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/raid1/www/Hosts/bankrupt/TCR_Public/131126.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, November 26, 2013, Vol. 17, No. 328 Headlines A123 SYSTEMS: Nov. 26 Class Action Lead Plaintiff Deadline Set ACOSTA INC: Moody's Assigns 'B2' CFR & 'B1' Secured Notes Rating AARON CARTER: Former Teen Pop Singer Files for Chapter 7 ADAYANA INC: Hires McGladrey LLP as Tax Professional ALLENS INC: Vegetable Processor Plans Auction in January AMERICAN ACHIEVEMENT: Visant Deal No Effect on Moody's Ratings AMERICAN ACHIEVEMENT: S&P Puts 'B-' CCR on Watch Positive AMERICAN AIRLINES: Workers Urge Judge to Approve DOJ Deal AMERICAN AIRLINES: Consumer Plaintiffs Oppose Antitrust Settlement AMERICAN AIRLINES: Delay in Antitrust Settlement No Bar to Merger AMERICAN BEACON: Moody's Corrects Text of November 4 Release ARCAPITA BANK: $1.5 Million Claim Shrinks to $149 BATE LAND: Denies Filing "Dirt-for-Debt" Plan BORGER ENERGY: Moody's Affirms 'Ba3' Rating; Outlook to Stable BREITBURN ENERGY: Moody's Rates New $300MM Senior Notes 'B3' BULLSEYE MERGERSUB: Moody's Rates New $550MM Secured Notes 'Caa1' C&K MARKET: Seeks Authority to Tap DIP Financing from US Bank C&K MARKET: Proposes Closing Sales for 21 Stores C&K MARKET: Seeks to Assume Supervalu Supply Agreement CALUMET SPECIALTY: Moody's Rates New $225MM Unsecured Notes 'B2' CANDEO SCHOOLS: S&P Rates $10.935MM 2013 Revenue Bonds 'BB+' CAPITOL BANCORP: Wilbur Ross's Talmer Bancorp to Buy Four Banks CAPITOL BANCORP: Judge OKs Bank Sale Over Creditor Protests CARDTRONICS INC: Moody's Affirms 'Ba2' CFR & 'B1' Sub. Debt Rating CASH STORE: Board of Directors Adopts New General By-Law CENGAGE LEARNING: Hires Hilco Valuation as Consultants CHRYSLER GROUP: Postpones IPO to Early 2014 CLI HOLDINGS: Alydian to Seek Sale of Bitcoin-Mining Assets CLOVIS PRINCE: 5th Circ. Affirms Conviction of $14M Bank Fraudster COMMSCOPE INC: S&P Assigns 'BB+' Rating to Proposed Term Loans CONTINENTAL BLDG: Moody's Cuts Corp. Family Rating to B3 CRAVEN PROPERTIES: Bankruptcy Case Now Under Chapter 7 CRC HEALTH: Moody's Rates $50MM Add-on Sr. Secured Term Loan 'B1' DEBORAH HEART: Moody's Confirms B1 Rating on $18.9MM Bonds DEL MONTE FOODS: Moody's Says Ratings Unaffected by Debt Upsize DETROIT, MI: Pays Law Firms, Professionals Almost $23MM so Far DETROIT, MI: Emergency Manager, Mayor-Elect Agree on Naming CFO DETROIT, MI: Moody's Confirms B1 Rating on Senior Lien Sewer Bonds DETROIT, MI: Moody's Confirms B1 Rating on Senior Lien Water Bonds DETROIT, MI: Moody's Confirms 'Caa3' Gen. Obligation Rating DIGITAL DOMAIN: Forbearance Period Under DIP Loan Expires Nov. 29 DREIER LLP: Creditors File 6 Suits Over Unpaid Bills DUNLAP OIL: Set for Conversion Hearing After Plan Rejected EMPIRE DIE: Has Final OK to Obtain Up to $6-Mil. in DIP Loans ENERGY FUTURE: Fidelity Investments Divide Shows Debt Knot EWGS INTERMEDIARY: Wins Court Approval of Sale Procedures EXIDE TECHNOLOGIES: October Loss Is Half Chapter 11 Expenses FISKER AUTOMOTIVE: Files Chapter 11 Petition to Facilitate Sale FLY LEASING: Moody's Hikes CFR to B1 & Term Loan Rating to Ba3 FLINTKOTE COMPANY: Plan Solicitation Exclusivity Expires June 30 FLINTKOTE COMPANY: Removal Deadline Extended Until April 30 FLORIDA GAMING: Seeks Exclusivity Pending March Sale FONTAINEBLEAU LAS VEGAS: Execs Say Trustee's $3B Suit Won't Fly FORUM ENERGY: Moody's Rates New $100MM Sr. Unsecured Notes 'Ba3' FRESH & EASY: US Trustee Balks at $42MM Property Sale Plan FRESH & EASY: Surplus Property Auction on for Dec. 12 FURNITURE BRANDS: Wins Court Approval for $280-Mil. KPS Deal GENELINK INC: Incurs $539,000 Net Loss in Third Quarter GENERAL MOTORS: U.S. Plans to Exit Stake by Year-End GENERAL NUTRITION: Moody's Cuts Sr. Sec. Term Loan Rating to 'B1' GENOA HEALTHCARE: S&P Withdraws 'B' Corporate Credit Rating GLYECO INC: Delays Q3 Form 10-Q to Complete Review GRAY TELEVISION: Acquisitions No Impact on Moody's Ratings HARRISBURG, PA: Asks Court to Extend Receivership HARRISBURG, PA: Takeover Threatens City Officials, 3rd Circ. Told HORNE INTERNATIONAL: Incurs $193,000 Net Loss in Third Quarter HOUSTON REGIONAL: Rockets Owner Willing to Buy Sports Network HOUSTON REGIONAL: Houston Astros Owner Sues McLane, Comcast HOWREY LLP: Estate Settles with Cadwalader, Ober Kaler IGLESIA PUERTA: Files Chapter 11 Plan & Disclosure Statement IGLESIA PUERTA: Has Interim Authority to Use Cash Collateral IGLESIA PUERTA: Has Interim Authority to Employ James & Haugland ILLINOIS FINANCE: Fitch Affirms BB+ Bonds Rating; Outlook Negative IMAGEWARE SYSTEMS: Posts $339,000 Net Income in Third Quarter IMPERIAL PETROLEUM: Accepts Resignation of Chairman IMPLANT SCIENCES: Files Form 10-Q, Had $6MM Loss in Sept. 30 Qtr. INFINIA CORP: Sells Arizona Solar Project for $10 Million INTELSAT JACKSON: Moody's Rates $1.75-Bil. Secured Term Loan 'Ba3' ISOLA USA: Moody's Puts 'Caa2' CFR on Review for Upgrade JEFFERSON COUNTY, AL: Bankruptcy Left Few Winners JEFFERSON COUNTY, AL: Debt-Adjustment Plan Formally Approved KENAN ADVANTAGE: Moody's Rates New $150MM Sr. Sec. Notes 'Ba3' KENAN ADVANTAGE: S&P Assigns 'BB-' Rating to $125MM Revolver Debt KINGSBURY CORP: Case Converted to Chapter 7 Despite Plan Filing KRATOS DEFENSE: Moody's Rates $675MM Second Lien Notes 'B3' KRATOS DEFENSE: S&P Assigns 'B' Rating to $675MM Second-Lien Notes KRONOS INC: Moody's Lowers CFR to B3 & 1st Lien Debt Rating to B1 KRONOS INC: S&P Retains 'CCC+' Rating on 2nd-Lien Loan Due 2020 LATTICE INC: Posts $49,445 Net Income in Third Quarter LEAGUE GROUP: B.C. Supreme Court Extends CCAA Proceedings LEHMAN BROTHERS: Defends Bid to Subordinate Fannie Mae Claim LEHMAN BROTHERS: Wants 27 Indemnification Claims Pegged at $0 LEHMAN BROTHERS: Black Diamond, DBDO Ask for Documents LEHMAN BROTHERS: Transfers 20% Stake in LBI to Third Party LEHMAN BROTHERS: Files 48th Status Report on ADR Settlements LEO MOTORS: Incurs $159,000 Net Loss in Third Quarter LIBERTY TIRE: Moody's Rates Proposed $25MM Add-on Notes 'Caa2' LIFEPOINT HOSPITALS: Fitch Rates $500MM Sr. Unsecured Notes 'BB' LIFEPOINT HOSPITALS: Moody's Rates Proposed Unsecured Notes Ba1 LIFEPOINT HOSPITALS: S&P Affirms 'BB-' CCR and Revises Outlook LIGHTSQUARED INC: Exit Plans Not Feasible, US Trustee Says LONGVIEW POWER: Judge Approves $150 Million Financing from Lenders LYFE COMMUNICATIONS: Incurs $451,700 Net Loss in Third Quarter MANASOTA GROUP: Delays Form 10-Q for Third Quarter MARIAH RE: Can't Take Back $100MM Payment, Insurer Argues MERCANTILE BANCORP: Plan Filing Period Extended Until Dec. 24 MERITAGE HOMES: Fitch Rates New $100MM Unsecured Notes 'BB-' MERITAGE HOMES: Moody's Rates New $100MM Unsecured Notes B1 METAL SERVICES: Moody's Says $25MM Add-on Notes is Credit Positive MOHEGAN TRIBAL: Moody's Raises CFR & $500MM Notes Rating to B3 MOMENTIVE PERFORMANCE: Moody's Cuts CFR to Caa2; Outlook Negative MOORE FREIGHT: Names Special Litigation Counsel MORY DUCROS: French Courier Company Enters Bankruptcy Proceedings MMRGLOBAL INC: Incurs $2.2 Million Net Loss in Third Quarter MT. LAUREL LODGING: Has Access to Cash Collateral Until Dec. 20 MULTI PACKAGING: Merger Deal No Effect on Moody's Ratings NEPHROS INC: Incurs $611,000 Net Loss in Third Quarter NETWORK CN: Incurs $898,000 Net Loss in Third Quarter NEXSTAR BROADCASTING: S&P Retains BB Rating on $498MM Term Loan NIRVANIX INC: Intellectual Property Sale Gets Court Approval NNN PARKWAY CORPORATE: Seeks to Use Cash Collateral to Operate NORTH AMERICAN BREWERIES: S&P Puts 'B' CCR on CreditWatch Negative NORBORD INC: Moody's Hikes CFR to Ba2 & Rates $240MM Notes Ba2 OCEANSIDE MILE: Taps Creim Macias as Reorganization Counsel OGX PETROLEO: Offshore Units Left Out of Bankruptcy Case ORDOT DUMP: Receiver to Report Issues to Fed Court OVERSEAS SHIPHOLDING: Gellert Scali Hiring Approved OXYSURE SYSTEMS: Incurs $82,600 Net Loss in Third Quarter PACIFIC GOLD: Posts $789,000 Net Income in Third Quarter PACIFIC THOMAS: Plan Contemplates Bankruptcy Exit by January PATHEON INC: Moody's Affirms B3 CFR & Alters Outlook to Developing PHOENIX SERVICES: S&P Retains 'B' Rating Following $25MM Add-On PHYSICAL PROPERTY: Incurs HK$43,000 Net Loss in Third Quarter PLANDAI BIOTECHNOLOGY: Delays Form 10-Q for Third Quarter POSITIVEID CORP: Sells 871,754 VeriTeQ Common Shares POSITRON CORP: Incurs $1.4 Million Net Loss in Third Quarter PRECISION OPTICS: Incurs $210,700 Net Loss in Fiscal Q1 RESIDENTIAL CAPITAL: Knocks Out $160 Million in Ill-Founded Claims RESIDENTIAL CAPITAL: Resolves Plan Objections, Files Revised Plan RESIDENTIAL CAPITAL: Seeks OK of Accord With Committee, Ally RESIDENTIAL CAPITAL: Removal Period Extended to Jan. 31, 2014 RESIDENTIAL CAPITAL: Has Mitchell Class Suit Settlement REVSTONE INDUSTRIES: Creditors Say Acrimony Warrants Trustee REVSTONE INDUSTRIES: Creditors' Committee Seeks Trustee Again REX VENTURE: Receiver to Auction Off Assets Dec. 16 RIH ACQUISITIONS: Can Hire Non-Bankruptcy Legal Professionals ROGERS BANCSHARES: Names Cheryl Shuffield as Liquidation Officer ROTECH HEALTHCARE: Says Baker & McKenzie Lied to Court RURAL/METRO CORP: McCall Wants Policy Assumed Under Plan SESI LLC: Moody's Affirms 'Ba1' CFR & Alters Outlook to Positive SHELBOURNE NORTH WATER: Irish Real Estate Mogul Sued for $95MM SHERIDAN HOLDINGS: Moody's Says Company Acquisition is Credit Pos. SIMPLY WHEELZ: Hertz Global Faces Suit Over Insolvency Exposure SPECIALTY PRODUCTS: Dec. 18 Hearing on Outline for Own Plan STONE CANYON: Voluntary Chapter 11 Case Summary SUDBURY MILL: Moody's Rates $18MM Class E Notes 'Ba3(sf)' TLO LLC: Court Approves TransUnion's Bid to Acquire Business TLO LLC: Disclosure Statement Hearing Reset to Dec. 4 TRANSWITCH CORP: Liquidating Under Chapter 7 UPH HOLDINGS: Panel Joins in Debtors & Hercules Enforcement Motion VANTAGE SPECIALTIES: Moody's Reiterates 'B2' Rating on Term Loan VELOCITY EXPRESS: Court Dismisses Chapter 11 Case VERTIS HOLDINGS: Exclusive Periods Extension Approved VISANT HOLDING: Moody's Affirms 'B3' CFR Over Acquisition Deal VISANT HOLDING: S&P Puts 'B' CCR on CreditWatch Negative WALKER LAND: Seeks to Use Cash Collateral to Operate WESCO DISTRIBUTION: Moody's Rates New $400MM Unsecured Notes at B1 WEST AIRPORT: WAP Objects to Continued Use of Cash Collateral WEST AIRPORT: Creditor Files Plan of Liquidation WISE METALS: Moody's Assigns B3 CFR & Caa1 Sec. Notes Rating WISE METALS: S&P Assigns 'B' CCR & Rates New $625MM Notes 'B-' WKI HOLDING: Moody's Corrects Text on Oct. 31 Release WOOTON GROUP: Simon Resnik Hayes Can Withdraw as General Counsel TLO LLC: Court Okays 4th Motion for Add'l DIP Loan of $1,000,000 WYLDFIRE ENERGY: Chapter 11 Trustee Files Liquidation Plan ZAYO GROUP: Moody's Rates Proposed $150MM Term Loan Add-on 'B1' ZAYO GROUP: S&P Retains 'B' Rating Following $150MM Loan Add-On * Service Members Left Vulnerable to Payday Loans * FDIC Will Give Full Outline of Big Bank Wind-Down Plans * FINRA Is Cracking Down on High-Risk Brokers * Regulators Put Tougher Restrictions on Bank Payday Loans * Supreme Court Asked to Rule on Inherited IRAs * MorrisAnderson Bags T&A's 2013 Outstanding Turnaround Firm Award * Large Companies With Insolvent Balance Sheets ********* A123 SYSTEMS: Nov. 26 Class Action Lead Plaintiff Deadline Set -------------------------------------------------------------- Glancy Binkow & Goldberg LLP on Nov. 22 disclosed that all purchasers of the securities of A123 Systems, Inc. between February 28, 2011 and October 16, 2012, inclusive have until November 26, 2013, to file a motion to be appointed as lead plaintiff in the shareholder lawsuit filed in the United States District Court for the Southern District of New York. A COPY OF THE COMPLAINT IS AVAILABLE FROM THE COURT OR FROM GLANCY BINKOW & GOLDBERG LLP. PLEASE CONTACT US AT (212) 682-5340, TOLL- FREE AT (888) 773-9224, OR AT SHAREHOLDERS@GLANCYLAW.COM TO DISCUSS THIS MATTER. IF YOU INQUIRE BY EMAIL PLEASE INCLUDE YOUR MAILING ADDRESS, TELEPHONE NUMBER AND NUMBER OF SHARES PURCHASED. A123's largest customer was Fisker Automotive, Inc. The Complaint alleges that during the Class Period certain officers and directors of the former Company issued materially false and misleading statements concerning A123's financial performance and prospects. Specifically, defendants failed to disclose that Fisker's inability to meet production milestones related to a funding agreement with the U.S. Department of Energy threatened Fisker's ability to pay A123, and that Fisker's weakening financial position was having an adverse effect on A123's own financial performance and prospects and its investment in Fisker preferred stock. To learn more about this action or if you have any questions concerning this Notice or your rights or interests with respect to these matters, please contact Michael Goldberg, Esquire, of Glancy Binkow & Goldberg LLP, 1925 Century Park East, Suite 2100, Los Angeles, California 90067, Toll-Free at (888) 773-9224, or contact Gregory Linkh, Esquire, of Glancy Binkow & Goldberg LLP at 122 E. 42nd Street, Suite 2920, New York, New York 10168, at (212) 682-5340, by e-mail to shareholders@glancylaw.com or visit our website at http://www.glancylaw.com About A123 Systems Based in Waltham, Massachusetts, A123 Systems Inc. designed, developed, manufactured and sold advanced rechargeable lithium-ion batteries and battery systems and provided research and development services to government agencies and commercial customers. A123 was the recipient of a $249 million federal grant from the Obama administration. A123 and U.S. affiliates, A123 Securities Corporation and Grid Storage Holdings LLC, sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case Nos. 12-12859 to 12-12861) on Oct. 16, 2012. A123 disclosed assets of $459.8 million and liabilities totaling $376 million. Lawyers at Richards, Layton & Finger, P.A., and Latham & Watkins LLP serve as the Debtors' counsel. Lazard Freres & Co. LLC acts as the Debtors' financial advisors, while Alvarez & Marsal serves as restructuring advisors. Logan & Company Inc. serves as the Debtors' claims and noticing agent. Brown Rudnick LLP and Saul Ewing LLP serve as counsel to the Official Committee of Unsecured Creditors. Prior to the bankruptcy filing, A123 had an agreement to sell an 80% stake in the business to Chinese auto-parts maker Wanxiang Group Corp. U.S. lawmakers opposed the deal over concerns on the transfer of American taxpayer dollars and technology to China. When it filed for bankruptcy, the Debtors presented a deal to sell all assets to Johnson Controls Inc., subject to higher and better offers. At the auction in December 2012, most of the assets ended up being sold for $256.6 million to Wanxiang. The deal received approval from the Committee on Foreign Investment in the U.S. on Jan. 29, 2013. A123 Systems was renamed B456 Systems Inc., following the sale. Wanxiang America Corporation and Wanxiang Clean Energy USA Corp. are represented in the case by lawyers at Young Conaway Stargatt & Taylor, LLP, and Sidley Austin LLP. JCI is represented in the case by Josh Feltman, Esq., at Wachtell Lipton Rosen & Katz LLP. In May 2013, the Delaware bankruptcy court confirmed the liquidation plan for A123 Systems Inc. The Plan repays all secured creditors in full with some money left over for unsecured creditors. Holders of $143.8 million in subordinated notes are projected to recoup 36.3 percent. If B456 Systems Inc., the company's new name, reduces claims to amounts the company believes correct, the recovery on the subordinated notes could increase to 62.9 percent, according to the disclosure statement. General unsecured creditors, who previously were said to have $124 million in claims, would have roughly the same recovery. ACOSTA INC: Moody's Assigns 'B2' CFR & 'B1' Secured Notes Rating ---------------------------------------------------------------- Moody's Investors Service assigned new ratings to Acosta, Inc. a B2 Corporate Family Rating ("CFR"); probability of default rating B2-PD; and B1 senior secured rating ($1,264 million term loan and $90 million revolver). The outlook is stable. Ratings Rationale: Moody's factors Acosta's comparatively low operating margin and high financial leverage relative to its Sales and Marketing Agency ("SMA") peers. Acosta's debt-to-EBITDA at well above 7.0x, as it is currently, compares unfavorably to the other two sizeable SMA competitors and to other companies also rated at the B2 level. Such high leverage is likely to hamper Acosta's ability to take advantage of opportunistic acquisitions or limit resources devoted to integration going forward and growing its business prudently. However, Moody's also recognizes Acosta's good liquidity, and its dominance as the country's largest SMA, a position which bolsters the inherent customer loyalty that companies in this high-barrier industry enjoy. Moody's expects that Acosta, as demonstrated by prior acquisition successes, should be able to integrate the Mosaic and foodservice acquisitions such that it raises its EBITDA margins back to the upper-teen percentages, as it continues to grow revenues. This should result in better profits and facilitate a lower debt-to-EBITDA back to about 6.0x, as Moody's does not anticipate Acosta to reduce the amount of debt meaningfully. After reducing financial leverage and sustaining it at a lower level, the company would be positioned more solidly in the B2 rating category. Moody's could downgrade the ratings if Acosta fails to delever as anticipated over the coming year, if liquidity deteriorates, or if the company stumbles in its integration of recent acquisitions. Flat profit margins or revenues failing to grow at historical averages could also pressure the rating down. Alternatively, the ratings could be upgraded if Acosta can boost its EBITDA margin closer to 20%, and use free cash to prepay debt obligations such that debt-to-EBITDA can be brought down and be sustained at about 5.0x. An upgrade would also require a demonstrated commitment to conservative financial policies with regard to dividends and acquisitions. The following ratings (and LGD assessments) were assigned: Corporate Family Rating, B2 Probability of Default Rating, B2-PD Senior Secured, B1 (LGD3, 33%); credit facilities due 2016 and 2018. (An additional $525 million senior unsecured note issuance, due 2018, is not rated by Moody's.) With expected fiscal 2014 revenues of $1.86 billion, Acosta Sales and Marketing is the leading sales and marketing agency in the U.S., providing outsourced marketing and merchandising services to manufacturers, suppliers, and producers of, primarily, food- related consumer packaged goods. Florida-headquartered Acosta is owned approximately 20% by management, with the remainder owned by private equity firms T.H. Lee and Goldman Sachs. The company was founded in 1927. AARON CARTER: Former Teen Pop Singer Files for Chapter 7 -------------------------------------------------------- Erik Hayden, writing for The Hollywood Reporter, reported that Aaron Carter is looking to emerge from dire financial straits. The former teen pop star recently filed for Chapter 7 bankruptcy in a Florida court in order to put behind him money woes incurred from years ago, Carter's publicist, Steve Honig, told The Hollywood Reporter. "The overwhelming majority of the debt that he's asking to be discharged is from more than 10 years ago, and that was when he was a minor and not in control of his own finances," Honig said, the report cited. "So this is a problem that's existed for a long time that he's now made the decision to do something about in order to be able to move forward with his life," the report further cited Honig as saying. The singer's rep said the decision to file for bankruptcy recently was made "because it became apparent that it was the only way to deal with the problem," the report related. Under Chapter 7 bankruptcy, Carter's property would be sold in order to pay debts. ADAYANA INC: Hires McGladrey LLP as Tax Professional ---------------------------------------------------- Adayana, Inc. seeks authorization from the U.S. Bankruptcy Court for the Southern District of Indiana to employ McGladrey LLP as tax professional nunc pro tunc to Nov. 18, 2013, and to establish interim compensation procedures. McGladrey LLP will prepare the Debtor's federal income tax and resident state income tax returns, plus additional tax returns, if any. Based upon McGladrey LLP's previous experience in providing tax advisory services to the Debtors and their companies, McGladrey LLP estimates that the costs of their services will be approximately $25,000-$35,000 for preparation of fiscal year 2013 federal, state and local tax returns and $45,000-$60,000 for work to be performed in 2014, due to various tax issues related to the bankruptcy. McGladrey LLP will also be reimbursed for reasonable out-of-pocket expenses incurred. Prior to the Debtor's petition date, McGladrey LLP provided tax, assurance and advisory services to the Debtor and its companies. McGladrey LLP was owed a balance of approximately $10,000 for prior tax and accounting work performed by McGladrey in 2013. The balance has been written-off by McGladrey LLP. Therefore, there are no outstanding obligations between the Debtor and McGladrey LLP. The Debtor and McGladrey LLP request that the Court adopt certain interim compensation procedures to ease the financial strain of quarterly or a single fee application places on the Debtor and the expense of filing interim fee applications. Those proposed procedures are as follows: (a) from time to time, McGladrey LLP will provide the Debtor with a statement McGladrey LLP's services and expenses incurred during the previous period (a "Fee Statement"). The Debtor will have seven days after receiving the Fee Statement to give McGladrey LLP any notice of objection to the fees and expenses contained in such Fee Statement. If the Debtor does not object to the Fee Statement, McGladrey LLP will file the Fee Statement and serve the Fee Statement on the Debtor's service list; (b) after the filing of the Fee Statement, the Debtor will be authorized to pay from the cash from operations 80% of the fees and 100% of the expenses set forth in the Fee Statement on an interim basis and subject to final allowance by the Court; (c) McGladrey LLP may file periodic interim fee applications in accordance with Section 331 of the Bankruptcy Code which will incorporate any Fee Statement filed prior to such application, including those to which there may have been an objection, for which McGladrey LLP may seek interim payment and allowance of the 20% of fees incurred but not yet paid (the "Holdback Amount"); and (d) nothing in the proposed interim compensation procedures shall affect the rights of any party-in-interest to object to an interim or final fee application filed by McGladrey LLP. Lawrence Keyler, partner of McGladrey LLP, assured 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. McGladrey LLP can be reached at: Lawrence Kelyer McGLADREY LLP 9225 Priority Way West Drive, Ste 300 Indianapolis, IN 46240 Tel: (317) 805-6200 Fax: (317) 805-6201 About Adayana, Inc. Adayana, Inc., is a holding company, incorporated under the laws of the state of Minnesota. Its primary assets are its equity ownership interests in two separate operating companies, ABG, an Adayana Company, and Vertex Solutions, Inc., one of which is headquartered in Indianapolis, and the other in Virginia. Both operating companies are in the "human capital" business, providing an array of technology-based consulting and training services. Adayana valued the subsidiaries' stock at $8 to $12 million as of March 31, 2013. It also owns personal property with book value of $949,280. Adayana, along with its two subsidiaries, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Ind. Case No. 13-10919) on Oct. 14, 2013. The Debtors are represented by Michael P. O'Neil, Esq., at Taft Stettinius & Hollister LLP, in Indianapolis, Indiana. ALLENS INC: Vegetable Processor Plans Auction in January -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Allens Inc., a processor of canned vegetables, intends to sell the business at auction in January. According to the report, although no buyer is yet under contract, the company said in court papers filed Nov. 22 that 59 potential purchasers signed confidentiality agreements entitling them to receive detailed financial information. Allens said three are interested in making the first offer and becoming the so-called stalking horse at auction. The loan financing the Chapter 11 reorganization begun in late October requires having a hearing to approve a sale by Jan. 27. Dates for the auction aren't specified, although the papers show initial bids due one week before the auction. Last week, the bankruptcy judge in Fayetteville, Arkansas, granted interim approval for Allens to borrow $100.2 million on a revolving credit and $14.2 million on a term loan from Bank of America NA as agent. Dec. 16 is the date for a hearing to consider final approval of the loan. Technical aspects of the loan are being opposed by a pair of produce suppliers contending their unpaid bills come before the bank lenders' secured claims as a consequence of the federal Perishable Agricultural Commodities Act, or PACA. For the time being at least, the interim loan provides that valid PACA claims come ahead of the bank. In Allen's bankruptcy, half of the 20 largest unsecured creditors are farmers or produce suppliers, with six each owed more than $1 million. Four other vegetable growers have claims exceeding $500,000 each. Financing for Allens' bankruptcy includes a $14 million term loan paying off a pre-bankruptcy term loan and a $105 million revolving credit to pay off the existing revolving credit. About Allens Inc. Siloam Springs, Arkansas-based Allens, Inc., a maker of canned and frozen vegetables in business since 1926, filed for bankruptcy on Oct. 28, 2013, seeking to sell some divisions or reorganize as a new company (Case No. 13-bk-73597, Bankr. W.D. Ark.). The Debtors' proposed counsel are Stan D. Smith, Esq., Lance R. Miller, Esq., and Chris A. McNulty, Esq., at Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., in Little Rock, Arkansas; and Nancy A. Mitchell, Esq., Maria J. DiConza, Esq., and Matthew L. Hinker, Esq., at Greenberg Traurig, LLP, in New York. Jonathan Hickman of Alvarez & Marsal North America, LLC, will serve as chief restructuring officer. Cary Daniel, Nick Campbell and Markus Lahrkamp of A&M will serve as assistant CROs. Lazard Freres & Co. LLC and Lazard Middle Market LLC serve as investment bankers, while GA Keen Realty Advisors, LLC, serves as real estate advisor. AMERICAN ACHIEVEMENT: Visant Deal No Effect on Moody's Ratings -------------------------------------------------------------- Moody's Investors Service says American Achievement Corporation's Corporate Family Rating and other ratings are not affected by the proposed acquisition of the company by Visant Holding Corp. ("Visant" B3 stable) for approximately $486 million, although the transaction is credit positive for American Achievement. Moody's expects to withdraw American Achievement's ratings upon close of the acquisition as its debt will be repaid as part of the transaction. The Troubled Company Reporter related in November 2010 that Moody's Investors Service upgraded American Achievement Group Holding Corp.'s corporate family rating to B3 from Caa1 and probability of default rating to B3 from Caa2 following the successful refinancing of the company's capital structure. Moody's has also assigned a B3 rating to the $365 million of American Achievement Corporation's senior secured notes with a coupon of 10.875%. These rating actions conclude the review for possible upgrade initiated on October 18, 2010. The rating outlook is stable. Given the changes to American Achievement's capital structure, the CFR and PDR ratings are transferred from America Achievement Group Holdings to American Achievement Corporation. American Achievement Corporation, headquartered in Austin, Texas, is a leading provider of education and special moment affinity products and services. The company holds a strong market position in each of its product segments -- yearbooks, class rings, and graduation products. American Achievement's financial sponsors are Fenway Partners, LLC. Revenue for the year ended August 31, 2013 approximated $270 million. AMERICAN ACHIEVEMENT: S&P Puts 'B-' CCR on Watch Positive --------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on American Achievement, including the 'B-' corporate credit rating and issue- level ratings, on CreditWatch with positive implications. The rating action follows Visant's announcement that is has entered into an agreement to acquire American Achievement in a predominantly debt-financed acquisition valued at $486 million. American Achievement is approximately one-fourth the size of Visant, based on EBITDA. The acquisition will likely improve American Achievement's business risk profile. However, the transaction is subject to regulatory review. Standard & Poor's has reviewed its ratings on American Achievement, which it labeled as "under criteria observation" (UCO) after the publishing of its revised Corporate criteria on Nov. 19. Standard & Poor's expedited the review of its ratings on American Achievement because of the company's agreement to be acquired by competitor Visant Holding Corp. With S&P's criteria review of the company complete, it has confirmed that its ratings on this issuer are unaffected by the criteria changes. The rating on American Achievement will likely remain on CreditWatch with positive implications until the transaction closes. Subsequently, S&P will likely withdraw the rating if the company repays this debt. AMERICAN AIRLINES: Workers Urge Judge to Approve DOJ Deal --------------------------------------------------------- Law360 reported that unions representing employees of bankrupt American Airlines on Nov. 21 urged a New York bankruptcy judge to approve a settlement agreement that would end the U.S. Department of Justice's challenge to the airline's merger with US Airways Group Inc., saying the deal is fair and would pave the way for American's resurgence. According to the report, the Allied Pilots Association, Association of Professional Flight Attendants and Transport Workers Union of America told the court in a brief to take swift action to approve the federal antitrust settlement. 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. In November 2013, AMR and the U.S. Justice Department a settlement of the anti-trust suit. The settlements require the airlines to shed 104 slots at Reagan National Airport in Washington and 34 at LaGuardia Airport in New York. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) AMERICAN AIRLINES: Consumer Plaintiffs Oppose Antitrust Settlement ------------------------------------------------------------------ Nick Brown, writing for Reuters, reported that a group of consumers who have sued American Airlines' bankrupt parent over its proposed merger with US Airways Group are now objecting to a settlement that would allow that merger to go forward. According to the report, California resident Carolyn Fjord, leading a proposed class of plaintiffs in an antitrust lawsuit against the two airlines, filed court papers on Nov. 21 in U.S. Bankruptcy Court in Manhattan, arguing that consumers would be hurt by the tie-up, which would create the world's largest airline. It was the only objection filed ahead of a midday deadline to oppose the settlement, which was reached earlier this month in a separate dispute between the airlines and the U.S. Department of Justice, the report said. The DOJ had blocked the deal, which was to serve as the basis for American parent AMR Corp's exit from bankruptcy, the report related. The sides settled after the airlines agreed to give low- cost competitors more access to several key U.S. airports, including in New York and Washington. The settlement still needs bankruptcy court approval before the merger can close and AMR can exit bankruptcy, the report added. A court hearing is scheduled for Nov. 25. 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. In November 2013, AMR and the U.S. Justice Department a settlement of the anti-trust suit. The settlements require the airlines to shed 104 slots at Reagan National Airport in Washington and 34 at LaGuardia Airport in New York. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) AMERICAN AIRLINES: Delay in Antitrust Settlement No Bar to Merger ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that although AMR Corp. and US Airways Group Inc. won't have formal approval until March of their antitrust settlement with the U.S. Justice Department, a Nov. 25 bankruptcy court hearing will give the airlines sufficient court sanction to carry out the merger. According to the report, this week the U.S. Bankruptcy Judge in New York is being asked to approve the settlement allowing AMR's American Airlines and US Airways to merge. Although the bankruptcy court formally approved AMR's reorganization plan in October, the plan couldn't be implemented until the resolution of the antitrust case filed by the government in August to bar the merger. AMR took the position that the settlement doesn't adversely affect any creditors, so no more voting on the reorganization plan is required, only court approval as an exercise of prudent business judgment. The law requires giving the public an opportunity to comment on a proposed antitrust settlement before it receives court approval. The U.S. District Court in Washington, where the antitrust suit is pending, laid down a schedule last week under which public comment is due by Feb. 7. The government will publish the comments, so the judge in Washington can't formally approve the antitrust settlement until around March 10. If the bankruptcy judge grants his approval this week, AMR will be able to implement the reorganization plan and merge with U.S. Airways in December. AMR rose 6 cents to $12.06 on Nov. 22 in over-the-counter trading. Following a three-day plunge in August immediately after the Justice Department sued to bar the merger, the stock has risen almost five times in price. 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. In November 2013, AMR and the U.S. Justice Department a settlement of the anti-trust suit. The settlements require the airlines to shed 104 slots at Reagan National Airport in Washington and 34 at LaGuardia Airport in New York. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) AMERICAN BEACON: Moody's Corrects Text of November 4 Release ------------------------------------------------------------ Moody's Investors Services, Inc., corrected headline and text to its Nov. 4, 2013 of its ratings release on American Beacon Advisors, Inc. The headline is corrected to Moody's assigns a Ba2 corporate family rating to American Beacon Advisors, Inc. Outlook is stable. In the headline, substitute "corporate family rating" for "issuer rating"; in the first sentence of the first paragraph, substitute "corporate family rating (CFR)" for "issuer rating"; in the first sentence of the fourth and fifth paragraphs, substitute "CFR" for "issuer rating". The Nov. 4 ratings release states that: Moody's Investors Service has assigned a Ba2 issuer rating to American Beacon Advisors, Inc. with a stable outlook. A Ba2/stable outlook rating was also assigned to its $170 million Term Loan B and a $15 million Revolving Credit Facility. American Beacon, formerly owned by AMR Corporation (AMR), parent of American Airlines, manages sub- advised mutual funds for defined contribution retirement and retail investors, as well as pension and cash management programs for AMR and other institutional investors. ARCAPITA BANK: $1.5 Million Claim Shrinks to $149 ------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that although Arcapita Bank BSC emerged from Chapter 11 reorganization in September, the Baharani investment bank continues chipping away at inflated claims. According to the report, Arcapita persuaded the bankruptcy judge in New York on Nov. 21 to reduce a $1.53 million claim to $149. The creditor, an individual named Hani Alsohaibi, originally sought $1.04 million and later raised the claim to $1.53 million. U.S. Bankruptcy Judge Sean H. Lane wrote an 11-page opinion to explain why he is entitled only to $149, the amount he held in an account with Arcapita. Judge Lane said the remainder of the claim represented Alsohaibi's investments in affiliates of Arcapita for which the company isn't liable. About Arcapita Bank Arcapita Bank B.S.C., also known as First Islamic Investment Bank B.S.C., along with affiliates, filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-11076) in Manhattan on March 19, 2012. The Debtors said they do not have the liquidity necessary to repay a US$1.1 billion syndicated unsecured facility when it comes due on March 28, 2012. Falcon Gas Storage Company, Inc., filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-11790) on April 30, 2012. Falcon Gas is an indirect wholly owned subsidiary of Arcapita that previously owned the natural gas storage business NorTex Gas Storage Company LLC. In early 2010, Alinda Natural Gas Storage I, L.P. (n/k/a Tide Natural Gas Storage I, L.P.), Alinda Natural Gas Storage II, L.P. (n/k/a Tide Natural Gas Storage II, L.P.) acquired the stock of NorTex from Falcon Gas for $515 million. Arcapita guaranteed certain of Falcon Gas' obligations under the NorTex Purchase Agreement. The Debtors tapped Gibson, Dunn & Crutcher LLP as bankruptcy counsel, Linklaters LLP as corporate counsel, Towers & Hamlins LLP as international counsel on Bahrain matters, Hatim S Zu'bi & Partners as Bahrain counsel, KPMG LLP as accountants, Rothschild Inc. and financial advisor, and GCG Inc. as notice and claims agent. Milbank, Tweed, Hadley & McCloy LLP represents the Official Committee of Unsecured Creditors. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. Founded in 1996, Arcapita is a global manager of Shari'ah- compliant alternative investments and operates as an investment bank. Arcapita is not a domestic bank licensed in the United States. Arcapita is headquartered in Bahrain and is regulated under an Islamic wholesale banking license issued by the Central Bank of Bahrain. The Arcapita Group employs 268 people and has offices in Atlanta, London, Hong Kong and Singapore in addition to its Bahrain headquarters. The Arcapita Group's principal activities include investing on its own account and providing investment opportunities to third-party investors in conformity with Islamic Shari'ah rules and principles. The Arcapita Group had roughly US$7 billion in assets under management. On a consolidated basis, the Arcapita Group owns assets valued at roughly US$3.06 billion and has liabilities of roughly US$2.55 billion. The Debtors owe US$96.7 million under two secured facilities made available by Standard Chartered Bank. Arcapita explored out-of-court restructuring scenarios but was unable to achieve 100% lender consent required to effectuate the terms of an out-of-court restructuring. Subsequent to the Chapter 11 filing, Arcapita Investment Holdings Limited, a wholly owned Debtor subsidiary of Arcapita in the Cayman Islands, issued a summons seeking ancillary relief from the Grand Court of the Cayman Islands with a view to facilitating the Chapter 11 cases. AIHL sought the appointment of Zolfo Cooper as provisional liquidator. As reported in the TCR on Jun 19, 2013, the Bankruptcy Court for the Southern District of New York entered its Findings of Fact, Conclusions of Law, and Order confirming the Second Amended Joint Chapter 11 Plan of Reorganization of Arcapita Bank B.S.C.(c) and Related Debtors with respect to teach Debtor other than Falcon Gas Storage Company, Inc. A copy of the Confirmed Second Amended Joint Plan (With First Technical Modifications) is available at: http://bankrupt.com/misc/arcapita.doc1265.pdf The effective date of the Debtors' Second Amended Joint Plan of Reorganization, dated as of June 11, 2013, occurred on Sept. 17, 2013, according to papers filed with the U.S. Bankruptcy Court for the Southern District of New York on Sept. 17, 2013. BATE LAND: Denies Filing "Dirt-for-Debt" Plan --------------------------------------------- Debtor Bate Land & Timber, LLC, has responded to the objection of Bate Land Company, LLC, to confirmation of its Plan of Reorganization. Bate Land & Timber says: 1. Clearly, under any objective or subjective standard, the various undisputed claims listed by Debtor are valid debts and incurred for valid business purposes, and the Plan, required for effective reorganization, was proposed by Debtor in good faith and should be confirmed by this court. 2. The Plan proposed by the Debtor is not a "dirt-for-debt" Plan. 3. The Plan proposed by the Debtor involves paying nothing to BLC, because BLC's debt was fully satisfied prior to the filing of the Chapter 11 petition. As reported in the TCR on Nov. 15, 2013, BLC claims to be owed $13 million as a result of a purchase money promissory note and deeds of trust. According to BLC, the Debtor alleges that it has satisfied BLC's claim through the transfer of two tracts of land in Pamlico County on July 25, 2013. BLC, however, points out that its acceptance of the deed conveying the property has still to be approved by the Court. BLC says the Debtor's Plan cannot be confirmed because it fails to meet the substantive requirements for confirmation as set forth in 11 U.S.C. Section 1129: -- The Plan has not been proposed in good faith and is in violation of Section 1129(a)(3) of the Bankruptcy Code. "The Debtor has acted in bad faith not only in the filing of this Plan, but in filing this case." -- The "Dirt for Debt" Plan proposed by the Debtor does not comply with the fair and equitable requirements of Section 1129(b) of the Bankruptcy Code. "In this case, BLC will present evidence that the current values of the Broad Creek and Smith Creek tracts are far lower than BLC's $12,936,254.65 claim. BLC's evidence will establish that part of the reason for this decline is the value and diminished quality of the timber on the Broad Creek and Smith Creek tracts as a result of Debtor's timber cutting on these and other tracts, and its failure to properly reseed the timber tracts following any timbering." The Debtor says that the Plan is not a "dirt-for-debt" plan. The Plan proposed by the Debtor involves paying nothing to BLC, because BLC's debt was fully satisfied prior to the filing of the Chapter 11 petition. A copy of the Debtor's response to the objection is available at: http://bankrupt.com/misc/blt.doc110.pdf About Bate Land & Timber Willotte, North Carolina-based Bate Land & Timber, LLC, sought protection under Chapter 11 of the Bankruptcy Code on July 25, 2013 (Case No. 13-04665, E.D.N.C.). Judge Stephani W. Humrickhouse oversees the Chapter 11 case. The Debtor listed estimated assets of $10 million to $50 million and estimated debts of $100,001 to $500,000. The petition was signed by Brad Cheers, manager. The Plan filed in the case proposes to sell all of the Debtor's real property valued at $47,032,125, and personal property valued at $6,445,499. Proceeds from the asset sales will fund the Plan. The liens secured by the Debtor's property will attach to the net proceeds of the sale remaining after payment costs of sale and all reasonable and ordinary closing costs. The Bankruptcy Administrator for the Eastern District of North Carolina was unable to organize and recommend the appointment of a committee of creditors holding unsecured claims against the Debtor. BORGER ENERGY: Moody's Affirms 'Ba3' Rating; Outlook to Stable -------------------------------------------------------------- Moody's Investors Service has affirmed the Ba3 rating for Borger Energy Associates, L.P. and has changed the rating outlook to stable from negative. There is approximately $70.4 million in debt outstanding. Ratings Rationale: The Ba3 rating considers the Project's long-term power purchase agreement (PPA) with Southwestern Public Service Company (SPS: senior unsecured Baa2; under review for upgrade) as well as a steam sales agreement with ConocoPhillips (ConocoPhillips; senior unsecured A1; stable outlook), traditional project finance features, and Borger's history of having operational issues, which has intermittently affected the consistency of the project's historical financial performance. The change in outlook to stable reflects the successful turnaround in the Project's financial performance after a forced outage in late 2011. Borger's Unit 1 experienced a forced outage on December 4, 2011, when bearings and compressor blades were damaged due to a loss of oil pressure during a trip related to a fuel sensor failure. The total outage lasted just under three months as Unit 1 was placed back into service in late February 2012. The plant's availability factor in 2012 was impacted by the outage and measured 90.80% (relative to the threshold requirement in the PPA of 92%), which in turn affected the plant's capacity revenue since Borger is paid capacity payments under the PPA with SPS based upon a 12-month rolling availability calculation and a 5-month summer peak availability calculation. However, the outage only impacted the 12-month rolling availability calculation since the event occurred during the winter months. The lower capacity revenue in 2012 combined with lower gas prices and higher contributions to the major maintenance account resulted in a debt service coverage ratio (DSCR) in 2012 of just below 1.0x (after factoring in contributions to the major maintenance fund). The change in rating outlook to stable also reflects the improvement in operating and financial performance as reflected in the DSCR for 2013. Borger's availability for 2013 YTD has been strong at around 96%. The Project has also been receiving its full capacity payment for most of the year as the Project exceeded the 92% availability threshold once the lower 12-month availability calculation rolled off in early 2013. Moody's also understands that per the terms of the sales agreement to sell Borger to FREIF North American Power I LLC, a fund affiliate of First Reserve Corporation, the prior owner was liable to cover repair costs net of insurance proceeds and provide the new owner's with any margin shortfall resulting from the outage. Overall, the project's 2013 performance benefits from excess insurance proceeds that total just under $1 million. Additionally, the combination of Unit 1 repairs, a new 10-year Long-Term Power parts agreement (LTP) with Siemens, the OEM vendor, and excess funds in the major maintenance account from the prior year will result in a substantially lower major maintenance fund deposit in 2013 than recent years. These factors should contribute to Borger producing a DSCR of approximately 1.48 times post-major maintenance fund in 2013. Excluding these one-time items and major maintenance funding at historical levels, Moody's calculated coverage would measure approximately 1.20 times on a post-major maintenance basis. Overall, Moody's anticipates that Borger's post-major maintenance debt service coverage will measure around 1.20 times over the next few years. In short, Moody's believes that Borger has turned the corner. The outage is behind them, and the availability factor has improved. Sustained coverages are expected to approximate 1.20 times. The new owner, First Reserve, has taken steps to stabilize the situation and improve performance with the execution of the LTP with Siemens, which will cover the turbine generator. Moody's further understands that Borger expects to enhance output of the plant through installation of a wet compression system, which puts more mass through the CT in peak periods. When implemented, capacity revenue will increase, offset by the installation costs. The stable outlook reflects Moody's view that Borger will continue to maintain high plant availability and will be able to maintain DSCR metrics after contributions to major maintenance that approximate 1.20 times. Because of this expected financial performance, the rating is unlikely to be upgraded in the near term, but positive rating pressure could surface if financial performance improved such Moody's expected that DSCR to be above 1.20 times on a consistent and sustained basis. Conversely, the rating could face downward pressure if the plant's operating performance is impacted by unplanned outages and/or if operating expenses, maintenance costs and capital expenditures causes the DSCR to drop below 1.10 times on a sustained basis. The last rating action on Borger was taken on February 28, 2012, when Moody's affirmed the Ba3 rating and revised the outlook to negative from stable. Borger Energy Associates, L.P. is a limited partnership that owns and operates a 230-megawatt, gas-fired cogeneration facility located near Borger, Texas. SPS, a wholly-owned utility operating subsidiary of Xcel Energy (senior unsecured rated Baa1; under review for possible upgrade), purchases all electricity generated. ConocoPhillips purchases Borger's steam for use in its adjacent refinery. The Borger plant consists of two Siemens 501D5A combustion turbines, and two heat recovery steam generators. BREITBURN ENERGY: Moody's Rates New $300MM Senior Notes 'B3' ------------------------------------------------------------ Moody's Investors Service assigned a B3 rating to BreitBurn Energy Partners L.P.'s proposed $300 million senior notes due 2022. BreitBurn Finance Corporation is a wholly-owned subsidiary of BreitBurn and serves as the co-issuer of the notes. The new notes are being offered as add-on notes under the indenture pursuant to which BreitBurn previously issued $450 million in aggregate principal amount of 7.875% senior notes due 2022. The new notes and the outstanding notes will have identical terms and will be treated as a single class of securities under the indenture. The rating outlook is stable. Proceeds from the proposed notes offering, in combination with BreitBurn's recent equity offering, will be used to repay borrowings under its senior secured revolving credit facility. BreitBurn utilized its revolver to finance the acquisition of oil properties and associated midstream assets in the Oklahoma Panhandle for an aggregate purchase price of approximately $864 million in July. "The add-on notes term out a portion of BreitBurn's outstanding revolver borrowings on a long-term basis," stated Michael Somogyi, Moody's Vice President -- Senior Analyst. "Combined with proceeds from the recent equity offering, the add-on notes enhance BreitBurn's liquidity position and provide for increased financial flexibility to fund expected future acquisitions." Ratings Rationale: The B3 rating on the proposed $300 million add on notes reflects both the overall probability of default of BreitBurn, to which Moody's assigns a B1-PD, and a loss given default of LGD 5 (79%). The company has a $1.6 billion borrowing base revolving credit facility with total lender commitments of $1.4 billion. BreitBurn has $305 million senior notes due 2020 in addition to the $450 million existing senior notes due 2022 and the $300 million proposed add-on notes to the 2022 notes. Both the new and existing senior notes are unsecured and subordinated to the senior secured credit facility's claim to the company's assets. This results in a two-notch differential between the B1 Corporate Family Rating (CFR) and the B3 notes under Moody's Loss Given Default Methodology. The B1 CFR is restrained by BreitBurn's high leverage profile on a production and proved developed (PD) reserve basis and by the structural risks inherent in the MLP business model which requires continuous cash distributions and external funding requirements to support the company's acquisitive growth strategy. The B1 CFR is supported by BreitBurn's added size and scale, higher liquids mix and the long-lived, shallow-decline characteristics of its reserve base. BreitBurn has spent over $1.8 billion on acquisitions since 2011, more than doubling its $300 - $500 million annual acquisition target. While management has demonstrated a balanced funding approach comprised of debt and equity, Moody's estimates BreitBurn's leverage on production and PD reserves to be around $55,000 per barrel of oil equivalent (boe) and $10.50 per boe, respectively. Leverage should improve as production grows and the benefits from recent acquisitions and BreitBurn's ramped up capital spending are realized. Moody's expects BreitBurn to exit 2014 with leverage on production and PD reserves of around $40,000 per boe and $9.00 per boe respectively. BreitBurn's SGL-3 Speculative Grade Liquidity rating reflects adequate liquidity based on increased availability under its revolving credit facility following the pay down of outstanding borrowings with proceeds from the add-on notes offering and recent equity raise. BreitBurn's borrowing base was increased from $1.5 billion to $1.6 billion. After giving effect to the $300 million proposed add-on notes, BreitBurn's borrowing base will be decreased by $75 million to $1.525 billion with approximately $927 million of availability. The revolver is scheduled to mature in May 2016 and Moody's expects BreitBurn to remain well in compliance with financial covenants. The stable outlook reflects Moody's expectation that BreitBurn remains disciplined in terms of a maintaining a balanced funding approach towards future acquisitions. Moody's could upgrade the ratings if the partnership is able to grow its production base to over 50,000 boe per day while maintaining an appropriate leveraged financial profile (debt/production less than $30,000 Boe day and debt /PD reserves of less than $6.50). Moody's could downgrade the ratings if leverage on production is sustained above $40,000 boe per day or if distribution coverage weakened below 1.1x for a sustained period. BreitBurn Energy Partners, L.P. is an independent exploration and production master limited partnership headquartered in Los Angeles, California. BULLSEYE MERGERSUB: Moody's Rates New $550MM Secured Notes 'Caa1' ----------------------------------------------------------------- Moody's Investors Service assigned a Caa1 rating to Bullseye MergerSub, Inc. (Brand Energy & Infrastructure) proposed $550 million senior unsecured notes. Concurrently, Moody's affirmed all existing ratings including the company's B2 Corporate Family Rating and B2-PD Probability of Default Rating. The ratings outlook remains stable. The proceeds from the proposed $550 million unsecured notes along with $1,225 million term loan and $775 million of equity will be used to acquire Brand Energy and Infrastructure Services, Inc. and Harsco's infrastructure segment (together "Brand") by Clayton, Dubilier & Rice. The total transaction (including fees and expenses) is expected to be valued at $2,550 million. Bullseye MergerSub, Inc. is the initial borrower under the term loan and unsecured notes. Additionally, part of the proceeds will be used to fund future acquisitions. Concurrently with the close of the transaction and as the survivor of the contemplated merger Brand Energy and Infrastructure Services, Inc. ("Brand" a subsidiary of Brand Energy, Inc.) will become the borrower and Moody's will transfer all ratings to Brand. The following rating actions were taken: (LGD point estimates are subject to change and all ratings are subject to the execution of the transaction as currently proposed and Moody's review of final documentation): Corporate Family Rating, affirmed at B2; Probability of Default Rating, affirmed at B2-PD; $550 million senior unsecured notes due 2021, assigned Caa1 (LGD5, 86%); $300 million first lien revolving credit facility due 2018, affirmed at B1. LGD rate changed to LGD3, 34% from LGD3, 35%; $1,225 million first lien term loan due 2020, affirmed at B1. LGD rate changed to LGD3, 34% from LGD3, 35%; The ratings outlook is stable. Ratings Rationale: The B2 Corporate Family Rating reflects Brand's high debt leverage at 5.9 times at the close of the transaction and expected aggressive balance sheet management. The rating also considers limited free cash flow generation as compared to debt levels with free cash flow to debt of between 4-5% over the next 12-18 months. Interest coverage is anticipated to be around 2 times which is in line with a B2 rating category. Additionally, the B2 Corporate Family Rating considers the historically weak performance of Harsco's infrastructure division. At the same time, the rating benefits from the size -- close to $3 billion of revenues -- and scale -- significant international presence - of the combined entity. Moreover, recurring revenue stream (an estimated 65% of revenues are tied to maintenance), good liquidity profile, end market diversity, and positive industry dynamics provide support to the company's ratings. The stable outlook reflects expected improvement in credit metrics and positive trends in the company's end markets. The ratings could be downgraded if debt leverage climbs above 6 times, free cash flow generation turns negative, and EBITDA- CAPEX/interest expense weakens below 1.5 times, all on a sustained basis. The ratings could be upgraded if debt leverage declines below 4.5 times, interest coverage increases above 2.2 times, and free cash flow to debt rises to 8%, all on a sustained basis. Brand Energy & Infrastructure Services, Inc., headquartered in Kennesaw, GA, is the largest multi-craft specialty services company in North America and provides services globally as well. It's services include specialized industrial services and infrastructure services supporting the refining, chemical, construction and power industries. Clayton Dubilier & Rice, through affiliated funds, will be the majority owner of Brand and Harsco is expected to own around 29%. Pro forma revenues for 2013 are expected to be around $3 billion. C&K MARKET: Seeks Authority to Tap DIP Financing from US Bank ------------------------------------------------------------- C&K Market, Inc., seeks authority from the U.S. Bankruptcy Court for the District of Oregon to obtain from U.S. Bank National Association a debtor-in-possession facility comprised of a committed, secured revolving line of credit in an aggregate principal amount equal to the lesser of (i) $23 million; (ii) the borrowing base as of the day plus $12 million; or (iii) the sum of the amounts set forth in the budget for the day under the line items entitled "Projected Ending Revolver Balance" and "DIP Ending Balance," plus $4 million, plus the Unrealized Sale Amount for such day. Outstanding advances under the DIP Facility will bear interest at the rate per annum applicable to Revolving Loans, generally LIBOR plus 2.5% to LIBOR plus 3%, plus 2%. Upon the occurrence and during the continuance of an Event of Default, the aggregate principal amount of all outstanding obligations under the DIP Facility will bear interest at the non-default rate, plus 2%. The DIP Facility will be secured by a first-priority perfected security interest and lien in favor of U.S. Bank on all Collateral plus all other assets of Debtor, subject only to valid, perfected, prior prepetition liens, Priming Interests and Permitted Liens and the Carveout, and excepting any avoidance actions and the proceeds thereof under Sections 544, 547, 548, 549 and 553 of the Bankruptcy Code. The DIP Advances and all other postpetition indebtedness owing to U.S. Bank will be allowable under Section 503(b)(1) of the Bankruptcy Code as an administrative expense with priority pursuant to the provisions of Section 364(c)(1) over all other administrative expenses and all other expenses and claims, subject only to the Carve-Out. U.S. Bank has agreed to a "carve-out" in an amount equal to the sum of (i) $100,000 for unpaid administrative expenses incurred following an Event of Default, plus (ii) the amount of funds then on deposit in a holding account for professional fees, plus (iii) the amount of administrative expenses then incurred but not yet paid into the Professional Fee Holding Account in an aggregate amount not to exceed $100,000. About C&K Market C&K Market Inc., a 57 year-old grocery store chain, sought bankruptcy protection from creditors with a plan to sell or close some of its stores, on Nov. 19, 2013 (Bankr. D. Ore. Case No. 13- 64561). The case is assigned to Judge Frank R. Alley, III. The Debtors are represented by Albert N. Kennedy, Esq., Timothy J. Conway, Esq., Michael W. Fletcher, Esq., and Ava L. Schoen, Esq., at Tonkon Torp LLP, in Portland, Oregon. The Food Partners, LLC, serves as the Debtors' financial advisor. The Debtors estimated debt of more than $100 million and assets of less than $50 million in court documents. C&K MARKET: Proposes Closing Sales for 21 Stores ------------------------------------------------- C&K Market, Inc., seeks authority from the U.S. Bankruptcy Court for the District of Oregon to sell or close approximately 21 of its 60 stores after determining that conducting store closing sales will maximize value to its estate and its creditors. As a necessary part of the store closing sale process, the Debtor seeks a waiver from any state or local laws purporting to restrict or otherwise govern "store closing," "liquidation," "going-out-of business" or similarly themed sales, except any laws for the protection of the health and safety of the public, and any consumer protection laws. Proceeds of any sale of assets will be remitted directly to U.S. Bank National Association for application to obligations owing to the DIP Financing. About C&K Market C&K Market Inc., a 57 year-old grocery store chain, sought bankruptcy protection from creditors with a plan to sell or close some of its stores, on Nov. 19, 2013 (Bankr. D. Ore. Case No. 13- 64561). The case is assigned to Judge Frank R. Alley, III. The Debtors are represented by Albert N. Kennedy, Esq., Timothy J. Conway, Esq., Michael W. Fletcher, Esq., and Ava L. Schoen, Esq., at Tonkon Torp LLP, in Portland, Oregon. The Food Partners, LLC, serves as the Debtors' financial advisor. The Debtors estimated debt of more than $100 million and assets of less than $50 million in court documents. C&K MARKET: Seeks to Assume Supervalu Supply Agreement ------------------------------------------------------ C & K Market, Inc., seeks authority from the U.S. Bankruptcy Court for the District of Oregon to assume its executory contract with Supervalu Holdings, Inc., its primary supplier of grocery products and health and beauty products. Pursuant to the Supply Agreement, Supervalu makes certain product lines available to the Debtor for sale in the Debtor's sales and provides related services like warehousing, marketing, and merchandising, and the Debtor currently pays for all product and services pursuant to 17-day trade terms by the consent of Supervalu, without waiver of its rights, despite contractual 15- day payment terms. As a condition to the Debtor's assumption of the Supply Agreement, the Supervalu has agreed to continue to provide 17-day trade terms through Oct. 31, 2014, with payment terms then reducing by three days in each annual period thereafter. About C&K Market C&K Market Inc., a 57 year-old grocery store chain, sought bankruptcy protection from creditors with a plan to sell or close some of its stores, on Nov. 19, 2013 (Bankr. D. Ore. Case No. 13- 64561). The case is assigned to Judge Frank R. Alley, III. The Debtors are represented by Albert N. Kennedy, Esq., Timothy J. Conway, Esq., Michael W. Fletcher, Esq., and Ava L. Schoen, Esq., at Tonkon Torp LLP, in Portland, Oregon. The Food Partners, LLC, serves as the Debtors' financial advisor. The Debtors estimated debt of more than $100 million and assets of less than $50 million in court documents. CALUMET SPECIALTY: Moody's Rates New $225MM Unsecured Notes 'B2' ---------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Calumet Specialty Products Partners, L.P.'s proposed $225 million senior unsecured notes offering. Proceeds from the notes will be used to fund capital expenditures. Calumet's B1 Corporate Family Rating (CFR), SGL-3 Speculative Grade Liquidity rating (SGL) and existing B2 senior unsecured existing notes ratings remain unchanged. The rating outlook is stable. "The new notes will increase Calumet's financial leverage, but help to pre-fund its 2014 capital expenditure program," said Gretchen French, Moody's Vice President. "Our underlying views on Calumet reflected in Moody's November 18th rating action remain unchanged." Issuer: Calumet Specialty Products Partners, L.P Ratings Assigned: -- $225 million Senior unsecured notes due 2022 , B2 (LGD4, 69%) Moody's current ratings for Calumet Specialty Products Partners, L.P. are: -- Corporate Family Rating, B1 -- Probability of Default Rating, B1-PD -- B2 Senior unsecured notes rating (LGD 4, 69%) -- Speculative Grade Liquidity rating, SGL-3 Ratings Rationale: The B2 rating on Calumet's senior unsecured notes reflects their position relative to Calumet's secured obligations. The unsecured notes are contractually subordinated to the $850 million revolving credit facility (secured by accounts receivable and inventory), with a borrowing base of $618 million as of September 30, 2013. Other secured debt ahead of the unsecured notes are obligations supported by Calumet's Collateral Trust Agreement with all of its secured hedging counterparties, which pledges all of Calumet's assets excluding the revolving credit facility collateral to be shared as security for payments due. Physical commodity forward contracts supported by the Collateral Trust Agreement have been limited to $100 million but there is no limit on financially settled commodity hedging instruments. The size of the potential senior secured and other structurally superior claims relative to the unsecured notes results in the notes being notched one rating beneath the B1 Corporate Family Rating under Moody's Loss Given Default Methodology. Calumet's B1 CFR reflects the partnership's scale, good operational and geographic diversity, relative stability gained from its downstream specialty products compared to the pure-play refiners, and access to advantaged feedstock for its refining business. Calumet's CFR is constrained by its corporate structure as a master limited partnership (MLP), which entails sizeable distributions to unit holders that need to grow over time. There is also execution risk associated with heavy organic capital spending needs and event risk (and related financing and integration risk) from acquisitions which are expected to remain an important part of Calumet's growth strategy. The rating further reflects Calumet's increasing exposure to transportation fuels, which are inherently more volatile and cyclical product lines than its downstream specialty products. Calumet's SGL-3 liquidity rating reflects adequate liquidity to cover all of the partnership's cash expenses including maintenance capital (approximately $80 million including turnaround expenditure) and MLP common unit distributions estimated at about $210 million for 2014. The cash flows in 2013 are atypically low and driven mainly by large swings in working capital because of the San Antonio refinery acquisition and an extraordinary level of environmental and turnaround spending. Normalized maintenance capital expenditures are expected to be in the $60-$80 million range going forward. Calumet had more than $477 million of availability under its revolving credit facility (maturing in June 2016) as of September 30, 2013. There are no active financial maintenance covenants associated with Calumet's revolving credit facility. Alternate liquidity is limited given that substantially all of the partnership's assets are pledged under the revolving credit facility and the Collateral Trust Agreement. The ratings could be upgraded if the partnership continues to grow its scale while maintaining an appropriate leverage profile (debt/EBITDA below 3.5x) and distribution coverage in the 1.2x- 1.5x range. The ratings could be downgraded if debt-financed acquisitions, weak refining margins, protracted refinery outages, or supply disruptions negatively affect cash generation, resulting in debt / EBITDA ratio exceeding 4.0x for a sustained period. Also, the ratings could be downgraded if Calumet adopts a more aggressive distribution policy. Calumet Specialty Products Partners, L.P. is a publicly traded Master Limited Partnership (MLP) headquartered in Indianapolis, Indiana. CANDEO SCHOOLS: S&P Rates $10.935MM 2013 Revenue Bonds 'BB+' ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB+' rating to the Phoenix Industrial Development Authority, Ariz.'s $10.935 million series 2013 fixed rate education facility revenue bonds issued on behalf of Candeo Schools Inc. The outlook is stable. "The rating reflects a very limited revenue base with high debt levels and a