy Code to recover any post-Petition Date transfer of Collateral), and subject to a carve-out for (a) Bankruptcy Court and United States Trustee fees, (b) all Court approved fees of the Debtors' professionals prior to a Termination Date, (c) up to $50,000 of allowed fees of the Debtors' professionals after the Termination Date and (d) cash in the amount of $100,000, pursuant to Sections 364(c) and (d). The entire unpaid principal amount of advances under the DIP Financing Agreement, along with all accrued and unpaid interest, fees and charges, must be paid in full by the Debtors on the Term Loan Maturity Date, which is the earlier of: (i) December 2, 2013, (ii) acceleration of any Obligations under the DIP Financing Agreement or (iii) the Termination Date. Interest on the outstanding balance of the amounts advanced under the DIP Financing Agreement accrues from the date that the advance is made until it is repaid at the per annum rate of 5%, with a Post-Default Rate of 7% per annum. George Hofmann, Esq., Steven C. Strong, Esq. -- scs@pkhlawyers.com -- and Victor P. Copeland, Esq., at Parsons Kinghorn Harris, A Professional Corporation, in Salt Lake City, Utah, serve as proposed attorneys for Infinia Corporation. Troy J. Aramburu, Esq. -- taramburu@swlaw.com -- and Jeff D. Tuttle, Esq. -- jtuttle@swlaw.com -- at Snell & Wilmer L.L.P., in Salt Lake City, Utah, serve as proposed attorneys for PowerPlay Solar. About Infinia Corp. Infinia Corp. and subsidiary Powerplay Solar I LLC, the owners of a solar generation project in Yuma, Arizona, filed Chapter 11 cases (Bankr. D. Utah Case No. 13-30688) on Sept. 17, 2013. The Debtors estimated assets and debts of at least $10 million. The Debtors are represented by George B. Hofmann, Esq., at PARSONS KINGHORN & HARRIS, P.C., in Salt Lake City, Utah. INFINIA CORP: Needs to Use Cash to Continue Operations ------------------------------------------------------ Infinia Corporation and Powerplay Solar I, LLC, seek authority from the U.S. Bankruptcy Court for the District of Utah, Central Division, to use of cash collateral securing their indebtedness from Atlas Global Asset Holdings, LP, and the DIP Secured Parties. As a result of the grant of the New DIP Liens, and the use of Cash Collateral, the Prepetition Lender Party will be granted adequate protection pursuant to Sections 361, 362, 363, and 364 of the Bankruptcy Code for any diminution in value resulting from the automatic stay or Debtors' use, sale or lease of the Prepetition Lender Party's Collateral (including Cash Collateral) during the bankruptcy cases. George Hofmann, Esq., Steven C. Strong, Esq., and Victor P. Copeland, Esq., at Parsons Kinghorn Harris, A Professional Corporation, in Salt Lake City, Utah, serve as proposed attorneys for Infinia Corporation. Troy J. Aramburu, Esq., and Jeff D. Tuttle, Esq., at Snell & Wilmer L.L.P., in Salt Lake City, Utah, serve as proposed attorneys for PowerPlay Solar. About Infinia Corp. Infinia Corp. and subsidiary Powerplay Solar I LLC, the owners of a solar generation project in Yuma, Arizona, filed Chapter 11 cases (Bankr. D. Utah Case No. 13-30688) on Sept. 17, 2013. The Debtors estimated assets and debts of at least $10 million. The Debtors are represented by George B. Hofmann, Esq., at PARSONS KINGHORN & HARRIS, P.C., in Salt Lake City, Utah. INFINIA CORP: Seeks to Sell Assets to Lender -------------------------------------------- Infinia Corporation and Powerplay Solar I, LLC, seek authority from the U.S. Bankruptcy Court for the District of Utah, Central Division, to sell substantially all of their assets to Atlas Global Investment Management LLP. Under the Atlas asset purchase agreement, Atlas has offered to purchase the assets for a credit bid equal to the amount of the obligations then outstanding under the DIP Credit Agreement and the Prepetition Credit Agreement, plus the assumption of certain liabilities of the Debtors. Further, the Assets will be sold free and clear of all liens, claims, interests and all other encumbrances of any kind or nature to the fullext extent possible under Section 363(f) of the Bankruptcy Code. According to George Hofmann, Esq., at Parsons Kinghorn Harris, A Professional Corporation, in Salt Lake City, Utah, the Atlas Agreement represents the highest and best purchase offer -- indeed, the only purchase offer -- that the Debtors have received to date for the assets, and the best available opportunity to maximize value for all stakeholders. Mr. Hoffman says that among the features of the Atlas Agreement that are particularly beneficial to unsecured creditors and other stakeholders of the Debtors are: (a) a provision permitting the Debtors to retain a "Cash Carve-Out" of $150,000 to be used for certain post-closing administrative expenses and to provide a distribution of at least $100,000 to the pool of unsecured creditors; (b) the assumption and payment of the Assumed Liabilities so that those liabilities will not dilute the pool of general unsecured creditor claims; (c) the retention of certain causes of action, including avoidance actions, by the Debtors' estates for the benefit of other stakeholders; and (d) the willingness of Atlas to serve as the "stalking-horse" bidder subject to higher or better offers without requiring any formal bid protections or a break-up fee that otherwise could have a chilling effect on the bidding and auction process. The Debtors propose that a Qualified Bidder desiring to make a Qualified Bid must deliver the bid requirements on or before Oct. 31, 2013. If any qualified bids are timely received, an auction will be held on Nov. 1. The Debtors have reserved a hearing to be held on Oct. 7, at 11:30 a.m. The Debtors also request that, if the bid procedures are approved, the Court hold a hearing to approve any sale of the assets on Nov. 4. Pursuant to the terms of the DIP Loan, the Debtors intend to close the sale by no later than Nov. 16. Steven C. Strong, Esq., and Victor P. Copeland, Esq., at Parsons Kinghorn Harris, A Professional Corporation, in Salt Lake City, Utah, also serve as proposed attorneys for Infinia Corporation. Troy J. Aramburu, Esq., and Jeff D. Tuttle, Esq., at Snell & Wilmer L.L.P., in Salt Lake City, Utah, serve as proposed attorneys for PowerPlay Solar. About Infinia Corp. Infinia Corp. and subsidiary Powerplay Solar I LLC, the owners of a solar generation project in Yuma, Arizona, filed Chapter 11 cases (Bankr. D. Utah Case No. 13-30688) on Sept. 17, 2013. The Debtors estimated assets and debts of at least $10 million. The Debtors are represented by George B. Hofmann, Esq., at PARSONS KINGHORN & HARRIS, P.C., in Salt Lake City, Utah. INFINIA CORP: Employs Parsons Kinghorn as Bankruptcy Counsel ------------------------------------------------------------ Infinia Corporation seeks authority from the U.S. Bankruptcy Court for the District of Utah, Central Division, to employ Parsons Kinghorn Harris, P.C., as its general bankruptcy counsel to be paid the following hourly rates: Shareholders: $195-$400 Associates: $150-$185 Paralegals: $75-125 The firm will also be reimbursed for any necessary out-of-pocket expenses. George Hoffman, Esq., a member of Parsons Kinghorn Harris, in Salt Lake City, Utah, assures the Court that the 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. PKH presently holds a retainer of $49,597 from the Debtor. About Infinia Corp. Infinia Corp. and subsidiary Powerplay Solar I LLC, the owners of a solar generation project in Yuma, Arizona, filed Chapter 11 cases (Bankr. D. Utah Case No. 13-30688) on Sept. 17, 2013. The Debtors estimated assets and debts of at least $10 million. The Debtors are represented by George B. Hofmann, Esq., at PARSONS KINGHORN & HARRIS, P.C., in Salt Lake City, Utah. INFINIA CORP: Taps Rocky Mountain Advisory as Accountants --------------------------------------------------------- Infinia Corporation seeks authority from the U.S. Bankruptcy Court for the District of Utah, Central Division, to employ Gil A. Miller and Rocky Mountain Advisory, LLC, as its accountants and financial advisors. RMA will be paid its currently hourly rates, which range between $125 and $350. The firm will also be reimbursed for any necessary out-of-pocket expenses. Gil A. Miller, senior managing director of Rocky Mountain Advisory LLC, 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. RMA presently holds a retainer of $19,378, received from the Debtor. About Infinia Corp. Infinia Corp. and subsidiary Powerplay Solar I LLC, the owners of a solar generation project in Yuma, Arizona, filed Chapter 11 cases (Bankr. D. Utah Case No. 13-30688) on Sept. 17, 2013. The Debtors estimated assets and debts of at least $10 million. The Debtors are represented by George B. Hofmann, Esq., at PARSONS KINGHORN & HARRIS, P.C., in Salt Lake City, Utah. INFINIA CORP: Taps Hamilton Clark as Financial Advisor & Banker --------------------------------------------------------------- Infinia Corporation seeks authority from the U.S. Bankruptcy Court for the District of Utah, Central Division, to employ Hamilton Clark Sustainable Capital, Inc., f/k/a Hamilton Clark Securities Company, as its financial advisor and investment banker. Hamilton Clark will charge the Debtor a flat monthly fee of $45,000, and a deferred fee of 6%. The deferred fee becomes payable if a business transaction is closed (i) during the term of Hamilton Clark's engagement with any party or (ii) within 12 months following the effective date of the termination of the agreement with a party included on Hamilton Clark's list or with a party that had any contact with the Debtor during Hamilton Clark's engagement but was not identified to Hamilton Clark. The deferred fee will be the greater of $200,000 or all monthly fees previously paid if the consideration for the business transaction is provided by an insider of the Debtor or an affiliate of that insider, and a minimum of $300,000 if the consideration for the business transaction is provided by an unrelated third party. In addition to the fees, Hamilton Clark will be reimbursed for any necessary out-of-pocket expenses. John J. McKenna, chairman and CEO of Hamilton Clark, 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. According to Mr. McKenna, at the end of August 2013, the firm sent the Debtor an invoice for roughly $20,120 for prepetition work but the firm agreed to waive its claim for the prepetition amount in anticipation of the postpetition engagement. About Infinia Corp. Infinia Corp. and subsidiary Powerplay Solar I LLC, the owners of a solar generation project in Yuma, Arizona, filed Chapter 11 cases (Bankr. D. Utah Case No. 13-30688) on Sept. 17, 2013. The Debtors estimated assets and debts of at least $10 million. The Debtors are represented by George B. Hofmann, Esq., at PARSONS KINGHORN & HARRIS, P.C., in Salt Lake City, Utah. INFINIA CORP: Hires Fenwick & West as Special Counsel ----------------------------------------------------- Infinia Corporation seeks authority from the U.S. Bankruptcy Court for the District of Utah, Central Division, to employ Fenwick & West LLP as special counsel with respect to corporate, transactional, and securities issues that may arise in the Chapter 11 case. The current hourly rates for the Fenwick attorneys primarily involved in advising and representing the Debtor are as follows: Alan C. Smith, Esq. -- acsmith@fenwick.com $735 Andrew T. Albertson, Esq. -- aalbertson@fenwick.com $565 The firm will also be reimbursed for any necessary out-of-pocket expenses incurred. Mr. Smith assures the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. The Debtor paid to Fenwick a $25,000 retainer on or about Sept. 3, 2013. The Debtor has billed $21,906 for the work provided by the firm as special counsel in advising the Debtor with respect to its restructuring efforts, and thus, $3,093 of the $25,000 retainer remains. According to Mr. Smith, the Debtor currently owes the firm a prepetition debt of $131,467 for services rendered prior to the Petition Date that are unrelated to the firm's service and retention as special counsel. Mr. Smith also discloses that Fenwick holds 568,368 shares of the Debtor's common stock, which represents less than one-fifth of one percent of the Debtor's outstanding shares of common stock. About Infinia Corp. Infinia Corp. and subsidiary Powerplay Solar I LLC, the owners of a solar generation project in Yuma, Arizona, filed Chapter 11 cases (Bankr. D. Utah Case No. 13-30688) on Sept. 17, 2013. The Debtors estimated assets and debts of at least $10 million. The Debtors are represented by George B. Hofmann, Esq., at PARSONS KINGHORN & HARRIS, P.C., in Salt Lake City, Utah. ISAACSON STEEL: Files Plan to Incorporate Global Settlement ----------------------------------------------------------- Isaacson Steel, Inc., and Isaacson Structural Steel, Inc., filed with the U.S. Bankruptcy Court for the District of New Hampshire a first amended joint plan of reorganization and accompanying disclosure statement. The Amended Plan is built upon the global settlement agreement entered into among the Debtors, the Official Committee of Unsecured Creditors of Isaacson Structural Steel, Inc., the New Hampshire Business Finance Authority, Passumpsic Savings Bank and its participants, Woodville Guaranty Savings Bank and Ledyard National Bank, and Turner Construction Company, Inc. A liquidating trust will be established to be funded by all of the Debtors' cash except cash to be retained to wind up the Debtors' affairs, D&O and E&O claims, and proceeds from estate actions. All classes of claims under the Plan will be impaired. The Debtors have requested that the Bankruptcy Court schedule a combined hearing on the adequacy of this Disclosure and the Confirmation of the Plan for October 23, 2013 and to shorten the required notice to all creditors to the extent reasonably necessary to accomplish that goal. If the Plan is confirmed at or shortly after that hearing, the Effective Date will be in late November. The Debtors also requested that the Court schedule the deadline for parties to file objections to the Disclosure Statement and confirmation of the Plan for Oct. 21. A full-text copy of the Plan and Disclosure Statement overview is available for free at http://bankrupt.com/misc/ISAACSONds0925.pdf William S. Gannon, Esq., at William S. Gannon PLLC, in Manchester New Hampshire, serves as attorney for the Debtors. About Isaacson Structural Steel, Inc. Based in Berlin, New Hampshire, Isaacson Structural Steel, Inc., and affiliate Isaacson Steel, Inc., filed separate Chapter 11 bankruptcy petitions (Bankr. D. N.H. Case Nos. 11-12416 and 11-12415) on June 22, 2011. Isaacson Structural Steel estimated both assets and debts of $10 million to $50 million. Isaacson Steel estimated assets and debts of $1 million to $10 million. The petitions were signed by Arnold P. Hanson, Jr., president. Bankruptcy Judge J. Michael Deasy presides over the cases. William S. Gannon, Esq., Esq., at William S. Gannon PLLC, in Manchester, New Hampshire, represents the Debtors as counsel. The Debtors retained General Capital Partners, LLC to act as their investment banker. An official committee of unsecured creditors has been appointed in Isaacson Structural Steel's case. Daniel W. Sklar, Esq., at Nixon Peabody LLP, in Manchester, represents the Committee. Mesirow Financial Consultants also advises the Committee. New Hampshire Business Finance Authority is represented by: George E. Marcus, Esq. MARCUS, CLEGG & MISTRETTA One Canal Plaza, Suite 600 Portland, Maine 04101 Turner Construction, Inc., is represented by: D. Ethan Jeffery, Esq. MURPHY & KING, P.C. One Beacon Street, 21st Floor Boston, MA 02108 Passumpsic Savings Bank is represented by: Daniel P. Luker, Esq. PRETI FLAHERTY PACHIOS & BELIVEAU, PLLP 57 North Main Street Concord, NH 03302-1318 J.C. PENNEY: Fitch Cuts Issuer Default Ratings to 'CCC' ------------------------------------------------------- Fitch Ratings has downgraded the Issuer Default Ratings (IDRs) on J.C. Penney Co., Inc. and J.C. Penney Corporation, Inc. to 'CCC' from 'B-'. Key Rating Drivers Higher than expected cash burn in 2013: The rating downgrades reflect higher than expected cash burn in 2013 and Fitch's concern that the projected FCF shortfall in 2014 will require additional external funding, even with $3-plus billion liquidity injection so far this year (and a $850 million draw on its revolver). Fitch now projects cash burn of $2.8 billion - $3.0 billion in 2013, a billion dollars higher than its mid-May projections. This reflects EBITDA of negative $1 billion to negative $1.2 billion (versus prior projections of negative $0.5 billion) and higher than expected working capital use in excess of $0.5 billion. The revised EBITDA reflects weaker-than-expected comp store sales (comps), particularly in the new home categories and back-to- school categories, and the subsequent markdown of excess inventory leading to significant gross margin contraction. The higher working capital use reflect the significant inventory build-up related to the new home departments and upcoming launches such as Disney, as well as the buildup related to bringing back some of the private label brands (St. John's Bay, Ambrielle, Cooks) and basics that were significantly cut back last year under Ron Johnson. Fitch believes the risk for further inventory markdown remains through the holiday season as inventory buys remain aggressive and sales could continue to disappoint. Equity infusion offsets higher cash burn: With the additional liquidity injection of approximately $800 million (or approximately $900 million if the underwriter exercises its option in full) from the recent equity offering on top of the $2.25 billion secured term loan issued in May, Fitch expects total year end liquidity to be around $2.0 to $2.1 billion (with $300 million available on its $1.85 billion credit facility assuming no change in the current $850 million outstanding and $500 million in letters of credit), allaying near-term concerns from the vendor community. However, additional external funding may be needed in 2014. Beyond 2013, Fitch estimates that the company will have to generate a minimum of $750 million-$875 million in EBITDA to fund ongoing capex in the $400 million to $500 million range and cash interest expense of $360 million-$375 million. This would require the company to return sales to about $13.4 billion to $13.6 billion - 14% to 16% above 2013 projected levels - and realize gross margins in the 39%-40% range, assuming a relatively flat cost structure. This appears highly ambitious given the significant execution risk. While the reintroduction of coupons and critical private brands such as St. John's Bay in major categories should stem the significant pace of decline in the business that occurred in 2012 and first half 2013 (top-line decline of 24.8% and 14.2%, respectively), the upfront investments in inventory, capex and promotional activity are significant and we have yet to see positive traction. Therefore, FCF is still expected to be materially negative in 2014. Cash burn could be as high as $1 billion next year if EBITDA is still modestly negative which could necessitate additional external funding for the 2014 holiday season. Peak seasonal working capital funding needs (from year end levels which are typically used as a gauge of trough working capital levels) are estimated to be $850 million to $1 billion. The speed and ability of the company to return to positive comps growth and sell at more normalized gross margins (in the 38% to 40% range assuming inventory buys are aligned with sales expectations) will ultimately determine additional funding requirements in 2014 and beyond. Issue Ratings Based On Recovery Analysis For issuers with IDRs at 'B+' and below, Fitch performs a recovery analysis for each class of obligations of the issuer. The issue ratings are derived from the IDR and the relevant Recovery Rating and notching, based on Fitch's recovery analysis, that places a liquidation value under a distressed scenario of close to $6 billion as of August 3, 2013 for J.C. Penney. J.C. Penney's $1.85 billion senior secured asset-based credit facility (ABL) that matures in April 2016 has been downgraded to 'B/RR1' from 'BB-/RR1'. RR1 indicates outstanding recovery prospects (91% - 100%) in a distressed scenario. The facility is secured by inventory and receivables with borrowings subject to a borrowing base. The company is subject to a springing covenant of maintaining fixed-charge coverage of 1.0x if the availability falls below the greater of (i) 10% of line cap (the lesser of total commitment or borrowing base) and (ii) $125 million. As of the end of the second quarter of 2013, the company had $497 million available for future borrowing (after taking into account $850 million in borrowings and $503 million in LOCs), of which $312 million is currently accessible due to the limitation of the fixed charge coverage ratio. The $2.25 billion term loan facility due May 2018 has also been downgraded to 'B/RR1' from 'BB-/RR1'. The term loan facility is secured by (a) first lien mortgages on owned and ground leased stores (subject to certain restrictions primarily related to Principal Property owned by J.C. Penney Corporation, Inc.), the company's headquarters and related land, and nine owned distribution centers; (b) a first lien on intellectual property (trademarks including J.C. Penney, Liz Claiborne, St. John's Bay, and Arizona), machinery, and equipment; (c) a stock pledge of J.C. Penney Corporation and all of its material subsidiaries and all intercompany debt; and (d) second lien on inventory and accounts receivable that back the $1.85 billion ABL facility. The term loan financing that was put in place in May maxed out the incremental amount of first- and second-lien debt J.C. Penney can incur under its credit facility, although it could try to tap into the $400 million accordion feature on its revolver, and could issue unsecured, subordinated debt, convertible notes or preferred equity. The $2.6 billion of senior unsecured notes have been downgraded to 'CCC/RR4' from 'B-/RR4', indicating average recovery prospects (31% - 50%). Rating Sensitivities A Negative Rating action could occur if comps and margin trends continue to erode, indicating J.C Penney is not stabilizing its core business, leading to concerns around the company's liquidity position. A Positive Rating action could occur if the company sufficient to cover its projected capex and interest expense at a total of $750 million to $875 million. Fitch has downgraded the ratings on J.C. Penney as follows: J.C. Penney Co., Inc. -- IDR to 'CCC' from 'B-'. J.C. Penney Corporation, Inc. -- IDR to 'CCC' from 'B-'; -- $1.85 billion senior secured bank credit facility to 'B/RR1' from 'BB-/RR1'; -- $2.25 billion senior secured term loan to 'B/RR1' from 'BB-/RR1'; and -- $2.6 billion senior unsecured notes and debentures to 'CCC/RR4' from 'B-/RR4'. JEFFREY A PROSSER: Dist. Ct. Dismisses FirstBank Foreclosure Suit ----------------------------------------------------------------- Chief District Judge Wilma A. Lewis granted, without prejudice, a motion to dismiss for lack of jurisdiction in a foreclosure action relating to Unit 222 of Stage 2A in Schoomer Bay Condominium. The action is FIRSTBANK PUERTO RICO, Plaintiff, v. AMJ, INC., and JAMES P. CARROLL as CHAPER 7 TRUSTEE OF THE ESTATE OF JEFFERY J. PROSSER, and SCHOONER BAY CONDOMINIUM ASSOCIATION, Defendants, Civil Action No. 2011-063 (D. Virgin Islands). A copy of Judge Lewis' Sept. 4, 2013 Memorandum Opinion is available at http://is.gd/GCNUAAfrom Leagle.com. The Motion to Dismiss was filed by AMJ. The District Court finds that FirstBank has not properly alleged complete diversity of citizenship with respect to Carroll/Prosser, and therefore dismissal under Fed.R.Civ.P. Rule 12(b)(1) for lack of subject matter jurisdiction is proper. Because the Court will grant FirstBank's request for leave to amend its Complaint, the dismissal will be without prejudice, the judge says. FirstBank Puerto Rico is represented by Justin K. Holcombe, Esq. -- jholcombe@dtflaw.com -- of Dudley, Topper and Feuerzeig, LLP, in, St. Thomas, U.S. Virgin Islands. AMJ Inc. is represented by Lawrence H. Schoenbach, Esq. -- schoenbachlawoffice@att.net -- of New York, NY. James P. Carroll, Chapter 7 Trustee of the Estate of Jeffrey J. Prosser, is represented by Bernard C. Pattie, Esq., of 1244 Queen Cross Street, Suite 5, in Christiansted, VI 00820-4932. Schooner Bay Condominium Association is represented by Robert. A. Waldman, Esq. -- rlwaldman@Venable.com -- of Venable LLP. K-V PHARMACEUTICAL: Appoints Joe Mahady as Chairman of the Board ---------------------------------------------------------------- K-V Pharmaceutical Company on Oct. 3 announced the appointment of Joseph M. Mahady as Chairman of its Board of Directors. Previously, Mr. Mahady served as Senior Vice President of Wyeth, LLC, and President of Wyeth Pharmaceuticals, Inc., where he led the company's $20 billion global pharmaceutical business. During his tenure, he oversaw the successful launch of more than 30 products in multiple therapeutic areas. Mr. Mahady has held various board positions, including Immunex, Albemarle, EKR Therapeutics, Discovery Labs and Cortendo AB. "Joe's extensive knowledge and expertise in women's healthcare will play a critical role in establishing a renewed focus at the company," said Greg Divis, CEO of KV. "We are fortunate to have Joe's leadership as we continue to grow our business and deliver high quality women's healthcare products." "I am excited to be joining KV at this particular time," said Mr. Mahady. "There is perhaps no more exciting time in a company's evolution than when it moves beyond adversity and applies the knowledge gained from that experience to strengthen the emerging company. KV is in that position today." Last month, KV announced it had emerged from Chapter 11 bankruptcy. The appointment of Mr. Mahady as Chairman is an important part of the company's effort to add depth to its Board of Directors and build upon its portfolio of FDA-approved women's healthcare products. KV will be announcing additional new members of its Board of Directors in the coming weeks. About K-V Pharmaceutical K-V Pharmaceutical Company (NYSE: KVa/KVb) -- http://www.kvpharmaceutical.com/-- is a fully integrated specialty pharmaceutical company that develops, manufactures, markets, and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products. The Company markets its technology distinguished products through ETHEX Corporation, a subsidiary that competes with branded products, and Ther-Rx Corporation, the company's branded drug subsidiary. K-V Pharmaceutical Company and certain domestic subsidiaries on Aug. 4, 2012, filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-13346, under K-V Discovery Solutions Inc.) to restructure their financial obligations. K-V employed Willkie Farr & Gallagher LLP as bankruptcy counsel, Williams & Connolly LLP as special litigation counsel, and SNR Denton as special litigation counsel. In addition, K-V tapped Jefferies & Co., Inc., as financial advisor and investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. The U.S. Trustee appointed five members to serve in the Official Committee of Unsecured Creditors. Kristopher M. Hansen, Esq., Erez E. Gilad, Esq., and Matthew G. Garofalo, Esq., at Stroock & Stroock & Lavan LLP, represent the Creditors Committee. Weil, Gotshal & Manges LLP's Robert J. Lemons, Esq., and Lori R. Fife, Esq., represent an Ad Hoc Senior Noteholders Group. KEOWEE FALLS: Oct. 24 Hearing on Final Decree Closing Ch.11 Case ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of South Carolina will convene a hearing on Oct. 24, 2013, at 9:30 a.m., to consider Keowee Falls Investment Group, LLC's motion for a final decree closing the Chapter 11 case. R. Geoffrey Levy, Esq., at Levy Law Firm, on behalf of the Debtor, has filed a report of substantial consummation of the Plan of Reorganization, which was confirmed on March 15, 2013. Mr. Levy also told the Court that the estate is fully administered. As reported in the Troubled Company Reporter on March 22, 2013, according to the confirmed Plan, the Debtor's remaining assets comprise of $165,000 in cash, a potential recovery on a $16 million unsecured claim in Cliffs Club's Chapter 11 case, and recovery from loans to related entities or parties. With the secured claims paid in full from the approved sale of its assets, unsecured creditors will be paid a pro rata share of the net cash proceeds. Equity holders will receive the surplus from any residual recoveries after unsecured creditors have been paid in full. About Keowee Falls Travelers Rest, South Carolina-based Keowee Falls Investment Group, LLC filed a Chapter 11 petition (Bankr. D. S.C. Case No. 12-01399) in Spartanburg, South Carolina, on March 2, 2012. Bankruptcy Judge John E. Waites presides over the case. R. Geoffrey Levy, Esq., at Levy Law Firm, LLC assists the Debtor in its restructuring effort. Keowee Falls estimated assets at $100 million to $500 million and debts at $10 million to $50 million. In its schedules, the Debtor disclosed $32,671,753 in assets and $19,913,844 in liabilities as of the Chapter 11 filing. The Debtor owned The Cliffs at Keowee Falls South before giving up the assets to lenders in exchange for $17 million of debt. KEYUAN PETROCHEMICALS: Incurs $497,000 Net Loss in Second Quarter ----------------------------------------------------------------- Keyuan Petrochemicals, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $497,000 on $94.3 million of sales for the three months ended June 30, 2013, compared with net income of $1.1 million on $184.4 million of sales for the same period last year. The Company reported net income of $2.4 million on $303.8 million of sales for the six months ended June 30, 2013, compared with net income of $2.9 million on $367.8 million of sales for the corresponding period of 2012. The Company's balance sheet at June 30, 2013, showed $826.2 million in total assets, $739.2 million in total current liabilities, Series B convertible preferred stock of $16.5 million, and stockholders' equity of $70.5 million. "The Company reported net income and cash flows used in operations of approximately $2.42 million and $86.8 million, respectively for the six months ended June 30, 2013, and a net loss and cash flows used in operations of approximately $5.85 million and $7.1 million, respectively for the year ended Dec. 31, 2012. At June 30, 2013, and Dec. 31, 2012, the Company had a working capital deficit of approximately $180 million and $159 million, respectively. These factors raise substantial doubt about the Company's ability to continue as a going concern." A copy of the Form 10-Q is available at http://is.gd/aYJ1I4 Headquartered in Ningbo, Zhejiang Province, P.R. China, Keyuan Petrochemicals, Inc., is engaged in the manufacture and sale of petrochemical and rubber products in the PRC. LANDAUER HEALTHCARE: Court Extends Deadline to Use Cash Collateral ------------------------------------------------------------------ The U.S. Bankruptcy Court granted Landauer Healthcare Holdings, Inc.'s request to extend the deadline to use cash collateral. Pursuant to the Court's interim order authorizing the Debtor's use of cash collateral, entered on Aug. 20, the Debtor's right to use cash collateral terminates immediately on the earlier of Sept. 14, 2013; the expiration of the approved budget; the date of a final hearing on the Debtor's request to use cash collateral; the date any material provision of the court's Interim Order will, for any reason, cease to be valid and binding or the Debtors will assert in any pleading filed with the Court; the date an application is filed by the Debtor for approval of any superpriority claim or any lien that is pari passu with or senior to the liens granted to the lenders pursuant to the Interim Order without prior written consent of the lenders; if the Court has not entered an order approving bidding procedures governing the sale of the Debtor's assets on Sept. 5; immediately upon entry of any bidding procedures order which does not contain a provision that is satisfactory to the lenders validating and confirming the lenders' credit bidding rights; the date the Chapter 11 case is converted to a Chapter 7 case, or a trustee or an examiner which expanded powers is appointed or elected; the date of commencement of any action by the Debtor against the lenders with respect to the prepetition obligations or prepetition liens; or the withdrawal, amendment, modification of, or filing of a pleading by the Debtor seeking to withdraw, amend or modify the proposed sale process and bidding procedures in a manner not acceptable to the lenders. The Court's recent order, dated Sept. 26, provides that the Debtor's right to use cash collateral terminates immediately on the earlier of Oct. 7; the date any material provision of the final order shall, for any reason, cease to be valid and binding or the Debtor will so assert in any pleading filed with the Court; the date an application is filed by the Debtor for approval of any superpriority claim or any lien that is pari passu with or senior to the liens granted to the lenders pursuant to the Final Order without prior written consent of the lenders; the date the Chapter 11 case is converted to a Chapter 7 case, or a trustee or an examiner which expanded powers is appointed or elected; the date of commencement of any action by the Debtor against the lenders with respect to the prepetition obligations or prepetition liens. Pursuant to the Aug. 20 interim order, the Court gave the official committee of unsecured creditors appointed in the case 60 days after the committee's appointment to investigate the validity, perfection, enforceability, and extent of pre-bankruptcy obligations and liens and any potential claims of the Debtor or their estates against the lenders with respect to the prepetition obligations, liens, "lender liability" claims and causes of action, any actions, claims or defenses under chapter 5 of the Bankruptcy Code or any other claims or causes of action. Other parties in interest have until 75 days after the entry of the Interim Court order to conduct a similar probe. Pursuant to the Court's latest order, the Committee's Investigation Termination Date is extended until Nov. 8, 2013. When it filed for bankruptcy, the Debtor owed $29,360,747 to the lenders led by TD Bank N.A., as administrative agent and TD Securities (USA) LLC and RBS Citizens N.A., as joint lead arrangers. A further hearing on the modification of the Final Order and (and approval of a revised Approved Budget) will be held Oct. 4, 2013 at 10:00 a.m. 