challenging competitive environment," said Standard & Poor's credit analyst Luke Gildner. "The rating also reflects a construction schedule that provides less than one month between scheduled completion and use." "It is vital that the construction project has little to no delays for Candeo to hit targeted growth projections, in our opinion," added Mr. Gildner. Supporting the rating is Candeo's history of strong academic performance supporting enrollment growth, a sizeable waitlist, good liquidity, and history of positive operations. The stable outlook reflects S&P's expectation that Candeo will meet its projected enrollment growth, generate break-even to positive operating results on a full accrual basis, and maintain strong levels of days' cash on hand. S&P could consider a negative outlook if projections are missed, there is a delay in the opening of the middle school campus, thus affecting enrollment, or cash significantly deteriorates. S&P could consider a positive outlook if Candeo's revenue base significantly increases to levels that bring pro forma lead- adjusted MADS below 15% of total revenues. CAPITOL BANCORP: Wilbur Ross's Talmer Bancorp to Buy Four Banks --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Capitol Bancorp Ltd., a bank holding company in Lansing, Michigan, was granted authority last week from the bankruptcy court in Detroit to sell four bank units to Wilbur Ross's Talmer Bancorp Inc. According to the report, the sale was made possible by a settlement with the Federal Deposit Insurance Corp., as receiver for other failed banks owned by Capitol. The settlement addressed so-called cross-guarantee claims, under which solvent Capitol banks would be liable for the FDIC's costs in taking over the failed banks. Talmer offered $4.5 million for the four banks and will pay the cost to cure breaches of contracts. Talmer will also provide the acquired banks with $90 million of additional capital and establish an escrow account with $2.5 million to pay professional fees. About Capitol Bancorp Capitol Bancorp Ltd. and Financial Commerce Corporation filed voluntary Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case Nos. 12-58409 and 12-58406) on Aug. 9, 2012. Capitol Bancorp -- http://www.capitolbancorp.com/-- is a community banking company with a network of individual banks and bank operations in 10 states and total consolidated assets of roughly $2.0 billion as of June 30, 2012. CBC owns roughly 97% of FCC, with a number of CBC affiliates owning the remainder. FCC, in turn, is the holding company for five of the banks in CBC's network. CBC is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, 12 U.S.C. Sec. 1841, et seq., and trades on the OTCQB under the symbol "CBCR." Lawyers at Honigman Miller Schwartz and Cohn LLP represent the Debtors as counsel. John A. Simon, Esq., at Foley & Lardner LLP, represents the Official Committee of Unsecured Creditors as counsel. In its petition, Capitol Bancorp scheduled $112,634,112 in total assets and $195,644,527 in total liabilities. The petitions were signed by Cristin K. Reid, corporate president. The Company's balance sheet at Sept. 30, 2012, showed $1.749 billion in total assets, $1.891 billion in total liabilities, and a stockholders' deficit of $141.8 million. Prepetition, the Debtor arranged a reorganization plan that was accepted by the requisite majorities of creditors and equity holders in all classes. Problems arose when affiliates of Valstone Partners LLC declined to proceed with a tentative agreement to fund the reorganization by paying $50 million for common and preferred stock while buying $207 million in face amount of defaulted commercial and residential mortgages. CAPITOL BANCORP: Judge OKs Bank Sale Over Creditor Protests ----------------------------------------------------------- Law360 reported that Capitol Bancorp Ltd. on Nov. 22 received a bankruptcy court's approval of its bid to sell off its remaining subsidiary banks for $4 million in cash and a $90 million equity contribution despite creditors' cries that the sale offers them almost no recovery. According to the report, the bank holding company can sell the banks to Wilbur Ross-controlled Talmer Bancorp Inc. under its proposed plan of liquidation following U.S. Bankruptcy Judge Marci B. McIvor's order greenlighting the transaction. The banks include Michigan Commerce Bank, Indiana Community Bank, and Bank of Las Vegas, the report said. About Capitol Bancorp Capitol Bancorp Ltd. and Financial Commerce Corporation filed voluntary Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case Nos. 12-58409 and 12-58406) on Aug. 9, 2012. Capitol Bancorp -- http://www.capitolbancorp.com/-- is a community banking company with a network of individual banks and bank operations in 10 states and total consolidated assets of roughly $2.0 billion as of June 30, 2012. CBC owns roughly 97% of FCC, with a number of CBC affiliates owning the remainder. FCC, in turn, is the holding company for five of the banks in CBC's network. CBC is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, 12 U.S.C. Sec. 1841, et seq., and trades on the OTCQB under the symbol "CBCR." Lawyers at Honigman Miller Schwartz and Cohn LLP represent the Debtors as counsel. John A. Simon, Esq., at Foley & Lardner LLP, represents the Official Committee of Unsecured Creditors as counsel. In its petition, Capitol Bancorp scheduled $112,634,112 in total assets and $195,644,527 in total liabilities. The petitions were signed by Cristin K. Reid, corporate president. The Company's balance sheet at Sept. 30, 2012, showed $1.749 billion in total assets, $1.891 billion in total liabilities, and a stockholders' deficit of $141.8 million. Prepetition, the Debtor arranged a reorganization plan that was accepted by the requisite majorities of creditors and equity holders in all classes. Problems arose when affiliates of Valstone Partners LLC declined to proceed with a tentative agreement to fund the reorganization by paying $50 million for common and preferred stock while buying $207 million in face amount of defaulted commercial and residential mortgages. CARDTRONICS INC: Moody's Affirms 'Ba2' CFR & 'B1' Sub. Debt Rating ------------------------------------------------------------------ Moody's Investors Service affirmed Cardtronics, Inc.'s existing ratings, including its Ba2 corporate family rating, its Ba2-PD probability of default rating, and the B1 rating for its senior subordinated debt. As part of the ratings action, Moody's raised Cardtronics' speculative grade liquidity rating to SGL-1, from SGL-2. The ratings outlook is stable. The rating actions were prompted by Cardtronics' plans to raise up to $287.5 million of new convertible senior notes and use approximately $156.5 million of the net proceeds to repay a portion of outstanding revolving loans. The company plans to use the remainder of the proceeds for general corporate purposes, execution of a convertible note hedge transaction, and up to $30 million for share repurchases. Moody's does not rate Cardtronics' proposed convertible notes. Moody's estimates that the proposed transaction will increase Cardtronics' total debt-to-EBITDA (incorporating Moody's standard analytical adjustments) modestly, to about 2.6x, pro forma for the full year of the acquisition of Cardpoint that closed in August 2013. Moody's affirmed Cardtronics' ratings based on the expectation that Cardtronics' leverage should decline to below 2.0x (Moody's adjusted) by year-end 2014, consistent with the ratings agency's previously communicated expectation. Ratings Rationale: Cardtronics' Ba2 corporate family rating reflects its predictable operating cash flow derived from transactions-based revenues, moderate financial leverage, healthy free cash flow relative to debt and very good liquidity. The company has a good track record of strong EBITDA growth through a combination of acquisitions, cost savings from acquisitions and organic expansion. Cardtronics' credit profile is also supported by its ownership of the Allpoint network, which provides a surcharge-free access to over 55,000 ATMs for the customers of participating financial institutions. The company's growing scale and investments in infrastructure provide operating leverage that should allow Cardtronics to mitigate some of the impact of competitive challenges or, potentially, declines in ATM interchange or only modest increases in surcharge rates. In Moody's opinion, the key long term risk to Cardtronics' ratings is the limited growth prospects for cash-based transactions owing to the secular shift from paper-based to electronic forms of payments and challenges from emerging payment options, such as mobile-based payments. As a result, Moody's believes that the company will be increasingly challenged to sustain its current organic growth rates in the high single digit percentages over the long term. The Ba2 rating additionally considers Cardtronics' business risks resulting from its concentrated customer revenue profile, highly competitive industry, and uncertainties in the intermediate to long term about the company's ability to maintain ATM surcharge fee and interchange rates in various jurisdictions in which it operates. Moody's upgraded Cardtronics' liquidity rating to SGL-1 from SGL-2 to reflect the prospective improvement in the company's liquidity after it repays about $156.5 million of loans under its revolving credit facility. The stable outlook reflects Moody's expectations that Cardtronics' revenues should grow in the mid to high single digit percentages in the next 12 to 18 months, excluding acquisitions, and that total debt to EBITDA leverage should decline to less than 2.0x over this period through EBITDA growth and debt repayment. Moody's could downgrade Cardtronics' ratings if the company experiences challenges in growing EBITDA or EBITDA margins deteriorate as a result of an organic decline in ATM transactions, a material adverse impact from changes in the regulatory environment or the loss of a large customer(s). In addition, aggressive fiscal policies or transformative acquisitions that increase execution risk could pressure the ratings. Specifically, Moody's could lower Cardtronics' ratings if the company is unable to maintain total debt to EBITDA (Moody's adjusted) below 2.5x and free cash flow weakens to the below mid-teens percentages of total debt for a protracted period. Given the mature growth prospects for the ATM industry in the long term, absent meaningful improvements in Cardtronics' business risk profile, notably through increased scale, higher levels of operating cash flow and greater product diversity, a ratings upgrade is unlikely. Additional upward rating triggers include a track record of growth in free cash flow driven by revenue growth and management's commitment to maintain debt-to-EBITDA leverage below 2.0x (Moody's adjusted), including potential increases in debt to finance acquisitions. Moody's affirmed the following ratings: Issuer: Cardtronics, Inc. Corporate family rating -- Ba2 Probability of default rating -- Ba2-PD $200 million senior subordinated notes due 2018 -- B1, LGD 5, 88% (changed from LGD 5, 86%) Outlook: Stable Moody's changed the following rating: Speculative Grade Liquidity Rating -- SGL-1, upgraded from SGL-2 Headquartered in Houston, TX, Cardtronics is the world's largest non-bank owner of ATMs. The company reported about $833 million in revenue in the twelve months ended September 30, 2013. CASH STORE: Board of Directors Adopts New General By-Law -------------------------------------------------------- The Cash Store Financial Services Inc. on Nov. 22 announced the adoption by its board of directors of a new general by-law for the Company, By-Law No. 4, and the repeal of By-Law No. 3. The newly adopted By-Law No. 4 is a revision of By-Law No. 3 to include a provision that requires advance notice to the Company in circumstances where director nominations are made by shareholders of the Company, other than in connection with (i) the requisition of a shareholders' meeting, or (ii) a shareholder proposal, in each case made pursuant to the Business Corporations Act (Ontario). Among other things, the Advance Notice Provision fixes a deadline by which holders of record of common shares of the Company must submit director nominations to the Company prior to any annual or special meeting of shareholders and sets forth the information that a shareholder must include in the notice to the Company. In the case of an annual meeting of shareholders, notice to the Company must be made not less than 30 days and not more than 65 days prior to the date of the annual meeting; provided, however, that in the event that the annual meeting is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice may be made not later than the close of business on the 10th day following such public announcement. In the case of a special meeting of shareholders (which is not also an annual meeting), notice to the Company must be made no later than the close of business on the 15th day following the day on which the first public announcement of the date of the special meeting was made. The Advance Notice Provision provides a clear process for shareholders to follow for director nominations and sets out a reasonable time frame for nominee submissions and the provision of accompanying information. The purpose of the Advance Notice Provision is to treat all shareholders fairly by ensuring that all shareholders receive adequate notice of the nominations to be considered at a meeting and can thereby exercise their voting rights in an informed manner. In addition, the Advance Notice Provision should assist in facilitating an orderly and efficient meeting process. The by-law amendment is effective immediately and will be placed before shareholders for ratification and confirmation at the next annual and special meeting of shareholders of the Company to be held on February 5, 2014. The full text of By-Law No. 4 is available at http://www.sedar.comor upon request by contacting the Company's Corporate Secretary, Jerry Roczkowsky at jerry.roczkowsky@csfinancial.ca About Cash Store Financial Headquartered in Edmonton, Alberta, The Cash Store Financial is the only lender and broker of short-term advances and provider of other financial services in Canada that is listed on the Toronto Stock Exchange (TSX: CSF). Cash Store Financial also trades on the New York Stock Exchange (NYSE: CSFS). Cash Store Financial operates 512 branches across Canada under the banners "Cash Store Financial" and "Instaloans". Cash Store Financial also operates 25 branches in the United Kingdom. Cash Store Financial is a Canadian corporation that is not affiliated with Cottonwood Financial Ltd. or the outlets Cottonwood Financial Ltd. operates in the United States under the name "Cash Store". Cash Store Financial does not do business under the name "Cash Store" in the United States and does not own or provide any consumer lending services in the United States. Cash Store Financial employs approximately 1,900 associates. The Company's balance sheet at June 30, 2013, showed $192.73 million in total assets, $171.47 million in total liabilities and $21.25 million in shareholders' equity. * * * As reported in the Feb. 8, 2013 edition of the TCR, Standard & Poor's Ratings Services lowered its issuer credit rating on Cash Store Financial (CSF) to 'CCC+' from 'B-'. The outlook is negative. "The downgrades follow a proposal by the payday loan registrar in Ontario to revoke CSF's payday lending licenses and CSF's announcement that it has discontinued its payday loan product in the region," said Standard & Poor's credit analyst Igor Koyfman. The company's businesses in Ontario, which account for approximately one-third of its store count, will begin offering a new line of credit product to its customers. S&P believes this is to offset the loss of its payday lending product; however, this is a relatively new product, and S&P believes that it will be challenging for the company to replace its lost earnings from the payday loan product. S&P also believes that the registrar's proposal could lead to similar actions in other territories," the Company said. As reported by the TCR on May 22, 2013, Moody's Investors Service downgraded the Corporate Family Rating and senior unsecured debt rating of Cash Store Financial Services to Caa1 from B3 and assigned a negative outlook. According to Moody's, CSFS remains unprofitable on both the pretax and net income lines and prospects for return to profitability are unclear. CENGAGE LEARNING: Hires Hilco Valuation as Consultants ------------------------------------------------------ Cengage Learning, Inc. and its debtor affiliates ask for permission from the Hon. Elizabeth S. Stong of the U.S. Bankruptcy Court for the Eastern District of New York to employ Hilco Valuation Services, LLC as inventory valuation consultants, nunc pro tunc to Sept. 13, 2013. Hilco Valuation will appraise the inventory of Cengage Learning Holdings II, LP. Hilco Valuation will provide to Cengage Learning a projection of gross and net liquidation value based upon an orderly liquidation value scenario, which include modeling 12-month seasonal recovery values. The valuation will be based on September 2013 month-end inventory detail. Hilco Valuation plans to address the objectives through analysis of inventory reports; walkthrough of existing inventory management reports and systems; and an on-site visit and inspection of representative distribution center facilities. As appropriate and during visits and analysis of the financial and operating data, Hilco Valuation will conduct management discussions with key Company executives. Hilco Valuation seeks compensation for a flat fee of $61,000 for its valuation and appraisal of the Debtors' inventory. The firm also will be reimbursed for reasonable out-of-pocket expenses incurred. Ian S. Fredericks, vice president and assistant general counsel for Hilco Trading, LLC, the parent company of Hilco Valuation, assured 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 Court will hold a hearing on the employment application on Dec. 3, 2013, at 8:30 a.m. Objections, if any, were due Nov. 21, 2013, at 4:00 p.m. Hilco Valuation can be reached at: Ian S. Fredericks HILCO VALUATION SERVICES, LLC 5 Revere Drive Suite 300 Northbrook, IL 60062 Tel: (842) 313-4720 Fax: (847) 897-0820 About Cengage Learning Stamford, Connecticut-based Cengage Learning -- http://www.cengage.com/-- provides innovative teaching, learning and research solutions for the academic, professional and library markets worldwide. Cengage Learning's brands include Brooks/Cole, Course Technology, Delmar, Gale, Heinle, South Western and Wadsworth, among others. Apax Partners LLP bought Cengage in 2007 from Thomson Reuters Corp. in a $7.75 billion transaction. The acquisition was funded in part with $5.6 billion in new debt financing. Cengage Learning Inc. filed a petition for Chapter 11 reorganization (Bankr. E.D.N.Y. Case No. 13-bk-44106) on July 2, 2013, in Brooklyn, New York, after signing an agreement where holders of $2 billion in first-lien debt agree to support a reorganization plan. The plan will eliminate more than $4 billion of $5.8 billion in debt. First-lien lenders who signed the so-called plan-support agreement include funds affiliated with BlackRock Inc., Franklin Mutual Adviser LLC, KKR & Co. and Oaktree Capital Management LP. Second- lien creditors and holders of unsecured notes aren't part of the agreement. The Debtors have tapped Kirkland & Ellis LLP as counsel, Lazard Freres & CO. LLC as financial advisor, Alvarez & Marsal North America, LLC, as restructuring advisor, and Donlin, Recano & Company, Inc., as claims and notice agent. The Debtors filed a Joint Plan of Reorganization and Disclosure Statement dated Oct. 3, 2013, which provides that the Debtors took extreme care to advance and protect the interest of unsecured creditors -- including seeking to protect four primary sources of potential recoveries for unsecured creditors and providing them with appropriate time to conduct diligence, and discuss their conclusions on, among other things, the value of those sources of potential recoveries. CHRYSLER GROUP: Postpones IPO to Early 2014 ------------------------------------------- Gilles Castonguay, writing for The Wall Street Journal, reported that U.S. car maker Chrysler Group LLC has postponed plans for a market listing until early next year, Fiat SpA, its Italian parent, said on Nov. 25, adding that it wasn't "practicable" to do it beforehand. "The Board of Directors of Chrysler Group LLC LLC?has determined that it won't be practicable for Chrysler Group LLC to launch and complete an initial public offering before the end of 2013," said a statement issued by Fiat, according to the WSJ report. Sergio Marchionne, chief executive of both car makers, had been aiming for a listing before the Christmas holidays, the report related. "Fiat remains supportive of Chrysler Group LLC's efforts to meet its contractual obligations to the VEBA, and expects Chrysler Group LLC to continue working on the necessary steps to enable an initial public offering to be launched in the first quarter of 2014," said the statement, the report cited. "No assurance can be given as to whether or when an offering will be launched as any launch will be subject to market conditions and other relevant considerations," it added. About Chrysler Group Chrysler Group LLC, formed in 2009 from a global strategic alliance with Fiat Group, produces Chrysler, Jeep(R), Dodge, Ram Truck, Mopar(R) and Global Electric Motorcars (GEM) brand vehicles and products. Headquartered in Auburn Hills, Michigan, Chrysler Group LLC's product lineup features some of the world's most recognizable vehicles, including the Chrysler 300, Jeep Wrangler and Ram Truck. Fiat will contribute world-class technology, platforms and powertrains for small- and medium-sized cars, allowing Chrysler Group to offer an expanded product line including environmentally friendly vehicles. Chrysler LLC and 24 affiliates on April 30, 2009, sought Chapter 11 protection from creditors (Bankr. S.D.N.Y (Mega-case), Lead Case No. 09-50002). The U.S. and Canadian governments provided Chrysler LLC with $4.5 billion to finance its bankruptcy case. In connection with the bankruptcy filing, Chrysler reached an agreement to sell all assets to an alliance between Chrysler and Italian automobile manufacturer Fiat. Under the terms approved by the Bankruptcy Court, the company formerly known as Chrysler LLC in June 2009, formally sold substantially all of its assets to the new company, named Chrysler Group LLC. * * * Chrysler has a 'B1' corporate family rating from Moody's. Moody's upgraded the rating from 'B2' to 'B1' in February 2013. In May 2013, Standard & Poor's Ratings Services affirmed its ratings, including the 'B+' corporate credit rating, on Chrysler Group. At the same time, S&P revised its outlook to positive from stable. CLI HOLDINGS: Alydian to Seek Sale of Bitcoin-Mining Assets ----------------------------------------------------------- Michael Bathon, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Alydian, a three-month- old startup backed by CoinLab Inc., intends to seek a sale of its bitcoin-mining assets under a bankruptcy court-approved auction process. "Such a sale is the best prospect for maximizing the return to all creditors," Peter Vessenes, managing director of Bainbridge Island, Washington-based CLI Holdings Inc., which does business as Alydian, said in court papers filed Nov. 15, the report related. CoinLab was founded by Mr. Vessenes, also chairman of the Bitcoin Foundation, to help nurture bitcoin companies, according to its website. It was subpoenaed in August along with 21 other companies as part of an investigation by New York's Department of Financial Services into the virtual currency. Introduced in 2008 by a programmer or group of programmers going under the name of Satoshi Nakamoto, bitcoin is used to pay for everything from Gummi bears to smartphones on the Internet. There are 12 million bitcoins in circulation, according to Bitcoincharts, a website that tracks activity across various exchanges. Bitcoins can potentially reduce banking-transaction fees, making it an attractive tender for those seeking to trade via the Web or in stores. The virtual currency traded at about $745 on Nov. 21, according to bitcoin exchange MtGox.com. The value of bitcoins surged after the U.S. Senate Committee on Homeland Security and Governmental Affairs held hearings last week during which the Justice Department said they can be a "legal means of exchange," lending legitimacy and confidence to the virtual currency. Alydian aspired to sell equipment, which it would host and operate, that would "mine" or harvest the virtual currency for customers. The company owes about $4.1 million to its 20 largest unsecured creditors, court papers show. XRay Holdings LLC is owed $3 million, CoinLab is owed $600,000 and Timothy C. Draper is owed about $250,000. The company doesn't expect any funds to be available for distribution to unsecured creditors. Alydian said it was forced into bankruptcy chiefly because it became harder and harder to mine bitcoins due to the increase in "miners," which receive bitcoins in exchange for working to help secure the bitcoin network. Miners essentially get "lottery tickets" for security work that give them the chance of getting a "lucky ticket" that entitles them to bitcoins, according to Vessenes. The more work done, the more tickets and a greater likelihood of a "winning the lottery and receiving a bitcoin," he said in court documents. The system generates a fixed number of bitcoins daily, a process that will occur until about 2140, he said. Other factors that drove the company to seek court protection were its inability to raise an additional capital infusion in the summer and a lawsuit by Bitvestment LLC in October in the federal court in New York. The company said it determined the cost of deploying its system "has exceeded the value of the bitcoins mined" and due to the "increase in the bitcoin mining network, under the current business model, Alydian cannot generate a positive cash flow." No formal request has been made to the bankruptcy court to seek approval of a sale process. About CLI Holdings CLI Holdings, Inc., doing business as Alydian, Inc., sought bankruptcy protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Wash. Case No. 13-bk-19746) in Seattle on Nov. 1, 2013. Alydian is a startup backed by virtual currency "incubator" CoinLab Inc. The business began operations on Aug. 7 and was CoinLab's first portfolio company. The company listed debt of as much as $10 million and assets of less than $50,000 in its bankruptcy petition. The Debtor is represented by: Deirdre Glynn Levin, Esq. KELLER ROHRBACK LLP 1201 Third Avenue #3200 Seattle, WA 98101 Tel: 206-623-1900 E-mail: dglynnlevin@kellerrohrback.com CLOVIS PRINCE: 5th Circ. Affirms Conviction of $14M Bank Fraudster ------------------------------------------------------------------ Law360 reported that the Fifth Circuit on Nov. 22 upheld the conviction of former cell tower development manager Clovis Prince for a scheme to defraud several banks of $13.6 million and related bankruptcy fraud, saying he had not shown any government misconduct in his trial. According to the report, in an unpublished decision, the three- judge panel confirmed Prince's conviction, finding that he had not properly backed his claims of evidentiary misconduct by prosecutors in his fraud trial. "[Prince's] conclusional allegations are insufficient to warrant relief," the panel said, the report cited. COMMSCOPE INC: S&P Assigns 'BB+' Rating to Proposed Term Loans -------------------------------------------------------------- Standard & Poor's Ratings Services' 'BB-' rating on CommScope reflects the company's "fair" business risk profile and "aggressive" financial risk profile. The business risk profile is based on CommScope's meaningful market share and favorable long- term demand fundamentals in its selected end markets and good geographic diversity, but also its limited revenue visibility in a cyclical operating environment and exposure to volatile raw material pricing. The financial risk profile acknowledges the company's strong free operating cash flow (FOCF) generation capabilities and adequate liquidity, but also its potential for volatile FOCF in times of macroeconomic stress and its moderately acquisitive growth strategy. Standard & Poor's has reviewed its ratings on CommScope Holding Co. Inc. and CommScope Inc., which it labeled as "under criteria observation" (UCO) after the publishing of its revised corporate criteria on Nov. 19, 2013. Standard & Poor's expedited the review of its ratings on CommScope because of the company's announced debt issue. With S&P's criteria review of CommScope complete, it has confirmed that its ratings on this issuer are unaffected by the criteria changes. RATINGS LIST CommScope Inc. Corporate Credit Rating BB-/Stable/-- New Rating CommScope Inc. Senior Secured $450 mil. 1st lien term loan B due 2017 BB+ Recovery Rating 1 $425 mil. 1st lien term loan B due 2018 BB+ Recovery Rating 1 CONTINENTAL BLDG: Moody's Cuts Corp. Family Rating to B3 -------------------------------------------------------- Moody's Investors Service downgraded Continental Building Products LLC's Corporate Family Rating to B3 from B2, and its Probability of Default Rating to B3-PD from B2-PD. In a related rating action, Moody's downgraded the company's first lien secured bank facility to B2 from B1, and its second lien bank credit facility to Caa2 from Caa1. These rating actions result from Continental's intent to pay shareholders a cash dividend in the amount of $130 million, funded entirely with debt. The rating outlook is stable. The following ratings/assessments were affected by this action: Corporate Family Rating downgraded to B3 from B2; Probability Default Rating downgraded to B3-PD from B2-PD; First Lien Sr. Sec. RCF due 2018 downgraded to B2 (LGD3, 37%) from B1 (LGD3, 37%); First Lien Sr. Sec. Term Loan due 2020 downgraded to B2 (LGD3, 37%) from B1 (LGD3, 37%); Second Lien Sr. Sec. Term Loan due 2021 downgraded to Caa2 (LGD5, 88%) from Caa1 (LGD5, 87%). Ratings Rationale: The downgrade of Continental's Corporate Family Rating to B3 from B2 and its Probability of Default Rating to B3-PD from B2-PD reflects the very aggressive financial strategy exhibited by Lone Star Funds. Lone Star Funds, through its affiliates, is the primary owner of Continental, and is directing the company to pay a special cash dividend of approximately $130 million. The company is financing this dividend with $130 million in debt by upsizing both of its term loans. In aggregate, the term loans are increasing by 30% to $570 million. Further, the dividend represents about 50% of the initial cash equity used by Lone Star Funds to acquire Continental, the entity formed to acquire the gypsum assets from LaFarge North America, Inc., less than three months ago. A large dividend is a scenario Moody's previously indicated could pressure the company's ratings. The increase in debt also will result in deterioration of key credit metrics and higher debt service requirements. On a pro- forma basis for last 12 months through September 30, 2013, debt- to-EBITDA will increase to about 6.5x from 5.3x. Interest coverage defined as EBITA-to-interest expense will be around 1.75x, which is characteristic of lower rated entities (all ratios incorporate Moody's standard adjustments and add-backs for one-time expenses). Continental's small size based on revenues and absolute EBITA levels relative to other rated manufacturing and wallboard companies leaves less cushion for earnings variability, especially given the potential volatility in the US construction markets. Providing some offset to Continental's leveraged capital structure and the other ratings constraints is Moody's expectation that the company will continue to benefit from the sustained rebound in repair and remodeling activity, as well as new home construction, key drivers of Continental's revenues. Moody's anticipates Continental's operating margins will improve from a combination of higher volumes, increased pricing, the success of its LiftLite wallboard and other new products, and ongoing cost reduction initiatives. Continental's stable rating outlook reflects Moody's projections that its debt credit metrics will be in line with its B3 Corporate Family Rating. Further, the company's ability to generate free cash flow and the lack of significant near-term maturities give Continental financial flexibility to support growth initiatives. The lowering of Continental's first lien senior secured bank credit facility to B2 from B1 and its second lien senior secured term loan due 2021 to Caa2 from Caa1 result from the downgrade of the company's corporate family rating. Positive rating actions could ensue if Continental benefits from strengthening end markets, resulting in more robust credit metrics, including higher operating earnings and improved free cash flow generation. Operating performance that results in EBITA- to-interest expense sustained above 2.5x, or debt-to-EBITDA sustained below 5.5x (all ratios incorporate Moody's standard adjustments) then positive rating actions could be considered. Also, a significant amount of permanent debt reductions and an improved liquidity profile would also support upward rating pressures. Negative rating actions could occur if Continental's operating performance falls below Moody's expectations or if the company experiences a weakening in financial performance due to a decline in demand for its products. EBITA-to-interest expense remaining below 1.25x or debt-to-EBITDA sustained above 6.0x (all ratios incorporate Moody's standard adjustments) could pressure the ratings. A deteriorating liquidity profile, debt-financed acquisitions or large dividends could stress the ratings as well. Continental Building Products LLC, headquartered in Reston, VA, manufactures gypsum wallboard and related products for use in residential and commercial construction, as well as for repair and remodeling applications. It operates in the Eastern United States and Eastern Canada. Lone Star Funds, through its affiliates, is the primary owner of Continental. Revenues for the twelve months through September 30, 2013 totaled approximately $375 million. CRAVEN PROPERTIES: Bankruptcy Case Now Under Chapter 7 ------------------------------------------------------ Craven Properties LP is now undergoing Chapter 7 liquidation after the bankruptcy judge entered an order converting the bankruptcy case. The United States Trustee moved to convert the bankruptcy case from Chapter 11 to Chapter 7. The U.S. Trustee said that although the case has been pending for almost a year, the Debtor has not proposed a plan of reorganization, and it is apparent from its monthly operating reports filed in the case that it does not have the ability to fund a confirmable plan of reorganization. "[The] Debtor and its officers and agents shall cooperate with the appointed chapter 7 trustee and turn over to said trustee all records and property of the estate in their possession or control as directed by the trustee," Judge Robert E. Brizendine said in the order. The judge required the Debtor to submit a schedule of all unpaid debts, a final report and account and its outstanding monthly operating reports. The Debtor also set a deadline for professionals to file an application for compensation and reimbursement of expenses for services rendered in connection with the administration of the chapter 11 case. Craven Properties, L.P., a single asset real estate, filed a Chapter 11 petition (Bankr. N.D. Ga. Case No. 12-23082) in its hometown in Gainesville, Georgia, on Aug. 31, 2012. Judge Robert Brizendine presides over the case. John J. McManus, Esq., at John J. McManus & Associates, P.C., serves as counsel. Billy J. Craven signed the petition. In its amended schedules, the Debtor disclosed $20,028,429 in assets and $3,872,671 in liabilities as of the Petition Date. CRC HEALTH: Moody's Rates $50MM Add-on Sr. Secured Term Loan 'B1' ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to CRC Health Corporation's $50 million add-on senior secured term loan B-4 and affirmed the B1 rating on CRC's existing credit facilities and the Caa1 rating on the company's senior subordinated notes. At the same time, Moody's affirmed CRC Health's B3 Corporate Family Rating, B3-PD Probability of Default Rating, and Speculative Grade Liquidity Rating of SGL-3. The rating outlook is stable. On November 14, 2013, CRC Health announced that it had signed a definitive agreement to acquire the outstanding capital stock of an undisclosed privately held drug and alcohol treatment company for a cash purchase price of approximately $58 million. The proceeds from the add-on term loan, along with cash and revolver borrowings will be used to consummate the acquisition and pay transaction fees and expenses. Following is a summary of Moody's rating actions: CRC Health Corporation: Rating assigned: $50 million senior secured term loan B-4, B1 (LGD 2, 26%) Ratings affirmed/LGD assessments revised: B3 Corporate Family Rating B3-PD Probability of Default Rating $63 million senior secured revolving credit facility at B1 (LGD 2, 26%) $309 million senior secured term loan at B1 (LGD 2, 26%) $88 million senior secured term loan B-3 at B1 (LGD 2, 26%) $176 million senior subordinated notes, to Caa1 (LGD 5, 74%) from Caa1 (LGD 5, 77%) Speculative Grade Liquidity Rating of SGL-3 The rating outlook is stable. Rating Rationale: CRC's B3 Corporate Family Rating reflects Moody's expectation that the company will continue to operate with very high financial leverage and modest interest coverage, as ongoing operating and economic pressures in the youth and weight management businesses impede improvements in credit metrics. In addition, the ratings reflect Moody's expectation that liquidity will remain adequate and further debt repayment will be minimal over the next twelve months. Moody's acknowledges the progress the company has made in reducing costs through its restructuring efforts. However, the company had experienced a setback with the closing of its New Life Lodge facility that impacted CRC's revenue base and delayed anticipated improvements in the credit profile of the company. The rating benefits from the company's scale and strong market position within a highly fragmented industry. The stable outlook reflects Moody's expectation that the company will continue to benefit over the near term from the reduction of its cost base and continue to generate positive free cash flow. While Moody's expects deleveraging to remain limited over the next 12 to 18 months, the stable outlook incorporates Moody's expectation that CRC's organic revenue growth will be partially driven by improved growth at New Life Lodge. The stable outlook also incorporates Moody's expectation that the company will maintain an adequate liquidity profile. The ratings could be downgraded if the company experiences further operational pressures resulting in declines in revenue and EBITDA, or if operating margins deteriorate. Moody's could also downgrade the rating if the company's liquidity profile weakens, either through declining cash flow or limited revolver availability. In addition, the ratings could be lowered if the company engages in material debt-financed acquisitions or faces an adverse outcome related to legal or regulatory proceedings requiring a cash settlement. While an upgrade is unlikely in the near-term, Moody's would consider upgrading the ratings if the company generates positive growth in revenue and EBITDA, and reduces leverage to below 6 times. Headquartered in Cupertino, California, CRC Health Corporation ("CRC") is a wholly owned subsidiary of CRC Health Group, Inc. CRC's Recovery division provides treatment services to patients suffering from chronic addiction diseases and related behavioral disorders. The company's Youth division provides therapeutic educational programs for adolescents through services ranging from short-term intervention programs to longer-term residential treatment. The Weight Management division provides treatment services for weight management and eating disorders, which are treated through a combination of medical, psychological, and social treatment programs. CRC Health is owned by private equity sponsor Bain Capital Partners, LLC. For the twelve months ended September 30, 2013, the company generated revenues of approximately $440 million. DEBORAH HEART: Moody's Confirms B1 Rating on $18.9MM Bonds ---------------------------------------------------------- Moody's Investors Service has confirmed the B1 rating assigned to Deborah Heart and Lung Center's (DHLC) $18.9 million of outstanding bonds issued by New Jersey Health Care Facilities Financing Authority. The outlook is negative. This action concludes the review for downgrade initiated on August 12, 2013. The confirmation reflects DHLC's liquidity position which should more than adequately cover a proposed legal settlement with the Internal Revenue Service (IRS), should the IRS agree to the settlement. Summary Rating Rationale: The confirmation of the B1 rating reflects Moody's belief that DHLC has sufficient liquidity to absorb a proposed settlement with the IRS regarding a determination of taxability. The confirmation also reflects overall stability in financial performance over the past three years requiring lower subsidies from The Deborah Hospital Foundation, following a longer-term history of larger losses and greater subsidies. The negative outlook reflects the growing financial pressures that Moody's believes may impair future financial performance given DHLC's high exposure to Medicare and concentration in cardiology services, as well as the uncertainty surrounding the IRS' determination of taxability should the proposed settlement not be agreed upon. The determination of taxability could result in a legal settlement with the IRS, which Moody's would expect to have minimal impact on Deborah's balance sheet position, although a longer term legal challenge could occur over the next few years should a settlement not be reached. Strengths: - DHLC has demonstrated improvement in year-to-date financial performance through September 30, 2013 with an operating cash flow margin of 4.1%, compared to 2.8% in the prior year comparable period, due to expense management and strategic initiatives that have resulted in additional revenue. - Deborah has maintained the combined cash position of the Center and the Foundation with $27.5 million in unrestricted cash and investments at the end of FY 2012, slightly down from $25.5 million at the end of FY 2011. Cash held relatively steady at $26.8 million as of September 30, 2013. Cash-to-debt of 118% is above average for speculative grade ratings and reflects DHLC's low debt burden of 16% debt to revenues (compared to national median of 38%). - DHLC has an all fixed rate debt structure with a debt service reserve fund. Management reports no near-term plans for additional debt. - An Irrevocable Subsidy Agreement from the Deborah Hospital Foundation has historically subsidized operating losses at the Center. Challenges: - Uncertainty is present regarding an IRS determination of taxability, although the proposed amount Deborah has offered as a settlement to the IRS would not result in a material impact to the organization's liquidity position. If, however, the IRS does not accept the proposed settlement an ongoing legal challenge could take place for the next several years with associated legal expenses. - DHLC experienced a material decline in inpatient admissions due to the shift to observation and same day care stays in YTD FY 2013. Year-to-date inpatient volumes declined by 13%. - The medical center has a high exposure to Medicare (60%, compared to median of 44%), given the hospital's specialized focus on cardiology, which could result in reimbursement declines and low revenue growth for the organization. - DHLC saw an increase in its unfunded pension liability to $23.7 million in FY 2012 due to a lower discount rate and asset returns. Cash to comprehensive debt declines to a moderate 56% when including pension liability. Management anticipates that as discount rates rise, the unfunded liability at FYE 2013 should be reduced materially. Outlook: The negative outlook reflects the uncertainty regarding the resolution of the IRS determination of taxability, the center's small size, concentrated service array, high Medicare exposure and reliance on fundraising to subsidize losses on clinical operations. What Could Make the Rating Go Up: Unlikely given the negative outlook, a rating upgrade would require material improvement in financial performance that is tied to favorable revenue growth and diversification, improvement in patient volumes, and growth in unrestricted cash and investments. What Could Make the Rating Go Down: A downgrade could occur if DHLC is faced with an ongoing legal challenge with the IRS that results in a reduction in liquidity beyond the proposed settlement amount. A downgrade could also occur should DHLC experience erosion in financial performance, reduction in liquidity position, or further patient volume declines. DEL MONTE FOODS: Moody's Says Ratings Unaffected by Debt Upsize --------------------------------------------------------------- Moody's Investors Service, Inc. said that the decision by Del Monte Foods Inc. to shift $40 million of its proposed acquisition financing to debt from equity does not affect its previously assigned ratings, including a B2 Corporate Family Rating, a B2 rating on the secured first-lien term loan and a Caa1 rating on the secured second-lien term loan. The rating outlook is stable. Del Monte Foods, a newly-formed subsidiary of Philippines-based Del Monte Pacific Limited, is in the process of raising financing to acquire the consumer products business of unaffiliated San Francisco-based Del Monte Corporation for $1.7 billion. The company has amended its originally proposed financing to increase the proposed size of the B2-rated first-lien term loan by $60 million -- to $710 million from $650 million -- and reduce the proposed size of the Caa1-rated second-lien term loan by $20 million -- to $260 million from $280 million. Correspondingly, Del Monte Pacific Limited will reduce the amount of cash equity it will contribute to the transaction by $40 million to about $710 million. In addition, the proposed pricing terms on each of the term loans improved by 50 basis points. Proforma leverage will be slightly higher, but will remain around 6 times at close. Rating Rationale: The B2 rating reflects Del Monte Foods's high proforma financial leverage along with declining sales volumes and heavy price competition in the core US packaged fruit and vegetable categories. The rating is supported by the strength of the Del Monte brand that holds a leading share in these categories. Another key rating consideration is the indirect controlling ownership by the Campos family that Moody's expects to be a conservative influence on financial policy. The rating is also supported by the company's solid liquidity profile that Moody's expects to include positive free cash flow, abundant availability under the ABL, and the "covenant-lite" structure of the proposed bank term loans. Del Monte Foods will be challenged to turn around several years of declining volumes in the canned fruit and vegetable businesses reflecting a growing preference among consumers for fresh produce. In addition, heavy competition, including a large private label presence in these categories has limited pricing power and pressured margins. Del Monte Foods's ratings could be downgraded if debt/EBITDA is sustained above 7.5 times or liquidity deteriorates materially. Conversely, the ratings could be upgraded if the company is able to strengthen core operating performance and debt/EBITDA is sustained below 5 times. DETROIT, MI: Pays Law Firms, Professionals Almost $23MM so Far -------------------------------------------------------------- Michael Bathon, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Detroit paid attorneys, consultants and other professionals working on the city's bankruptcy about $22.8 million through Oct. 1, according to an e- mail from a spokesman for Kevyn Orr, the city's emergency financial manager. According to the report, Jones Day, the lead law firm for the record Chapter 9 bankruptcy, has received about $11 million so far, and its fees are capped at $18 million, the spokesman, Bill Nowling, said in an e-mail on Nov. 20. Conway Mackenzie Inc., a restructuring firm working on the bankruptcy, got about $4.6 million from its capped total of $19.3 million. Detroit filed the biggest municipal bankruptcy in U.S. history in July, saying it couldn't repay all of its $18 billion in debt and still provide basic services. Accounting firm Ernst & Young LLP has received about $4.2 million from its contract, capped at $8 million, and Plante Moran PLLC has been paid about $1.5 million of its $3.97 million allowance. Investment bank Miller Buckfire & Co. has received about $1.2 million of its capped $8 million. The city is awaiting a ruling from U.S. Bankruptcy Judge Steven Rhodes on whether it's eligible for bankruptcy protection under the Bankruptcy Code's Chapter 9, which covers municipalities. Under Chapter 9, Judge Rhodes must find that the city either tried to reach a deal before seeking court protection with creditors, including unions and retirees that oppose the bankruptcy effort, or that talks were impractical. To remain in bankruptcy, the city must convince Judge Rhodes that it's insolvent, that it's entitled under state law to file for bankruptcy, that it tried to negotiate with creditors or was unable to do so, and that it intends to file a plan to adjust its debts. About City of Detroit, Michigan The City of Detroit, Michigan, weighed down by more than $18 billion in accrued obligations, sought municipal bankruptcy protection on July 18, 2013, by filing a voluntary Chapter 9 petition (Bankr. E.D. Mich. Case No. 13-53846). Detroit listed more than $1 billion in both assets and debts. Kevyn Orr, who was appointed in March 2013 as Detroit's emergency manager, signed the petition. Detroit is represented by lawyers at Jones Day and Miller Canfield Paddock and Stone PLC. Michigan Governor Rick Snyder authorized the bankruptcy filing. The filing makes Detroit the largest American city to seek bankruptcy, in terms of population and the size of the debts and liabilities involved. The City's $18 billion in debt includes $5.85 billion in special revenue obligations, $6.4 billion in post-employment benefits, $3.5 billion for underfunded pensions, $1.13 billion on secured and unsecured general obligations, and $1.43 billion on pension- related debt, according to a court filing. Debt service consumes 42.5 percent of revenue. The city has 100,000 creditors and 20,000 retirees. Detroit is represented by David G. Heiman, Esq., and Heather Lennox, Esq., at Jones Day, in Cleveland, Ohio; Bruce Bennett, Esq., at Jones Day, in Los Angeles, California; and Jonathan S. Green, Esq., and Stephen S. LaPlante, Esq., at Miller Canfield Paddock and Stone PLC, in Detroit, Michigan. Sharon Levine, Esq., at Lowenstein Sandler LLP, is representing the American Federation of State, County and Municipal Employees and the International Union. Babette Ceccotti, Esq., at Cohen, Weiss & Simon LLP, is representing the United Automobile, Aerospace and Agricultural Implement Workers of America. A nine-member official committee of retired workers was appointed in the case. The Retirees' Committee is represented by Dentons US LLP. DETROIT, MI: Emergency Manager, Mayor-Elect Agree on Naming CFO --------------------------------------------------------------- Reuters reported that Detroit's state-appointed emergency manager and its mayor-elect announced the appointment on Nov. 21 of a new chief financial officer for the cash-strapped city, with the joint action signaling a change from previously estranged relations between the emergency manager's office and city government. According to the report, John Hill, the former chief executive officer of a business-backed civic group for Washington, D.C., was tapped to lead Detroit's finance department and work on the city's restructuring team, according to the announcement by Emergency Manager Kevyn Orr and Mayor-elect Mike Duggan. Hill, a certified public accountant, headed Washington's Federal City Council from 2004 to 2012, the report related. He previously served as executive director of that city's Financial Control Board, which was created by Congress in 1994 to take over the U.S. capital city's finances and budget. "John Hill brings a wealth of municipal finance and restructuring experience to Detroit," Orr said in a statement, the report cited. "John's similar service in our nation's capital will help move Detroit forward." Detroit, which filed the biggest municipal bankruptcy in U.S. history on July 18, is currently awaiting a ruling from a U.S. judge on whether it meets eligibility requirements to remain in federal court to work out a plan to deal with more than $18 billion of debt and other obligations, the report further related. Prior to the bankruptcy filing, Orr, a former corporate bankruptcy attorney, was selected by Michigan's governor to run the state's biggest city. About City of Detroit, Michigan The City of Detroit, Michigan, weighed down by more than $18 billion in accrued obligations, sought municipal bankruptcy protection on July 18, 2013, by filing a voluntary Chapter 9 petition (Bankr. E.D. Mich. Case No. 13-53846). Detroit listed more than $1 billion in both assets and debts. Kevyn Orr, who was appointed in March 2013 as Detroit's emergency manager, signed the petition. Detroit is represented by lawyers at Jones Day and Miller Canfield Paddock and Stone PLC. Michigan Governor Rick Snyder authorized the bankruptcy filing. The filing makes Detroit the largest American city to seek bankruptcy, in terms of population and the size of the debts and liabilities involved. The City's $18 billion in debt includes $5.85 billion in special revenue obligations, $6.4 billion in post-employment benefits, $3.5 billion for underfunded pensions, $1.13 billion on secured and unsecured general obligations, and $1.43 billion on pension- related debt, according to a court filing. Debt service consumes 42.5 percent of revenue. The city has 100,000 creditors and 20,000 retirees. Detroit is represented by David G. Heiman, Esq., and Heather Lennox, Esq., at Jones Day, in Cleveland, Ohio; Bruce Bennett, Esq., at Jones Day, in Los Angeles, California; and Jonathan S. Green, Esq., and Stephen S. LaPlante, Esq., at Miller Canfield Paddock and Stone PLC, in Detroit, Michigan. Sharon Levine, Esq., at Lowenstein Sandler LLP, is representing the American Federation of State, County and Municipal Employees and the International Union. Babette Ceccotti, Esq., at Cohen, Weiss & Simon LLP, is representing the United Automobile, Aerospace and Agricultural Implement Workers of America. A nine-member official committee of retired workers was appointed in the case. The Retirees' Committee is represented by Dentons US LLP. DETROIT, MI: Moody's Confirms B1 Rating on Senior Lien Sewer Bonds ------------------------------------------------------------------ Moody's Investors Service has confirmed the City of Detroit's (MI) Sewer Enterprise ratings at B1 for the senior lien bonds and B2 for the second lien bonds. The outlook for the ratings is negative. Concurrently, Moody's has also confirmed the city's (MI) Water Enterprise ratings at B1 for the senior lien bonds and B2 for the second lien bonds; the city's General Obligation (GO) rating at Caa3; the city's Ca General Obligation Limited Tax (GOLT) and Certificate of Participation (COP) ratings at Ca; and all the ratings on the city's outstanding bonds backed by Distributable State Aid payments. Distributable State Aid bond rating confirmations include the Aa3 rating on the Distributable State Aid General Obligation (Limited Tax) Bonds, Series 2010; the A1 rating on the Local Government Loan Program Revenue Bonds (City of Detroit Unlimited Tax General Obligation -- Second Lien), Series 2010E; and the A3 rating on the Local Government Loan Program Revenue Loan Bonds (City of Detroit Limited Tax General Obligation -- Third Lien), Series 2012C. Summary Rating Rationale: The ratings were originally placed under review after the Emergency Manager released his Proposal to Creditors on June 14, 2013. The review for downgrade was focused on whether a negotiated settlement was likely amongst parties or if a bankruptcy filing was imminent. Subsequent to Moody's placement of the ratings on review, the city filed a petition on July 18, 2013 seeking federal bankruptcy protection under Chapter 9. That petition is currently before US Bankruptcy Judge Stephen Rhodes, who will determine whether the city may proceed under Chapter 9 bankruptcy protection. Confirmation of the senior and second lien ratings at B1 and B2, respectively, is based on the ongoing heightened repayment risk facing bondholders as the city continues through the Chapter 9 bankruptcy process. While the bankruptcy filing has yet to delay debt service payments or significantly disrupt operations, the possibility of a distressed exchange remains a risk based on statements made in the EM's proposal to create a new authority to oversee the operations of the disposal system. The outlook for the ratings is negative given that ultimate recovery for bondholders is still unknown as the city continues through the Chapter 9 bankruptcy process. The negative outlook reflects uncertainty with respect to ongoing negotiations with creditors and the city's proposed Plan of Adjustment should it be deemed eligible to proceed under Chapter 9. The city has also been exploring the possibility of creating a separate authority to govern its water and sewer system, which could potentially result in a distressed exchange, particularly as proposed in the EM's Proposal to Creditors. Moody's rating and outlook incorporate both the potential for the court to deem the city eligible for bankruptcy and possible risks even if the city were deemed ineligible at this time. Strengths: -- Large metropolitan service area, providing treatment and disposal services to 30% of State of Michigan (GO rated Aa2/positive) residents -- New management team focusing on optimization plans and federal court orders implementing additional operational autonomy from the City of Detroit (GO rated Caa3/negative) -- Closed loop system that prevents diversion of sewage disposal system revenue to the general operations of Detroit Challenges: -- Leveraged system with remaining capital needs that are currently being assessed -- New competition coming online that may attract current customers away from DWSD -- Ongoing discussions to create a separate authority, which may also involve a distressed exchange proposal for existing bondholders Outlook: The negative outlook reflects the fact that ultimate recovery for bondholders is unknown as the city continues through the Chapter 9 bankruptcy process. The outlook also contemplates pending outcomes with respect to ongoing negotiations with creditors and review of the city's proposed Plan of Adjustment should the city be deemed eligible to proceed under Chapter 9, as well as any change to governance and debt structure that could occur with the implementation of a new authority. What could change the ratings UP (or removal of the negative outlook): -- Elimination of distressed exchange risk associated with new authority proposal -- Continued payment of debt service payments on time and in full -- Long term stabilization of usage trends -- Sustained improvement in debt service coverage -- Elimination of the system's exposure to the city's Chapter 9 proceedings What could change the ratings DOWN: -- Delayed or reduced debt service payments -- Continued declines in volume trends that materially impact operating revenues -- Failure to continue implementing future rate increases/reduce operating expenditures needed to maintain satisfactory debt service coverage -- Increase in capital needs that substantially leverage the system and/or reduce liquidity DETROIT, MI: Moody's Confirms B1 Rating on Senior Lien Water Bonds ------------------------------------------------------------------ Moody's Investors Service has confirmed the City of Detroit's (MI) Water Enterprise ratings at B1 for the senior lien bonds and B2 for the second lien bonds. The outlook for the ratings is negative. Concurrently, Moody's has also confirmed the city's Sewer Enterprise ratings at B1 for the senior lien bonds and B2 for the second lien bonds; the General Obligation (GO) rating at Caa3; the General Obligation Limited Tax (GOLT) and Certificate of Participation (COP) ratings at Ca; and all the ratings on the city's outstanding bonds backed by Distributable State Aid payments. Distributable State Aid bond rating confirmations include the Aa3 rating on the Distributable State Aid General Obligation (Limited Tax) Bonds, Series 2010; the A1 rating on the Local Government Loan Program Revenue Bonds (City of Detroit Unlimited Tax General Obligation -- Second Lien), Series 2010E; and the A3 rating on the Local Government Loan Program Revenue Loan Bonds (City of Detroit Limited Tax General Obligation -- Third Lien), Series 2012C. Summary Rating Rationale: The ratings were originally placed under review after the Emergency Manager released his Proposal to Creditors on June 14, 2013. The review for downgrade was focused on whether a negotiated settlement was likely amongst parties or if a bankruptcy filing was imminent. Subsequent to Moody's placement of the ratings on review, the city filed a petition on July 18, 2013 seeking federal bankruptcy protection under Chapter 9. That petition is currently before US Bankruptcy Judge Stephen Rhodes, who will determine whether the city may proceed under Chapter 9 bankruptcy protection. Confirmation of the senior and second lien ratings at B1 and B2, respectively, is based on the ongoing heightened repayment risk facing bondholders as the city continues through the Chapter 9 bankruptcy process. While the bankruptcy filing has yet to delay debt service payments or significantly disrupt operations, the possibility of a distressed exchange remains a risk based on statements made in the EM's proposal to create a new authority to oversee the operations of the supply system. The outlook for the ratings is negative given that ultimate recovery for bondholders is still unknown as the city continues through the Chapter 9 bankruptcy process. The negative outlook reflects uncertainty with respect to ongoing negotiations with creditors and the city's proposed Plan of Adjustment should it be deemed eligible to proceed under Chapter 9. The city has also been exploring the possibility of creating a separate authority to govern its water and sewer system, which could potentially result in a distressed exchange, particularly as proposed in the EM's Proposal to Creditors. Moody's rating and outlook incorporate both the potential for the court to deem the city eligible for bankruptcy and possible risks even if the city were deemed ineligible at this time. Strengths: -- Large metropolitan service area, providing service to 43% of State of Michigan (GO rated Aa2/positive) residents -- Ample water supply and system-wide capacity for treatment and distribution -- New management team focusing on optimization plans and federal court orders implementing additional operational autonomy from the City of Detroit (GO rated Caa3/negative) -- Closed loop system that prevents diversion of system revenue to the general operations of Detroit Challenges: -- Leveraged system with remaining capital needs that are currently being assessed -- New competition coming online that may attract current customers away from DWSD -- Ongoing discussions to create a separate authority, which may also involve a distressed exchange proposal for existing bondholders Outlook: The negative outlook reflects the fact that ultimate recovery for bondholders is still unknown as the city continues through the Chapter 9 bankruptcy process. The outlook also contemplates pending outcomes with respect to ongoing negotiations with creditors and review of the city's proposed Plan of Adjustment should the city be deemed eligible to proceed under Chapter 9, as well as any change to governance and debt structure that could occur with the implementation of a new authority. What could change the rating UP (or removal of the negative outlook): -- Elimination of distressed exchange risk associated with new authority proposal -- Elimination of the system's exposure to the city's Chapter 9 proceedings -- Continued payment of debt service payments on time and in full -- Long term stabilization of usage trends -- Sustained improvement in debt service coverage What could change the rating Down: -- Delayed or reduced debt service payments -- Continued declines in volume trends that materially impact operating revenues -- Failure to continue implementing future rate increases/reduce operating expenditures needed to maintain satisfactory debt service coverage -- Increase in capital needs that substantially leverage the system and/or reduce liquidity DETROIT, MI: Moody's Confirms 'Caa3' Gen. Obligation Rating ----------------------------------------------------------- Moody's Investors Service has confirmed the City of Detroit's (MI) Caa3 General Obligation (GO) rating, as well as its Ca General Obligation Limited Tax (GOLT) and Certificate of Participation (COP) ratings. The outlook for the ratings is negative. Summary Rating Rationale: Detroit's ratings had been under review for downgrade since June when the Emergency Manager (EM) released his Proposal to Creditors. The focus of the review was on the potential impact that a negotiated settlement or bankruptcy filing might have on the various debt security classes. Subsequent to Moody's placement of the ratings on review, the city filed a petition on July 18, 2013 seeking federal bankruptcy protection under Chapter 9. That petition is currently before US Bankruptcy Judge Stephen Rhodes, who will determine whether the city may proceed under Chapter 9 bankruptcy protection. Confirmation of the city's GO, GOLT and COPs ratings is based on Moody's assessment of expected recovery for bondholders following the city's default on these classes of debt. The current ratings incorporate Moody's estimates of bondholder recovery, which range from 65%-80% for GOULT securities and 35-65% for GOLT debt and COPs. Further, Moody's expectation is that while the city continues to work through the Chapter 9 process, GO, GOLT and COPs bondholders will not receive scheduled debt service. Moody's maintains a one notch rating differential between the GOULT and GOLT bonds based on Moody's analysis of the pledge and the possible difference in ultimate recovery rates for each security type. The negative outlook represents the uncertainties associated with a municipal bankruptcy, still a rare event. Should the city fail in its push for eligibility from the bankruptcy court, this event would create another layer of uncertainty to the process as it is unclear what recovery bondholders would be entitled to from state proceedings. Strengths: -- State appointed receiver with significant statutory authority for oversight of the city's finances and operations. -- Escrowed bond proceeds available following successful completion of the MFA financing deal Challenges: -- Defaulted GO, GOLT and COPs debt service payments, with delinquencies expected to continue as the city continues to negotiate with creditors -- Weak liquidity profile, requiring active cash flow management techniques, including debt refinancing, to meet operating needs -- Continued turn over in key management positions -- Potential termination payment due for swap agreements issued in conjunction with Certificates of Participation Outlook: A negative outlook has been assigned pending outcomes of ongoing negotiations with creditors, and also pending review of the city's proposed Plan of Adjustment should it be deemed eligible to proceed under Chapter 9. Another less-likely scenario is that the city is not eligible to proceed under Chapter 9. This adds another layer of uncertainty to the process as it is unclear how bondholders would be impacted by a declaration of ineligibility. However, the current rating action encompasses both possibilities. What Could Change the Ratings UP (or removal of the negative outlook): -- Material operating