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. Michael R. Nestor, Esq., Matthew B. Lunn, Esq., and Justin H. Rucki, Esq., at Young Conaway Stargatt & Taylor, LLP; and John A. Bicks, Esq., Charles A. Dale III, Esq., and Mackenzie L. Shea, Esq., at K&L Gates LLP, serve as the Debtor's counsel. Carl Marks Advisory Group serves as the Debtor's financial advisors, and Epiq Systems as claims and notice agent. Roberta A. DeAngelis, the U.S. Trustee for Region 3, appointed five members to the official committee of unsecured creditors in the Chapter 11 cases. The Committee retained Landis Rath & Cobb LLP as counsel. LIBERATOR INC: Incurs $288,000 Net Loss in Fiscal 2013 ------------------------------------------------------ Liberator, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $288,485 on $13.84 million of net sales for the year ended June 30, 2013, as compared with a net loss of $782,417 on $14.47 million of net sales during the prior year. The Company's balance sheet at June 30, 2013, showed $3.16 million in total assets, $4.74 million in total liabilities and a $1.57 million total stockholders' deficit. Liggett, Vogt & Webb, P.A., in Boynton Beach, Florida, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2013. The independent auditors noted that the Company has a net loss of $288,485, a working capital deficiency of $1,233,352, an accumulated deficit of $8,047,685 and a negative cash flow from continuing operations of $103,765. These factors raise substantial doubt about the Company's ability to continue as a going concern. A copy of the Form 10-K is available for free at: http://is.gd/foo3ur About Liberator Inc. Atlanta, Georgia-based Liberator is a vertically integrated manufacturer that designs, develops and markets products and accessories that enhance intimacy. Liberator is also a nationally recognized brand trademark, brand category and a patented line of products commonly referred to as sexual positioning shapes and sex furniture. LIGHTSQUARED INC: Bankruptcy Judge Approves Bidding Procedures -------------------------------------------------------------- Judge Shelley Chapman of the U.S. Bankruptcy Court in Manhattan approved on Oct. 1 the procedures for the auction of LightSquared's assets. The approval came after the wireless-satellite company settled its dispute with a group of lenders over how the sale of its assets should be conducted. LightSquared will offer for sale all or substantially all of its assets, which include so-called "LP assets" and the assets of LightSquared Inc., the holding company largely owned by Philip Falcone and his investment firm Harbinger Capital Partners LLC. The court-approved process, currently led by a $2.22 billion offer for the LP assets from L-Band Acquisition LLC and an offer for One Dot Six Corp.'s wireless spectrum assets from Mast Spectrum Acquisition Corp., impose a Nov. 20 deadline on the submission of bids for the assets. LightSquared will hold an auction on Nov. 25 at the New York offices of Milbank Tweed Hadley & McCloy LLP if it receives other offers from interested buyers. If the bid deadline is extended to Nov. 25, the company will hold an auction on Dec. 3. The bankruptcy court will hold a hearing on Dec. 10 to consider approval of the sale of the assets to the winning bidder. Objections to the sale are due by Nov. 26. L-Band is entitled to bid protection in the form of a break-up fee of $51.8 million, which is subject to upward adjustment in accordance with the court-approved procedures. Meanwhile, MAST Spectrum is entitled to reimbursement of fees and expenses incurred in connection with its offer, which will be allowed as administrative expenses. Any decision to be made by LightSquared under the bid procedures will be made by the independent committee of LightSquared's board of directors. A copy of Judge Chapman's ruling can be accessed for free at http://is.gd/gUzdPC Judge Okays Payment to Independent Committee Separately, Judge Chapman final approval for LightSquared to pay the three-person committee that will oversee the sale of its assets at the auction. The members will be paid $35,000 a month until the end of 2013 and $25,000 a month after that, according to Judge Chapman's Oct. 2 ruling. Earlier, Nextel co-founder Christopher Rogers replaced Donna Alderman as the third member of the committee. Judge Chapman rejected Ms. Alderman's nomination after the lenders raised concerns about her relationship with L-Band's parent, Dish Network Corp. The two other members are Alan Carr, managing director at Strategic Value Partners LLC, and Neal Goldman, a managing director at Mackay Shields LLC and a principal at Banc of America Securities LLC. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. LONGVIEW POWER: Cash Collateral Hearing Adjourned to Oct. 21 ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware will adjourned the hearing scheduled for Oct. 7, 2013, to Oct. 21, at 10 a.m., to consider: 1. Longview Power, LLC, et al.'s motion for use of cash collateral; and 2. the Contractor Parties' motions for relief from the automatic stay. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., on behalf of the Debtor, said that the Contractor Parties and the steering committee of a group of lenders under the Debtors' senior secured facility had consented to the adjournment of the hearing. As reported in the Troubled Company Reporter on Sept. 12, 2013, the Debtor was given interim permission from the bankruptcy court to pay bills using cash representing collateral for secured lenders' claims. About Longview Power Longview Power LLC is a special purpose entity created to construct, own, and operate a 695 MW supercritical pulverized coal-fired power plant located in Maidsville, West Virginia, just south of the Pennsylvania border and approximately 70 miles south of Pittsburgh. The project is owned 92% by First Reserve Corporation (First Reserve or sponsor), a private equity firm specializing in energy industry investments, through its affiliate GenPower Holdings (Delaware), L.P., and 8% by minority interests. Longview Power, LLC, filed a Chapter 11 (Bank. D. Del. Lead Case. 13-12211) on Aug. 30, 2013. The petitions were signed by Jeffery L. Keffer, the Company's chief executive officer, president, treasurer and secretary. The Debtor estimated assets and debts of more than $1 billion. Judge Brendan Linehan Shannon presides over the case. Kirkland & Ellis LLP and Richards, Layton & Finger, P.A., serve as the Debtors' counsel. Lazard Freres & Company LLC acts as the Debtors' investment bankers. Alvarez & Marsal North America, LLC, is the Debtors' restructuring advisors. Ernst & Young serves as the Debtors' accountants. The Debtors' claims agent is Donlin, Recano & Co. Inc. Roberta A. DeAngelis, U.S. Trustee for Region 3, disclosed that as of September 11, 2013, a committee of unsecured creditors has not been appointed in the bankruptcy case of Longview Power LLC due to insufficient response to the U.S. Trustee's communication/contact for service on the committee. LONGVIEW POWER: Can Hire Denton US as Counsel in Kvaerner Matter ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Longview Power, LLC, et al., to employ Denton US LLP as special counsel. Denton US is expected to represent the Debtors in connection with the arbitration captioned Kvaerner North American Construction Inc. v. Longview Power, LLC, et al. Specifically, Denton US will, among other things: -- assist the Debtor in proceedings before the Court with respect to any action to estimate the claims or causes of action from a related to the claims or causes of action asserted by the contractors in the Arbitration pursuant to Section 502(c) of the Bankruptcy Code; and -- assist the Debtors in proceedings before the Court to determine the validity, extent, and priority of any liens filed by the contractors. About Longview Power Longview Power LLC is a special purpose entity created to construct, own, and operate a 695 MW supercritical pulverized coal-fired power plant located in Maidsville, West Virginia, just south of the Pennsylvania border and approximately 70 miles south of Pittsburgh. The project is owned 92% by First Reserve Corporation (First Reserve or sponsor), a private equity firm specializing in energy industry investments, through its affiliate GenPower Holdings (Delaware), L.P., and 8% by minority interests. Longview Power, LLC, filed a Chapter 11 (Bank. D. Del. Lead Case. 13-12211) on Aug. 30, 2013. The petitions were signed by Jeffery L. Keffer, the Company's chief executive officer, president, treasurer and secretary. The Debtor estimated assets and debts of more than $1 billion. Judge Brendan Linehan Shannon presides over the case. Kirkland & Ellis LLP and Richards, Layton & Finger, P.A., serve as the Debtors' counsel. Lazard Freres & Company LLC acts as the Debtors' investment bankers. Alvarez & Marsal North America, LLC, is the Debtors' restructuring advisors. Ernst & Young serves as the Debtors' accountants. The Debtors' claims agent is Donlin, Recano & Co. Inc. Roberta A. DeAngelis, U.S. Trustee for Region 3, disclosed that as of September 11, 2013, a committee of unsecured creditors has not been appointed in the bankruptcy case of Longview Power LLC due to insufficient response to the U.S. Trustee's communication/contact for service on the committee. LONGVIEW POWER: Ernst & Young Approved as Tax Advisor ----------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Longview Power, LLC, et al., to employ Ernst & Young LLP as their tax advisor to the Debtors. As reported in the Troubled Company Reporter on Sept. 18, 2013, Jeffery L. Keffer, the Company's president and chief executive officer, informed the Court that Ernst & Young has provided services to the Debtors over a number of years and has familiarity with the Debtors' business, and can deliver the proposed tax advisory services in a cost-efficient manner. As tax advisor, Ernst & Young will, among other things: * work with the Debtors and their counsel in developing an understanding of the U.S. federal and state and local income and indirect tax issues and alternatives associated with the restructuring; and * work with Debtor personnel and/or outside legal counsel in Developing an understanding of the Debtors' business objectives and strategies, including understanding the tax implications of any reorganization and/or restructuring alternatives being evaluated that may result in a change in the equity, capitalization, and/or ownership of the shares/partnership interests of the Debtors or their assets, including assistance with modeling the foregoing. Ernst & Young will be paid based on these hourly rates, depending on the classification of the professional providing the services: Title Hourly Rates ----- ------------ Partner, Principal, Executive Director $750-900 Senior Manager $675-825 Manager $575-625 Senior $375-550 Staff $150-300 The firm will also be reimbursed for any direct expenses incurred in connection with its retention in the Chapter 11 cases. James Steen, a partner at Ernst & Young, assures the Court that his firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, as required by Section 327(a), and does not hold or represent an interest adverse to the Debtors or the Chapter 11 estates. About Longview Power Longview Power LLC is a special purpose entity created to construct, own, and operate a 695 MW supercritical pulverized coal-fired power plant located in Maidsville, West Virginia, just south of the Pennsylvania border and approximately 70 miles south of Pittsburgh. The project is owned 92% by First Reserve Corporation (First Reserve or sponsor), a private equity firm specializing in energy industry investments, through its affiliate GenPower Holdings (Delaware), L.P., and 8% by minority interests. Longview Power, LLC, filed a Chapter 11 (Bank. D. Del. Lead Case. 13-12211) on Aug. 30, 2013. The petitions were signed by Jeffery L. Keffer, the Company's chief executive officer, president, treasurer and secretary. The Debtor estimated assets and debts of more than $1 billion. Judge Brendan Linehan Shannon presides over the case. Kirkland & Ellis LLP and Richards, Layton & Finger, P.A., serve as the Debtors' counsel. Lazard Freres & Company LLC acts as the Debtors' investment bankers. Alvarez & Marsal North America, LLC, is the Debtors' restructuring advisors. Ernst & Young serves as the Debtors' accountants. The Debtors' claims agent is Donlin, Recano & Co. Inc. Roberta A. DeAngelis, U.S. Trustee for Region 3, disclosed that as of September 11, 2013, a committee of unsecured creditors has not been appointed in the bankruptcy case of Longview Power LLC due to insufficient response to the U.S. Trustee's communication/contact for service on the committee. LONGVIEW POWER: Has Until Oct. 29 to File Schedules and Statements ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware extended until Oct. 29, 2013, Longview Power, LLC, et al.'s time to file its schedules of assets and liabilities, schedules of current income and expenditures, schedules of executory contracts and unexpired leases, and statements of financial affairs. Longview Power LLC is a special purpose entity created to construct, own, and operate a 695 MW supercritical pulverized coal-fired power plant located in Maidsville, West Virginia, just south of the Pennsylvania border and approximately 70 miles south of Pittsburgh. The project is owned 92% by First Reserve Corporation (First Reserve or sponsor), a private equity firm specializing in energy industry investments, through its affiliate GenPower Holdings (Delaware), L.P., and 8% by minority interests. Longview Power, LLC, filed a Chapter 11 (Bank. D. Del. Lead Case. 13-12211) on Aug. 30, 2013. The petitions were signed by Jeffery L. Keffer, the Company's chief executive officer, president, treasurer and secretary. The Debtor estimated assets and debts of more than $1 billion. Judge Brendan Linehan Shannon presides over the case. Kirkland & Ellis LLP and Richards, Layton & Finger, P.A., serve as the Debtors' counsel. Lazard Freres & Company LLC acts as the Debtors' investment bankers. Alvarez & Marsal North America, LLC, is the Debtors' restructuring advisors. Ernst & Young serves as the Debtors' accountants. The Debtors' claims agent is Donlin, Recano & Co. Inc. Roberta A. DeAngelis, U.S. Trustee for Region 3, disclosed that as of September 11, 2013, a committee of unsecured creditors has not been appointed in the bankruptcy case of Longview Power LLC due to insufficient response to the U.S. Trustee's communication/contact for service on the committee. MARANI BRANDS: Suspending Filing of Reports with SEC ---------------------------------------------------- Marani Brands, Inc., filed a Form 15 with the U.S. Securities and Exchange Commission to terminate the registration of the Company's common stock under Section 12(g) of the Securities Exchange Act of 1934. As of Sept. 29, 2013, there were 204 holders of common shares. As a result of the Form 15 filing, the Company is not anymore obligated to file regulatory filings with the SEC. About Marani Brands Based in North Hollywood, Calif., Marani Brands, Inc. (OTC BB: MRIB) primarily engages in the distribution of wine and spirit products manufactured in Armenia. The Company's signature product is Marani Vodka, a premium vodka which is manufactured exclusively for the Company in Armenia. The Company's balance sheet at March 31, 2010, showed $1,137,841 in assets and $3,188,227 of liabilities, for a stockholders' deficit of $2,050,386. As reported in the Troubled Company Reporter on October 19, 2009, Gruber & Company, LLC, in Saint Louis, Missouri, expressed substantial doubt about the Company's ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended June 30, 2009, and 2008. The auditing firm said that the Company's viability is dependent upon its ability to obtain future financing and the success of its future operations. MICHAEL BAKER: Moody's Assigns 'B2' CFR, Outlook Stable ------------------------------------------------------- Moody's Investors Service has assigned a B2 CFR and stable rating outlook to Integrated Mission Solutions, LLC ("IMS"), the entity planning to acquire publicly traded Michael Baker Corporation ("MBC") in a stock tender transaction. Following close of the pending transaction, IMS will be renamed to Michael Baker International, LLC. Ratings assigned - subject to review of final documentation: Corporate Family B2 Probability of Default, B2-PD $350 million senior secured notes due 2018, B2, LGD4, 51% Rating outlook: Stable Ratings Rationale The B2 Corporate Family Rating reflects elevated financial leverage, a federal contracting business lessened by US fiscal austerity, potential integration challenges, and IMS' short operating history. Moody's estimates debt to EBITDA pro forma for the transaction, in the 5x range, on par with the CFR. The acquisition will significantly increase the scale of operations, and IMS' services work for the U.S. government abroad should provide cross-sell opportunities to MBC's engineering and infrastructure services with potential for cost synergies from overhead reduction as well. Success of the integration will heavily factor into forward profitability. IMS' brief, acquisitive operating history amplifies the integration risk consideration. A partial mitigating observation to this risk is that IMS will seek to migrate onto MBS' larger and more well established information technology network. The pro forma funded backlog to revenue ratio of over 80% -- a good level for a services contractor-- supports the rating and helps revenue transparency while the low asset intensity of the services business model supports the prospect for free cash flow even if achievement of cross sell and integration targets takes longer than planned. The rating outlook is stable due to an adequate liquidity profile. There will be no scheduled debt amortization under the $350 million senior secured notes and less than $2 million per annum expected under the $8.7 million CADI Obligation. The only maintenance covenant will be a springing test on the planned (unrated) asset-based revolving credit facility. Likelihood of free cash flow to debt in the mid to high single digit percentage range further supports stability. Upward rating momentum would depend on successful integration of the acquisitions and expectation of debt to EBITDA of 4x, free cash flow to debt at 10% or more and good liquidity. Downward rating pressure would grow with debt to EBITDA above 6x, low free cash flow generation, or declining backlog. The principal methodology used in this rating was the Global Aerospace and Defense Industry Methodology published in June 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Integrated Mission Solutions, LLC, pro forma for the pending acquisition of Michael Baker Corporation, will provide engineering, development, intelligence and technology solutions with global reach and mobility. Annual revenues pro forma for the transaction will be approximately $975 million. The company will be majority-owned by DC Capital Partners. MISSION NEW ENERGY: Financial Results Update -------------------------------------------- Mission NewEnergy Limited provided the following financial results update. The conditions precedent to concluding the sale of the 100,000 tpa refinery as announced in April 2013 were yet to be completed. Had the conditions precedent been completed at the time of lodgement of the preliminary final report or progressed to an extent where the sale was highly probable, the Group would have shown a reversal of the previous impairment of Property, Plant and Equipment. Subsequent to the release of the preliminary final report, in concluding matters for the final audited financial report, the Board has determined that despite the conditions precedent not being fully completed, the satisfaction of those conditions has now advanced to a point where it is highly probable that the sale will conclude and will hence reflect the impairment reversal in the final audited annual report. As a result of this, the following differences between the Preliminary Final Report and the Financial Report will be evident: The Profit after Income Tax attributable to members of the parent entity has increased from a loss of $2,177,000 to a profit of $10,057,000. This is primarily due to the reversal of impairment of refinery assets to a value of A$12.2 million in the Consolidated Group Statement of Profit and Loss. In the Consolidated Group Balance sheet, the Non-current assets held for sale of $2,000,000 has been increased to $14,573,000 About Mission NewEnergy Based in Subiaco, Western Australia, Mission New Energy Limited is a producer of biodiesel that integrates sustainable biodiesel feedstock cultivation, biodiesel production and wholesale biodiesel distribution focused on the government mandated markets of the United States and Europe. The Company is not operating its biodiesel refining segment. The refineries are being held in care and maintenance either awaiting a return to positive operating conditions or the sale of assets. The Company has materially diminished its Jatropha contract farming operation and the company is now focused on divesting the remaining Indian assets. The Company intends to cease all Indian operations. Grant Thornton Audit Pty Ltd, in Perth, Australia, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company incurred operating cash outflows of A$4.9 million during the year ended June 30, 2012, and, as of that date, the consolidated entity's total liabilities exceeded its total assets by A$24.4 million. As of June 30, 2013, the Group had AU$7.53 million in total assets, AU$32.60 million in total liabilities, and a AU$25.07 million total deficiency. MOMENTIVE SPECIALTY: Geoffrey Manna Elected to Board ---------------------------------------------------- The Board of Directors of Momentive Specialty Chemicals Inc. increased the size of its board from five to six members, in accordance with its by-laws, and Geoffrey A. Manna was elected a director. Mr. Manna has been appointed to the Company's Audit Committee. He will receive the same compensation as is currently paid to other non-employee directors, which is described in the discussion of Director Compensation. About Momentive Specialty Momentive Specialty Chemicals, Inc., headquartered in Columbus, Ohio, is a leading producer of thermoset resins (epoxy, formaldehyde and acrylic). The company is also a supplier of specialty resins for inks and specialty coatings sold to a diverse customer base as well as a producer of commodities such as formaldehyde, bisphenol A, epichlorohydrin, versatic acid and related derivatives. Momentive Specialty posted net income of $324 million in 2012 and net income of $118 million in 2011. The Company's balance sheet at June 30, 2013, showed $3.47 billion in total assets, $5.06 billion in total liabilities and a $1.58 billion total deficit. * * * Momentive Specialty carries a 'B-' issuer credit rating from Standard & Poor's Ratings Services. It has 'B3' corporate family and probability of default ratings from Moody's Investors Service. As reported in the Oct. 27, 2010 edition of TCR, Moody's Investors Service assigned a 'Caa1' rating to the guaranteed senior secured second lien notes due 2020 of Momentive Specialty (formerly known as Hexion Specialty Chemicals Inc.). Proceeds from the notes were allocated for the repayment of $533 million of guaranteed senior secured second lien notes due 2014. "With this refinancing Hexion will have refinanced or extended the maturities on the vast majority of the debt that was originally slated to mature prior to 2015. There is less than $600 million of this debt remaining, which should be much easier to for the company to refinance as its credit metrics improve further," stated John Rogers, Senior Vice President at Moody's. NIRVANIX INC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Nirvanix, Inc. 9191 Towne Centre Drive Suite 510 San Diego, CA 92122 Case No.: 13-12595 Chapter 11 Petition Date: October 1, 2013 Court: United States Bankruptcy Court District of Delaware (Delaware) Judge: Hon. Brendan Linehan Shannon Debtor's Counsel: Norman L. Pernick, Esq. COLE, SCHOTZ, MEISEL, FORMAN & LEONARD, PA 500 Delaware Avenue,Suite 1410 Wilmington, DE 19801 Tel: 302-652-3131 Fax: 302-652-3117 Email: npernick@coleschotz.com Marion M. Quirk, Esq. COLE, SCHOTZ, MEISEL, FORMAN & LEONARD, PA 500 Delaware Avenue, Suite 1410 Wilmington, DE 19801 Tel: 302-652-3131 Fax: 302-652-3117 Email: bankruptcy@coleschotz.com Patrick J. Reilley, Esq. COLE, SCHOTZ, MEISEL, FORMAN & LEONARD, PA 500 Delaware Avenue, Suite 1410 Wilmington, DE 19801 Tel: 302-652-3131 Fax : 302-652-3117 Email: preilley@coleschotz.com Debtor's Claims/ Noticing Agent: EPIQ SYSTEMS INC. Debtor's Special Corporate Counsel: COOLEY LLP Debtor's Financial Advisor: ARCH & BEAM GLOBAL LLC Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The petition was signed by Debra Chrapaty, CEO. Debtor's List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Dell Marketing LP Trade $407,463 c/o Dell USA LP PO Box 910916 Pasadena,CA 91110-0916 Nimsoft Inc. Trade $156,100 Equinix(Germany) GmbH Trade EUR127,133 Equinix New York Trade $129,060 Modis Inc. Trade $117,089 Rebit, Inc. Trade $91,384 Century Link Trade $81,302 Switch/SuperNap Trade $72,582 Value Labs Trade $64,900 Cyrus One Trade $46,126 Coresite Trade $46,108 By Appointment Only Trade $34,500 Salesforce.com, Inc. Trade $28,305 Broadband Developments, Inc. Trade $21,000 Level (3) Communications, LLC Trade $18,656 Independent Consulting Services Trade $18,000 Enterprise Strategy Group Trade $17,500 Equinox Japan K.K. Trade $16,329 McGladery & Pullen Trade $16,133 Gartner, Inc. Trade $15,500 NUTRIOM LLC: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Nutriom, LLC 3145 Hogum Bay Rd NE Olympia, WA 98516 Case No.: 13-46221 Chapter 11 Petition Date: October 1, 2013 Court: United States Bankruptcy Court Western District of Washington (Tacoma) Judge: Hon. Paul B. Snyder Debtor's Counsel: Brian L. Budsberg, Esq. BUDSBERG LAW GROUP PLLC 1115 W Bay Dr Ste 201 Olympia, WA 98502 Tel: 360-584-9093 Email: paralegal@budsberg.com Total Assets: $2.39 million Total Liabilities: $7.05 million The petition was signed by Hernan Etcheto, president of Omnicron Corp., owner 100 percent of Nutriom, LLC. A copy of the Company's list of its 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/wawb13-46221.pdf OCEAN 4660: Ch.11 Trustee's Right to Use Cash to Expire Oct. 4 -------------------------------------------------------------- The U.S. Bankruptcy Court approved Ocean 4660, LLC's motion to use cash collateral with the consent of secured creditor Comerica Bank. The Chapter 11 Trustee is authorized to use cash collateral on an interim basis through and including Oct. 4, and in accordance with the cash collateral budget for the month of September 2013. As interim adequate protection for the use of cash collateral, Comerica will continue to have nunc pro tunc as of the Petition Date: (a) a replacement lien pursuant to 11 U.S.C. Section 361(2) on and in all property acquired or generated post petition by the Debtor to the same extent and priority and of the same kind and nature as Comerica's pre-petition liens and security interests in the Cash Collateral; and (b) an administrative expense claim pursuant to Sections 507(a)(2) and 503(b) of the Bankruptcy Code for the diminution in the Cash Collateral resulting by and through the use thereof during this proceeding. The replacement liens, administrative claims and adequate protection payments granted to Comerica shall be subject and junior to all unpaid fees due to the Office of the United States Trustee pursuant to 28 U.S.C. Sec. 1930; and all unpaid fees required to be paid to the Clerk of Court. Joaquin J. Alemany, Esq. HOLLAND & KNIGHT LLP 701 Brickell Avenue, Suite 3000 Miami, FL 33131 Tel: (305) 374-8500 Fax: (305) 789-7799 E-mail: joaquin.alemany@hklaw.com About Ocean 4660 Ocean 4660, LLC, owner of a beachfront property operated as the Lauderdale Beachside Hotel in Lauderdale-by-the-Sea, Florida, filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 13-23165) in its hometown on June 2, 2013. Rick Barreca signed the petition as chief restructuring officer. The Lauderdale Beachside Hotel features a beach-front location, two five-story interior corridor buildings (east and west), 147 guest rooms, a beach front tiki bar and grill, a large adjoining restaurant and commercial kitchen space and on-site parking. The restaurant space and the tiki bar and grill are unoccupied. The occupancy rates have generally been between 40 percent and 70 percent occupancy. Room rates are $40 to $80 per night. The Company disclosed $15,762,871 in assets and $16,587,678 in liabilities as of the Chapter 11 filing. Judge John K. Olson presides over the case. The Debtor tapped RKJ Hotel Management, LLC, as hotel manager and RKJ's Rick Barreca as the CRO. The Debtor tapped Genovese Joblove & Battista, P.A. as counsel. Irreconcilable differences prompted the firm to withdraw as counsel in July 2013. The Court approved the appointment of Maria Yip, of Coral Gables, Florida, as Chapter 11 trustee. Drew M. Dillworth, Esq., of the Law firm of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A. serves as his counsel. Kerry-Ann Rin, CPA, and the consulting firm of Yip Associates serve as financial advisor, and accountant. The U.S. Trustee has not appointed an official committee of unsecured creditors. ODYSSEY PICTURES: Delays Form 10-K for Fiscal 2013 -------------------------------------------------- Odyssey Pictures Corporation has not been able to compile all of the requisite formatted financial data and narrative information necessary for it to have sufficient time to complete its annual report on Form 10-K for the year ended June 30, 2013, without unreasonable effort or expense. The Form 10-K will be filed as soon as reasonably practicable. About Odyssey Plano, Tex.-based Odyssey Pictures Corp., during the nine months ended March 31, 2012, realized revenues from the sale of branding and image design products and media placement services. The Company's ongoing operations have consisted of the sale of these branding and image design products, increasing media inventory, productions in progress and development of IPTV Technology and related services. The Company reported net income to the Company of $34,775 for the year ended June 30, 2012, compared with net income to the Company of $60,400 during the prior fiscal year. The Company's balance sheet at March 31, 2013, showed $1.49 million in total assets, $4.05 million in total liabilities and a $2.55 million total stockholders' deficiency. Patrick Rodgers, CPA, PA, in Altamonte Springs, Florida, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2012. The independent auditors noted that the Company may not have adequate readily available resources to fund operations through June 30, 2013, which raises substantial doubt about the Company's ability to continue as a going concern. OGX PETROLEO: Missed Crucial $44.5-Mil. Bond Payment ---------------------------------------------------- Luciana Magalhaes and John Lyons, writing for The Wall Street Journal, reported that Brazilian commodity magnate Eike Batista's oil firm OGX missed a crucial bond payment on Oct. 1, setting up one of the biggest defaults in the history of Latin America. According to the report, the $44.5 million missed payment triggered a downgrade to "D" by the credit-ratings firm Standard & Poor's, although some creditors and analysts expect that OGX will still have a multiday grace period to make the payment before formally defaulting. Once considered among the world's wealthiest men, Mr. Batista, 56 years old, is scrambling to salvage parts of his commodity empire, the report related. Investors have sold off his shares and bonds, worrying his various companies may not reach profitability Restructuring OGX's debts has additional importance because it is a linchpin in a matrix of Batista companies with interlinked businesses, the report said. Another of Mr. Batista's companies, shipbuilder OSX, was set up to build oil platforms for OGX and also faces solvency questions. The missed payment adds pressure to the talks between OGX and its creditors, which include U.S.-based investment firms Pacific Investment Management Co., or Pimco, and BlackRock Inc., the report further related. Based in Rio de Janeiro, Brazil, OGX Petroleo e Gas Participaaoes S.A. is an independent exploration and production company with operations in Latin America. * * * As reported in the Troubled Company Reporter-Latin America on July 17, 2013, Moody's Investors Service downgraded OGX Petroleo e Gas Participaaoes S.A.'s Corporate Family Rating to Ca from Caa2 and OGX Austria GmbH's senior unsecured notes ratings to Ca from Caa2. The rating outlook remains negative. PARKWAY ACQUISITION: Files Chapter 11 Plan to Sell Assets --------------------------------------------------------- Parkway Acquisition I, LLC, f/k/a Parkway Hospital Associates, filed a plan of reorganization with the U.S. Bankruptcy Court for the Southern District of New York providing for the sale of its property based on a stalking horse contract and competitive bidding. The vast bulk of the net proceeds of the sale are earmarked to be paid to the first mortgage holder Auberge Grand Central LLC. The Debtor proposes to pay 95% of all net proceeds to Auberge, while noting that Auberge has not yet accepted the Plan and the pay-outs will likely be subject of additional negotiations. The remaining 5% is earmarked to pay all other claims and administrative expenses. A full-text copy of the Disclosure Statement dated Sept. 20, 2013, is available at http://bankrupt.com/misc/PARKWAYds0920.pdf About Parkway Acquisition 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. PENN NATIONAL: S&P Lowers Corp. Credit Rating to 'BB-' ------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on U.S. gaming operator Penn National Gaming Inc. to 'BB-' from 'BB'. The rating outlook is stable. At the same time, S&P assigned the company's proposed $1.25 billion senior secured credit facility (consisting of a $500 million revolver due 2018, a $500 million term loan A due 2018, and a $250 million term loan B due 2020) its 'BB+' issue- level rating (two notches above the corporate credit rating), with a recovery rating of '1', indicating S&P's expectation for very high (90% to 100%) recovery for lenders in the event of a payment default. In addition, S&P assigned the company's proposed $300 million senior unsecured notes its 'B+' issue-level rating (one notch lower than the corporate credit rating), with a recovery rating of '5', indicating that lenders can expect modest (10% to 30%) recovery in the event of a payment default. Penn National will use proceeds from the proposed debt issuances to repay existing debt, to pay fees and expenses associated with the transaction, and for general corporate purposes. S&P also affirmed all existing issue-level ratings on the company's debt. S&P expects the company to use proceeds from the proposed refinancing transactions to repay its existing debt, and S&P would withdraw its issue-level ratings on the existing debt when it is repaid. In the event the proposed refinancing transactions are not completed and the debt is not repaid, S&P would lower its issue-level ratings on the existing senior secured credit facilities to 'BB+' and subordinated notes to 'B+', levels that reflect its recovery ratings on the existing debt issuances and are in line with Penn National's current corporate credit rating. "We expect Penn National will complete the planned spin-off of its real estate assets into a gaming-focused REIT (Gaming & Leisure Properties Inc., or GLPI) in the fourth quarter of 2013. Almost all of the approvals required from gaming and racing regulatory agencies have been received, and Penn National's Board of Directors has approved the spin-off. Both Penn National and GLPI are in the process of obtaining the necessary financing to complete the transactions. The downgrade reflects weaker credit measures resulting from a significant increase in debt-like obligations associated with the long-term master lease, under which Penn National will manage the casino properties it is spinning off to GLPI. The downgrade also reflects a reassessment of our business risk profile, lowering it to "fair" from "satisfactory." We believe that the large fixed rent expense that Penn National will pay to GLPI to manage the properties will reduce the company's operating flexibility, potentially leading to greater volatility of cash flows, particularly in an economic downturn," S&P said. PHARMACEUTICAL RESEARCH: Moody's Corrects Text on Aug. 30 Release ----------------------------------------------------------------- Moody's Investors Service corrects in the list of affected ratings for issuer Pharmaceutical Research Associates, Inc., the following heading above the bank credit facility ratings: "The following ratings were affirmed and will be withdrawn at the close of the transaction." The updated debt list for Pharmaceutical Research Associates, Inc. now reads as follows: Pharmaceutical Research Associates, Inc., The following ratings were confirmed and will be withdrawn at the close of the transaction: Corporate Family Rating, B2 Probability of Default Rating, B2-PD The following ratings were affirmed and will be withdrawn at the close of the transaction: First lien senior secured revolving credit facility, B1 (LGD 3, 33%) First lien senior secured term loan, B1 (LGD 3, 33%) Second lien senior secured term loan, Caa1 (LGD 5, 85%) The outlook was changed to negative. PLANDAI BIOTECHNOLOGY: Incurs $2.9 Million Net Loss in 2013 ----------------------------------------------------------- Plandai Biotechnology, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $2.96 million on $359,143 of revenues for the year ended June 30, 2013, as compared with a net loss of $3.83 million on $74,452 of revenues during the prior fiscal year. As of June 30, 2013, the Company had $8.83 million in total assets, $12.31 million in total liabilities and a $3.48 million stockholders' deficit allocated to the Company. For the fiscal year ended June 30, 2013, the Company's cash used in operating activities totaled $1,846,334, which was primarily attributable to operational costs in South Africa associated with getting the Senteeko estate operational. Cash used in investing activities was $1,986, 908, which consisted almost entirely of leasehold improvements and fixed asset acquisitions in South Africa. Cash provided by financing activities was $4,327,047, the majority of which was provided by a bank loan of $3,944,712 that was used to purchase equipment and leasehold improvements for the South African operations. As of June 30, 2013, the Company had current assets of $518,994 compared to current liabilities of $823,729. Cash on hand was $498,917. Patrick Rodgers, CPA, PA, in Altamonte Springs, Florida, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2013. The independent auditors noted that the Company has incurred losses since inception, has a negative working capital balance at June 30, 2013, and has a retained deficit, which raises substantial doubt about its ability to continue as a going concern. A copy of the Form 10-K is available for free at: http://is.gd/U33hRM About Plandai Based in Seattle, Washington, Plandai Biotechnology, Inc., through its recent acquisition of Global Energy Solutions, Ltd., and its subsidiaries, focuses on the farming of whole fruits, vegetables and live plant material and the production of proprietary functional foods and botanical extracts for the health and wellness industry. Its principle holdings consist of land, farms and infrastructure in South Africa. PMC MARKETING: PREPA Not Entitled to Prepetition Expense -------------------------------------------------------- A Puerto Rico bankruptcy court denied creditor P.R. Electric Power Authority's motion for prepetition administrative expenses in the bankruptcy case of PMC Marketing Corp. On review, Bankruptcy Judge Brian K. Tester found that the electricity provided by PREPA is a "service" and thus does not fall under 11 U.S.C. Sec. 503(b)(9). As such, PREPA is not entitled to a prepetition expense, the judge said. A copy of Judge Tester's Sept. 4, 2013 Opinion & Order is available at http://is.gd/r8TdGlfrom Leagle.com. PMC Marketing Corp. filed a voluntary Chapter 11 bankruptcy petition on March 18, 2009 (Bankr. D. P.R., Case No. 09-02048). The case was converted into a Chapter 7 proceeding on May 19, 2010. On May 20, 2010, Noreen Wiscovitch-Rentas was appointed the Chapter 7 Trustee. PRECISION OPTICS: Swings to $1.8 Million Net Loss in Fiscal 2013 ---------------------------------------------------------------- Precision Optics Corporation, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $1.78 million on $2.51 million of revenues for the year ended June 30, 2013, as compared with net income of $960,972 on $2.15 million of revenues during the prior year. The Company's balance sheet at June 30, 2013, showed $2.30 million in total assets, $592,886 in total liabilities, all current, and $1.71 million in total stockholders' equity. A copy of the Form 10-K is available for free at: http://is.gd/TkCWmF About Precision Optics Headquartered in Gardner, Massachusetts, Precision Optics Corporation, Inc., has been a developer and manufacturer of advanced optical instruments since 1982. The Company designs and produces high-quality micro-optics, medical instruments and other advanced optical systems. The Company's medical instrumentation line includes laparoscopes, arthroscopes and endocouplers and a world-class product line of 3-D endoscopes for use in minimally invasive surgical procedures. PRESSURE BIOSCIENCES: Richard Thomley Named Acting CFO ------------------------------------------------------ Conrad Mir, the chief financial officer of Pressure BioSciences, Inc., notified the Company's Board of Directors of his resignation from his position as chief financial officer, effective Sept. 26, 2013. The resignation of Mr. Mir was not a result of any disagreements relating to the Company's operations, policies or practices. Mr. Mir has accepted a position as chief executive officer of another publicly-traded company. On Sept. 27, 2013, the Board of Directors of the Company appointed Mr. Richard P. Thomley as the Company's Acting Chief Financial Officer. Mr. Thomley, age 62, has been an independent financial consultant to the Company since March 2013, during which time he has been involved in all areas of financial responsibilities, including SEC reporting. Before that, Mr. Thomley was the Director of Finance of Kiva Systems, Inc., from June 2007 until January 2012. Mr. Thomley was the chief accounting officer at Spire Corp. from January to June 2007. Mr. Thomley served as the corporate controller for Implant Sciences, Inc., from November 2004 until January 2007. Mr. Thomley was chief financial officer at SynQor, Inc., from July 2000 to November 2004. Mr. Thomley has also held senior management positions in finance at Genesis Technical and Financial, Catamount Manufacturing, Inc., ChemDesign Corp., and Ansul Fire Protection Co. He has over 30 years experience in U.S. GAAP accounting, internal management, financial reporting and analysis, and SEC reporting. Mr. Thomley is a certified public accountant. The Company does not have a written employment agreement with Mr. Thomley; however, the Company has orally agreed to pay Mr. Thomley $100 per hour for his services. Mr. Thomley is expected to devote approximately 100 hours a month to oversee the Company's financial and administrative operations. About Pressure Biosciences Pressure BioSciences, Inc., headquartered in South Easton, Massachusetts, holds 14 United States and 10 foreign patents covering multiple applications of pressure cycling technology in the life sciences field. Pressure Biosciences disclosed a net loss applicable to common shareholders of $4.40 million on $1.23 million of total revenue for the year ended Dec. 31, 2012, as compared with a net loss applicable to common shareholders of $5.10 million on $987,729 of total revenue for the year ended Dec. 31, 2011. The Company's balance sheet at June 30, 2013, showed $1.43 million in total assets, $2.65 million in total liabilities and a $1.21 million total stockholders' deficit. Marcum LLP, in Boston, Massachusetts, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has had recurring net losses and continues to experience negative cash flows from operations. These conditions raise substantial doubt about its ability to continue as a going concern. PROGRESSIVE SOLUTIONS: Moody's Assigns 'B2' Corp. Family Rating --------------------------------------------------------------- Moody's Investors Service assigned a B2 Corporate Family Rating and a B2-PD Probability of Default Rating to Progressive Solutions LLC and P2 Newco Acquisition, Inc., co-borrowers. At the same time, Moody's assigned a B1 rating to the first lien term loan and a Caa1 rating to the second lien term loan that are being issued in conjunction with the planned merger between Progressive Solutions, Inc. and PMSI Holdings Corporation, two relatively small pharmacy benefit managers that focus on the workers' compensation segment. Management expects the merger to close in the fourth quarter, subject to regulatory clearance. The rating outlook is stable. This is a first time rating for Progressive Solutions. Ratings assigned: Progressive Solutions LLC (P2 Newco Acquisition, co-borrower) Corporate Family Rating at B2 Probability of Default Rating at B2-PD $490 million First Lien Senior Secured Term Loan at B1 (LGD3, 38%) $50 million Senior Secured Revolver at B1 (LGD3, 38%) $160 million Second Lien Senior Secured Term Loan at Caa1 (LGD6, 90%) Ratings Rationale "Progressive Solutions' B2 rating is prospective and reflects our expectation that management will reduce high leverage through cost synergies and new client wins," said Diana Lee, a Moody's Senior Credit Officer. "The combined company will be a leader in this niche segment, but it will contend with strong competition and high customer concentration risk," continued Ms. Lee. Progressive Solutions' B2 CFR reflects its high leverage, which Moody's expects will moderate as the company achieves cost synergies and realizes full benefits from recent contract wins. The ratings also reflect its position as a niche PBM focused exclusively on the workers' compensation market and its high customer concentration risk. Although this newly merged company will be a leading player in this space, it will continue to face competition from several small PBMs as well as much larger PBMs, such as Express Scripts Holdings (Baa3 stable), that also serve the group health segment. That said, drug costs represent about 20% of the medical spend associated with workers' compensation claims and are rising due in part to drug inflation and increased case severity. Ancillary service revenues (about 30%) are generated from out of network prescription processing as well as home health, durable medical equipment and other related services. The company's ability to realize cost savings and to continue to win new customers will be critical to future performance especially in light of only recent improvement in profitability at PMSI. Despite our expectations that Progressive will deleverage and focus on organic growth, there is risk of acquisitions, especially in this consolidating industry. The stable outlook reflects Moody's belief that the company will achieve cost savings and realize benefits from recent contract wins, both of which will help raise profitability and reduce leverage. The outlook also considers that even if the company pursues tuck-in acquisitions, it will sustain leverage at or below 5.0 times. If the company is able to gain new business and improve profitability and cash flow, and its financial policies include internally funded acquisitions, the ratings could be upgraded. If the company sustains debt/EBITDA below 4.0 times and RCF/debt above 15%, the ratings could be upgraded. If the company does not achieve expected cost savings and deleveraging, or the company engages in debt financed acquisitions, such that debt/EBITDA is sustained above 5.0 times or RCF/debt is sustained below 10%, the ratings could be downgraded. The company will maintain a good liquidity profile over the next 12 months, reflecting positive free cash flow, access to a modest revolver and limted covenant restrictions. 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. Progressive Solutions, Inc., headquartered in Westerville, Ohio, and PMSI, headquartered in Tampa, Florida, are both workers' compensation pharmacy benefit managers and ancillary service providers. RAINBOW SPRINGS: Case Summary & 6 Unsecured Creditors ----------------------------------------------------- Debtor: Rainbow Springs Owners, LLC c/o The Corporation Trust Company of NV 311 South Division Street Carson City, NV 89703 Case No.: 13-51924 Chapter 11 Petition Date: October 1, 2013 Court: United States Bankruptcy Court District of Nevada (Reno) Judge: Hon. BruceE T. Beesley Debtor's Counsel: Samuel A. Schwartz, Esq. THE SCHWARTZ LAW FIRM, INC. 6623 LAS VEGAS BLVD. SO., STE 300 Las Vegas, NV 89119 Tel: (702) 385-5544 Fax: (702) 385-2741 Email: sam@schwartzlawyers.com Total Assets: $3.85 million Total Liabilities: $5.72 million The petition was signed by Jack La Flesch, manager. A copy of the Company's list of its 6 unsecured creditors is available for free at http://bankrupt.com/misc/nvb13-51924.pdf REDHILL PLAZA: Case Summary & 12 Unsecured Creditors ---------------------------------------------------- Debtor: Redhill Plaza, LLC 1400 Reynolds Ave #104 Irvine, CA 92614 Case No.: 13-18192 Chapter 11 Petition Date: October 1, 2013 Court: United States Bankruptcy Court Central District Of California (Santa Ana) Judge: Hon. Mark S Wallace Debtor's Counsel: Michael R Totaro, Esq. Totaro & Shanahan POB 789 Pacific Palisades, CA 90272 Tel: 310-573-0276 Fax: 310-496-1260 Email: tsecfpacer@aol.com Total Assets: $6.04 million Total Debts: $5.59 million The petition was signed by Ratan Lal Baid, manager. A copy of the Company's list of its 12 unsecured creditors is available for free at http://bankrupt.com/misc/cacb13-18192.pdf REVLON CONSUMER: CEO Transition No Effect on Moody's Rating ----------------------------------------------------------- Moody's Investors Service said Revlon Consumer Products Corporation's announcement that it plans to appoint a new Chief Executive Officer does not affect the company's Ba3 Corporate Family Rating (CFR) or negative rating outlook. The change comes at a sensitive time for Revlon and leaves some uncertainty about long-term leadership, but will likely better position it to integrate and take advantage of commercial opportunities relating to the pending $660 million acquisition of The Colomer Group (TCG). The principal methodology used in this rating was the Global Packaged Goods published in June 2013. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Revlon, headquartered in New York, NY, is a worldwide cosmetics, skin care, fragrance, and personal care products company. Revlon is a wholly-owned subsidiary of publicly-traded Revlon, Inc. (REV), which is majority-owned by MacAndrews & Forbes Holdings Inc. (M&F). M&F is wholly-owned by Ronald O. Perelman. Revlon's principal brands include Revlon, Almay, Sinful Colors, Pure Ice, Charlie, Jean Nate, Mitchum, Gatineau, and Ultima II. Revlon announced the TCG acquisition on August 5th and expects to close the transaction in October 2013. Revlon's net sales for the LTM June 2013 period were approximately $1.4 billion. RICEBRAN TECHNOLOGIES: To Issue $15 Million Common Shares --------------------------------------------------------- Ricebran Technologies disclosed in a regulatory filing with the U.S. Securities and Exchange Commission that it is offering [ ] shares of its common stock, no par value per share, together with warrants to purchase [ ] shares of the Company's common stock, at a proposed maximum aggregate offering price of $15 million. The Company's common stock is traded on the OTCQB Marketplace, operated by OTC Markets Group, under the symbol "RIBT". On Sept. 25, 2013, the last reported sales price for the Company's common stock was $0.06 per share. A copy of the preliminary prospectus is available for free at: http://is.gd/C8gVNe About RiceBran Scottsdale, Ariz.-based RiceBran Technologies, a California corporation, is a human food ingredient and animal nutrition company focused on the procurement, bio-refining and marketing of numerous products derived from rice bran. As reported in the TCR on April 15, 2013, BDO USA, LLP, in Phoenix, Arizona, expressed substantial doubt about RiceBran Technologies' ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses from operations resulting in an accumulated deficit of $204.4 million at Dec. 31, 2012. "Although the Company emerged from bankruptcy in November 2010, there continues to be substantial doubt about its ability to continue as a going concern." The Company's balance sheet at June 30, 2013, showed $42.55 million in total assets, $36.84 million in total liabilities and $8.01 million in total temporary equity, and a $2.29 million total deficit attributable to the Company's shareholders. RITE AID: Green Equity Held 4.4% Equity Stake at Oct. 1 ------------------------------------------------------- In an amended Schedule 13D filed with the U.S. Securities and Exchange Commission, Green Equity Investors III, L.P., and its affiliates disclosed that as of Oct. 1, 2013, they beneficially owned 40,000,000 shares of common stock of Rite Aid Corporation representing 4.4 percent beneficial ownership of Common Stock outstanding based on 909,615,997 shares of Common Stock outstanding as reported in the Company's Form 10-Q filed with the Securities and Exchange Commission on July 5, 2013. A copy of the regulatory filing is available for free at: http://is.gd/WnVIOD About Rite Aid Corp. Drugstore chain Rite Aid Corporation (NYSE: RAD) -- http://www.riteaid.com/-- based in Camp Hill, Pennsylvania, is one of the nation's leading drugstore chains with 4,626 stores in 31 states and the District of Columbia. Rite Aid disclosed net income of $118.10 million on $25.39 billion of revenue for the year ended March 2, 2013, as compared with a net loss of $368.57 million on $26.12 billion of revenue for the year ended March 2, 2012. The Company's balance sheet at Aug. 31, 2013, showed $7.16 billion in total assets, $9.48 billion in total liabilities and a $2.31 billion total stockholders' deficit. * * * As reported by the TCR on March 1, 2013, Moody's Investors Service upgraded Rite Aid Corporation's Corporate Family Rating to B3 from Caa1 and Probability of Default Rating to B3-PD from Caa1-PD. At the same time, the Speculative Grade Liquidity rating was revised to SGL-2 from SGL-3. This rating action concludes the review for upgrade initiated on Feb. 4, 2013. Rite Aid carries a 'B-' corporate credit rating from Standard & Poor's Ratings Services. SAINT ANNE RETIREMENT: Fitch Affirms 'BB+' Rating on $20.4MM Bonds ------------------------------------------------------------------ Fitch Ratings has affirmed the 'BB+' rating on the following Lancaster County Hospital Authority bonds, issued on behalf of Saint Anne Retirement Community (SARC): -- $20.4 million series 2012; The Rating Outlook is Stable. Security The bonds are supported by a gross revenue pledge, mortgage lien, and debt service reserve fund. Key Rating Drivers MANAGEABLE DEBT BURDEN: SARC's pro forma debt burden is moderate, evidenced by pro forma MADS equal to 10.3% of total revenue and 8.8x debt to net available. Of note, SARC's revenue-only coverage has averaged 1.3x since fiscal 2009. SUFFICIENT OPERATING PROFITABILITY: SARC's profitability metrics are strong for the 'BB' rating category and sufficient against its debt level. Its operating ratio of 95.4% in fiscal 2013 (Jun. 30 year end) has been very consistent since fiscal 2009. Further, its 5.8% net operating margin was sufficient to produce good revenue- only MADS coverage despite declining from 9.5% in fiscal 2012. LIGHT LIQUIDITY: At fiscal year ended June 30, 2013, SARC's had $8.1 million in unrestricted cash and investments, equating to a somewhat light 195.6 days cash on hand (DCOH), 38.6% cash to debt and 4.8x cushion ratio. Since SARC is a Type C fee-for-service facility, Fitch believes that this level of liquidity is sufficient for the rating. SIZEABLE NURSING COMPONENT: Fitch notes that approximately 70% of SARC's total revenues are driven by its 119-bed Skilled Nursing Facility (SNF). While management has been successful in improving operating performance, potential cuts to Medicare and Medicaid (together, 55.4% of 2013 SNF revenues) presents some risk to SARC's revenue base. SNF OCCUPANCY PRESSURED: During 2013 the average occupancy in the SNF slipped to 80.8% from 92.9% prior year, due in large part to a higher-than-average number of deaths, and lower inpatient census at the area hospitals. Still, ILU and ALU occupancy both remained steady near 91% in 2013 despite higher turnover than prior year, demonstrating SARC's stable position in its service area. Rating Sensitivities LIQUIDITY A LIMITING FACTOR: Due to its reliance on SNF revenues which are predominately from government payors, Fitch believes SARC is Stable at its current rating level. Any upward rating movement is precluded by SARC's light liquidity levels and the risks associated with its relatively small revenue base. Credit Profile Saint Anne's Retirement Community (SARC) is located outside Columbia, PA in the township of West Hempfield, approximately 35 miles southeast of Harrisburg and 10 miles west of Lancaster. SARC is sponsored by the Religious Congregation of Sisters of the Adorers of the Blood of Christ, United States Province (ASC), and operates a 119-bed SNF, 53 ALUs, and 71 rental and entrance fee ILUs. In fiscal 2012 (year ended June 30), SARC reported approximately $15.4 million of total revenues. Modest Debt Level The 'BB+' rating incorporates SARC's manageable debt level of $20.4 million, which allows for sufficient coverage and moderate leverage against a small revenue base and somewhat light cash flow. As a type C CCRC with some rental contracts, SARC produces modest entrance fee levels which translated into a 7.8% net operating margin-adjusted in fiscal 2013. SARC produced coverage which is solid for the rating level, at 1.4x including turnover entrance fees and 1.2x by revenue only. Some Occupancy Pressure SARC does not have plans of additional debt, and its modest capital budget near $750K for fiscal 2014 will flex as operating performance allows. SARC was impacted in 2013 by lower than expected SNF occupancy. This concern is heightened due to SARC's reliance on the SNF for nearly 70% of its revenues ($10.6 million in 2013). Still, SARC has taken steps to negotiate stronger census and reimbursement for 2014 and Fitch expects steady to modest improvement in both occupancy and cash flow. Light Liquidity Constraints Due to SARC's small revenue base and its significant exposure to Medicare and Medicaid payors, any positive rating movement would require liquidity metrics more closely reflect Fitch's 'BBB' category median levels. SARC maintained $7.8 million in unrestricted cash at June 30, 2013, and is not budgeting for meaningful growth over the near term. Further, its investment mix is aggressive, at approximately 85% equity to 15% fixed income allocations. Finally, SARC is contemplating a campus expansion over the longer term which could pressure its balance sheet metrics, but also provide more revenue diversity and keep SARC competitive within its mature market. SPENCER NADLAN: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor entities filing separate Chapter 11 petitions: Entity Case No. ------ -------- Spencer Nadlan, Inc. 13-46011 348 Marcy Avenue Brooklyn, NY 11211 Franklin Park Development Corp. 13-46012 Chapter 11 Petition Date: October 2, 2013 Court: United States Bankruptcy Court Eastern District of New York (Brooklyn) Judge: Hon. Nancy Hershey Lord Debtor's Counsel: Mark Frankel, Esq. BACKENROTH FRANKEL & KRINSKY LLP 489 Fifth Avenue, 28th Floor New York, NY 10017 Tel: (212) 593-1100 Fax: (212) 644-0544 Email: mfrankel@bfklaw.