surpluses, achieved through structurally balanced financial results that will carry forward to future fiscal years -- A material improvement in the city's unrestricted cash and investment position such that the city continues to be less dependent on cash flow borrowing -- Resumption of debt service payments to bondholders What Could Change the Ratings DOWN: -- Revenue challenges that continue to exceed expenditure (and alternate revenue) solutions -- Continued operating deficits leading to heightened cash-flow weakness -- Further increase of the city's debt leverage -- Elimination of legislative authority for state oversight/assistance DIGITAL DOMAIN: Forbearance Period Under DIP Loan Expires Nov. 29 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved on Nov. 8, 2013, an eighth amendment to the final order authorizing DDMG Estate, f/k/a as Digital Domain Media Group, Inc., and its debtor-affiliates, to obtain postpetition financing, entered on Nov. 7, 2012. The Final DIP Order is amended, as follows: Nothwithstanding the occurrence of a Termination Event, the expiration of the Remedies Notice Period and the termination of the automatic stay under section 362(a) to allow the DIP Agent to exercise any and all default remedies, the DIP Agent and DIP Lenders shall forbear from exercising their remedies under the Final DIP Order, DIP Term Sheet Documentation and applicable bankruptcy law and nonbankruptcy law through and until the earlier of (i) Nov. 29, 2013, or (ii) the occurrence of a Termination Event (other than the occurrence of the Maturity Date) (the "Forbearance Period"). During the Forbearance Period, the Debtors may incur indebtedness and use Cash Collateral in accordance with the terms and conditions of the Final DIP Order, the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, and the Seventh Amendment, which shall remain in full force and effect, except as specifically amended or modified by this order. A copy of the Approved Revised Budget is available for free at http://bankrupt.com/misc/digitaldomain.doc1071-1.pdf About Digital Domain Port St. Lucie, Florida-based Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/-- engaged in the creation of original content animation feature films, and development of computer-generated imagery for feature films and trans-media advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11, 2012, to sell its business for $15 million to Searchlight Capital Partners LP, subject to higher and better offers. The Company disclosed assets of $205 million and liabilities totaling $214 million. The Debtors also have sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. An official committee of unsecured creditors appointed in the case is represented by lawyers at Sullivan Hazeltine Allinson LLC and Brown Rudnick LLP. At a bankruptcy auction, the principal part of the business was purchased by a joint venture between Galloping Horse America LLC, an affiliate of Beijing Galloping Horse Co., and an affiliate of Reliance Capital Ltd., based in Mumbai. The $36.7 million total value of the contact includes $3.6 million to cure defaults on contracts and $2.9 million in reimbursement of payroll costs. As the result of a settlement negotiated by the unsecured creditors' committee with secured lenders, there will be some recovery for the committee's constituency. DREIER LLP: Creditors File 6 Suits Over Unpaid Bills ---------------------------------------------------- Law360 reported that the unsecured creditors' committee of defunct law firm Dreier LLP filed six adversary suits in New York bankruptcy court on Nov. 22, in an attempt to claim some $426,000 in unpaid bills for legal services performed while the firm was still afloat. According to the report, in a flurry of filings on the evening of Nov. 22, the creditors filed six near-identical adversarial suits against former clients that, the creditors alleged, didn't pay the bills for legal services the firm's lawyers performed. Named in the suits are entertainment entrepreneur David Engelke and Solid State Logic Inc., the report said. About Marc Dreier and Dreier LLP Marc Dreier founded New York-based law firm Dreier LLP -- http://www.dreierllp.com/-- in 1996. On Dec. 8, 2008, the U.S. Securities and Exchange Commission filed a suit, alleging that Mr. Dreier made fraudulent offers and sales of securities in several cities, selling fake promissory notes to hedge and other private investment funds. The SEC asserted that Mr. Dreier also distributed phony financial statements and audit opinions, and recruited accomplices in connection with that scheme. Mr. Dreier, currently in prison, was charged by the U.S. government for conspiracy, securities fraud and wire fraud (S.D.N.Y. Case No. 09-cr-00085). Dreier LLP sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 08-15051) on Dec. 16, 2008. Stephen J. Shimshak, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, was tapped as counsel. The Debtor estimated assets of $100 million to $500 million, and debts between $10 million and $50 million in its Chapter 11 petition. Sheila M. Gowan, a partner with Diamond McCarthy, was appointed Chapter 11 trustee for the Dreier law firm. Ms. Gowan is represented by Jason Porter, Esq., at Diamond McCarthy LLP. Wachovia Bank National Association; the Dreier LLP Chapter 11 Trustee; and Steven J. Reisman as post-confirmation representative of the bankruptcy estate of 360networks (USA) Inc. signed a petition that put Mr. Dreier into bankruptcy under Chapter 7 on Jan. 26, 2009 (Bankr. S.D.N.Y. Case No. 09-10371). Mr. Dreier pleaded guilty to fraud and other charges in May 2009. The scheme to sell $700 million in fake notes unraveled in late 2008. Mr. Dreier is serving a 20-year sentence in a federal prison in Minneapolis. DUNLAP OIL: Set for Conversion Hearing After Plan Rejected ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Dunlap Oil Co.'s reorganization plan was rejected last week by the U.S. Bankruptcy Court in Tucson, Arizona, and a hearing will be held Dec. 12 for the bankruptcy judge to consider converting the case to liquidation in Chapter 7. According to the report, the court is also allowing secured creditors to foreclose on the Wilcox, Arizona-based gasoline supplier. Dunlap operated retail outlets while supplying gasoline to Texaco and Chevron stations in the state. When the bankruptcy began in October 2012, the primary secured creditors were Canyon Community Bank, with a claim of about $6.28 million, and Compass Bank, owed about $5.44 million. About Dunlap Oil and Quail Hollow Inn Dunlap Oil Company, Inc., and Quail Hollow Inn, LLC, sought Chapter 11 protection (Bankr. D. Ariz. Case No. 12-23252 and 12-23256) on Oct. 24, 2012. Founded in 1958, Dunlap Oil is a Willcox, Arizona-based operator of 14 gasoline services stations. QOH owns the 89-room outside corridor Best Western Plus Quail Hollow hotel in Willcox. The two companies are owned and operated by the Dunlap family. The Hon. Brenda Moody Whinery presides over the case. John R. Clemency, Esq., and Lindsi M. Weber, Esq., at Gallagher & Kennedy, P.A., serve as the Debtors' counsel. Peritus Commercial Finance LLC serves as financial advisor. Quail Hollow Inn also hired Sally M. Darcy of McEvoy Daniels & Darcy P.C. for the limited purpose of handling any claims, issues, and/or disputes between QHI and Best Western International, Inc. The Debtors' lead counsel, Gallagher & Kennedy, P.A., has a conflict precluding its representation of the Debtor in matters relating to Best Western. QOH declared assets of at least $1 million and debts exceeding $10 million. DOC estimated assets and debts of $10 million to $50 million. The petitions were signed by Theodore Dunlap, president. Ilene J. Lashinsky, the U.S. Trustee for Region 14, has appointed three creditors to serve on an Official Committee of Unsecured Creditor for the Chapter 11 bankruptcy case of Dunlap Oil Company. The Committee tapped Nussbaum Gillis & Dinner, P.C. as its counsel. Pineda Grantor Trust II, successor-in-interest to Compass Bank, is represented by Steven N. Berger, Esq., and Bradley D. Pack, Esq., at Engelman Berger, P.C. Canyon Community Bank NA is represented by Pat P. Lopez III, Esq., Rebecca K. O'Brien, Esq., and Jeffrey G. Baxter, Esq., at Rusing Lopez & Lizardi, P.L.L.C. EMPIRE DIE: Has Final OK to Obtain Up to $6-Mil. in DIP Loans ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Ohio entered, on Nov. 6, 2013, a final order authorizing Empire Die Casting Co., Inc., to obtain secured postpetition financing of up to $6.0 million from FirstMerit Bank, N.A. The maturity date of the Revolving Facility will be the earliest to occur of (a) Dec. 31, 2013, (b) the effective date of a sale of all or substantially all of the Debtor's assets or business pursuant to Section 363 of the Bankruptcy Code, and (c) the occurrence of a Termination Event. The Non-Default Interest Rate is 8% p.a. The Default Interest Rate is the applicable rate plus 5% p.a. A commitment fee of $80,000 will be charged. The Debtor is also authorized to use cash collateral of its prepetition lender. A copy of the Final DIP Financing Order is available at: http://bankrupt.com/misc/empiredie.doc81.pdf About Empire Die Macedonia, Ohio-based Empire Die Casting Co., Inc., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ohio Case No. 13-52996) on Oct. 16, 2013. The case is before Judge Marilyn Shea-Stonum. The Debtor is represented by Marc B. Merklin, Esq., and Kate M. Bradley, Esq., at Brouse McDowell, LPA, in Akron, Ohio. FirstMerit Bank, N.A. is represented by Scott N. Opincar, Esq., at McDonald Hopkins LLC, in Cleveland, Ohio. The Debtor estimated assets of $10 million to $50 million and liabilities of $1 million to $10 million. The petition was signed by Robert Hopkins, president. ENERGY FUTURE: Fidelity Investments Divide Shows Debt Knot ---------------------------------------------------------- Michael Bathon, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a delegate from Fidelity Investments was absent as Energy Future Holdings Corp.'s board met last month to plan for bankruptcy, while representatives of every other influential creditor from Apollo Global Management LLC to Oaktree Capital Group LLC filed into a New York law office, according to two people with knowledge of the discussions. According to the report, Fidelity, the second-biggest mutual-fund manager in the U.S., faced a conflict because a strategy championed by some of its fellow senior lenders had the potential to wipe out a $500 million investment it also had in the junior bonds from one of about a half-dozen debt-issuing units of the power producer. Fidelity's more than $1 billion stake in Dallas-based Energy Future's debt illustrates why creditors have failed to agree on a plan to restructure $43.6 billion of bonds and loans as the target of the largest leveraged buyout in history veers toward bankruptcy. Any reorganization of the former TXU Corp. needs to resolve claims on 75 bonds and loans held by at least 600 creditors, according to data compiled by Bloomberg. "This capital structure is fraught with problems and that's the risk that you have investing in it," Peter Thornton, an analyst at Montpelier, Vermont-based debt researcher KDP Investment Advisors Inc., said in a telephone interview. "If you think you have something that can be challenged later by someone else in the capital structure, you got yourself a problem, and if it's really complex like TXU, you're not going to know until it's all done with." Fidelity owns debt in at least seven parts of Energy Future, data compiled by Bloomberg show. Because varying levels of seniority in the holdings determine which creditors are paid first, the Boston- based firm that oversees $1.9 trillion globally has been left in the position where any reorganization decision would favor some assets over others. About Energy Future Holdings, fka TXU Corp. Energy Future Holdings Corp., formerly known as TXU Corp., is a privately held diversified energy holding company with a portfolio of competitive and regulated energy businesses in Texas. Oncor, an 80 percent-owned entity within the EFH group, is the largest regulated transmission and distribution utility in Texas. The Company delivers electricity to roughly three million delivery points in and around Dallas-Fort Worth. EFH Corp. was created in October 2007 in a $45 billion leverage buyout of Texas power company TXU in a deal led by private-equity companies Kohlberg Kravis Roberts & Co. and TPG Inc. Restructuring Talks With Creditors In April 2013, Energy Future Holdings Corp., Energy Future Competitive Holdings Company, Texas Competitive Electric Holdings Company LLC, and Energy Future Intermediate Holding Company LLC confirmed in a regulatory filing that they are in restructuring talks with certain unaffiliated holders of first lien senior secured claims concerning the Companies' capital structure. The Companies expect to continue to explore all available restructuring alternatives to facilitate the creation of sustainable capital structures for the Companies and to otherwise attempt to address the Creditors' concerns with the Restructuring Proposal and Sponsor Proposal. The Companies have retained Kirkland & Ellis LLP and Evercore Partners to advise the Companies with respect to the potential changes to the Companies' capital structure and to assist in the evaluation and implementation of other potential restructuring options. The Creditors have retained Paul, Weiss, Rifkind, Wharton & Garrison LLP and Millstein & Co., L.P. to advise the Creditors and to assist in the Creditors' evaluation of potential restructuring options involving the Companies. According to a Wall Street Journal report, people familiar with the matter said Apollo Global Management LLC, Oaktree Capital Management, Centerbridge Partners and GSO Capital Partners, the credit arm of buyout firm Blackstone Group LP, all hold large chunks of Energy Future Holdings' senior debt. Many of these firms belong to a group being advised by Jim Millstein, a restructuring expert who helped the U.S. government revamp American International Group Inc. According to the Journal, people familiar with Apollo's thinking said Apollo recently enlisted investment bank Moelis & Co. for additional advice to ensure it gets as much attention as possible on the case given its large debt holdings. EWGS INTERMEDIARY: Wins Court Approval of Sale Procedures --------------------------------------------------------- Michael Bathon, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Edwin Watts Golf Shops LLC, which sells golf equipment and clothing online and through 90 U.S. retail stores, won court approval of procedures for a bankruptcy sale process without having a lead bidder under contract. According to the report, U.S. Bankruptcy Judge Mary F. Walrath granted the company approval to hold an open auction on Dec. 3, according to court documents filed Nov. 20 in Wilmington, Delaware. Potential buyers have to submit bids by Dec. 2. Edwin Watts, based in Fort Walton Beach, Florida, had originally agreed to sell assets to a joint venture of Hilco Merchant Resources LLC and GWNE Inc. for about $45 million, according to court papers. The company may still designate a prospective purchaser as the so- called stalking-horse bidder, affording it certain protections and a break-up fee, to set the floor for other buyers to beat. Edwin Watts would seek court approval of any sale at a hearing scheduled for Dec. 5, court papers show. The company also won approval of a loan of much as $38 million to fund operations in bankruptcy, according to court documents. About EWGS Intermediary EWGS Intermediary and Edwin Watts Golf Shops, which operate as an integrated, multi-channel retailer, offering brand name golf equipment, apparel and accessories, filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-12876). They are represented by Domenic E. Pacitti, Esq., and Michael W. Yurkewicz, Esq., at Klehr Harrison Harvey Branzburg LLP, in Wilmington, Delaware. The Debtors tapped Bayshore Partners LLC as their investment banker, FTI Consulting, LLC, as their financial advisors, and Epiq Bankruptcy Solutions, LLC, as claims and noticing agent. The Company indicates total assets greater than $100 million on its Chapter 11 petition. EXIDE TECHNOLOGIES: October Loss Is Half Chapter 11 Expenses ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that battery maker Exide Technologies reported a net loss of $12.1 million in October, about half attributable to expenses of the bankruptcy reorganization. Bloomberg pointed out that the operating report filed with the U.S. Bankruptcy Court in Delaware shows October revenue of $97.1 million, producing a $201,000 operating loss. From inception of the Chapter 11 reorganization in June, the cumulative net loss is $75.3 million on revenue from $453.6 million. Total Chapter 11 costs so far are $37 million. In October, Exide had $11.3 million in professional costs. From the outset of bankruptcy, professional expenses amount to $26.9 million. Exide's principal bankruptcy lawyers so far cost $3.6 million, meaning that the bulk of the expense comes from financial advisers and investment bankers. Milton, Georgia-based Exide is in bankruptcy a second time. The new bankruptcy resulted from higher costs for lead and the loss of a large customer. The 8.625 percent first-lien notes due in 2018 traded at 3:30 p.m. on Nov. 22 for 75 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bonds are up 34 percent since the last trade before bankruptcy at 56.672 cents. The convertible subordinated notes due in September last traded on Nov. 19 for 17.796 cents on the dollar, compared with 10.5 cents in the last trade before bankruptcy. About Exide Technologies Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. Exide first sought Chapter 11 protection (Bankr. Del. Case No. 02-11125) on April 14, 2002 and exited bankruptcy two years after. Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, and James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP represented the Debtors in their successful restructuring. Exide returned to Chapter 11 bankruptcy (Bankr. D. Del. Case No. 13-11482) on June 10, 2013. For the new case, Exide has tapped Anthony W. Clark, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, and Pachulski Stang Ziehl & Jones LLP as counsel; Alvarez & Marsal as financial advisor; Sitrick and Company Inc. as public relations consultant and GCG as claims agent. The Debtor disclosed $1.89 billion in assets and $1.14 billion in liabilities as of March 31, 2013. Exide's international operations were not included in the filing and will continue their business operations without supervision from the U.S. courts. The Official Committee of Unsecured Creditors is represented by Lowenstein Sandler LLP and Morris, Nichols, Arsht & Tunnell LLP as co counsel. Zolfo Cooper, LLC serves as its bankruptcy consultants and financial advisors. FISKER AUTOMOTIVE: Files Chapter 11 Petition to Facilitate Sale --------------------------------------------------------------- Fisker Automotive Holdings, Inc., developer of the Karma plug-in hybrid electric sedan, filed a petition for Chapter 11 protection (Bankr. D. Del. Case No. 13-bk-13087) on Nov. 22, with plans to sell the business to Hybrid Tech Holdings, LLC. Fisker Automotive Holdings and debtor-affiliate Fisker Automotive Inc. disclosed that they have entered into an asset purchase agreement with Hybrid for the sale of substantially all of its assets. Hybrid is the lender under an approximately $170 million loan secured by first liens on substantially all of Fisker Automotive's assets. Hybrid's parent, Hybrid Technology, LLC, purchased the loan from the U.S. Department of Energy (DoE) after DoE conducted a robust marketing process and auction. To facilitate the sale process and provide for orderly distributions to creditors, Fisker Automotive has voluntarily filed petitions under Chapter 11 of the U.S. Bankruptcy Code. Hybrid Technology has committed up to approximately $8 million in debtor-in-possession (DIP) financing to fund the sale and Chapter 11 process. "After having evaluated and pursued all other alternatives, we believe the sale to Hybrid and the related Chapter 11 process is the best alternative for maximizing Fisker Automotive's value for the benefit of all stakeholders," said Marc Beilinson, Fisker Automotive's Chief Restructuring Officer. "We believe that the Fisker Automotive technology and product development capability will remain a guiding force in the evolution of the automotive industry under Hybrid's leadership." Sales Slow Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Hybrid will buy the business in exchange for $75 million of the secured loan made by the U.S. Department of Energy. According to the report, founded 2007, Anaheim, California-based Fisker only sold 1,800 autos at prices ranging from $100,000 and $120,000. Production halted last year with the bankruptcy of A123 Systems Inc., the sole supplier of the cars' lithium-ion batteries. The final blow came in October 2012 when Hurricane Sandy destroyed the entire U.S. inventory of 338 vehicles. The government had agreed to provide Fisker with $530 million in loans. By the time production halted, the government advanced $192 million and later seized $20 million in cash on account of defaults. On Nov. 22, just before the bankruptcy filing, Hybrid Tech purchased the government loan with a then-outstanding balance of $165.5 million. In total, Fisker said it owes $203.2 million for borrowed money. After the government stopped making loan advances, Fisker financed the business by raising $500 million in capital. Fisker blamed financial problems on a two-year delay in bringing the first cars to market and "negative press" arising from defective batteries supplied by A123. The federal loan required selling 11,000 cars by February 2012. Fisker filed claims against A123 for $48.7 million on warranties for batteries already sold and another $91.2 million for damages arising from termination of the battery-supply contract. With court approval, Fisker settled by accepting one approved unsecured warranty claim for $15 million. In addition to swapping the assets for $75 million of the government loan, Hybrid Tech will supply $725,000 in cash for distribution to creditors under a liquidating Chapter 11 plan and will waive $4 million of the $8 million it will provide to finance bankruptcy. Owed $74 million, an affiliate of Bayerische Motoren Werke AG has the largest unsecured claim, according to a court filing by Fisker. The sale agreement requires court approval by Jan. 6. Hybrid Tech bought the government loan for $25 million. About Fisker Automotive Anaheim, Calif.-based Fisker Automotive Inc., is a manufacturer of plug-in hybrid sports cars. Fisker estimated assets of more than $100 million and listed debt of $500 million in its bankruptcy petition. The assets include a plant purchased for $21 million from General Motors Corp. The plant never operated. The cars were assembled in Finland. Fisker now has 21 employees. Fisker received a $529 million loan from the Department of Energy's Advanced Technology Vehicles Manufacturing Loan Program and drew down about $192 million before the department froze the loan after Fisker failed to hit several development targets. The company defaulted on its loan in April 2013. FLY LEASING: Moody's Hikes CFR to B1 & Term Loan Rating to Ba3 -------------------------------------------------------------- Moody's Investors Service upgraded FLY Leasing Limited's Corporate Family Rating to B1 from B2 and upgraded the rating of the company's secured term loan due 2019 issued by its subsidiary FLY Funding II S.a r.l to Ba3 from B1. The outlook is stable. Ratings Rationale: The ratings upgrade reflects FLY's improved leverage and profitability. FLY steadily repaid debt since 2011, when leverage peaked after the company acquired a highly leveraged aircraft portfolio. The company also raised $170 million of equity in July 2013, further improving leverage measures. Pro-forma for the $105 million term loan add-on closed on 21 November 2013 and BOS debt restructuring announced on 15 November 2013, the firm's Debt to Equity measured 2.9x, compared to 5.0x at March 31, 2012. FLY has also reduced its cost of funding, aiding profitability. FLY's B1 corporate family rating also reflects the company's modest competitive positioning in the commercial aircraft leasing business, fleet composition that includes a high, though declining percentage of less-in-demand aircraft, and lessee concentration. FLY's rating is further constrained by the company's high reliance on wholesale funding as well as predominance of secured debt in its funding structure. The rating also reflects better alignment of interests between FLY and its external manager BBAM LP (BBAM), which has management relationships with other aircraft financiers, after private equity firm Onex Corporation acquired an ownership stake in BBAM and made a direct investment in FLY. The stable outlook reflects Moody's view that the company will continue to execute on its portfolio overhaul strategy and that leverage and liquidity will continue to be carefully managed. Moody's could upgrade FLY's ratings if the company achieves meaningful funding diversification including reduced reliance on secured financing. A funding structure that continues to significantly rely on bank financing and that effectively encumbers all assets would likely limit FLY's Corporate Family Rating to the "single B" category. Factors that could lead to a downgrade include significant deterioration in the company's leverage, profitability and liquidity position. FLINTKOTE COMPANY: Plan Solicitation Exclusivity Expires June 30 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware entered on Nov. 15, 2013, a twenty-sixth order, extending The Flintkote Company and Flintkote Mines Limited's exclusive period to file a Chapter 11 Plan for up to an additional five months, from Nov. 30, 2013, through April 30, 2014. The Debtors' exclusive right to solicit acceptances of their Chapter 11 Plan will be extended up to an additional 5 months, from Jan. 31, 2014, through June 30, 2013. As reported in the TCR on Jan. 23, 2013, Delaware Bankruptcy Judge Judith Fitzgerald confirmed the Debtors' Amended Joint Plan of Reorganization (as modified Nov. 16, 2011). The U.S. District Court for the District of Delaware needs to affirm confirmation of the Plan and the Sec. 524(g) injunction. About The Flintkote Company Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. Flintkote Mines Limited is a subsidiary of Flintkote Company and is engaged in the mining of base-precious metals. The Flintkote Company filed for Chapter 11 protection (Bankr. D. Del. Case No. 04-11300) on April 30, 2004. Flintkote Mines Limited filed for Chapter 11 relief (Bankr. D. Del. Case No. 04-12440) on Aug. 25, 2004. Kevin T. Lantry, Esq., Jeffrey E. Bjork, Esq., Dennis M. Twomey, Esq., Jeremy E. Rosenthal, Esq., and Christina M. Craige, Esq., at Sidley Austin, LLP, in Los Angeles; James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Del., represent the Debtors in their restructuring efforts. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, in New York, N.Y.; Peter Van N. Lockwood, Esq., Ronald E. Reinsel, Esq., at Caplin & Drysdale, Chartered, in Washington, D.C.; and Philip E. Milch, Esq., at Campbell & Levine, LLC, in Wilmington, Del., represent the Asbestos Claimants Committee as counsel. When Flintkote Company filed for protection from its creditors, it estimated more than $100 million each in assets and debts. When Flintkote Mines Limited filed for protection from its creditors, it estimated assets of $1 million to $50 million, and debts of more than $100 million. The Debtors' Chapter 11 cases have been re-assigned to Judge Mary F. Walrath in line with the retirement of former Bankruptcy Judge Judith Fitzgerald. FLINTKOTE COMPANY: Removal Deadline Extended Until April 30 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware entered on Nov. 15, 2013, a twenty-fifth order, extending the time period provided by Bankruptcy Rule 9027 within which The Flintkote Company and Flintkote Mines Limited may file notices of removal of any claim or cause of action in a civil action under Bankruptcy Rule 9027(a)(2) for up to an additional five months, through the earlier of (i) April 30, 2014, and (ii) the effective date of the Debtor's confirmed plan of reorganization. About The Flintkote Company Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. Flintkote Mines Limited is a subsidiary of Flintkote Company and is engaged in the mining of base-precious metals. The Flintkote Company filed for Chapter 11 protection (Bankr. D. Del. Case No. 04-11300) on April 30, 2004. Flintkote Mines Limited filed for Chapter 11 relief (Bankr. D. Del. Case No. 04-12440) on Aug. 25, 2004. Kevin T. Lantry, Esq., Jeffrey E. Bjork, Esq., Dennis M. Twomey, Esq., Jeremy E. Rosenthal, Esq., and Christina M. Craige, Esq., at Sidley Austin, LLP, in Los Angeles; James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Del., represent the Debtors in their restructuring efforts. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, in New York, N.Y.; Peter Van N. Lockwood, Esq., Ronald E. Reinsel, Esq., at Caplin & Drysdale, Chartered, in Washington, D.C.; and Philip E. Milch, Esq., at Campbell & Levine, LLC, in Wilmington, Del., represent the Asbestos Claimants Committee as counsel. When Flintkote Company filed for protection from its creditors, it estimated more than $100 million each in assets and debts. When Flintkote Mines Limited filed for protection from its creditors, it estimated assets of $1 million to $50 million, and debts of more than $100 million. The Debtors' Chapter 11 cases have been re-assigned to Judge Mary F. Walrath in line with the retirement of former Bankruptcy Judge Judith Fitzgerald. FLORIDA GAMING: Seeks Exclusivity Pending March Sale ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Miami Jai-Alai, the fronton and casino operator, negotiated an interim settlement with its secured lenders and would-be purchaser to sell the facility by March 31. According to the report, in return for the lenders' dropping a request for appointment of a Chapter 11 trustee, the casino agreed to a timeline for sale and is allowing a pre-bankruptcy receiver to continue running the project. The casino filed papers last week asking the bankruptcy court in Miami to extend its exclusive right to file a reorganization plan to April 16. The court will take up the request at a Dec. 11 hearing. A pivotal issue in the case is whether the lenders are entitled to a premium of $26.8 million on top of the $90 million in principal. This month, the casino sued to invalidate the premium. Lenders include Summit Partners LP and Canyon Value Realization Fund LP. The casino said they are trying to take ownership through a "loan to own" scheme. About Florida Gaming Florida Gaming Centers Inc. filed for Chapter 11 bankruptcy (Bankr. S.D. Fla. Case No. 13-29597) in Miami on Aug. 19, 2013. Florida Gaming Centers operates a casino and jai-alai frontons in Miami. The Company disclosed debt of $138.3 million and assets of $180 million in its petition. Its parent, Florida Gaming Corp. (FGMG:US), and two other affiliates also sought court protection. Florida Gaming previously negotiated a sale of virtually all its assets to casino operator Silvermark LLC for $115 million in cash and $14 million in assumed liabilities. A provision in the financing agreement required Florida Gaming to make an additional payment to the lender -- ABC Funding -- if the assets are sold to third party. Jefferies LLC was hired to determine that amount, about $26.8 million, and valued the company at more than $180 million. Luis Salazar, Esq., Esq., at Salazar Jackson in Miami, represents Florida Gaming. ABC Funding, LLC, as Administrative Agent for a consortium of prepetition lenders, and the prepetition lenders are represented by Dennis Twomey, Esq., and Andrew F. O'Neill, Esq., at SIDLEY AUSTIN LLP, in Chicago, Illinois; and Drew M. Dillworth, Esq., and Marissa D. Kelley, Esq., at STEARNS WEAVER MILLER WEISSLER ALHADEFF & SITTERSON, P.A., in Miami, Florida. The Prepetition Lenders are Summit Partners Subordinated Debt Fund IV-A, L.P., Summit Partners Subordinated Debt Fund IV-B, L.P., JPMorgan Chase Bank, N.A., Locust Street Funding LLC, Canyon Value Realization Fund, L.P., Canyon Value Realization Master Fund, L.P., Canyon Distressed Opportunity Master Fund, L.P., and Canyon-GRF Master Fund II, L.P. FONTAINEBLEAU LAS VEGAS: Execs Say Trustee's $3B Suit Won't Fly --------------------------------------------------------------- Law360 reported that former executives of the failed $2.9 billion Fontainebleau Las Vegas resort and casino project asked a Florida bankruptcy judge on Nov. 21 to dismiss the Chapter 7 trustee's $3 billion suit against them, saying the trustee had failed to properly allege improper behavior. According to the report, appearing in a hearing before U.S. Bankruptcy Judge A. Jay Cristol were attorneys for the 11 alleged insiders of Fontainebleau Resorts LLC, including real estate mogul and Fontainebleau principal Jeffrey Soffer. About Fontainebleau Las Vegas Fontainebleau Las Vegas -- http://www.fontainebleau.com/-- was planned as a hotel-casino on property along the Las Vegas Strip. Its developer, Fontainebleau Las Vegas Holdings LLC and affiliates, filed for Chapter 11 protection (Bankr. S.D. Fla. Lead Case No. 09-21481) on June 9, 2009. Scott L Baena, Esq., at BilzinSumbergBaena Price & Axelrod LLP, represented the Debtors in their restructuring effort. Kurtzman Carson Consulting LLC served as the Debtors' claims agent. Attorneys at Genovese Joblove& Battista, P.A., and Fox Rothschild, LLP, represented the Official Committee of Unsecured Creditors. Fontainebleau Las Vegas LLC estimated more than $1 billion in assets and debts, while each of Fontainebleau Las Vegas Capital Corp. and Fontainebleau Las Vegas Holdings LLC estimated less than $50,000 in assets. In February 2010, Icahn Enterprises L.P. acquired Fontainebleau for roughly $150 million. The bankruptcy case was subsequently converted to Chapter 7. Soneet R. Kapila has been named the trustee for the Chapter 7 case of Fontainebleau Las Vegas. FORUM ENERGY: Moody's Rates New $100MM Sr. Unsecured Notes 'Ba3' ---------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Forum Energy Technologies, Inc.'s proposed offering of $100 million senior unsecured notes. The Ba2 Corporate Family Rating (CFR), Ba2-PD Probability of Default Rating (PDR), SGL-1 Speculative Grade Liquidity Rating and stable outlook are not affected by this action. The notes will be an add-on to the company's 6.25% senior unsecured notes due 2021 and will be part of the same series of debt securities. Proceeds of this debt offering will be used to reduce amounts outstanding under Forum's revolving credit facility. Ratings Assigned: -- Senior Unsecured Notes Rating, Ba3, LGD-5 (75%) "The proposed notes offering will add to the long term financing of Forum's recent acquisitions, while freeing up availability under its secured revolving credit facility," commented Andrew Brooks, Moody's Vice President. "We believe the company will seek additional growth opportunities to further augment the size and scale of its oilfield equipment manufacturing and supply operations through the acquisition of complementary businesses, and expect the company's record of conservative financial policies and positive cash flow to continue to prevail." Ratings Rationale: The Ba3 rating on the company's proposed senior unsecured notes reflects both the overall probability of default, to which Moody's assigns a PDR of Ba2-PD, and a loss given default of LGD-5 (75%). The senior unsecured notes are rated Ba3, one notch beneath its Ba2 CFR reflecting the contractual subordination of the notes relative to the company's $600 million senior secured bank credit facility in accordance with Moody's Loss Given Default methodology. While Moody's expects free cash flow will be used for debt reduction, should the secured revolver see consistent levels of high utilization for acquisition financing, the notes rating could run the risk of double-notching to B1. Forum's Ba2 CFR reflects its relatively modest size, although the broad scope of its product offering and exposure across the energy value chain helps offset risk through highly cyclical business conditions closely correlating to capital spending in the oil and gas production industry. Moreover, the balance in its business mix between manufactured product and after market consumables helps stabilize earnings and cash flow. While Forum has achieved a high rate of growth through acquisitions, it has employed sound financial policies. The company has low capital spending requirements and it has consistently generated free cash flow. Company management is well seasoned, operating under a board of directors comprised of senior executives with deep industry backgrounds. Moody's foresees very good liquidity through 2014, and Moody's has assigned Forum an SGL-1 Speculative Grade Liquidity Rating. Proceeds from the notes offering will reduce the $228 million outstanding balance under Forum's $600 million senior secured revolving credit facility. The revolver has a scheduled maturity date of October 2016. With the expectation of continuing positive free cash flow, supplemented by the liquidity available to the company under its revolving credit facility, Moody's expects Forum to require only limited external liquidity for the financing of future acquisitions, or its underlying business. Forum is expected to be well in compliance with the three financial covenants dictated by the revolver. The outlook is stable based on the balanced mix of Forum's product offerings, its consistent generation of free operating cash flow and the modest use of leverage in its capital structure. A rating downgrade would be considered should the company depart from its strategy of conservatively financing niche acquisitions such that debt/EBITDA consistently exceeded 2.5x, and debt/book capital exceeded 40%. A rating upgrade could be considered as the company grows EBITDA towards $500 million, presuming this growth continues to generate a 12% or higher consolidated return on assets (EBIT/assets) with leverage remaining under the company's stated goal of 2x net debt/EBITDA. Headquartered in Houston, Texas, Forum Energy Technologies is a holding company whose subsidiaries design and manufacture global oilfield products for the subsea, drilling, completion, production and infrastructure sectors of the oil and natural gas industry. FRESH & EASY: US Trustee Balks at $42MM Property Sale Plan ---------------------------------------------------------- Law360 reported that the U.S. Trustee's Office took issue on Nov. 21 with high-end grocery chain Fresh & Easy Neighborhood Market Inc.'s plan to unload 53 properties to a Fortress Investment Group LLC unit in a $41.5 million stalking horse sale, arguing the timeline is much too short to hold a robust auction process. According to the report, the bankruptcy watchdog contends that the 10 business days until the proposed bid deadline of Dec. 10 doesn't give prospective buyers enough time to do due diligence investigations of the dozens of properties up for sale. About Fresh & Easy Fresh & Easy Neighborhood Market Inc., and its affiliate filed Chapter 11 petitions (Bankr. D. Del. Case Nos. 13-12569 and 13-12570) on Sept. 30, 2013. The petitions were signed by James Dibbo, chief financial officer. Judge Kevin J. Carey presides over the case. Fresh & Easy owes $738 million to Cheshunt, England-based Tesco, the U.K.'s biggest retailer. Fresh & Easy never made a profit and lost an average of $22 million a month in the 12 months ended in February, according to court papers. Jones Day serves as lead bankruptcy counsel. Richards, Layton & Finger, P.A., serves as local Delaware counsel. Alvarez & Marsal North America, LLC, serves as financial advisors, and Alvarez & Marsal Securities, LLC, serves as investment banker. Prime Clerk LLC acts as the Debtors' claims and noticing agent. Gordon Brothers Group, LLC, and Tiger Capital Group, LLC, serves as the Debtors' consultant. The Debtors estimated assets of at least $100 million and liabilities of at least $500 million. Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed five creditors to serve in the Official Committee of Unsecured Creditors in the Chapter 11 cases of Fresh & Easy Neighborhood Market Inc., et al. FRESH & EASY: Surplus Property Auction on for Dec. 12 ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Fresh & Easy Neighborhood Market Inc. received no competing bids and was authorized by the bankruptcy court on Nov. 22 to sell about 150 supermarkets plus a production facility in Riverside, California to Ron Burkle's Yucaipa Cos. According to the report, the bankruptcy judge in Delaware also approved procedures for selling the right to transfer leases at locations Yucaipa isn't buying. In addition, the judge set up an auction to sell 53 parcels of real property in California, Arizona and Nevada that aren't being purchased by Yucaipa and aren't covered by the lease sale. Bids are due initially for the leases on Dec. 9. The bid deadline for the real property is Dec. 10. The auctions will take place Dec. 12, followed by sale-approval hearings on Dec. 19. About Fresh & Easy Fresh & Easy Neighborhood Market Inc., and its affiliate filed Chapter 11 petitions (Bankr. D. Del. Case Nos. 13-12569 and 13-12570) on Sept. 30, 2013. The petitions were signed by James Dibbo, chief financial officer. Judge Kevin J. Carey presides over the case. Fresh & Easy owes $738 million to Cheshunt, England-based Tesco, the U.K.'s biggest retailer. Fresh & Easy never made a profit and lost an average of $22 million a month in the 12 months ended in February, according to court papers. Jones Day serves as lead bankruptcy counsel. Richards, Layton & Finger, P.A., serves as local Delaware counsel. Alvarez & Marsal North America, LLC, serves as financial advisors, and Alvarez & Marsal Securities, LLC, serves as investment banker. Prime Clerk LLC acts as the Debtors' claims and noticing agent. Gordon Brothers Group, LLC, and Tiger Capital Group, LLC, serves as the Debtors' consultant. The Debtors estimated assets of at least $100 million and liabilities of at least $500 million. Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed five creditors to serve in the Official Committee of Unsecured Creditors in the Chapter 11 cases of Fresh & Easy Neighborhood Market Inc., et al. FURNITURE BRANDS: Wins Court Approval for $280-Mil. KPS Deal ------------------------------------------------------------ A Delaware bankruptcy judge on Nov. 22 approved the $280 million sale of Furniture Brands International Inc. to private-equity firm KPS Capital Partners LP, rejecting an investment fund's objection that an accelerated sale process had left a rival suitor out in the cold. Furniture Brands and KPS expect to complete the transaction in the next several business days, according to a press release by both companies. Ralph Scozzafava, Chairman of the Board and CEO of Furniture Brands, said: "We congratulate KPS and firmly believe that this transaction is the best outcome for all of our stakeholders. KPS has a long track record of providing companies that have undergone restructurings with the operational expertise and financial strength they need to preserve their market leadership as strong standalone businesses positioned for future growth. We are quite pleased that KPS has extended an offer of employment to substantially all of our employees who will help build a successful future for Furniture Brands." On Oct. 3, 2013, KPS was named as the "stalking horse" bidder in the Court-supervised sales process under Section 363 of the United States Bankruptcy Code. KPS also provided Furniture Brands with a $190 million Debtor-in-Possession financing facility to support its operations. In order to maximize the value of the Company's assets, the agreement between Furniture Brands and KPS allowed for additional qualified prospective bidders to enter an auction process, in accordance with procedures established by the Court. The Court set November 20, 2013 as the deadline for submitting bids and November 21, 2013 as the date of the auction. Samson Offer? According to reports, Broadbill Investment Partners LLC, which holds an equity stake in the furniture maker, argued that a recent decision to tighten the sale schedule prevented Samson Holding Ltd. from submitting a competing offer. Broadbill says that Samson Holding, a Chinese furniture maker, should have been given more time to propose a plan. Samson owns 9.5 percent of Furniture Brands' common stock. Michael Bathon, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Furniture Brands canceled a bankruptcy auction planned for Nov. 21 after it received no other qualified competing bids. According to Bloomberg News, KPS replaced Oaktree Capital Management LP as the lead bidder for the proposed auction after making a superior purchase offer and bankruptcy-financing package than the biggest distressed-debt investor. Bloomberg recounts that Furniture Brands entered bankruptcy after negotiating a deal with Oaktree to sell its assets for about $166 million, according to court documents. KPS pushed Oaktree to better its terms at Furniture Brands' first hearing and indicated it would continue to pursue the furniture maker. The private- equity firms each submitted improved proposals, with Oaktree stopping at $260 million, according to court papers. KPS said it intends to operate the entire business and virtually all current employees will be offered jobs. 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. The Creditors' Committee tapped Blank Rome LLP as counsel, Hahn & Hessen LLP as counsel, BDO Consulting as financial advisor, and Houlihan Lokey Capital, Inc., as investment banker. Proskauer Rose LLP is acting as legal counsel to KPS with respect to the sale. GENELINK INC: Incurs $539,000 Net Loss in Third Quarter ------------------------------------------------------- Genelink, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $539,292 on $294,739 of revenue for the three months ended Sept. 30, 2013, as compared with a net loss of $974,386 on $425,073 of revenue for the same period a year ago. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $1.21 million on $1.16 million of revenue as compared with a net loss of $2.04 million on $1.72 million of revenue for the same period during the prior year. The Company's balance sheet at Sept. 30, 2013, showed $1.28 million in total assets, $4.48 million in total liabilities and a $3.20 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/XWw9my COO and Interim CFO Appointment GeneLink appointed Michael G. Smith as chief operating officer and interim chief financial officer of the Company effective Nov. 12, 2013. Michael G. Smith, age 47, has been employed by GeneLink as senior vice president of operations since Sept. 1, 2012. Prior to that, Mr. Smith spent more than 25 years working for large public companies, working with high growth companies, and building startups. Michael's career started with budgeting for The American Water System. He followed that position with different Information Technology and Operations roles, both as a consultant and as a corporate executive, most notably Tempur-Pedic. Michael led both domestic and global implementation and operations teams as the company grew from $17 million to $1 billion. He has spent his entire career leading, organizing, and implementing all facets of a company's operations including sales, customer service, manufacturing, and finance. Mr. Smith's real passion and direction is utilizing his entrepreneur background to help companies structure themselves to prepare for high volume due to the results of the sales and marketing efforts of the company. Mr. Smith has over three years of experience in working with both the GeneLink and their market partner brands Dermagenetics, geneME, and foru. The Company has agreed to pay Mr. Smith a base salary of $110,000 per year. On July 1, 2013 Mr. Smith received options to acquire 300,000 shares of common stock at an exercise price of .03 per share. These options vest in four equal annual installments commencing on date of grant. About Genelink Based in Orlando, Fla., GeneLink, Inc., is a solution provider in the genetically customized nutritional and personal care marketplace. Genelink disclosed a net loss of $3.05 million on $2.13 million of revenue for the year ended Dec. 31, 2012, as compared with a net loss of $3.83 million on $4.68 million of revenue during the prior year. Hancock Askew & Co., LLP, in Savannah, GA, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company incurred significant net losses in 2012 and 2011, has a working capital deficit and a significant accumulated deficit. These items raise substantial doubt as to the Company's ability to continue as a going concern. GENERAL MOTORS: U.S. Plans to Exit Stake by Year-End ---------------------------------------------------- Paul Lienert, writing for Reuters, reported that the U.S. Treasury Department said it expected to sell its remaining shares of General Motors Co by the end of the year, a plan that may leave taxpayers with a shortfall of about $10 billion on the automaker's 2009 bailout. According to the report, Treasury on Nov. 21 said it had completed the sale of 70.2 million shares of GM stock and to date had recouped $38.4 billion from the $49.5 billion taxpayer-funded rescue of the Detroit company. At current prices, Treasury would recoup another $1.2 billion from its remaining stake of 31.1 million shares, bringing its total recovery to $39.6 billion, the report related. Treasury said its initial cost basis for the GM shares was $43.52 per share. Treasury previously said it expected to exit by April 2014, but analysts had expected it to move up the final sale date, the report said. "Our goal was never to make a profit," said a Treasury official who requested anonymity, the report cited. "It was to save the U.S. auto industry." About General Motors With its global headquarters in Detroit, Michigan, General Motors Company (NYSE:GM, TSX: GMM) -- http://www.gm.com/-- is one of the world's largest automakers, traces its roots back to 1908. GM employs 208,000 people in every major region of the world and does business in more than 120 countries. GM and its strategic partners produce cars and trucks in 30 countries, and sell and service these vehicles through the following brands: Baojun, Buick, Cadillac, Chevrolet, GMC, Daewoo, Holden, Isuzu, Jiefang, Opel, Vauxhall, and Wuling. GM's largest national market is China, followed by the United States, Brazil, the United Kingdom, Germany, Canada, and Italy. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. General Motors Co. was formed to acquire the operations of General Motors Corp. through a sale under 11 U.S.C. Sec. 363 following Old GM's bankruptcy filing. The U.S. government once owned as much as 60.8% stake in New GM on account of the financing it provided to the bankrupt entity. The deal was closed July 10, 2009, and Old GM changed its name to Motors Liquidation Co. General Motors Corp. and three of its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 09-50026) on June 1, 2009. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Garden City Group is the claims and notice agent of the Debtors. The U.S. Trustee appointed an Official Committee of Unsecured Creditors and a separate Official Committee of Unsecured Creditors Holding Asbestos-Related Claims. Lawyers at Kramer Levin Naftalis & Frankel LLP served as bankruptcy counsel to the Creditors Committee. Attorneys at Butzel Long served as counsel on supplier contract matters. FTI Consulting Inc. served as financial advisors to the Creditors Committee. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represented the Asbestos Committee. Legal Analysis Systems, Inc., served as asbestos valuation analyst. The Bankruptcy Court entered an order confirming the Debtors' Second Amended Joint Chapter 11 Plan on March 29, 2011. The Plan was declared effect on March 31, 2011. GENERAL NUTRITION: Moody's Cuts Sr. Sec. Term Loan Rating to 'B1' ----------------------------------------------------------------- Moody's Investors Service downgraded General Nutrition Centers, Inc. ("GNC") senior secured term loan to B1 from Ba3 and affirmed all other existing ratings including the Corporate Family Rating at B1, the Probability of Default Rating at B1-PD, and Speculative Grade Liquidity rating at SGL-1. The downgrade of the senior secured term loan to the same level as the corporate family rating follows GNC's announcement that they have increased their existing term loan by $250 million. The stable outlook is maintained. The following ratings are affirmed: Corporate Family Rating at B1 Probability of Default Rating at B1- PD Speculative Grade Liquidity rating at SGL-1 The following rating is downgraded: Senior secured bank credit facilities to B1 (LGD 3, 46%) from Ba3 (LGD 3, 42%) Ratings Rationale: Moody's expects that the proceeds from the proposed $250 million term loan increase will be ultimately used to fund share repurchases. Moody's estimates that the incremental debt will increase debt to EBITDA to 4.2 times from 3.9 times for the lagging twelve months ended September 30, 2013. The downgrade of the senior secured credit facilities reflects that the proposed $250 million term loan add-on results in a higher proportion of secured debt in the capital structure relative to the unsecured trade and lease rejection claims. The affirmation of the Corporate Family Rating acknowledges that GNC's credit metrics will remain in line with its B1 Corporate Family Rating, despite the increase in debt levels. GNC's B1 Corporate Family Rating continues to be supported by the company's well known brand name in its target markets along with Moody's favorable view of the vitamin, mineral, and nutritional supplement ("VMS") category which accounts for about one-third of GNC's consolidated revenues. This product category performed well during the recent economic recession and it is a relatively large market that should continue to benefit from an increasing number of Americans over the age of 50. The rating also reflects GNC's moderate leverage with pro forma debt to EBITDA of 4.2 times and good interest coverage with pro forma EBITA to interest expense of 4.2 times. Key credit concerns include GNC's sizable concentration in sports nutrition which is a much more limited product segment with a relatively smaller target market than the VMS product category. Also considered is the potential risk arising from adverse publicity and product liability claims with regard to certain products sold by GNC, particularly diet products and herbs, two faddish product categories that are more exposed to such product liability risks and earnings volatility. The stable outlook incorporates Moody's view that that GNC's earnings will continue to benefit from its highly regarded brand and positive demographic trends. The stable outlook also reflects Moody's expectation that GNC is likely to regularly increase its debt levels going forward such that it keeps credit metrics in line with its B1 rating. A higher rating would require that GNC achieve debt to EBITDA at or below 4.0 times, and maintain EBITA to interest expense above 2.5 times. In addition, an upgrade would require that GNC adhere to a financial policy that would support credit metrics remaining at these levels. Ratings could be lowered if it appears that debt to EBITDA will rise above 5.0 times or EBITA to interest expense will drop below 2.25 times. Independent of any qualitative metrics, ratings could be lowered if GNC experiences new product-related risks that result in material obligations that negatively impact the company's earnings and liquidity profile. General Nutrition Centers, Inc., ("GNC") headquartered in Pittsburgh, PA, manufactures and retails vitamins, minerals, nutritional supplements domestically and internationally. About 75% of its revenue is generated by about 3,300 company owned stores and website. It also has about 2,900 franchise locations in the U.S. and 55 countries that generate about 15% of its revenue. Total revenues are about $2.6 billion. GENOA HEALTHCARE: S&P Withdraws 'B' Corporate Credit Rating ----------------------------------------------------------- Standard & Poor's Ratings Services said it withdrew its 'B' corporate credit rating and issue level ratings on U.S.-based Genoa Healthcare Group LLC at the issuer's request, following a refinancing of Genoa's debt. Standard & Poor's has reviewed its ratings on Genoa, which it labeled as "under criteria observation" (UCO) after the publishing of its revised Corporate criteria on Nov. 19. Standard & Poor's expedited the review of its ratings on Genoa because of the refinancing. GLYECO INC: Delays Q3 Form 10-Q to Complete Review -------------------------------------------------- Glyeco, Inc., filed with the U.S. Securities and Exchange Commission a Notification of Late Filing on Form 12b-25 with respect to its quarterly report on Form 10-Q for the quarter ended Sept. 30, 2013. The Company has requested this extension to enable its independent auditors to complete their review of the financial statements to be included in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended Sept. 30, 2013. The Company intends to file the Quarterly Report on Form 10-Q within the additional time allowed by this extension. About GlyEco, Inc. Phoenix, Ariz.-based GlyEco, Inc., is a green chemistry company formed to roll-out its proprietary and patent pending glycol recycling technology that transforms waste glycols, a hazardous material, into profitable green products. Glyeco disclosed a net loss of $1.86 million on $1.26 million of net sales for the year ended Dec. 31, 2012, as compared with a net loss of $592,171 on $824,289 of net sales for the year ended Dec. 31, 2011. The Company's balance sheet at March 31, 2013, showed $9.16 million in total assets, $2.63 million in total liabilities and $6.53 million in total stockholders' equity. Jorgensen & Co., in Lehi, UT, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has not yet achieved profitable operations and is dependent on its ability to raise capital from stockholders or other sources and other factors to sustain operations. These factors, among other matters, raise substantial doubt that the Company will be able to continue as a going concern. GRAY TELEVISION: Acquisitions No Impact on Moody's Ratings ---------------------------------------------------------- Moody's Investors Service said that there is no immediate impact to the ratings or positive outlook of Gray Television after its recently announced acquisition plans. On November 20, 2013, Gray Television announced a series of transactions through which Gray and Excalibur Broadcasting, LLC (a planned variable interest entity) will acquire 15 network affiliated stations in seven markets for $335 million in cash, plus working capital adjustments. Separately, Excalibur Broadcasting, LLC agreed to acquire two Fox affiliated stations for $7.5 million. Moody's expects overall financial metrics and operating performance to remain within levels appropriate for its B3 Corporate Family Rating. As reported in the Oct. 17, 2013 edition of The Troubled Company Reporter, Moody's Investors Service assigned Caa1 to Gray Television, Inc.'s proposed $300 million add-on to the existing 7.50% senior notes. The new notes are being issued to partially refinance the 1st lien senior secured term loan B which was upgraded to Ba3 from B2 reflecting the new debt mix. The outstanding 7.5% senior notes were also upgraded to Caa1 from Caa2. Moody's affirmed the Ba3 rating on the company's existing priority 1st lien senior secured revolver, the B3 Corporate Family Rating (CFR), B3-PD Probability of Default Rating (PDR), and SGL-2 Speculative Grade Liquidity (SGL) Rating. The rating outlook was changed to positive from stable reflecting the company's improved credit metrics and Moody's expectations for further improvement based on growth in core advertising over the next 12 months and heightened political ad demand in 2014. Gray Television, Inc. ("Gray"), headquartered in Atlanta, GA, is a television broadcaster that will own 70 primary television stations serving 39 mid-sized markets (ranked #61 to #208), plus 53 secondary channels covering roughly 7.3% of US households. Network affiliations for primary stations include 26 CBS, 22 NBC, 14 ABC, and 8 FOX stations. The company operates the #1 or #2 ranked stations in 38 of 39 markets. Gray is publicly traded and its shares are widely held with J. Mack Robinson or affiliates owning approximately 3% of common stock. The dual class equity structure provides J. Mack Robinson or affiliates with roughly 37% of voting control. Excluding announced acquisitions, the company recorded total revenues of approximately $377 million for the 12 months ended September 30, 2013. HARRISBURG, PA: Asks Court to Extend Receivership ------------------------------------------------- ABC27.COM reports that Pennsylvania's Department of Community and Economic Development has filed a petition with Commonwealth Court to extend the receivership for the City of Harrisburg for another two-year term. The petition also seeks and to retain the services of William Lynch as the receiver, according to the report. The report notes that DCED Secretary C. Alan Walker said the city has made significant progress, but the extension of the receivership is necessary to continue moving the recovery forward. Mr. Walker said the two-year period is mandated by law and not a reflection of how long the receiver anticipates his services will be needed, the report relates. About Harrisburg, Pennsylvania The city of Harrisburg, in Pennsylvania, is coping with debt related to a failed revamp of an incinerator. The city is $65 million in default on $242 million owing on bonds sold to finance an incinerator that converts trash to energy. The Harrisburg city council voted 4-3 on Oct. 11, 2011, to authorize the filing of a Chapter 9 municipal bankruptcy (Bankr. M.D. Pa. Case No. 11-06938). The city claims to be insolvent, unable to pay its debt and in imminent danger of having tax revenue seized by holders of defaulted bonds. Judge Mary D. France presided over the Chapter 9 case. Mark D. Schwartz, Esq. and David A. Gradwohl, Esq., served as Harrisburg's counsel. The petition estimated $100 million to $500 million in assets and debts. Susan Wilson, the city's chairperson on Budget and Finance, signed the petition. Harrisburg said in court papers it is in imminent jeopardy through six pending legal actions by creditors with respect to a number of outstanding bond issues relating to the Harrisburg Materials, Energy, Recycling and Recovery Facilities, which processes waste into steam and electrical energy. The owner and operator of the incinerator is The Harrisburg Authority, which is unable to pay the bond issues. The city is the primary guarantor under each bond issue. The lawsuits were filed by Dauphin County, where Harrisburg is located, Joseph and Jacalyn Lahr, TD Bank N.A., and Covanta Harrisburg Inc. The Commonwealth of Pennsylvania, the County of Dauphin, and Harrisburg city mayor Linda D. Thompson and other creditors and interested parties objected to the Chapter 9 petition. The state later adopted a new law allowing the governor to appoint a receiver. Kenneth W. Lee, Esq., Christopher E. Fisher, Esq., Beverly Weiss Manne, Esq., and Michael A. Shiner, Esq., at Tucker Arensberg, P.C., represented Mayor Thompson in the Chapter 9 case. Counsel to the Commonwealth of Pennsylvania was Neal D. Colton, Esq., Jeffrey G. Weil, Esq., Eric L. Scherling, Esq., at Cozen O'Connor. In November 2011, the Bankruptcy Judge dismissed the Chapter 9 case because (1) the City Council did not have the authority under the Optional Third Class City Charter Law and the Third Class City Code to commence a bankruptcy case on behalf of Harrisburg and (2) the City was not specifically authorized under state law to be a debtor under Chapter 9 as required by 11 U.S.C. Sec. 109(c)(2). Dismissal of the Chapter 9 petition was upheld in a U.S. District Court. That same month, the state governor appointed David Unkovic as receiver for Harrisburg. Mr. Unkovic is represented by the Municipal Recovery & Restructuring group of McKenna Long & Aldridge LLP, led by Keith Mason, Esq., co-chair of the group. Mr. Unkovic resigned as receiver March 30, 2012. Mr. Unkovic was replaced by William Lynch as receiver. HARRISBURG, PA: Takeover Threatens City Officials, 3rd Circ. Told ----------------------------------------------------------------- Law360 reported that an attorney for a group of Harrisburg city officials urged the Third Circuit on Nov. 21 to overthrow a decision finding that his clients did not have enough of a personal stake to establish standing to challenge a state takeover aimed at preventing a bankruptcy filing for the financially troubled municipality. According to the report, Plaintiffs' attorney Paul Rossi argued pursuant to Act 47 -- the state law allowing Gov. Tom Corbett to declare a state of fiscal emergency and appoint a special receiver to take charge of Harrisburg's finances. The case is Wanda Williams, et al v. Governor of Pennsylvania, et al., Case No. 13-1896 (3d Cir.). About Harrisburg, Pennsylvania The city of Harrisburg, in Pennsylvania, is coping with debt related to a failed revamp of an incinerator. The city is $65 million in default on $242 million owing on bonds sold to finance an incinerator that converts trash to energy. The Harrisburg city council voted 4-3 on Oct. 11, 2011, to authorize the filing of a Chapter 9 municipal bankruptcy (Bankr. M.D. Pa. Case No. 11-06938). The city claims to be insolvent, unable to pay its debt and in imminent danger of having tax revenue seized by holders of defaulted bonds. Judge Mary D. France presided over the Chapter 9 case. Mark D. Schwartz, Esq. and David A. Gradwohl, Esq., served as Harrisburg's counsel. The petition estimated $100 million to $500 million in assets and debts. Susan Wilson, the city's chairperson on Budget and Finance, signed the petition. Harrisburg said in court papers it is in imminent jeopardy through six pending legal actions by creditors with respect to a number of outstanding bond issues relating to the Harrisburg Materials, Energy, Recycling and Recovery Facilities, which processes waste into steam and electrical energy. The owner and operator of the incinerator is The Harrisburg Authority, which is unable to pay the bond issues. The city is the primary guarantor under each bond issue. The lawsuits were filed by Dauphin County, where Harrisburg is located, Joseph and Jacalyn Lahr, TD Bank N.A., and Covanta Harrisburg Inc. The Commonwealth of Pennsylvania, the County of Dauphin, and Harrisburg city mayor Linda D. Thompson and other creditors and interested parties objected to the Chapter 9 petition. The state later adopted a new law allowing the governor to appoint a receiver. Kenneth W. Lee, Esq., Christopher E. Fisher, Esq., Beverly Weiss Manne, Esq., and Michael A. Shiner, Esq., at Tucker Arensberg, P.C., represented Mayor Thompson in the Chapter 9 case. Counsel to the Commonwealth of Pennsylvania was Neal D. Colton, Esq., Jeffrey G. Weil, Esq., Eric L. Scherling, Esq., at Cozen O'Connor. In November 2011, the Bankruptcy Judge dismissed the Chapter 9 case because (1) the City Council did not have the authority under the Optional Third Class City Charter Law and the Third Class City Code to commence a bankruptcy case on behalf of Harrisburg and (2) the City was not specifically authorized under state law to be a debtor under Chapter 9 as required by 11 U.S.C. Sec. 109(c)(2). Dismissal of the Chapter 9 petition was upheld in a U.S. District Court. That same month, the state governor appointed David Unkovic as receiver for Harrisburg. Mr. Unkovic is represented by the Municipal Recovery & Restructuring group of McKenna Long & Aldridge LLP, led by Keith Mason, Esq., co-chair of the group. Mr. Unkovic resigned as receiver March 30, 2012. Mr. Unkovic was replaced by William Lynch as receiver. HORNE INTERNATIONAL: Incurs $193,000 Net Loss in Third Quarter -------------------------------------------------------------- Horne International, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $193,000 on $11,000 of revenues for the three months ended Sept. 30, 2013, as compared with a net loss of $407,000 on $1 million of revenues for the three months ended Sept. 23, 2012. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $724,000 on $61,000 of revenues as compared with a net loss of $1.24 million on $3.40 million of revenues for the three months ended Sept. 23, 2012. The Company's balance sheet at Sept. 30, 2013, showed $60,000 in total assets, $2.71 million in total liabilities and a $2.65 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/H00g0V About Horne International Fairfax, Va.-based Horne International, Inc., is an engineering services company focused on provision of integrated, systems approach based solutions to the energy and environmental sectors. HOUSTON REGIONAL: Rockets Owner Willing to Buy Sports Network ------------------------------------------------------------- Law360 reported that the Houston Astros told a Texas bankruptcy judge on Nov. 21 that the ball club was making some progress toward restructuring Houston Regional Sports Network LP, and Houston Rockets owner Leslie Alexander said he was prepared to step in and buy the troubled Comcast affiliated network if necessary. According to the report, the remarks came during a status conference before U.S. Bankruptcy Judge Marvin Isgur, who is presiding over an involuntary Chapter 11 case Comcast filed against HRSN over the network's inability to secure third-party carriage agreements. About Houston Regional Sports Network An involuntary Chapter 11 bankruptcy petition was filed against Houston Regional Sports Network, L.P. d/b/a Comcast SportsNet Houston (Bankr. S.D. Tex. Case No. 13-35998) on Sept. 27, 2013. The involuntary filing was launched by three units of Comcast/NBC Universal and a television-related company. The petitioners are: Houston SportsNet Finance LLC, Comcast Sports Management Services LLC, National Digital Television Center LLC, and Comcast SportsNet California, LLC. The petitioning creditors have filed papers asking the Bankruptcy Judge to appoint an independent Chapter 11 trustee "to conduct a fair and open auction process for the Network's business assets on a going concern basis." Houston Regional Sports Network is a joint enterprise among affiliates of the Houston Astros baseball team, the Houston Rockets basketball team, and Houston SportsNet Holdings, LLC -- "Comcast Owner" -- an affiliate of Comcast Corporation. The Network has three limited partners -- Comcast Owner, Rockets Partner, L.P., and Astros HRSN LP Holdings LLC. The primary purpose of Houston Regional Sports Network is to create and operate a regional sports programming service that produces, exhibits, and distributes sports programming on a full-time basis, including live Astros and Rockets games within the league- permitted local territories. Counsel for the petitioning creditors are Howard M. Shapiro, Esq., at Wilmer Cutler Pickering Hale and Dorr LLP; George W. Shuster, Jr., Esq., at Wilmer Cutler Pickering Hale and Dorr LLP; Vincent P. Slusher, Esq., at DLA Piper; and Arthur J. Burke, Esq., at Davis Polk & Wardwell LLP. Judge Marvin Isgur presides over the case. HOUSTON REGIONAL: Houston Astros Owner Sues McLane, Comcast ----------------------------------------------------------- Michael Bathon & Laurel Brubaker Calkins, writing for Bloomberg News, reported that the owner of Major League Baseball's Houston Astros sued former owner Drayton McLane Jr. and Comcast Corp., claiming he was misled about the value of the regional sports network that televises the team's games. According to the report, Houston Baseball Partners LLC, led by Jim Crane, filed the lawsuit Nov. 21 in state court in Houston. The company said it paid $615 million for the team and its 40 percent stake in Houston Regional Sports Network LP in November 2011 "based on knowing misrepresentations" McLane gave him concerning the network's value. "The former owner of the Houston Astros Major League Baseball team made hundreds of millions of dollars, and his media business partner stands to benefit by a similar amount, by selling an asset they knew at the time to be overpriced and broken," Houston Baseball Partners said in the filing, the report related. Subscription prices for the network were "falsely inflated" and subsequently rejected by major cable and satellite TV distributors, according to the complaint, the report said. The network is operated by NBCUniversal, a unit of Comcast, which are both named as defendants with McLane. The suit alleges fraud, negligent misrepresentation and breach of contract. McLane didn't immediately respond to a call for comment on the lawsuit, the report further related. The case is Houston Baseball Partners LLC v. McLane Champions LLC, 2013-70769, 80th Judicial District of Harris County, Texas (Houston). About Houston Regional Sports Network An involuntary Chapter 11 bankruptcy petition was filed against Houston Regional Sports Network, L.P. d/b/a Comcast SportsNet Houston (Bankr. S.D. Tex. Case No. 13-35998) on Sept. 27, 2013. The involuntary filing was launched by three units of Comcast/NBC Universal and a television-related company. The petitioners are: Houston SportsNet Finance LLC, Comcast Sports Management Services LLC, National Digital Television Center LLC, and Comcast SportsNet California, LLC. The petitioning creditors have filed papers asking the Bankruptcy Judge to appoint an independent Chapter 11 trustee "to conduct a fair and open auction process for the Network's business assets on a going concern basis." Houston Regional Sports Network is a joint enterprise among affiliates of the Houston Astros baseball team, the Houston Rockets basketball team, and Houston SportsNet Holdings, LLC -- "Comcast Owner" -- an affiliate of Comcast Corporation. The Network has three limited partners -- Comcast Owner, Rockets Partner, L.P., and Astros HRSN LP Holdings LLC. The primary purpose of Houston Regional Sports Network is to create and operate a regional sports programming service that produces, exhibits, and distributes sports programming on a full-time basis, including live Astros and Rockets games within the league- permitted local territories. Counsel for the petitioning creditors are Howard M. Shapiro, Esq., at Wilmer Cutler Pickering Hale and Dorr LLP; George W. Shuster, Jr., Esq., at Wilmer Cutler Pickering Hale and Dorr LLP; Vincent P. Slusher, Esq., at DLA Piper; and Arthur J. Burke, Esq., at Davis Polk & Wardwell LLP. Judge Marvin Isgur presides over the case. HOWREY LLP: Estate Settles with Cadwalader, Ober Kaler ------------------------------------------------------ Sara Randazzo, writing for The Am Law Daily, reported that two more firms that hired partners from Howrey amid its 2011 collapse have settled with the now-defunct firm's bankruptcy trustee, who has pushed aggressively to recover money for the Howrey estate under the so-called unfinished business doctrine. According to the report, in the latest round of settlements, Cadwalader, Wickersham & Taft has agreed to pay the Howrey estate at least $600,000, and Washington, D.C.?area firm Ober Kaler has settled for an undisclosed amount. Both deals require the approval of U.S. Bankruptcy Judge Dennis Montali in San Francisco. The Cadwalader settlement is tied to seven litigation matters the firm took on when it hired former Howrey antitrust partners Peter Moll and Brian Wallach, according to a Nov. 21 court filing, the report related. Relying on the unfinished business doctrine, trustee Allan Diamond claims the bankruptcy estate has an ownership right to those matters and deserves a portion of the money they generated. Under the agreement filed on Nov. 21, Cadwalader will pay $605,405 initially and up to $82,800 out of the future revenue it collects from one pending matter, the report further related. All told, according to the filing, Cadwalader had earned $4 million in revenue on the seven matters at issue as of the end of 2012. In urging the court to approve the deal, Diamond said, "There is a certain litigation risk involved in pursuit of unfinished business claims against Cadwalader that is heightened somewhat by factors and defenses unique to that firm," the report cited. About Howrey LLP Three creditors filed an involuntary Chapter 7 petition (Bankr. N.D. Cal. Case No. 11-31376) on April 11, 2011, against the remnants of the Washington-based law firm Howrey LLP. The filing was in San Francisco, where the firm had an office. The firm previously was known as Howrey & Simon and Howrey Simon Arnold & White LLP. The firm at one time had more than 700 lawyers in 17 offices. The partners voted to dissolve in March 2011. The firm specialized in antitrust and intellectual-property matters. The three creditors filing the involuntary petition together have $36,600 in claims, according to their petition. The involuntary chapter 7 petition was converted to a chapter 11 case in June 2011 at the request of the firm. In its schedules filed in July, the Debtor disclosed assets of $138.7 million and liabilities of $107.0 million. Representing Citibank, the firm's largest creditor, is Kelley Cornish, Esq., a partner at Paul, Weiss, Rifkind, Wharton & Garrison. Representing Howrey is H. Jason Gold, Esq., a partner at Wiley Rein. The Official Committee of Unsecured Creditors is represented in the case by Bradford F. Englander, Esq., at Whiteford, Taylor And Preston LLP. In September 2011, Citibank sought conversion of the Debtor's case to Chapter 7 or, in the alternative, appointment of a Chapter 11 Trustee. The Court entered an order appointing a Chapter 11 Trustee. In October 2011, Allan B. Diamond was named as Trustee. He is represented by Andrew Baxter Ryan, Esq., and Stephen Todd Loden, Esq., at Diamond McCarthy LLP as counsel. IGLESIA PUERTA: Files Chapter 11 Plan & Disclosure Statement ------------------------------------------------------------ Iglesia Puerta Del Cielo, Inc., filed with the U.S. Bankruptcy Court for the Western District of Texas, El Paso Division, a plan of reorganization and accompanying disclosure statement. The Plan pays all administrative and priority claims on the effective date. Secured creditors Isaac Group Lender, Judgment Creditors and Rodriguez-Herrera will be paid in full through the return of the collateral securing their debt, to wit a 16-acre parcel of unimproved property adjacent to the Church. General unsecured creditors will be paid in full not later than 36 months after the effective date. Finally, secured creditor Evangelical Christian Credit Union will be paid in full per the payment plan set forth in the Plan of Reorganization confirmed on June 29, 2010, in a prior Chapter 11 case filed by the Debtor. The Debtor estimates that the aggregate allowed claims against the Debtor's estates will be as follows: Class Classification Treatment ----- -------------- --------- N/A Administrative Claims Unimpaired. Est. Allowed Amount of Claims: $20,000 N/A Priority Tax Claims Unimpaired; paid over 5-year period. Est. Allowed Amount of Claims: $0 1 Allowed Secured Tax Unimpaired. Claims 2 Secured Claims of ECCU Impaired. Est. Allowed Amount of Claims: $8,405,739 3 Allowed Claims of Isaac Group Lenders Unimpaired. Est. Allowed Amount of Claims: $763,589 4 Secured Allowed Claims of Judgment Creditors Unimpaired. Est. Allowed Amount of Claims: $104,588 5 Secured Allowed Claim of Rodriguez-Herrera Unimpaired. Est. Allowed Amount of Claims: $154,788 6 General Unsecured Claims Impaired. Est. Allowed Amount of Claims: $192,750 7 Subordinated and Penalty Claims No recovery. Est. Allowed Amount of Claims: $0 8 Interests No recovery. Est. Allowed Amount of Claims: None The Debtor estimates that there will be no funds available to allowed general unsecured claims if the Plan is not accepted by the requisite Classes of creditors and confirmed by the Court. A full-text copy of the Disclosure Statement, dated Nov. 14, 2013, is available for free at: http://bankrupt.com/misc/IGLESIAds1114.pdf Iglesia Puerta del Cielo, Inc., a domestic non-profit corporation that provides religious services to third parties, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Tex. Case No. 13-31911) on Nov. 12, 2013. The case is assigned to Judge Christopher Mott. Wiley F. James, III, Esq., at James & Haugland, P.C., in El Paso, Texas, represents the Debtor. The Debtor estimated assets of at least $10 million and liabilities of at least $1 million. IGLESIA PUERTA: Has Interim Authority to Use Cash Collateral ------------------------------------------------------------ Judge Ronald B. King of the U.S. Bankruptcy Court for the Western District of Texas, El Paso Division, gave interim authority for Iglesia Puerta Del Cielo, Inc., to use the cash collateral securing its prepetition indebtedness from lender Evagelical Christian Credit Union. As adequate protection against any diminution in value of the Lender's interest, the Debtor grants the Lender valid and automatically perfected first priority replacement liens and security interests on all of the properties and assets of the Debtor. Additionally, all secured creditors that hold perfected prepetition liens against the Debtor's property are granted replacement liens on the same property in the same order of priority postpetition. A final hearing on the use of cash collateral will be held on Dec. 18, 2013, at 1:00 p.m. The Lender is represented by James Brewer, Esq. -- Jim.Brewer@kempsmith.com -- at Kemp Smith LLP, in El Paso, Texas. Iglesia Puerta del Cielo, Inc., a domestic non-profit corporation that provides religious services to third parties, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Tex. Case No. 13-31911) on Nov. 12, 2013. The case is assigned to Judge Christopher Mott. Wiley F. James, III, Esq., at James & Haugland, P.C., in El Paso, Texas, represents the Debtor. The Debtor estimated assets of at least $10 million and liabilities of at least $1 million. IGLESIA PUERTA: Has Interim Authority to Employ James & Haugland ---------------------------------------------------------------- Judge Ronald B. King of the U.S. Bankruptcy Court for the Western District of Texas, El Paso Division, gave interim authority for Iglesia Puerta Del Cielo, Inc., to employ James & Haugland, P.C., as attorneys. If any supplemental declarations or affidavits are filed and served, absent any objections filed within 21 days after the filing and service of the supplemental declarations, J&H's employment will continue as authorized by the Court. The primary attorneys and paralegal within J&H who will represent the Debtor and their current standard hourly rates are as follows: Wiley F. James, III $300 Corey W. Haugland $300 James T. Wall $200 Aldo R. Lopez $170 Janet J. Sinclair, legal assistant $95 The firm will also be reimbursed for any necessary out-of-pocket expenses. Iglesia Puerta del Cielo, Inc., a domestic non-profit corporation that provides religious services to third parties, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Tex. Case No. 13-31911) on Nov. 12, 2013. The case is assigned to Judge Christopher Mott. Wiley F. James, III, Esq., at James & Haugland, P.C., in El Paso, Texas, represents the Debtor. The Debtor estimated assets of at least $10 million and liabilities of at least $1 million. ILLINOIS FINANCE: Fitch Affirms BB+ Bonds Rating; Outlook Negative ------------------------------------------------------------------ Fitch Ratings affirms the rating on approximately $16.4 million of Illinois Finance Authority's revenue bonds issued on behalf of Lutheran Social Services of Illinois (LSSI, the institution). The Rating Outlook is Negative. Security: The bonds are secured by the unrestricted receivables of the obligated group, backed by a fully funded debt service reserve fund and features a historical, annual debt service coverage (DSCR) covenant of 1.1 times (x). Key Rating Drivers: Operations Under Stress: The rating continues to reflect LSSI's three consecutive years of negative operating performance, violation of the DSCR in both fiscal 2012 and 2013 and reimbursement challenges given the state's (IL, Fitch rated 'A-', Outlook Negative) budgetary and economic challenges. Demand Variability: Utilization trends for LSSI's services generally remain stable however certain service lines are expected to be pressured in fiscal 2014. Fitch expects the institution to focus on operating sustainability including cutting programs as necessary, similar to management actions taken in fiscal 2013. Limited Liquidity Levels: Recurring balance sheet resource reliance including Cornerstone Foundation support (CF) to augment insufficient funds for operations and DSC has diminished unrestricted cash and investments at both CF and LSSI. State Funding Volatility: LSSI's disproportionately high reliance on government funding (over 74%) is problematic as the state's ongoing fiscal stress may adversely affect the institution's operations due to extended vendor payment timelines. Rating Sensitivities: Continued Operational Challenges: LSSI's inability to improve margins for fiscal 2014 and increased reliance on CF assets for operational sufficiency could pressure the rating. Covenant Violations: Continued inability to meet a substantive portion of the DSCR from operational surplus or a lack of marked improvement in coverage levels would indicate a recurring weakness in LSSI's operating profile and could jeopardize the current rating. Credit Profile: LSSI, headquartered in Des Plaines, is a large, not for profit residential and social services provider. Total revenues of the obligated group (OG) were approximately $95.5 million in fiscal 2013. LSSI's operational viability and bond rating is hinged on solid demand and essentiality of services provided by the institution and financial support provided by its non-obligated foundation subsidiary, CF. LSSI's disclosure practices are standard. Operating Deficits; DSCR Not Met: LSSI's operating performance for fiscal 2013 resulted in a negative 2.9% margin, slightly improved from the previous fiscal year (-3%). This result while somewhat encouraging since LSSI experienced volume declines in fiscal 2013, including the foster child and family programs and weaker gift and contribution levels, also culminated in a second consecutive year of violating the DSCR. Fiscal 2013's negative operations resulted in a DSCR of 0.2x. While not an event of default, pursuant to the trust indenture requirement LSSI has retained a consultant who is expected to recommend steps to achieve fiscal balance. Previously, at the 2012 review, Fitch and LSSI management discussed the likelihood that operating results would not improve materially for the 2013 year end. Therefore, Fitch expects to review fiscal 2014 results once available and could take rating action if operations and coverage levels do not improve. LSSI's first quarter fiscal 2014 results reflected some operational improvement; Fitch expects the institution's focus on fund raising and growing gifts and contribution revenue to augment fiscal 2014 results. Essential Service Provider: LSSI's core mission of service is relatively insulated due primarily to its extensive history in providing state mandated social services. However utilization statistics relating to client encounters are subject to fluctuations. Total clients served in 2013 (96,707) were lower than in 2012 (108,735); the four year average of total clients recorded by LSSI was 93,372. A decline of served clients does not necessarily correspond to weaker operating results as many services subject to such vagaries are conducted by volunteers. Fitch expects growth or maintenance of volumes for fiscal 2014, however, LSSI's inability to stabilize the main revenue generating programs could impede rating improvement. Foundation Assets Support Operations: Cornerstone Foundation resources support LSSI operations annually via an endowment grant of five percent of assets and also provides supplemental monies for capital purposes. CF exists primarily to support LSSI's mission but is not obligated on the rated debt, but Fitch views the foundation as a key source of additional liquidity. CF investment portfolio balances totaled $12.1 million as of November 2013, reflecting a 14.6% return year to date. LSSI's available funds, comprised of unrestricted cash and investments declined from over $5 million in fiscal 2008 to less than $3 million in fiscal 2012. Available funds totaled $3.64 million in fiscal 2013. LSSI's portfolio grew 12% for the calendar 2013 year-to-date, to approximately $4.9 million. In addition to its unrestricted funds, LSSI can access up to $8.5 million of CF funds (currently $2.65 million remains available as the remainder is drawn down) and consequently the rating reflects LSSI's access to CF assets. As of fye 2013 LSSI and CF, combined, had available funds totaling $14.6 million which constituted 14.9% of operating expenses and 72.2% of total debt. Total debt as of June 30, 2013 included the entire balance of a bank line of credit ($3.6 million). As of the first quarter fiscal 2013, $1.8 million of the line remains drawn. LSSI's investment allocations, 45% to equity and fixed income, equally, and 10% to alternatives is slightly more conservative than CF whose allocations include over 60% to equities, 20% to fixed income and 10% to alternatives. Fitch considers the investment allocations for LSSI and CF moderately conservative which should limit volatility in the combined financial cushion that supports the obligated group's rating. Manageable Debt Burden: LSSI has $1.8 million currently outstanding in a bank line of credit and entered into approximately $470k in various capital lease financings in fiscal 2013. Approximately $16.8 million in bonded debt remains outstanding. Pro forma MADS combining capital leases, occurring in 2018, totals $2.2 million and accounts for 2.3% of unrestricted operating revenues. Fitch notes positively that there are no near term debt plans for LSSI aside from costs related to general maintenance and facility improvements. IMAGEWARE SYSTEMS: Posts $339,000 Net Income in Third Quarter ------------------------------------------------------------- Imageware Systems, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income of $339,000 on $2.49 million of revenues for the three months ended Sept. 30, 2013, as compared with a net loss of $2.72 million on $938,000 of revenues for the same period a year ago. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $8.05 million on $4.37 million of revenues as compared with a net loss of $10.26 million on $3.02 million of revenue for the same period a year ago. The Company's balance sheet at Sept. 30, 2013, showed $8.57 million in total assets, $4.72 million in total liabilities and $3.85 million in total shareholders' equity. A copy of the Form 10-Q is available for free at: http://is.gd/TmF9dM About ImageWare Systems Headquartered in San Diego, California, ImageWare Systems, Inc., is a leader in the emerging market for software-based identity management solutions, providing biometric, secure credential, law enforcement and enterprise authorization. Its "flagship" product is the IWS Biometric Engine. Scalable for small city business or worldwide deployment, the Company's biometric engine is a multi- biometric platform that is hardware and algorithm independent, enabling the enrollment and management of unlimited population sizes. The Company's identification products are used to manage and issue secure credentials, including national IDs, passports, driver licenses, smart cards and access control credentials. Its law enforcement products provide law enforcement with integrated mug shot, fingerprint LiveScan and investigative capabilities. The Company also provides comprehensive authentication security software. Imageware Systems incurred a net loss of $10.19 million in 2012, as compared with a net loss of $3.18 million in 2011. IMPERIAL PETROLEUM: Accepts Resignation of Chairman --------------------------------------------------- Imperial Petroleum, Inc., had accepted the resignation of its Chairman and Director, J. Greg Thagard. Mr. Thagard resigned to pursue personal interests and had no disagreements with the Management of the Company or with its Board of Directors. About Imperial Petroleum Headquartered in Evansville, Ind., Imperial Petroleum Inc. (OTC BB: IPMN) operates as a diversified energy and mineral mining company in the United States. Its oil and natural gas properties include the Coquille Bay field located in Plaqumines Parish, Louisiana; the Haynesville field located in Claiborne and Webster Parishes in north Louisiana; the Bastian Bay field located in Plaquemines parish, Louisiana; LulingField located in Guadalupe county, Texas; and the Shrewsbury field in Grayson County and the Claymour field in Todd County, western Kentucky. As reported by the TCR on June 24, 2011, the Company anticipates its current working capital will not be sufficient to meet its required capital expenditures and that the Company will be required to either access additional borrowings from its lender or access outside capital. Currently the Company projects it will require non-discretionary capital expenditures of approximately US$500,000 in the next fiscal year to re-establish and maintain economic levels of production at Coquille Bay. Without access to such capital for non-discretionary projects, the Company's production may be significantly curtailed or shut in and jeopardize its leases. In the auditors' report accompanying the financial statements for year ended July 31, 2011, Weaver Martin & Samyn, LLC, in Kansas City Missouri, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses from operations and is dependent upon obtaining debt financing for funds to meet its cash requirements. The Company's balance sheet at April 30, 2012, showed $2.08 million in total assets, $11.92 million in total liabilities, all current, and a $9.83 million total stockholders' deficit. IMPLANT SCIENCES: Files Form 10-Q, Had $6MM Loss in Sept. 30 Qtr. ----------------------------------------------------------------- Implant Sciences Corporation filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $6.02 million on $1.16 million of revenues for the three months ended Sept. 30, 2013, as compared with a net loss of $12.74 million on $1.41 million of revenues for the same period during the prior year. The Company's balance sheet at Sept. 30, 2013, showed $4.44 million in total assets, $53.32 million in total liabilities and a $48.87 million total stockholders' deficit. Bankruptcy Warning "Despite our current sales, expense and cash flow projections and $6,922,000 in cash available from our line of credit with DMRJ, at November 5, 2013, we will require additional capital in the first quarter of fiscal 2015 to fund operations and continue the development, commercialization and marketing of our products. Our failure to achieve our projections and/or obtain sufficient additional capital on acceptable terms would have a material adverse effect on our liquidity and operations and could require us to file for protection under bankruptcy laws," the Company said the the Quarterly Report. A copy of the Form 10-Q is available for free at: http://is.gd/up1fJp 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. Marcum LLP, in Boston, Massachusetts, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2012. The independent auditors noted that the Company has had recurring net losses and continues to experience negative cash flows from operations. As of Sept. 25, 2012, the Company's principal obligation to its primary lender was $33,429,000 with accrued interest of $3,146,000. The Company is required to repay all borrowings and accrued interest to this lender on March 31, 2013. These conditions raise substantial doubt about its ability to continue as a going concern. For the year ended June 30, 2013, the Company incurred a net loss of $27.35 million on $12.01 million of revenues as compared with a net loss of $14.63 million on $3.40 million of revenues during the prior year. INFINIA CORP: Sells Arizona Solar Project for $10 Million --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Infinia Corp. and its Powerplay Solar I LLC unit, the owners of a solar generation project in Yuma, Arizona, held a successful auction that pushed the cash component of the purchase price up to $10.4 million. According to the report, the companies filed for Chapter 11 protection in September in Salt Lake City, originally intending to sell the facility to lender Atlas Global Asset Holdings LP mostly in exchange for debt. The Atlas contract would have set aside $150,000 to complete the bankruptcy after the sale plus $100,000 for unsecured creditors. As it turned out, Ricor Generation Inc. won the auction with a $10.4 million cash offer, coupled with the assumption of specified debts and payment of costs to cure breaches of contract. The bankruptcy court approved the sale last week. 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. Fenwick & West LLP serves as the Debtors' special corporate counsel. Hamilton Clark Sustainable Capital, Inc., serves as the Debtors' financial advisor and investment banker. Gil A. Miller and Rocky Mountain Advisory, LLC, also serve as the Debtors' financial advisors and accountants. The U.S. Trustee has appointed four members to the official committee of unsecured creditors. J. Thomas Beckett, Esq., at Parsons Behle & Latimer, represents the Creditors' Committee. INTELSAT JACKSON: Moody's Rates $1.75-Bil. Secured Term Loan 'Ba3' ------------------------------------------------------------------ Moody's Investors Service rated Intelsat Jackson Holdings S.A.'s new 6-year $1.75 billion senior secured term loan and 4-year $500 million senior secured revolving term loan Ba3. The new term loan replaces a like-sized commitment of Jackson's $3.25 billion senior secured term loan B-1 due April 12, 2018 while the new revolving credit facility replaces a like-sized facility maturing January 12, 2016. The transaction has no impact on Intelsat's B3 corporate family rating (CFR), B3-PDR probability of default rating, or any instrument ratings in the Intelsat family, and the new credit facilities are rated at the same Ba3 level as the existing facilities. The outlook remains unchanged at stable and, as the transaction has no impact on liquidity, Intelsat's SGL-2 liquidity rating (indicating good liquidity) is also unchanged. Jackson is an indirect, wholly-owned subsidiary of Intelsat S.A. (Intelsat) which, as the publicly traded ultimate parent of the Intelsat group of companies and guarantor of all publicly traded bonds issued by them, is the entity at which Moody's maintains the family's CFR and PDR. The following summarizes Moody's ratings and rating actions for Intelsat: Assignments: Issuer: Intelsat Jackson Holdings S.A. Senior Secured Bank Credit Facility, Assigned Ba3 (LGD1, 7%) Ratings Rationale: Intelsat's B3 CFR primarily reflects a limited ability to repay debt, elevated leverage and uncertain free cash flow after 2014. On average, free cash flow available to reduce debt is limited to only ~1% of Intelsat's debt because maintenance capital expenditures, interest expense and cash taxes consume nearly all of the company's EBITDA. Post-2014 free cash flow is uncertain since plans for several satellites whose useful lives expire within four years have not been disclosed and deferred revenue will exceed customer pre-payments and become a use of cash. There is also the potential of interest rates increasing as debts are rolled-over and, over several years, of competition from terrestrial fiber eroding satellite's market share. Despite these uncertainties and already elevated leverage, Moody's views Intelsat's capital structure as sustainable since cash flow will be modestly positive. The company's strong business profile, which features a large 42 station-kept satellite fleet covering 99% of Earth's population, and a stable, predictable, contract-based revenue stream with a solid $10.3 billion backlog (~4 years of revenue) booked with well-regarded customers, also supports the rating. Rating Outlook: Intelsat's stable ratings outlook is based on reasonable visibility of modest, positive cash flow through 2014, along with good liquidity arrangements. What Could Change the Rating UP: With company guidance indicating a three-year period of lower- than-average capital spending, depending on plans for several satellites whose useful lives expire within four years, Intelsat has an opportunity to de-lever by way of debt reduction. Should this result in sustainable free cash flow to debt approaching/exceeding 5% of debt (all measures incorporating Moody's adjustments), positive ratings pressure could result. An upgrade would also depend on positive industry fundamentals, maintenance of solid liquidity and clarity on capital structure planning. What Could Change the Rating DOWN: Downwards rating pressure is most likely to come from debt- financed capital expenditures related to several satellites whose useful lives expire within four years or, alternatively, reduced EBITDA should Intelsat not replace the applicable satellites. Irrespective, should Debt-to-EBITDA trend back towards 8x, or should sustainable free cash flow revert to a deficit, or should liquidity arrangements deteriorate materially, downwards rating pressure would result. Headquartered in Luxembourg, and with offices and operations in Washington D.C., Intelsat S.A. is one of the two largest fixed satellite services operators in the world. After a recent IPO, approximate 20% of Intelsat S.A.'s shares are publicly traded with the balance continuing to be owned by financial investors and management. Annual revenues are approximately $2.6 billion; EBITDA is approximately $2.0 billion. ISOLA USA: Moody's Puts 'Caa2' CFR on Review for Upgrade -------------------------------------------------------- Moody's Investors Service placed certain ratings of Isola USA on review for upgrade -- the Caa2 corporate family (CFR) and Caa2-PD probability of default ratings. The review was prompted by the company's announcement of a debt refinancing intended to extend its debt maturities and lower debt service costs. The review will conclude once the refinancing is completed, when Moody's expects to assign ratings on the new senior secured credit facilities and withdraw the existing senior secured ratings. Ratings Actions: Corporate Family Rating - Caa2, placed on review for upgrade Probability of Default Rating - Caa2-PD, placed on review for upgrade Summary Rating Rationale: The review will focus on the company's successful execution of the refinancing, particularly by repaying a portion of the high coupon pay-in-kind debt, which has been accreting faster than the company's EBITDA growth. The proposed maturity extension and lowered rate will provide Isola with additional time to address its debt load, which remains elevated given the company's weak revenue and EBITDA growth outlook in the near term. If the transaction closes under generally the same terms and conditions as announced (ie., about $250 million of new secured debt and reduction to mezzanine PIK notes), the likely outcome of the rating review is expected to position both the company's corporate family and probability of default ratings two notches higher than the current Caa2 and Caa2-PD ratings, respectively. The rating on the new senior secured debt will likely be notched one level above the CFR. Also considered in the review will be the degree of the variability in Isola's cash generation given its limited visibility into end-market demand, and Isola's exposure to the volatile semiconductor industry and to OEMs in the highly cyclical automotive, technology, telecommunications and networking end- market segments. In 2012 the company announced plans for an initial public offering (IPO) with proceeds to reduce debt, and which Moody's believes is still part of Isola's long term plans. Isola maintains adequate liquidity supported by cash balances of roughly $72 million as of September 28, 2013. JEFFERSON COUNTY, AL: Bankruptcy Left Few Winners ------------------------------------------------- Martin Z. Braun, writing for Bloomberg News, reported that the impact of Jefferson County's bankruptcy will reverberate for decades in Alabama and in the $3.7 trillion U.S. municipal bond market. According to the report, creditors, including JPMorgan Chase & Co., agreed to forgive $1.4 billion of the county's $3 billion sewer bonds. Ratepayers, like Charles Hicks, a retired landscaper who lives on a fixed income in Birmingham, will see his sewer rate rise about 8 percent annually for the next four years and 3.5 percent annually thereafter, under a plan approved by a federal judge on Nov 21. "There's a lot of pain going around -- bondholders are taking large losses, but ratepayers are as well," Matt Fabian, a managing director at Concord, Massachusetts-based Municipal Market Advisors, told Bloomberg. For the next 40 years, residents and businesses that already have some of the highest sewer rates in the country will pay back more in principal and interest than they owed before the bankruptcy, according to an analysis by Jim White, a Birmingham-based financial adviser who did an analysis for residents challenging the bankruptcy plan, the report noted. Until Detroit's July filing, Jefferson County was the nation's largest municipal bankruptcy. About Jefferson County Jefferson County has its seat in Birmingham, Alabama. It has a population of 660,000. Jefferson County filed a bankruptcy petition under Chapter 9 (Bankr. N.D. Ala. Case No. 11-05736) on Nov. 9, 2011, after an agreement among elected officials and investors to refinance $3.1 billion in sewer bonds fell apart. John S. Young Jr. LLC was appointed as receiver by Alabama Circuit Court Judge Albert Johnson in September 2010. Jefferson County's bankruptcy represents the largest municipal debt adjustment of all time. The county said that long-term debt is $4.23 billion, including about $3.1 billion in defaulted sewer bonds where the debt holders can look only to the sewer system for payment. The county said it would use the bankruptcy court to put a value on the sewer system, in the process fixing the amount bondholders should be paid through Chapter 9. Judge Thomas B. Bennett presides over the Chapter 9 case. Lawyers at Bradley Arant Boult Cummings LLP and Klee, Tuchin, Bogdanoff & Stern LLP, led by Kenneth Klee, represent the Debtor as counsel. Kurtzman Carson Consultants LLC serves as claims and noticing agent. Jefferson estimated more than $1 billion in assets. The petition was signed by David Carrington, president. The bankruptcy judge in January 2012 ruled that the state court- appointed receiver for the sewer system largely lost control as a result of the bankruptcy. Before deciding whether Jefferson County is eligible for Chapter 9, the bankruptcy judge will allow the Alabama Supreme Court to decide whether sewer warrants are the equivalent of "funding or refunding bonds" required under state law before a municipality can be in bankruptcy. U.S. District Judge Thomas B. Bennett ruled in March 2012 that Jefferson County is eligible under state law to pursue a debt restructuring under Chapter 9. Holders of more than $3 billion in defaulted sewer debt had challenged the county's right to be in Chapter 9. In June 2013, the county reached settlement with holders of 78 percent of the $3.1 billion in sewer debt at the core of the county's financial problems. The bondholders will be paid $1.84 billion through a refinancing, according to a term sheet. The settlement calls for JPMorgan Chase & Co., the owner of $1.22 billion in bonds, to make the largest concessions so other bondholder will recover more. On June 30, 2013, Jefferson County filed a Chapter 9 plan of debt adjustment. Pursuant to the Plan, sewer bondholders will receive 65 percent in cash. If they elect to waive claims against JPMorgan and bond insurers, they receive 80 percent in cash. Bondholders supporting the plan already agreed to waive claims and receive the larger recovery. Existing sewer bonds will be canceled in exchange for payments under the plan. The county will fund plan distributions by selling new sewer bonds calculated to generate $1.96 billion to cover the $1.84 billion earmarked for existing sewer bondholders. JPMorgan has agreed to waive $842 million of the sewer debt and a $657 million swap debt, resulting in an 88 percent overall write off by JPMorgan. To finance the new sewer bonds, there will be 7.4 percent in rate increases for sewer customers in each of the first four years. In later years, rate increases will be 3.5 percent. JEFFERSON COUNTY, AL: Debt-Adjustment Plan Formally Approved ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Jefferson County, Alabama's municipal debt-adjustment plan was formally approved on Nov. 22 when the U.S. Bankruptcy Judge in Birmingham signed a confirmation order. According to the report, the plan gives the bankruptcy court power to enforce increases in sewer rates for decades to come. The county's bankruptcy, where pain is being shared by bondholders as well as taxpayers, may influence how municipalities and bondholders deal with governments unable to pay their bills in the future. The county sold $1.8 billion in bonds to fund the plan. It reduces sewer debt from $3.2 billion to $1.7 billion. About Jefferson County Jefferson County has its seat in Birmingham, Alabama. It has a population of 660,000. Jefferson County filed a bankruptcy petition under Chapter 9 (Bankr. N.D. Ala. Case No. 11-05736) on Nov. 9, 2011, after an agreement among elected officials and investors to refinance $3.1 billion in sewer bonds fell apart. John S. Young Jr. LLC was appointed as receiver by Alabama Circuit Court Judge Albert Johnson in September 2010. Jefferson County's bankruptcy represents the largest municipal debt adjustment of all time. The county said that long-term debt is $4.23 billion, including about $3.1 billion in defaulted sewer bonds where the debt holders can look only to the sewer system for payment. The county said it would use the bankruptcy court to put a value on the sewer system, in the process fixing the amount bondholders should be paid through Chapter 9. Judge Thomas B. Bennett presides over the Chapter 9 case. Lawyers at Bradley Arant Boult Cummings LLP and Klee, Tuchin, Bogdanoff & Stern LLP, led by Kenneth Klee, represent the Debtor as counsel. Kurtzman Carson Consultants LLC serves as claims and noticing agent. Jefferson estimated more than $1 billion in assets. The petition was signed by David Carrington, president. The bankruptcy judge in January 2012 ruled that the state court- appointed receiver for the sewer system largely lost control as a result of the bankruptcy. Before deciding whether Jefferson County is eligible for Chapter 9, the bankruptcy judge will allow the Alabama Supreme Court to decide whether sewer warrants are the equivalent of "funding or refunding bonds" required under state law before a municipality can be in bankruptcy. U.S. District Judge Thomas B. Bennett ruled in March 2012 that Jefferson County is eligible under state law to pursue a debt restructuring under Chapter 9. Holders of more than $3 billion in defaulted sewer debt had challenged the county's right to be in Chapter 9. In June 2013, the county reached settlement with holders of 78 percent of the $3.1 billion in sewer debt at the core of the county's financial problems. The bondholders will be paid $1.84 billion through a refinancing, according to a term sheet. The settlement calls for JPMorgan Chase & Co., the owner of $1.22 billion in bonds, to make the largest concessions so other bondholder will recover more. On June 30, 2013, Jefferson County filed a Chapter 9 plan of debt adjustment. Pursuant to the Plan, sewer bondholders will receive 65 percent in cash. If they elect to waive claims against JPMorgan and bond insurers, they receive 80 percent in cash. Bondholders supporting the plan already agreed to waive claims and receive the larger recovery. Existing sewer bonds will be canceled in exchange for payments under the plan. The county will fund plan distributions by selling new sewer bonds calculated to generate $1.96 billion to cover the $1.84 billion earmarked for existing sewer bondholders. JPMorgan has agreed to waive $842 million of the sewer debt and a $657 million swap debt, resulting in an 88 percent overall write off by JPMorgan. To finance the new sewer bonds, there will be 7.4 percent in rate increases for sewer customers in each of the first four years. In later years, rate increases will be 3.5 percent. KENAN ADVANTAGE: Moody's Rates New $150MM Sr. Sec. Notes 'Ba3' -------------------------------------------------------------- Moody's Investors Service has affirmed the B1 Corporate Family Rating ("CFR") for Kenan Advantage Group, Inc. and maintained its negative outlook, following Kenan's acquisition of RTL-Westcan Group. At the same time, Moody's has affirmed the Ba3 rating for the amended senior secured credit facility; assigned a Ba3 rating to a C$100mm Term Loan; and has assigned a B3 rating to the company's proposed $150mm senior unsecured notes due 2018. The rating actions consider Kenan's leading position in the market for liquid bulk transportation as well as the elevated debt levels as a result of Kenan's acquisitive growth strategy and past shareholder distribution. Ratings Rationale: Kenan recently completed the acquisition of RTL-Westcan for approximately $209mm in cash. RTL-Westcan is a provider of liquid and dry bulk transportation services in western and northern Canada. Kenan has funded the acquisition with interim borrowings under its senior secured credit facility, and intends to refinance a portion of its senior secured credit facility with U.S. and Canadian dollar term loans and an add-on of $150mm to its $200mm outstanding senior unsecured notes due 2018. The acquisition of RTL-Westcan further strengthens Kenan's position as a leading provider of liquid bulk transportation services to the fuels, chemicals, food and merchant gas markets. Moreover, Moody's expects RTL-Westcan to enhance Kenan's operating performance, considering its relative profitability and cash flow generation. Although RTL-Westcan is Kenan's largest acquisition to date, Moody's assesses the integration risk to be limited, in view of management's extensive experience in integrating regional operators. The ratings also take into account the elevated debt levels of Kenan as a result of its acquisitive growth strategy and the $175mm distribution to its shareholders in December 2012. On an LTM September 2013 basis (and including Moody's standard adjustments), Total Debt to EBITDA is 5.5x, although somewhat lower if the full year earnings of Enterprise Transportation, acquired in January 2013, are taken into account. Moody's estimates that the acquisition of RTL-Westcan causes Total Debt to EBITDA to increase only marginally, calculated on a pro forma basis as of LTM September 2013. Although financial leverage is high relative to Kenan's B1 rating category, Moody's expects Kenan to bring its metrics levels more in line with a B1 rating in 2014, as the company benefits from RTL-Westcan's earnings contribution and further growth in its existing operations. Kenan's negative outlook reflects the company's weakened credit metrics which do not allow for any potential performance shortfalls. The outlook also considers the possibility that financial leverage remains at elevated levels as a result of further acquisitions. Ratings could be revised downward if Kenan would not be able to strengthen its credit profile to a level that is more appropriate for the B1 rating category. Specifically, ratings could be lowered if Debt to EBITDA would exceed 5.0x on a sustained basis, if EBIT to Interest would continue to be below 1.5x, or if availability under the revolving credit facility were to diminish due to high usage or covenant restrictions. Since debt is not likely to be reduced materially during the next few years, ratings are not expected to be upgraded over the near term. However, over the longer term, ratings could be adjusted upward, if the company could demonstrate improving margins and leverage through earnings growth or reduction of debt through the use of free cash flow. Debt to EBITDA would need to be sustained below 4.0x and EBIT to Interest would need to exceed 3.0x to warrant an upgrade of the CFR. Issuer: Kenan Advantage Group, Inc. Affirmations: Corporate Family Rating, Affirmed B1 Probability of Default, Affirmed B1-PD Senior Secured Credit Facility, Affirmed Ba3 (LGD3, 30% from LGD3, 31%) Senior Unsecured Notes, Affirmed B3 (LGD5, 84% from LGD5, 86%) Assignments: Senior Secured CAD Term Loan, Assigned Ba3 (Kenan Canada GP as co-borrower), (LGD3, 30%) Senior Unsecured Notes, Assigned B3 (LGD5, 84%) Outlook Actions: Outlook, Remains Negative Kenan Advantage Group, Inc., headquartered in North Canton, OH, is a provider of liquid bulk transportation and logistics services to the fuels, chemicals, food and merchant gas markets. KENAN ADVANTAGE: S&P Assigns 'BB-' Rating to $125MM Revolver Debt ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Kenan Advantage Group Inc. The outlook is stable. At the same time, S&P assigned 'BB-' issue-level ratings to Kenan Advantage's $125 million revolver, $430 million term loan, $100 million U.S. dollar-equivalent Canadian term loan, and $100 million delayed-draw term loan, with '2' recovery ratings, indicating S&P's expectation of a substantial (70%-90%) recovery of principal in a payment default scenario. S&P's 'B-' issue- level rating on the $350 million upsized senior unsecured notes, after including a $150 million add-on, remain unchanged, with a '6' recovery rating, indicating S&P's expectation of negligible (0%-10%) recovery in the event of a payment default. "The rating affirmation reflects Kenan Advantage's improved geographic and product diversity, as well as the addition of RTL- Westcan Group's more profitable operations," said credit analyst Anita Ogbara. These benefits were partially offset by the addition of $210 million in debt to finance the acquisition. Still, over the next year, we expect stable demand for petroleum products and accretive acquisitions will improve Kenan Advantage's credit metrics. Pro forma for the transaction, funds from operations (FFO) to total debt is about 10% and debt to EBITDA is about 5.5x. S&P previously expected total debt to EBITDA of 5.0x- 5.5x area and FFO to debt in the mid-teens percent area. The corporate credit rating is based on a "fair" business risk profile and a "highly leveraged" financial risk profile, which results in a 'b' initial analytical outcome ("anchor"). S&P applies a one-notch uplift under its comparable ratings analysis to arrive at the 'B+' corporate credit rating. S&P's business risk assessment incorporates its view of the cyclical transportation industry's "high" risk and "very low" country risk, as well as Kenan Advantage's "satisfactory" competitive position. Kenan Advantage operates in a competitive and fragmented industry with relatively modest, albeit improving, returns. However, the company's competitive position benefits from its stable end markets, leading market position in short-haul-truck fuel delivery, and a diverse mix of customers and geographic regions. S&P's assessment of Kenan Advantage's financial risk profile as "highly leveraged" is based on the company's acquisitive debt- financed growth strategy and its very aggressive financial policy. Still, S&P bases its current ratings on the expectation that the company will continue to manage its acquisitions in a manner that will preserve the ratings at the current level. The company's financial policy has a negative impact on S&P's rating outcome by limiting its financial risk profile to highly leveraged under its criteria. S&P believes that Kenan Advantage's active acquisition program could increase its debt leverage following acquisitions. S&P applied a positive comparable ratings assessment, given Kenan Advantage's participation in petroleum fuels delivery, which compares favorably versus other cyclical transportation companies due to its low volatility of demand. Also, the company's forecast credit metrics, while highly leveraged, are better than those of most companies with that financial risk profile. Kenan Advantage serves 48 states in the U.S., as well as in Canada and Mexico. The company (pro forma for the RTL-Westcan acquisition) operates approximately 162 terminals and 176 satellite locations and maintains a specialized fleet of approximately 4,900 tractors and more than 9,700 trailers. Over the past several years, Kenan Advantage has expanded by consolidating small private carriers and increasing its geographic footprint through midsize strategic acquisitions. In the near term, given its relatively stable end markets, S&P expects Kenan Advantage's core fuel delivery business to be less cyclical than that of its typical trucking peers. The company's customers include major oil companies, chemical companies, convenience stores, truck stops, and food processors. Kenan Advantage's market position benefits from long-standing contractual agreements with customers. The company's top 15 customers represent about 40% of total revenues. Kenan Advantage serves more than 1000 customers. The company provides short-haul "last mile" delivery of petroleum (with an average length of haul of less than 40 miles), chemical, and food-grade products. Given the relative stability of its end markets, Kenan Advantage's predictable schedules and consistent routes attract drivers who are not unionized. Relative to its trucking peers, Kenan Advantage's scale and end markets provide competitive advantages. The fuel transport business is highly fragmented, and Kenan Advantage is more than 5x the size of the next largest competitor. Due to increasing capital and regulatory requirements, the industry has consolidated over the past several years, and S&P expects this will continue over the next few years. S&P expects leverage will fluctuate, given Kenan Advantage's acquisitive debt-financed growth strategy. Following the RTL- Westcan acquisition, lease-adjusted credit metrics are on the weaker end of S&P's expectations for debt leverage. S&P expects Kenan Advantage will de-lever somewhat over the next several years, but continue to pursue a debt-financed growth strategy. S&P's base case assumes: -- U.S. GDP growth of 1.6% this year and 2.5% in 2014; -- Revenue growth in the mid-single-digit percent area in 2014- 2015; and -- Gradually improving margins from the integration of higher- margin RTL-Westcan. Based on these assumptions, S&P arrives at the following credit measures: -- FFO to debt in the low-to-mid-teens percent area in 2014 and 2015; and -- Debt to EBITDA of about 5.0x-5.5x in 2014 and 2015. The outlook is stable. S&P expects Kenan Advantage will benefit from increased geographic and product diversity following its acquisition of RTL-Westcan. However, over the next two years, S&P expects Kenan Advantage will continue to make acquisitions that likely will increase its debt levels. S&P could lower the ratings if overpayment for acquisitions or earnings deterioration results in debt to EBITDA consistently higher than 6.0x. Given the company's acquisitive growth strategy and financial sponsor ownership, an upgrade is unlikely. KINGSBURY CORP: Case Converted to Chapter 7 Despite Plan Filing --------------------------------------------------------------- The Honorable J. Michael Deasy early this month entered an order converting the Chapter 11 cases of Kingsbury Corporation, Donson Group, Ltd., and Ventura Industries, LLC, to cases under Chapter 7 of the Bankruptcy Code. The Nov. 7 order converting the bankruptcy case was entered at the behest of the U.S. Trustee. Kingsbury early this year filed a proposed liquidating plan which promises to return 100 cents on the dollar to secured and unsecured creditors. But William K. Harrington, the U.S. Trustee for Region 1, argued that the Debtors are unable to propose a confirmable plan, noting that the Debtors have ceased operations and their real property have been foreclosed upon. "Because a plan based on the outcome of litigation is by its very nature speculative, and because the Debtors have no other source of income with which to satisfy the confirmation requirements of 11 U.S.C. Sec. 1129(a)(9)(A),(B) and (C), the Debtors cannot demonstrate the ability to propose a feasible Chapter 11 plan within a reasonable period of time," the U.S. Trustee said. About Kingsbury Corp. Kingsbury Corp. -- http://www.kingsburycorp.com/-- makes and assembles machine systems. Kingsbury and affiliate Ventura Industries, LLC, filed Chapter 11 petition (Bankr. D. N.H. Case Nos. 11-13671 and 11-13687) on Sept. 30, 2011. Maire B. Corcoran, Esq., Robert J. Keach, Esq., Jessica A. Lewis, Esq., and Jennifer Rood, Esq., at Berstein, Shur, Sawyer & Nelson, serve as counsel to the Debtors. Donnelly Penman & Partners serves as its investment banker. In its schedules, the Debtor disclosed $10,134,679 in assets, and $24,534,973 in liabilities as of the petition date. The Debtor proposed a liquidating plan, which provides for the sale of Kingsbury's real estate located at 80 Laurel Street, Keene, New Hampshire. Secured claims will be paid in full from the sale proceeds, or holders of secured claims will retain their liens in the real estate and their allowed secured claims will be satisfied from the real estate proceeds. General unsecured claims will be paid in full, while interests will be canceled and holders of interests will take nothing under the Plan. William K. Harrington, the U.S. Trustee for Region 1, appointed five members to serve on the Official Committee of Unsecured Creditors. Steven C. Reingold, Esq., at Jager Smith P.C., represents the Official Committee of Unsecured Creditors as counsel. KRATOS DEFENSE: Moody's Rates $675MM Second Lien Notes 'B3' ----------------------------------------------------------- Moody's Investors Service affirmed Kratos Defense & Security Solutions, Inc.'s Corporate Family and Probability of Default ratings (CFR and PDR) of B3 and B3-PD respectively. At the same time the rating agency assigned a rating of B3 (LGD-4, 54%) on the company's proposed issue of $675 million of second lien notes due in 2020. Proceeds from the issuance along with cash on hand and revolving credit borrowings will be used to refinance the company's $625 million first lien notes and pay associated premiums and expenses. Upon full redemption of the existing notes the rating on those obligations would be withdrawn. The company's Speculative Grade Liquidity rating (SGL) was lowered to SGL-3 (adequate) from SGL-2 (good). The rating outlook is stable. As a result of the transaction, Kratos will have higher debt and significantly lower balance sheet liquidity. Offsetting this will be lower interest expense and an extended debt maturity as the 10% existing notes due in 2017 are repaid. Kratos will also have greater flexibility to address its capital structure consistent with its recently espoused policy of debt reduction. This arises from redemption options included in the proposed indenture for the second lien notes. The reduction in interest expense also improves prospects for free cash flow available for debt repayment going forward. The affirmation of the B3 CFR and B3-PD PDR ratings balances this higher financial leverage with improved coverage metrics and an assumption that Kratos will deploy a substantial portion of future cash flow towards lowering its debt burden. The lower liquidity rating considers the reduction in cash balance and the utilization of the company's asset-backed revolving credit facility (not rated) to fund the cost of the refinancing. The stable outlook recognizes that despite business pressures that could constrain the pace of potential debt reduction, interest coverage and cash flow should strengthen as a result of lower borrowing costs and provide support for the B3 CFR. Ratings Rationale: The B3 CFR considers Kratos' moderate size, high financial leverage and a declining U.S. defense spending environment. But it also recognizes Kratos' product portfolio is positioned in areas where funding levels are less vulnerable -- such as equipment used in unmanned aerial & missile systems, satellite communications, electronic warfare, radar and signals processing. Moreover, the company's infrastructure security business, which is driven by demand from commercial end-markets, should experience steady-to- firmer volumes. While competitive pressure within the defense services contracting environment has escalated over the past year, Kratos' service businesses now constitute a minor portion of its revenue mix (about a tenth). Free cash flow to debt should be in the low single digit percentage range in 2014, and will benefit from the refinancing transaction as well as provide flexibility to navigate through a period when sequestration budget caps in 2014 and beyond more broadly affect the sector. The stable rating outlook considers that although the U.S. defense spending environment constrains revenue opportunities and limits prospects for margin improvement, Kratos' performance is sustainable with several coverage ratios benefiting from the refinancing transaction and that a substantial portion of free cash flow will be applied to reduce indebtedness over the intermediate term. A rating downgrade would likely follow expectation of debt to EBITDA rising and remaining above the 7 times level and/or if liquidity were to weaken further. A positive outlook or higher rating is unlikely at this time but would require an expectation of debt to EBITDA sustained in the low 5x range with EBIT to interest approaching 1.5x. Ratings assigned: $675 million second lien notes, B3, LGD-4 , 54% Ratings affirmed: Corporate Family, B3 Probability of Default, B3-PD $625 million first lien notes, B3, LGD-4 , 52% (to be withdrawn upon completion of refinancing) Ratings lowered: Speculative Grade Liquidity to SGL-3 from SGL-2 The last rating action was on April 19, 2013 at which time the company's CFR and PDR were affirmed, the rating outlook was changed to stable from positive and the SGL rating was upgraded to SGL-2 from SGL-3. Kratos Defense & Solutions, Inc., headquartered in San Diego, CA, operates in two sectors; Kratos Government Solutions (81% of 2012 revenues) and Public Safety and Security (19%). Revenue for the twelve months ending September 30, 2013 were $978 million. KRATOS DEFENSE: S&P Assigns 'B' Rating to $675MM Second-Lien Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' issue-level rating to Kratos Defense & Security Solutions Inc.'s proposed $675 million second-lien notes with a recovery rating of '4', indicating average recovery (30%-50%) in a payment default scenario. The company will use the notes to refinance its existing $625 million notes. The 'B' corporate credit rating and negative outlook are unaffected by the transaction. S&P believes the impact of higher incremental debt will be offset by lower interest expense and better cash generation in the future. S&P's range of expected key credit ratios is unchanged, with debt to EBITDA of 6.2x-6.7x and EBITDA interest coverage of 1.7x-2.2x in 2014. RATINGS LIST Kratos Defense & Security Solutions Inc. Corporate Credit Rating B/Negative New Ratings Kratos Defense & Security Solutions Inc. $675 mil second-lien notes B Recovery Rating 4 KRONOS INC: Moody's Lowers CFR to B3 & 1st Lien Debt Rating to B1 ----------------------------------------------------------------- Moody's Investors Service downgraded Kronos Incorporated's corporate family rating ("CFR") to B3 from B2, its probability of default rating to B3-PD from B2-PD, and the ratings for its 1st and 2nd lien senior secured credit facilities by one notch to B1 and Caa2, respectively. Kronos' ratings outlook is stable. The company plans to increase the size of its previously proposed dividend to $490 million by upsizing its incremental term loans to $380 million from $300 million. The downgrade of Kronos' ratings reflects the deterioration in the company's credit metrics resulting from the increase in debt and its aggressive financial policies. Ratings Rationale: Moody's estimates that pro forma for the dividend recapitalization, Kronos' leverage will increase by about 1.3x to 7.6x (total debt-to-LTM June 2013 EBITDA, incorporating Moody's standard analytical adjustments). This is approximately 0.3x higher than the recapitalization that was announced last week, and more than the pro forma leverage that resulted from the dividend recapitalization in October 2012. Moody's believes that given Kronos' recent history of debt-funded dividends and increasing financial risk tolerance, frequent debt-funded shareholder distributions could cause leverage to stay at elevated levels. Moody's also expects Kronos' leverage to remain near 6.5x (Moody's adjusted) until mid 2015, assuming there are no leveraging transactions. The B3 CFR is largely driven by Kronos' aggressive fiscal policies under its financial sponsors. The B3 rating reflects Kronos' elevated financial risk, especially compared to some of its main competitors, its highly competitive market, and narrow market focus on the workforce management (WFM) applications segment. At the same time, Kronos' B3 rating is supported by its leading market position in the WFM segment which has good growth prospects. Kronos' credit profile benefits from its large and diversified installed base, its high levels of recurring maintenance and subscription revenues, and Moody's expectation that Kronos should generate free cash flow of about 3% to 4% of total debt in the next 12 months. The stable ratings outlook reflects Moody's expectations that Kronos will maintain good liquidity and generate organic EBITDA growth in the low teens percentages in the next 12 to 18 months. Moody's could raise Kronos' ratings if the company generates sustained revenue and earnings growth and demonstrates more conservative financial policies such that Moody's believes that Kronos could sustain leverage below 6.5x (Moody's adjusted) and free cash flow in the mid single digit percentages of total debt. Conversely, Moody's could downgrade Kronos' ratings if revenue growth weakens as a result of increasing competition or execution challenges, or EBITDA margins decline, leading to an erosion in liquidity and operating cash flow. The rating could be downgraded if free cash flow falls to breakeven levels for an extended period of time or leverage is sustained above 8x. Moody's has taken the following rating actions: Issuer: Kronos Incorporated Corporate Family Rating -- B3, downgraded from B2 Probability of Default Rating -- B3-PD, downgraded from B2-PD Senior Secured Revolver Credit Facility due October 2017 -- B1, LGD2 (29%), downgraded from Ba3, LGD3 (31%) 1st Lien Term Loan due October 2019 -- B1, LGD2 (29%), downgraded from Ba3, LGD3 (31%) 2nd Lien Term Loan due April 2020 -- Caa2, LGD 5 (83%), downgrade from Caa1, LGD5 (84%) Outlook Action: Outlook: Stable, revised from negative Headquartered in Chelmsford, MA, Kronos provides human capital management solutions to enterprise customers. Kronos was taken private by private equity firms Hellman & Friedman and JMI Equity in 2007. KRONOS INC: S&P Retains 'CCC+' Rating on 2nd-Lien Loan Due 2020 --------------------------------------------------------------- Standard & Poor's Ratings Services said its 'CCC+' issue rating and '6' recovery rating on Kronos Inc.'s second-lien term loan due 2020 remain unchanged following the company's intention to increase by $80 million the size of its planned add-on to the second-lien debt. The '6' recovery rating indicates S&P's expectations of negligible (0%-10%) recovery in the event of a payment default. The 'B' corporate credit rating and negative outlook on Kronos and the ratings on its other issues also remain unchanged. The total planned add-on is now $380 million, bringing the total loan amount outstanding to $2.27 billion, consisting of $1.405 billion first-lien and $865 million second-lien debt. The company plans to use the proceeds from the add-on to help fund a dividend to shareholders. With this increase to the add-on, leverage will rise modestly to a pro forma fiscal 2013 level of 8.3x from 8.0x. S&P's rating reflects its view of the company's "fair" business risk position and its highly leveraged financial risk profile. The negative outlook reflects S&P's view that the current high leverage level will decline modestly over the next year assuming the company's strong operating performance continues. For the complete corporate credit rating rationale, see S&P's research update on Kronos, published Nov. 15, 2013, on RatingsDirect. RATINGS LIST Kronos Inc. Corporate Credit Rating B/Negative/-- Senior Secured $865 mil. second-lien term loan due 2020 CCC+ Recovery Rating 6 LATTICE INC: Posts $49,445 Net Income in Third Quarter ------------------------------------------------------ Lattice Incorporated filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income of $49,445 on $2.17 million of revenue for the three months ended Sept. 30, 2013, as compared with a net loss of $107,317 on $2.12 million of revenue for the same period a year ago. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $16,222 on $6.27 million of revenue as compared with net income of $20,982 on $6.04 million of revenue for the same period during the prior year. The Company's balance sheet at Sept. 30, 2013, showed $4.59 million in total assets, $6.30 million in total liabilities and a $1.71 million deficit attributable to shareowners of the Company. A copy of the Form 10-Q is available for free at: http://is.gd/nnCtRM About Lattice Inc. Pennsauken, New Jersey-based Lattice Incorporated provides telecommunications services to correctional facilities and specialized telecommunication service providers in the United States. Lattice Incorporated disclosed a net loss of $570,772 on $10.77 million of revenue for the year ended Dec. 31, 2012, as compared with a net loss of $6.06 million on $11.44 million of revenue for the year ended Dec. 31, 2011. Rosenberg Rich Baker Berman & Company, in Somerset, New Jersey, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has a history of operating losses, has a working capital deficit and requires additional working capital to meet its current liabilities. These factors raise substantial doubt about the Company's ability to continue as a going concern. LEAGUE GROUP: B.C. Supreme Court Extends CCAA Proceedings --------------------------------------------------------- The Supreme Court of British Columbia approved the appointment of John Parkinson as the Interim Chief Executive Officer of the LEAGUE Group and an extension to the CCAA proceedings until June 28, 2014, under expanded powers of the Monitor, PWC. In addition, IGW Public Limited Partnership, a member of the LEAGUE Group, on Nov. 22 received court approval for the sale of all of its units in TSX listed Partners REIT (PAR.UN) to McCowan and Associates Ltd. McCowan and Associates is a private company controlled by Ron McCowan, an entrepreneur who has over 40 years of extensive experience in real estate development, construction, ownership and management. McCowan and Associates currently owns and manages properties comprising more than 3 million square feet. IGW Public Limited Partnership will sell 3,872,863 units to McCowan and Associates for $7 per unit (a premium of 20% from Nov 21st 2013 closing price of $5.85). The total consideration will be $27,110,041. The proceeds will be used to pay down certain elements of the LEAGUE Group's secured debt. "The extension and the sale represents a step forward in the LEAGUE Group's progression through the CCAA process," says John Parkinson, also adding, "We are impressed with McCowan and Associates and believe their involvement will play a significant role in the future of Partners REIT." About the LEAGUE Group LEAGUE Financial Partners is a real estate management and development company. On October 18, 2013, IGW Public Limited Partnership and certain other entities (the "League Group") filed for, and were granted, creditor protection under the Companies' Creditors Arrangement Act (CCAA) by the Supreme Court of British Columbia. LEHMAN BROTHERS: Defends Bid to Subordinate Fannie Mae Claim ------------------------------------------------------------ Lehman Brothers Holdings Inc. defended its request to subordinate the claim of Federal National Mortgage Association (Fannie Mae) tied to the sale of residential mortgage-backed securities. In court papers, Lehman asked Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York to issue an order subordinating the claim, saying the securities were issued by Structured Asset Securities Corp. "SASCO is the issuer of the Lehman RMBS and it is an affiliate of LBHI," said Alfredo Perez, Esq., at Weil Gotshal & Manges LLP, in New York. "As such, [the Fannie Mae claim] is subject to mandatory subordination under section 510(b)." Section 510(b) of the Bankruptcy Code requires the subordination of claims for damages arising from the purchase or sale of a security of the debtor or its affiliate to the claims of unsecured creditors. Fannie Mae had argued that its claim doesn't fit into any of the categories that would subject it to subordination under Section 510(b). It wants its claim allowed as general unsecured. The claim, which alleges violations of U.S. securities law, seeks to recover losses from Fannie Mae's investments in residential mortgage-backed securities. Earlier, Lehman and Fannie Mae signed a stipulation, under which both sides agreed that the portions of the company's objection asserting that the agency's aggregate recoveries may exceed its actual losses and that the agency's recoveries on its claim constitute a windfall at the expense of general unsecured creditors will be continued without prejudice. The stipulation can be accessed for free at http://is.gd/o1J735 Fannie Mae is represented by David Neier, Esq. -- dneier@winston.com -- at Winston & Strawn LLP, in New York. Fannie Mae's Objection LEHMAN BANKRUPTCY NEWS earlier reported that The Federal National Mortgage Association (Fannie Mae) asked the U.S. Bankruptcy Court in Manhattan to deny Lehman Brothers Holdings' request to subordinate its claim tied to the sale of residential mortgage- backed securities. Fannie Mae argued that its claim isn't subject to "mandatory subordination" under Section 510(b), a provision of the Bankruptcy Code cited by Lehman when it asked the court in September to block the agency's bid to have its claim allowed as general unsecured. Fannie Mae said its claim does not fit into any of the categories that would subject it to subordination. The claim, which alleges violations of U.S. securities law, seeks to recover losses from Fannie Mae's investments in RMBS issued by Lehman's affiliates. Lehman wants the claim subordinated pursuant to Section 510(b) and classified in Class 11 under its $65 billion payout plan. Section 510(b) requires that claims for damages resulting from the purchase or sale of a security of a debtor or its affiliate be subordinated to the claims of other unsecured creditors. Meanwhile, Lehman's payout plan classifies claims that are subject to the provision in Class 11. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 08-13555) on Sept. 15, 2008. Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012, a second payment of $10.2 billion on Oct. 1, 2012, and a third distribution of $14.2 billion on April 4, 2013. The brokerage is yet to make a first distribution to non-customers, although customers are being paid in full. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: Wants 27 Indemnification Claims Pegged at $0 ------------------------------------------------------------- Lehman Brothers Holdings Inc. asked the U.S. Bankruptcy Court in Manhattan to estimate in the amount of zero dollars 27 indemnification claims filed by former employees. Attorney for Lehman, Robert Lemons, Esq., at Weil Gotshal & Manges LLP, in New York, said the company's alleged liability "is so contingent and speculative that the employee indemnification claims likely will remain contingent and unliquidated indefinitely." The claims seek indemnification and advancement of defense costs from Lehman in connection with any litigation that has been or could be initiated against the former employees, according to court papers. The claims are listed at http://is.gd/kpPULx "The claimants alleged in their proofs of claim that LBHI may owe such obligations pursuant to LBHI's bylaws or other documents," Mr. Lemons said. "However, claimants did not point to any costs incurred or judgments entered against them that could be subject to the alleged indemnities referenced in the claims." A court hearing is scheduled for Dec. 19. Objections are due by Dec. 12. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 08-13555) on Sept. 15, 2008. Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012, a second payment of $10.2 billion on Oct. 1, 2012, and a third distribution of $14.2 billion on April 4, 2013. The brokerage is yet to make a first distribution to non-customers, although customers are being paid in full. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: Black Diamond, DBDO Ask for Documents ------------------------------------------------------ Black Diamond Offshore Ltd. and Double Black Diamond Offshore Ltd. asked the U.S. Bankruptcy Court in Manhattan to force Lehman Brothers Holdings Inc. to turn over documents related to two ISDA master agreements with the company's special financing unit and Lehman Brothers International (Europe). The claimants want a turnover of all documents reflecting derivative transactions completed pursuant to the agreements, and documents related to the guarantees drafted or issued by Lehman in connection with the agreements. The ISDA master agreements were terminated early after Lehman filed for bankruptcy protection in 2008, according to the claimants which are owed more than $15.8 million pursuant to the guarantees. A court hearing is scheduled for Dec. 18. Objections are due by Dec. 13. Black Diamond and DBDO are represented by: Angela J. Somers, Esq. Reid Collins & Tsai LLP One Penn Plaza, 49th Floor New York, NY 10119 Tel: (212) 344-5200 Fax: (212) 344-5299 Email: asomers@rctlegal.com About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 08-13555) on Sept. 15, 2008. Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012, a second payment of $10.2 billion on Oct. 1, 2012, and a third distribution of $14.2 billion on April 4, 2013. The brokerage is yet to make a first distribution to non-customers, although customers are being paid in full. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: Transfers 20% Stake in LBI to Third Party ---------------------------------------------------------- The trustee liquidating Lehman Brothers Holdings Inc.'s brokerage announced that the company transferred more than 20% of its ownership interest in the brokerage to an "unrelated third party." James Giddens, the court-appointed trustee, said that he registered the transfer of 211 shares of the common stock of the brokerage on Nov. 20, which represents about 21% of the equity of the brokerage. The move is part of the agreement made early this year, which settled nearly $44 billion in customer claims by Lehman and its European unit against the brokerage. The agreement, approved on April 16 by the U.S. Bankruptcy in Manhattan, required Lehman and the brokerage to deconsolidate for tax purposes, which was to be effected by the transfer of at least 20% of the holdings company's ownership interest in the brokerage to a third party buyer. The settlement paved the way for full repayment to former customers of the brokerage. Under the deal, Lehman's customer claim was slashed from $19.9 billion to $2.3 billion. Meanwhile, Lehman Brothers International (Europe) received a $9 billion customer claim, down from the $24 billion it originally wanted. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 08-13555) on Sept. 15, 2008. Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012, a second payment of $10.2 billion on Oct. 1, 2012, and a third distribution of $14.2 billion on April 4, 2013. The brokerage is yet to make a first distribution to non-customers, although customers are being paid in full. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEHMAN BROTHERS: Files 48th Status Report on ADR Settlements ------------------------------------------------------------ Weil Gotshal & Manges LLP, Lehman's legal counsel, filed a status report on the settlement of claims it negotiated through the so- called alternative dispute resolution process. The report noted that since the filing of the 47th status report, Lehman has served two additional ADR notices, bringing the total number of notices served to 437. The company also reached settlements with counterparties in nine ADR matters, eight as a result of mediation. Upon closing of those settlements, the company will recover a total of $2,054,130,582. Settlements have now been reached in 290 ADR matters involving 388 counterparties. As of Nov. 20, 120 of the 129 ADR matters that reached the mediation stage and concluded were settled through mediation. Only nine mediations were terminated without settlement. Fourteen more mediations are scheduled to be conducted for the period Nov. 22, 2013 to Jan. 29, 2014. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 08-13555) on Sept. 15, 2008. Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012, a second payment of $10.2 billion on Oct. 1, 2012, and a third distribution of $14.2 billion on April 4, 2013. The brokerage is yet to make a first distribution to non-customers, although customers are being paid in full. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. LEO MOTORS: Incurs $159,000 Net Loss in Third Quarter ----------------------------------------------------- Leo Motors, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $158,938 on $0 of revenues for the three months ended Sept. 30, 2013, as compared with a net loss of $184,052 on $915 of revenues for the same period a year ago. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $528,065 on $0 of revenues as compared with net income of $391,479 on $25,301 of revenues for the same period during the prior year. The Company's balance sheet at Sept. 30, 2013, showed $1.58 million in total assets, $2.10 million in total liabilities and a $511,693 total deficit. A copy of the Form 10-Q is available for free at: http://is.gd/1w6M4i About Leo Motors Headquartered in Hanam City, Gyeonggi-do, Republic of Korea, Leo Motors, Inc., a Nevada corporation, is currently engaged in the research and development of multiple products, prototypes and conceptualizations based on proprietary, patented and patent pending electric power generation, drive train and storage technologies. In 2011, the Company determined its investment in Leo B&T Inc. an investment account was impaired and recorded an expense of $4.5 million. During the 2012 year the Company had a net non operating income largely from the result of the forgiveness of debt for $1.3 million. The Company reported a net loss of $1.9 million on $25,605 of revenues in 2012, compared with a net loss of $5.4 million on $920,587 of revenues in 2011. In its audit report on the consolidated financial statements for the year ended Dec. 31, 2012, John Scrudato CPA, in Califon, New Jersey, expressed substantial doubt about Leo Motors' ability to continue as a going concern, citing the Company's significant losses since inception of $16.2 million and working capital deficit of $632,161. LIBERTY TIRE: Moody's Rates Proposed $25MM Add-on Notes 'Caa2' -------------------------------------------------------------- Moody's assigned a Caa2 rating to Liberty Tire Holdco LLC's proposed $25 million add-on to the 11% notes due 2016. Moody's also affirmed the Caa1 corporate family and Caa1-PD probability of default ratings for Liberty Tire as well as the Caa2 rating on the company's existing $200 million senior unsecured notes. Proceeds of the offering will primarily be applied to reduce revolver draw. The company's rating outlook is stable. Assignments: Issuer: Liberty Tire Recycling Holdco, LLC $25 million Add-On Senior Unsecured Regular Bond/Debenture Oct 1, 2016, Assigned Caa2 (LGD4, 67%) Affirmations: Issuer: Liberty Tire Recycling Holdco, LLC Corporate Family Rating, Affirmed Caa1 Probability of Default Rating, Affirmed Caa1-PD $200 million Existing Senior Unsecured Regular Bond/Debenture Oct 1, 2016, Affirmed Caa2 (LGD4, 67% from LGD4, 66%) Outlook Actions: Issuer: Liberty Tire Recycling Holdco, LLC Outlook, Remains Stable Ratings Rationale: Liberty Tire's Caa1 Corporate Family Rating recognizes the company's high leverage, (over 6.2x Moody's adjusted debt/EBITDA for LTM 09/30/2013), low single digit operating margins, adequate liquidity, and modest scale. The proposed $25 million term loan add-on and recent revolving credit facility amendment which increased the size of the revolving commitment $10 million to $75 million and extends the maturity 18 months to April 2016, provide additional liquidity which should allow management to fully focus on continuing operational improvements. Liberty Tire is the largest collector of used vehicular tires in the US and Canada. The company processes scrap tires for use in several end market uses include reselling the tires with remaining tread life for use on other cars, mixing crumb rubber in road surface and safety asphalt, using rubber mulch for playgrounds and flowerbeds, and burning tires as fuel for cement, paper, and other energy-intense processes. In the absence of alternative uses, the company disposes the shredded tires in landfills, itself a value-added service as many landfills are prohibited from accepting whole tires. The stable outlook reflects Moody's expectation of modest positive free cash flow generation in 2014 with all meaningful facilities contributing to earning while capex declines to maintenance levels. Free cash flow is expected to be applied to reduce revolver draw. Moody's does not anticipate meaningful improvement in end market demand for the company's products. Moody's considers Liberty Tire's liquidity to be adequate with about $48 million in revolver availability assuming a successful placement of the $25 million add-on ($22 million net of fees). Moody's expects free cash flow generation to gradually improve into 2014 through EBITDA generation as the company's efforts to improve plant operations and tire collection costs pay off. Moody's notes the company's lowest liquidity point tends to be early in the year when inventory builds for spring concentrated sale of rubber mulch at home improvement centers and highway road surfacing. Leverage declining below 5.0x on a sustained basis, liquidity sustained above $30 million, and free cash flow/debt improving to the mid single digit level could lead to a rating upgrade. Liquidity declining to $10 million or lower, an acquisition driving up leverage over 7.0x, or expectation for negative free cash flow on a sustained basis could lead to downgrade. Liberty Tire Recycling Holdco, LLC., headquartered in Pittsburgh, PA, is a scrap tire collector and recycler in the United States and Canada. Revenues in 2012 were $327 million. The company is majority-owned by American Securities, LLC. LIFEPOINT HOSPITALS: Fitch Rates $500MM Sr. Unsecured Notes 'BB' ---------------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to LifePoint Hospitals, Inc.'s $500 million proposed senior unsecured notes. A complete list of ratings follows at the end of this release. The ratings apply to approximately $1.7 billion of debt at Sept. 30, 2013. The Rating Outlook is Stable. Key Rating Drivers: -- Pro forma for the $500 million notes issue, LifePoint's leverage (total debt to EBITDA) of 4.0x EBITDA at Sept. 30, 2013, is amongst the lowest in the for-profit hospital industry. -- Fitch anticipated that debt would trend higher during the second half of 2013 as the result of funding acquisitions and share repurchases, but it remains consistent with the company's publicly stated leverage target of 3x-4x EBITDA. -- Liquidity is solid. Lower profitability resulting from the integration of recently acquired hospitals is expected to pressure the level of free cash flow (FCF; cash from operations less dividends and capital expenditures), but Fitch expects it to remain above $150 million annually. -- Organic growth in patient volume has been persistently weak across the for-profit hospital industry. However, Fitch expects the sector to benefit from the implementation of the Affordable Care Act (ACA) starting in 2014. LifePoint's recent hospital acquisitions are also supporting growth for the company. Solid Balance Sheet Helps Acquisition Strategy: LifePoint has consistently demonstrated a strong level of financial flexibility in recent years. Although the notes issuance increases leverage by a full turn of EBITDA, the company maintains good headroom in the financial and credit metrics relative to the 'BB' rating. Pro forma for the notes issuance, gross debt leverage remains among the lowest in the for-profit hospital industry with debt-to-EBITDA of 1.4x through the senior secured bank debt, 3.0x through the senior unsecured notes, and 4.0x through the senior subordinated convertible notes. Hospital acquisitions have recently been a top use of cash for LifePoint, consuming 31%, 52%, and 9.6% of CFO in 2011, 2012 and the LTM ended Sept. 30, 2013, respectively. Fitch estimates that the company's recent acquisitions will contribute about $220 million of revenue in 2013, or about 5.5% of the company's 2012 revenue before bad debt expense of $4.1 billion. In recent years, LifePoint has primarily used cash on hand to fund a series of small acquisitions, focusing on inpatient acute care hospital assets. With CFO trending around $400 million and capital expenditures around $230 million, Fitch estimates that LifePoint can fund two or three small hospital acquisitions with cash on hand annually assuming that asset prices do not increase significantly. LifePoint has announced three acquisitions during 2013, and proceeds of the notes issuance will be in part applied to the cost of these acquisitions. Higher debt levels to fund acquisitions are consistent with Fitch's expectation that LifePoint does not have financial incentive to manage its balance sheet with debt below 3.0x EBITDA. LifePoint's relatively stronger balance sheet, coupled with a record of accomplishment of successfully managing sole provider hospitals in rural markets, help make the company an attractive acquirer of hospitals in its preferred markets. LifePoint has recently been focusing on adding assets in faster growing markets where it can still have sole provider status, and in recent years has added markets in three new states - North Carolina, Michigan and Indiana. LifePoint does have some geographic concentration, with 55% of 2012 revenue generated in the company's five largest states, so acquisitions that broaden geographic scope are favorable to the business profile. Good Financial Flexibility: Adequate sources of liquidity also support LifePoint's credit profile. In the past year, LifePoint extended its debt maturity profile by refinancing its bank term loan and retiring the subordinate convertible debentures, which were puttable to the company in February 2013. The largest upcoming maturity is the $575 million senior subordinated convertible notes maturing May 2014. Fitch expects the company will refinance this maturity, and notes that LifePoint currently has capacity to refinance the debt on either of the secured or unsecured level. The bank agreement permits additional secured debt up to a senior secured leverage ratio of 3.5x with an $800 million carveout regardless of the ratio (there is a springing lien provision in the senior unsecured notes indenture which required these notes to become ratably secured when secured debt is greater than 3.0x EBITDA). At Sept. 30, 2013, liquidity was provided by approximately $194 million of cash on hand, availability on the company's $350 million bank credit facility revolver ($326 million available), and FCF ($202 million for the latest 12 months [LTM] period, defined as cash from operations less dividends and capital expenditures). Fitch projects that LifePoint's FCF will contract by about $40 million in 2013 versus the LTM level, to $160 million. This is because of lower profitability and higher capital expenditures in Q4'13. An expectation for a slight contraction in the EBITDA margin is primarily because of the integration of less profitable acquired hospitals. Rural Market Recovery Lagging Broader Industry: LifePoint is the only pure-play non-urban hospital operator in the industry, with a sole-provider position in 53 of its 57 markets, although the company has gained exposure in larger rural and small suburban markets through some of its recent acquisitions. Having sole-provider status in the vast majority of markets confers certain benefits on LifePoint in capturing organic patient volume growth as well as in negotiating price increases with commercial health insurers. While LifePoint's organic patient volume growth has recently lagged the broader for-profit hospital industry, the company's results have been consistent with the experience of other rural and suburban market hospital operators. While persistently weak organic volume trends across the industry began to show signs of improvement in the second half of 2011, providers in urban markets exhibited a much stronger rebound in volume growth that has since reversed for most companies, with weak organic volume trends industry-wide in 2012 and the first nine months of 2013. LifePoint and the company's peers have recently been successful in augmenting weak organic operating trends through acquisition of inpatient hospitals and other types of care delivery assets. Consolidation of the industry has been encouraged by the financial pressures on smaller operators related to payment reforms that are required by the Affordable Care Act (ACA), and capital requirements necessary to comply with other government mandates, such as the implementation of electronic health records. Affordable Care Act a Positive Driver In 2014: The main provisions of the ACA that will affect the for-profit hospital industry include the mandate for individuals to purchase health insurance or face a financial penalty, and the expansion of Medicaid eligibility. These elements are scheduled to take effect in early 2014. Fitch expects an initially positive financial effect on the acute- care hospital industry because of the coverage expansion elements of the ACA, mostly as the result of reduced levels of uncompensated care, but also through a mild positive boost to utilization of healthcare services by the newly insured. Over the several years following the coverage expansion, Fitch expects to see some erosion of the initial benefits. This is because of a reduction in Medicare payments through cuts required by the ACA, as well as a general evolution away from volume-based and toward value-based pricing for healthcare providers. Rating Sensitivities: LifePoint's current financial and credit metrics provide decent headroom within the 'BB' rating category. However, a positive rating action is unlikely in the near term unless Fitch believes the company will maintain its gross debt level at or below 3.0x EBITDA. A downgrade could result from gross debt to EBITDA consistently maintained above 4.0x and FCF generation trending below $150 million annually. Drivers of higher leverage and lower cash generation could include leveraging acquisitions, difficulties in integrating recent acquisitions, and a persistently weak organic operating trend in the for-profit hospital sector. Debt Issue Ratings: Fitch currently rates LifePoint as follows: -- Issuer Default Rating 'BB'; -- Secured bank facility 'BB+'; -- Senior unsecured notes 'BB'; -- Subordinated convertible notes 'BB-'. LIFEPOINT HOSPITALS: Moody's Rates Proposed Unsecured Notes Ba1 --------------------------------------------------------------- Moody's Investors Service assigned a Ba1 (LGD 3, 39%) rating to LifePoint Hospitals' proposed senior unsecured note offering. LifePoint's existing ratings, including the Ba2 Corporate Family Rating and Ba2-PD Probability of Default Rating remain unchanged. The outlook for the ratings is stable. While the issuance of $500 million in senior notes will increase adjusted debt to EBITDA to 4.4 times, Moody's does not expect leverage to be sustained at this level. Moody's expects that leverage will return to around 4.0 times by the end of 2014 through a combination of incremental EBITDA from previously announced acquisitions and the maturity of the company's $575 million convertible senior subordinated notes in May 2014. However, barring any other changes in the capital structure or the Corporate Family Rating, Moody's expects to downgrade the company's senior debt to Ba2 upon the maturity of the subordinated notes. The repayment of the subordinated debt upon maturity will eliminate a layer of loss absorption that currently benefits the rating on the company's senior secured and senior unsecured debt. The lower rating would also reflect the fact that the preponderance of the company's debt would reside at the senior creditor level at that point. Following is a summary of Moody's rating actions. Rating assigned: Senior unsecured notes due 2021 at Ba1 (LGD 3, 39%) Ratings unchanged / LGD assessments revised: Senior secured revolver at Ba1 (LGD 3, 39%) from (LGD 3, 35%) Senior secured term loans at Ba1 (LGD 3, 39%) from (LGD 3, 35%) Senior notes at Ba1 (LGD 3, 39%) from (LGD 3, 35%) Ratings Rationale: LifePoint's Ba2 Corporate Family Rating reflects Moody's expectation that the company's operating performance will result in strong interest coverage and cash flow coverage of debt. Leverage will increase in the near term but is not expected to remain above 4.0 times. Moody's also expects the company to continue with its active pursuit of acquisitions and share repurchase activity. The rating also incorporates Moody's expectation of a difficult operating environment in the near term, characterized by reimbursement pressures and weak volume trends, but improving in 2014 as provisions of the Affordable Care Act are implemented. Moody's does not expect an upgrade in the near term given the increase in leverage. However, Moody's could upgrade the rating if the company grows earnings through acquisitions that do not significantly disrupt operations or require a material use of incremental debt, such that debt to EBITDA is sustained at or below 3.0 times. Moody's could downgrade the rating if it believes LifePoint's financial policy is becoming more aggressive and it pursues debt financed acquisitions or share repurchases or if the company experiences operating challenges such that debt to EBITDA is expected to be sustained above 4.0 times. Headquartered in Brentwood, Tennessee, LifePoint Hospitals is a leading operator of general acute care hospitals with operations predominantly in non-urban communities. The company generated revenue of approximately $3.6 billion net of the provision for doubtful accounts in the twelve months ended September 30, 2013. LIFEPOINT HOSPITALS: S&P Affirms 'BB-' CCR and Revises Outlook -------------------------------------------------------------- Standard & Poor's Ratings Services has reviewed its ratings on LifePoint Hospitals Inc., which it labeled as "under criteria observation" (UCO) after the publishing of its revised corporate criteria on Nov. 19, 2013. Standard & Poor's expedited the review of its ratings on LifePoint because of the company's announced debt issue. With S&P's criteria review of LifePoint complete, it assigned a 'BB-' issue-level rating (the same as the corporate credit rating) and '3' recovery rating to LifePoint's proposed senior unsecured notes. The '3' recovery rating indicates S&P's expectation of meaningful (50-70%) recovery for lenders in the event of default. S&P also affirmed its 'BB-' corporate credit and debt ratings on the company. S&P also revised the outlook to negative from stable. "The ratings on Brentwood, Tenn.-based LifePoint Hospitals Inc. incorporate Standard & Poor's Ratings Services' assessment that the rural hospital chain has a "weak" business risk profile, given its relatively limited size and market exposure and reimbursement risk," said credit analyst David Peknay. "We view LifePoint's financial risk profile as "significant", reflecting a debt-to- EBITDA ratio within its publicly stated 3x to 4x target. The pending debt issuance and declining operating trends suggests that Lifepoint's financial risk profile is at risk in that debt to EBITDA may remain above 4x through 2014, although our base case anticipates delevering to about 3.9x. LifePoint owns and operates 57 hospitals in nonurban locations." S&P's negative rating outlook on LifePoint Hospitals reflects its view that industry pressures may jeopardize its base case expectations and preclude its deleveraging scenario. If physician employment costs, weak patient volume trends, and reimbursement cuts continue to strain profitability, it may make it difficult for the company to reduce leverage back to the level that S&P considers consistent with a significant financial risk profile. Upside scenario A revision to a stable outlook is predicated on the company reducing leverage below 4x and S&P believes it will remain there. Key factors that we believe must occur include the margin stabilization of the its base business, attainment of reasonable profitability from its acquisitions, and confidence in the company's commitment to maintaining leverage below 4x. Downside scenario A downgrade would be predicated on operating challenges that would prevent LifePoint from again achieving credit metrics consistent with a significant financial risk profile. This might include sustained organic revenue declines of even modest size, caused by a chronic reduction in admissions and adverse reimbursement changes. S&P believes this would be accompanied by a margin contraction of at least 100 basis points. LIGHTSQUARED INC: Exit Plans Not Feasible, US Trustee Says ---------------------------------------------------------- The U.S. Trustee claims that that none of the four competing reorganization plans for LightSquared Inc. -- one each by LightSquared, Harbinger, a group of secured lenders and Mast Capital Management LLC -- is feasible and can be confirmed by the bankruptcy court. The assets the plans are hoping to sell may not even be controlled by the estate, depending on approval from the Federal Communications Commission and Industry Canada, according to U.S. Trustee Tracy Hope Davis, Law360 reported. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Trustee, in her court filing on Nov. 22, offered her opinion that none of the plans meets the "feasibility" requirement because they all require approval from the U.S. Federal Communications Commission to use or sell spectrum licenses. The U.S. Trustee said it "may take years" before FCC approval is secured. She also said all four plans are defective because they too liberally dispense immunity from lawsuits in favor of non- bankrupt third parties. There is a hearing on Nov. 26 in U.S. Bankruptcy Court in Manhattan were proponents of the four plans once again can vent their objections to the others' proposals. Three plans call for a sale of assets while the proposal by LightSquared's owner Harbinger Capital Partners LLC is a reorganization. There will be a confirmation hearing on Dec. 10 for approval of one of the plans. Confirmation is preceded by an auction on Dec. 3 to determine who makes the best offer for the business. LightSquared hinted in a court filing this month that it may attempt to delay plan approval in view of the company's suit filed on Nov. 15 alleging that Charles Ergen and his Dish Networks Corp. impermissibly purchased more than $1 billion in LightSquared debt as part of a scheme to become the owner through the plan proposed by secured noteholders. Dish has an offer on the table to pay $2.22 billion in cash for LightSquared's assets. Dish shareholders are in Nevada state court on Nov. 26 asking the judge to bar Ergen from participating in the LightSquared auction, saying he violated duties to Dish in buying up LightSquared debt for his personal benefit. 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: Judge Approves $150 Million Financing from Lenders ------------------------------------------------------------------ Longview Power LLC won court approval of a $150 million loan from a majority of its lenders to help fund operations while undergoing a Chapter 11 restructuring. Joseph Checkler, writing for Dow Jones Business News, reported that Judge Brendan Shannon of U.S. Bankruptcy Court in Wilmington, Del., on Nov. 21 approved a loan that the company hopes will keep it afloat as it marches toward an exit from bankruptcy as soon as early 2014. The DIP financing package calls for lenders holding more than 60% of Longview's senior debt to provide new financing for Longview, so it can fix its power plant and continue with its restructuring. Bloomberg News reports that The financing package consists of a multidraw term loan of as much as $150 million, which includes a letter of credit sub-facility for as much as $30 million, according to documents filed Nov. 1. The financing "provides a comprehensive capital solution" to support Longview's restructuring while forming the "framework for a plan of reorganization," the company said in court papers, according to Bloomberg. "We think this is a more constructive phase of the case," said Kirkland & Ellis LLP's Ray Schrock, referring to the constant acrimony between parties since Longview's August Chapter 11 filing, the Dow Jones report cited. $2-Bil. Plant Longview spent $2 billion to build a coal-fired plant in West Virginia. According to Dow Jones Business News, the debtor-in-possession loan comes amid an ongoing fight between Longview and the contractors who built its now troubled coal-fired power plant, the report related. That squabble is tying up $58 million in lines of credit, money that Longview could have theoretically fallen back on once it used the rest of its cash. Now, it won't need to rely on it. The contractors last week said they wouldn't oppose the loan, a key moment because they have rights against the assets that secure the new financing. Some wording changes were made to the loan documents reserving the rights of the contractors. Those contractors, subsidiaries of Norwegian construction company Kvaerner ASA, of Siemens AG, and of German engineering firm Foster Wheeler AG, have been in a blame game with Longview over problems at the 700-megawatt plant, located in Maidsville, W.V., the report further related. The plant, called Longview, provides power in West Virginia, Pennsylvania and New Jersey. About Longview Power LLC 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. The Debtor disclosed assets of $1,717,906,595 plus undisclosed amounts and liabilities of $1,075,748,155 plus undisclosed amounts. 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 case due to insufficient response to the U.S. Trustee's communication/contact for service on the committee. Longview in November 2013 filed a bankruptcy-exit plan that will drop $1 billion in debt from the Debtor's balance sheet and raise money to cover the cost of fixing the plant. Under the Plan, the lenders would share between 85 percent and 90 percent of the reorganized company's equity, court papers show. The lenders providing the bankruptcy loan would get the rest of the equity. LYFE COMMUNICATIONS: Incurs $451,700 Net Loss in Third Quarter -------------------------------------------------------------- LYFE Communications, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $451,719 on $46,743 of revenues for the three months ended Sept. 30, 2013, as compared with a net loss of $322,534 on $133,107 of revenues for the same period during the prior year. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $1.70 million on $157,001 of revenues as compared with a net loss of $1.07 million on $458,654 of revenues for the same period a year ago. The Company's balance sheet at Sept. 30, 2013, showed $1.11 million in total assets, $3.72 million in total liabilities and a $2.60 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/u4Rg9E About LYFE Communications South Jordan, Utah-based LYFE Communications, Inc.'s business is to develop, deploy, and operate next generation media and communications network based services to single-family, multi- family, high-rise resort and hospitality properties. LYFE Communications incurred a net loss of $1.74 million on $531,531 of revenue for the year ended Dec. 31, 2012, as compared with a net loss of $3.88 million on $621,830 of revenue for the year ended Dec. 31, 2011. HJ & Associates, LLC, 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 suffered losses since inception. The Company has not established operations with consistent revenue streams and has a working capital deficit. These factors raise substantial doubt about the Company's ability to continue as a going concern. MANASOTA GROUP: Delays Form 10-Q for Third Quarter -------------------------------------------------- Manasota Group, Inc., filed with the U.S. Securities and Exchange Commission a Notification of Late Filing on Form 12b-25 with respect to its quarterly report on Form 10-Q for the quarter ended Sept. 30, 2013. During the last five months, the Company's accounting staff has been fully engaged with determining the proper accounting treatment of certain adjustments relating to the building it owns. As a result, the subject report could not be filed timely without unreasonable effort and expense. About Manasota Group Manasota Group, Inc., f/k/a Horizon Bancorporation, Inc., was incorporated in the State of Florida on May 27, 1998, for the purpose of becoming a bank holding company owning all of the outstanding capital stock of Horizon Bank, a commercial bank chartered under the laws of Florida and a member of the Federal Reserve System. Manasota Group reported net income of $35,440 on $175,004 of total operating income for the year ended Dec. 31, 2012, as compared with a net loss of $544,686 on $273,266 of total operating revenue during the prior year. For the three months ended March 31, 2013, the Company posted net income of $6,122 on $43,751 of total operating revenue, as compared with net income of $10,891 on $43,751 of total operating revenue for the same period a year ago. As of March 31, 2013, the Company had $1.20 million in total assets, $1.51 million in total liabilities and a $312,286 total shareholders' deficit. MARIAH RE: Can't Take Back $100MM Payment, Insurer Argues --------------------------------------------------------- Law360 reported that American Family Mutual Insurance Co. told a New York federal court on Nov. 20 that the liquidators of Mariah Re Ltd. could not reel back the $100 million the reinsurer paid for storm losses, arguing the payment was based on accurate data. According to the report, American Family and fellow defendants AIR Worldwide Corp. and ISO Services Inc. each asked the court to toss Mariah's lawsuit, which alleged that ISO improperly revised a report about a 2011 storm to state that metropolitan areas in Kansas were impacted. The case is Mariah Re Ltd. (In Liquidation) v. American Family Mutual Insurance Company et al., Case No. 1:13-cv-04657 (S.D.N.Y.) before Judge Richard J. Sullivan. Messrs. Geoffrey Varga and Jess Shakespeare of Kinetic Partners were appointed as liquidators of Mariah Re. They can be reached at: Geoffrey Varga Jess Shakespeare KINETIC PARTNERS (CAYMAN) LIMITED The Harbour Centre, 42 North Church Street P.O. Box 10387, Grand Cayman KY1-1004 Cayman Islands MERCANTILE BANCORP: Plan Filing Period Extended Until Dec. 24 ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has extended Mercantile Bancorp, Inc.'s exclusive periods to file and obtain acceptances of a Chapter 11 Plan until Dec. 24, 2013, and Feb. 24, 2014, respectively. About Mercantile Bancorp Mercantile Bancorp -- http://www.mercbanx.com/-- is a Quincy, Illinois-based bank holding company with wholly owned subsidiaries consisting of one bank in Illinois and one each in Kansas and Florida, where the Company conducts full-service commercial and consumer banking business, engages in mortgage banking, trust services and asset management, and provides other financial services and products. The Company also operated Mercantile Bank branch offices in Missouri and Indiana. On Aug. 10, 2011, the Illinois Division of Banking released a Consent Order that Mercantile Bank, the Federal Deposit Insurance Corporation, and the Division entered into as of July 28, 2011. Under the Order, Mercantile Bank will cease operating with all money transmitters and currency businesses providing brokerage, sale or exchange of non-United States currency for deposit customers. Furthermore, Mercantile Bank may not enter into a new line of business without the prior written consent of the FDIC and the Division. Mercantile Bancorp filed a Chapter 11 petition (Bankr. D. Del. Case No. 13-11634) on June 27, 2013. The petition shows assets and debt both exceeding $50 million. Liabilities include $61.9 million owing on junior subordinated debentures. Mercantile stopped paying interest on the debentures in 2009, since then running up $14 million in unpaid interest. Stuart M. Brown, Esq. at DLA Piper LLP (US), in Wilmington, Delaware; and Richard A. Chesley, Esq., Kimberly D. Newmarch, Esq., and Aaron M. Paushter, Esq., at DLA Piper LLP (US), in Chicago, Illinois, are the attorneys for the Debtor. A three-member official committee of unsecured creditors was appointed by the U.S. Trustee. An official committee of trust preferred securities holders was also appointed by the U.S. Trustee. The TruPS Committee is represented by Domenic E. Pacitti, Esq., at Klehr Harrison Harvey Branzburg LLP, in Wilmington, Delaware; Morton R. Branzburg, Esq., at Klehr Harrison Harvey Branzburg LLP, in Philadelphia, Pennsylvania; David R. Seligman, P.C., Esq., and Jeffrey W. Gettleman, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois; and Joseph Serino Jr., P.C., Esq., and John P. Del Monaco, Esq., at Kirkland & Ellis LLP, in New York. MERITAGE HOMES: Fitch Rates New $100MM Unsecured Notes 'BB-' ------------------------------------------------------------ Fitch Ratings has assigned a 'BB-/RR3' rating to Meritage Homes Corporation's (NYSE: MTH), proposed offering of $100 million of senior unsecured notes. The offering is an add-on to its existing 7.15% senior unsecured notes due 2020. The issuance will be equal in right of payment with all other senior unsecured debt. Meritage intends to use the proceeds of the notes offering for general corporate purposes, including the acquisition and development of land and home construction. The Rating Outlook is Positive. A complete list of ratings follows at the end of this release. Key Rating Drivers: The ratings and Outlook for MTH are influenced by the company's execution of its business model, conservative land policies, geographic diversity and healthy liquidity position. The Positive Outlook also takes into account Fitch's expectation of further moderate improvement in the housing market in 2013 and 2014, share gains by MTH and hence volume outperformance relative to industry trends as the market continues its shift to trade-up housing (Meritage's strength) and much better profitability and sharply improved credit metrics. MTH's sales are reasonably dispersed among its 15 metropolitan markets within seven states. During 2012, the company ranked among the top 10 builders in such markets as Dallas/Fort Worth, San Antonio and Austin, TX; Orlando, FL; Phoenix, AZ; Riverside/San Bernardino, CA; Denver, CO; and San Francisco/Oakland/Fremont and Sacramento, CA. The company also builds in the Central Valley, CA; Houston, TX; Inland Empire, CA; Tucson, AZ; Tampa, FL; and Raleigh-Durham and Charlotte, NC. MTH also announced its entry into the Nashville, Tennessee market with its August 2013 acquisition of Phillips Builders. Currently, Fitch estimates about 65% -70% of MTH's home deliveries are to first- and second-time trade-up buyers, 30%-35% to entry-level buyers, less than 5% are to luxury and active adult (retiree) homebuyers. Improving Housing Market: Housing metrics have all showed improvement so far in 2013. For the first eight months of the year, single-family housing starts improved 19.3%, while new-home sales increased 20.4%. Existing home sales improved 11.8% for the first nine months of 2013. The most recent Freddie Mac 30-year interest rate was 4.35%, 104 bps above the all-time low of 3.31% set the week of Nov. 21, 2012. The NAR's latest monthly existing home affordability index was 164.3, moderately below the all-time high of 213.6. Fitch's housing forecasts for 2013 assume a continued moderate rise off the bottom of 2011. New-home inventories are well below the norm and affordability is near record highs. In a slowly growing economy with still above-average distressed home sales competition, less competitive rental cost alternatives and low mortgage rates (on average), the housing recovery will be maintained this year and in 2014. Fitch's housing estimates for 2013 follow: Single-family starts are forecast to grow 16.8% to 625,000, while multifamily starts expand about 20% to 295,000; single-family new-home sales should grow approximately 20% to 439,000 as existing home sales advance 8.5% to 5.05 million. Average single-family new-home prices (as measured by the Census Bureau), which dropped 1.8% in 2011, increased 8.7% in 2012. Median home prices expanded 2.4% in 2011 and grew 7.9% in 2012. Average and median home prices should improve approximately 8% and 7.2%, respectively, in 2013. As Fitch noted in the past, the housing recovery will likely occur in fits and starts. Higher Mortgage Rates and Home Prices: The most recent Freddie Mac average mortgage rate was 4.35%, up 19 bps sequentially from the previous week and about 90 bps higher than the average rate during the month of April 2013, a recent low point for mortgage rates. While the current rates are still well below historical averages, the sharp increase in rates and rising home prices are moderating affordability. In the case of MTH, whose average home price is roughly $340,700, assuming a 20% down payment, a 100 bps rise in current mortgage rates will increase principal and interest payment by about $165 each month or a 12.2% impact. A couple of August and September housing metrics showed some weakness following the increase in interest rates during the past six months. The Pending Home Sales Index declined 5.6% to 101.6 in September from 107.6 in August and is 1.2% lower than the 102.8 recorded in September 2012. New home sales in August grew 7.9% on a seasonally-adjusted basis to 421,000, compared with 390,000 during the previous month. The July 2013 new home sales were 14.1% lower relative to June 2013. Additionally, the August 2013 estimate is the second lowest seasonally-adjusted sales level so far this year. While Fitch does not expect the current higher mortgage rates to derail the housing recovery, a continued sharp increase in rates could further slow it down. Land Strategy: MTH employs conservative land and construction strategies. The company typically options or purchases land only after necessary entitlements have been obtained so that development or construction may begin as market conditions dictate. Under normal circumstances MTH extensively uses lot options, and that is expected to be the future strategy in markets where it is able to do so. The use of non-specific performance rolling options gives the company the ability to renegotiate price/terms or void the option, which limits downside risk in market downturns and provides the opportunity to hold land with minimal investment. However, as of September 30, 2013, only 29% of MTH's lots were controlled through options - a much lower than typical percentage due to considerable option abandonments and write-offs in recent years. Additionally, there are currently fewer opportunities to option lots and, in certain cases, the returns for purchasing lots outright are far better than optioning lots from third parties. Total lots controlled, including those optioned, were 25,046 at Sept. 30, 2013. This represents a 5-year supply of total lots controlled based on trailing 12-months deliveries. On the same basis, MTH's owned lots represent a supply of 3.5 years. Liquidity/Debt: MTH successfully managed its balance sheet during the severe housing downturn, allowing the company to accumulate cash and pay down its debt as it pared down inventory. The company had unrestricted cash of $177.6 million and investments and securities of $92.8 million at Sept. 30, 2013. The company's debt totaled $798.3 million at the end of the first quarter. MTH's debt maturities are well-laddered, with the next debt maturity on March 2018, when its 4.50% $175 million senior notes become due. In July 2012, the company entered into a new $125 million unsecured revolving credit facility maturing in 2015. The facility was amended during the second quarter of 2013, which increased the commitment to $135 million and extended the maturity to 2016. There were no outstandings under the revolver as of Sept. 30, 2013. MTH generated negative cash flow from operations during the past two years as the company started to rebuild its land position. The company had negative cash flow of $220.5 million during 2012 after spending $480 million on land and development during the year. Fitch expects the company to moderately increase its land and development spending during 2013, resulting in negative cash flow of about $75 million - $125 million this year. Fitch is comfortable with this strategy given the company's liquidity position and debt maturity schedule. Fitch expects MTH over the next few years will maintain liquidity (consisting of cash and investments and the revolving credit facility) of at least $225 million - $250 million, a level which Fitch believes is appropriate given the challenges still facing the industry. Rating Sensitivities: Future ratings and Outlooks will be influenced by broad housing market trends as well as company-specific activity, such as -- Trends in land and development spending; -- General inventory levels; -- Speculative inventory activity (including the impact of high cancellation rates on such activity); -- Gross and net new order activity; -- Debt levels; -- Free cash flow trends and uses; and -- MTH's cash position. A ratings upgrade may be considered if the recovery in housing continues at a healthy pace and shows durability; MTH shows sustained improvement in credit metrics (such as homebuilding debt to EBITDA consistently below 5x); and the company continues to maintain a healthy liquidity position (above $250 million). A negative rating action could be triggered if the industry recovery dissipates; 2014 revenues drop high-teens or greater while the pretax loss is higher than 2011 levels; and MTH's liquidity position falls sharply, perhaps below $200 million as the company maintains an overly aggressive land and development spending program. Fitch rates the following with a Positive Outlook: MTH: -- Long-term Issuer Default Rating (IDR) 'B+'; -- Senior unsecured debt 'BB-/RR3'. The Recovery Rating (RR) of 'RR3' on the company's senior unsecured debt indicates good recovery prospects for holders of these debt issues. MTH's exposure to claims made pursuant to performance bonds and joint venture debt and the possibility that part of these contingent liabilities would have a claim against the company's assets were considered in determining the recovery for the unsecured debtholders. Fitch applied a liquidation value analysis for the RR. MERITAGE HOMES: Moody's Rates New $100MM Unsecured Notes B1 ----------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Meritage Homes Corporation's proposed $100 million senior unsecured notes due 2020. In the same rating action, Moody's affirmed the company's B1 Corporate Family Rating, B1-PD Probability of Default Rating, B1 rating on the existing senior unsecured notes due 2018, 2020 and 2022 and convertible senior notes due 2032, (P)B1 rating on the senior unsecured shelf, and SGL-2 Speculative Grade Liquidity (SGL) rating. The rating outlook is stable. The following rating actions were taken: Proposed $100 million senior unsecured notes due 2020, assigned B1 (LGD4 - 54%); Corporate Family Rating, affirmed at B1; Probability of Default Rating, affirmed at B1-PD; $175 million 4.5% senior unsecured notes due 2018, affirmed at B1. LGD rate changed to LGD4 - 54% from LGD4 - 53%; $196 million 7.15% senior unsecured notes due 2020, affirmed at B1. LGD rate changed to LGD4 - 54% from LGD4 - 53%; $300 million 7.0% senior unsecured notes due 2022, affirmed at B1. LGD rate changed to LGD4 - 54% from LGD4 - 53%; $127 million 1.875% convertible senior unsecured notes due 2032, affirmed at B1. LGD rate changed to LGD4 - 54% from LGD4 - 53%; Senior unsecured shelf rating, affirmed at (P)B1; Speculative Grade Liquidity rating, affirmed at SGL-2; The rating outlook is stable. Ratings Rationale: The proposed $100 million senior unsecured notes will be guaranteed by all of Meritage's wholly owned subsidiaries, as are the existing senior unsecured notes and convertible senior notes. The proceeds from the note offering will be used for general corporate purposes including for acquisition and development of land and home construction. As a result of this transaction, the company's adjusted homebuilding debt to capitalization ratio is expected to increase slightly to 54% from 51% at September 30, 2013. Meritage's debt leverage had declined from 56.2% in Q3 2012 as a result of the $76 million deferred tax valuation allowance reversal that benefited equity. The B1 Corporate Family Rating reflects the relative stability of Meritage's operating performance over the last several years, moderate homebuilding debt-to-capitalization ratio, healthy gross margins, profitability on a net income basis, (the company resumed generating net income in Q2 2012 and was profitable for six consecutive quarters), modest land supply, and healthy cash position. Additionally, Moody's ratings incorporate the industry's positive momentum which Moody's expects to translate into improved credit metrics for Meritage in 2014. Despite the favorable industry conditions, Moody's believes that it will take time for some of the company's traditional homebuilding metrics, including interest coverage, debt leverage, and returns, to return to normalized levels. Moody's expects cash flow from operations to continue to be negative and cash balances to decline as the company invests in land and land development over the next 12 to 18 months. The rating also reflects Meritage's reliance on its Texas and California operations, which accounted for 27% and 26% of revenues for the YTD period ended 9/30/13. Moody's recognizes that the company has been able to reduce the revenue concentration from prior levels in 2011 and 2012. The SGL assessment takes into account internal and external sources of liquidity, covenant compliance, and alternate sources of liquidity. Meritage's SGL-2 rating indicates a good liquidity profile, supported by a $178 million cash balance at September 30, 2013, full availability under its $200 million revolving credit facility, and by the lack of near term debt maturities. However, liquidity is constrained by the expected negative cash flow generation, lack of any significant sources of alternate liquidity, and by the need to comply with financial covenants in the credit facility agreement. The stable outlook reflects Meritage's steady financial performance and Moody's view that the company will continue to generate improved results over the next year, as demand and pricing continue to strengthen. The outlook also incorporates Moody's view that an improving operating environment combined with expected capital structure discipline should allow the company's debt leverage to decline. The ratings would be considered for an upgrade if Meritage's homebuilding debt-to-capitalization ratio declined and was maintained below 50% and if the company expands its profitability on a net income basis, while maintaining solid liquidity. The ratings could be lowered if the company jeopardized its liquidity position by engaging in large land purchases or substantial share buy-backs, if gross margins or earnings deteriorate substantially, or if the adjusted homebuilding debt- to-capitalization ratio rises above 60%. Meritage Homes Corporation is the ninth largest homebuilder in the U.S., primarily building single-family and attached homes in 15 metropolitan areas in Arizona, Texas, California, Colorado, Florida and North Carolina. Formerly known as Meritage Corporation, the company was founded in 1985 and is headquartered in Scottsdale, Arizona. Total revenues and consolidated net income for the LTM period ended September 30, 2013, were approximately $1.6 billion and $174 million, respectively. METAL SERVICES: Moody's Says $25MM Add-on Notes is Credit Positive ------------------------------------------------------------------ Moody's Investors Service said that Metal Services LLC's proposed $25 million add-on term loan and credit agreement amendment are modestly credit-positive, but the company's ratings and outlook are unchanged at present. Headquartered in Kennett Square, Pennsylvania, Metal Services LLC (dba Phoenix Services LLC) provides on-site steel mill services. The company was founded by CEO Douglas Lane in 2006 and has been majority-owned by private equity firm Olympus Partners since 2009. MOHEGAN TRIBAL: Moody's Raises CFR & $500MM Notes Rating to B3 -------------------------------------------------------------- Moody's Investors Service raised Mohegan Tribal Gaming Authority's Corporate Family Rating to B3 from Caa1 following the closing of a $955 million bank loan refinancing that puts the company in a better position to compete within Connecticut as well as with casino facilities in neighboring states. The bank loan refinancing follows the August completion of a $500 million senior unsecured notes issue due 2021, proceeds of which were used to refinance the company's relatively high cost third lien notes. This rating action completes the review process that was initiated on Oct. 17. The rating outlook is stable. Ratings Upgraded: Corporate Family Rating, to B3 from Caa1 Probability of Default Rating, to B3-PD from Caa1-PD $500 million 9.75% senior unsecured notes 2021, to B3 (LGD 3, 48%) from Caa1 (LGD 3, 43%) $9.7 million 6.875% senior subordinated notes 2015, to Caa2 (LGD 6, 96%) from Caa3 (LGD 5, 89%) $21.2 million 7.125% senior subordinated notes 2014, to Caa2 (LGD 6, 96%) from Caa3 (LGD 5, 89%) Ratings Affirmed: $100 million revolver 2018, at B2 (LGD 3, 37% from LGD3, 36%) $125 million senior secured term loan 2018, at B2 (LGD 3, 37% from LGD3, 36%) $730 million senior secured term loan 2019, at B2 (LGD 3, 37% from LGD3, 36%) Ratings Withdrawn: $225 million term loan facility 2016 at B3 (LGD 3, 33%) $200 million 11.5% 2nd lien notes 2017 at Caa3 (LGD 5, 87%) Ratings Rationale: Combined, MTGA's bank loan financing and senior unsecured note issuance will reduce the company's overall cost of debt and lower its annual interest expense by about $16 million. This interest savings combined with the upcoming expiration of MTGA's relinquishment liability in January 2015 has the potential to improve the company's free cash flow by about $60 million. The bank loan refinancing also further improved MTGA's debt maturity profile -- there will be no material debt maturities until 2018 -- and put in place a pre-payable debt structure that further facilitates debt reduction. Other factors supporting MTGA's B3 Corporate Family Rating include the benefit to the company's earnings from cost reduction efforts to date, and longer-term diversification efforts that Moody's believes on a larger scale and over time, would partly mitigate the company's continued and significant exposure to growing gaming competition in the Northeastern US. Key credit concerns include MTGA's significant asset concentration in the Connecticut gaming market and high leverage with debt/EBITDA currently at about 5.7 times. Also considered is Moody's view that MTGA will continue to face significant earnings pressure from new competition as more casinos are expected to open in the company's primary and secondary feeder markets. The ratings also incorporate the unique risks common to Native American gaming issuers which are largely a function of a tribe's status as a sovereign entity. MTGA owns and operates a gaming and entertainment complex located near Uncasville, Connecticut, known as Mohegan Sun, and a gaming and entertainment facility offering slot machines and harness racing in Plains Township, Pennsylvania known as Mohegan Sun at Pocono Downs. The company generates annual net revenue of about $1.3 billion. MOMENTIVE PERFORMANCE: Moody's Cuts CFR to Caa2; Outlook Negative ----------------------------------------------------------------- Moody's Investors Service lowered Momentive Performance Materials Inc.'s Corporate Family Rating (CFR) to Caa2 from Caa1 and affirmed its Caa1-PD Probability of Default Rating. These actions reflect ongoing weak financial performance and liquidity as well as Moody's opinion that potential losses for debtholders have increased due to the extended downturn in the company's end markets. Moody's also lowered the company's senior secured first lien notes to B3 from B1, the senior secured 1.5 lien notes to Caa1 from B2 and the springing lien notes to Caa2 from Caa1. Moody's affirmed Momentive's senior subordinated notes rating at Caa3. Moody's lowered the company's speculative grade liquidity rating to SGL-4 from SGL-3 due to the reduction in the company's available liquidity. "Although Momentive's financial performance continues to improve on a quarter over quarter basis, it is still not profitable enough to cover its cash costs," stated John Rogers, Senior Vice President at Moody's. "This extended downturn in its end markets will likely force management to resort to asset sales or other extraordinary measures to maintain a reasonable amount of liquidity and avoid a distressed restructuring." Ratings downgraded: Momentive Performance Materials Inc. Corporate Family Rating to Caa2 from Caa1 Speculative Grade Liquidity Rating to SGL-4 from SGL-3 Guaranteed senior secured first lien notes due 2020 to B3 (LGD2, 35%) from B1 (LGD2, 14%) (originally issued by MPM Escrow LLC) Guaranteed senior secured 1.5 lien notes due 2020 to Caa1 (LGD3, 56%) from B2 (LGD3, 32%) Guaranteed springing lien notes due 2021 to Caa2 (LGD5, 77%) from Caa1 (LGD4, 58%) Ratings affirmed: Momentive Performance Materials Inc. Probability of Default Rating at Caa1-PD Senior subordinated notes due 2016 at Caa3 (LGD6, 92% from LGD5, 84%) Ratings Rationale: The downgrade to a Caa2 CFR reflects the continuing cash burn as a result of the slow recovery in financial performance and negative gross cash flow, which reduced available liquidity to $245 million in the third quarter 2013. While Momentive's financial performance is expected to improve in 2014, Moody's believes that free cash flow will remain negative and liquidity will continue to decline. The company's sharp decline in financial performance began in late 2011 as a result of new silicones industry capacity and weaker than anticipated global demand in key downstream markets (construction and electronics). The downturn has been exacerbated by unusually slow demand growth in Asia, which has kept prices and capacity utilization rates low. As of September 30, 2013, the company's credit metrics were extremely weak with Debt/EBITDA of 16.9x and negative Retained Cash Flow/Debt (RCF/Debt). The aforementioned ratios reflect Moody's Global Standard Adjustments, which include the capitalization of pensions and operating leases, as well as MPM's HoldCo PIK debt (the PIK debt has a value of $825 million at September 30, 2013 and is accreting at 11%, or roughly $90 million, per year; 10% of MPM's equity and the PIK HoldCo notes are held by affiliates of General Electric Corporation). The affirmation of the Caa1 PDR reflects Moody's opinion that the risk of default has not increased significantly but that the potential recoveries for debt holders have declined in the event of a default. Moody's has estimated this impact by lowering the family recovery rate to 35% from 50%. The expectation for a lower recovery rate in the event of bankruptcy causes the rating on the secured first lien notes and the secured 1.5 lien notes to decline by two notches versus one for the CFR. The rating on the springing lien notes declines by only one notch as it is lower in the capital structure. The negative outlook reflects the expected decline in liquidity over the next four quarters despite improving quarter over quarter operating performance. MPM has no significant maturities before 2016 and is working to improve liquidity with potential asset sales and other options. In the absence of a sizable transaction, Moody's expects liquidity to decline in 2014, albeit at a slower pace. The Caa2 CFR could be downgraded further if liquidity falls below $200 million and the company is unlikely to execute on options to meaningfully improve liquidity. The CFR could be raised if the company is able to increase liquidity by over $100 million and negative free cash flow declines sustainably below $15 million per quarter. MPM has two businesses Silicones (Organosilicones) and Quartz. The silicone business accounts for over 90% of revenues and 85% of EBITDA, As mentioned above, the business is suffering from over capacity in Asia and weak demand growth, which has compressed margins and kept capacity utilization rates low. The Quartz business is a global supplier of quartz tubing, ingots and crucibles and high-performance, non-oxide ceramic products. This business is also suffering due to the downturn in the semiconductor and solar businesses. Moody's lowered Momentive's Speculative Grade Liquidity Rating to SGL-4 from SGL-3 due to the large decline in liquidity since the first quarter of 2013 and the maturity of its revolving credit facility in December 2014. MPM's liquidity is supported by cash of $92 million (excluding $5 million of restricted cash) and revolver availability of $153 million (without triggering the financial maintenance covenant under the ABL facility), as of September 30, 2013. MPM has two credit facilities a $270 million asset based credit facility and an unused $75 million secured revolver. The ABL facility had $90 million outstanding, $68 million letters of credit and $78 million of availability, as of September 30, 2013. The ABL facility has a springing covenant if availability falls below $27 million or 12.5% of the borrowing base (up to the full ABL commitment). MPM would not be in compliance with the springing 1:1 fixed charge coverage covenant, which limits availability under the ABL facility. The company is and is expected to remain in compliance with the total senior secured net debt/EBITDA covenant in its $75 million secured revolver. In the third quarter of 2013, liquidity was reduce by more than $80 million driven by an unusually large outflow of cash. In the quarter, the company built up of inventory to prepare for a potential work stoppage at its main US plant. As this potential business interruption has passed, Moody's expects that this excess inventory plus the normal seasonal sales pattern will cause free cash flow to improve to a range of negative $10-20 million in the fourth quarter. In 2014, free cash flow is expected to return to the negative $30-50 million per quarter range. Management has a limited amount of time to execute on plans to improve liquidity before the end of 2014 or face the potential threat of default or bankruptcy. Momentive Performance Materials Inc., headquartered in Albany, New York, is the second largest producer of silicones and silicone derivatives worldwide. The company has two divisions: silicones (which accounted for roughly 90% of revenues) and quartz. Revenues were over $2.3 billion for the LTM ending September 30, 2013. MOORE FREIGHT: Names Special Litigation Counsel ----------------------------------------------- Moore Freight Services, Inc. and G.R.E.A.T. Logistics, Inc. seek authorization from the Hon. Keith Lundin of the U.S. Bankruptcy Court for the Middle District of Tennessee to employ The Law Office of Dre McElroy, Tate Law Group, and Savage, Turner, Pinckney & Madison as special litigation counsel. The Debtors have selected those firms as Special Counsel because they believe Special Counsel to be well qualified to represent Debtors in connection with their claims against Pilot Flying J. Subject to the control and further order of this Court, the professional services that Special Counsel will render to Debtors include, but shall not be limited to, the following: (a) assist and advise the Debtors with respect to claims against Pilot Flying J generally for withheld rebates; (b) prepare, file, and prosecute on the Debtors' behalf an action against Pilot Flying J; (c) appear, as appropriate, before the Court and other state or federal courts and tribunals on behalf of the Debtors with respect to the claims against PFJ; and (d) perform all other necessary legal services related to the Debtors' claims against PFJ for withheld rebates. The Debtors wish to retain Special Counsel, subject to Court approval, on a contingency basis on the following terms: (a) 40% of any amount recovered in excess of the $240,713 already paid to Moore Freights, the 40% contingency fee is the total percentage payable jointly to the Special Counsel; (b) reasonable costs and expenses incurred solely and directly for the benefit of Moore Freight or as pro-rated among all plaintiffs if beneficial to the entire group; (c) in the event of termination of the representation by Special Counsel for lack of cooperation by Moore Freight, then the Debtors agree to pay, in addition to the reasonable costs and expenses incurred solely and directly on behalf of Moore Freight, the reasonable value of services performed by Special Counsel that would not otherwise have been performed for or provided on behalf of other plaintiffs represented by Special Counsel at a rate of $250 per hour; and (d) in the event of termination of the representation by Moore Freight, then the Debtors agree to pay, in addition to the reasonable costs and expenses incurred solely and directly on behalf of Moore Freight, the reasonable value of services performed by Special Counsel that would not otherwise have been performed for or provided on behalf of other plaintiffs represented by Special Counsel at the greater of an hourly rate of $250 or the applicable percentage of fee due under any offers for settlement with Moore Freight made by Pilot Flying J. L. Andrew McElroy, II, principal of The Law Office of Drew Mc Elroy, Mark A. Tate, principal of The Tate Law Group, LLC, and Robert Bartley Turner, principal of Savage, Turner, Pinckney & Madison, assured the Court that their respective firms are 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 law firms can be reached at: L. Andrew McElroy, II, Esq. THE LAW OFFICES OF DREW MCELROY 1348 Dowell Springs Blvd., Knoxville, TN 37909 Tel: (865) 357-7171 Mark A. Tate, Esq. THE TATE LAW GROUP, LLC 2 East Bryan Street, Ste 600 Savannah, GA 31401 Tel: (912) 289-8307 Fax: (912) 234-9700 Robert Bartley Turner, Esq. SAVAGE, TURNER, PINCKNEY & MADISON 304 East Bay Street Savannah, GA 31401 Tel: (912) 231-1140 Fax: (912) 232-4212 About Moore Freight Service and G.R.E.A.T. Logistics Moore Freight Service, Inc. and G.R.E.A.T. Logistics Inc. sought Chapter 11 protection (Bankr. M.D. Tenn. Case Nos. 12-08921 and 12-08923) in Nashville on Sept. 28, 2012. Moore Freight is a freight service company specializing in flat gas transportation. Founded in 2001, Moore is the largest commercial flat glass logistics firm in the U.S. It operates in the U.S., Canada and Mexico. GLI does not have any operations other than the limited, occasional freight brokerage services currently provided to Moore Freight. Bankruptcy Judge Keith M. Lundin oversees the cases. Attorneys at Harwell Howard Hyne Gabbert & Manner, P.C., serve as counsel. LTC Advisory Services LLC serves as the Debtor's financial advisors. Moore Freight estimated assets and debts of $10 million to $50 million. CEO Dan R. Moore signed the petitions. Counsel for the Debtor's pre-bankruptcy and DIP lender, Marquette Transportation Finance, Inc., are Linda W. Knight, Esq., at Gullett, Sanford, Robinson & Martin, PLLC; and Thomas J. Lallier, Esq., at Foley & Mansfield PLLP. On Sept. 17, 2013, the Court approved Moore Freight Service, Inc., et al.'s Amended Disclosure Statement describing the Debtors' Amended Plan of Reorganization dated Sept. 16, 2013. The Amended Plan contemplates the continuation of the Debtors' business, payment in full of Allowed Secured Claims, and a fair distribution to unsecured creditors, which distribution Debtor believe far exceeds the amount unsecured creditors would receive in the event of a Chapter 7 liquidation. MORY DUCROS: French Courier Company Enters Bankruptcy Proceedings ----------------------------------------------------------------- Law360 reported that French courier service Mory Ducros on Nov. 22 announced that it has entered bankruptcy proceedings, saying it has been unable to implement a turnaround plan since the company was established via a merger in January. According to the report, the insolvency has caused the company to suspend payments and will eliminate the jobs of 5,000 Mory Ducros employees and another 2,000 subcontractors, the French Democratic Confederation of Labour, or CFDT, union said. But the company says that the insolvency will help it restructure under more financially viable terms. MMRGLOBAL INC: Incurs $2.2 Million Net Loss in Third Quarter ------------------------------------------------------------ MMRGlobal, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $2.24 million on $112,569 of total revenues for the three months ended Sept. 30, 2013, as compared with a net loss of $1.52 million on $345,821 of total revenues for the same period during the prior year. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $4.90 million on $535,146 of total revenues as compared with a net loss of $4.48 million on $717,398 of total revenues for the same period a year ago. The Company's balance sheet at Sept. 30, 2013, showed $2.69 million in total assets, $9.80 million in total liabilities and a $7.11 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/JZE8Ja About MMRGlobal Los Angeles, Calif.-based MMR Global, Inc. (OTC BB: MMRF) -- http://www.mmrglobal.com/-- through its wholly-owned operating subsidiary, MyMedicalRecords, Inc., provides secure and easy-to- use online Personal Health Records (PHRs) and electronic safe deposit box storage solutions, serving consumers, healthcare professionals, employers, insurance companies, financial institutions, and professional organizations and affinity groups. MMRGlobal incurred a net loss of $5.90 million in 2012, as compared with a net loss of $8.88 million in 2011. Rose, Snyder & Jacobs LLP, in Encino, California, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has incurred significant operating losses and negative cash flows from operations during the years ended Dec. 31, 2012, and 2011, that raise substantial doubt about the Company's ability to continue as a going concern. MT. LAUREL LODGING: Has Access to Cash Collateral Until Dec. 20 --------------------------------------------------------------- Judge Robyn L. Moberly in mid-November entered an interim order authorizing Mt. Laurel Lodging Associates, LLP, to use cash collateral of The National Republic Bank of Chicago. The Debtor's use of cash collateral is authorized only through Dec. 20, 2013, and may not be extended other than on the express written consent of NRB or order of the Court. According to the Nov. 15 order, the Debtor may not make any payments during the interim period to Sun Development & Management Corporation or Access Point Financial, Inc. As adequate protection, the Debtor will continue operating the Hotel and using Cash Collateral to pay operating expenses of the hotel as set forth in the budget. The Debtor will provide financial reporting to NRB on or before the twentieth day following the final day of every month. A final hearing on the Debtor's request to use NRB's cash collateral will be held Dec. 20, 2013 at 10:00 a.m. NRB will file its supplemental objection to the Debtor's motion on or before Dec. 5, 2013, and the Debtor will file its reply on or before Dec. 12, 2013. On or before Dec. 12, 2013 at 6:00 p.m. EST, the Debtor and NRB will exchange all evidence they intend to use or introduce at the final hearing. The TCR on Nov. 14 reported on NRB's objection to the Debtor's proposed use of cash collateral. NRB complained that the Debtor has failed to offer the Bank any adequate protection in the form of a replacement lien on unencumbered assets or to prove that the Bank is protected by an equity cushion in the hotel. About Mt. Laurel Lodging Mt. Laurel Lodging Associates, LLP, and its six affiliates sought protection under Chapter 11 of the Bankruptcy Code on Nov. 4, 2013 (Bankr. S.D. Ind. Case No. 13-11697) to stop foreclosures and non- judicial sales of seven hotels located in five states. The National Republic Bank of Chicago says the debtors defaulted on loans with outstanding balances of about $121 million. The case is assigned to Judge Robyn L. Moberly. The petition lists the assets and debt as both exceeding $10 million on the Mount Laurel property. The Debtors are represented by Brian A Audette, Esq., and David M Neff, Esq., at Perkins Coie LLP, in Chicago, Illinois; and Andrew T. Kight, Esq., and Michael P. O'Neil, Esq., at Taft Stettinius & Hollister LLP, in Indianapolis, Indiana. NRB is represented by James E. Carlberg, Esq., and James P. Moloy, Esq., at Bose McKinney & Evans LLP, in Indianapolis, Indiana; and Timothy P. Duggan, Esq., at Stark & Stark, P.C., in Lawrenceville, New Jersey. MULTI PACKAGING: Merger Deal No Effect on Moody's Ratings --------------------------------------------------------- The recent announcement by Multi Packaging Solutions Inc. ("MPS") regarding its agreement to merge with UK- based packaging firm Chesapeake Services Limited is potentially credit positive, but does not immediately impact MPS' B2 Corporate Family Rating ("CFR") or stable rating outlook. NEPHROS INC: Incurs $611,000 Net Loss in Third Quarter ------------------------------------------------------ Nephros, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $611,000 on $418,000 of total net revenues for the three months ended Sept. 30, 2013, as compared with a net loss of $853,000 on $604,000 of total net revenues for the same period a year ago. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $2.52 million on $1.51 million of total net revenues as compared with a net loss of $2.16 million on $1.43 million of total net revenues for the same period during the previousl year. The Company's balance sheet at Sept. 30, 2013, showed $2.55 million in total assets, $2.12 million in total liabilities and $430,000 in total stockholders' equity. A copy of the Form 10-Q is available for free at: http://is.gd/Urz61e Bridge Financing On Nov. 12, 2013, the company issued a six-month 12 percent senior secured note to Lambda Investors in the principal amount of $1,500,000. Under the terms of the note, the company has undertaken to conduct a $2.75 million rights offering of common stock at an anticipated offering price of $0.30 per share. All of the Company's stockholders and warrantholders will be eligible to participate in the offering on a pro rata basis based upon their proportionate ownership of the company's common stock on an as converted basis. The note requires the company to repay the bridge loan with the proceeds from the rights offering or any other financing transaction. In connection with the proposed rights offering, Nephros will file a registration statement on Form S-1, as may be amended, with the Securities and Exchange Commission. The securities offered in the rights offering may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective. Additional information is available for free at: http://is.gd/jD7S8Y About Nephros River Edge, N.J.-based Nephros, Inc., is a commercial stage medical device company that develops and sells high performance liquid purification filters. Its filters, which it calls ultrafilters, are primarily used in dialysis centers and healthcare facilities for the production of ultrapure water and bicarbonate. Rothstein Kass, in Roseland, New Jersey, expressed substantial doubt about Nephros, Inc.'s ability to continue as a going concern, following its audit of the Company's financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has incurred negative cash flow from operations and net losses since inception. NETWORK CN: Incurs $898,000 Net Loss in Third Quarter ----------------------------------------------------- Network CN Inc. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $898,156 on $151,119 of advertising services revenues for the three months ended Sept. 30, 2013, sa compared with a net loss of $664,759 on $356,480 of advertising services revenues for the same period a year ago. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $2.67 million on $708,074 of advertising services revenues as compared with a net loss of $129,812 on $1.29 million of adverstising services revenues for the same period during the prior year. The Company's balance sheet at Sept. 30, 2013, showed $1.05 million in total assets, $7.55 million in total liabilities and a $6.50 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/xTCPou About Network CN Causeway Bay, Hong Kong-based Network CN Inc. provides out-of-home advertising in China, primarily serving the needs of branded corporate customers. In the auditors' report on the consolidated financial statemetns for the period ended Dec. 31, 2012, Union Power Hong Kong CPA Limited, in Hong Kong SAR, expressed substantial doubt about Network CN's ability to continue as a going concern. The independent auditors noted that the Company has incurred net losses of $1.2 million, $2.1 million and $2.6 million for the years ended Dec. 31, 2012, 2011, and 2010, respectively. The Company reported a net loss of $1.2 million on $1.8 million of revenues in 2012, compared with a net loss of $2.1 million on $1.8 million of revenues in 2011. NEXSTAR BROADCASTING: S&P Retains BB Rating on $498MM Term Loan --------------------------------------------------------------- Standard & Poor's Ratings Services said that Irving, Texas-based TV broadcaster Nexstar Broadcasting Group Inc. has announced plans to refinance its existing term loan B due 2019 with the proceeds of a $348 million add-on to its existing term loan B-2 due 2020. S&P's rating on the term loan B-2 remains 'BB', with a recovery rating of '1', indicating its expectations for very high (90%- 100%) recovery for debtholders in the event of a payment default. S&P expects to withdraw its ratings on the term loan B when the transaction closes. S&P's rating on Nexstar reflects its expectation that, pro forma for the pending CCA acquisition, the company will be able to keep its lease-adjusted debt to average trailing-eight-quarter EBITDA ratio below 6x throughout the election and Olympics cycle, absent a reversal of economic growth, large debt-financed acquisitions, or significant shareholder-favoring measures. S&P views Nexstar's business risk profile as "fair" because of duopolies in a majority of its markets, resulting in a relatively good EBITDA margin; its position as a midsize TV broadcaster with leading news ratings in many of its markets; its somewhat lower competitive pressure in its smaller markets; and its advertising revenue stream's vulnerability to economic downturns and the election cycle. S&P views Nexstar's financial risk profile as "highly leveraged" because of its high debt leverage, moderate EBITDA coverage of interest, and its expectation that the company will continue to pursue debt-financed acquisitions. Standard & Poor's has reviewed its ratings on Nexstar, which it labeled as "under criteria observation" (UCO) after the publishing of its revised Corporate criteria on Nov. 19. Standard & Poor's expedited the review of its ratings on Nexstar because of the company's announced debt add-on. With S&P's criteria review of the company complete, it has confirmed that its ratings on this issuer are unaffected by the criteria changes. RATINGS LIST Nexstar Broadcasting Group Inc. Corporate Credit Rating B+/Stable/-- Ratings Unchanged Nexstar Broadcasting Inc. Mission Broadcasting Inc. $498M* term loan B-2 due 2020 BB Recovery Rating 1 *Following $348M add-on. NIRVANIX INC: Intellectual Property Sale Gets Court Approval ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Nirvanix Inc., a cloud-based data storage provider, got authority from the bankruptcy court last week to sell intellectual property assets for $2.8 million in cash, plus assumption of specified liabilities, to Acme Acquisition LLP. According to the report, there were no other qualified offers. The official creditors' committee dropped its objection to the sale. About Nirvanix, Inc. Cloud storage company Nirvanix, Inc., based in San Diego, California, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.Del. Case No. 13-12595) on Oct. 1, 2013. The case is assigned to Judge Brendan Linehan Shannon. The Debtor is represented by Norman L. Pernick, Esq., Marion M. Quirk, Esq., and Patrick J. Reilley, Esq., at Cole, Schotz, Meisel, Forman & Leonard, PA. Cooley LLP serves as the Debtor's special corporate counsel. Arch & Beam Global LLC serves as the Debtor's financial advisor. Epiq Systems Inc. is the Debtor's claims and noticing agent. The Debtor disclosed estimated assets of $10 million to $50 million and estimated debts of $10 million to $50 million. The petition was signed by Debra Chrapaty, CEO. NNN PARKWAY CORPORATE: Seeks to Use Cash Collateral to Operate -------------------------------------------------------------- NNN Parkway Corporate Plaza 3, LLC, seeks authority from the U.S. Bankruptcy Court for the Central District of California, Santa Ana Division, to use cash collateral to continue to operate its business. The Debtor proposes to provide as adequate protection replacement lien in postpetition assets, subject to a carve-out, use of the Cash Collateral limited to a budget, and adequate protection payment in the amount of monthly interest owed under the 2005 Loan Documents to CW Capital Asset Management, the special servicer to the 2005 Loan. The Debtor asks that the replacement liens be subject and junior to: (i) the payment of professional fees and expenses allowed under Sections 330 and 331 of the Bankruptcy Code of professionals engaged by the Debtor and any official committees whose engagement has been approved by this Court, but not to exceed $250,000 in the aggregate; and (ii) the fees of the Office of the United States Trustee pursuant to 28 U.S.C. Section 1930. U.S. Bank National Association, as trustee for the registered holders of Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2006-C23, objects to the Debtor's Cash Collateral Motion, complaining that the Debtor filed its bankruptcy case to (i) compel the Trust to fund certain tenant improvement costs that the TIC Investors are unwilling to pay, and (ii) force the Trust and the non-debtor TIC Investors to accept a change in the ownership structure of the property and a modification of the Loan Documents and TIC Agreement. "The Debtor's use of bankruptcy to orchestrate a hostile takeover of the ownership interests of the 24 non-debtor owners of the Property, and to compel the use of Rents to fund leasehold expenses that are the responsibility of the owners, is manifestly improper, and should be rejected by the Court," U.S. Bank further complains. NNN Parkway Corporate Plaza 3, which owns 17.25% tenant-in-common interest in four parcels in the real property commonly referred to as Parkway Corporate Plaza, in Roseville, California, sought protection under Chapter 11 of the Bankruptcy Code on Nov. 14, 2013 (Case No. 13-19322, Bankr. C.D. Calif.). The Debtor is represented by Scott H.McNutt, Esq., Michael C. Abel, Esq., and Thomas B. Rupp, Esq., at McNutt Law Group LLP, in San Francisco, California; and Robert A. Hessling, Esq., and Matthew F. Kennedy, Esq., at ROBERT A. HESSLING, APC, in Torrance, California. U.S. Bank is represented by Keith C. Owens, Esq. -- kowens@venable.com -- and Jennifer L. Nassiri, Esq. -- jlnassiri@venable.com -- at Venable LLP, in Los Angeles, California. NORTH AMERICAN BREWERIES: S&P Puts 'B' CCR on CreditWatch Negative ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on Delaware- based North American Breweries Holdings LLC (NAB) on CreditWatch with negative implications, including its 'B' corporate credit rating. NAB's CreditWatch negative listing follows the company's violation of its bank maintenance financial covenants as of the 2013 third quarter, after much weaker than expected financial performance. "Although NAB recently received an equity infusion to cure the covenant violations, it is our opinion that NAB may not be able to improve its liquidity position and financial performance sufficiently to support the current rating," said Standard & Poor's credit analyst Jean Stout. During the 2013 third quarter, NAB's net sales declined about 16%, primarily owing to reduced volume, largely as a result of reduced demand for the company's brands and lower contract manufacturing amid weak industry demand. As a result, S&P estimates leverage has increased to well over 6x. In order to resolve the CreditWatch listing, Standard & Poor's will review the company's operating strategies, including its plan to improve its operating performance and reduce leverage. S&P's review will also include an assessment of NAB's plans to improve the company's liquidity position given that its bank covenants tighten during the next several quarters, specifically the leverage covenant in the 2013 fourth quarter and then both covenants in the 2014 first quarter, and overall operating trends are expected to remain weak. NORBORD INC: Moody's Hikes CFR to Ba2 & Rates $240MM Notes Ba2 -------------------------------------------------------------- Moody's Investors Service upgraded Norbord Inc's corporate family rating (CFR) to Ba2 from Ba3, probability of default rating (PDR) to Ba2-PD from Ba3-PD and speculative grade liquidity rating to SGL-1 from SGL-2. A Ba2 rating was assigned to the proposed $240 million first lien senior secured notes due 2020. The transaction is expected to be leverage neutral with proceeds from the proposed debt offering being used to refinance $240 million of the company's secured and unsecured notes (due June 2015). The rating of the existing first-lien senior secured notes (due 2017) was affirmed at Ba2. The upgrade reflects expectations of continued strong financial performance as the US housing market returns to trend levels over the next 2-3 years and it also recognizes the company's improved debt maturity profile as a result of the proposed financing. The rating outlook is stable. Upgrades: Issuer: Norbord Inc. Probability of Default Rating, Upgraded to Ba2-PD from Ba3-PD Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2 Corporate Family Rating, Upgraded to Ba2 from Ba3 Assignments: Issuer: Norbord Inc. Senior Secured Regular Bond/Debenture, Assigned Ba2, GD3, 43 % Issuer: Norbord GP I Outlook, Remains Stable Issuer: Norbord Inc. Outlook, Remains Stable Affirmations: Issuer: Norbord GP I Senior Secured Regular Bond/Debenture Feb 15, 2017, Affirmed Ba2, Downgraded to a range of LGD3, 43 % from a range of LGD3, 39 % Ratings Rationale: The Ba2 corporate family rating reflects the company's cost competitive asset base, modest geographic diversification and support from its major shareholder Brookfield Asset Management. The ratings are constrained by the inherent vulnerability of earnings to highly cyclical demand and pricing for oriented strandboard ("OSB"), the company's small revenue base and lack of product diversity. Moody's expects the company will generate strong credit metrics as the US housing market continues to improve towards trend levels over the next few years. Norbord's financial performance is significantly influenced by OSB pricing, which is expected to remain volatile as idled OSB capacity will invariably restart at a different pace than demand from the US housing recovery. Norbord's has strong liquidity (SGL-1), supported by a cash balance of $239 million (September 2013), approximately $241 million of availability under a $245 million revolving credit facility that matures in May 2015 and Moody's estimate that free cash flow generation will be about $10 million over the next 12 months after higher than normal capital expenditures to bring idled capacity back on line. The company's net debt to capitalization was 28% as of September 2013, against a maximum of 65%, and the company's tangible net worth was $519 million against a threshold of $250 million. Liquidity is augmented by a fully available $100 million accounts receivable securitization facility. The program has an evergreen commitment that is subject to termination on 12 months' notice. Following the proposed refinancing, Norbord will have no debt maturities till 2017, when the existing $200 million of senior notes become due. The stable outlook reflects Moody's view that Norbord will generate strong leverage metrics for its rating over the next 12- 18 months. An upgrade would depend on a sustained improvement in the company's financial performance. Quantitatively, this could result if normalized RCF/TD and (RCF-Capex)/TD measures remained above 20% and 12%, respectively, while maintaining very good liquidity to manage the volatility of OSB prices. The rating could be lowered if the company's liquidity deteriorates and if RCF/TD and (RCF-Capex)/TD measures drop below 12% and 6% for a sustained period of time. Headquartered in Toronto, Canada, Norbord is an international producer of panel boards, principally OSB. The company operates nine OSB facilities in North America, three plants in the U.K. (producing OSB, particle board and medium density fiberboard ) and one facility in Belgium (producing OSB). OCEANSIDE MILE: Taps Creim Macias as Reorganization Counsel ----------------------------------------------------------- Oceanside Mile, LLC, dba Seabonay Beach Resort, asks for permission from the Hon. Barry Russell of the U.S. Bankruptcy Court for the Central District of California to employ Creim Macias Koenig & Frey, LLP as reorganization counsel, effective Oct. 17, 2013. The Debtor requires Creim Macias to: (a) advise the Debtor with regard to the requirements of the Bankruptcy Court, Bankruptcy Code, Federal Rules of Bankruptcy Procedure, Local Bankruptcy Rules and the Office of the U.S. Trustee as they pertain to the Debtor; (b) advise the Debtor with regard to certain rights and remedies of its bankruptcy estate and the rights, claims and interests of creditors; (c) assist the Debtor with the negotiation, documentation and any necessary Court approval of transactions disposing of property of the estate; (d) represent the Debtor in any proceeding or hearing in the Bankruptcy Court involving the estate unless the Debtor is represented in such proceeding or hearing by other special counsel; (e) conduct examinations of witnesses, claimants or adverse parties and representing the Debtor in any adversary proceeding except to the extent that any such adversary proceeding is in an area outside of Creim Macias' expertise or which is beyond Creim Macias' staffing capabilities; (f) prepare and assist the Debtor in the preparation of reports, applications, pleadings, and orders including, but not limited to, applications to employ professionals, interim statements and operating reports, initial filing requirements, schedules and statement of financial affairs, financing pleadings and pleadings with respect to the Debtor's use, sale or lease of property outside the ordinary course of business; (g) assist the Debtor in the negotiation, formulation, preparation and confirmation of a plan of reorganization and the preparation and approval of a disclosure statement in respect of the Plan; and (h) perform any other services which may be appropriate in Creim Macias' representation of the Debtor during the Debtor's bankruptcy case. Creim Macias will be paid at these hourly rates: Partners $400-$595 Associates $275-$350 Paralegal and case clerks $125-$175 Creim Macias will also be reimbursed for reasonable out-of-pocket expenses incurred. Creim Macias received a pre-petition retainer from the Debtor in the amount of $37,000 of which $1,213 was used for the filing fees for this case. Creim Macias provided legal services to the Debtor prior to the filing of the petition date of $7,619.50 which was applied to such bill in the ordinary course on ordinary and usual business terms prior to filing the petition. As of the petition date, the balance on the retainer is $28,138.73. Sandford L. Frey, Esq., partner of Creim Macias, assured 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. Creim Macias can be reached at: Sandford L. Frey, Esq. CREIM MACIAS KOENIG & FREY LLP 633 W. Fifth Street, 51st Floor Los Angeles, CA 90071 Tel: (213) 614-1944 Fax: (213) 614-1961 E-mail: sfrey@cmkllp.com About Oceanside Mile Oceanside Mile LLC filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 13-35286) on Oct. 17, 2013. Arturo Rubinstein signed the petition as managing member. The Debtor estimated assets of at least $10 million and liabilities of at least $1 million. Judge Barry Russell presides over the case. The Debtor is represented by Sandford L. Frey, Esq., Stuart I. Koenig, Esq., and Martha C. Wade, Esq., at Creim Macias Koenig & Frey LLP, in Los Angeles, California. First-Citizens Bank & Trust Company is represented by Craig H. Averch, Esq., and Roberto J. Kampfner, Esq., at White & Case LLP, in Los Angeles, California. OGX PETROLEO: Offshore Units Left Out of Bankruptcy Case -------------------------------------------------------- Michael Bathon, substituting for Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that OGX Petroleo & Gas Participacoes SA's request to include offshore units in Brazil's biggest bankruptcy case was rejected by a Rio de Janeiro court. According to the report, Judge Gilberto Matos agreed to begin bankruptcy protection proceedings for Eike Batista's oil company while refusing to include the Vienna-based unit that sold $3.6 billion of dollar-denominated bonds, according to a decision published on Nov. 21 on the Rio State Tribunal's website. OGX will appeal the foreign units' exclusion, the company said in a statement. Judge Matos recommended OGX International GmbH and OGX Austria GmbH file for Chapter 15 under U.S. bankruptcy code that promotes cooperation with appointed representatives and foreign tribunals. OGX is studying seeking protection in the U.S. or Austria, Fabiano Robalinho Cavalcanti, a partner at law firm Sergio Bermudes that represents OGX, said by telephone from Rio. "For bondholders, you'd much rather be dealing with a Chapter 15 in the U.S. if that's an option," Gianna Bern, president of the risk-management firm Brookshire Advisory & Research, said by phone from Chicago. "It will be a road that is familiar to all the legal participants" About OGX Petroleo 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. OGX filed for bankruptcy in a business tribunal in Rio de Janeiro on Oct. 30, 2013, case number 0377620-56.2013.8.19.0001. The bankruptcy filing puts $3.6 billion of dollar bonds into default in the largest corporate debt debacle on record in Latin America. The filing by the oil company that transformed Eike Batista into Brazil's richest man followed a 16-month decline that wiped out more than $30 billion of his personal fortune. The filing, which in Brazil is called a judicial recovery, follows months of negotiations to restructure the dollar bonds, in which OGX sought to convert debt to equity and secure as much as $500 million in new funds. OGX said Oct. 29 that the talks concluded without an agreement. The company's cash fell to about $82 million at the end of September, not enough to sustain operations further than December. ORDOT DUMP: Receiver to Report Issues to Fed Court -------------------------------------------------- guampdn.com reports that solid waste receiver Gershman, Brickner & Bratton Inc. was slated to present its quarterly progress Nov. 20, 2013, in the U.S. District Court of Guam -- an event that was delayed last month as the court addressed challenges filed by the governor's office related to government representation in the case. According to the report, much has happened since the receiver's last quarterly report, in May. An island-wide curbside recycling program started to roll out at the end of October and is expected to be completed by the end of the year. The report adds that the receiver this month awarded a $49 million contract to Black Construction Corporation to close the Ordot Dump -- the completion of which is the last major objective of the court-ordered receivership, according to the report. The receiver had selected GHD Inc. to provide construction management services for the dump closure, the report notes. Pending issues include compensating the property owners of the new landfill site and also the Ordot residents whose land was taken as the Ordot dump grew, the report relays. In 2004, the government of Guam and the U.S. Environmental Protection Agency agreed to close the Ordot dump after GovGuam was found in violation of the Clean Water Act, the report notes. The dump was discharging leachate, or water filtered through the trash, into the Lonfit River, the report recalls. In 2008, after four years of delaying the dump's closure, Tydingco-Gatewood placed Guam's solid waste operations under court-ordered receivership, putting Gershman, Brickner & Bratton in charge of closing the dump and building a solid waste landfill, the report says. The Ordot dump was officially closed on Aug. 31, 2011, and the Layon landfill opened the following day, in Inarajan, the report adds. OVERSEAS SHIPHOLDING: Gellert Scali Hiring Approved --------------------------------------------------- BankruptcyData reported that the U.S. Bankruptcy Court approved Overseas Shipholding Group's motion to retain Gellert, Scali, Busenkell & Brown as special litigation counsel at the following hourly rates: Michael Busenkell at $350, Brya Kielson at 270 and paraprofessional at 105 to 165. As previously reported, "GSBB is well-suited to provide the type of legal services required by the Debtors. The Debtors seek to retain GSBB as their attorneys because of, among other reasons, GSBB's experience in and knowledge of business reorganizations, and in particular GSBB's knowledge of business reorganization litigation matters and adversary proceedings, such as the Litigation Matters. GSBB is well-suited to the type of representation required by the Debtors, as GSBB has extensive experience litigating bankruptcy disputes." About Overseas Shipholding Group Overseas Shipholding Group, Inc., headquartered in New York, is one of the largest publicly traded tanker companies in the world, engaged primarily in the ocean transportation of crude oil and petroleum products. OSG owns or operates 111 vessels that transport oil and petroleum products throughout the world. Overseas Shipholding Group and 180 affiliates filed voluntary Chapter 11 petitions (Bankr. D. Del. Lead Case No. 12-20000) on Nov. 14, 2012, disclosing $4.15 billion in assets and $2.67 billion in liabilities. Greylock Partners LLC Chief Executive John Ray serves as chief reorganization officer. James L. Bromley, Esq., and Luke A. Barefoot, Esq., at Cleary Gottlieb Steen & Hamilton LLP serve as OSG's Chapter 11 counsel. Derek C. Abbott, Esq., Daniel B. Butz, Esq., and William M. Alleman, Jr., at Morris, Nichols, Arsht & Tunnell LLP, serve as local counsel. Chilmark Partners LLC serves as financial adviser. Kurtzman Carson Consultants LLC is the claims and notice agent. The Export-Import Bank of China, owed $312 million used for the construction of five tankers, is represented by Louis R. Strubeck, Jr., Esq., and Kristian W. Gluck, Esq., at Fulbright & Jaworski LLP in Dallas; David L. Barrack, Esq., and Beret Flom, Esq., at Fulbright & Jaworski in New York; and John Knight, Esq., and Christopher Samis, Esq., at Richards Layton & Finger PA. Chilmark Partners, LLC serves as financial and restructuring advisor. Akin Gump Strauss Hauer & Feld LLP, and Pepper Hamilton LLP, serve as co-counsel to the official committee of unsecured creditors. FTI Consulting, Inc., is the financial advisor and Houlihan Lokey Capital, Inc., is the investment banker. OXYSURE SYSTEMS: Incurs $82,600 Net Loss in Third Quarter --------------------------------------------------------- Oxysure Systems Inc. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $82,613 on $545,820 of net revenues for the three months ended Sept. 30, 2013, as compared with a net loss of $133,779 on $103,327 of net revenues for the same period during the prior year. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $444,571 on $1.26 million of net revenues as compared with a net loss of $678,001 on $194,102 of net revenues for the same period a year ago. The Company's balance sheet at Sept. 30, 2013, showed $1.20 million in total assets, $1.51 million in total liabilities and a $310,451 total stockholders' deficit. "Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. While we have turned a profit during the three months ended September 30, 2013, historically we have been suffering from recurring loss from operations. We have an accumulated deficit of $14,703,693 and $14,258,667 at September 30, 2013 and December 31, 2012, respectively, and stockholders' deficits of $310,451 and $652,125 as of September 30, 2013 and December 31, 2012, respectively. We require substantial additional funds to manufacture and commercialize our products. Our management is actively seeking additional sources of equity and/or debt financing; however, there is no assurance that any additional funding will be available," the Company said the Quarterly Report. "In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying September 30, 2013 balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financing requirements on a continuing basis, to maintain present financing, and to generate cash from future operations. These factors, among others, raise substantial doubt about our ability to continue as a going concern," the Company added. A copy of the Form 10-Q is available for free at: http://is.gd/bYmRNW Frisco, Tex.-based OxySure Systems, Inc. (OTC QB: OXYS) is a medical technology company that focuses on the design, manufacture and distribution of specialty respiratory and emergency medical solutions. The company pioneered a safe and easy to use solution to produce medically pure (USP) oxygen from inert powders. The Company owns nine (9) issued patents and patents pending on this technology which makes the provision of emergency oxygen safer, more accessible and easier to use than traditional oxygen provision systems. PACIFIC GOLD: Posts $789,000 Net Income in Third Quarter -------------------------------------------------------- Pacific Gold Corp. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income of $789,200 on $0 of total revenue for the three months ended Sept.30, 2013, as compared with a net loss of $2.58 million on $82,457 of total revenue for the same period a year ago. For the nine months ended Sept. 30, 2013, the Company reported net income of $52,936 on $0 of total revenue as compared with a net loss of $5.72 million on $161,115 of total revenue for the same period last year. The Company's balance sheet at Sept. 30, 2013, showed $2.02 million in total assets, $4.07 million in total liabilities and a $2.04 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/yG2IcY About Pacific Gold Las Vegas, Nev.-based Pacific Gold Corp. is engaged in the identification, acquisition, and development of prospects believed to have gold mineralization. Pacific Gold through its subsidiaries currently owns claims, property and leases in Nevada and Colorado. Pacific Gold disclosed a net loss of $16.62 million in 2012, as compared with a net loss of $1.38 million in 2011. Silberstein Ungar, PLLC, in Bingham Farms, Michigan, 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 losses from operations, has negative working capital and is in need of additional capital to grow its operations so that it can become profitable. These factors raise substantial doubt about the Company's ability to continue as a going concern. PACIFIC THOMAS: Plan Contemplates Bankruptcy Exit by January ------------------------------------------------------------ Pacific Thomas Corporation will seek approval of the latest iteration of the disclosure statement explaining its proposed reorganization plan at a hearing on Dec. 12, 2013, at 1:00 p.m. According to the Third Amended Disclosure Statement in support of the Third Amended Plan of Reorganization, dated Nov. 13, 2013, the Plan is a reorganizing plan accomplished through the continuation of Debtor's primary business, the ownership, management, leasing, and or sale/refinance of commercial real estate. The Debtor seeks to accomplish payment under the Plan primarily from the net proceeds and revenues generated through the sale or refinance of Pacific Thomas' properties. The Plan may provide for the Debtor to reorganize by continuing to operate, to liquidate by selling assets of the estate, refinancing assets of the estate or a combination of all of the above. This is a combination refinancing and restructuring plan. The refinancing portion the Plan will be achieved through a proposed loan from Thorofare Capital. The funds from Debtor's refinance loan will be used to make pay-off / pay-down payments to the Alameda County Treasurer and certain secured creditors. The balance of the Plan proposed with a restructuring will be financed by the cash flow of the reorganized debtor. The effective date of the Plan is projected to be Jan. 15, 2014. The first payment due under the plan based upon the projected Effective Date is Feb. 15, 2014; the pay-off and pay-down payments will be due within 2 court days of the funding of the Debtor's refinance loan. A senior financial executive or real estate professional will act as the Reorganized Debtor's CEO, will provide oversight and will be the key-decision maker with final decision-making authority for the Reorganized Debtor. Randall Whitney will provide assistance in the operation of the Reorganized Debtor's business and day-to- day management decisions. Loh Realty (http://www.lohrealty.com) and the Oakland office of Collier's International (http://www.colliers.com/en-us/oakland)will serve as the Reorganized Debtor's Property Manager and Leasing Agent. Creditors will be paid under these terms: -- ADMINISTRATIVE CLAIMS. The Debtor will have sufficient cash on hand to pay administrative claims on the Effective Date of the Plan; the source of this cash will be cash in the Debtor's DIP bank accounts, cash from third party funding sources (new value), and cash from the Thorofare loan proceeds, subject to lender approval. If the insiders should not be able to liquidate the Hawaii real estate prior to plan confirmation, they will deed the Hawaii real property to the Reorganized Debtor at confirmation. -- CLASS 1. The allowed secured claim of Summit Bank will be paid in 60 equal monthly installments and a balloon payment on or before the 60th month following the Effective Date. -- CLASS 2. Secured creditor Bank of the West will be paid in full by proceeds from the Thorofare Capital refinancing loan on the earlier of the Effective Date or upon the closing of the refinancing loan. -- CLASS 3. The allowed secured claim of Private Mortgage Fund, LLC, will be paid in a stipulated amount upon the closing of a refinance loan on the earlier of the loan transaction closing or the Effective Date. -- CLASS 4. The allowed secured claim of Jacol will be paid in parts, in a stipulated amount, from the refinancing loan proceeds, on the earlier of the Effective Date or upon the closing of the Thorofare Capital refinancing loan, with the remaining balance being paid in full on or before the 60th month following the Effective Date. -- CLASS 5. A portion of Alameda County Treasurer's claims (Class 5(ii)-(iv) and 5(viii)) will be paid in full at the closing of a refinance loan while its remaining secured claims (Class 5(i), (v), (vi), (vii), and (ix)) will be paid off in equal monthly installments over a period of 5 years from the Petition Date. -- CLASS 6. Allowed non-insider unsecured creditors (Class 6A) will receive 50% of their allowed claim on or before the 60th month following the Effective Date. Holders of allowed unsecured claims of insiders (Class 6B) will not receive any of their allowed claims. -- CLASS 7. Insiders will have their existing shares of Pacific Thomas cancelled and will be issued new shares in the Reorganized Debtor, a newly organized entity, in exchange for a new value investment from the sale of unrelated real estate property in Hawaii. Any interested party desiring further information about the Plan may contact: MATLOCK LAW GROUP, P.C. Anne-Leith Matlock, Esq. K. Brian Matlock, Esq. Kathrin Dimas, Esq. 1485 Treat Blvd., Suite 200 Walnut Creek, CA 94597 Tel: (925) 944-7131 Fax: (925) 944-7138 E-mail: anne-leith@matlocklawgroup.com A copy of the Disclosure Statement dated Nov. 13, 2013 http://bankrupt.com/misc/Pacific_Thomas_DS_3rd_Plan.pdf About Pacific Thomas Corp. Walnut Creek, California, Pacific Thomas Corporation filed a Chapter 11 petition (Bankr. N.D. Cal. Case No. 12-46534) in Oakland on Aug. 6, 2012, estimating in excess of $10 million in assets and liabilities. The Debtor is related to Pacific Thomas Capital, which specializes in real estate services, focusing on the investment, ownership and development of commercial real estate properties, according to http://www.pacificthomas.com/ Real estate activities has spanned throughout the Hawaiian Islands as well as U.S. West Coast locations in California, Nevada, Arizona and Utah. Hawaii based activities are managed under the name Thomas Capital Investments. Bankruptcy Judge M. Elaine Hammond presides over the case. Anne- Leith Matlock, Esq., at Matlock Law Group, P.C., serves as general counsel. The petition was signed by Jill V. Worsley, COO, secretary. Kyle Everett was named Chapter 11 trustee of the Debtor. Craig C. Chiang, Esq., at Buchalter Nemer, P.C., in San Francisco, Calif., represents the Chapter 11 trustee as counsel. In its schedules, the Debtor disclosed $19,960,679 in assets and $16,482,475 in liabilities as of the petition date. PATHEON INC: Moody's Affirms B3 CFR & Alters Outlook to Developing ------------------------------------------------------------------ Moody's Investors Service revised the rating outlook on Patheon, Inc. to developing from positive and affirmed Patheon's existing ratings including the B3 Corporate Family Rating. This follows the announcement that the company is going private and entering into a merger transaction that will lead to a transformational change in the company's business profile and capital structure. On November 19, 2013, Patheon announced that it had entered into an agreement under which it will be taken private by a newly created entity ("Newco") controlled by private equity firm JLL Partners, Inc. (JLL) -- its current majority shareholder, and Royal DSM N. V. (DSM, A1, positive) -- a leading life science and material sciences group based in the Netherlands. Newco will be formed by combining Patheon with DSM's business group -- DSM Pharmaceutical Products ("DPP") -- creating an entity with anticipated combined 2014 annual sales of approximately $2 billion. The transaction will be financed through a combination of debt and equity. The company expects to complete the transaction in the first half of 2014, subject to regulatory approvals in various jurisdictions. Ratings affirmed: Corporate Family Rating at B3 Probability of Default Rating at B3-PD Senior secured credit facilities at B3 (LGD 3, 47%) Speculative Grade Liquidity rating at SGL-2 Rating Rationale: "The developing outlook reflects uncertainty regarding details of the transaction and its implications on the company's business profile and credit metrics," commented Moody's Senior Analyst John Zhao. "We recognize the long term strategic benefit of increased scale and an expanded product line and service offerings as a result of the merger, while cautioning that heightened financial and execution risks may arise from the transaction." On a standalone basis, Patheon's current B3 Corporate Family Rating reflects high financial leverage, in part due to debt added in connection with its acquisition of Banner in late 2012, as well as Patheon's track record of negative free cash flow and the expectation that the company will see only modest free cash flow in the near term. The rating also reflects broader challenges in the contract manufacturing industry, including overcapacity and pricing pressure. Further, the significant fixed costs of Patheon's business lead to high operating leverage and margins that are extremely sensitive to revenue and product mix. While this is positive in an environment of revenue growth, it creates the potential for earnings volatility. The rating balances the company's scale and diversity against risks associated with the likelihood of additional debt-financed acquisitions as industry consolidation continues, particularly at a time when Patheon is at an early stage of a significant turnaround in its legacy operations. The ratings are supported by Patheon's leading market position in the pharmaceutical contract manufacturing arena and Moody's expectation that demand from pharmaceutical companies for contract manufacturing services will grow over the long-term. Moody's could upgrade the ratings if the company (on a standalone basis) is able to continue to improve profitability, reduce earnings volatility and sustain debt to EBITDA below 4.5 times and interest coverage (defined as EBITDA less capital expenditures to interest expense) above 1.5 times. Moody's would also need to gain comfort that the company can operate with sustained positive free cash flow. Moody's could downgrade the ratings if debt/EBITDA increases materially from its current level, interest coverage falls below 1.0 times sustainably, or if free cash flow will remain negative (exclusive of unusual items, such as severance). Deterioration of liquidity for any reason would also lead to a downgrade. Patheon Inc. ("Patheon"), headquartered in Mississauga, Ontario, Canada is a leading provider of commercial manufacturing and pharmaceutical development services ("PDS") of branded and generic prescription drugs to the international pharmaceutical industry. Patheon's stock is publicly traded on the Toronto Stock Exchange, and the company files with the SEC. JLL Partners, a private equity firm, owns approximately 56% of the company's restricted voting shares. PHOENIX SERVICES: S&P Retains 'B' Rating Following $25MM Add-On --------------------------------------------------------------- Standard & Poor's Ratings Services' 'B' issue-level rating on Kennet Square, Pa.-based Phoenix Services International LLC's first-lien term loan is based on S&P's view of the steel mill services provider's "vulnerable" business risk and "aggressive" financial risk. Key credit factors include the company's high customer concentration and S&P's expectation that leverage will be in the 4x to 5x EBITDA range over the next 12 months. Standard & Poor's has reviewed its ratings on Phoenix Services, which it labeled as "under criteria observation" after the publishing of its revised corporate criteria on Nov. 19. Standard & Poor's expedited the review of its ratings on Phoenix Services because of the company's announced incremental term loan borrowings. With S&P's criteria review of Phoenix Services complete, it has confirmed that its ratings on this issuer are unaffected by the criteria changes. RATINGS LIST Phoenix Services International LLC Corporate Credit Rating B/Stable/-- Rating Unchanged $180 mil term loan due 2017 B Recovery Rating 3 PHYSICAL PROPERTY: Incurs HK$43,000 Net Loss in Third Quarter ------------------------------------------------------------- Physical Property Holdings Inc. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss and comprehensive loss of HK$43,000 on HK$278,000 of total operating revenues for the three months ended Sept. 30, 2013, as compared with a net loss and comprehensive loss of HK$101,000 on HK$248,000 of total operating revenues for the same period during the prior year. For the nine months ended Sept. 30, 2013, the Company reported a net loss and comprehensive loss of HK$223,000 on HK$781,000 of total operating revenues as compared with a net loss and comprehensive loss of HK$373,000 on HK$624,000 of total operating revenues for the same period a year ago. The Company's balance sheet at Sept. 30, 2013, showed HK$9.73 million in total assets, HK$11.48 million in total liabilities, all current, and a HK$1.75 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/Huxam2 About Physical Property Located in Hong Kong, Physical Property Holdings Inc., through its wholly-owned subsidiary, Good Partner Limited, owns five residential apartments located in Hong Kong. The Company was incorporated in the State of Delaware. PLANDAI BIOTECHNOLOGY: Delays Form 10-Q for Third Quarter --------------------------------------------------------- Plandai Biotechnology, Inc., filed with the U.S. Securities and Exchange Commission a Notification of Late Filing on Form 12b-25 with respect to its quarterly report on Form 10-Q for the quarter ended Sept. 30, 2013. The Company has experienced a delay in completing the necessary disclosures and finalizing its financial statements with its independent public accountant in connection with its Quarterly Report on Form 10-Q for the period ended Sept. 30, 2013. As a result of this delay, the Company was unable to file its Quarterly Report by the prescribed filing date of Nov. 14, 2013, without unreasonable effort or expense. 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. Plandai incurred 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. 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. POSITIVEID CORP: Sells 871,754 VeriTeQ Common Shares ---------------------------------------------------- PositiveID Corporation, on Nov. 8, 2013, entered into a letter agreement with VeriTeQ Corporation (f/k/a Digital Angel Corporation). On Nov. 13, 2013, the Company entered into a Stock Purchase Agreement with Hudson Bay Master Fund Ltd. and seven other accredited purchasers. Also on that date, Hudson and VeriTeQ entered into a financing transaction. Pursuant to the SPA, the Company sold its remaining shares of VeriTeQ common stock (871,754) and the convertible note owed from VeriTeQ to the Company (convertible into 135,793 shares of VeriTeQ common stock). Total proceeds from the sale are $750,000. Pursuant to the Letter Agreement, VeriTeQ is required to deliver to the Company a warrant to purchase 300,000 shares of VeriTeQ common stock at price of $2.84. The warrant will have the same terms as the warrant being entered into between the Purchasers and VeriTeQ, including a term of 5 years and customary pricing reset provisions. The Letter Agreement also specifies that the remaining outstanding payable balance owed from VeriTeQ to the Company would be repaid pursuant to the following schedule: (a) $100,000 paid upon VeriTeQ raising capital in excess of $3 million (excluding the transaction between VeriteQ and Purchasers of November 13, 2013), (b) within 30 and 60 days after the initial $100,000 payment, VeriTeQ will pay $50,000 each (total of and additional $100,000) to the Company, and (c) the remaining balance of the payable (approximately $12,000) will be paid within 90 days after the initial $100,000 payment. The Letter Agreement also included several administrative corrections to previous agreements between the Company and VeriTeQ. A copy of the SPA is available for free at: http://is.gd/GBvq4h Delays Form 10-Q PositiveID Corporation was unable, without unreasonable effort or expense, to file its quarterly report on Form 10-Q for the quarter ended Sept. 30, 2013, by the Nov. 14, 2013, filing date applicable to smaller reporting companies due to a delay experienced by the Company in the completion of its independent auditor's review of the financial statements included in the Quarterly Report. About PositiveID Delray Beach, Fla.-based PositiveID Corporation has historically developed, marketed and sold RFID systems used for the identification of people in the healthcare market. Beginning in early 2011, the Company has focused its strategy on the growth of its HealthID business, including the continued development of its GlucoChip, its Easy Check breath glucose detection device, its iglucose wireless communication system, and potential strategic acquisition opportunities of businesses that are complementary to its HealthID business. PositiveID incurred a net loss of $7.99 million on $0 of revenue for the year ended Dec. 31, 2012, as compared with a net loss of $16.48 million on $0 of revenue for the year ended Dec. 31, 2011. The Company's balance sheet at June 30, 2013, showed $2.10 million in total assets, $7.18 million in total liabilities and a $5.08 million total stockholders' deficit. EisnerAmper LLP, in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that at Dec. 31, 2012, the Company has a working capital deficiency and an accumulated deficit. Additionally, the Company has incurred operating losses since its inception and expects operating losses to continue during 2013. These conditions raise substantial doubt about its ability to continue as a going concern. POSITRON CORP: Incurs $1.4 Million Net Loss in Third Quarter ------------------------------------------------------------ Positron Corporation filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss and comprehensive loss of $1.39 million on $351,000 of sales for the three months ended Sept. 30, 2013, as compared with a net loss and comprehensive loss of $1.56 million on $370,000 of sales for the same period during the prior year. For the nine months ended Sept. 30, 2013, the Company reported a net loss and comprehensive loss of $3.67 million on $1.15 million of sales as compared with a net loss and comprehensive loss of $5.76 million on $2.42 million of sales for the same period a year ago. The Company's balance sheet at Sept. 30, 2013, showed $2.47 million in total assets, $11.50 million in total liabilities and a $9.02 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/8mO8y4 About Positron Corporation Headquartered in Fishers, Indiana, Positron Corporation is a molecular imaging company focused on nuclear cardiology. Positron disclosed a net loss and comprehensive loss of $7.95 million in 2012, as compared with a net loss and comprehensive loss of $6.12 million in 2011. Sassetti LLC, in Oak Park, Illinois, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has a significant accumulated deficit which raises substantial doubt about the Company's ability to continue as a going concern. PRECISION OPTICS: Incurs $210,700 Net Loss in Fiscal Q1 ------------------------------------------------------- Precision Optics Corporation, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $210,721 on $907,426 of revenues for the three months ended Sept. 30, 2013, as compared with a net loss of $358,094 on $563,398 of revenues for the same period a year ago. The Company's balance sheet at Sept. 30, 2013, showed $2.17 million in total assets, $642,657 in total liabilities, all current, and $1.53 million in total stockholders' equity. A copy of the Form 10-Q is available for free at: http://is.gd/A4R1q5 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. Precision Optics incurred 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. RESIDENTIAL CAPITAL: Knocks Out $160 Million in Ill-Founded Claims ------------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that although Residential Capital LLC is yet to emerge from bankruptcy reorganization, it too is whittling down ill- founded claims. According to the report, last week, U.S. Bankruptcy Judge Martin Glenn tossed out two $79.1 million claims filed by an individual named Robert Sweeting. ResCap, the mortgage-servicing subsidiary of non-bankrupt Ally Financial Inc., allegedly defrauded Judge Sweeting because the homeowner said his signature on a mortgage was a forgery. Unfortunately for Sweeting, he sued in California state court and lost. Judge Glenn threw out the two claims in their entirety on the grounds of collateral stopped, res judicata, and the Rooker- Feldman doctrine. Translating the defenses to plain English, Judge Glenn said Sweeting wasn't entitled to make the claims a second time in federal bankruptcy court when they were already tossed in state court. About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities at March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. ResCap sold most of the businesses for a combined $4.5 billion. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: Resolves Plan Objections, Files Revised Plan ----------------------------------------------------------------- Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York opened on Nov. 19 the trial on the confirmation of the Joint Chapter 11 Plan filed by Residential Capital, LLC, and its debtor affiliates, and the Official Committee of Unsecured Creditors. The confirmation trial will continue until Nov. 26. Prior to the Nov. 19 hearing, Judge Glenn held pre-trial status conferences on Nov. 4 and 14, during which the Debtors related that they have resolved most of the Plan-related objections, both formal and informal, except for, among other things, the objections raised by the junior secured noteholders and Wells Fargo as JSN collateral agent, the U.S. Trustee, and the U.S. Department of Justice. A table of the Plan-related objections and their resolution is available for free at: http://bankrupt.com/misc/RESCAPstatreport1105.pdf As a result of the agreed modifications to the Plan, certain insurers under General Motors Combined Specialty Insurance Program 12/15/00 - 12/15/03; Deutsche Alt-A Securities, Inc., and its affiliates; Federal Home Loan Mortgage Corporation; Federal Housing Finance Agency, as conservator for the Federal Home Loan Mortgage Corporation; Los Angeles County Treasurer and Tax Collector; County of San Bernardino, California; and Philip Roger Flinn, II, withdrew their objections to the confirmation of the Plan. Furthermore, as a result of the agreed modifications and resolution of the Plan confirmation objections, the Debtors revised their Chapter 11 Plan. The Revised Plan, among other things, modifies the language on third-party release carve-out to provide that the third party release will not apply to any claims held by: (i) the Federal Housing Finance Agency, as conservator for the Federal National Mortgage Association ("Fannie Mae"), and/or Fannie Mae against Ally Bank, any claims of FHFA and/or Fannie Mae against Ally Bank for continuing liabilities, obligations, and duties owed by Ally Bank to FHFA and/or Fannie Mae under the Fannie Mae Contract, including the obligations and duties to honor all selling and servicing representations and warranties related to the portfolio of loans sold and/or serviced, or that were previously serviced, by Ally Bank; (ii) the FHFA and/or the Federal Home Loan Mortgage Corporation ("Freddie Mac") (a) against Ally Bank for any selling and servicing representation and warranty claims for loans sold to Freddie Mac directly by Ally Bank subsequent and pursuant to the May 1, 2012, and August 1, 2012, master selling and servicing agreements among Ally Bank and Freddie Mac, and (b) against Ally Financial Inc. as guarantor for the limited time that the Debtors subserviced the Ally Bank loans sold pursuant to the agreements; (iii) the United States and the DOJ/AG Settling States with regard to any monetary obligation the Ally Released Parties may have arising under the DOJ/AG Settlement or causes of action preserved under the DOJ/AG Settlement; and will not apply to (iv) any liability or obligation of AFI to the United States or the States arising under the Internal Revenue Code, environmental laws, civil fraud laws, or criminal laws, including, but not limited to, any liability or obligation preserved under the DOJ/AG Settlement. UMB Bank, N.A., as successor notes trustee under the indenture for 9.625% Junior Secured Guaranteed Notes due 2015, continues to object to confirmation of the Plan, despite having been revised twice by the Debtors. According to the Debtors' counsel, Gary Lee, Esq., at Morrison & Foerster LLP, in New York, all of the Debtors' major creditors voted for the Joint Plan except for the JSNs and their trustee. Of the 1,432 votes cast, only 64 voted no to the proposal. The JSNs complain that by the Amended Plan, the Plan Proponents seek to unclassify that portion of the JSN Claims asserting the Notes Trustee's Fee Claims. In supplemental pleadings filed in support of the Amended Plan, the Plan Proponents take the position that the Notes Trustee's Fee Claims are not entitled to any direct recovery from the Debtors' estates. The Amended Plan's failure to provide for the Notes Trustee's Fee Claims ignores Second Circuit precedent, violates Section 1129(b)(1) of the Bankruptcy Code, and unless remedied, should result in denial of confirmation of the Amended Plan, the JSNs argue. During the hearing, Judge Glenn granted the Debtors and the Creditors Committee's motion in limine to exclude the proposed expert testimony of Raymond T. Lyons, a recently retired and respected former bankruptcy judge in the District of New Jersey. Judge Glenn denied UMB Bank and the JSNs' motion in limine to exclude the proposed rebuttal expert testimony of Gina Guzeit offered by the Debtors and the Creditors Committee. The Plan is hinged on a $2.1 billion settlement contribution by parent Ally Financial Inc. The Debtors maintain that the global settlement with Ally and other major creditors and the Joint Plan before the Court resolve billions of dollars of claims and bring the Chapter 11 cases to the threshold of a successful resolution that just months ago seemed hopelessly locked away. Without the global settlement and the Plan, the Chapter 11 cases would devolve into potentially endless litigation, not only against Ally and its affiliates, but also among the creditor constituencies, the Debtors assert. A full-text copy of the Nov. 12, 2013 version of the Amended Plan is available at http://bankrupt.com/misc/RESCAPplan1112.pdf A full-text copy of the Nov. 18, 2013 version of the Amended Plan is available at http://bankrupt.com/misc/RESCAPplan1118.pdf Plan Supplement Exhibits The Debtors and the Official Committee of Unsecured Creditors filed with the Court a schedule of executory contracts and unexpired leases not included on the schedule of contracts and leases to be assumed by the Debtors pursuant to the Joint Chapter 11 Plan. Pursuant to Article V.A of the Plan, executory contracts and unexpired leases that are not (i) on the Assumption Schedule, (iii) previously assumed, or (iii) subject to a pending motion to assume, are deemed to be rejected as of the Effective Date. Accordingly, the Pending Agreements are not deemed to be rejected under the Plan because they are the subject of a pending motion to assume and assign. Out of an abundance of caution, the Plan Proponents are sending the notice to the Non-Debtor counterparties to the Pending Agreements. A schedule of the Pending Agreement is available for free at http://bankrupt.com/misc/RESCAP_pendingagreements1029.pdf The Debtors also filed with the Court Exhibit 2: Liquidating Trust Agreement, Exhibit 4: Borrower Claims Trust Agreement, Exhibit 13: Liquidating Trust Causes of Action, and Exhibit 15: Borrower- Related Causes of Action. Full-text copies of the Plan Exhibits are available at: http://bankrupt.com/misc/RESCAPplanex1115.pdf About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities at March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. ResCap sold most of the businesses for a combined $4.5 billion. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: Seeks OK of Accord With Committee, Ally ------------------------------------------------------------ Residential Capital LLC and its affiliates seek the Court's authority to approve a settlement agreement with the Official Committee of Unsecured Creditors and Ally Financial Inc. and its non-debtor affiliates. The settlement is ancillary to a separate settlement between Ally and the Federal Housing Finance Agency resolving billions of dollars of claims brought by the FHFA as conservator for the Federal Home Loan Mortgage Corporation related to the Debtors' residential mortgage-backed securities. As a result of the Settlement, the Plan proponents have modified the Plan to provide that: (a) the claims of the FHFA in the Debtors' bankruptcy cases will be allowed in the amount of $1.2 billion in class RS-11; (b) the Allowed FHFA Claim will receive a cash distribution of $24 million on the effective date of the Plan; and (c) the Third Party Release Carve-Out will be modified to allow the FHFA to retain certain claims against Ally. In addition, and as a result of the Ally/FHFA Settlement, Freddie Mac and the FHFA have withdrawn their objections to the Plan, and with it, the Parties will not litigate at confirmation the impact of the Housing and Economic Recovery Act of 2008. Gary S. Lee, Esq., at Morrison & Foerster LLP, in New York, tells the Court that the Debtors believe that entry into the Settlement Agreement is reasonable and in the best interests of the Debtors' estates and their creditors. Absent a settlement, litigating these claims would have required the Debtors to engage in costly, burdensome, and uncertain litigation for months or even years, Mr. Lee says. Additionally, litigation regarding HERA's impact on the Plan would likely be time consuming and cause the Debtors to incur significant administrative expense, and could be a substantial obstacle to the confirmation of the otherwise largely consensual Plan, Mr. Lee asserts. The FHFA Claims are based on litigation arising out of Freddie Mac's purchase of approximately $6 billion in Debtor-sponsored residential mortgage-backed securities. As far as the Debtors are aware, the FHFA is the largest holder of RMBS in these Chapter 11 cases. The FHFA objected to the Plan's proposed subordination of the FHFA Claims. A ruling in the FHFA's favor on subordination could have had a material negative effect on the distributions to the Debtors' other creditors. The Ally/FHFA Settlement also resolves the FHFA's claims against Ally pending in the U.S. District Court for the Southern District of New York. That settlement includes a substantial contribution from Ally to resolve the FHFA Case. In addition, the FHFA assigned to Ally its and Freddie Mac's rights to receive any and all distributions to the FHFA under the Plan on account of the FHFA Claims as of the effective date of the Plan. The Debtors and the Committee are not parties to the Ally/FHFA Settlement; however, based on that separate settlement, the Settlement Agreement was negotiated. The Settlement Agreement fairly resolves significant securities claims against the Debtors, eliminates two significant objections to confirmation, and is supported by the Committee. About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities at March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. ResCap sold most of the businesses for a combined $4.5 billion. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: Removal Period Extended to Jan. 31, 2014 ------------------------------------------------------------- Judge Martin Glenn, at the behest of Residential Capital LLC and its affiliates, extended the period within which the Debtors may file notices of removal of civil actions to the later of (a) Jan. 31, 2014, or (b) should the Court enter an order terminating the automatic stay as to a particular Civil Action, for that Civil Action, 30 days after the entry of the order terminating the automatic stay, without prejudice to the Debtors to seek further extensions. According to Gary S. Lee, Esq., at Morrison & Foerster LLP, in New York, due to the urgent need to focus on critical activities such as plan-related negotiations, the Debtors and their professionals have not had a sufficient opportunity to analyze the merits of the Civil Actions and the desirability of removing them to the appropriate bankruptcy court or district court. Thus, the Debtors are continuing to review their files and records and undertaking an analysis of the relevant court documents to determine whether the Debtors' estates would benefit from the removal of any of the thousands of Civil Actions pending in courts throughout the country, Mr. Lee says. Further extending the Debtors' period to file notices of removal will provide them with adequate time to conduct the review and to evaluate the pending litigation matters within the larger context of the Chapter 11 cases, Mr. Lee asserts. About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities at March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. ResCap sold most of the businesses for a combined $4.5 billion. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: Has Mitchell Class Suit Settlement ------------------------------------------------------- Debtor Residential Funding Company, LLC, and the plaintiffs in the class action case captioned Steven and Ruth Mitchell v. Residential Funding Company, LLC, et al. (Case No. 03-CV-220489- 01), currently pending in the Circuit Court of Jackson County, Missouri, Division 4, entered into a settlement fixing the amount of an allowed general unsecured claim for the benefit of the class action plaintiffs. The Settlement Agreement resolves all remaining claims between the parties, including, but not limited to, the Plaintiffs' remaining punitive damages claims against RFC with respect to the 248 loans held by the approximately 365 members of the Mitchell Settlement Class as well as any purported liability stemming from the trial sanctions motion, thereby eliminating the risk of an allowed punitive damage claim that could exceed the original $92 million award and an additional award of potentially $8 to $20 million in monetary sanctions against RFC. RFC reached the settlement in February 2012. In April 2012, the Mitchell Settlement Class received preliminary certification from the state court. Under the terms of the settlement agreement, RFC agreed to pay $14.5 million to the Mitchell Settlement Class and an additional $2,780,365 million in attorneys' fees. The Debtors are only agreeing to provide the class representative with an allowed, general unsecured claim for $14.5 million. In exchange for the remittance of the Mitchell Settlement Amount, the Class agreed to provide the certain persons release from certain claims and causes of action. The Bankruptcy Court will convene a hearing on Dec. 17, 2013, at 10:00 a.m., to consider approval of the settlement agreement. Objections are due Nov. 29. The Debtors are represented by Gary S. Lee, Esq., Norman S. Rosenbaum, Esq., and Jordan A. Wishnew, Esq., at Morrison & Foerster LLP, in New York. About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities at March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. ResCap sold most of the businesses for a combined $4.5 billion. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). REVSTONE INDUSTRIES: Creditors Say Acrimony Warrants Trustee ------------------------------------------------------------ Law360 reported that the official committee of unsecured creditors in the contentious Revstone Industries LLC bankruptcy requested on Nov. 20 that a Chapter 11 trustee be appointed to oversee the case, citing nearly a year of unrelenting acrimony that has bogged down the proceedings since shortly after the auto parts conglomerate sought court protection. According to the report, in a motion before the Delaware bankruptcy court, the committee chronicled the history of the case, in which nearly every significant step has been fraught with some sort of battle or dispute. About Revstone Industries et al. Lexington, Kentucky-based Revstone Industries LLC, a maker of truck parts, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 12-13262) on Dec. 3, 2012. Judge Brendan Linehan Shannon oversees the case. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP represents Revstone. In its petition, Revstone estimated under $50 million in assets and debts. Affiliate Spara LLC filed its Chapter 11 petition (Bankr. D. Del. Case No. 12-13263) on Dec. 3, 2012. Lexington-based Greenwood Forgings, LLC (Bankr. D. Del. Case No. 13-10027) and US Tool & Engineering LLC (Bankr. D. Del. Case No. 13-10028) filed separate Chapter 11 petitions on Jan. 7, 2013. Judge Shannon also oversees the cases. Duane David Werb, Esq., at Werb & Sullivan, serves as bankruptcy counsel to Greenwood and US Tool. Greenwood estimated $1 million to $10 million in assets and $10 million to $50 million in debts. US Tool & Engineering estimated under $1 million in assets and $1 million to $10 million in debts. The petitions were signed by George S. Homeister, chairman. Metavation, also known as Hillsdale Automotive, LLC, joined parent Revstone in Chapter 11 on July 22, 2013 (Bankr. D. Del. Case No. 13-11831) to sell the bulk of its assets to industry rival Dayco for $25 million, absent higher and better offers. Metavation has tapped Pachulski as its counsel. Pachulski also serves as counsel to Revstone and Spara. Metavation also has tapped McDonald Hopkins PLC as special counsel, and Rust Consulting/Omni Bankruptcy as claims agent and to provide administrative services. Stuart Maue is fee examiner. Mark L. Desgrosseilliers, Esq., at Womble Carlyle Sandridge & Rice, LLP, represents the Official Committee of Unsecured Creditors in Revstone's case. REVSTONE INDUSTRIES: Creditors' Committee Seeks Trustee Again ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Revstone Industries LLC's official unsecured creditors' committee said the U.S. Bankruptcy Court should appoint a Chapter 11 trustee or convert the reorganization to a liquidation because of the acrimony between the parties. According to the report, in a filing last week in Wilmington, the committee described in detail the conflicts and litigation that erupted soon after the December Chapter 11 filing by Revstone, which makes parts for truck engines. The committee's first request for a trustee, in February, was resolved in an arrangement that wasn't disclosed. Revstone violated that settlement, allowing the committee to file a reorganization plan in July. Lexington, Kentucky-based Revstone filed a competing plan. The committee said last week that neither plan can be approved because there isn't enough cash to pay professional costs. The committee arranged a Dec. 11 hearing for the judge to rule on the latest trustee motion. If the judge decides a trustee isn't appropriate in Chapter 11, the committee wants the case converted to a Chapter 7 liquidation, in which a trustee would be appointed as a matter of course. The chances of recovery by unsecured creditors are "increasingly dim," the committee said. The bankruptcy judge last month warned that he would appoint a trustee if there is "acrimony and deadlock between debtors and stakeholders." About Revstone Industries et al. Lexington, Kentucky-based Revstone Industries LLC, a maker of truck parts, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 12-13262) on Dec. 3, 2012. Judge Brendan Linehan Shannon oversees the case. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP represents Revstone. In its petition, Revstone estimated under $50 million in assets and debts. Affiliate Spara LLC filed its Chapter 11 petition (Bankr. D. Del. Case No. 12-13263) on Dec. 3, 2012. Lexington-based Greenwood Forgings, LLC (Bankr. D. Del. Case No. 13-10027) and US Tool & Engineering LLC (Bankr. D. Del. Case No. 13-10028) filed separate Chapter 11 petitions on Jan. 7, 2013. Judge Shannon also oversees the cases. Duane David Werb, Esq., at Werb & Sullivan, serves as bankruptcy counsel to Greenwood and US Tool. Greenwood estimated $1 million to $10 million in assets and $10 million to $50 million in debts. US Tool & Engineering estimated under $1 million in assets and $1 million to $10 million in debts. The petitions were signed by George S. Homeister, chairman. Metavation, also known as Hillsdale Automotive, LLC, joined parent Revstone in Chapter 11 on July 22, 2013 (Bankr. D. Del. Case No. 13-11831) to sell the bulk of its assets to industry rival Dayco for $25 million, absent higher and better offers. Metavation has tapped Pachulski as its counsel. Pachulski also serves as counsel to Revstone and Spara. Metavation also has tapped McDonald Hopkins PLC as special counsel, and Rust Consulting/Omni Bankruptcy as claims agent and to provide administrative services. Stuart Maue is fee examiner. Mark L. Desgrosseilliers, Esq., at Womble Carlyle Sandridge & Rice, LLP, represents the Official Committee of Unsecured Creditors in Revstone's case. REX VENTURE: Receiver to Auction Off Assets Dec. 16 --------------------------------------------------- Kenneth D. Bell, in his capacity as the court-appointed receiver for Rex Venture Group, LLC, in Case No. 3:12-CV-519, pending in the U.S. District Court for the Western District of North Carolina, Charlotte Division, posted a notice of his intention to sell to the highest qualified bidder(s) these real property: 1. An office building and attached laundromat at 801 and 803 West Center Street, Lexington, Davidson County, NC; Tax PIN: 6725- 02-59-4801; Deed Book 2041, Page 2402. 2. A warehouse at 4095 Old Salisbury Road, Lexington, Davidson County, NC; Tax PIN: 6714-01-05-4777; Deed Book 2055, Page 1992. The Receiver will also sell personal property of the Receivership Defendant. These properties will be sold at public auction to be held on Dec. 16, 2013, at 12:00 p.m. at 4095 Old Salisbury Rd., Lexington, Davidson County, North Carolina. The auction of these properties will be in conjunction with the personal property auction that will be held tDecember 16-17, 2013 commencing at 9:00 a.m. both days. All sales will be for cash or cash equivalents. All sales will be free and clear of all liens, claims or encumbrances. The successful bidder(s) for the parcels of real property will be required to submit a deposit of 20 percent of the final contract purchase price within 24 hours of the auction, either by cashier's check, company or personal check accompanied by a bank letter of guarantee, or electronic funds transfer, with the balance due within 30 days after the date of approval by the Receiver. The party who submits the second-highest bid must agree that their bid will be irrevocable until the earlier of: (a) 60 days after the auction; or (b) the closing of the sale to the successful bidder. Sales will be "AS IS" and "WHERE IS" with no representations or warranties of any type, and will close no later than 30 days after the date of approval by the Receiver. The Receiver reserves the right to postpone or adjourn the auction, to accept any bid or to reject any and all bids that he deems not to be in the best interests of the Receivership Estate, or to withdraw any of the real or personal properties at any time prior to the announcement of the completion of the auction. The Receiver's acceptance of any bid is expressly conditioned on the successful bidder executing a purchase and sale agreement or bill of sale in form and content satisfactory to the Receiver. RIH ACQUISITIONS: Can Hire Non-Bankruptcy Legal Professionals ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey authorized RIH Acquisitions NJ, LLC, et al., to employ non- bankruptcy legal professionals to provide services in the ordinary course of their businesses. The Non-Bankruptcy Legal Professionals provide services to RIH Acquisitions in a variety of matters unrelated to the Chapter 11 cases, including legal services with regard to specialized areas of the law, like labor, workers' compensation and general liability issues. The Non-Bankruptcy Legal Professionals to be employed are: * Marks O'Neill, Esq., at O'Brien & Courtney, as personal injury counsel in the Philadelphia, Pennsylvania, area. * Fox Rothschild LLP, as labor and employment counsel including union issues. * Graham Curtin, P.A., as litigation and general counsel. * Pietras Saracino Smith & Meeks, LLP, as workers compensation counsel. * Blank Rome LLP as employment litigation counsel. About RIH Acquisitions RIH Acquisitions NJ LLC, doing business as the Atlantic Club Casino Hotel in Atlantic City, New Jersey, filed a Chapter 11 petition on Nov. 6, 2013 (Bankr. D.N.J. Case No. 13-34483) in Camden, New Jersey, designed to sell the property in the near term. The Debtors are represented by Michael D. Sirota, Esq., and Warren A. Ustaine, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., in Hackensack, New Jersey; and Paul V. Shalhoub, Esq., at Willkie Farr & Gallagher LLP, in New York. Duane Morris, LLP, serves as the Debtors' special gaming regulatory counsel. Imperial Capital, LLC, serves as financial advisor and investment banker to the Debtors, while Mercer (US) Inc. serves as compensation consultant. Kurtzman Carson Consultants LLC is the Debtors' claims and noticing agent. Northlight Financial LLC, as DIP Lender, is represented by Harlan W. Robins, Esq., at Dickinson Wright PLLC, in Columbus, Ohio; Kristi A. Katsma, Esq., at Dickinson Wright PLLC, in Detroit, Michigan; and Bruce Buechler, Esq., and Kenneth A. Rosen, Esq., at Lowenstein Sandler LLP, in Roseland, New Jersey. ROGERS BANCSHARES: Names Cheryl Shuffield as Liquidation Officer ---------------------------------------------------------------- Rogers Bancshares Inc. seeks authorization from the U.S. Bankruptcy Court for the Eastern District of Arkansas to employ Cheryl F. Shuffield as chief liquidation officer and Frost PLLC as accountants for the Debtor. Ms. Shuffield, as CLO, shall perform the following services, assisted as appropriate by her accounting firm: (a) manage and maintain the Debtor's estate; (b) keep or cause to be kept books containing a description of all property from time to time constituting the Debtor's assets, accounting of all receipts and disbursements; (c) maintain insurance for the Debtor as needed; (d) maintain records and other business records for the Debtor as needed; (e) perform any and all duties and obligations under the Sale Order to effectuate a closing of the Sale with Simmons First National Bank; (f) pay and discharge any costs, expenses, or obligations deemed necessary for the Debtor; (g) deposit estate funds; (h) draw checks and make disbursements as approved by the Court; (i) enter into contracts and execute negotiable and non- negotiate obligations; (j) when and if advisable, object to claims; (k) establish a reserve for the payment of future expenses; (l) file and pay employment, income, or other taxes as appropriate; and (m) perform such other tasks as agreed to among the Debtor and the Committee and that are otherwise necessary for the wind down of the Debtor's affairs. Ms. Shuffield will be paid $310 per hour for her services. To the extent possible she will delegate tasks to lower hourly billing individuals within her firm to assist her with the tasks described herein. The hourly rates of such individuals range from $95 to $300. Ms. Shuffield and Frost PLLC will also be reimbursed for reasonable out-of-pocket expenses incurred. Ms. Shuffield, member of Frost PLLC, assured 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. Frost PLLC can be reached at: Ms. Cheryl F. Shuffield, CPA FROST PLLC 425 West Capitol Avenue, Suite 3300 Little Rock, AK 72201 Tel: (501) 975-0100 E-mail: cshuffield@frostpllc.com Little Rock, Arkansas-based Rogers Bancshares Inc., filed for Chapter 11 relief (Bankr. E.D. Ark. Case No. 13-13838) on July 5, 2013. Bankruptcy Judge James G. Mixon presides over the case. Samuel M. Stricklin, Esq. -- sam.stricklin@bgllp.com -- at Bracewell & Giuliani, LLP represents the Debtor in its restructuring efforts. The Debtor estimated $10 million to $50 million in assets and debts. Rogers owes $41.3 million on three issues of junior subordinated debentures and $39.6 million on four issues of preferred stock. The petition was signed by Susan F. Smith, secretary. The Official Committee of Unsecured Creditors has hired Hunton & Williams LLP and James F. Dowden PA as counsel; and Carl Marks Advisory Group LLC as financial advisors. ROTECH HEALTHCARE: Says Baker & McKenzie Lied to Court ------------------------------------------------------ Law360 reported that the reorganized Rotech Healthcare Inc. in Delaware bankruptcy court filed a supplemental objection to Baker & McKenzie LLP's request for more than $1 million in fees, saying the firm withheld a significant conflict of interest with a Rotech lien holder from the court. According to the report, the medical equipment supplier said Baker & McKenzie, which briefly served as counsel to the company's equity committee, recently filed unredacted time records reveal an undisclosed conflict of interest with Fidelity Management & Research Co., a holder of Rotech's first lien notes. As previously reported by The Troubled Company Reporter, Rotech filed an objection to Baker & McKenzie's request for more than $1 million in fees, saying the firm hadn't provided the estate with any value during the bankruptcy proceedings. The medical equipment supplier said in its objection that Baker & McKenzie, which acted for several months as counsel to the company's equity committee, wasted time and money drawing the bankruptcy proceedings into unnecessary litigation and should therefore not be reimbursed for any of its fees. About Rotech Healthcare Based in Orlando, Florida, Rotech Healthcare Inc. (NASDAQ: ROHI) -- http://www.rotech.com/-- provides home medical equipment and related products and services in the United States, with a comprehensive offering of respiratory therapy and durable home medical equipment and related services. The company provides equipment and services in 48 states through approximately 500 operating centers located primarily in non-urban markets. The Company reported a net loss of $14.76 million in 2011, a net loss of $4.20 million in 2010, and a net loss of $21.08 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $255.76 million in total assets, $601.98 million in total liabilities, and a $346.22 million total stockholders' deficiency. On April 8, 2013, Rotech Healthcare and 114 subsidiary companies filed petitions seeking relief under chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 13-10741) to implement a pre- arranged plan negotiated with secured lenders. Attorneys at Proskauer Rose LLP, and Young, Conaway, Stargatt & Taylor serve as counsel to the Debtors; Foley & Lardner LLP is the healthcare regulatory counsel; Akin Gump Strauss Hauer & Feld LLP is the special healthcare regulatory counsel; Barclays Capital Inc. is the financial advisor; Alix Partners, LLP is the restructuring advisor; and Epiq Bankruptcy Solutions LLC is the claims agent. Prepetition term loan lender and DIP lender Silver Point Capital and other consenting noteholders are represented by Wachtell, Lipton, Rosen & Katz, and Richards Layton & Finger PA. The Official Committee of Unsecured Creditors tapped Otterbourg, Steindler, Houston & Rosen, P.C., as counsel; Buchanan Ingersoll & Rooney PC as Delaware counsel; and Grant Thornton LLP as financial advisor. The U.S. Trustee at the end of April appointed an official committee of equity holders. Members include Alden Global Recovery Master Fund LP, Varana Capital Master LP, Wynnefield Partners Small Cap Value LP I, Bastogne Capital Partners, LP, and Kenneth S. Grossman P.C. Pension Plan. The Equity Panel is represented by Bayard, P.A. as Delaware counsel. Rotech on Aug. 29 disclosed that the Bankruptcy Court has approved the Second Amended Joint Plan of Reorganization, along with $358 million of exit financing commitments received from Wells Fargo and certain existing holders of the 10.5% Senior Second Lien Secured Notes. The reorganization plan was confirmed at a court hearing in Delaware and was supported by the Statutory Committee of Unsecured Creditors. Creditors entitled to vote overwhelmingly voted in favor of the reorganization plan. Under the reorganization plan, the Company's existing common stock will be cancelled and substantially all of the new common stock of reorganized Rotech will be distributed to holders of the 10.5% Senior Second Lien Secured Notes. Trade suppliers are to be paid in full, if they agree to continue providing credit. The existing $23.5 million term loan would be paid in full, and the $230 million in 10.75 percent first-lien notes will be amended. The Company, on Sept. 27, 2013, implemented the reorganization plan approved when a bankruptcy judge in Delaware signed a confirmation order on Aug. 29. RURAL/METRO CORP: McCall Wants Policy Assumed Under Plan -------------------------------------------------------- Plaintiffs in a prepetition state court action against Rural/Metro Corp. and its insurers want the court to deny confirmation of the debtors' reorganization plan unless they assume the policy of healthcare professional liability insurance issued by Lexington Insurance Company. Prepetition, the plaintiffs pursued the action styled Lisa McCall- Stowers, individually and as guardian of Rhonda McCall, incompetent, and as guardian and next friend of D.M.,2 a minor, Roger W. McCall, Sr., Wilma McCall and Roger W. McCall, Jr. v. University Hospitals Medical Group, Inc., University Hospitals of Cleveland, Tia Melton, M.D., Rural/Metro Corporation d/b/a Rural Metro Ambulance, Rural/Metro of Ohio, Inc. d/b/a Rural Metro Ambulance, Rural/Metro of Northern Ohio, Inc. d/b/a Rural Metro Ambulance, Alan Ward, Kelsey M. Schoonover, John Does #1-5 and ABC Companies #1-5 filed Sept. 8, 2012 in the Court of Common Pleas, Cuyahoga County, Ohio, CV 12-791690. Pursuant to Endorsement 7 to the Policy, the Debtors are required to pay all costs under the self-insured retention of $1 million per occurrence that triggers coverage (the "SIR"). The SIR represents amounts potentially owed by the Debtors to Plaintiffs, inter alios, who establish that the Debtors are legally obligated to pay damages resulting from a medical incident arising out of professional services provided by the Debtors as Insured. The Plaintiffs say the Plan's proposed treatment of the Policy, as an executory contract, is impermissible under applicable law for a number of reasons. "If the Debtors wish to retain the benefits of the Policy as an executory contract, they may only to do so by complying with the Bankruptcy Code," says counsel to the Plaintiffs. "The Debtors cannot, as the Plan contemplates, assume the beneficial aspects of the Policy (i.e. "vest" their insurance rights in the Reorganized Debtors) without also fully performing all contractual obligations (i.e. paying the SIR). The law simply does not permit the Debtors to parse executory contracts as contemplated by the Plan; i.e. assume and assign rights under the Policy to the Reorganized Debtors and at the same treat the obligation to pay the SIR as a general unsecured claim. That is tantamount to the Debtors asking the Court to re-write the terms of the Policy." Counsel for the Plaintiffs can be reached at: Frederick B. Rosner, Esq. Julia Klein, Esq. THE ROSNER LAW GROUP LLC 824 N. Market St., Suite 810 Wilmington, DE 19801 Telephone: (302) 777-1111 E-mail: klein@teamrosner.com The Chapter 11 Plan Rural/Metro Corp. is slated to seek confirmation of its First Amended Joint Chapter 11 Plan of Reorganization at a hearing on Dec. 16, 2013. The voting deadline to accept or reject the Plan is 5:00 p.m. on Dec. 9, 2013. Entities holding in excess of 51% of the Debtors' secured debt and entities holding in excess of 66.66% of the Debtors' unsecured notes have conveyed support for the Plan. The Plan was largely worked out prepetition. The plan calls for unsecured noteholders with $312.2 million in claims to acquire all of the preferred stock and 70 percent of the common stock in return for a $135 million equity contribution through a rights offering. Holders of other unsecured claims aggregating $40 million are slated to have a 25% recovery in the form of cash or stock. Equity holders won't recover anything. A copy of the document is available for free at http://bankrupt.com/misc/Rural_Metro_1st_Amended_DS.pdf About Rural/Metro Corp Headquartered in Scottsdale, Arizona, Rural/Metro Corporation -- http://www.ruralmetro.com-- is a national provider of 911- emergency and non-emergency interfacility ambulance services and private fire protection services, operating in 21 states and nearly 700 communities. Rural/Metro was acquired in 2011 in a leveraged buyout by Warburg Pincus LLC as part of a transaction valued at $676.5 million. Rural/Metro Corp. and 59 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-11952) on Aug. 4, 2013, before the U.S. Bankruptcy Court for the District of Delaware. Debt includes $318.5 million on a secured term loan and $109 million on a revolving credit with Credit Suisse AG serving as agent. There is $312.2 million owing on two issues of 10.125 percent senior unsecured notes. The Debtors' lead bankruptcy counsel are Matthew A. Feldman, Esq., Rachel C. Strickland, Esq., and Daniel Forman, Esq., at Willkie Farr & Gallagher LLP, in New York. Maris J. Kandestin, Esq., and Edmon L. Morton, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, serve as the Debtors' local Delaware counsel. Alvarez & Marsal Healthcare Industry Group, LLC, and FTI Consulting, Inc., are the Debtors' financial advisors, while Lazard Freres & Co. L.L.C. is their investment banker. Donlin, Recano & Company, Inc., is the Debtors' claims and noticing agent. The U.S. Trustee has appointed a three-member official committee of unsecured creditors in the Chapter 11 case. The Debtors have arranged $75 million of DIP financing from a group of prepetition lenders led by Credit Suisse AG. An interim order has allowed the Debtors to access $40 million of the DIP facility. The Debtors have filed a reorganization plan largely worked out before the Chapter 11 filing in early August. Existing shareholders receive nothing in the plan. The Company's debt includes $318.5 million on a secured term loan and $109 million on a revolving credit with Credit Suisse AG serving as agent. There is $312.2 million owing on two issues of 10.125 percent senior unsecured notes. SESI LLC: Moody's Affirms 'Ba1' CFR & Alters Outlook to Positive --------------------------------------------00------------------ Moody's Investors Service changed SESI, L.L.C.'s rating outlook to positive from stable. At the same time, Moody's affirmed the company's Ba1 Corporate Family Rating (CFR), Ba2 senior unsecured note rating and SGL-1 Speculative Grade Liquidity Rating. "The positive outlook captures SESI's ongoing commitment to maintaining conservative financial policies and drive to promote international growth in the highly competitive oilfield services industry," said Sajjad Alam, Moody's Analyst. Issuer: SESI, L.L.C. Outlook change: Outlook changed to Positive from Stable Affirm: Corporate Family Rating, Affirm Ba1 Probability of Default Rating, Affirm Ba1-PD Senior Unsecured Regular Bond/Debenture, Affirm Ba2 (LGD5, 71%) Speculative Grade Liquidity Rating, Affirm SGL-1 SESI's low leverage (1.6x Moody's adjusted debt/EBITDA at September 30, 2013) is the primary support for its ratings given the extreme volatility in its operating environment. Management has demonstrated its ability and willingness to keep a conservative financial profile since acquiring Complete Production Services, Inc. in February, 2012. Despite challenging North American market conditions since mid-2012, SESI has generated free cash flow, paid down debt and invested adequately in its businesses. Moody's expects ongoing management focus on free cash flow generation and opportunistic investments in 2014 and beyond. The OFS sector is highly competitive and fragmented with low barriers to entry and minimal product differentiation. Hence, a flexible balance sheet is imperative in navigating sharp downturns and sustaining a stable credit profile. Having a broad geographic presence in the OFS industry is also necessary to offset regional and cyclical effects. All of Moody's investment grade OFS companies are globally diversified and have substantial non-US based operations. SESI's management is actively exploring opportunities in a number of large and mature international OFS markets (e.g., Brazil, Colombia and Saudi Arabia) that have good market penetration potential and could provide durable returns. If SESI can realize its projected 15%-20% annual international growth, the company could potentially originate a fourth of its revenues from foreign markets by the end of 2016, in addition to generating 18%-20% of revenues from offshore Gulf of Mexico (GoM) operations. As activity levels continue to build in deepwater GoM, SESI will be able to participate in more revenue opportunities. However, additional exposure to US onshore markets may not be credit enhancing. Moody's expects SESI to move towards an unsecured capital structure as its ratings move towards investment grade. The company executed an amendment to its secured credit agreement in November 2013 that will allow the security to fall away once the company is rated investment grade by both Moody's and S&P. Successful execution of the international expansion strategy, prudent management of future shareholder returns and financial leverage, and upward trending margins and earnings will be key considerations for an upgrade. An upgrade to Baa3 will depend on management's commitment to maintaining the debt/EBITDA ratio between 1.5x and 2x through the cycle and its ability to meet the stated 15%-20% annual international growth target consistently. While a downgrade is unlikely in 2014, the ratings could face downward pressure if management pursues aggressive growth or financial policies. Any debt funded share repurchases or dividend payments could hinder an upgrade. A downgrade could result if debt/EBITDA approaches 3x. SESI, L.L.C. is a wholly-owned subsidiary of Superior Energy Services, Inc., which is a publicly traded diversified oilfield services company headquartered in Houston, Texas. SHELBOURNE NORTH WATER: Irish Real Estate Mogul Sued for $95MM -------------------------------------------------------------- Law360 reported that RMW Acquisition Co. LLC filed suit in Illinois federal court on Nov. 21 to recoup the more than $95 million it is allegedly owed as a result of the unfinished Chicago Spire, saying that guarantor Garrett M. Kelleher is responsible for paying the debt. According to the report, development on the Chicago Spire, which was supposed to be the tallest building in the U.S., came to a halt in 2008 due to the economic crisis, leaving only the foundation of the building completed along with a massive hole of debt. The case is RMW Acquisition Company LLC v. Kelleher, Case No. 1:13-cv-08405 (N.D. Ill.) before Judge Sharon Johnson Coleman. A group of creditors filed an involuntary Chapter 11 petition against Chicago, Illinois-based Shelbourne North Water Street L.P. on Oct. 10, 2013 (Case Number 13-12652, Bankr. D.Del.). The case is assigned to Judge Kevin J. Carey. The Petitioners are represented by Zachary I Shapiro, Esq., and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware. SHERIDAN HOLDINGS: Moody's Says Company Acquisition is Credit Pos. ------------------------------------------------------------------ Moody's Investors Service said that Sheridan Holdings, Inc.'s announced acquisition of Medical Anesthesia Consultants Medical Group, Inc. on November 18, 2013, is a credit positive. As reported by The Troubled Company Reporter on Feb. 8, 2013, Moody's retained B2 Corporate Family Rating and assigned B1 rating on First Lien Revolver and Term Loan. Headquartered in Sunrise, Florida, Sheridan Healthcare, Inc. (a wholly owned subsidiary of Sheridan Holdings, Inc.) (collectively "Sheridan") is a leading provider of physician services to hospitals and ambulatory surgical facilities. The company provides outsourced physician staffing services for anesthesia, neonatology, radiology, pediatrics and emergency departments. Sheridan also provides a full complement of professional and administrative support services including physician billing. SIMPLY WHEELZ: Hertz Global Faces Suit Over Insolvency Exposure --------------------------------------------------------------- Levi & Korsinsky on Nov. 22 disclosed that a class action lawsuit has been commenced in the United States District Court for the District of New Jersey on behalf of investors who purchased Hertz Global Holdings, Inc. common stock between February 25, 2013 and November 4, 2013. To learn more about the action visit http://zlk.9nl.com/hertz- global-holdings-htz or call: 877-363-5972. There is no cost or obligation to you. The complaint alleges that the Company issued materially false and misleading statements and/or failed to disclose that: a) Hertz was losing sales in a significant market which offers higher rental prices and margins than off-airport, longer-term "replacement car" locations; b) Hertz faced undisclosed exposure to the insolvency of its subsidiary Simply Wheelz LLC, c) Hertz and Advantage Rent A Car were in disagreement over the value of Advantage's assets; and d) Hertz was carrying the value of its fleet transferred to Advantage and Simply Wheelz on its books at an artificially inflated level. On November 4, 2013, Hertz announced its third quarter 2013 financial results for the quarter ended September 30, 2013, reporting that its net income fell from $242.9 million to $214.7 million in the third quarter of 2012. The Company also acknowledged its exposure to Simply Wheelz's insolvency. The following day, Simply Wheelz announced it would file for bankruptcy. Shareholders of Hertz have until January 20, 2014 to seek appointment as lead plaintiff. Your ability to share in any recovery doesn't require that you serve as a lead plaintiff. To obtain additional information, contact Joseph E. Levi, Esq. either via email at jlevi@zlk.com or by telephone at (212) 363-7500, toll-free: (877) 363-5972, or visit http://zlk.9nl.com/hertz-global-holdings-htz/ Levi & Korsinsky is a national firm with offices in New York, New Jersey, and Washington D.C. The firm has extensive expertise in prosecuting securities litigation involving financial fraud, representing investors throughout the nation in securities and shareholder lawsuits. About Simply Wheelz LLC Simply Wheelz LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Miss. Case No. 13-03332) on Nov. 5, 2013. The case is assigned to Judge Edward Ellingon. The Debtor estimated assets and debt in excess of $100 million. The Debtors are represented by Christopher R. Maddux, Esq., and Stephen W. Rosenblatt, Esq., at Butler Snow O'Mara Stevens & Cannada, in Ridgeland, Mississippi. SPECIALTY PRODUCTS: Dec. 18 Hearing on Outline for Own Plan ----------------------------------------------------------- Specialty Products Holding Corp. and Bondex International, Inc., will seek approval of the latest iteration of the disclosure statement explaining their proposed reorganization plan at a hearing on Dec. 17, 2013, at 1:30 p.m. Deadline to file objections to the adequacy of the information in the disclosure statement is Dec. 11, 2013. The Debtors on Nov. 18, 2013, filed their First Amended Joint Plan of Reorganization and the explanatory Disclosure Statement. A copy of the Disclosure Statement dated Nov. 18, 2013, is available for free at: http://bankrupt.com/misc/Specialty_Products_DS_1st_Am_Plan.pdf The Debtors' Plan provides for an asbestos trust to be established and funded with cash to pay present and future asbestos-related claims. The trust will be funded by secured notes, issued by the Debtors and their ultimate parent, RPM International Inc. ("International"), and the amounts and terms of the notes will, with one exception, be determined by the final outcome or settlement of the litigation that will determine the asbestos claimants' rights in the chapter 11 cases. The one exception is that the notes will provide for an aggregate initial nonrefundable payment of $125 million to the asbestos trust irrespective of the outcome of any litigation. In short, the Debtors and International have committed to pay to asbestos claimants the maximum amount to which they are entitled based on the applicable judgments or rulings in the litigation that will determine the extent of the claimants' rights in the chapter 11 cases, and to make comparable payments to other similarly situated creditors. Representatives of the current and future asbestos claimants have contended that the combined liability of both Debtors exceeds $1 billion and is as much as approximately $1.3 billion; the Debtors believe their collective liability approximates $125 million. The Bankruptcy Court convened a hearing on an estimation of the asbestos claims against both Debtors and determined that an appropriate estimate of their collective liability was $1.166 billion. The Debtors and International believe that the court's ruling is in error and have appealed that ruling. The appeals of the Debtors and International remain pending at the current time. The representatives of the asbestos claimants have also contended that the Debtors' estates hold substantial claims against International and other parties. In that regard, the representatives have asserted that the SPHC estate has claims against International and other parties that may amount to $1.2 billion. The Debtors believe the alleged SPHC estate claims are weak, and International contends that the claims are meritless and has stated that it will vigorously contest them. The Bankruptcy Court recently granted the representatives of the asbestos claimants authority to commence the litigation and it is anticipated that the representatives will shortly file a complaint initiating a lawsuit against International and other parties. According to the Debtors, the Plan treats other creditors equitably by providing compensation for them that is equivalent to the compensation to be received by asbestos claimants. Attorneys of the Debtors can be reached at: Daniel J. DeFranceschi, Esq. Paul N. Heath, Esq. Zachary I. Shapiro, Esq. RICHARDS, LAYTON & FINGER One Rodney Square 920 North King Street Wilmington, DE 19801 Telephone: (302) 651-7700 - and - Gregory M. Gordon, Esq. Dan B. Prieto, Esq. Paul M. Green, Esq. JONES DAY 2727 N. Harwood Street Dallas, TX 75201 Telephone: (214) 220-3939 Rival Plan As reported in the Oct. 25, 2013 edition of the TCR, the Official Committee of Asbestos Personal Injury Claimants and the Future Claimants' Representative have proposed a Chapter 11 plan for SPHC. The Third Amended Plan, filed Oct. 15, 2013, provides that: (i) SPHC will be separated from non-Debtor direct or indirect parent Bondex International; (ii) Reorganized SPHC will be managed and/or sold for the benefit of holders of all Claims that are not paid in Cash, subordinated, cancelled or otherwise treated pursuant to the Plan; (iii) all of SPHC's causes of action will survive; (iv) Asbestos PI Trust Claims against SPHC will be channeled to an Asbestos PI Trust; and (v) current SPHC equity interests will be cancelled, annulled, and extinguished. RPM says the Rival Plan is patently unconfirmable because, among other things: -- It does not satisfy the Bankruptcy Code's requirements for specifying the treatment of each class of impaired claims. -- It violates the Code's requirement that only substantially similar claims may be placed in the same class by putting claims against Bondex and other entities that are merely alleged liabilities of SPHC in the same class with the actual asbestos liabilities of SPHC. -- It discriminates unfairly by providing nothing whatsoever to International on account of its equity interest in SPHC while using that equity interest to pay claims against Bondex and other entities that are merely alleged liabilities of SPHC, rather than allowed claims against SPHC. About Specialty Products Cleveland, Ohio-based Specialty Products Holdings Corp., aka RPM, Inc., is a wholly owned subsidiary of RPM International Inc. The Company is the holding company parent of Bondex International, Inc., and the direct or indirect parent of certain additional domestic and foreign subsidiaries. The Company claims to be a leading manufacturer, distributor and seller of various specialty chemical product lines, including exterior insulating finishing systems, powder coatings, fluorescent colorants and pigments, cleaning and protection products, fuel additives, wood treatments and coatings and sealants, in both the industrial and consumer markets. The Company filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 10-11780) on May 31, 2010. Gregory M. Gordon, Esq., Dan B. Prieto, Esq., and Robert J. Jud, Esq., at Jones Day, serve as bankruptcy counsel. Daniel J. DeFranceschi, Esq., and Zachary I. Shapiro, Esq., at Richards Layton & Finger, serve as co- counsel. Logan and Company is the Company's claims and notice agent. The Company estimated its assets and debts at $100 million to $500 million. The Company's affiliate, Bondex International, Inc., filed a separate Chapter 11 petition on May 31, 2010 (Case No. 10-11779), estimating its assets and debts at $100 million to $500 million. On May 20, 2013, the Bankruptcy Court entered an order estimating the amount of the Debtors' asbestos liabilities, and a related memorandum opinion in support of the estimation order. The Bankruptcy Court estimated the current and future asbestos claims associated with Bondex International, Inc. and Specialty Products Holding at approximately $1.17 billion. The estimation hearing represents one step in the legal process in helping to determine the amount of potential funding for a 524(g) asbestos trust. STONE CANYON: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Stone Canyon Golf, LLC 12475 N Rancho Vistoso Blvd, Suite 155 Oro Valley, AZ 85755 Case No.: 13-20334 Chapter 11 Petition Date: November 24, 2013 Court: United States Bankruptcy Court District of Arizona (Tucson) Judge: Hon. Eileen W. Hollowell Debtor's Counsel: Frederick J. Petersen, Esq. MESCH, CLARK & ROTHSCHILD, P.C. 259 N. Meyer Avenue Tucson, AZ 85701 Tel: 520-624-8886 Fax: 520-798-1037 Email: ecfbk@mcrazlaw.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $10 million to $50 million The petition was signed by Susan Lea Clifton, as Trustee of the Robert A. Hansen Family Trust, managing member of Hansen Stone Golf, L.L.C, a managing member of Stone Canyon Golf, L.L.C. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. SUDBURY MILL: Moody's Rates $18MM Class E Notes 'Ba3(sf)' --------------------------------------------------------- Moody's Investors Service announced that it has assigned the following provisional ratings to notes and loans to be issued by Sudbury Mill CLO Ltd.: U.S. $2,600,000 Class X Senior Floating Rate Notes due 2026 (the "Class X Notes"), Assigned (P)Aaa (sf) U.S. $200,000,000 Class A-1 Senior Floating Rate Notes due 2026 (the "Class A-1 Notes"), Assigned (P)Aaa (sf) U.S. $50,000,000 Class A-2 Senior Loans due 2026 (the "Class A-2 Loans"), Assigned (P)Aaa (sf) Up to U.S. $50,000,000 Class A-2 Senior Floating Rate Notes due 2026 (the "Class A-2 Notes"), Assigned (P)Aaa (sf) U.S. $38,000,000 Class B-1 Senior Floating Rate Notes due 2026 (the "Class B-1 Notes"), Assigned (P)Aa2 (sf) U.S. $15,000,000 Class B-2 Senior Fixed Rate Notes due 2026 (the "Class B-2 Notes"), Assigned (P)Aa2 (sf) U.S. $24,500,000 Class C Deferrable Mezzanine Floating Rate Notes due 2026 (the "Class C Notes"), Assigned (P)A2 (sf) U.S. $25,000,000 Class D Deferrable Mezzanine Floating Rate Notes due 2026 (the "Class D Notes"), Assigned (P)Baa3 (sf) U.S. $18,000,000 Class E Deferrable Mezzanine Floating Rate Notes due 2026 (the "Class E Notes"), Assigned (P)Ba3 (sf) The Class A-2 Loans and the Class A-2 Notes are together referred to as the "Class A-2 Debt." At closing, the Class A-2 Notes will have a zero principal balance. The aggregate outstanding amount of the Class A-2 Notes may be increased to U.S. $50,000,000 upon a conversion of the Class A-2 Loans. Moody's issues provisional ratings in advance of the final sale of financial instruments, but these ratings only represent Moody's preliminary credit opinions. Upon a conclusive review of a transaction and associated documentation, Moody's will endeavor to assign definitive ratings. A definitive rating (if any) may differ from a provisional rating. Ratings Rationale: Moody's provisional ratings of the notes address the expected losses posed to noteholders. The provisional ratings reflect the risks due to defaults on the underlying portfolio of loans, the transaction's legal structure, and the characteristics of the underlying assets. Sudbury Mill CLO is a managed cash flow CLO. The issued notes and loans will be collateralized primarily by broadly syndicated senior secured corporate loans. At least 90% of the portfolio must be invested in first-lien senior secured loans and eligible investments, and up to 10% of the portfolio may consist of second- lien loans, unsecured loans and bonds. The underlying collateral pool is expected to be at least 70% ramped as of the closing date. Shenkman Capital Management, Inc. (the "Manager") will direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's four year reinvestment period. Thereafter, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit risk assets, and are subject to certain restrictions. In addition to the notes and loans rated by Moody's, the Issuer will issue subordinated notes. The Class A-2 will be issued in a loans form and may be converted to notes form in accordance with the CLO indenture and the Class A-2 loan agreement. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes sequentially. TLO LLC: Court Approves TransUnion's Bid to Acquire Business ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Florida has approved TransUnion Holding Co. Inc.'s bid to acquire TLO, a provider of risk-mitigation services. Under the terms of the offer selected Friday by the court as the winning bid, TransUnion will purchase TLO for $154 million in cash. The transaction, which is expected to close by the end of 2013, will not materially affect TransUnion's financial results for 2013. Friday's decision marks the end of a court-managed sale process that included a motion filed by TransUnion in October to become the so-called stalking horse bidder for TLO, according to a pres release by TransUnion. "TransUnion and TLO will be a powerful combination. TLO's capabilities are highly complementary to our own," said Jim Peck, TransUnion's president and CEO. "Coupled with TransUnion's sophisticated technology, high powered analytics and robust data, we are well positioned to help a variety of organizations and businesses make better decisions, faster." Bill Rochelle, the bankruptcy columnist for Bloomberg News, recounts that TLO filed a proposed liquidating Chapter 11 plan at the end of October. The plan will distribute assets according to priorities in bankruptcy law, with unsecured creditors receiving leftovers after secured creditors and those with priorities are paid in full. TLO's stockholders will receive a dividend if creditors are fully paid. The assets for distribution will be composed mostly of sale proceeds and recoveries from a $40 million policy on the life of the company's founder, Hank Asher, who died early this year, before bankruptcy. A hearing for approval of disclosure material explaining the plan comes up for hearing on Dec. 4 in U.S. Bankruptcy Court in West Palm Beach, Florida. Once the disclosure statement is approved, creditors can vote on the plan. Sale Hearing Delay TLO, LLC, successfully overcame a bid by Tracers Information Specialists, Inc., to delay the auction and sale. The Debtor pointed out that the asset purchase agreement requires the entry of final, non-appealable order within a very short time frame as a precondition to closing, and that a delay of the auction and sale will prevent the Debtor from satisfying this closing condition. Equally significant, according to the Debtor, is that if the auction and sale do not proceed as scheduled, the Debtor and its creditors face a risk of significant and irreparable harm because the Debtor has insufficient cash with which to fund ongoing operations. Tracers' supposed interest in any of the assets sold can simply attach to the proceeds of the sale. "To the extent that Tracers really contends that TLO has no interest in the data that Tracers itself transferred to TLO long ago, such that TLO cannot sell that data "free and clear" of Tracers' supposed retained interest in that data, the Court can try that issue on November 21 [the trial date set for the "Tracers Adversary"], before the sale hearing, as Tracers itself suggested," according to the Debtor. About TLO LLC TLO LLC, a provider of risk-mitigation services, filed a petition for Chapter 11 reorganization (Bankr. S.D. Fla. Case No. 13-bk20853) on May 9, 2013, in West Palm Beach, Florida, near the company's headquarters in Boca Raton. The petition was signed by E. Desiree Asher as CEO. Judge Paul G. Hyman, Jr., presides over the case. Robert C. Furr, Esq., and Alvin S. Goldstein, Esq., at Furr & Cohen, serve as the Debtor's counsel. Bayshore Partners, LLC is the Debtor's investment banker. Thomas Santoro and GlassRatner Advisory & Capital Group, LLC are the Debtor's financial advisors. Paul J. Battista, Esq., and Mariaelena Gayo-Guitian, Esq., at Genovese, Joblove & Battista, P.A., represent the Official Committee of Unsecured Creditors as counsel. The Debtor disclosed assets of $46.6 million and liabilities of $109.9 million, including $93.4 million in secured claims. The principal lender is Technology Investors Inc., owed $89 million. TII is owned by the estate of Hank Asher, the company's primary owner who died this year. There is $4.6 million secured by computer equipment. TLO LLC: Disclosure Statement Hearing Reset to Dec. 4 ----------------------------------------------------- Tue hearing to consider the approval of the disclosure statement describing TLO LLC's Plan of Liquidation has been rescheduled to Dec. 4, 2013, at 1:30 p.m. Objections, if any, to the approval of the Disclosure Statement must be filed on or before Nov. 27, 2013. As reported in the TCR on Nov. 8, 2013, the Plan proposes to pay holders of allowed claims and interests from the proceeds derived from the sale of the Debtor's assets, the recoveries from litigation involving or related to the life insurance policy of the Debtor's founder, Hank Asher, and certain other litigation claims as described in the Plan. A copy of the disclosure statement explaining the terms of the Plan is available for free at: http://bankrupt.com/misc/TLO_LLC_Plan_Outline.pdf About TLO LLC TLO LLC, a provider of risk-mitigation services, filed a petition for Chapter 11 reorganization (Bankr. S.D. Fla. Case No. 13-bk20853) on May 9, 2013, in West Palm Beach, Florida, near the company's headquarters in Boca Raton. The petition was signed by E. Desiree Asher as CEO. Judge Paul G. Hyman, Jr., presides over the case. Robert C. Furr, Esq., and Alvin S. Goldstein, Esq., at Furr & Cohen, serve as the Debtor's counsel. Bayshore Partners, LLC is the Debtor's investment banker. Thomas Santoro and GlassRatner Advisory & Capital Group, LLC are the Debtor's financial advisors. Paul J. Battista, Esq., and Mariaelena Gayo-Guitian, Esq., at Genovese, Joblove & Battista, P.A., represent the Official Committee of Unsecured Creditors as counsel. The Debtor disclosed assets of $46.6 million and liabilities of $109.9 million, including $93.4 million in secured claims. The principal lender is Technology Investors Inc., owed $89 million. TII is owned by the estate of Hank Asher, the company's primary owner who died this year. There is $4.6 million secured by computer equipment. TRANSWITCH CORP: Liquidating Under Chapter 7 -------------------------------------------- TranSwitch Corp. filed for Chapter 7 protection (Bankr. D. Conn. Case No. 13-51829), BankruptcyData reported. The Company is represented by Stephen B. Selbst of Herrick, Feinstein. Shelton, Connecticut-based TranSwith (NASDAQ: TXCC) provides innovative integrated circuit and intellectual property solutions that deliver core functionality for video, voice, and data communications equipment for the customer premises and network infrastructure markets. UPH HOLDINGS: Panel Joins in Debtors & Hercules Enforcement Motion ------------------------------------------------------------------ The Official Committee of Unsecured Creditors of UPH Holdings, Inc., et al., joins the Joint Motion of the Debtors and creditor Hercules Technology II, L.P., to (i) enforce the Asset Purchase Agreement between Debtors and TNCI Operating Company LLC, (ii) enforce Escrow Agreement, (iii) direct that Escrow Agent be directed to distribute interim closing proceeds from the Escrow Amount to Hercules Technology II, L.P., and (iv) for related relief, filed Oct. 25, 2013. According to papers filed with the Court, the Committee agrees with the Movants that the Escrow Agent should be directed to release sale proceeds to Hercules at Interim and Final Closings, notwithstanding the pendency of TNCI's Working Capital Dispute. "As discussed in the Enforcement Motion, the Debtors' unsecured creditors are the parties who will be harmed in the amount of $1,106.00 per day if TNCI's attempt to delay payment to Hercules is successful. "There is simply no reason to impose this cost and burden on the Debtors' unsecured creditors. TNCI will not be harmed if sale proceeds are released to Hercules as scheduled under the APA. If the estates are not able to pay any Working Capital Shortfall the Court ultimately may find, Hercules is more than capable of satisfying any such obligation. In the absence of any nonpayment risk, the Court should not allow TNCI to sideline the paydown of Hercules's secured claim while its speculative Working Capital Dispute is litigated. "As a result, the Committee fully supports the Movants' request that the Court direct the payment of sale proceeds to Hercules at the Interim and Final Closings." As reported in the TCR on Aug. 7, 2013, the U.S. Bankruptcy Court for the Western District of Texas authorized the Debtors to sell substantially all of its assets to TNCI Operating Company, LLC, pursuant to an asset purchase agreement dated July 3, 2013, and pay the net proceeds of sale to Hercules Technology II, L.P. About UPH Holdings UPH Holdings Inc. and several affiliates filed Chapter 11 petitions (Bankr. W.D. Tex. Lead Case No. 13-10570) on March 28, 2013. Judge Tony M. Davis oversees the case. Jennifer Francine Wertz, Esq., and Patricia Baron Tomasco, Esq., at Jackson Walker, L.L.P., serve as the Debtors' counsel. Q Advisors, LLC serves as financial advisors. UPH Holdings disclosed $26,917,341 in assets and $19,705,805 in liabilities as of the Chapter 11 filing. Other affiliates that sought Chapter 11 protection are: Pac-West Telecomm, Inc.; Tex-Link Communications, Inc.; Unipoint Holdings, Inc.; Unipoint Enhanced Services, Inc.; Unipoint Services, Inc.; Nwire LLC; and Peering Partners Communications LLC (Case Nos. 13-10571 to 13-10577). Judy A. Robbins, the United States Trustee for Region 7, has appointed a five-member Official Committee of Unsecured Creditors in the Chapter 11 cases of UPH Holdings, Inc., Pac-West Telecomm Inc., and their affiliated debtors. The Committee tapped Kelley Drye & Warren LLP as its counsel, and QSI Consulting, Inc. as its financial advisor. VANTAGE SPECIALTIES: Moody's Reiterates 'B2' Rating on Term Loan ---------------------------------------------------------------- Moody's Investors Service reiterated the B2 rating on Vantage Specialties, Inc. Senior Secured Term Loan B due 2018. The company is adding $75 million to the term loan to pay a special dividend to The Jordan Company, the private equity owner. Vantage's secured term loan facility previously totaled $240 million; the increase brings the long term debt total to $315 million. Vantage Specialties Chemicals, Inc. (VSC), based in Chicago, Illinois, is a privately-held by affiliate of The Jordan Company and certain members of VSC's management team, and is the holding company of Vantage Specialties, Inc. (Vantage). Vantage is a leading, vertically integrated, specialty chemicals company focused on naturally derived ingredients from renewable and sustainable feedstocks specifically the manufacturer of oleochemicals and specialty derivative chemicals. Vantage converts animal and vegetable based raw materials into widely used products in a range of specialized applications. The company runs its operations through two main complementary business segments: oleochemicals and specialty derivatives. Revenues for the LTM ending September 30, 2013 were $549 million. VELOCITY EXPRESS: Court Dismisses Chapter 11 Case ------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has dismissed VEC Liquidating Corporation, et al.'s Chapter 11 cases. The Debtors' claims and noticing agent, Kurtzman Carson Consultants, LLC, is relieved of its responsibilities as the Debtors' claims and noticing agent. As reported in the TCR on Nov. 15, 2013, the Debtors in seeking the dismissal, explained: "When the Sale and the Sale Settlement Agreement were entered into, the Debtors believed they would be able to satisfy, through funds from the Sale and the Sale Settlement Agreement as well as retained causes of action and other assets, the administrative expense claims for the remainder of the Chapter 11 Cases as well as priority unsecured claims in order to allow the Debtors to confirm a plan of liquidation. However, since the closing of the Sale, the actual proceeds received by the Debtors from, for example, the Canadian Cash Flow and retained causes of action, failed to meet the amounts required to satisfy the Debtors' priority unsecured claims. "Indeed, the Debtors have determined that their remaining assets will not be sufficient to pay any distribution at all to priority unsecured claims, so a plan is impossible. However, United States Trustee fees have been paid in full, non-disputed administrative claims have also been paid in full, and negotiated resolutions have even been reached with substantially all disputed administrative claims. However, the estates do not have sufficient funds to pay retained professionals in full. There is certainly no cash to pay lower priority claims." In summary, the Debtors said it is plain that cause exists for the dismissal of their Chapter 11 cases. "The Debtors have terminated their business operations and liquidated or disposed of all of their assets through these cases. Thus, obviously there is no reasonable likelihood of their rehabilitation. Moreover, the Debtors are unable to effectuate a Chapter 11 plan of liquidation, as there are insufficient funds available for distribution to any, let alone all priority unsecured creditors, and no remaining assets to be liquidated or recovered for the benefit of their estates. "Furthermore, because they have no remaining assets to liquidate, the Debtors submit that converting their Chapter 11 cases to cases under Chapter 7 of the Bankruptcy Code would only create unnecessary administrative expenses, with no meaningful prospect of recoveries, and is therefore unwarranted. Dismissing their Chapter 11 Cases, on the other hand, will eliminate the accrual of any administrative expense obligations and bring closure to these cases in a timely and efficient manner. In short, there is no remaining purpose to be served by having the debtors remain in a bankruptcy case under any chapter. Accordingly, the Debtors submit that sufficient cause exists to dismiss their Chapter 11 Cases, and that doing so is in the best interests of their estates and creditors." About Velocity Express Velocity Express -- http://www.velocityexpress.com/-- operated a nationwide network of regional ground delivery services. Together with 12 affiliates, Velocity filed for Chapter 11 protection (Bankr. D. Del. Case No. 09-13294) on Sept. 24, 2009. The Company disclosed assets of $94.1 million and debt of $120.6 million as of Sept. 1, 2009. Velocity subsequently changed its name to VEC Liquidating Corporation following the sale of its assets to ComVest Velocity Acquisition I, LLC. The buyer is represented in the case by Kenneth G. Alberstadt, Esq., at Akerman Senterfitt LLP in New York. DIP Lender Burdale is represented in the case by Jonathan M. Cooper, Esq., Randall L. Klein, Esq., and Sarah J. Risken, Esq., at Goldberg Kohn Bell Black Rosenbloom & Moritz, LTD., in Chicago. VERTIS HOLDINGS: Exclusive Periods Extension Approved ----------------------------------------------------- BankruptcyData reported that the U.S. Bankruptcy Court approved Vertis Holdings' fourth motion to extend the exclusive period during which the Company can file a plan and solicit acceptances thereof through and including January 6, 2014 and April 7, 2014, respectively. As previously reported, "Granting the Debtors an additional 90-day extension of the Exclusive Periods will not harm or prejudice the Debtors' creditors or other parties in interest. To the contrary, extension of the Exclusive Periods will benefit creditors and other parties in interest by allowing the Debtors to continue to resolve the remaining pending matters in their chapter 11 cases and effectuate the most efficient and cost-effective mechanism for the wind-down of the Debtor' estates....Termination of the Exclusive Periods, on the other hand, could give rise to the risk of multiple plans being filed to the overall disruption of these cases and detriment of creditors -- the Debtors believe that such an outcome at this stage would run counter to the best interests of the Debtors and all parties in interest....In addition, the Debtors have complied with their obligations under the Supplemental Cash