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Meshulam Rothchild, secretary. The Debtor did not file its list of largest unsecured creditors when it filed its petition. STELERA WIRELESS: Auction For FCC Licenses Set on Nov. 20 --------------------------------------------------------- U.S. Bankruptcy Judge Niles Jackson has signed off on an order authorizing the bidding procedures governing the sale of their FCC licenses, bid protections, the scheduling and notice with respect to the sale process, the auction, and the sale hearing. Any and all objections and responses to the Motion that have not been withdrawn are overruled. The auction will take place on Nov. 20, 2013 at 9:00 a.m. (prevailing Central Time) at the offices of Christensen Law Group, PLLC, 210 Park Avenue, Suite 700, Oklahoma City, Oklahoma 73102. The sale hearing will be held before the bankruptcy court on November 22, 2013 at 10:00 a.m. (prevailing Central Time). Objections, if any, to the sale of the FCC Licenses and the transactions contemplated by the License Purchase Agreement or any other relief requested in the motion must: (a) be in writing; (b) comply with the Bankruptcy Rules and the Local Rules of the United States Bankruptcy Court for the Western District of Oklahoma; (c) be filed with the clerk of the Bankruptcy Court for the Western District of Oklahoma (or filed electronically via CM/ECF), on or before October 17, 2013 (prevailing Central Time) A copy of the order and the bidding and sale procedures are available for free at: http://bankrupt.com/misc/STELERA_sale.pdf About Stelera Wireless 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. TENET HEALTHCARE: Fitch Affirms 'B' Issuer Default Rating --------------------------------------------------------- Fitch Ratings has affirmed and removed the ratings of Tenet Healthcare Corporation from Rating Watch Negative following the acquisition of Vanguard Health Systems. The Rating Outlook is Stable. The ratings apply to approximately $10.2 billion of debt. Key Rating Drivers: -- Tenet has acquired Vanguard, a competing for-profit hospital operator, in an all-cash transaction valued at $4.3 billion. The purchase price represents 7.7x Vanguard's June 30, 2013 latest 12 months (LTM) EBITDA of $555 million. The acquisition was entirely debt funded, resulting in pro forma leverage of 5.7x at June 30, 2013. -- Fitch views the purchase of Vanguard as strategically sound because it will enhance the geographic scope of Tenet's portfolio of acute-care hospitals and add operational diversification through Vanguard's health plan business. The strategic rationale for consolidation in the hospital industry is encouraged by reforms favoring larger, integrated systems of care delivery, including the Affordable Care Act (ACA). -- The most important risks to Tenet's credit profile are the company's strained free cash flow (FCF) and industry lagging profitability. Vanguard has several large ongoing capital expansion projects, the funding of which will further pressure cash flows in 2014-2015. -- Given Tenet's somewhat limited financial flexibility and the high degree of operating leverage inherent in the business model of a hospital company, persistently weak growth in organic patient utilization in the for-profit hospital sector is a concern. -- Fitch believes the implementation of the health insurance expansion elements of the ACA will be a positive catalyst for EBITDA growth for the hospital industry starting in 2014, primarily because of a drop in the number of uninsured patients and the associated financial burden of bad debt expense. Vanguard Acquisition Drives Higher Leverage Tenet acquired Vanguard in an all-cash deal for a total consideration of $4.3 billion, including the purchase of Vanguard's public equity for $1.8 billion and the refinancing of $2.5 billion of Vanguard's net outstanding debt. The transaction was entirely debt funded; Tenet issued notes (including $1.8 billion 6% secured notes due 2020 and $2.8 billion of 8.125% unsecured notes due 2022) to finance the acquisition. Funding of the acquisition resulted in pro forma debt-to-EBITDA of 5.7x for the combined entity, and total secured debt to EBITDA of 2.9x. Tenet does have capacity for additional debt under its debt agreements, although the capacity for debt secured pari passu to the notes is nearly exhausted. The senior secured note indentures limit the company's ability to issue additional secured debt. Secured debt is permitted up to the greater of $3.2 billion and 4.0x EBITDA. Debt secured on a basis pari passu to the secured notes is limited to the greater of $2.6 billion and 3.0x EBITDA. Considering the debt funding of the Vanguard acquisition, Fitch estimates that Tenet has about $2 billion of incremental total secured debt capacity and $150 million in pari passu secured debt capacity. Lagging FCF and profitability The most important risk to the credit profile is strained FCF (cash from operations less dividends and capital expenditures) and industry-lagging profitability. Although Tenet continues to lag industry peers in profitability, the company's operating margins have recently improved, helped by management's strategy to aggressively grow the relatively more profitable outpatient business. Expansion in FCF has also been aided by the recent refinancing of some of the company's most expensive debt. Despite progress in improving the business mix and reducing fixed interest expense, Tenet's FCF generation remains thin ($7 million in the LTM ended June 30, 2013) and margin expansion has stalled in recent quarters, as weak organic growth in patient volumes has weighed on profitability. The acquisition will further pressure FCF in the near term due to Vanguard's elevated capital spending profile. Fitch expects Tenet to generate positive but thin FCF in 2013-2014, with a FCF margin below 1%. Vanguard is committed to capital investments in some of its recently acquired markets. However, the funding of these projects will support growth in EBITDA over the longer term. Some of the in-progress projects, including a heart hospital in Detroit, MI and a general acute care hospital in New Braunfels, TX, are scheduled to open in 2014, in time to coincide with the health insurance expansion of the ACA. While Fitch does not expect Tenet to encounter any major difficulties in the integration of Vanguard it is worth noting that the company does not have a track record of integrating larger acquisitions. Most of Tenet's recent purchases have been small and focused on outpatient services. Assuming a smooth integration process, operating synergies should contribute to improved profitability post the acquisition. Tenet expects to achieve $100 million-$200 million in cost synergies, with half of the benefit realized by the end of the first full year post the acquisition. While cost synergies are a proven component of return on investment in hospital acquisitions, Fitch conservatively discounts the amount of synergies Tenet expects to realize, with forecasted growth in EBITDA in 2014-2015 instead driven by the implementation of the ACA and organic growth in the business helped by Vanguard's expansion projects. Affordable Care Act Positive Driver In 2014 Fitch believes the implementation of the health insurance expansion elements of the ACA will be a positive catalyst for EBITDA growth for the hospital industry in 2014-2015, primarily because of a reduction in uninsured patient volumes and the associated burden of bad debt expense. However, modeling the ACA's effects for a combined Tenet/Vanguard is difficult because of uncertainties in the assumptions of the legislation's effects on the industry. Beginning in 2014, there will be better visibility on the influence of the ACA on the hospital industry. The open enrollment period for health insurance plans offered in the insurance exchanges started on Oct. 1. There was little information available beforehand about the expected number of enrollees and the types of coverage these individual would choose. There are also likely to be further development in the states' Medicaid expansion plans. Post the acquisition, Tenet will have 27 of its 77 acute-care hospitals in Florida and Texas, two states that do not plan to expand Medicaid eligibility on Jan. 1, 2014. This will dampen the positive effects of the insurance expansion provisions of the ACA for the company. Weak Organic Operating Trends The for-profit hospital industry has been experiencing weak organic operating trends since the trough of the 2007-2009 recession. Conditions have been particularly challenging in the urban markets where Tenet and Vanguard's hospitals are located because of higher levels of Medicaid and uninsured patients (which are less profitable than those with commercial health insurance). Vanguard is also highly exposed to trends in Medicaid through the company's health plan business. The decision by the state of Arizona to cut Medicaid payments rates to providers and cap enrollment has recently been a headwind to that company's operations. Fitch does not forecast an improvement in organic operating trends in the hospital industry in the second half of 2013. In addition to weak economic conditions, other factors including pressure by commercial and government payors and a growing consumer share of healthcare spending are constraining growth in healthcare utilization. The 2% sequestration of Medicare payments and reforms to Medicare reimbursement required by the ACA will also continue to weigh on top-line growth. Rating Sensitivities: Maintenance of the 'B' IDR will require an expectation of debt-to- EBITDA dropping to near 5.0x by mid-2015. There could be a tolerance for higher leverage at the 'B' IDR (up to 5.5x total debt to EBITDA) assuming the expectation of improvement in the FCF profile. An expectation of an improving FCF profile could be supported by: -- Positive developments in the insurance expansion required by the ACA, such as strong participation in the health insurance exchanges or more state governments opting into Medicaid expansion; -- Evidence of some stabilization of organic operating trends in Tenet's largest hospital markets; -- The on-time and on-budget completion of Vanguard's schedule of capital projects. The Stable Rating Outlook reflects Fitch's belief that the 5.0x leverage target is achievable based mostly on EBITDA expansion driven by the ACA and organic growth in the business, as opposed to the realization of synergies or the application of cash to debt reduction. Given Tenet's strained FCF, opportunities to pay-down debt are limited. The company has recently been more aggressive in returning cash to shareholders, and has indicated that it will continue to make share repurchases post the acquisition. If the company chooses to fund share repurchase with debt and delay deleveraging, it could result in a downgrade of the ratings. A Positive Rating Outlook is unlikely over the next two-to-three years. Debt Issue Ratings: Fitch has affirmed Tenet's ratings as follows: -- Issuer Default Rating at 'B'; -- Senior secured credit facility and senior secured notes at 'BB/RR1'; -- Senior unsecured notes at 'B-/RR5'. The Recovery Ratings (RRs) reflect Fitch's expectation that the enterprise value of Tenet will be maximized in a restructuring scenario (going concern), rather than a liquidation. The recovery analysis is pro forma for the Vanguard acquisition, including the contribution of Vanguard's EBITDA and the debt issued to fund the transaction. Fitch estimates a post-default EBITDA for Tenet of $1.2 million, which is a 35% haircut from the June 30, 2013 LTM EBITDA level of $1.8 billion. A 35% haircut represents roughly the level of EBITDA decline that results in 1.0x coverage of Fitch's estimate of Tenet's fixed charges adjusted for Vanguard in a distressed scenario, including interest and rent expense and maintenance- related capital expenditures. Fitch then applies a 6.5x multiple to post-default EBITDA, resulting in a post-default EV of $7.6 billion for Tenet. The multiple is based on observation of both recent transactions/takeout and public market multiples in the healthcare industry. It represents a haircut from recent transaction multiples, which have been ~8.0x, but is close to recent public market multiples. Fitch applies a waterfall analysis to the post-default EV based on the relative claims of the debt in the capital structure. Administrative claims are assumed to consume 10% of post-default EV. Fitch assumes that Tenet would draw $400 million or 50% of the available capacity on the $800 million revolver in a bankruptcy scenario, and includes that amount in the claims waterfall. The revolver is collateralized by patient accounts receivable, and Fitch assumes a reduction in the borrowing base in a distressed scenario, limiting the amount Tenet can draw on the facility. The 'BB/RR1' rating for Tenet's secured debt (which includes the bank credit facility and the senior secured notes) reflects Fitch's expectation of 100% recovery under a bankruptcy scenario. The 'B-/RR5' rating on the unsecured notes reflects Fitch's expectations of recovery of 25% of outstanding principal. The bank facility is assumed to be fully recovered before the secured notes. The bank facility is secured by a first-priority lien on the patient accounts receivable of all of the borrower's wholly owned hospital subsidiaries while the secured notes are secured by the capital stock of the operating subsidiaries, making the notes structurally subordinate to the bank facility with respect to the accounts receivable collateral. Total debt of $10.2 billion consists primarily of: Senior unsecured notes: -- $60 million due 2014; -- $474 million due 2015; -- $300 million due 2020; -- $750 million due 2020; -- $2.8 billion due 2022; -- $430 million due 2031. Senior secured notes: -- $1.041 billion due 2018; -- $1.8 billion due 2020; -- $500 million due 2020; -- $850 million due 2021 -- $1.05 billion due 2021. TRANS ENERGY: Amends Annual Reports in Response to Comments ----------------------------------------------------------- Trans Energy, Inc., amended its annual reports on Form 10-K for the years ended Dec. 31, 2009, Dec. 31, 2010, Dec. 31, 2011, and Dec. 31, 2012, to reflect changes made in response to comments the Company received from the staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission in connection with the staff's review of the Annual Reports. Significant changes include the following: * Expanded disclosure to discuss technology used to establish appropriate level of certainty for material additions to the Company's reserve estimates * Expanded disclosure on number of producing wells to include net number of wells * Drilling activity disclosure has been expanded to include 2010 activity Copies of the Amended Annual Reports are available at: http://is.gd/QPV8sB http://is.gd/ApMrK4 http://is.gd/n6Sq46 http://is.gd/ofPsym About Trans Energy St. Mary's, West Virginia-based Trans Energy, Inc. (OTC BB: TENG) -- http://www.transenergyinc.com/-- is an independent energy company engaged in the acquisition, exploration, development, exploitation and production of oil and natural gas. Its operations are presently focused in the State of West Virginia. In its audit report on the Company's 2011 results, Maloney + Novotny, LLC, in Cleveland, Ohio, noted that the Company has generated significant losses from operations and has a working capital deficit of $18.37 million at Dec. 31, 2011, which together raises substantial doubt about the Company's ability to continue as a going concern. The Company's balance sheet at June 30, 2013, showed $88.89 million in total assets, $85.48 million in total liabilities and $3.40 million in total stockholders' equity. TRANS ENERGY: Presented at IPAA Investment Symposium ---------------------------------------------------- Trans Energy, Inc.'s chairman Steve Lucado and president John Corp presented at the IPAA OGIS Conference on Wednesday, Oct. 2, 2013. The conference was held at the Palace Hotel in San Francisco, California. The webcast of the Trans Energy, Inc. presentation can be accessed at: http://www.investorcalendar.com/CEPage.asp?ID=171620 The presentation focused on the Company's development efforts in the Marcellus Shale, specifically in Marion, Marshall, Tyler and Wetzel counties in Northern West Virginia. The presentation covered the following topics: * General information about Trans Energy, Inc. * Discussion of drilling results * Production history and future drilling plans * Wet gas economics * SEC Reserves * Debt financing - Credit Agreement * Other information About Trans Energy St. Mary's, West Virginia-based Trans Energy, Inc. (OTC BB: TENG) -- http://www.transenergyinc.com/-- is an independent energy company engaged in the acquisition, exploration, development, exploitation and production of oil and natural gas. Its operations are presently focused in the State of West Virginia. In its audit report on the Company's 2011 results, Maloney + Novotny, LLC, in Cleveland, Ohio, noted that the Company has generated significant losses from operations and has a working capital deficit of $18.37 million at Dec. 31, 2011, which together raises substantial doubt about the Company's ability to continue as a going concern. The Company's balance sheet at June 30, 2013, showed $88.89 million in total assets, $85.48 million in total liabilities and $3.40 million in total stockholders' equity. TRANSGENOMIC INC: P. Kinnon Named President, CEO and Director ------------------------------------------------------------- Paul Kinnon has been named president, chief executive officer and a director of Transgenomic, Inc., replacing Craig J. Tuttle, effective Sept. 30, 2013. Mr. Kinnon brings over two decades of business and scientific leadership in the biotechnology and pharmaceutical industries to Transgenomic, with a proven track record of developing and launching life science products. Most recently, he has provided commercial and strategic consultancy services to a variety of life science companies and investors, including Transgenomic. With broad experience covering clinical diagnostic, core life science research and applied markets, his appointment strengthens the executive leadership team and adds significant commercial, operational, and scientific expertise. Rodney S. Markin, M.D., Ph.D., chairman of Transgenomic commented: "Paul has a demonstrable history of success in building teams, forming strategic partnerships and leading global organizations. He has also played a pivotal role in the successful growth and development of many innovation-driven companies. We anticipate that the Board's appointment of Paul as CEO will allow Transgenomic to leverage the Company's leading assets, talent and business partners." Dr. Markin added: "We thank Craig for his service to the Company and wish him well in his future endeavors." "Transgenomic is an exciting story, with a lot of potential for growth, particularly in the area of innovative genetic testing and services," said Mr. Kinnon. "We have clear strengths in our tools, technologies, world class clinical and research services, and a terrific team of motivated people. I look forward to leading the Transgenomic team as we refine and implement strategies designed to better address our many promising market opportunities and create value for all of our stakeholders." Before joining Transgenomic, Mr. Kinnon was president and CEO of ZyGEM Corporation Limited, which he transformed from a local New Zealand reagent firm into a global company developing breakthrough analytic systems. Mr. Kinnon joined ZyGEM in 2007 from Invitrogen Corp. (now Life Technologies), where he held the positions of Vice President of Global Strategic Alliances and Vice President and General Manager of the Applied Markets Business Unit. Previously, Mr. Kinnon held business, sales and marketing roles of increasing responsibility at Guava Technologies, Cellomics, and other life science companies. Additional information regarding the executive changes is available for free at http://is.gd/ZSoWJj About Transgenomic Transgenomic, Inc. -- http://www.transgenomic.com/-- is a global biotechnology company advancing personalized medicine in cardiology, oncology, and inherited diseases through its proprietary molecular technologies and world-class clinical and research services. The Company is a global leader in cardiac genetic testing with a family of innovative products, including its C-GAAP test, designed to detect gene mutations which indicate cardiac disorders, or which can lead to serious adverse events. Transgenomic has three complementary business divisions: Transgenomic Clinical Laboratories, which specializes in molecular diagnostics for cardiology, oncology, neurology, and mitochondrial disorders; Transgenomic Pharmacogenomic Services, a contract research laboratory that specializes in supporting all phases of pre-clinical and clinical trials for oncology drugs in development; and Transgenomic Diagnostic Tools, which produces equipment, reagents, and other consumables that empower clinical and research applications in molecular testing and cytogenetics. Transgenomic believes there is significant opportunity for continued growth across all three businesses by leveraging their synergistic capabilities, technologies, and expertise. The Company actively develops and acquires new technology and other intellectual property that strengthens its leadership in personalized medicine. Transgenomic incurred a net loss of $8.32 million in 2012, a net loss of $9.78 million in 2011 and a net loss of $3.13 million in 2010. As of June 30, 2013, the Company had $39.36 million in total assets, $18.34 million in total liabilities and $21.01 million in total stockholders' equity. Forbearance Agreement On Feb. 7, 2013, the Company entered into a Forbearance Agreement with Dogwood Pharmaceuticals, Inc., a wholly owned subsidiary of Forest Laboratories, Inc., and successor-in-interest to PGxHealth, LLC, with an effective date of Dec. 31, 2012. In December 2012, the Company commenced discussions with the Lender to defer the payment due on Dec. 31, 2012, until March 31, 2013. As of Dec. 31, 2012, an aggregate of $1.4 million was due and payable under the Note by Transgenomic, and non-payment would constitute an event of default under the Note and that certain Security Agreement, dated as of Dec. 29, 2010, entered into between Transgenomic and PGX. Pursuant to the Forbearance Agreement, the Lender agreed, among other things, to forbear from exercising its rights and remedies under the Note and the Security Agreement as a TRIBUNE CO: Former Executive Sentenced to 2 Years for Theft ----------------------------------------------------------- Law360 reported that a former Tribune Co. executive will serve two years in prison for stealing $264,000 from the now-bankrupt media company, her attorney confirmed on Sept. 25. According to the report, Stephanie Pater, who oversaw the company's real estate operations, pled guilty in June to mail fraud, admitting that she stole the money through fake contracts with Tribune, according to court documents. In those contracts, Pater received bogus bonuses that were improperly directed from a real estate brokerage, the report related. Other than confirming the sentence length, Pater's attorney, private practitioner John Legutki, declined to comment, the report said. The case is In Re: Tribune Company Fraudulent Conveyance Litigation, Case No. 1:11-md-02296 (S.D.N.Y.) before Judge Richard J. Sullivan. About Tribune Co. Chicago, Illinois-based Tribune Co. -- http://www.tribune.com/-- and 110 of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-13141) on Dec. 8, 2008. The Debtors proposed Sidley Austin LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North America LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors listed $7,604,195,000 in total assets and $12,972,541,148 in total debts. Chadbourne & Parke LLP and Landis Rath LLP served as co-counsel to the Official Committee of Unsecured Creditors. AlixPartners LLP served as the Committee's financial advisor. Landis Rath Moelis & Company served as the Committee's investment banker. Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, represented the Committee in connection with the lawsuit filed against former officers and shareholders for the 2007 LBO of Tribune. Protracted negotiations and mediation efforts and numerous proposed plans of reorganization filed by Tribune Co. and competing creditor groups delayed Tribune's emergence from bankruptcy. Many of the disputes among creditors center on the 2007 leveraged buyout fraudulence conveyance claims, the resolution of which is a key issue in the bankruptcy case. Judge Kevin J. Carey issued an order dated July 13, 2012, overruling objections to the confirmation of Tribune Co. and its debtor affiliates' Plan of Reorganization. In November 2012, Tribune received approval from the Federal Communications Commission to transfer media licenses, one of the hurdles to implementing the reorganization plan. Aurelius Capital Management LP failed in halting implementation of the plan pending appeal. Tribune Co. exited Chapter 11 protection Dec. 31, 2012, ending four years of reorganization. The reorganization allowed a group of banks and hedge funds, including Oaktree Capital Management and JPMorgan Chase & Co., to take over the media company. TSC SIEBER: Judgment in Escana Interpleader Suit Affirmed --------------------------------------------------------- District Judge Michael H. Schneider in Tyler, Texas, affirmed the bankruptcy court's resolution of cross-motions for summary judgment in an adversary interpleader action. Encana Oil & Gas (USA) Inc. originally filed this action in the U.S. District Court for the Northern District of Texas, asking the court to determine the competing rights of the claimants to $345,665.50. Encana deposited the funds in the court's registry. The claimants included TSC Sieber Services, L.C., hired by Encana as the general contractor of a natural gas pipeline project, and several subcontractors hired by TSC Sieber to work on the project. After Encana paid TSC Sieber approximately half of the funds owing under their agreement, several subcontractors notified Encana that they had not been paid for services and materials related to the project. Encana promptly ceased payments to TSC Sieber and initiated this interpleader action, depositing with the district court the full balance due under its agreement with TSC Sieber. TSC Sieber subsequently filed for chapter 11 bankruptcy protection, and the district court in the Northern District transferred the case for consideration as an adversary proceeding related to the pending bankruptcy action. The bankruptcy case was then converted to a chapter 7 proceeding, and the bankruptcy court appointed Stephen J. Zayler as trustee of the bankruptcy estate. Finding the requirements satisfied under the interpleader statute, the bankruptcy court discharged Encana. The claimants then filed cross-motions for summary judgment, agreeing that no genuine issues of material fact existed and asking the bankruptcy court to resolve their respective rights to the interpleader fund as a matter of law. On July 26, 2012, the bankruptcy court issued a Memorandum of Decision Resolving Competing Motions for Summary Judgment (Interpleader) finding in favor of the trustee. The bankruptcy court also simultaneously entered four orders ruling on the motions for summary judgment (incorporating the reasoning set forth in the memorandum) and the judgment in the adversary proceeding. In its memorandum, the bankruptcy court found that under the undisputed facts of this case, Encana's filing of the interpleader action precluded the subcontractors from seeking protection under the Texas Trust Fund Act or from perfecting mineral liens under chapter 56 of the Texas Property Code. Specifically, the bankruptcy court held the subcontractors had not shown that the statutory requirements under the Texas Trust Fund Act and chapter 56 were satisfied. More generally, the bankruptcy court noted that Encana's invocation of the interpleader procedure alleviated the need for protection of the subcontractors' rights under both the Texas Trust Fund Act and chapter 56. Subcontractors Holt Texas, Ltd. and Transamerican Underground, Ltd. filed a notice of appeal challenging the bankruptcy court's rulings. The appellants challenge the bankruptcy court's denial of their rights under both the Texas Trust Fund Act and the bankruptcy court's ruling that the appellants mineral lien rights do not extend to the interpleader fund. The District Court adopts the bankruptcy court's reasoning and holds the following: 1) The Texas Trust Fund Act is inapplicable to this interpleader action because Encana's deposit of the interpleader funds with the court was not a "payment [] made to a contractor or subcontractor, or to an officer, director, or agent of a contractor or subcontractor." Tex. Prop. Code Sec. 162.001(a). The payment is necessary to invoke the protections of the Texas Trust Fund Act. 2) Appellants do not assert valid mineral liens under chapter 56 of the Texas Property Code. Encana can only be liable under chapter 56 to the subcontractor to the extent that it is liable to the general contractor. But when Encana deposited the funds in the registry of the Northern District, Encana was insulated from liability to TSC Sieber for money due under the contract, thus, superseding Appellants' attempts to perfect a mineral lien or otherwise invoke the protection of chapter 56. The case before the District Court is, ENCANA OIL & GAS (USA) INC. v. TSC SIEBER SERVICES, L.C., et al., Appellees, Case No. 6:12-cv- 888 (E.D. Tex.). A copy of Judge Schneider's Sept. 24, 2013 Memorandum Opinion and Order is available at http://is.gd/yMZKLo from Leagle.com. TSC Sieber Services, LC, filed a Chapter 11 voluntary petition (Bankr. E.D. Tex. Case No. 09-61042) on Oct. 17, 2009. The case was subsequently converted to Chapter 7 on Nov. 2, 2009, and Stephen J. Zayler was appointed as the Chapter 7 Trustee. The Debtor was primarily engaged in the business of pipeline construction. The Debtor eventually conducted its operations from three locations -- Arp, Texas, Millsap, Texas, and Keithville, Louisiana. TUOMEY HEALTHCARE: S&P Lowers Rating on Revenue Bonds to 'CCC' -------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered to 'CCC' from 'BB' its long-term rating and underlying rating (SPUR) on South Carolina Jobs Economic Development Authority's series 2006 revenue bonds, issued for the Tuomey Healthcare System. At the same time, S&P revised the outlook to developing from negative. The downgrade is due to the fact that the courts have denied Tuomey's request to appeal a court ruling that found Tuomey Healthcare System in violation of the Stark Law and False Claims Act, and granted the government's request to impose between $237 million and up to $277 million in damages. "Given the increasing likelihood that Tuomey may have to pay a sizable settlement and the related uncertainty surrounding the subsequent effects on Tuomey's financial profile, we believe a lower rating is warranted, said Standard & Poor's credit analyst Margaret McNamara. "The 'CCC' rating connotes our view that Tuomey is currently vulnerable to nonpayment." The developing outlook reflects the possibility that S&P could raise the rating if the change in legal status were more favorable to Tuomey or if Tuomey presented a plan for resolution of the judgment that was consistent with a higher rating. Alternatively, S&P could lower the rating if Tuomey files for bankruptcy or experiences substantial financial decline. UNI-PIXEL INC: UniBoss Sensor Film Rebranded as InTouch Sensors --------------------------------------------------------------- UniPixel, Inc., and Kodak have made significant progress in their joint effort to commercialize and manufacture UniPixel's next- generation touch-screen sensors, including product rebranding. InTouch SensorsTM is UniPixel's newly developed and named pro-cap, multi-touch sensor film, previously named after the UniBossTM manufacturing process. Kodak and UniPixel have further cobranded this new name as "InTouch SensorsTM Powered by Kodak," which reflects the synergistic contributions the companies bring to this new touch-screen sensor solution. Recent developments include: * Strong overall market interest -- The global market introduction of InTouch SensorsTM is driven by the multi- million dollar preferred price and capacity licenses executed with two Fortune 100 companies. The product continues to gain interest throughout the entire touch module market segment with numerous active customer engagements and requests for price and delivery terms for smart phones, tablets, ultrabooks, notebooks and all-in-one touch sensor solutions. * Commercial production trials underway -- Two new plating lines that were recently delivered to UniPixel's Texas facility have been calibrated to support the UniBossTM production process, bringing the total number of plating lines that are now being used for commercial production trials to three. * Ramped up equipment capacity at Kodak's Rochester, New York Facility -- The recent installation of the first printing line at the Eastman Business Park in the Rochester facility further advances the schedule, with four plating lines and two printing lines to be operational by the fourth quarter of 2013. Kodak and UniPixel are planning to build out equipment capacity throughout 2014 to support anticipated increasing demand, and are planning to expand the Rochester site by adding additional plating lines while increasing throughput via continuous process improvement. Kodak CEO Antonio M. Perez said: "Working together, Kodak and UniPixel are quickly approaching the global market rollout of a functionally printed touch-screen sensor. In light of the initial interest for this product, we believe this solution has the potential to shake up this large and growing market. The superior technologies that both companies are contributing to this product will enable us to produce and deliver touch-screen sensors at the very highest level of quality, durability and value. 'InTouch SensorsTM Powered by Kodak' exemplify the kind of breakthrough solutions you can expect from the new Kodak." Reed Killion, president and CEO of UniPixel, said: "Our sensor rebranding aligns with the ramp-up of equipment capacity to meet licensing agreement milestones and the anticipated demand for InTouch SensorsTM to be used in a wide variety of devices. We believe the brand 'InTouch Sensors' will become synonymous with quality, price and performance. The name of Kodak in the tagline reveals the important role our technology, development, and manufacturer partner is playing in UniPixel's touch-screen sensors. "Given the substantial resources Kodak has applied to supporting our efforts, we remain on track to begin commercial production in the fourth quarter of 2013, and then ramp production volumes throughout 2014. With the unmatched capabilities of our touch sensor technology, and the strength and support of Kodak and UniPixel's other global partners, we look forward to making the commercial rollout of InTouch Sensors a success over the weeks and months ahead." Under the new InTouch Sensors brand, UniPixel and Kodak are in the process of bringing to market a touch-sensor with a price and performance curve that is unmatched in the industry. InTouch Sensors offer the unique advantages of metal mesh touch-sensors based on an additive, roll-to-roll, flexible electronics process as compared to the traditional subtractive ITO-based and subtractive ITO replacement-based touch-sensor solutions. These advantages include higher touch sensitivity, improved touch distinction, better durability, significantly higher conductivity, extensibility to a greater number of sizes and form factors, and faster sensing speeds. The UniBoss additive manufacturing process is more efficient and sustainable, promising lower production costs contrasted with standard ITO-based touch technology due to lower material costs, fewer steps in the manufacturing process and a more simplified supply chain. UniPixel is leveraging its manufacturing and supply chain agreement with Kodak for supply chain management, quality systems, as well as lab access and related resources for defect analysis, data collection, processing and metrology for commercial production. Additionally, Kodak research and development resources are working with UniPixel to integrate Kodak technologies such as high resolution deposition and material formulation expertise into the InTouch manufacturing process. UniPixel and Kodak have begun discussions with several manufacturing companies in Asia that have expressed strong interest in setting up manufacturing capabilities for InTouch Sensors in their respective countries. "The terms and conditions of any potential agreements will depend on the volume commitments, geography, and strategic contribution of any partners, all of which will impact the funding and exclusivity of the relationship," said Killion. About Uni-Pixel Inc. The Woodlands, Tex.-based Uni-Pixel, Inc. (OTC BB: UNXL) -- http://www.unipixel.com/-- is a production stage company delivering its Clearly Superior(TM) Performance Engineered Films to the Lighting & Display, Solar and Flexible Electronics market segments. "As of December 31, 2012, we had a cash balance of approximately $13.0 million and working capital of $12.8 million. We project that current cash reserves will sustain our operations through at least December 31, 2013, and we are not aware of any trends or potential events that are likely to adversely impact our short term liquidity through this term. We expect to fund our operations with our net product revenues from our commercial products, cash and cash equivalents supplemented by proceeds from equity or debt financings, and loans or collaborative agreements with corporate partners, each to the extent necessary," according to the Company's annual report for the year ended Dec. 31, 2012. Uni-Pixel incurred a net loss of $9.01 million in 2012, as compared with a net loss of $8.56 million in 2011. The Company's balance sheet at June 30, 2013, showed $63.28 million in total assets, $6.56 million in total liabilities and $56.71 million in total shareholders' equity. UNITED AMERICAN: Delays Form 10-K for Fiscal 2013 ------------------------------------------------- United American Healthcare Corporation was not in a position to file its annual report on Form 10-K for the Company's fiscal year ended June 30, 2013, with the U.S. Securities and Exchange Commission because the Company was not able to complete the Form 10-K in a timely manner without unreasonable effort or expense. Based on work completed to date by the Company on its year-end closing procedures and preparation of its financial statements, the Company expects to file the Form 10-K on or before Oct. 15, 2013. About United American Chicago-based United American Healthcare, through its wholly owned subsidiary Pulse Systems, LLC, provides contract manufacturing services to the medical device industry, with a focus on precision laser-cutting capabilities and the processing of thin-wall tubular metal components, sub-assemblies and implants, primarily in the cardiovascular market. As reported in the TCR on Oct. 18, 2012, Bravos & Associates, CPA's, in Bloomingdale, Illinois, expressed substantial doubt about United American's ability to continue as a going concern. The independent auditors noted that the Company incurred a net loss from continuing operations of $1.9 million during the year ended June 30, 2012, and, as of that date, had a working capital deficiency of $10.2 million. For the nine months ended March 31, 2013, the Company reported net income of $398,000 on $6.05 million of contract manufacturing revenue, as compared with a net loss of $2.33 million on $4.80 million of contract manufacturing revenue for the same period a year ago. The Company's balance sheet at March 31, 2013, showed $15.54 million in total assets, $12.67 million in total liabilities and $2.87 million in total shareholders' equity. USG CORP: Modine Manufacturing CEO Elected to Board --------------------------------------------------- The Board of Directors of USG Corporation elected Thomas A. Burke, president and chief executive officer at Modine Manufacturing Company, a director of the Company for a term expiring at the 2016 annual meeting of stockholders. Mr. Burke was also appointed to the Audit and Governance Committees of the Board. Mr. Burke will be entitled to receive the same compensation for service as a director as is applicable to the Company's other directors. About USG Corporation Based in Chicago, Ill., USG Corporation -- http://www.usg.com/-- through its subsidiaries, manufactures and distributes building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The company filed for Chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). When the Debtors filed for protection from their creditors, they disclosed $3.252 billion in assets and $2.739 billion in liabilities. The Debtors emerged from bankruptcy protection on June 20, 2006. For the 12 months ended Dec. 31, 2012, the Company incurred a net loss of $125 million on $3.22 billion of net sales, as compared with a net loss of $390 million on $2.91 billion of net sales during the prior year. As of June 30, 2013, the Company had $3.68 billion in total assets, $3.64 billion in total liabilities and $40 million in total stockholders' equity including noncontrolling interest. * * * As reported by the TCR on Aug. 15, 2011, Standard & Poor's Ratings Services lowered its corporate credit rating on USG Corp. to 'B' from 'B+'. "The downgrade reflects our expectation that USG's operating results and cash flow are likely to be strained over the next year due to the ongoing depressed level of housing starts and still- weak commercial construction activity," said Standard & Poor's credit analyst Thomas Nadramia. "It is now more likely, in our view, that any meaningful recovery in housing starts may be deferred until late 2012 or into 2013. As a result, the risk that USG's liquidity in the next 12 to 24 months will continue to erode (and be less than we incorporated into our prior ratings) has increased. The ratings previously incorporated a greater improvement in housing starts, which would have enabled USG to reduce its negative operating cash flow in 2012 and achieve breakeven cash flow or better by 2013." As reported by the TCR on Dec. 5, 2012, Moody's Investors Service affirmed USG Corporation's Caa1 Corporate Family Rating and Caa1 Probability of Default Rating. USG's Caa1 Corporate Family Rating reflects its high debt leverage characteristics, despite Moody's expectation of improving operating performance. In the Sept. 10, 2013, edition of the TCR, Fitch Ratings has upgraded the ratings of USG Corporation, including the company's Issuer Default Rating (IDR) to 'B' from 'B-'. The upgrade reflects USG's improving profitability and credit metrics this year and the expectation that this trend continues through at least 2014. USMART MOBILE: Chief Operating Officer Quits -------------------------------------------- Kenneth Lap Yin Chan resigned as the chief operating officer of USmart Mobile Device Inc. due to his health reason. Mr. Chan confirmed that his resignation was not due to any disagreement with the Company. The board of directors of the Company has already begun the process of identifying a qualified officer candidate to fill Mr. Chan's seat on which he served. About USmart Mobile Del.-based USmart Mobile, previously known as ACL Semiconductors Inc., is currently engaged in the production, manufacturing and distribution of smartphones, electronic products and components in Hong Kong Special Administrative Region and the People's Republic of China through its operating subsidiaries. The Company's balance sheet at June 30, 2013, showed $32.56 million in total assets, $33.65 million in total liabilities and a $1.08 million total stockholders' deficit. "As of March 31, 2013, the Company has total current assets of $6,831,666 and current liabilities of $34,389,086. This raises substantial doubt about the Company's ability to continue as a going concern. We will continue to seek additional sources of available financing on acceptable terms; however, there can be no assurance that we will be able to obtain the necessary additional capital on a timely basis or on acceptable terms, if at all. In addition, if the results are negatively impacted and delayed as a result of political and economic factors beyond management's control, our capital requirements may increase," according to the Company's quarterly report for the period ended March 31, 2013. VALENCE TECHNOLOGY: Hearing on Amended Plan Approval on Oct. 30 --------------------------------------------------------------- The Bankruptcy Court issued an order approving the disclosure statement relating to the amended plan of reorganization of Valence Technology, Inc. The Court scheduled a confirmation hearing with respect to the Amended Plan on Oct. 30, 2013, at 1:30 p.m. (central time). On Aug. 21, 2013, the Company filed a proposed plan of reorganization and related disclosure statement with the Bankruptcy Court, soliciting acceptances of the Plan and seeking confirmation of the Plan by the Bankruptcy Court. On Sept. 20, 2013, the Debtor filed a proposed Amended Plan related proposed Amended Disclosure Statement. The Amended Plan provides for the resolution of outstanding claims against the Debtor. Among other things, the Amended Plan provides that: (i) each holder of an allowed Priority Non-Tax Claim, an allowed DIP Claim, an allowed Convenience Claim or an allowed general unsecured claim of $500 or less will be paid in full; (ii) Berg & Berg Enterprises, LLC, the pre-petition secured lender, the holder of pre-petition secured indebtedness of the Debtor, will extend the maturity date of part of its pre-petition secured claim under a new promissory note secured by a first priority lien against all of the reorganized Debtor's assets, and receive, in exchange for its remaining pre-petition secured claim in the amount of $50 million, 100 percent of the shares of New Valence Stock, representing 100 percent of the reorganized Debtor's issued and outstanding shares of capital stock on the effective date; (iii) holders of certain classes of unsecured claims will receive payment in full over time; (iv) holders of pre-petition equity interests in the Debtor, including, without limitation, any shares of the Debtor's preferred stock, common stock, and any option, warrant or right to acquire any ownership interest in the Debtor, will receive no distribution; and (v) all pre-petition equity interests in the Debtor will be canceled on the effective date of the Amended Plan. Under the terms of the Amended Plan, the Pre-petition Secured Lender will provide exit financing to the Debtor by entering into a new loan agreement in the amount of $20 million with the reorganized Debtor on the effective date of the Amended Plan. The New Loan will have a 5-year term and simple accrued interest at the rate of 5 percent per annum, and will be secured by a first priority lien against all of the reorganized Debtor's assets. Payment of the New Loan will be subordinated to payment of claims of a number of junior classes, including, without limitation, the general unsecured creditors. The proceeds from the New Loan will be used to pay claims under the Amended Plan and to fund the reorganized Debtor's working capital and general corporate needs. A copy of the First Amended Plan is available for free at: http://is.gd/7s8bjW A copy of the First Amended Disclosure Statement is available at: http://is.gd/2qJE33 About Valence Technology Valence Technology, Inc., filed a Chapter 11 petition (Bankr. W.D. Tex. Case No. 12-11580) on July 12, 2012, in its home-town in Austin. Founded in 1989, Valence develops lithium iron magnesium phosphate rechargeable batteries. Its products are used in hybrid and electric vehicles, as well as hybrid boats and Segway personal transporters. The Debtor disclosed debt of $82.6 million and assets of $31.5 million as of March 31, 2012. The Debtor disclosed $24,858,325 in assets and $78,520,831 in liabilities as of the Chapter 11 filing. Chairman Carl E. Berg and related entities own 44.4 percent of the shares. ClearBridge Advisors LLC owns 5.5 percent. Judge Craig A. Gargotta presides over the case. The Company is being advised by Sabrina L. Streusand at Streusand, Landon & Ozburn, LLP with respect to bankruptcy matters. The petition was signed by Robert Kanode, CEO. On Aug. 8, 2012, the U.S. Trustee for Region 7 appointed five creditors to serve on the Official Committee of Unsecured Creditors of the Debtor. Brinkman Portillo Ronk, PC, serves as its counsel. VHGI HOLDINGS: Unit Files for Chapter 11 in Indiana --------------------------------------------------- Due to the failure of Hassan Alshaban Principal and Al Rami PureAl Rami Pure LLC to perform under the terms of the agreed upon renegotiated terms of the Equity Investment Agreement, Lily Group Inc., a wholly-owned subsidiary of VHGI Holdings, Inc., filed a voluntarily petition for reorganization under Chapter 11 of the United States Bankruptcy Code in Bankruptcy Court for the Southern District of Indiana, case number: 13-81073. Lily Group remains in possession of its assets and continues to operate its business as a debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. As a result of the filing of the Chapter 11 petition, an event of default has occurred pursuant to the terms of the $13,000,000 Note Purchase Agreement between Lily Group Inc. and Platinum Partners Credit Opportunities Master Fund LP. VHGI Holdings, Inc., is also in default of all outstanding notes and obligations. On Sept. 12, 2013 Lily Group, Inc., a wholly-owned subsidiary of VHGI Holdings, Inc., notified Al Rami Pure LLC that it was terminating the Equity Investment Agreement between the parties as a result of the failure of Hassan Alshaban Principal of Al Rami Pure and Al Rami Pure LLC to perform under the terms of the agreement. Lily Group Inc. is attempting to close the final issue of the failed transaction by successfully retrieving the deposited funds placed on deposit within the UAE banks associated with this transaction. About VHGI Holdings Fort Worth, Tex.-based VHGI Holdings, Inc., is a holding company with revenue streams from these business segments: (a) precious metals (b) oil and gas (c) coal and (d) medical technology. VHGI incurred a net loss of $22.34 million on $481,568 of total revenue for the year ended Dec. 31, 2012, as compared with a net loss of $5.43 million on $499,617 of total revenue during the prior year. As of Dec. 31, 2012, the Company had $47.45 million in total assets, $62.18 million in total liabilities and a $14.72 million total stockholders' deficit. Liggett, Vogt & Webb, P.A., in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has incurred recurring operating losses, has significant amounts of past due debts and will have to obtain additional capital to sustain operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. VIGGLE INC: Draws Down $2 Million Under New Credit Facility ----------------------------------------------------------- Viggle Inc. and Sillerman Investment Company II LLC, an affiliate of the Company's executive chairman and chief executive officer, on March 11, 2013, entered into an amended and restated line of credit, pursuant to which the Company may, from time to time, draw on the New $25,000,000 Line of Credit in amounts of no less than $1,000,000. On Sept. 25, 2013, the Company drew $2,000,000 under the New $25,000,000 Line of Credit. Following the Sept. 25, 2013 draw, there is $4,000,000 available to be drawn under the New $25,000,000 Line of Credit. In accordance with the terms of the New $25,000,000 Line of Credit, the Company issued to SIC II warrants to purchase 2,000,000 shares of the Company's Common Stock, par value $0.001 per share. These warrants will be exercisable at a price of $1.00 per share and will expire five years after issuance. The Company expects to record a stock-based compensation charge of approximately $805,000 relating to these warrants. The Board of Directors also approved for purposes of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, the transaction and the issuance of the warrants for purposes of securing an exemption for that acquisition of all those warrants and the shares into which they may be converted by SIC II. As approved by the Board of Directors, SIC II is a director of the Company by deputization for purposes of securing an exemption for these transactions from the provisions of Section 16(b) of the Exchange Act pursuant to Rule 16b-3 thereunder. About Viggle New York City-based Viggle Inc. is a loyalty marketing company. The Company has developed a loyalty program for television that gives people real rewards for checking into the television shows they are watching on most mobile operating system. Viggle users can redeem their points in the app's rewards catalog for items such as movie tickets, music, or gift cards. Viggle incurred a net loss of $91.40 million on $13.90 million of revenues for the year ended June 30, 2013, as compared with a net loss of $96.51 million on $1.73 million of revenues during the prior year. The Company's balance sheet at June 30, 2013, showed $16.77 million in total assets, $54.15 million in total liabilities and a $37.37 million total stockholders' deficit. BDO USA, LLP, in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2013. The independent auditors noted that the Company has suffered recurring losses from operations and at June 30, 2013, has deficiencies in working capital and equity that raise substantial doubt about its ability to continue as a going concern. VIGGLE INC: R. Sillerman Held 82.6% Equity Stake at Sept. 16 ------------------------------------------------------------ In an amended Schedule 13D filed with the U.S. Securities and Exchange Commission, Robert F.X. Sillerman disclosed that as of Sept. 16, 2013, he beneficially owned 109,561,913 shares of common stock of Viggle Inc. representing 82.6 percent of the shares outstanding. Mr. Sillerman previously reported beneficial ownership of 109,518,087 common shares or 74.6 percent equity stake as of Sept. 6, 2013. A copy of the regulatory filing is available for free at http://is.gd/Sbkt3L About Viggle New York City-based Viggle Inc. is a loyalty marketing company. The Company has developed a loyalty program for television that gives people real rewards for checking into the television shows they are watching on most mobile operating system. Viggle users can redeem their points in the app's rewards catalog for items such as movie tickets, music, or gift cards. Viggle incurred a net loss of $91.40 million on $13.90 million of revenues for the year ended June 30, 2013, as compared with a net loss of $96.51 million on $1.73 million of revenues during the prior year. The Company's balance sheet at June 30, 2013, showed $16.77 million in total assets, $54.15 million in total liabilities and a $37.37 million total stockholders' deficit. BDO USA, LLP, in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2013. The independent auditors noted that the Company has suffered recurring losses from operations and at June 30, 2013, has deficiencies in working capital and equity that raise substantial doubt about its ability to continue as a going concern. VILLAGE AT KNAPP'S: Wants to Hire John Huizinga as Accountants -------------------------------------------------------------- The Village At Knapp's Crossing, L.L.C., seeks to employ John S. Huizinga CPA as accountants. The Firm is contemplated to review and analyze financial information for the Debtor. Those services will include assisting the Debtor and its attorney in preparing and/or performing monthly operating reports, financial projections and budgets, case reconciliations, cash collateral analyss, financial analysis and other forensic accounting and financial advisory services, as necessary. The Firm has performed accounting services for the Debtor in the past and is willing to continue performing accounting services on the Debtor's behalf and to be compensated at these hourly rates: * Correspondence, Adjusting Journal Entries, Bookkeeping $40 to $80 * Tax and Consulting $140 * Financial Statement Work $140 To the best of the Debtor's knowledge, the Firm does not represent nor hold any interest adverse to the Debtor or the Debtor's estate with regard to the matter in which it is to be employed. The Firm is "disinterested" in accordance with Sec. 101(14) of the Bankruptcy Code. About Village At Knapp's The Village At Knapp's Crossing, L.L.C. in Grand Rapids, Michigan, filed for Chapter 11 (Bankr. W.D. Mich. Case No. 13-06094) on July 25, 2013. Judge Scott W. Dales handles the case. On the Petition Date, the Debtor estimated its assets and debts at $10 million to $50 million. The petition was signed by Steven D. Benner, managing member on behalf of S.D. Benner, sole member. Tishkoff & Associates PLLC is the Debtor's counsel. VILLAGE AT KNAPP'S: First Community Bank Denied Stay Relief ----------------------------------------------------------- Judge James Gregg denied without prejudice First Community Bank's motion for stay relief in its favor. The Village At Knapp's Crossing, L.L.C. in Grand Rapids, Michigan, filed for Chapter 11 (Bankr. W.D. Mich. Case No. 13-06094) on July 25, 2013. Judge Scott W. Dales handles the case. On the Petition Date, the Debtor estimated its assets and debts at $10 million to $50 million. The petition was signed by Steven D. Benner, managing member on behalf of S.D. Benner, sole member. Tishkoff & Associates PLLC is the Debtor's counsel. VISCOUNT SYSTEMS: Issues 21.654 Series A Conv. Preferred Shares --------------------------------------------------------------- Viscount Systems, Inc., issued a total of 21.654 Series A Convertible Redeemable Preferred Stock, par value $0.001 per share, to the outstanding holders of A Shares as dividend payments on the A Shares for the period ended Sept. 30, 2013. The A Shares issued are subject to the conversion and dividend rights as set forth in the Certificate of Designation, Preferences and Rights of the Series A Convertible Redeemable Preferred Stock dated June 5, 2012, as amended October 17, 2012. About Viscount Systems Burnaby, Canada-based Viscount Systems, Inc., is a manufacturer, developer and service provider of access control security products. The Company reported a net loss of C$2.9 million in 2011, compared with a net loss of C$1.3 million in 2010. The Company's balance sheet at June 30, 2013, showed C$1.67 million in total assets, C$6.21 million in total liabilities and a C$4.54 million total stockholders' deficit. The Company's bank credit facility was suspended on December 30, 2011 due to the bank's assessment of the Company's financial position. Management has determined that the Company will need to raise a minimum of C$500,000 by way of new debt or equity financing to continue normal operations for the next twelve months. Management has been actively seeking new investors and developing customer relationships, however a financing arrangement has not yet completed. Short-term loan financing is anticipated from related parties, however there is no certainty that loans will be available when required. These factors raise substantial doubt about the ability of the Company to continue operations as a going concern. Following the 2011 results, Dale Matheson Carr-Hilton Labonte LLP, in Vancouver, Canada, expressed substantial doubt about Viscount Systems' ability to continue as a going concern. The independent auditors noted that the Company has an accumulated deficit of C$5,769,027 and has reported a loss of C$2,883,304 for the year ended Dec. 31, 2011. VISUALANT INC: Obtains Favorable Decision vs. Ascendiant -------------------------------------------------------- Visualant, Inc., filed a complaint on June 17, 2013, against Ascendiant Capital Partners, LLC, in the California Superior Court, County of Orange (Case No. 30-2013-00656770-CU-BC-CJC) for breach of contract, seeking damages, specific performance and injunctive relief against Ascendiant. The Company entered into an Option Agreement with Ascendiant dated April 26, 2013, pursuant to which the Company had the option to purchase from Ascendiant 4,000,000 shares of the Company's common stock for an aggregate purchase price of $300,000. On May 31, 2013, the Company exercised its option to purchase the 4,000,000 Option Shares from Ascendiant and paid to Ascendiant the $300,000 purchase price. In its Complaint, the Company alleges that Ascendiant breached its obligations under the Option Agreement by delivering to the Company only 2,284,525 of the 4,000,000 Option Shares and failing to deliver the remaining 1,715,475 Option Shares. The Company filed a motion for preliminary injunction, seeking an order requiring Ascendiant to transfer the remaining 1,715,475 Option Shares to Visualant or, in the alternative, enjoining Ascendiant from transferring, selling, or otherwise encumbering the Option Shares. On Sept. 24, 2013, the California Superior Court granted Visualant's motion, finding that Visualant was likely to prevail on the merits of its claim against Ascendiant. The Court ordered Ascendiant to deliver 1,715,475 Option Shares to the Company by 4:00PM, Sept. 27, 2013. This delivery has occurred. The Company expects to pursue its damage claim. About Visualant Inc. Seattle, Wash.-based Visualant, Inc., was incorporated under the laws of the State of Nevada on Oct. 8, 1998. The Company develops low-cost, high speed, light-based security and quality control solutions for use in homeland security, anti- counterfeiting, forgery/fraud prevention, brand protection and process control applications. Visualant incurred a net loss of $2.72 million for the year ended Sept. 30, 2012, compared with a net loss of $2.39 million for the same period during the prior year. The Company's balance sheet at June 30, 2013, showed $5.59 million in total assets, $7.32 million in total liabilities, $46,609 in noncontrolling interest and a $1.78 million total stockholders' deficit. PMB Helin Donovan, LLP, in Nov. 10, 2012, issued a "going concern" qualification on the consolidated financial statements for the year ended Sept. 30, 2012. The independent auditors noted that the Company has sustained a net loss from operations and has an accumulated deficit since inception which raise substantial doubt about the Company's ability to continue as a going concern. WA INVESTMENTS: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: WA Investments I, LP One Embarcadero Center, Suite 500 San Francisco, CA 94111 Case No.: 13-36175 Chapter 11 Petition Date: October 1, 2013 Court: United States Bankruptcy Court Southern District of Texas (Houston) Judge: Hon. Karen K. Brown Debtor's Counsel: Miles Cohn, Esq. CRAIN, CATON & JAMES, PC 1401 McKinney, 17th Floor Houston, TX 77010 Tel: 713-752-8668 Fax: 713-425-7968 Email: mcohn@craincaton.com Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million The petition was signed by Mark Keener, manager of general partner. The Debtor did not file its list of largest unsecured creditors when it filed its petition. WASHINGTON MUTUAL: Receiver Fights Golden Parachutes ---------------------------------------------------- June Williams, writing for Courthouse News Service, reported that after Washington Mutual became the biggest bank failure in U.S. history, 92 of its officers and executives tried to profit from the collapse through illegal golden-parachute payments, the receiver claims in court. According to the report, the WMI Liquidating Trust sued the Federal Deposit Insurance Corp., the Board of Governors of the Federal Reserve, and the 92 former bank officers in Federal Court. Washington Mutual filed for bankruptcy and was placed in receivership in 2008, the report recalled. JPMorgan Chase bought it for $1.9 billion in September 2008, in a deal brokered by the federal government. WaMu had $310 billion in assets when it collapsed. In its 103-page lawsuit, the WMI Liquidating Trust seeks judgment that various severance and benefits sought in bankruptcy proceedings are prohibited by the federal Golden Parachute Regulations, the report said. "The individual defendants include some of WMI's most senior executives and members of its Executive Committee. These same individual defendants seek to profit as a result of the bank failure and recover from WMILT pursuant to contracts or plans providing for large -- and now prohibited -- 'golden parachute' payments," according to the complaint, the report added. WMILT is represented by Edgar Sargent and Justin Nelson with Susman Godfrey, in Seattle, and by Brian Rosen and John Mastando III with Weil, Gotshal & Manges of New York City. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- was the holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. Washington Mutual Bank was taken over on September 25, 2008, by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). WaMu owns 100% of the equity in WMI Investment. WATERFRONT OFFICE: Can Access Cash Collateral Until Oct. 31 ----------------------------------------------------------- In a tenth preliminary order dated Sept. 26, 2013, Judge Alan H. W. Shiff of the U.S. Bankruptcy Court for the District of Connecticut authorized Debtors Waterfront Office Building, LP, and Summer Office Building, LP, to use rents which may constitute cash collateral of Secured Creditor Deutsche Genossenschafts- Hypothekenbank AG, until Oct. 31, 2013. The Debtors are prohibited from using the rents other than in accordance with the Budget without the written agreement of the Secured Creditor. The Debtors' use and disbursement of the rents will be consistent with the Lockbox Agreement dated as of July 18, 2007, between the Debtors and the Secured Creditor. As adequate protection for the preliminary use of the rents by the Debtors, the Secured Creditor is granted replacement and/or substitute liens (subject only to a carveout for amounts payable by the Debtors under (i) 28 U.S.C. Sec. 1930(a)(6), and (ii) approved fees and expenses of the Debtors' and any Committee's court approved professionals) in all pre-petition and post- petition assets and proceeds of the same, excluding any bankruptcy avoidance causes of action. A final hearing on the Cash Collateral Motion will be held on Oct. 22, 2013, at 10:00 a.m. Objections are due no later than Oct. 18, 2013. About Waterfront Office Building & Summer Office Building Stamford, Conn.-based Waterfront Office Building, LP, filed a voluntary Chapter 11 petition (Bankr. D. Conn. Case No. 12-52121) in Bridgeport on Nov. 27, 2012, listing $50 million to $100 million in both assets and debts. The Debtor owns a 206,186 square foot multi-tenant office building on 8.1 waterfront acres with two on site restaurants and an adjacent 71-slip marina. Summer Office Building, LP, also filed for Chapter 11 (Bankr. D. Conn. Case No. 12-52122), listing $10 million to $50 million in assets and $50 million to $100 million in debts. Judge Alan H.W. Shiff oversees the Chapter 11 cases. The petitions were signed by Paul Kuehner, manager of managing member of sole member of Debtor's GP. Deustche Genossenschafts-Hypothekenbank AG, secured creditor to the Debtors, has filed a Chapter 11 Plan and Disclosure Statement, which proposes to pay all creditors in full on the plan effective date. The DG Hyp Plan contemplates satisfaction of DG Hyp's Claim in exchange for the Debtors' primary assets, the Properties and amounts held in the Debtors' Accounts. Under the Plan, DG Hyp, which holds a senior mortgage on the Properties in excess of the Properties' appraised value, will take the Properties in satisfaction of the mortgage. Dg Hyp will pay in full all real estate tax claims of the City of Stamford and all Allowed General Unsecured Claims. DG Hyp agrees to waive any distribution on account of the DG Hyp's Deficiency Claim only in the event the DG Hyp Plan is confirmed by the Bankruptcy Court. The Plan designates Class 1 as Other Priority Claims, Class 2 as City of Stamford Secured Claim, Class 3 as DG Hyp Secured Claim scheduled at approximately $3.5 million, Class 4 as General Unsecured Claims estimated to total $350,000, and Class 5 as Equity Interests which are to be extinguished on the Effective Date. DG Hyp is represented by John Carberry, Esq., at CUMMING & LOCKWOOD LLC, in Stamford, Connecticut; and Deborah J. Piazza, Esq., at TARTER KRINSKY & DROGIN LLP, in New York. WATERFRONT OFFICE: Files Second Amended Plan of Reorganization -------------------------------------------------------------- Waterfront Office Building, LP, and Summmer Office Building, LP, filed with the U.S. Bankruptcy Court for the District of Connecticut on Sept. 27, 2013, a Second Amended Disclosure Statement with respect to the Second Amended Plan of Reorganization proposed by the Debtors and filed on Sept. 27, 2013. Pursuant to the Debtors' Second Amended Plan, the DG-Hyp Secured Claims in Class 2 will be allowed in an amount to be determined by the Bankruptcy Court. In full satisfaction, settlement, release and discharge of and in exchange for the Allowed DG-Hyp Secured Claims and all Liens securing such Claims, DG-Hyp will receive, on or as soon as practicable after the later of the Effective Date or the Allowance Date with respect to the DG-Hyp Secured Claims: (i) title to the real property owned by Summer and any security deposits paid by Summer's tenants not previously returned to any such tenants; (ii) approximately $3,500,000 representing the Debtors' reserves held under the Pre-Petition Date loan documents between DG-Hyp and the Debtors and Cash Collateral Order (net of reserves funded for post-Petition Date taxes and insurance) and (iii) the DG-Hyp Promissory Note, which will be issued by the Reorganized Debtor in the principal amount of any balance due on the Allowed DG-Hyp Secured Claims. (Assuming that the Debtors' estimates of value of the DG-Hyp Collateral are accurate and assuming further that any disputes to the amount of the DG-Hyp Claim are decided in DG-Hyp's favor, the principal amount of the DG-Hyp Promissory Note would be approximately $20,000,000). The Plan Supplement will identify the principal amount of the DG- Hyp Promissory Note, and the Plan Supplement will include the form of the DG-Hyp Promissory Note. To the extent that there is any inconsistency or conflict between the DG-Hyp Promissory Note and the Plan, the provisions of the Plan will control. DG-Hyp General Unsecured Claims in Class 3, estimated to total $16,500,000, will receive payments equal to three percent (3%) of any such Claim from the Reorganized Debtor in four (4) equal quarterly Cash payments commencing with the first full calendar quarter following the Effective Date. Each quarterly Cash payment will be made no later than ten (10) business days after the end of such calendar quarter. General Unsecured Claims in Class 4, estimated to total $350,000, will receive a payment equal to one hundred percent (100%) of its Allowed Claim on the first anniversary of the Effective Date plus a payment of five percent (5%) interest on its Allowed Claim accruing from the Effective Date through the date of Distribution. Easch holder of a Tenant Claim in Class 5, will be paid in full, plus interest at the Case Interest Rate, the amount of a Tenant Claim within twelve months that it would otherwise be due under the Tenant's lease with Waterfront. Notwithstanding the foregoing, the Reorganized Debtor will have the right to pay the Holder of a Tenant Claim in full any time after the Effective Date without premium or penalty. Holders of Interests in the Debtors in Class 6 will be permitted to retain their Interests; provided, however, that they contribute five million dollars ($5,000,000) in total to the Reorganized Debtor on the Effective Date, pursuant to the conditions provided in Section C. Means of Implementation of the Plan 1.a-d. The Class 6 Interests will be extinguished in the event they are not the successful bidder in any auction for the equity in the Reorganized Debtor provided in Section C. The sources of Cash necessary for the Reorganized Debtor to pay Allowed Claims that are to be paid in Cash by the Reorganized Debtor under the Plan will be: (a) the Cash of the Reorganized Debtor on hand as of the Effective Date; (b) Cash arising from the operation, ownership, maintenance, and/or sale of the Assets owned and managed by or at the direction of the Debtors, including, without limitation, the DG-Hyp Collateral; and (c) any Cash generated or received by the Reorganized Debtor after the Effective Date from any other source, including the $5,000,000 to be contributed by the Holders of the Interest to be issued on the Effective Date under the Plan. On the Effective Date, Summer will merge into Waterfront. The effect of the merger will include a substantive consolidation of the Summer and Waterfront estates. A copy of the Debtors' Second Amended Disclosure Statement is available at http://bankrupt.com/misc/waterfrontoffice.dcc153.pdf About Waterfront Office Building & Summer Office Building Stamford, Conn.-based Waterfront Office Building, LP, filed a voluntary Chapter 11 petition (Bankr. D. Conn. Case No. 12-52121) in Bridgeport on Nov. 27, 2012, listing $50 million to $100 million in both assets and debts. The Debtor owns a 206,186 square foot multi-tenant office building on 8.1 waterfront acres with two on site restaurants and an adjacent 71-slip marina. Summer Office Building, LP, also filed for Chapter 11 (Bankr. D. Conn. Case No. 12-52122), listing $10 million to $50 million in assets and $50 million to $100 million in debts. Judge Alan H.W. Shiff oversees the Chapter 11 cases. The petitions were signed by Paul Kuehner, manager of managing member of sole member of Debtor's GP. Deustche Genossenschafts-Hypothekenbank AG, secured creditor to the Debtors, has filed a Chapter 11 Plan and Disclosure Statement, which proposes to pay all creditors in full on the plan effective date. The DG Hyp Plan contemplates satisfaction of DG Hyp's Claim in exchange for the Debtors' primary assets, the Properties and amounts held in the Debtors' Accounts. Under the Plan, DG Hyp, which holds a senior mortgage on the Properties in excess of the Properties' appraised value, will take the Properties in satisfaction of the mortgage. Dg Hyp will pay in full all real estate tax claims of the City of Stamford and all Allowed General Unsecured Claims. DG Hyp agrees to waive any distribution on account of the DG Hyp's Deficiency Claim only in the event the DG Hyp Plan is confirmed by the Bankruptcy Court. The Plan designates Class 1 as Other Priority Claims, Class 2 as City of Stamford Secured Claim, Class 3 as DG Hyp Secured Claim scheduled at approximately $3.5 million, Class 4 as General Unsecured Claims estimated to total $350,000, and Class 5 as Equity Interests which are to be extinguished on the Effective Date. DG Hyp is represented by John Carberry, Esq., at CUMMING & LOCKWOOD LLC, in Stamford, Connecticut; and Deborah J. Piazza, Esq., at TARTER KRINSKY & DROGIN LLP, in New York. WATERFRONT OFFICE: DG-Hyp Files 2nd Amended Plan of Reorganization ------------------------------------------------------------------ Deutsche Genossenschafts-Hypothekenbank AG filed with the U.S. Bankruptcy Court for the District of Connecticut on Sept.26, 2013, a Second amended Disclosure Statement with respect to the Second Amended Plan of Reorganization proposed by DG-Hyp for the Debtors. The DG-Hyp Plan proposes to pay all creditors in full on or around the Effective Date. According to the DG-Hyp, with accrued and unpaid interest, costs and fees, and various outlays, the Debtors currently owe it in excess of $55,672,000. DG Hyp has recently had the Properties appraised as having a value of $41,200,000, leaving DG Hyp with a large deficiency claim estimated at approximately $14,472,000. Pursuant to DG-Hyp's Second Amended Plan, Class 5 Equity Interests in the Debtors will be extinguished and the holders of Interests will not receive an Distributions on account of their Interests. Class 4 General Unsecured Claims will receive on the Effective Date, or as soon as practicable after such Claim becomes an Allowed Claim, payment from DG-Hyp, in Cash, in the full amount of the Allowed Claim which will be paid from the $3,500,000 held in the Debtors' Accounts to be turned over to DG Hyp. DG-Hyp agrees to waive any distribution on account of the DG-Hyp's Deficiency Claim only in the event the DG-Hyp Plan is confirmed by the Bankruptcy Court. The Class 3 Secured Claim of DG- Hyp will receive deeds to the Properties, free and clear of any Liens, Claims or encumbrances on the Effective Date and the turnover of any and all amounts held in the Debtors' Accounts (approximately $3,500,000). A copy of DG-Hyp's Second Amended Disclosure Statement is available at http://bankrupt.com/misc/waterfrontoffice.doc150.pdf About Waterfront Office Building & Summer Office Building Stamford, Conn.-based Waterfront Office Building, LP, filed a voluntary Chapter 11 petition (Bankr. D. Conn. Case No. 12-52121) in Bridgeport on Nov. 27, 2012, listing $50 million to $100 million in both assets and debts. The Debtor owns a 206,186 square foot multi-tenant office building on 8.1 waterfront acres with two on site restaurants and an adjacent 71-slip marina. Summer Office Building, LP, also filed for Chapter 11 (Bankr. D. Conn. Case No. 12-52122), listing $10 million to $50 million in assets and $50 million to $100 million in debts. Judge Alan H.W. Shiff oversees the Chapter 11 cases. The petitions were signed by Paul Kuehner, manager of managing member of sole member of Debtor's GP. Secured Creditor DG-Hyp is represented by John Carberry, Esq., at CUMMING & LOCKWOOD LLC, in Stamford, Connecticut; and Deborah J. Piazza, Esq., at TARTER KRINSKY & DROGIN LLP, in New York WAVE HOUSE: Court Confirms 1st Amended Plan ------------------------------------------- The U.S. Bankruptcy Court for the Southern District of California confirmed Wave House Belmont Park, LLC's first amended plan of reorganization. The Plan calls for the Debtor to liquidate its remaining assets to pay creditors in full. The Debtor will press forward with its litigation against the City of San Diego in the action styled Wave House Belmont Park, LLC, v. The City of San Diego, Case No. 10- 90553-LT. The Plan is also hinged on separate settlement agreements with Symphony Asset Pool XVI, LLC, and East West Bank. Under the EWB settlement, a promissory note in the sum of $1,127,651 will executed by EWB in favor of the Debtor. The Plan proposes to pay holders of general unsecured claims in full in an amount up to 100% of the amount of the general unsecured claim with interest accruing at the current federal short term rate of .20%. Payment to general unsecured claims is contingent of the funds available from the proceeds of the San Diego adversarial action and the promissory note, after payment in full of the secured claims of Kathleen Lochtefeld and Symphony Asset Pool XVI, LLC, and the unsecured priority claim of the County of San Diego Treasurer-Tax Collector. A full-text copy of the Disclosure Statement dated March 6, 2013, is available for free at: http://bankrupt.com/misc/WAVEHOUSEds0306.pdf John L. Smaha, Esq., and Gustavo E. Bravo, Esq., at Smaha Law Group, APC, in San Diego, California, represent the Debtors. About Wave House San Diego, California-based Wave House Belmont Park, LLC, filed for Chapter 11 bankruptcy protection (Bankr. S.D. Cal. Case No. 10-19663) on Nov. 3, 2010. John L. Smaha, Esq., at Smaha Law Group, APC, assists the Debtor in its restructuring effort. Wave House, the company that operates the San Diego amusement area Belmont Park, filed for bankruptcy protection after the city imposed an eightfold increase in rent. The Debtor disclosed $28.3 million in assets and $17.6 million in liabilities. WM SIX FORKS: Court Pegs 2nd Quarter Fee at $30,000 --------------------------------------------------- WM Six Forks, LLC, appeared at a hearing Sept. 5, 2013, in Raleigh, North Carolina, to show cause why its case should not be dismissed or sanctions should not be imposed for failure to remit the appropriate quarterly fee for the second quarter of 2013. At issue is whether a credit bid, exercised by a secured creditor pursuant to 11 U.S.C. Sec. 363(k), is considered a "disbursement" for purposes of calculating the quarterly fee due under 28 U.S.C. Sec. 1930(a)(6). Prior to the petition date, on July 22, 2008, the debtor executed a building loan agreement in favor of Capmark Finance Inc. in the original principal amount of $36,587,800, which was secured by a deed of trust and assignment of rents, profits and income encumbering the Manor Six Forks project as well as a security agreement and financing statement covering "collateral . . . now or thereafter located on the premises of, relate to, or used in connection with the construction, financing, repair, ownership, management, and operations of [the project.]" On Aug. 14, 2012, Lenox Mortgage XVII LLC, successor-by-assignment to Capmark Finance, filed a proof of claim, Claim No. 1, in the amount of $39,027,860. The debtor and Lenox Mortgage entered into a purchase and sale agreement, dated Dec. 10, 2012, which provided for the sale of the project to Lenox Mortgage for a total purchase price of $37,100,000. The purchase agreement entitled Lenox Mortgage "to exercise its credit bid right pursuant to section 363(k) of the Bankruptcy Code on account of its allowed secured claim in an amount not less than $39,027,860.00. . . ." On Feb. 15, 2013, the court entered an order confirming the debtor's plan of liquidation dated Dec. 10, 2012, as amended on Feb. 5, 2013, which provided for the sale of the project pursuant to Sections 363(b) and 1123(a)(5)(D) of the Bankruptcy Code following court-approval of the purchase agreement and certain bidding procedures. The confirmation order provided, in accordance with the terms of the purchase agreement, for the transfer of the project to Lenox Mortgage in full satisfaction of its allowed claim. The confirmation order also approved the procedures and deadline by which qualified bids were to be submitted and scheduled a hearing for the approval of the sale of the project, which was held on March 21, 2013. There were no other qualified bids, and on March 27, 2013, in accordance with the confirmation order and the purchase agreement, the court entered an order approving sale of the project to Lenox Mortgage in exchange for a credit bid of $37,100,000. On April 11, 2013, the debtor closed on the sale of the project, which was purchased by Deancurt Raleigh, LLC, the successor-by-assignment to Lenox Mortgage under the purchase agreement. At the closing and pursuant to the purchase agreement, confirmation order and order approving the sale, the project was transferred to Deancurt in consideration of the credit bid in the amount of $37,100,000. On Aug. 1, 2013, the debtor filed its quarterly fee statement and its post-confirmation report for the quarter, which ended June 30, 2013. The debtor, in this post-confirmation report, listed total disbursements for the second quarter in the amount of $111,821.65, resulting in a quarterly fee of $975.00 that was subsequently paid by the debtor on Aug. 2. Under the section of the post- confirmation report entitled "Sale of Property," the debtor stated the "[p]roject was sold to Lenox Mortgage XVII LLC in April of 2013." On Aug. 8, 2013, and on motion of the bankruptcy administrator, the court entered an order directing the debtor to appear and show cause currently before the court for its failure to pay the correct quarterly fee for the second quarter. In her motion, the bankruptcy administrator contends that the debtor owes the maximum quarterly fee of $30,000 for the second quarter, based on the credit bid submitted by Lenox Mortgage in the amount of $37,100,000. In a Sept. 23, 2013 Order available at http://is.gd/snQxsyfrom Leagle.com, Bankruptcy Judge A. Thomas Small -- utilizing a broad interpretation of the term "disbursements" under Sec. 1930(a)(6) -- finds that the credit bid submitted by Lenox Mortgage is a disbursement and should be included in the calculation of the applicable quarterly fee. Accordingly, the quarterly fee owed for the second quarter is $30,000, $975 of which has been paid by the debtor. About WM Six Forks WM Six Forks LLC is the owner of an apartment and retail/office complex in Raleigh, North Carolina, known as Manor Six Forks, which opened in March 2010. The property includes 298 residential apartments and roughly 14,000 square feet of retail/office space on the ground floor. As of the bankruptcy filing date, all the retail/office space is vacant and roughly 95% of the residential apartments are subject to existing leases. WM Six Forks filed a Chapter 11 petition (Bankr. E.D.N.C. Case No. 12-05854) on Aug. 12, 2012. The Debtor said in court papers the Manor is valued at $32.54 million. The Debtor also owns a 15.15- acre property, the value of which is not yet determined. The Debtors' property serves as collateral to a $39 million debt to Lenox Mortgage XVI, LLC. A copy of the schedules filed together with the petition is available at http://bankrupt.com/misc/nceb12- 05854.pdf Bankruptcy Judge J. Rich Leonard oversees the case. The Debtor hired Northen Blue, LLP as counsel. The petition was signed by William G. Garner, manager of WM6F Completion & Performance Assoc., LLC. Dawn Barnes has been assigned as case manager. The Bankruptcy Administrator for the Eastern District of North Carolina Bankruptcy notified that it was unable to form a creditors committee in the Chapter 11 case of WM Six Forks, LLC. Judge J. Rich Leonard of the U.S. Bankruptcy Court for the Eastern District of North Carolina, Raleigh Division, confirmed on Feb. 15, 2013, WM Six Forks, LLC's Plan of Liquidation. WORLD SURVEILLANCE: Chairman of the Board Quits ----------------------------------------------- Anthony R. Bocchichio resigned as a member of World Surveillance Group Inc.'s Board of Directors and as its chairman on Sept. 24, 2013, as a result of contract differences. Glenn D. Estrella, the Company's president and chief executive officer, has been named interim Chairman while the Company conducts a search for a new Chairman of the Board. About World Surveillance World Surveillance Group Inc. designs, develops, markets and sells autonomous lighter-than-air (LTA) unmanned aerial vehicles (UAVs) capable of carrying payloads that provide persistent security and/or wireless communication from air to ground solutions at low, mid and high altitudes. The Company's airships, when integrated with electronics systems and other high technology payloads, are designed for use by government-related and commercial entities that require real-time intelligence, surveillance and reconnaissance or communications support for military, homeland defense, border control, drug interdiction, natural disaster relief and maritime missions. The Company is headquartered at the Kennedy Space Center, in Florida. World Surveillance disclosed a net loss of $3.36 million on $272,201 of net revenues for the year ended Dec. 31, 2012, as compared with a net loss of $1.12 million on $19,896 of net revenues in 2011. Rosen Seymour Shapss Martin & Company LLP, in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has experienced significant losses and negative cash flows, resulting in decreased capital and increased accumulated deficits. These conditions raise substantial doubt about its ability to continue as a going concern. The Company's balance sheet at June 30, 2013, showed $3.60 million in total assets, $16.93 million in total liabilities, all current and $13.33 million total stockholders' deficit. Bankruptcy Warning "Our indebtedness at June 30, 2013 