Collateral Order, which has provided the Debtors with liquidity following the closing of the sale to Quad. With the closing of the sale to quad, the Debtors have ceased conducting all material business operations, aside from providing certain transition services to Quad that are largely funded by Quad under the Transition Services Agreement. Therefore, the Debtors do not expect significant unanticipated administrative costs as they move further into the wind-down phase of these chapter 11 cases, and generally intend to continue to pay their postpetition bills, including, without limitation, all require fees due to the Office of the United States Trustee under 28 U.S.C. Section 1930, as they become due." About Vertis Holdings Vertis Holdings Inc. -- http://www.thefuturevertis.com/-- provides advertising services in a variety of print media, including newspaper inserts such as magazines and supplements. Vertis and its affiliates (Bankr. D. Del. Lead Case No. 12-12821), returned to Chapter 11 bankruptcy on Oct. 10, 2012, this time to sell the business to Quad/Graphics, Inc., for $258.5 million, subject to higher and better offers in an auction. As of Aug. 31, 2012, the Debtors' unaudited consolidated financial statements reflected assets of approximately $837.8 million and liabilities of approximately $814.0 million. Bankruptcy Judge Christopher Sontchi presides over the 2012 case. Vertis is advised by Perella Weinberg Partners, Alvarez & Marsal, and Cadwalader, Wickersham & Taft LLP. Quad/Graphics is advised by Blackstone Advisory Partners, Arnold & Porter LLP and Foley & Lardner LLP, special counsel for antitrust advice. Kurtzman Carson Consultants LLC is the Debtors' claims agent. Quad/Graphics is a global provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail inserts/circulars, direct mail, books, directories, and commercial and specialty products, including in-store signage. Headquartered in Sussex, Wis. (just west of Milwaukee), the Company has approximately 22,000 full-time equivalent employees working from more than 50 print-production facilities as well as other support locations throughout North America, Latin America and Europe. Vertis first filed for bankruptcy (Bankr. D. Del. Case No. 08- 11460) on July 15, 2008, to complete a merger with American Color Graphics. ACG also commenced separate bankruptcy proceedings. In August 2008, Vertis emerged from bankruptcy, completing the merger. Vertis against filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 10-16170) on Nov. 17, 2010. The Debtor estimated its assets and debts of more than $1 billion. Affiliates also filed separate Chapter 11 petitions -- American Color Graphics, Inc. (Bankr. S.D.N.Y. Case No. 10-16169), Vertis Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10-16170), Vertis, Inc. (Bankr. S.D.N.Y. Case No. 10-16171), ACG Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10- 16172), Webcraft, LLC (Bankr. S.D.N.Y. Case No. 10-16173), and Webcraft Chemicals, LLC (Bankr. S.D.N.Y. Case No. 10-16174). The bankruptcy court approved the prepackaged Chapter 11 plan on Dec. 16, 2010, and Vertis consummated the plan on Dec. 21. The plan reduced Vertis' debt by more than $700 million or 60%. GE Capital Corporation, which serves as DIP Agent and Prepetition Agent, is represented in the 2012 case by lawyers at Winston & Strawn LLP. Morgan Stanley Senior Funding Inc., the agent under the prepetition term loan, and as term loan collateral agent, is represented by lawyers at White & Case LLP, and Milbank Tweed Hadley & McCloy LLP. On Jan. 16, 2013, Quad/Graphics completed the acquisition of Vertis Holdings for a net purchase price of $170 million. This assumes the purchase price of $267 million less the payment of $97 million for current assets that are in excess of normalized working capital requirements. VISANT HOLDING: Moody's Affirms 'B3' CFR Over Acquisition Deal -------------------------------------------------------------- Moody's Investors Service affirmed Visant Holding Corp. B3 Corporate Family Rating (CFR) in connection with the company's announcement that it agreed to buy American Achievement Corporation for $486 million. Moody's also affirmed Visant's debt ratings and downgraded its speculative grade liquidity rating to SGL-3 from SGL-2 principally due to tight covenant cushion over the next year. The rating outlook is stable. "The acquisition of American Achievement is positive for Visant because it will decrease its leverage, reduce its costs and improve its earnings and cash flow," said Kevin Cassidy, Senior Credit Officer at Moody's Investors Service. The combined company will be better able to leverage its costs. The acquisition will increase Visant's revenue by almost 25% to $1.4 billion. It will also expand its presence in the southern United States, an attractive market because of its outsized proportion of high school and college students compared to the rest of the US. Visant's increased scale and cash flow will also give it additional flexibility to invest in different growth platforms, such as its fragrance and cosmetic sampling business. Visant plans to finance the acquisition with additional secured term loan and unsecured borrowings, totaling up to $310 million, in addition to cash on hand and revolver borrowings. Visant will acquire all of the equity interests in American Achievement, whose approximate $385 million of debt will be repaid. The transaction is subject to regulatory review. The ratings on Visant's senior secured credit facility and unsecured notes are unlikely to change if the transaction is financed under its current terms, but loss given default assessments are subject to change based on the revised debt mix. The downgrade of the speculative grade liquidity rating to SGL-3 from SGL-2 principally reflects Moody's expectation of diminishing cushion under the leverage covenant over the next year due in part to sizable covenant step downs. "While the acquisition will modestly improve the covenant cushion because a portion of the allowable synergies, as defined in the credit agreement, can be immediately included in EBITDA calculation, Moody's thinks covenants will remain under pressure," noted Cassidy. The liquidity rating also reflects the company's need to refinance a substantial amount of debt in the next couple of years Ratings affirmed: Visant Holding Corp. Corporate Family Rating at B3; Probability of Default Rating at B3-PD; Visant Corporation $175 million revolving credit facility due December 2015 at B1 (LGD 2, 29%); $1,250 million senior secured term loan due December 2016 at B1 (LGD 2, 29%); $750 million senior unsecured notes due October 2017 at Caa2 (LGD 5, 84% from 83%); Rating downgraded: Visant Holding Corp. Speculative-grade liquidity rating to SGL 3 from SGL 2 Rating Rationale: Visant's B3 Corporate Family Rating (CFR) reflects it high 7.5 times debt-to-EBITDA leverage and revenue pressure from the slow erosion of demand for school affinity products. The company's good market position in its Scholastic and Memory Book segments and cost vigilance support a strong margin and adequate cash flow, which Visant is utilizing to invest in areas such as its sampling business that are experiencing growth. The proposed acquisition of American Achievement will strengthen the company's market position in memory books and class rings, provide cost synergies, and help bolster the company's free cash flow. Moody's expects that the American Achievement acquisition and debt reduction funded from cash flow will result in leverage declining to a 6 times range in 2015. The stable rating outlook reflects Moody's view that debt reduction and the acquisition and related cost synergies will reduce debt-to-EBITDA to a 6 times range in 2015 and that the company will generate comfortably positive cash flow. Moody's expects cost cutting initiatives and the growth in the international fragrance and cosmetic sampling business will partially offset EBITDA and cash flow erosion in the memory book business. A downgrade could occur if a larger than expected earnings decline results in leverage staying high for a prolonged period and lower cash flow. Key credit metrics driving a potential downgrade would be debt/EBITDA sustained over 7 times or if operating margins fall to the low teens. Failure to refinance the upcoming debt maturities well ahead of schedule would likely cause a liquidity rating downgrade and possibly a downgrade in the CFR as well. Despite the expected positive effects from the proposed acquisition of American Achievement, an upgrade is unlikely in the near term given the still relatively high leverage (expected to remain above 6 times through 2014) and declining revenue and earnings trends. Over the longer term, the ratings could be upgraded if debt/EBITDA is sustained under 5.5 times, revenue stabilizes, earnings and cash flow improve and the company refinances its upcoming debt maturities. Visant, headquartered in Armonk, New York, is a leading marketing and publishing services enterprise, services school affinity, direct marketing, fragrance and cosmetics sampling and educational publishing markets. The company has 3 segments: Scholastic (mostly class rings and other graduation products), Memory Book (mostly school yearbooks) and Marketing and Publishing Services (mostly magazine inserts and other innovative direct marketing products). The company reported revenue of approximately $1.1 billion for the last twelve months ended September 29, 2013. Visant's financial sponsors include affiliates of Kohlberg Kravis Roberts & Co. L.P. ("KKR") and DLJ Merchant Banking Partners III, L.P. American Achievement Corporation, headquartered in Austin, Texas, is a leading provider of education and special moment affinity products and services. The company holds a strong market position in each of its product segments -- yearbooks, class rings, and graduation products. American Achievement's financial sponsors are Fenway Partners, LLC. Revenue for the year ended August 31, 2013 approximated $270 million. VISANT HOLDING: S&P Puts 'B' CCR on CreditWatch Negative -------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit rating on Visant Holding Corp., along with all issue-level ratings on its debt, on CreditWatch with negative implications. The CreditWatch placement is based on Visant's announcement that it entered into an agreement to acquire American Achievement for $486 million in a predominantly debt-financed transaction. Visant currently has approximately $1.9 billion in debt outstanding. Visant estimates that it will be able to realize $35 million to $40 million of operational synergies within the first 18 months of the transaction close. As of Sept. 30, 2013, pro forma for this acquisition, total lease-adjusted leverage (excluding synergies) remains extremely high, at approximately 7.7x. S&P believes the acquisition will strengthen Visant's competitive position in the school affinity market. Additionally, if synergies are realized as expected, the EBITDA margin should improve from current levels in the low-20% area. Still, leverage remains very high and the long-term sustainability of the capital structure is unclear, particularly in light of the absence of organic revenue growth. The acquisition is subject to regulatory review. Standard & Poor's has reviewed its ratings on Visant, which it labeled as "under criteria observation" (UCO) after the publishing of its revised Corporate criteria on Nov. 19. Standard & Poor's expedited the review of its ratings on Visant because of the company's agreement to acquire competitor American Achievement. With S&P's criteria review of the company complete, it has confirmed that its ratings on this issuer are unaffected by the criteria changes. For the complete recovery analysis, see the recovery report on Visant, to be published as soon as possible on RatingsDirect. S&P will resolve the CreditWatch listing following its review of the financial impact of the transaction on the company's financial risk profile. S&P will meet with management to discuss their integration plans as well as their long-term financial policies, specifically regarding debt reduction. Upon completion of S&P's review, the ratings could remain unchanged or it could lower ratings by one notch. WALKER LAND: Seeks to Use Cash Collateral to Operate ---------------------------------------------------- Walker Land & Cattle, LLC, seeks authority from the U.S. Bankruptcy Court for the District of Idaho to use cash collateral to pay its general operating expenses from Nov. 15, 2013, to Dec. 18, 2013. Without permission to use cash collateral pending presentation and confirmation of a Chapter 11 plan of reorganization, the Debtor will be unable to reorganize. As adequate protection, the Debtor is willing to give adequate protection by granting a revolving postpetition adequate protection lien in postpetition receivables, to the same extent, value and priority as existed as of the Petition Date, to the extent of cash collateral actually used, and to the extent that the respective real properties do not have a sufficient equity cushion to adequately protect the prepetition secured creditors. Walker Land & Cattle, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Idaho Case No. 13-41437) on Nov. 15, 2013. The case is assigned to Judge Jim D. Pappas. The Debtor estimated assets and liabilities ranging from $50 million to $100 million. The petition was signed by Roland N. (Rollie) Walker, manager. The Debtor's counsel is Robert J Maynes, Esq., at Maynes taggart, PLLC, in Idaho Falls, Idaho. WESCO DISTRIBUTION: Moody's Rates New $400MM Unsecured Notes at B1 ------------------------------------------------------------------ Moody's Investors Service assigned a B1 rating to WESCO Distribution, Inc.'s proposed $400 million senior unsecured notes due 2021. In addition, Moody's upgraded WESCO International, Inc.'s (parent of WESCO Distribution, Inc.) Speculative Grade Liquidity ("SGL") rating to SGL-1 from SGL-2 and affirmed the company's Ba3 Corporate Family Rating ("CFR") and Ba3-PD Probability of Default Rating ("PDR"). As part of this rating action, Moody's also affirmed the Ba3 ratings for the company's senior secured term loans. The ratings outlook remains stable Proceeds from the senior notes offering will be used to repay a commensurate amount under the US dollar denominated sub-facility of the company's senior secured term loan, resulting in a leverage neutral transaction. The ratings are subject to Moody's receipt and review of final documentation. "The proposed issuance of $400 million of senior notes will reduce WESCO's interest rate sensitivity by providing an improved balance of fixed to floating rate debt and extend its debt maturity profile" commented Harman Saggu, Moody's Analyst. The affirmation of the Ba3 CFR acknowledges the proposed leverage neutral notes offering and the recent improvement in WESCO's credit metrics from elevated leverage levels arising from the debt funded December 2012 acquisition of EECOL Electric Corporation ("EECOL"). Post the EECOL transaction, the company utilized free cash flow to reduce funded debt, such that pro forma leverage (on a Moody's adjusted basis) declined from about 4.1 times (as of December 31, 2012) to about 3.7 times as of September 30, 2013. The upgrade of the Speculative Grade Liquidity rating to SGL-1 from SGL-2 primarily reflects increased availability under the company's $600 million revolving credit facility due to the substantial repayment of outstanding balances during the first nine months of 2013. In December 2012, WESCO utilized borrowings under the revolving credit facility to partially fund its acquisition of EECOL. The upgrade of the SGL rating also reflects Moody's expectation that the company will continue to maintain significant cash balances and generate solid free cash flow over the next 12 months. The following summarizes the rating activity. Ratings assigned: WESCO Distribution, Inc. Proposed $400 million Senior Unsecured Notes due 2021 at B1 (LGD4, 64%) Ratings upgraded: WESCO International, Inc. Speculative grade liquidity rating to SGL-1 from SGL-2 Ratings affirmed: WESCO International, Inc. Corporate family rating at Ba3 Probability of default rating at Ba3-PD Ratings affirmed and LGD point estimates adjusted: WESCO Distribution, Inc. $700 million senior secured term loan due 2019 to Ba3 (LGD3, 42%) from Ba3 (LGD4, 50%) WDCC Enterprises, Inc. CAD$150 million secured term loan due 2019 to Ba3 (LGD3, 42%) from Ba3 (LGD4, 50%) The ratings outlook is stable. Ratings Rationale: WESCO's Ba3 Corporate Family Rating is supported by its moderate pro forma leverage of about 3.7 times (including Moody's standard adjustments and full year estimates for EECOL's EBITDA), good pro forma coverage with EBITDA less capex to interest of about 4.8 times, and a consistently solid free cash flow generation profile. The rating is also supported by WESCO's business position as one of the few players of scale in the highly fragmented U.S. electrical distribution industry, a substantial revenue base, extensive product breadth, and good customer diversity. Furthermore, the Ba3 rating incorporates WESCO's demonstrated ability and willingness to direct excess cash flows towards de- leveraging the business following material acquisition activity. The Ba3 rating also considers WESCO's inherently thin operating margins as a distributor, the cyclicality of its business, limited global diversification, and the potential for increased acquisition activity given recent weak revenue trends and the outlook for sluggish economic growth in the United States. The B1 rating for the proposed $400 million senior notes due 2021 reflects the overall probability of default for WESCO, reflected in the Ba3-PD Probability of Default Rating, and a loss given default assessment of LGD4. The B1 rating of the proposed senior notes also reflect its effective subordination to the existing secured term loans and the secured revolving credit facility. The borrower under the notes is WESCO Distribution, Inc., and the notes are guaranteed on a senior unsecured basis by WESCO International, Inc. The notes are not guaranteed by any of the borrower's or WESCO International's subsidiaries. The Ba3 ratings of the secured term loans reflect a one notch downward over-ride from Moody's Loss Given Default ("LGD") model implied rating. The over-ride reflects the fact that the Accounts Receivable Securitization ("ARS") facility due September 2016, which is not included in Moody's Loss Given Default waterfall, has a first lien pledge on a substantial portion of the company's accounts receivables. The stable outlook reflects Moody's expectation that WESCO will continue to grow its revenue and earnings through a combination of modest economic growth in the United States and increased acquisition activity. The outlook also reflects Moody's expectation that WESCO will continue to successfully manage EECOL's integration and reduce leverage through application of excess cash flows towards debt reduction. The ratings could be upgraded if WESCO successfully integrates EECOL, grows revenues and profitability such that debt to EBITDA is expected to be sustained near 3.0 times and EBITDA less capex to interest expense at over 5.0 times while maintaining strong levels of free cash flow through business cycles. A ratings upgrade would also require that WESCO maintain a conservative financial policy with respect to shareholder enhancement activities and debt financed acquisitions. The ratings could be downgraded if financial policy becomes more aggressive and/or an economic downturn leads to a contraction in profitability and operating margins such that debt to EBITDA approaches 5.0 times. The ratings could also be downgraded if the company's free cash flow profile experiences a sustained and material deterioration. WESCO International, Inc. is one of the leading providers of electrical construction products and electrical, industrial, and communications maintenance, repair and operating supplies ("MRO") in North America. The company reported sales of $7.3 billion for the twelve months ended September 30, 2013. WEST AIRPORT: WAP Objects to Continued Use of Cash Collateral ------------------------------------------------------------- WAP Holdings, LLC, as assignee to First-Citizens Bank & Trust Company, as the holder of a loan secured by a first priority lien on substantially all of the assets of West Airport Palms Business Park, LLC, asks the U.S. Bankruptcy Court for the Southern District of Florida to prohibit the continued use of cash collateral and to require the Debtor to file delinquent Debtor in Possession monthly operating reports. WAP Holdings relates that on Oct. 16, 2013, First-Citizens Bank & Trust Company assigned its liens and claim against the Debtor to it. According to WAP, the Debtor has not filed a monthly report since Aug. 30, 2013 (for the period July 2, 2013, until July 31, 2013). WAP explains that without the monthly operating reports, the creditors and the Court cannot determine whether the Debtor has been operating in compliance with the budget or whether there are funds over and above the amounts in the budget that have been received and should be held for the benefit of or paid to WAP. Thus, WAP tells the Court that it does not consent to any further use of its cash collateral. About West Airport Palms Business Park Headquartered in Miami, Florida, West Airport Palms Business Park, LLC, filed for Chapter 11 (Bankr. S.D. Fla. Case No. 13-25728) on July 2, 2013. Judge Robert A. Mark presides over the case. James Schwitalla, Esq., represents the Debtor as counsel. In its petition, the Debtor scheduled assets of $14,440,419 and liabilities of $9,284,422. The petition was signed by Alexander Montero, managing member. The U.S. Trustee said that an official committee has not been appointed in the case. The U.S. Trustee reserves the right to appoint such a committee if interest developed among the creditors. WEST AIRPORT: Creditor Files Plan of Liquidation ------------------------------------------------ WAP Holdings, LLC, as assignee of First-Citizens Bank & Trust Company and a secured creditor of West Airport Palms Business Park, LLC, filed with the U.S. Bankruptcy Court for the Southern District of Florida on Nov. 13, 2013, a proposed Chapter 11 Plan of Liquidation for the Debtor and an explanatory disclosure statement. According to WAP Holdings, the Plan provides for the sale of all right, title and interest of the Debtor's Property and all personal property associated therewith, the distribution of proceeds of such liquidation and the extinguishment of Allowed Equity Interests in West Airport Palms as provided in the Plan. On Sept. 13, 2013, First Citizens obtained a Summary Judgment of Foreclosure against West Airport Palms, and other related parties, in the case entitled First-Citizens Bank & Trust Company v. West Airport Palms Business Park, LLC, et al., pending in the Circuit Court for the 11th Judicial Circuit in and for Miami-Dade County, Florida, case no. 10-39220 CA (22). The Final Judgment has been assigned to WAP Holdings. The foreclosure sale of the Property has been continued to Jan. 14, 2014. "WAP Holdings has proposed this Plan in order to acquire title to the Property free and clear of liens, pay Administrative Claims, pay Allowed Priority Claims, Allowed Secured Tax Claims and make a meaningful distribution to Laura Marquina and Aldo Farradaz, the holders of the only Non-Insider General Unsecured Claims in this case. WAP Holdings does not intend to solicit the votes of Insiders who allegedly asserts Claims against the Debtor. Insiders are presumed to have rejected the Plan. Notwithstanding, WAP Holdings can achieve confirmation of the Plan through cramdown as the Plan (a) provides a greater distribution to creditors than would be achieved through a Chapter 7 liquidation, and (b) no class of creditors or equity interests that is junior to the Claims of Ms. Marquina and Mr. Farradaz will receive or retain any property under the Plan." Pursuant to the Plan terms, holders of Allowed Class 2 General Unsecured Claims of Creditors who are not Insiders, other than the WAP General Unsecured Claim, will receive all remaining Plan Cash, following payment of the distributions to Administrative Claims, Professional Fee Claims, U.S. Trustee's Fees, and Priority Tax Claims. Allowed Class 3 WAP General Unsecured Claims will be subordinate to Class 2 and will receive any Plan Cash or the Proceeds of Litigations Claims if, and only if, Class 2 has been paid in full. Allowed Class 4 Insider General Unsecured Claims will receive nothing under the Plan. WAP Holdings does not intend to solicit acceptances from Class 4. All Class 6 Equity Interests will be extinguished on the Effective Date of the Plan and will neither receive nor retain any property under the Plan. A copy of the Disclosure Statement in connection with WAP Holdings' Plan of Liquidation for the Debtor is available for free at http://bankrupt.com/misc/westairport.doc107.pdf About West Airport Palms Business Park Headquartered in Miami, Florida, West Airport Palms Business Park, LLC, filed for Chapter 11 (Bankr. S.D. Fla. Case No. 13-25728) on July 2, 2013. Judge Robert A. Mark presides over the case. James Schwitalla, Esq., represents the Debtor as counsel. In its petition, the Debtor scheduled assets of $14,440,419 and liabilities of $9,284,422. The petition was signed by Alexander Montero, managing member. The U.S. Trustee said that an official committee has not been appointed in the case. The U.S. Trustee reserves the right to appoint such a committee if interest developed among the creditors. WISE METALS: Moody's Assigns B3 CFR & Caa1 Sec. Notes Rating ------------------------------------------------------------ Moody's Investors Service assigned a B3 Corporate Family Rating and a B3-PD Probability of Default Rating to Wise Metals Group LLC. At the same time, Moody's assigned a Caa1 rating to the proposed senior secured notes due in 2018 to be issued by Wise Metals Group LLC and Wise Alloys Finance Corporation as co- issuers. Wise Metals Group LLC and Wise Alloys Finance Corporation will be jointly and severally liable for the notes. The notes will be guaranteed by certain subsidiaries, excluding Wise Recycling LLC and its subsidiaries. Proceeds will be used to repay existing debt and redeem approximately $158 million in preferred, non- convertible membership interests. The rating outlook is stable. Assignments: Issuer: Wise Metals Group LLC Probability of Default Rating, Assigned B3-PD Corporate Family Rating, Assigned B3 Senior Secured Regular Bond/Debenture, Assigned Caa1, LGD4, 60% Outlook Actions: Issuer: Wise Metals Group LLC Outlook, Stable Ratings Rationale: The B3 corporate family rating reflects Moody's view that Wise will exhibit high debt balances relative to earnings and consequently, weak debt protection metrics over the next 12 to 18 months. Moody's estimates that debt-to-EBITDA will range between 5.5x and 6x while EBIT-to-interest will be in the 1.4x to 1.7x range. Debt protection metrics, while initially relatively weak, should start to evidence meaningful improvement in the late 2014 to early 2015 timeframe after the company completes its near term expansion CAPEX projects, and can redirect cash flow towards debt repayment. Also factored into the rating is Moody's assumption that operating cash flow will remain positive while earnings will grow at a moderate pace over the medium term, driven by higher production capacity from the current CAPEX investment and higher shipment volumes that will be available to the company. The rating also considers Wise's relatively modest size and earnings base, concentration of sales in the North American can sheet segment, slow recovery of demand for aluminum products and secular decline in general aluminum beverage can consumption in North America. Furthermore, while Wise's largely margin-on-metal business model and the ability to pass through primary aluminum and certain other costs provides some cushion to aluminum spot price volatility, the company's performance is sensitive to volume levels in order to cover fixed costs. At the same time, the rating incorporates Wise's high leverage profile and weak credit metrics, as well as heightened capital spending requirements which will consume free cash flow in the near term. Against these constraints, the rating considers Wise's good position in the North American beverage can sheet market and, specific to its customer base, sales that are supported by multi- year contracts and carry the potential for volume and earnings growth. The rating also incorporates Moody's expectation that the company will continue to generate positive operating cash flow going forward, which should enable Wise to cover working capital and CAPEX requirements without significantly increasing debt balances although working capital requirements are likely to require use of the company's ABL revolving credit facility from time to time. Under Moody's loss given default methodology, the Caa1 rating on the senior secured notes reflects the weaker security available to this instrument relative to the company's asset-backed revolving credit facilities (ABL) and priority accounts payables. The stable outlook reflects Moody's expectation that Wise's performance over the next 12 to 18 months, will not deteriorate from its current run rate and that improvement will be evidenced over time based upon its contract positions and growth CAPEX. The outlook also anticipates that can sheet demand in the North American markets will continue to only modestly decline and that Wise will continue to be able to achieve some incremental volume growth The rating and/or outlook could be pressured should market fundamentals deteriorate and the company experience sustained volume and margin declines or should an improvement in credit metrics take longer than originally expected. The rating would also be pressured should the expected higher volume levels resulting from increased capacity and new contract levels not materialize. Quantitatively, ratings could be downgraded if debt- to-EBITDA is likely to be sustained above 5.5 times, EBIT-to- interest below 1.5 times, or if the company generates negative free cash flow on a sustained basis. A significant contraction in liquidity or availability under the ABL could also negatively affect the rating or outlook. An upgrade is unlikely at this time due Wise's highly leveraged profile and modest earnings base. Over time, upward ratings momentum could occur should the company achieve higher shipment levels, improved margins and more robust earnings performance, such that debt-to-EBITDA and EBIT-to-interest were to be sustained below 4.5 times and above 2.0 times, respectively. Headquartered in Muscle Shoals, Alabama, Wise Metals Group LLC (Wise) is a holding company that owns a 100% stake in Wise Alloys LLC, a producer of rolled aluminum products that supplies primarily to the North American can sheet market and contributes the great majority of the company's consolidated revenues, while the remainder is comprised of sales to other sectors. Wise also wholly-owns Listerhill Total Maintenance Center LLC, which provides project and maintenance engineering services, Alabama Electric Motor Services LLC, which sells and services electric motors and Wise Recycling LLC (Wise Recycling), which collects, processes and sells scrap metal. Consolidated revenues for the 12 months ending September 30, 2013 were approximately $1.4 billion. WISE METALS: S&P Assigns 'B' CCR & Rates New $625MM Notes 'B-' -------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'B' corporate credit rating to Muscle Shoals, Ala.-based Wise Metals Group LLC. The outlook is stable. S&P also assigned its 'B-' issue-level rating (one notch lower than the corporate credit rating) to Wise's proposed $625 million senior secured notes co-issued by Wise Alloys Finance Corp. The recovery rating on the proposed notes is '5', indicating S&P's expectation for modest (10% to 30%) recovery for lenders in the event of payment default. The notes are being sold pursuant to Rule 144A without registration rights. The company plans to use proceeds from the proposed notes to repay existing debt, to redeem preferred equity, and for transaction-related fees and expenses. "The outlook is stable, reflecting our view that credit measures should remain within our thresholds for the 'B' rating and highly leveraged financial risk profile, with debt to EBITDA in excess of 6x in 2013 and 2014," said Standard & Poor's credit analyst Amanda Buckland. "The rating and outlook assume that Wise maintains adequate liquidity to fund internal working capital needs and capital spending." S&P could lower the rating if the company's liquidity position deteriorated such that it deemed it to be "less than adequate." This could occur if Wise lost one of its top three customers or experienced a significant outage at its sole manufacturing facility, causing annual volumes sold to drop more than 40%, effectively reducing ABL availability to nearly zero due to shrinkage of assets to support the borrowing base combined with lower cash flows. S&P do not expect an upgrade in the next year because adjusted debt to EBITDA is forecast to remain above 6x and due to Wise's ownership by a financial sponsor. WKI HOLDING: Moody's Corrects Text on Oct. 31 Release ----------------------------------------------------- Moody's Investors Service made a correction to its Oct. 31, 2013 ratings release on WKI Holding Company, Inc. ("World Kitchen"). In the debt list, the expiration date of the $90 million senior secured revolving credit facility was corrected to March 2018. The Oct. 31 release noted these rating actions: Issuer: WKI Holding Company, Inc. -- Corporate Family Rating, affirmed at B2 -- Probability of Default Rating, affirmed at B2-PD -- $90 million senior secured revolving credit facility expiring February 2018, affirmed at B1 (LGD3, 41%, from LGD3, 39%) -- $252 million ($242 million outstanding) senior secured term loan due March 2019, affirmed at B1 (LGD3, 41%, from LGD3, 39%) WOOTON GROUP: Simon Resnik Hayes Can Withdraw as General Counsel ---------------------------------------------------------------- Early this month, the U.S. Bankruptcy Court for the Central District of California granted the motion of Simon Resnik Hayes LLP and M. Jonathan Hayes, Esq., to withdraw as general counsel to Wooton Group, LLC. About Wooton Group Beverly Hills, Calif.-based Wooton Group, LLC, filed a bare- bones Chapter 11 petition (Bankr. C.D. Cal. Case No. 12-31323) in Los Angeles on June 19, 2012. Judge Thomas B. Donovan oversees the case. M. Jonathan Hayes, Esq., Matthew D. Resnik, Esq., and Roksana D. Moradi, Esq., at Simon Resnik Hayes LLP, in Sherman Oaks, Calif., represent the Debtor as counsel. The petition was signed by Mark Slotkin, managing member. In its schedules, the Debtor disclosed assets of $10,500,961 and debts of $7,227,376 as of the petition date. TLO LLC: Court Okays 4th Motion for Add'l DIP Loan of $1,000,000 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida approved on Nov. 4, 2014, TLO LLC's fourth emergency motion to obtain post-petition financing of $1,000,000 from the Debtor's current and co-chief Executive officers, Eliza Desiree Asher and Caroline Asher, the daughters of the deceased founder of the Debtor, Hank Asher. The Debtor's principals -- Ms. Asher and Ms Yoost or their Irrevocable Trusts -- have each agreed to loan an additional $500,000 (up to a maximum of $1,000,000 in the aggregate) to the Debtor, immediately, upon the same terms as the Initial DIP Loan in the original amount of $2,000,000, the Second DIP Loan in the original amount of $2,000,000 and the Third DIP Loan in the original amount of $1,000,000. A copy of the Order approving the Fourth DIP Loan is available at: http://bankrupt.com/misc/tlollc.doc453.pdf About TLO LLC TLO LLC, a provider of risk-mitigation services, filed a petition for Chapter 11 reorganization (Bankr. S.D. Fla. Case No. 13-bk20853) on May 9, 2013, in West Palm Beach, Florida, near the company's headquarters in Boca Raton. The petition was signed by E. Desiree Asher as CEO. Judge Paul G. Hyman, Jr., presides over the case. Robert C. Furr, Esq., and Alvin S. Goldstein, Esq., at Furr & Cohen, serve as the Debtor's counsel. Bayshore Partners, LLC is the Debtor's investment banker. Thomas Santoro and GlassRatner Advisory & Capital Group, LLC are the Debtor's financial advisors. Paul J. Battista, Esq., and Mariaelena Gayo-Guitian, Esq., at Genovese, Joblove & Battista, P.A., represent the Official Committee of Unsecured Creditors as counsel. The Debtor disclosed assets of $46.6 million and liabilities of $109.9 million, including $93.4 million in secured claims. The principal lender is Technology Investors Inc., owed $89 million. TII is owned by the estate of Hank Asher, the company's primary owner who died this year. There is $4.6 million secured by computer equipment. WYLDFIRE ENERGY: Chapter 11 Trustee Files Liquidation Plan ---------------------------------------------------------- Michael A. McConnell, the duly-appointed Chapter 11 Trustee of the bankruptcy estate of Wyldfire Energy, Inc., has submitted a proposed Plan of Liquidation for the Debtor. According to the explanatory disclosure statement, the Trustee has collected approximately $500,000 for payment of administrative expenses and creditor claims. The estate's settlement with Cierra Resources, Inc., and Leo Whelan and Wexco Resources, LLC, may yield additional revenue. Any additional funds for distribution to creditors, including unsecured creditors, will be from the sale of any remaining estate assets and any recovery on estate causes of action, including avoidance actions, that the Plan Administration Agent -- in his sole discretion -- elects to pursue. At this time, the Trustee does not forecast that there will be sufficient funds on hand on the Effective Date to make any distributions to unsecured creditors (Class 2). Under the Plan, all administrative claims and Secured Tax Claims (Class 1) will be paid in full. All stock and equity interests in the Debtor (Class 3) will be cancelled and extinguished. Estate Assets When it filed for bankruptcy, the Debtor owned producing and non- producing oil and gas leasehold interests in the Eagle Ford Shale in south Texas, additional interests in the Barnett Shale in north Texas, and investment interests in oil and gas lease projects in the Niobrara formation. Some of the Debtor's interests were sold prior to appointment of the Trustee. Other interests lapsed due to non-production. The Debtor's remaining mineral and leasehold interests in the Eagle Ford Shale will be assigned to Carlton Scott "Bubba" Riggs and Riggs Energy Group, Inc., pursuant to a settlement approved by the Bankruptcy Court. Remaining assets include mineral interests in Tarrant County, cash, and a promissory note from Wexco Resources, Inc. in the amount of $1,560,383. Additional mineral interests may be assigned by Cierra Resources pursuant to settlements approved by the Bankruptcy Court. Settlements Mediation took place on Sept. 17 and 18, 2013, in San Antonio, Texas, under the supervision of the Hon. Leif M. Clark (Retired) as mediator. Key parties, including Ms. Ford, and Mr. Riggs, participated. Settlement agreements were drafted and signed as a result of the mediation. The settlements resulted in the resolution of all controversies and disputes between and among the settling parties, and specifically provide for: i) mutual releases and dismissal of all litigation between the Debtor, the Riggs Group, Robert J. Riley, and Leo Whelan and his affiliated entities; ii) the withdrawal of claims of Mr. Riggs and Riggs Energy, Inc. against the estate, including Claim No. 10 and Claim No. 11, both in the amount of $54.4 million; iii) promissory notes from Wexco and Mr. Riley; iv) transfer of the Debtor's Eagle Ford mineral interests to the Riggs Group; and, v) in the event of a sale of certain mineral interests owned by Cierra Resources by Nov. 1, 2013, the transfer of sale proceeds and other assets from Cierra Resources to Wyldfire in satisfaction of estate claims against Mrs. Ford and her companies and mutual releases. The settlements were approved by the Bankruptcy Court in October 2013. The Nov. 1 date has now passed without the occurrence of the contemplated sale of assets by Cierra Resources. The parties are discussing a possible stipulation to extend the deadline and to transfer those assets to other parties for purposes of sale. A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/Wyldfire_Trustee_Plan_Outline.pdf About Wyldfire Energy Palo Pinto, Texas-based Wyldfire Energy, Inc., filed a Chapter 11 petition (Bankr. N.D. Tex. Case No. 12-70239) in Wichita Falls, Texas, on June 20, 2012. Tamara Ford, a 100% stockholder, signed the Chapter 11 petition. Ronald L. Yandell, Esq., represented the Debtor. Judge Harlin DeWayne Hale oversees the case. At the behest of former associate Riggs Group, the Court ordered the appointment of a Chapter 11 trustee in April 2013. The Chapter 11 trustee, Michael A. McConnell, has tapped as advisors the law firm of Kelly Hart & Hallman LLP as his general counsel, and Lain Faulkner & Co., P.C. as his accountants. According to the Trustee, Wyldfire was no longer in a financial position to acquire and sell oil and gas leases. Wyldfire's remaining business was limited to supervising a small team of contract landmen. The Trustee elected to terminate their contracts and discontinue operations as of the end of April 2013. ZAYO GROUP: Moody's Rates Proposed $150MM Term Loan Add-on 'B1' --------------------------------------------------------------- Moody's Investors Service rated Zayo Group, LLC's proposed $150 million term loan add-on B1 (LGD3-41%). This transaction will increase the size of the company's existing Term Loan B due 2019 to $1.75 billion from $1.6 billion. The proceeds from the term loan add-on will be used for general corporate purposes. Rating Rationale: The higher debt load resulting from this transaction will temporarily stress Zayo's leverage metrics beyond the limit of the current B2 corporate family rating (CFR). Proforma for this transaction, Zayo will have approximately $240 million of cash on the balance sheet. Higher leverage will reduce Zayo's financial flexibility and any use of proceeds that is not EBITDA accretive will negatively impact the company's ratings. Zayo's B2 corporate family rating reflects its high leverage, weak free cash flow profile and the company's very aggressive financial policy. Zayo's business model requires heavy capital investment and is susceptible to customer churn, both of which pressure free cash flows. And, in addition to increasing its credit risk, Zayo's serial debt-financed acquisition activity has also led to poor visibility into the company's organic growth and steady state cost structure. These credit weaknesses are offset by Zayo's strong revenue growth, stable base of contracted recurring revenues and valuable fiber optic network assets. Following the acquisition of AboveNet, the company has achieved meaningful margin expansion which has resulted in lower leverage and modestly positive free cash flow. The stable outlook is based on Moody's view that Zayo will continue to generate positive free cash flow and reduce leverage while maintaining adequate liquidity. Moody's could upgrade Zayo's ratings if adjusted leverage approaches 4x and FCF/Debt is sustained above 10%. Upward rating migration would also be contingent on management's commitment to lower leverage and a less aggressive stance towards debt-financed M&A. Downward rating pressure could develop if liquidity becomes strained or if capital intensity increases such that Zayo is unable to generate sustainable positive free cash flow or if leverage is not on track to fall towards 5.5x by year end 2014. Debt-financed M&A that materially delays (i.e. by more than 2 fiscal quarters) the targeted leverage reduction or results in sustained negative free cash flow would likely lead to a downgrade. Headquartered in Boulder, Colorado, Zayo Group is a provider of bandwidth infrastructure and network-neutral interconnection services with significant fiber network assets and national reach. In July 2012, the company completes its biggest acquisition of AboveNet for approximately $2.2 billion. ZAYO GROUP: S&P Retains 'B' Rating Following $150MM Loan Add-On --------------------------------------------------------------- Standard & Poor's Ratings Services ratings said its 'B' issue rating and '4' recovery rating on Louisville, Colo.-based Zayo Group LLC's term loan remain unchanged following the announced $150 million add-on to the loan. The '4' recovery rating indicates S&P's expectation for average (30%-50%) recovery of principal in the event of default. Standard & Poor's has reviewed all its ratings on Zayo Group LLC, which it labeled as "under criteria observation" (UCO) after the publishing of its revised corporate criteria on Nov. 19, 2013. Standard & Poor's expedited the review of its ratings on Zayo because of the company's announced term loan add-on. With S&P's criteria review of Zayo complete, it has confirmed that its ratings on this issuer are unaffected by the criteria changes. S&P expects the company to use proceeds from the add-on to invest in its fiber-optic network or data center portfolio. S&P's base- case expectation is that Zayo will continue to pursue debt- financed acquisitions or capital investments that will keep leverage in the 6x area longer term, including S&P's adjustments. "We assess Zayo's financial risk profile as "highly leveraged", reflecting our expectation that leverage will be in the 6x area by the end of fiscal 2014, with funds from operations to debt in the low-double-digit percentage area over the next fiscal year. In our view, Zayo's business has significant operating leverage and thus the company could de-leverage significantly through EBITDA growth. However, additional debt financings for acquisitions or capital expansion projects are also likely and could keep leverage elevated, in our view," S&P said. "We assess Zayo's business risk profile as "fair," incorporating its high EBITDA margins but also the risks associated with rapid expansion and the possibility of increasing competition in many fiber markets, particularly the larger metro markets Zayo entered through its acquisition of AboveNet. However, we believe these risks are tempered somewhat by continued market demand for bandwidth that, in our view, will continue to exceed data infrastructure supply growth over the next few years. Zayo also benefits from its recurring revenue business model with multiple- year contracts and sizable contractual revenue backlog," S&P added. RATINGS LIST Zayo Group LLC Corporate Credit Rating B/Stable/-- Senior Secured $1.77 bil. term loan B due 2019 B Recovery Rating 4 * Service Members Left Vulnerable to Payday Loans ------------------------------------------------- Jessica Silver-Greenberg, writing for The New York Times' DealBook, reported that Petty Officer First Class Vernaye Kelly winces when roughly $350 is automatically deducted from her Navy paycheck twice a month. Month after month, the money goes to cover payments on loans with annual interest rates of nearly 40 percent, the report said. The monthly scramble -- the scrimping, saving and going without -- is a familiar one to her. More than a decade ago, she received her first payday loan to pay for moving expenses while her husband, a staff sergeant in the Marines, was deployed in Iraq. Alarmed that payday lenders were preying on military members, Congress in 2006 passed a law intended to shield servicemen and women from the loans tied to a borrower's next paycheck, which come with double-digit interest rates and can plunge customers into debt. But the law failed to help Ms. Kelly, 30, this year, the report related. Nearly seven years since the Military Lending Act came into effect, government authorities say the law has gaps that threaten to leave hundreds of thousands of service members across the country vulnerable to potentially predatory loans -- from credit pitched by retailers to pay for electronics or furniture, to auto- title loans to payday-style loans, the report said. The law, the authorities say, has not kept pace with high-interest lenders that focus on servicemen and women, both online and near bases. "Somebody has to start caring," said Ms. Kelly, who took out another payday loan with double-digit interest rates when her car broke down in 2005 and a couple more loans this summer to cover her existing payments, the report further related. "I'm worried about the sailors who are coming up behind me." * FDIC Will Give Full Outline of Big Bank Wind-Down Plans --------------------------------------------------------- Law360 reported that Federal Deposit Insurance Corp. Chairman Martin Gruenberg said on Nov. 21 that his agency would soon put out a fuller description of its plans for taking apart a failed global financial institution. According to the report, Gruenberg said the FDIC will open to public comment the description of how it intends to use its orderly liquidation authority for a big bank or systemically significant nonbank financial institution. * FINRA Is Cracking Down on High-Risk Brokers --------------------------------------------- Jean Eaglesham and Rob Barry, writing for The Wall Street Journal, reported that under pressure from Washington to crack down on rogue stockbrokers, the Financial Industry Regulatory Authority is highlighting a fast-track program it began earlier this year to go after what it calls "high-risk brokers." According to the report, the results: Forty-two of the most troubled brokers were targeted for "expedited investigation," and 16 of them were thrown out of the securities industry, Finra Chairman and Chief Executive Richard Ketchum wrote in a Nov. 13 letter to Sen. Edward Markey (D., Mass.). The letter includes other previously undisclosed details of what Mr. Ketchum described as increasing efforts by Wall Street's self- regulator to scrutinize repeat offenders among the 634,955 brokers licensed by Finra, the report related. Mr. Markey pressed Finra last month for more information, telling Mr. Ketchum that articles in The Wall Street Journal raised "serious concerns" about Finra's ability to protect investors from rogue brokers, the report said. According to an analysis by the Journal of state securities records, more than 5,000 brokers licensed to sell securities earlier this year had worked at a firm that was expelled by Finra from 2005 to 2012. * Regulators Put Tougher Restrictions on Bank Payday Loans ---------------------------------------------------------- Danielle Douglas, writing for The Washington Post, reported that the government is imposing tougher restrictions on banks that offer short-term, high-interest loans that have been blamed for trapping some Americans in a cycle of debt. According to the report, on Nov. 21, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. issued identical guidance to limit the risks of loans tied to consumers' paychecks, government benefits or other income directly deposited into their bank accounts. Critics say these products carry the same abusive high interest rates and balloon payments as the payday loans offered by storefront and online operators, the report related. But industry groups contend that placing strict constraints on banks will only push people with limited access to credit into the arms of less- regulated vendors. "The OCC encourages banks to offer responsible products that meet the small-dollar credit needs of customers," Comptroller of the Currency Thomas J. Curry said in a statement, the report cited. "However, deposit advance products.?.?. pose significant safety and soundness and consumer protection risks." Mr. Curry said the guidance is meant to clarify the agency's expectations for banks to understand and manage those risks. Neither the OCC nor the FDIC will bar banks from deposit-advance loans, but their policies could radically alter the operations of the handful of banks that offer the product. * Supreme Court Asked to Rule on Inherited IRAs ----------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that U.S. Supreme Court justices will hold a conference on Nov. 26 to decide whether to grant an appeal to determine whether an inherited individual retirement account is protected from the claims of creditors in bankruptcy. According to the report, two U.S. appeals courts have reached different conclusions on whether an inherited IRA is an exempt asset that an individual can retain despite filing for bankruptcy. In April, Frank Easterbrook, chief judge of the U.S. Court of Appeals for the Seventh Circuit in Chicago, disagreed with an opinion last year from the New Orleans-based Fifth Circuit. Judge Easterbrook concluded that inherited IRAs aren't exempt in bankruptcy and do belong to creditors. The person who lost in Chicago petitioned the high court seeking to appeal. The petitioner called the case an "ideal vehicle" for resolving the split among the circuits because Easterbrook explicitly rejected the reasoning of the New Orleans court. The bankruptcy trustee, the winner in Easterbrook's opinion, said Supreme Court review is premature because only two appeals courts have written on the topic. The trustee said the New Orleans decision provided an "irrational windfall" for bankrupts. The trustee urged the Supreme Court to deny an appeal, giving the Fifth Circuit time to reverse itself. The Supreme Court could say as early as Nov. 26 whether it will take the case. If it doesn't, or if the justices seek the view of the U.S. solicitor general, who argues before the high court on behalf of the government, word could come down on Dec. 2. While an IRA funded by the debtor's own contributions is immune from creditor claims in bankruptcy, the case before Judge Easterbrook's court involved a woman who inherited her deceased mother's $300,000 account. After the daughter filed for bankruptcy, the bankruptcy judge ruled that the IRA wasn't exempt. The district court reversed, and Judge Easterbrook reversed once again. The Fifth Circuit reached the opposite result in March 2012, focusing on what it called the "plain meaning" of the statutes. The case is Clark v. Rameker, 13-299, U.S. Supreme Court, (Washington). * MorrisAnderson Bags T&A's 2013 Outstanding Turnaround Firm Award ------------------------------------------------------------------ MorrisAnderson, a financial and operational advisory firm, on Nov. 22 disclosed that it has been recognized as an Outstanding Turnaround Firm by Turnarounds & Workouts, a bankruptcy, restructuring and distressed investing publication that has been reporting on industry news and analysis for more than a quarter century. The recognition honors firms that are routinely retained in the most complex and sophisticated restructuring transactions. MorrisAnderson was specifically recognized for the following outstanding achievements: -- Serving as Chief Restructuring Officer and guiding two clients -- a provider of ATM services and self-service kiosks as well as a global organizational training provider -- through Chapter 11 proceedings and ultimately through successful sale transactions; -- Serving as liquidating trustee on behalf of several clients in a variety of industries: horse racing, commercial airline, real estate investment trust and agribusiness; and -- Serving as FA to $200 million magazine distributor, $100 million food distributor and $500 million assisted living center roll-up. "2013 was a solid year for MorrisAnderson and we are honored to be among the firms selected for this prestigious recognition," said Dan Dooley, principal and chief executive officer of MorrisAnderson. "This recognition further demonstrates our commitment to ensuring a successful outcome for our clients through any complex turnaround transaction. We are extremely proud of our recent accomplishments and look forward to continuing to provide industry-leading client service and results." MorrisAnderson was among 12 firms recognized in 2013. The publication's editorial staff selects honorees based upon the firm's recent representations, as well as nominations from leading restructuring professionals nationwide. "All of the firms included on this year's Outstanding Turnaround Firms list had notable engagements within the past year," noted Turnarounds & Workouts editor Nina Novak. "I believe that the senior professionals at these organizations will continue to be leaders in the restructuring world for years to come." To view the list of Outstanding Turnaround Firms and read more about the firms' achievements, visit http://bit.ly/OTF13 About MorrisAnderson Chicago-based MorrisAnderson is a middle market consulting firm focused on underperforming and distressed companies, with offices in New York, Missouri and Florida. The firm's service offerings include financial advisory, interim, turnaround and crisis management, investment banking, performance improvement and litigation support. MorrisAnderson emphasizes hands-on involvement, consistent and reliable communication and a collaborative approach with stakeholders. * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Share- Total Total Holders' Working Assets Equity Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------ -------- ------- ABSOLUTE SOFTWRE ALSWF US 129.8 (11.3) (10.7) ABSOLUTE SOFTWRE ABT CN 129.8 (11.3) (10.7) ABSOLUTE SOFTWRE OU1 GR 129.8 (11.3) (10.7) ACCELERON PHARMA XLRN US 48.4 (19.9) 6.2 ACCELERON PHARMA 0A3 GR 48.4 (19.9) 6.2 ADVANCED EMISSIO ADES US 106.4 (46.1) (15.3) ADVANCED EMISSIO OXQ1 GR 106.4 (46.1) (15.3) ADVENT SOFTWARE AXQ GR 454.9 (133.8) (83.4) ADVENT SOFTWARE ADVS US 454.9 (133.8) (83.4) AIR CANADA-CL A AIDIF US 9,481.0 (3,056.0) 105.0 AIR CANADA-CL A AC/A CN 9,481.0 (3,056.0) 105.0 AIR CANADA-CL A ADH GR 9,481.0 (3,056.0) 105.0 AIR CANADA-CL A ADH TH 9,481.0 (3,056.0) 105.0 AIR CANADA-CL B ADH1 TH 9,481.0 (3,056.0) 105.0 AIR CANADA-CL B ADH1 GR 9,481.0 (3,056.0) 105.0 AIR CANADA-CL B AC/B CN 9,481.0 (3,056.0) 105.0 AIR CANADA-CL B AIDEF US 9,481.0 (3,056.0) 105.0 AK STEEL HLDG AK2 GR 3,766.4 (211.8) 394.9 AK STEEL HLDG AK2 TH 3,766.4 (211.8) 394.9 AK STEEL HLDG AKS US 3,766.4 (211.8) 394.9 AK STEEL HLDG AKS* MM 3,766.4 (211.8) 394.9 ALLIANCE HEALTHC AIQ US 528.2 (131.1) 64.8 AMC NETWORKS-A AMCX US 2,524.8 (611.9) 790.3 AMC NETWORKS-A 9AC GR 2,524.8 (611.9) 790.3 AMER AXLE & MFG AXL US 3,008.7 (101.6) 345.2 AMER AXLE & MFG AYA GR 3,008.7 (101.6) 345.2 AMR CORP AAMRQ* MM 26,780.0 (7,922.0) 143.0 AMR CORP AAMRQ US 26,780.0 (7,922.0) 143.0 AMR CORP ACP GR 26,780.0 (7,922.0) 143.0 AMYLIN PHARMACEU AMLN US 1,998.7 (42.4) 263.0 ANACOR PHARMACEU ANAC US 44.9 (7.3) 17.0 ANACOR PHARMACEU 44A TH 44.9 (7.3) 17.0 ANACOR PHARMACEU 44A GR 44.9 (7.3) 17.0 ANGIE'S LIST INC ANGI US 109.7 (23.0) (24.2) ANGIE'S LIST INC 8AL TH 109.7 (23.0) (24.2) ANGIE'S LIST INC 8AL GR 109.7 (23.0) (24.2) ARRAY BIOPHARMA ARRY US 152.6 (13.2) 82.3 ARRAY BIOPHARMA AR2 TH 152.6 (13.2) 82.3 ARRAY BIOPHARMA AR2 GR 152.6 (13.2) 82.3 AUTOZONE INC AZO US 6,892.1 (1,687.3) (1,680.7) AUTOZONE INC AZ5 TH 6,892.1 (1,687.3) (1,680.7) AUTOZONE INC AZ5 GR 6,892.1 (1,687.3) (1,680.7) BARRACUDA NETWOR CUDA US 236.2 (90.1) (66.5) BARRACUDA NETWOR 7BM GR 236.2 (90.1) (66.5) BENEFITFOCUS INC BNFT US 54.8 (43.9) (3.6) BENEFITFOCUS INC BTF GR 54.8 (43.9) (3.6) BERRY PLASTICS G BERY US 5,045.0 (251.0) 550.0 BERRY PLASTICS G BP0 GR 5,045.0 (251.0) 550.0 BOSTON PIZZA R-U BPZZF US 156.7 (108.0) (4.2) BOSTON PIZZA R-U BPF-U CN 156.7 (108.0) (4.2) BRP INC/CA-SUB V DOO CN 1,768.0 (496.6) (21.8) BRP INC/CA-SUB V B15A GR 1,768.0 (496.6) (21.8) BRP INC/CA-SUB V BRPIF US 1,768.0 (496.6) (21.8) BURLINGTON STORE BUI GR 2,594.2 (421.3) 139.7 BURLINGTON STORE BURL US 2,594.2 (421.3) 139.7 CABLEVISION SY-A CVC US 7,588.1 (5,565.5) (14.0) CABLEVISION SY-A CVY GR 7,588.1 (5,565.5) (14.0) CAESARS ENTERTAI C08 GR 26,096.4 (1,496.8) 626.7 CAESARS ENTERTAI CZR US 26,096.4 (1,496.8) 626.7 CAPMARK FINANCIA CPMK US 20,085.1 (933.1) - CC MEDIA-A CCMO US 15,231.2 (8,370.8) 786.9 CENTENNIAL COMM CYCL US 1,480.9 (925.9) (52.1) CENVEO INC CVO US 1,186.2 (503.8) 164.1 CHOICE HOTELS CZH GR 555.7 (484.7) 79.2 CHOICE HOTELS CHH US 555.7 (484.7) 79.2 CIENA CORP CIEN TE 1,727.4 (83.2) 763.4 CIENA CORP CIE1 TH 1,727.4 (83.2) 763.4 CIENA CORP CIE1 GR 1,727.4 (83.2) 763.4 CIENA CORP CIEN US 1,727.4 (83.2) 763.4 CINCINNATI BELL CBB US 2,551.7 (687.2) (147.2) COMVERSE INC CNSI US 844.8 (9.4) (6.1) COMVERSE INC CM1 GR 844.8 (9.4) (6.1) DIAMOND RESORTS D0M GR 1,073.5 (81.3) 682.4 DIAMOND RESORTS DRII US 1,073.5 (81.3) 682.4 DIRECTV DTV CI 20,588.0 (6,208.0) (300.0) DIRECTV DIG1 GR 20,588.0 (6,208.0) (300.0) DIRECTV DTV US 20,588.0 (6,208.0) (300.0) DOMINO'S PIZZA EZV GR 468.5 (1,322.2) 76.9 DOMINO'S PIZZA EZV TH 468.5 (1,322.2) 76.9 DOMINO'S PIZZA DPZ US 468.5 (1,322.2) 76.9 DUN & BRADSTREET DNB US 1,849.9 (1,206.3) (128.9) DUN & BRADSTREET DB5 GR 1,849.9 (1,206.3) (128.9) DUN & BRADSTREET DB5 TH 1,849.9 (1,206.3) (128.9) DYAX CORP DYAX US 70.6 (38.8) 41.0 DYAX CORP DY8 GR 70.6 (38.8) 41.0 EASTMAN KODAK CO KODN GR 3,815.0 (3,153.0) (785.0) EASTMAN KODAK CO KODK US 3,815.0 (3,153.0) (785.0) ENTRAVISION CO-A EV9 GR 455.7 (5.6) 78.1 ENTRAVISION CO-A EVC US 455.7 (5.6) 78.1 EVERYWARE GLOBAL EVRY US 356.6 (53.9) 142.5 FAIRPOINT COMMUN FRP US 1,592.6 (406.7) 30.0 FERRELLGAS-LP FGP US 1,356.0 (86.6) (21.3) FERRELLGAS-LP FEG GR 1,356.0 (86.6) (21.3) FIFTH & PACIFIC LIZ GR 846.2 (213.7) (64.6) FIFTH & PACIFIC FNP US 846.2 (213.7) (64.6) FOREST OIL CORP FST US 1,909.3 (63.1) (148.3) FOREST OIL CORP FOL GR 1,909.3 (63.1) (148.3) FREESCALE SEMICO FSL US 3,819.0 (4,526.0) 1,239.0 FREESCALE SEMICO 1FS GR 3,819.0 (4,526.0) 1,239.0 FREESCALE SEMICO 1FS TH 3,819.0 (4,526.0) 1,239.0 GENCORP INC GCY GR 1,750.4 (142.6) 111.1 GENCORP INC GY US 1,750.4 (142.6) 111.1 GENCORP INC GCY TH 1,750.4 (142.6) 111.1 GLG PARTNERS INC GLG US 400.0 (285.6) 156.9 GLG PARTNERS-UTS GLG/U US 400.0 (285.6) 156.9 GLOBAL BRASS & C BRSS US 576.5 (37.0) 286.9 GLOBAL BRASS & C 6GB GR 576.5 (37.0) 286.9 GOLD RESERVE INC GRZ CN 23.7 (0.1) (17.3) GOLD RESERVE INC GDRZF US 23.7 (0.1) (17.3) GRAHAM PACKAGING GRM US 2,947.5 (520.8) 298.5 HALOZYME THERAPE HALOZ GR 110.1 (3.5) 63.2 HALOZYME THERAPE HALO US 110.1 (3.5) 63.2 HCA HOLDINGS INC 2BH TH 28,393.0 (7,044.0) 2,352.0 HCA HOLDINGS INC 2BH GR 28,393.0 (7,044.0) 2,352.0 HCA HOLDINGS INC HCA US 28,393.0 (7,044.0) 2,352.0 HD SUPPLY HOLDIN 5HD GR 6,587.0 (753.0) 1,281.0 HD SUPPLY HOLDIN HDS US 6,587.0 (753.0) 1,281.0 HOVNANIAN ENT-A HO3 GR 1,664.1 (467.2) 950.2 HOVNANIAN ENT-A HOV US 1,664.1 (467.2) 950.2 HOVNANIAN ENT-B HOVVB US 1,664.1 (467.2) 950.2 HUGHES TELEMATIC HUTC US 110.2 (101.6) (113.8) HUGHES TELEMATIC HUTCU US 110.2 (101.6) (113.8) IMMUNE PHARMACEU EPCTSEK EU 1.0 (16.2) (8.9) IMMUNE PHARMACEU IMNP SS 1.0 (16.2) (8.9) IMMUNE PHARMACEU IMNP BY 1.0 (16.2) (8.9) IMMUNE PHARMACEU IMNP TQ 1.0 (16.2) (8.9) INFOR US INC LWSN US 6,202.6 (476.4) (417.5) INSYS THERAPEUTI INSY US 22.2 (63.5) (70.0) INSYS THERAPEUTI NPR1 GR 22.2 (63.5) (70.0) IPCS INC IPCS US 559.2 (33.0) 72.1 ISTA PHARMACEUTI ISTA US 124.7 (64.8) 2.2 JUST ENERGY GROU 1JE GR 1,533.5 (359.8) (281.4) JUST ENERGY GROU JE US 1,533.5 (359.8) (281.4) JUST ENERGY GROU JE CN 1,533.5 (359.8) (281.4) L BRANDS INC LTD GR 6,072.0 (861.0) 613.0 L BRANDS INC LTD TH 6,072.0 (861.0) 613.0 L BRANDS INC LTD US 6,072.0 (861.0) 613.0 LDR HOLDING CORP LDRH US 78.7 (0.6) 9.6 LEE ENTERPRISES LEE US 989.0 (102.6) (11.9) LORILLARD INC LO US 3,555.0 (2,042.0) 1,297.0 LORILLARD INC LLV TH 3,555.0 (2,042.0) 1,297.0 LORILLARD INC LLV GR 3,555.0 (2,042.0) 1,297.0 MACROGENICS INC M55 GR 42.2 (10.9) 9.9 MACROGENICS INC MGNX US 42.2 (10.9) 9.9 MANNKIND CORP NNF1 GR 287.6 (167.7) (138.5) MANNKIND CORP MNKD US 287.6 (167.7) (138.5) MANNKIND CORP NNF1 TH 287.6 (167.7) (138.5) MARRIOTT INTL-A MAQ GR 6,480.0 (1,409.0) (776.0) MARRIOTT INTL-A MAR US 6,480.0 (1,409.0) (776.0) MARRIOTT INTL-A MAQ TH 6,480.0 (1,409.0) (776.0) MARRONE BIO INNO MBII US 25.6 (47.8) (12.8) MDC PARTNERS-A MDZ/A CN 1,365.7 (40.1) (211.1) MDC PARTNERS-A MD7A GR 1,365.7 (40.1) (211.1) MDC PARTNERS-A MDCA US 1,365.7 (40.1) (211.1) MEDIA GENERAL MEG US 749.9 (217.2) 36.8 MERITOR INC MTOR US 2,570.0 (822.0) 338.0 MERITOR INC AID1 GR 2,570.0 (822.0) 338.0 MONEYGRAM INTERN MGI US 4,923.2 (116.3) 49.2 MORGANS HOTEL GR M1U GR 580.7 (163.7) 9.9 MORGANS HOTEL GR MHGC US 580.7 (163.7) 9.9 MPG OFFICE TRUST MPG US 1,280.0 (437.3) - NANOSTRING TECHN NSTG US 30.5 (2.0) 10.9 NATIONAL CINEMED XWM GR 982.5 (217.5) 139.1 NATIONAL CINEMED NCMI US 982.5 (217.5) 139.1 NAVISTAR INTL IHR GR 8,241.0 (3,933.0) 1,329.0 NAVISTAR INTL IHR TH 8,241.0 (3,933.0) 1,329.0 NAVISTAR INTL NAV US 8,241.0 (3,933.0) 1,329.0 NEKTAR THERAPEUT NKTR US 383.0 (50.3) 127.0 NEKTAR THERAPEUT ITH GR 383.0 (50.3) 127.0 NORCRAFT COS INC 6NC GR 265.0 (6.1) 47.7 NORCRAFT COS INC NCFT US 265.0 (6.1) 47.7 NORTHWEST BIO NWBO US 2.4 (16.2) (16.3) NYMOX PHARMACEUT NY2 TH 1.4 (6.9) (2.7) NYMOX PHARMACEUT NY2 GR 1.4 (6.9) (2.7) NYMOX PHARMACEUT NYMX US 1.4 (6.9) (2.7) OCI PARTNERS LP OCIP US 438.9 (122.9) 72.2 OMEROS CORP 3O8 GR 12.0 (23.9) (1.6) OMEROS CORP OMER US 12.0 (23.9) (1.6) OMTHERA PHARMACE OMTH US 18.3 (8.5) (12.0) OPHTHTECH CORP OPHT US 40.2 (7.3) 34.3 OPHTHTECH CORP O2T GR 40.2 (7.3) 34.3 PALM INC PALM US 1,007.2 (6.2) 141.7 PHILIP MORRIS IN PM1 TE 36,795.0 (5,908.0) (2.0) PHILIP MORRIS IN PM FP 36,795.0 (5,908.0) (2.0) PHILIP MORRIS IN PM US 36,795.0 (5,908.0) (2.0) PHILIP MORRIS IN 4I1 TH 36,795.0 (5,908.0) (2.0) PHILIP MORRIS IN PMI SW 36,795.0 (5,908.0) (2.0) PHILIP MORRIS IN PM1EUR EU 36,795.0 (5,908.0) (2.0) PHILIP MORRIS IN PM1CHF EU 36,795.0 (5,908.0) (2.0) PHILIP MORRIS IN 4I1 GR 36,795.0 (5,908.0) (2.0) PLAYBOY ENTERP-A PLA/A US 165.8 (54.4) (16.9) PLAYBOY ENTERP-B PLA US 165.8 (54.4) (16.9) PLY GEM HOLDINGS PG6 GR 1,088.3 (37.7) 212.1 PLY GEM HOLDINGS PGEM US 1,088.3 (37.7) 212.1 PROTALEX INC PRTX US 2.0 (7.6) (0.5) PROTECTION ONE PONE US 562.9 (61.8) (7.6) QUALITY DISTRIBU QLTY US 465.1 (38.1) 92.3 QUINTILES TRANSN QTS GR 2,842.0 (712.0) 382.8 QUINTILES TRANSN Q US 2,842.0 (712.0) 382.8 RE/MAX HOLDINGS 2RM GR 238.1 (23.7) 31.5 RE/MAX HOLDINGS RMAX US 238.1 (23.7) 31.5 REGAL ENTERTAI-A RETA GR 2,508.3 (658.5) 54.0 REGAL ENTERTAI-A RGC US 2,508.3 (658.5) 54.0 RENAISSANCE LEA RLRN US 57.0 (28.2) (31.4) RENTPATH INC PRM US 208.0 (91.7) 3.6 REVLON INC-A REV US 1,259.4 (619.8) 192.4 REVLON INC-A RVL1 GR 1,259.4 (619.8) 192.4 RINGCENTRAL IN-A 3RCA GR 48.5 (20.7) (22.8) RINGCENTRAL IN-A RNG US 48.5 (20.7) (22.8) RITE AID CORP RAD US 7,169.0 (2,317.9) 1,943.6 RITE AID CORP RTA GR 7,169.0 (2,317.9) 1,943.6 RURAL/METRO CORP RURL US 303.7 (92.1) 72.4 SALLY BEAUTY HOL S7V GR 1,925.8 (294.4) 503.5 SALLY BEAUTY HOL SBH US 1,925.8 (294.4) 503.5 SILVER SPRING NE 9SI TH 513.9 (88.9) 76.3 SILVER SPRING NE 9SI GR 513.9 (88.9) 76.3 SILVER SPRING NE SSNI US 513.9 (88.9) 76.3 SUNESIS PHARMAC RYIN TH 50.6 (5.8) 15.3 SUNESIS PHARMAC RYIN GR 50.6 (5.8) 15.3 SUNESIS PHARMAC SNSS US 50.6 (5.8) 15.3 SUNGAME CORP SGMZ US 0.2 (2.0) (2.0) SUPERVALU INC SJ1 GR 4,738.0 (1,031.0) 154.0 SUPERVALU INC SVU US 4,738.0 (1,031.0) 154.0 SUPERVALU INC SJ1 TH 4,738.0 (1,031.0) 154.0 TANDEM DIABETES TNDM US 48.6 (2.8) 13.8 TAUBMAN CENTERS TU8 GR 3,438.8 (211.5) - TAUBMAN CENTERS TCO US 3,438.8 (211.5) - THRESHOLD PHARMA NZW1 GR 101.0 (17.5) 74.4 THRESHOLD PHARMA THLD US 101.0 (17.5) 74.4 TOWN SPORTS INTE T3D GR 408.9 (40.4) (3.9) TOWN SPORTS INTE CLUB US 408.9 (40.4) (3.9) TROVAGENE INC-U TROVU US 9.6 (2.5) 7.1 ULTRA PETROLEUM UPL US 2,069.0 (376.8) (243.9) ULTRA PETROLEUM UPM GR 2,069.0 (376.8) (243.9) UNISYS CORP UIS1 SW 2,237.7 (1,509.9) 411.6 UNISYS CORP UISCHF EU 2,237.7 (1,509.9) 411.6 UNISYS CORP UIS US 2,237.7 (1,509.9) 411.6 UNISYS CORP UISEUR EU 2,237.7 (1,509.9) 411.6 UNISYS CORP USY1 GR 2,237.7 (1,509.9) 411.6 UNISYS CORP USY1 TH 2,237.7 (1,509.9) 411.6 VECTOR GROUP LTD VGR GR 1,121.0 (192.6) 316.7 VECTOR GROUP LTD VGR US 1,121.0 (192.6) 316.7 VENOCO INC VQ US 695.2 (258.7) (39.2) VERISIGN INC VRS TH 2,330.0 (493.8) 97.7 VERISIGN INC VRS GR 2,330.0 (493.8) 97.7 VERISIGN INC VRSN US 2,330.0 (493.8) 97.7 VIRGIN MOBILE-A VM US 307.4 (244.2) (138.3) VISKASE COS I VKSC US 334.7 (3.4) 113.5 WEIGHT WATCHERS WW6 GR 1,408.2 (1,509.4) (79.8) WEIGHT WATCHERS WTW US 1,408.2 (1,509.4) (79.8) WEST CORP WSTC US 3,480.7 (782.6) 349.0 WEST CORP WT2 GR 3,480.7 (782.6) 349.0 WESTMORELAND COA WLB US 939.8 (280.3) 4.1 WESTMORELAND COA WME GR 939.8 (280.3) 4.1 XERIUM TECHNOLOG XRM US 600.8 (35.1) 123.8 XOMA CORP XOMA GR 76.9 (16.9) 46.5 XOMA CORP XOMA TH 76.9 (16.9) 46.5 XOMA CORP XOMA US 76.9 (16.9) 46.5 ********* 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 ***