was $16,938,962. A portion of such indebtedness reflects judicial judgments against us that could result in liens being placed on our bank accounts or assets. We are continuing to review our ability to reduce this debt level due to the age and/or settlement of certain payables but we may not be able to do so. This level of indebtedness could, among other things: * make it difficult for us to make payments on this debt and other obligations; * make it difficult for us to obtain future financing; * require us to redirect significant amounts of cash from operations to servicing the debt; * require us to take measures such as the reduction in scale of our operations that might hurt our future performance in order to satisfy our debt obligations; and * make us more vulnerable to bankruptcy or an unwanted acquisition on terms unsatisfactory to us," the Company said in the quarterly report for the period ended June 30, 2013. WOUND MANAGEMENT: Inks Shipping Agreement with WellDyne ------------------------------------------------------- Wound Management Technologies, Inc., entered into a Shipping and Consulting Agreement with WellDyne Health, LLC, on Sept. 20, 2013. Under the Agreement, WellDyne agreed to provide certain storage, shipping, and consulting services, and was granted the right to conduct online resales of certain of the Company's products to U.S. consumers. As additional consideration under the Agreement, an affiliate of WellDyne was issued a warrant for the purchase shares of the Company's common stock, par value $0.001 per share, equal to the lesser of (a) 4.9 percent of the issued and outstanding Common Stock (on a fully-diluted basis), or (b) 4,500,000 shares. The Warrant has a term of five years and an exercise price of $0.06, subject to adjustment. About Wound Management Fort Worth, Texas-based Wound Management Technologies, Inc., markets and sells the patented CellerateRX(R) product in the expanding advanced wound care market; particularly with respect to diabetic wound applications. Wound Management disclosed a net loss of $1.84 million on $1.17 million of revenue for the year ended Dec. 31, 2012, as compared with a net loss of $12.74 million on $2.21 million of revenue during the prior year. The Company's balance sheet at June 30, 2013, showed $1.37 million in total assets, $5.45 million in total liabilities and a $4.07 million total stockholders' deficit. Pritchett, Siler & Hardy, P.C., 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 has incurred substantial losses and has a working capital deficit which factors raise substantial doubt about the ability of the Company to continue as a going concern. WPCS INTERNATIONAL: Unit to Sell Pride Group for $1.4 Million ------------------------------------------------------------- WPCS Australia Pty Ltd, a wholly-owned subsidiary of WPCS International Incorporated, entered into a Securities Purchase Agreement with Turquino Equity LLC, whose managing member is Andrew Hidalgo, former chairman and chief executive officer of the Company. Pursuant to the Agreement, WPCS Australia agreed to sell 100 percent of the shares of The Pride Group (QLD) Pty Ltd, an Australian corporation wholly-owned by WPCS Australia, to Turquino, for $1,400,000. At the Closing Date, the Company will settle the Purchase Price with Turquino by applying the net after tax severance balance due Mr. Hidalgo under his separation agreement, as partial payment towards the Purchase Price, and Turquino will pay cash for the difference between the Purchase Price and the net severance balance due. The Agreement contains a number of conditions to closing, including but not limited to the following: (i) Each of the WPCS Australia and Turquino will have performed and complied with all terms of the Agreement required to be performed or complied with by it at or prior to the Closing Date; (ii) No action or proceeding by or before any governmental authority will have been instituted or threatened which might restrain, prohibit or invalidate any of the transactions contemplated by the Agreement, other than an action or proceeding instituted or threatened by a party or any of its affiliates; (iii) The representations and warranties contained in made by each of WPCS Australia and Turquino to each other will be true and correct in all material respects on the closing date as though made on and as of the closing date; (iv) WPCS Australia obtaining a fairness opinion that the Purchase Price is fair; and (v) The Company has obtained shareholder approval, if required. There can be no assurance that the Agreement will close by Nov. 1, 2013, the anticipated closing date, or at all. A copy of the Securities Purchase Agreement is available at: http://is.gd/8Nj5nT About WPCS International Exton, Pennsylvania-WPCS International Incorporated is a global provider of design-build engineering services for communications infrastructure, with approximately 250 employees in five operations centers on three continents. The Company provides its engineering capabilities including wireless communication, specialty construction and electrical power to a diversified customer base in the public services, healthcare, energy and corporate enterprise markets worldwide. CohnReznick LLP, in Roseland, New Jersey, expressed substantial doubt about WPCS International's ability to continue as a going concern following the annual report for the year ended April 30, 2013. The independent auditors noted that the Company has incurred net losses and negative cash flows from operating activities, had a working capital deficiency as of and for the years ended April 30, 2013, and 2012, and has an accumulated deficit as of April 30, 2103. As of July 31, 2013, WPCS International had $18.73 million in total assets, $24.45 million in total liabilities, and a $5.72 million total deficit. WPCS INTERNATIONAL: To Sell Australia Operations for $1.4-Mil. -------------------------------------------------------------- WPCS International Incorporated has entered into a definitive stock purchase agreement for the sale of The Pride Group (QLD) Pty Ltd., to Turquino Equity LLC, for a purchase price of $1.4 million. Turquino's managing member is Andrew Hidalgo, former Chairman and CEO of WPCS. At closing, the Company will settle the purchase price with Turquino by applying the net after tax severance balance due Mr. Hidalgo under his separation agreement, as partial payment towards the purchase price of the Australia Operations, and the Company will receive cash from Turquino for the difference between the purchase price and the net severance balance due. The closing is anticipated for Nov. 1, 2013, and is subject to certain conditions to be fulfilled prior to closing, including the Australia Operations obtaining a fairness opinion and WPCS shareholder approval, if required. Sebastian Giordano, interim chief executive officer, commented, "We are pleased to enter into this agreement to sell the Australia Operations, a non-core underperforming asset. For the fiscal year ended April 30, 2013, the Australia Operations generated a net loss of approximately $2.4 million, which included a goodwill impairment charge of $1.9 million, while it most recently reported a net loss of approximately $27,000 for the first quarter ended July 31, 2013. The Company believes this transaction is consistent with ongoing efforts to improve its financial results." About WPCS International Exton, Pennsylvania-WPCS International Incorporated is a global provider of design-build engineering services for communications infrastructure, with approximately 250 employees in five operations centers on three continents. The Company provides its engineering capabilities including wireless communication, specialty construction and electrical power to a diversified customer base in the public services, healthcare, energy and corporate enterprise markets worldwide. CohnReznick LLP, in Roseland, New Jersey, expressed substantial doubt about WPCS International's ability to continue as a going concern following the annual report for the year ended April 30, 2013. The independent auditors noted that the Company has incurred net losses and negative cash flows from operating activities, had a working capital deficiency as of and for the years ended April 30, 2013, and 2012, and has an accumulated deficit as of April 30, 2103. The Company reported a net loss of $6.8 million on $42.3 million of revenue in fiscal 2013, compared with a net loss of $20.6 million on $65.5 million in fiscal 2012. As of July 31, 2013, WPCS International had $18.73 million in total assets, $24.45 million in total liabilities and a $5.72 million total deficit. YANGAROO INC: Completes Financing and Debt Restructuring -------------------------------------------------------- YANGAROO Inc., a secure digital media management company, on Oct. 1 disclosed that it has completed its debt restructuring and satisfied the Escrow Release Conditions of its recent private placement of subscription receipts, sold at a price of $0.25 per subscription receipt, based on the post-consolidation share price, as was initially announced in a news release dated July 3rd, 2013, and the closing of which was announced on September 5th, 2013. The Company had exceeded its original expectations and raised CAD $1,600,000 under the Private Placement. "We are delighted to announce the completion of the financing and the balance sheet restructuring. We now face the future with the resources and capital structure to achieve our goals," said Gary Moss, President and CEO of the Company. "This has been a long and very complicated process. I want to thank the many advisors who helped to craft the roadmap and assisted in executing the plan. I also want to thank our shareholders and debenture holders for their support and I welcome the new investors who participated in the financing." As the Escrow Release Conditions have been satisfied in accordance with the subscription receipt agreement, each Subscription Receipt will be automatically converted into one common share of the Company and one warrant of the Company , issued as of September 30th, 2013. Each Warrant will entitle the holder, upon exercise, to purchase one Common Share during a period of thirty-six (36) months following the Conversion Date , at a price of $0.25 within the first year of the Warrant Exercise Period and at a price of $0.35 within the second and third years of the Warrant Exercise Period. The majority of the Proceeds were deposited into escrow with Equity Financial Trust Company on the date of closing of the Private Placement. A small amount of the Proceeds, as delivered by certain insiders of the Company, were subject to the same or substantially similar terms and conditions as those delivered under the Subscription Receipt Agreement, but were not held by Equity. The Escrowed Proceeds, less professional and escrow fees, will be released to the Company, as well as to the Company's agent, Fraser Mackenzie Limited, which will be entitled to receive its commission comprised of (i) a cash fee equal to eight percent (8%) of the gross subscription proceeds, and (ii) broker warrants entitling Fraser, upon exercise of the Broker Warrants, to purchase, in aggregate, Common Shares equal to eight percent 8% of the number of Common Shares sold pursuant to the Private Placement. Such Broker Warrants shall be exercisable at a price of $0.25 per Common Share until the Warrant Expiry Date. That portion of the Proceeds that were held in trust but did not for Escrowed Proceeds will also be released to the Company. As certain directors of the Company had participated in the Private Placement, this Private Placement constitutes a related party transaction under Multilateral Instrument 61-101 and TSX Venture Exchange Policy 5.9. The Company is relying on exemptions from the formal valuation and minority approval requirements of MI 61-101, based on a determination that the securities of the Company are listed on the TSX Venture Exchange only and that the fair market value of the Private Placement, insofar as it involves interested parties, does not exceed 25% of the market capitalization of the Company at the time the Private Placement was initially announced. No new insiders have been created, nor has there been any change of control as a result of the Private Placement. In compliance with applicable securities laws and the rules of the TSX Venture Exchange, (i) the Common Shares, the Warrants and the Broker Warrants will be subject to a hold period of four (4) months following the issuance thereof, and (ii) the Common Shares underlying the Warrants and the Broker Warrants will be subject to a four (4) month hold period following their issuance upon exercise thereof. In order to satisfy the Escrow Release Conditions, the Company was required to effect the Share Consolidation and complete the Shares for Debt Transaction. Share Consolidation The Company announced the completion of the consolidation of its issued and outstanding common shares on September 19th, 2013. As of the Effective Date, the Company's common shares were consolidated on a basis of ten pre-consolidation shares for each one post-consolidation share, resulting in a total of 16,324,477 common shares issued and outstanding as at the Effective Date. The Share Consolidation was approved by the Company's shareholders at its annual and special shareholders meeting held on August 15, 2013 and has been accepted by the Exchange. Letters of transmittal with respect to the Common Shares were mailed out to all registered shareholders together with the Notice and Information Circular prior to the Annual and Special Meeting of the Shareholders. All registered shareholders of the Company will be required to send their certificates representing pre- consolidation Common Shares with a properly executed letter of transmittal to Equity, the Company's transfer agent, in accordance with the instructions provided in the letter of transmittal. The Company has not changed its name or its trading symbol as part of the Consolidation. Shares for Debt Transaction The Company announced on September 19th, 2013 that it entered into shares for debt agreements with a majority of its debenture holders whereby, of the outstanding indebtedness of the Company equal to $6,379,656.84, a total of $4,245,128.26 is being converted into 16,980,513 post-consolidation common shares of the Company at a deemed price of $0.25 per common share. The Company had exceeded the 40% conversion threshold it had previously set and announced in the July 3 Release, as over 66% of the Total Debt is being converted under the Shares for Debt Transaction. The Shares for Debt Transaction and issuance of the common shares do not result in the creation of a new Control Person and will be subject to a four-month hold period from the date of issuance. The Shares for Debt Transaction has been approved by the TSX Venture Exchange. As the Shares for Debt Transaction does not result in the creation of a new control person, disinterested shareholder approval was not required or sought. No warrants will be issued with respect to the Shares for Debt Transaction. As certain directors of the Company participated in the Shares for Debt Transaction, this Shares for Debt Transaction constitutes a related party transaction under Multilateral Instrument 61-101 and TSX Venture Exchange Policy 5.9. The Company is relying on exemptions from the formal valuation and minority approval requirements of MI 61-101, based on a determination that the securities of the Company are listed on the TSX Venture Exchange only and that the transaction was designed to improve the financial position of the Company. One new insider has been created as a result of the Shares for Debt Transaction. There has not been any change of control as a result of the Shares for Debt Transaction. The Company has entered into an Advisory Agreement with Fraser Mackenzie Merchant Capital Partnership with respect to the services provided by FMMC in connection with the Shares for Debt Transaction and the Debenture Amendment and, under such agreement, FMMC shall be entitled to receive, subject to approval of the Exchange, 384,281 Common Shares and 336,364 non-transferable warrants. Headquartered in Toronto, Canada, YANGAROO, Inc. -- http://www.yangaroo.com-- provides digital delivery solution for the music and advertising industries. The Company's patented Digital Media Distribution System (DMDS) sets the global standard for business-to-business distribution of audio and video media via the internet. It replaces the physical distribution of audio and video content for music, music videos, and advertising to television, radio, media, retailers and other authorized recipients and digital solution. The Company delivers services to the industries such as entertainment, media and advertising industries. YNOT LLC: Vantage South Bank Wins Ch.7 Conversion Bid ----------------------------------------------------- YNOT LLC, a North Carolina limited liability company that owns commercial and residential real estate in Durham County and Alamance County, North Carolina, will liquidate under Chapter 7 of the Bankruptcy Code after Bankruptcy Judge Randy D. Doub converted its Chapter 11 case. Vantage South Bank sought Chapter 7 conversion. The Bankruptcy Administrator supported conversion. The Court also converted to Chapter 7 the bankruptcy case of Susan M. Hutson, the sole managing member and owner of YNOT. A copy of Judge Doub's Sept. 27, 2013 Order is available at http://is.gd/Kdv3Pbfrom Leagle.com. YNOT, LLC, filed a voluntary Chapter 11 petition (Bankr. E.D.N.C. Case No. 12-07112) on October 4, 2012. YNOT cited assets and liabilities each in the range of $1 million to $10 million. YNOT and Ms. Hutson, who also filed a personal Chapter 11 bankruptcy, were represented by counsel, William Janvier, at the commencement of the chapter 11 case. However, on January 2, 2013 Mr. Janvier filed a motion for withdrawal in both Ms. Hutson's individual bankruptcy case (Case No. 12-07111-8-RDD) and YNOT's case. An Order Granting Mr. Janvier's Motion to Withdraw was entered on February 1, 2013. On January 28, 2013, Scott Kirk, on behalf of the Bankruptcy Administrator, filed a Motion to Appoint a Chapter 11 Trustee. An Order was entered on January 30, 2013 appointing George Oliver as Chapter 11 Trustee in both cases. On February 20, 2013 an Order was entered granting Trustee's application to employ Oliver, Friesen, and Cheek, PLLC as Counsel for Trustee. ZALE CORP: Files Form 10-K, Posts $10MM Net Earnings in 2013 ------------------------------------------------------------ Zale Corporation filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing net earnings of $10.01 million on $1.88 billion of revenues for the year ended July 31, 2013, as compared with a net loss of $27.31 million on $1.86 billion of revenues for the year ended July 31, 2012. The Company's balance sheet at July 31, 2013, showed $1.18 billion in total assets, $1 billion in total liabilities and $185.32 million in total stockholders' investment. "As of July 31, 2013, we had cash and cash equivalents totaling $17.1 million. We believe that our operating cash flows and available credit facility are sufficient to finance our cash requirements for at least the next twelve months," the Company said in the Report. A copy of the Form 10-K is available for free at: http://is.gd/uYtlyh About Zale Corporation Based in Dallas, Texas, Zale Corporation (NYSE: ZLC) -- http://www.zalecorp.com/-- is a specialty retailer of diamonds and other jewelry products in North America, operating approximately 1,695 retail locations throughout the United States, Canada and Puerto Rico, as well as online. Zale Corporation's brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Zale also operates online at http://www.zales.com/, http://www.zalesoutlet.com/, http://www.gordonsjewelers.com/and http://www.pagoda.com/ ZBB ENERGY: Incurs $12.5-Mil. Net Loss in Fiscal 2013 ----------------------------------------------------- ZBB Energy Corporation filed with the U.S. Securities and Exchange Commission on Sept. 27, 2013, its annual report on Form 10-K for the fiscal year ended June 30, 2013. Baker Tilly Virchow Krause, LLP, in Milwaukee, Wisconsin, expressed substantial doubt about the Company's ability to continue as a going concern, citing the Company's recurring operating losses, operating cash flow deficits, and accumulated deficit of $80.9 million. The Company reported a net loss of $12.5 million on $7.7 million of total revenues in fiscal 2013, compared with a net loss of $13.9 million on $4.8 million of total revenues in fiscal 2012. The Company's balance sheet at June 30, 2013, showed $13.1 million in total assets, $7.0 million in total liabilities, and equity of $6.1 million. A copy of the Form 10-K is available at http://is.gd/qU7CBF Milwaukee, Wisconsin-based ZBB Energy Corporation (NYSE MKT: ZBB) develops and manufactures distributed energy storage solutions based upon the Company's proprietary zinc bromide rechargeable electrical energy storage technology and proprietary power electronics systems. A developer and manufacturer of modular, scalable and environmentally friendly power systems, ZBB was incorporated in Wisconsin in 1998 and is headquartered in Wisconsin, U.S.A. with offices also located in Perth, Western Australia. Z TRIM HOLDINGS: Files Copy of Investor Presentation with SEC ------------------------------------------------------------- Z Trim Holdings, Inc., will present to members of the investment community as part of a road show program. A copy of the investor presentation to be used on the road show is available for free at: http://is.gd/XT7LqC About Z Trim Mundelein, Ill.-based Z Trim Holdings, Inc., is a functional food ingredient company which provides custom product solutions that help answer the food industry's problems. Z Trim's revolutionary technology provides value-added ingredients across virtually all food industry categories. Z Trim's all-natural products, among other things, help to reduce fat and calories, add fiber, provide shelf-stability, prevent oil migration, and add binding capacity -- all without degrading the taste and texture of the final food products. Z Trim Holdings disclosed a net loss of $9.58 million in 2012 following a net loss of $6.94 million in 2011. The Company's balance sheet at March 31, 2013, showed $5.60 million in total assets, $8.85 million in total liabilities and a $3.25 million total stockholders' deficit. M&K CPAS, PLLC, in Houston, Texas, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company had a working capital deficit and reoccurring losses as of Dec. 31, 2012. These conditions raise substantial doubt about its ability to continue as a going concern. * U.S. Treasury Says Mere Prospect of Default Endangers Economy --------------------------------------------------------------- Annie Lowrey, writing for The Washington Post, reported that the debt-limit impasse could cause credit markets to freeze, the dollar to plummet and interest rates to rise precipitously, the Treasury Department said in a report released on Oct. 4. A default might prove catastrophic, the report said, and could potentially result "in a financial crisis and recession that could echo the events of 2008 or worse." "As we saw two years ago, prolonged uncertainty over whether our nation will pay its bills in full and on time hurts our economy," said Treasury Secretary Jacob J. Lew in a statement urging lawmakers to act, the report related. "Postponing a debt ceiling increase to the very last minute is exactly what our economy does not need -- a self-inflicted wound harming families and businesses." According to the Post, the report shows that the Congressional debt-limit standoff in 2011 hurt consumer confidence, small business confidence, household wealth and the stock market, with ramifications for lending and the economic recovery. "A precise estimate of the effects is impossible," the report says, "and the current situation is different than that of late 2011, yet economic theory and empirical evidence is clear about the direction of the effect: a large, adverse, and persistent financial shock like the one that began in late 2011 would result in a slower economy with less hiring and a higher unemployment rate than would otherwise be the case, the Post further related. Economic officials have privately indicated that they are worried Washington's repeated flirtations with budgetary and financial crises have inured the markets to the real possibility of missed or delayed payments, or even default, the report added. By mid- October, the Treasury expects to have only $30 billion in cash on hand, meaning that on any given day it might have too little money to pay all the government's bills. * BigLaw Braces for Revenue Hit in Federal Shutdown --------------------------------------------------- Law360 reported that while BigLaw attorneys were plenty busy on Sept. 30 preparing clients for wide-ranging fallout expected from the government shutdown, lawyers said the stoppage could hit firms' critical fourth-quarter revenues and severely impact the year's numbers if it drags on. According to the report, Rich Gold, a partner on Holland & Knight LLP's policy side, said a revenue disruption from the shutdown that began at midnight on Oct. 1 might be offset by the recent jump in related advising work -- if it doesn't last too long. * CFTC Enforcement Chief to Leave --------------------------------- Scott Patterson and Jamila Trindle, writing for The Wall Street Journal, reported that David Meister, enforcement chief of the Commodity Futures Trading Commission, plans to leave the agency this month, according to an email he sent to the commission late on Sept. 30. According to the report, Mr. Meister's departure comes as the agency's enforcement division is still juggling two big cases: civil charges against former MF Global Holdings Ltd. Chief Executive Jon Corzine and potential charges against J.P. Morgan Chase & Co. for market manipulation in its "London whale" trading fiasco. "While I certainly will be speaking to each of you before I leave, I did want to make sure to say that I very much respect and admire all that each of you do in your service to the American public," Mr. Meister wrote in the email to the agency's commissioners, the report related. He didn't respond to a request for comment. Mr. Meister cut his teeth on organized-crime cases at the U.S. Attorney's Office of the Southern District of New York in the 1980s, listening to wire taps of mobsters while he was still in law school, the report said. That experience paid off in the agency's charges against MF Global, which lean on recordings of the firm's top officials, including Mr. Corzine. Mr. Meister, who joined the agency in 2010, has taken on big Wall Street banks and demanded larger fines when they want to settle, including a record-setting $700 million settlement with UBS AG in December for allegedly rigging the London interbank offer rate, the report added. * Citi to Pay Freddie Mac $395 Million Over Mortgages ----------------------------------------------------- Nick Timiraos and Saabira Chaudhuri, writing for The Wall Street Journal, reported that Citigroup Inc. agreed to pay $395 million to Freddie Mac as part of a settlement over defective mortgages sold to the government-controlled home-loan financier, the bank said on Sept. 25. According to the report, Freddie Mac and its larger sibling, Fannie Mae, can force banks to buy back mortgages that don't conform to agreed-upon guidelines, and both companies have demanded that lenders repurchase billions in soured loans over the past four years. Citi's settlement covers 3.7 million loans sold to Freddie between 2002 and 2012, the bank said, the report related. Citi said it wouldn't need to boost its loan-loss reserves. The agreement "marks another important milestone in successfully resolving Citi's remaining legacy mortgage issues," said Jane Fraser, the chief executive of the bank's CitiMortgage division. A Freddie Mac spokesman, Thomas Fitzgerald, said: "We believe the agreement is an equitable one that resolves legacy repurchase issues and allows both companies to move forward." In July, Citi reached a similar settlement with Fannie Mae for $968 million, the report recalled. * Fannie Mae Bond Deal in the Works ----------------------------------- Al Yoon, writing for The Wall Street Journal, reported that Fannie Mae is planning a bond deal that will pay buyers to share a tiny sliver of the risk of the U.S. home-lending business. According to the report, the Washington-based company plans to sell about $675 million of securities in an offering that is expected to be announced next month. The securities are derivatives whose value will depend on the performance of a pool of $28.05 billion of mortgages acquired by Fannie Mae in the third quarter of 2012, according to a term sheet reviewed by The Wall Street Journal. The deal follows a similar issue in July from Fannie's smaller brother, Freddie Mac, the report related. Both companies are issuing the securities to help meet a mandate from their regulator, the Federal Housing Finance Agency, to reduce the cost of defaults to U.S. taxpayers, who bailed out the companies with $188 billion during the financial crisis. The plan represents the latest effort to lure Wall Street back into a business that generated billions of dollars in fees and profits during the housing boom but has since gone nearly silent, the report added. Fannie and Freddie don't make mortgage loans, but buy loans made by other lenders and package them into securities that they sell to investors, with a guarantee that buyers will continue to receive regular principal and interest payments even if underlying mortgages default, the report said. * Government Shuts Down as Congress Misses Deadline --------------------------------------------------- Lori Montgomery, Paul Kane and Debbi Wilgoren, writing for The Washington Post, reported that the U.S. government on Oct. 1 began to shut down for the first time in 17 years, after a Congress bitterly divided over President Obama's signature health-care initiative failed to reach agreement to fund federal agencies. According to the report, thousands of government workers arrived at federal office buildings to clean off their desks, set out-of- office e-mail messages and make whatever arrangements were necessary to stay off the job indefinitely. Others, including Border Patrol officers, prison guards and air traffic controllers, were required to work but were told they may not be paid. Washington's iconic memorials were shuttered, along with Smithsonian museums, the National Zoo and national parks across the country, the report said. By mid-morning, some frustrated federal workers were already waiting for metro trains to take them back home, carrying potted plants from their offices with them. "Let's fire 'em all -- we need to get rid of them," Teresa Washington, an Environmental Protection Agency worker, said about the lawmakers whose actions -- or inaction -- spurred the shutdown, the report cited. "It's not fair. They still get paychecks and we don't." The Democratic-controlled Senate rejected a request by the Republican-controlled House of Representatives for a special conference committee to resolve differences on how to fund the government, including whether to link funding to changes in the health-care law, the report said. * JPMorgan Talks Said to See Possible $11 Billion Settlement ------------------------------------------------------------ Christie Smythe, Dawn Kopecki & Karen Gullo, writing for Bloomberg News, reported that JPMorgan Chase & Co.'s negotiations with federal and state authorities to resolve a series of investigations tied to mortgage bonds are focusing on a potential $11 billion figure, including $4 billion for consumer relief, a person familiar with the talks said. According to the report, the amount isn't final, said the person, who asked not to be identified because the negotiations aren't public. Those involved in the talks include the U.S. Justice Department, the Department of Housing and Urban Development and New York Attorney General Eric Schneiderman, who is co-chairman of a federal and state working group on residential mortgage-backed securities. PMorgan Chief Executive Officer Jamie Dimon arrived at the Justice Department in Washington this morning to personally discuss the settlement with Attorney General Eric Holder, according to a person familiar with the meeting, the report related. Federal officials rejected a proposal from the bank earlier this week to pay between $3 billion and $4 billion to settle the probes, a separate person with knowledge of the negotiations said. Talks Fluid The talks are still fluid and the size of the settlement keeps changing, according to another person familiar with the matter, the report further related. The people said they weren't sure which claims may be resolved. The bank is trying to resolve as many probes as possible before the end of the third quarter on Sept. 30, according to people familiar with the bank's thinking. JPMorgan is seeking to negotiate a resolution to mortgage-bond investigations being conducted by federal and state authorities, including probes by U.S. attorneys in Philadelphia, Washington and Sacramento, California, according to another person briefed on the effort, the report added. * JPMorgan, Citigroup Lose Bid to Throw Out FDIC Lawsuit -------------------------------------------------------- Bob Van Voris, writing for Bloomberg News, reported that JPMorgan Chase & Co. and Citigroup Inc. were among the banks that lost a bid to throw out a Federal Deposit Insurance Corp. lawsuit over $388 million in securities sold to a failed lender. According to the report, U.S. District Judge Louis Stanton in Manhattan on Sept. 28 denied a motion to dismiss the suit, which also targets UBS AG, Deutsche Bank AG and Wells Fargo & Co. Stanton rejected defense arguments that FDIC filed the suit too late and that the agency failed to make a sufficient claim that could allow it to recover. In the suit, filed last year, FDIC alleged that the banks misrepresented the quality of the loans underlying 11 residential mortgage-backed securities that Colonial Bank purchased in 2007, the report related. Colonial Bank, of Montgomery, Alabama, was closed by the Alabama State Banking Department on Aug. 14, 2009, and the FDIC was named as a receiver for the institution, the report further related. The misrepresentations included inaccurate loan-to-value ratios based on inflated property values, according to the complaint, the report added. Many of the properties at issue also had second mortgages that weren't disclosed, the FDIC said. The case is Federal Deposit Insurance Corp. as receiver for Colonial Bank v. Chase Mortgage Finance Corp, 12-cv-6166, U.S. District Court, Southern District of New York (Manhattan). * JPMorgan Employee Said to Be Cooperating in RMBS Probe -------------------------------------------------------- Laurie Asseo & Tom Schoenberg, writing for Bloomberg News, reported that a JPMorgan Chase & Co. employee is cooperating with federal investigators examining whether the bank knew the mortgage bonds it sold were of poor quality, a person familiar with the probe said. According to the report, the JPMorgan employee told her superiors at the bank they were vastly overstating the quality of mortgages packaged into securities, according to the person, who asked not to be identified because the matter isn't public. The Justice Department also has documents showing JPMorgan was aware it was selling residential mortgage-backed securities of poor quality, the person said. The disclosure of a cooperator comes as the lender is in talks to pay about $11 billion to end investigations into its mortgage-bond sales practices by state and federal authorities, according to people familiar with the talks, who requested anonymity because the negotiations are private, the report related. The discussions are fluid as is the size of a possible settlement, the people said. The Justice Department is under pressure from U.S. Senator John McCain to hold individual executives personally accountable for any wrongdoing at the bank, the report said. McCain, the ranking Republican on a Senate subcommittee that probed JPMorgan's record trading loss last year, sent a letter on Sept. 30 to Attorney General Eric Holder, criticizing Holder's Sept. 26 meeting with JPMorgan Chief Executive Officer Jamie Dimon. Adora Andy Jenkins, a Justice Department spokeswoman, and Joe Evangelisti, a spokesman for New York-based JPMorgan, declined to comment on the whether the government had obtained a cooperating witness, the report further related. * Lindquist Snags Former Wells Fargo Atty, Bankruptcy Pro --------------------------------------------------------- Lindquist & Vennum LLP is pleased to announce that Thomas E. Hoffman, Esq. -- thoffman@lindquist.com -- has joined the firm as a partner in the financial restructuring & bankruptcy practice group. His practice will focus on representing financial institutions, insurance companies and similar organizations in commercial workout and bankruptcy matters. He will also represent financial institutions in consumer regulatory and compliance matters. Prior to joining the firm, Hoffman served as an in-house attorney in Wells Fargo & Company's commercial restructuring and bankruptcy group and then its consumer default servicing group for more than 25 years. In this role he initially supervised the work of in- house attorneys in the commercial restructuring and bankruptcy group across the country. More recently, he managed an in-house team of attorneys handling default servicing matters across Wells Fargo's consumer lines of business, including the real estate groups, the auto group, credit cards, student lending, and wealth management. "The addition of Tom Hoffman and his decades of experience with large commercial workouts provides greater depth to our financial restructuring & bankruptcy practice," said Dennis O'Malley, Esq. - - domalley@lindquist.com -- managing partner at Lindquist. "Our clients will also benefit significantly from his years of experience in the consumer area." Hoffman was recently appointed to the Bankruptcy Practice Committee for the District of Minnesota, is the former chair of the Hennepin County Bar Association's Debtor/Creditor Committee, and a former board member and President of the Hennepin County Bar Foundation. He frequently presents at Continuing Legal Education (CLE) seminars and has served as an adjunct professor at William Mitchell College of Law and St. Thomas Law School. Hoffman graduated from William Mitchell College of Law and received his bachelor's degree from the University of Minnesota. * SEC Official Says Pension Disclosures Remain Under Scrutiny ------------------------------------------------------------- Reuters reported that the U.S. Securities and Exchange Commission's scrutiny of public pension liabilities will not let up any time soon, a top SEC official said on Sept. 26. According to the report, pension disclosure will be "a continuing and very significant theme of the SEC," John Cross, head of the SEC's Office of Municipal Securities, told attendees at the National Association of Bond Lawyers' annual workshop. "I can't overemphasize the significance and at least the need to focus on pension liabilities because of the sheer magnitude of the numbers," Cross said, adding that those liabilities go the heart of state and local government fiscal health, the report further related. The SEC has cracked down on pension and disclosure problems, hitting Illinois in March with charges for not adequately informing investors about the liabilities, the report further related. The SEC had brought similar charges against New Jersey in 2010. Both states settled the charges without admitting or denying them. The SEC has also caught Harrisburg, Pennsylvania, and Miami in its regulatory net for allegedly making misleading statements and omissions in bond documents, the report added. * Treasury Loses Big on TARP Investments in Bankruptcy ------------------------------------------------------ Jacqueline Palank, writing for Daily Bankruptcy Review, reported that recovering five cents of every dollar you're owed isn't a great outcome in bankruptcy court. But for the U.S. Department of the Treasury, that's as good as it gets. * U.S. Government Heads Toward Shutdown --------------------------------------- Lori Montgomery and David A. Fahrenthold, writing for The Washington Post, reported that the U.S. government was bracing on Sept. 30 for its first shutdown in nearly two decades, with frustrated and weary lawmakers expected to gather at the U.S. Capitol with little hope of finding a compromise that would keep the government funded. According to the report, House Majority Whip Kevin McCarthy (R- Cal.) declined to say on "Fox News Sunday" whether Republicans would consider the only plan President Obama and other Democratic leaders say they will accept: a simple bill that funds federal agencies without dismantling any part of Obama's signature 2010 health-care law. Instead, McCarthy said, Republicans were headed in a different direction, one likely to set up yet another late- night showdown. McCarthy predicted that the House will "send another provision not to shut the government down but to fund it. And it will have a few other options in there for the Senate to look at," the report related. Unlike other budget crises of the past three years, this one was unfolding in slow motion, the report said. The halls of the Capitol were dark on Sept. 29. There were no negotiations, and neither the House nor the Senate was in session. The next move belonged to Senate Majority Leader Harry M. Reid (D- Nev.), who has vowed to reject measures the House approved early Sunday to delay the health law for one year, repeal a tax on medical devices and guarantee that paychecks are sent to active- duty military service members, even in the event of a shutdown, the report further related. * U.S. Loan Delinquency Rate Down 34% in August, LPS Report Shows ----------------------------------------------------------------- Lender Processing Services, Inc., a provider of integrated technology, data and analytics to the mortgage and real estate industries, reports the following "first look" at August 2013 month-end mortgage performance statistics derived from its loan- level database representing approximately 70 percent of the overall market. Total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure): 6.20% Month-over-month change in delinquency rate: -3.31% Year-over-year change in delinquency rate: -9.71% Total U.S. foreclosure pre-sale inventory rate: 2.66% Month-over-month change in foreclosure presale inventory rate: -5.74% Year-over-year change in foreclosure presale inventory rate: -34.08% Number of properties that are 30 or more days past due, but not in foreclosure: (A) 3,124,000 Number of properties that are 90 or more days delinquent, but not in foreclosure: 1,288,000 Number of properties in foreclosure pre-sale inventory: (B) 1,341,000 Number of properties that are 30 or more days delinquent or in foreclosure: (A+B) 4,465,000 States with highest percentage of non-current* loans: FL, MS, NJ, NY, ME States with the lowest percentage of non-current* loans: MT, CO, WY, SD, ND *Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state. Notes:(1) Totals are extrapolated based on LPS Applied Analytics' loan-level database of mortgage assets.(2) All whole numbers are rounded to the nearest thousand. * Volcker Rule Costs Tallied as U.S. Regulators Press Deadline -------------------------------------------------------------- Jesse Hamilton & Cheyenne Hopkins, writing for Bloomberg News, reported that the fate of the Dodd-Frank Act's ban on banks trading for their own accounts -- one of the final pieces of the U.S. effort to prevent a repeat of the 2008 financial crisis -- may rest with a cluster of economists at the Securities and Exchange Commission. According to the report, the agency's 50 economists are attempting to calculate the costs and benefits of the so-called Volcker rule, a linchpin of the financial overhaul that would curb the kind of high-stakes proprietary trading that could lead to crippling losses or bailouts at banks like JPMorgan Chase & Co. or Citigroup Inc. Court challenges that overturned other Dodd-Frank regulations because of faulty cost-benefit analysis have increased pressure on the SEC economists, led by Craig M. Lewis, a veteran finance professor on leave from Vanderbilt University, the report related. Their work may determine whether the rule could withstand a similar lawsuit -- an option banks and trade groups say is under consideration. The economists are racing the clock: Regulators are under pressure from President Barack Obama and Treasury Secretary Jacob J. Lew to finish the rule in the next three months, the report said. At a recent meeting, Lew gave the heads of the five agencies drafting the rule a series of deadlines designed to make sure the government meets the year-end target, according to a person briefed on the meeting who asked not to be identified because it wasn't public. "Hell or high water, we're getting it done," Comptroller of the Currency Thomas Curry said in an interview, the report further related. * Wells Fargo in $869 Million Settlement with Freddie Mac --------------------------------------------------------- Dakin Campbell, writing for Bloomberg News, reported that Wells Fargo & Co., the largest U.S. home lender, agreed to an $869 million settlement with Freddie Mac to resolve disputes over faulty loans sold to the government-backed firm before Jan. 1, 2009. According to the report, the accord includes a one-time $780 million cash payment to Freddie Mac and credits tied to previous buybacks, San Francisco-based Wells Fargo said on Sept. 30 in a statement. The firm already had set aside money to cover the cost of the agreement, according to the statement. "We do not expect the company to take an additional charge for this settlement," Joseph Morford, an RBC Capital Markets analyst, wrote in a note to clients, the report added. "We are pleased to see Wells move past more of its outstanding legacy issues, and we believe this should be a slight positive for the stock." Home lenders including Bank of America Corp. and Citigroup Inc. have sought to resolve claims tied to faulty mortgages sold to Fannie Mae and Freddie Mac, the U.S.-owned firms that took a $187.5 billion bailout during the financial crisis, the report further related. Citigroup reached a $395 million deal with Freddie Mac last week and announced a $968 million settlement with Fannie Mae in July. * Student-Loan Defaults Rise in U.S. as Borrowers Struggle ---------------------------------------------------------- Janet Lorin & John Hechinger, writing for Bloomberg News, reported that about one in seven borrowers defaulted on their federal student loans, showing how former students are buckling under higher-education costs in a weak economy. According to the report, the default rate, for the first three years that students are required to make payments, was 14.7 percent, up from 13.4 percent the year before, the U.S. Education Department said on Oct. 1. Based on a related measure, defaults are at the highest level since 1995. The fresh data follows the announcement by Barack Obama's administration that it would seek to restrain skyrocketing college expenses by tying federal financial aid to a new government rating of costs and educational outcomes, the report related. The rising number of defaults shows the pain of borrowers, said Rory O'Sullivan, policy and research director at Young Invincibles, a Washington nonprofit group. "Our generation is behind in the economic recovery and not recovering as fast as we need to," said O'Sullivan, whose group represents the interests of people ages 18 to 34, the report further related. "It's financial disaster for borrowers. Defaults can dramatically affect their credit rating and make it harder to borrow in the future." * Rising Rates May Affect Interest Expense of Lower-Rated Cos. -------------------------------------------------------------- Lower-rated companies with variable rate debt will be most affected by higher interest rates in the near term, though the impact will not be significant, Moody's Investors Service says in a new report. And companies with no variable rate debt will be affected when they come to refinance their existing obligations or issue new debt. In the new report, "Rising Rates Would Have Modest Effect on Interest Expense of Lower-Rated Companies," Moody's looks at the impact of higher interest rates on the 25 largest speculative- grade issuers rated B3 negative or below identified in its annual refunding report. "Companies with variable-rate debt are most exposed to higher interest rates in the short term, as interest rates on that debt periodically reset," says analyst and author of the report, Tiina Siilaberg. "Variable rate debt accounts for 26% of the total debt of the companies we reviewed, lead by companies in the telecom, technology & media and the business and consumer services industries." The report analyzes the impact of an increase in interest rates from 100 to 500 basis points on both variable rate debt and total debt. A 100 basis point rise will increase annual interest expense on variable rate debt by about 5%, Siilaberg says. When applied to all of the companies' obligations, interest coverage declines by almost 12%. A 500 basis point uptick will increase annual interest expense on variable rate debt by about 21%, and when applied to all obligations, interest coverage goes down by 39%. Out of the 25 companies that were on the B3 Negative and lower list at the beginning of this year, 19 companies remain. The maturities through 2017 for the remaining companies declined by 33% to $50 billion from $75 billion, Siilaberg says. The ratings of four companies' ratings were withdrawn and one company refinanced its maturities beyond 2017, while Clearwire Communications was acquired by Sprint Communications, and its debt was subsequently upgraded. "While refunding indices indicate continued favorable market conditions for refinancing, market access could be negatively affected by factors such as uncertainty around global macroeconomic conditions," notes co-author of the report, Kevin Cassidy. "Upcoming budget and debt-ceiling discussions in the US and international geopolitical risks, for example, could both have a negative influence." * Energy Future, OGX May Push 4Q High Yield Default Rate to 3.5% ---------------------------------------------------------------- The potential defaults of two large companies could add $20 billion to the year's U.S. high yield default tally in the fourth quarter and push the trailing 12-month default rate to an estimated 3.5%, according to Fitch Ratings. Energy Future Holdings (EFH) is teetering on bankruptcy, and Brazilian oil company OGX Petroleo e Gas Participacoes S.A. (OGX) is already in a grace-period default following a missed interest payment on Oct. 1. An EFH bankruptcy would qualify as the fifth largest on record for a nonfinancial entity. Using current market prices as a proxy, the par weighted average recovery rate on EFH bonds is estimated at 57%, with secured issues currently trading at an average of 86% of par and unsecured bonds at 19%. While the company's troubles have been known for some time, the unsecured issues in particular ($7 billion in face value) were trading at a more robust 44% of par at the beginning of the year. Current prices result in a 2013 mark-to-market loss on EFH bonds of $2.4 billion. The mark to market loss on OGX bonds -- now trading at 15% of par -- is larger at $2.6 billion. For perspective, the year-to-date loss on all defaults (January through September) was $2.2 billion (on these issues, there was a 17% erosion in par value when comparing beginning of the year versus prices shortly after default). The trailing 12-month default rate ended September at 1.7%. Recent defaults have included Rural Metro, Green Field Energy, Lone Pine Resources and FriendFinder Networks. The four have added $1.3 billion to the year's default tally, bringing the par value of bond defaults thus far to $12.7 billion and the issuer count to 27. This compares with $13.4 billion and 25 issuers over the same period in 2012. * AlixPartners Congratulates Koch Induction Into TMA Hall of Fame ----------------------------------------------------------------- Albert A. "Al" Koch, vice chairman at global business advisory firm AlixPartners and managing director in the firm's Turnaround & Restructuring Services group, on Oct. 3 received congratulations from his AlixPartners colleagues in advance of his induction on Friday into the Turnaround Management Association (TMA) Hall of Fame, one of the most prestigious honors in the field of corporate renewal. Mr. Koch, who has been with AlixPartners 18 years (following 14 years at a major accounting firm), has led some of the highest- profile turnaround-and-restructuring engagements in the firm's history, including General Motors -- the largest industrial restructuring in U.S. history. In that engagement, he served as chief restructuring officer of GM, playing a key role in restructuring the company for future competitiveness. Then he served as chief executive officer of "old GM," where in conjunction with federal, state and local regulators and other stakeholders he engineered a historic trust for the continuing environmental remediation of former GM plants and properties, for as long as 100 years in some cases. Recently, Mr. Koch was also part of the AlixPartners team at Eastman Kodak Co., which last month emerged from bankruptcy with a new lease on life as a company focused on delivering imaging innovation for business. "Al Koch is truly a giant in his field and all of us at AlixPartners congratulate him on his upcoming induction into the TMA Hall of Fame," said Lisa Donahue, global leader of Turnaround & Restructuring Services at AlixPartners. "Besides being a stellar practitioner throughout his distinguished career, Al has also always stood out for his thoughtfulness -- for clients, for other engagement stakeholders and for staff. He has a genuine concern for the needs of everyone he interacts with, and has always done his best to live up to his longtime personal and professional credo: 'to achieve the greatest good for the greatest number of people.' Al has been a mentor to many throughout our industry, and an inspiration to all." The TMA Hall of Fame ceremony will take place Friday at the TMA's annual meeting at the Marriott Wardman Park hotel in Washington, D.C. The Hall honors those "whose outstanding individual contributions have made a lasting positive impact on an industry dedicated to stabilizing underperforming companies, rebuilding corporate value and retaining jobs." Past inductees have included such luminaries as AlixPartners founder Jay Alix, Edward Altman (father of the Altman Z-score) and businessman Wilbur Ross. About the Turnaround Management Association The Turnaround Management Association -- http://wwturnaround.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, executive recruiters, and consultants, as well as academic, government, and judicial employees. About AlixPartners AlixPartners -- http://www.alixpartners.com-- is a global business advisory firm of results-oriented professionals who specialize in creating value and restoring performance at every stage of the business lifecycle. * Lorie Beers Joins Conway MacKenzie as Senior Managing Director ---------------------------------------------------------------- Lorie R. Beers has recently joined Conway MacKenzie, and its investment banking affiliate Variant Capital, as a Senior Managing Director. In addition to her responsibilities in the restructuring arena, Ms. Beers is transitioning into the leadership role for the Firm's investment banking practice. Ms. Beers has been in the restructuring and investment banking businesses combined for over 25 years. Most recently she was Global Co-head of Investment Banking and Global Compliance Officer for Seabury Group in New York. Prior to that, Ms. Beers established KPMG's Special Situations East Coast practice. In addition, she spent several years practicing law in various bankruptcy departments at a number of East Coast law firms. About Conway MacKenzie Conway MacKenzie is one of the premier financial advisory firms in the turnaround industry. The firm specializes in performing transaction advisory, turnaround and crisis management, valuation and forensic accounting and litigation support across virtually every industry. About Variant Capital Variant Capital provides investment banking services to the middle market including capital raising, mergers and acquisitions advisory, financial restructuring and equity sponsor advisory services. * BOOK REVIEW: The ITT Wars: An Insider's View of Hostile Takeovers --------------------------------------------------------- Author: Rand Araskog Publisher: Beard Books Soft cover: 236 pages List Price: $34.95 Review by Gail Owens Hoelscher Buy a copy for yourself and one for a colleague on-line at: http://is.gd/zrjGXr This book was originally published in 1989 when the author was Chairman and Chief Executive Officer of ITT Corporation, a $25 billion conglomerate with more than 100,000 employees and operations spanning the globe with an amazing array of businesses: insurance, hotels, and industrial, automotive, and forest products. ITT owned Sheraton Hotels, Caesars Gaming, one half of Madison Square Garden and its cable network, and the New York Knickerbockers basketball and the New York Rangers hockey teams. The corporation had rebounded from its troubles of the previous two decades. Araskog was made CEO in 1978 to make sense of years of wild acquisition and growth. Under Harold Geneen, successor to ITT's founder and champion of "growth as business strategy," ITT's sales had grown from $930 million in 1961 to $8 billion in 1970 and $22 billion in 1979. It had made more than 250 acquisitions and had 2,000 working units. (It once acquired some 20 companies in one month). ITT's troubles began in 1966, when it tried to acquire ABC. National sentiment against conglomerates had become endemic; the merger became its target and was eventually abandoned. Next came a variety of allegations, some true, some false, all well publicized: funding of Salvador Allende's opponents in Chile's 1970 presidential elections; influence peddling in the Nixon White House; underwriting the 1972 Republican National Convention. ITT's poor handling of several antitrust cases was also making headlines. Then came recession in 1973. ITT's stock plummeted from 60 in early 1973 to 12 in late 1974. Geneen found himself under fire and, in Araskog's words, the "succession wars" among top ITT officers began. Geneen was forced out in 1977, and Araskog, head of ITT's Aerospace, Electronics, Components, and Energy Group, with more than $1 billion in sales, won the CEO prize a year later. Araskog inherited a debt-ridden corporation. He instituted a plan of coherent divesting and reorganization of the company into more manageable segments, but was cut short by one of the first hostile bids by outside financial interests of the 1980s, by businessmen Jay Pritzker and Philip Anschutz. This book is the insider's story of that bid. The ITT Wars reads like a "Who's Who" of U.S. corporations in the 1970s and 1980s. Araskog knew everyone. His writing reflects his direct, passionate, and focused management style. He speaks of wars, attacks, enemies within, personal loyalty, betrayal, and love for his company and colleagues. In the book's closing sentences, Araskog says, "We fought when the odds were against us. We won, and ITT remains one of the most exciting companies of the twentieth century. We hope to keep the wagon train moving into the twenty-first century and not have to think about making a circle again. Once is enough." Araskog wrote a preface and postlogue for the Beard Books edition, and provides us with ten years of perspective as well as insights into what came next. In 1994, he orchestrated the breakup of ITT into five publicly traded companies. Wagon circling began again in early 1997 when Hilton Hotels made a hostile takeover offer for ITT Corporation. Araskog eventually settled for a second-best victory, negotiating a friendly merger with The Starwood Corporation, in which ITT shareholders became majority owners of Starwood and Westin Hotels, with the management of Starwood assuming management of the merged entity. Today Mr. Araskog continues to serve on the boards of the four corporations created from ITT, as well as on the boards of Shell Oil Company and Dow Jones, Inc. He heads up his own investment company with headquarters on Worth Avenue, in Palm Beach, Florida. ********* 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 ***