/raid1/www/Hosts/bankrupt/TCR_Public/140131.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, January 31, 2014, Vol. 18, No. 30
Headlines
1016 WEST HOLLYWOOD: Case Summary & 4 Unsecured Creditors
AB DAC INC: Foreclosure Auction Set for Feb. 28
AFA INVESTMENTS: Court Sets March 5 Combined Plan Hearing
ALLIED SECURITY: Moody's Cuts CFR to B2 & Rates 1st Lien Debt B1
AMERICAN AIRLINES: Southwest, JetBlue Win Most of Reagan Slots
ALTEGRITY INC: Debt Maturities May Blow The Whistle on Firm
AMERICAN REALTY: 50% Recovery for Gen. Unsecured Claims Under Plan
AMERICAN REALTY: Court to Consider Plan Outline on Feb. 11
AMERICAN TIRE: Hercules Tire Deal No Impact on Moody's B2 Rating
ANAREN INC: Moody's Assigns B3 CFR & Rates $165MM Secured Debt B2
ANCESTRY.COM HOLDINGS: Moody's Affirms Caa1 Unsecured Debt Rating
ANCESTRY.COM HOLDINGS: S&P Keeps 'CCC+' Rating After $100MM Add-On
ATARI INC: Plan Declared Effective in December
ATLS ACQUISITION: Wants Plan Exclusivity Extended Through April
AUTOMATED BUSINESS: PNC Agrees to Use of Cash Through Dec. 31
AUTOMATED BUSINESS: Halevy Objects to Releases Granted to PNC
BATISTA-SANECHEZ: SunTrust Bank's $2-Mil. Claim Allowed
BAY CLUB PARTNERS-472: In Chapter 11, Seeks to Use Cash Collateral
BAY CLUB PARTNERS-472: Wants to Continue MEB Management Agreement
BAY CLUB PARTNERS-472: Seeks Authority to Refund Deposits
BAY CLUB PARTNERS-472: Hiring Tonkon Torp as Chapter 11 Counsel
BAY CLUB PARTNERS-472: Section 341(a) Meeting Set on March 4
BERNARD L. MADOFF: Ex-Aide's Balances Totaled Almost $70-Mil.
BERNARD L. MADOFF: Investor Who Lost In Fund Deal Can't Sue
BIANCHI ORCHARD: Case Summary & 20 Largest Unsecured Creditors
BROADWAY SELF-STORAGE: Foreclosure Auction Set for Feb. 27
BROWNSVILLE MD: Updates Company Mailing Address
BROWNSVILLE MD: Court Approves Rentfro Law as Special Counsel
BUCKEYE STEEL: Ohio Appeals Court Affirms Ruling Against TTA
BUILDERS GROUP: Noreen Wiscovitch Appointed as Ch.11 Trustee
C.W. MINING: 10th Circuit Affirms Ruling Approving Sale of Assets
CARECORE NAT'L: Moody's Assigns B2 CFR & Rates 1st Lien Debt B2
CARECORE NATIONAL: S&P Assigns 'B' CCR & Rates $390MM Debt 'B'
CARIBBEAN DIVERSIFIED: In Default of CSE Requirements
CENGAGE LEARNING: Gets Court OK for Accounting Services From A&M
CHRYSLER GROUP: Fiat Plan Takes Advantage of Finance, Tax Benefits
CHRYSLER GROUP: Fiat Scraps Dividend
CHRYSLER GROUP: Moody's Rates $2BB Loan 'Ba1' & $2.9BB Notes 'B1'
CHRYSLER GROUP: S&P Rates Proposed New Secured Term Loan B 'BB+'
COLOREP INC: Executive Sounding Board's Katz Okayed as CRO
COMMUNITY TOWERS I: San Jose Office Complex to Liquidate in Ch. 7
COMMUNITY TOWERS I: Must Turn Over Postpetition Rent to SJTC
COOPER TIRE: Moody's Confirms B1 CFR & Alters Outlook to Negative
CORRECTION CORP: Fitch Affirms 'BB+' IDR & Unsec. Notes Rating
COEUR MINING: Moody's Cuts CFR to B3 & Unsec Notes Rating to Caa1
CYNERGY GROUP: Voluntary Chapter 11 Case Summary
DENVER MERCHANDISE: 5th Cir. Affirms Prepayment Ruling v. BoNY
DETROIT, MI: Wants 50,000 Visas to Bring Immigrants to City
DETROIT, MI: Governor Defends State Money for City Pensions
DETROIT, MI: May File $18 Billion Bankruptcy Plan in Two Weeks
DIAMOND FOODS: S&P Assigns 'B-' CCR & Rates New $415MM Loan 'B-'
DOLAN COMPANY: NYSE Commences Stock Delisting Proceedings
DONALD E. WILKINSON: Feb. 13 Hearing on Bid to Sell Assets
DOTS LLC: Donlin Recano Retained as Ch. 11 Claims & Noticing Agent
EARL GAUDIO: Jan. 28 Hearing on Claim Objection Vacated
EDISON MISSION: Has Until March 31 to Decide on Leases
EDWARD J WILLIAMS DMD: Case Summary & 9 Top Unsecured Creditors
ENDICOTT INTERCONNECT: Amends Sale Deal with Integrian Holdings
ENDICOTT INTERCONNECT: Plan Outline Hearing Set for Feb. 27
ENDICOTT INTERCONNECT: Court Grants Final Cash Collateral Order
EVERGREEN SOLAR: Court Interprets Release Provision
FIBERTOWER NETWORK: Court Confirms 4th Amended Plan
FREEDOM INDUSTRIES: Bankruptcy Judge Approves Loan of Up to $5MM
FREEDOM INDUSTRIES: Reveals 2nd Contaminant in Tank Spill
FRESH & EASY: Court Extends Plan Filing Deadline to April 1
FRESH & EASY: Has Until Feb. 28 to Decide on Unexpired Leases
FRIENDFINDER NETWORKS: SSG Served as Investment Banker
GANNETT INC: Moody's Hikes Rating on Unsec. Notes Due 2027 to Ba1
GATEWAY CLUB: Case Summary & 20 Largest Unsecured Creditors
GLENDALE RANCH: Case Summary & 20 Largest Unsecured Creditors
GMG CAPITAL: Court Denies Motion to Extend Plan Filing Period
GMX RESOURCES: Looper Reed Firm Changes Name
GORDON PROPERTIES: Has OK to Borrow Up to $500,000 From Owners
GORDON PROPERTIES: Court OKs Settlement Agreement With Stites
GORDON PROPERTIES: Appointment of Stephen Leach as Examiner Denied
HAMPTON LAKE: Gets Chapter 11 Plan Confirmed
HEALTH MANAGEMENT: Fitch Withdraws 'BB+' Rating on 2016 Notes
HIBU INC: Seeks U.S. Recognition of UK Restructuring
HOUSTON REGIONAL: Creditors Want Termination of Exclusivity
INNKEEPERS USA: Hotel Portfolio From Chatham, Cerberus for Sale
INTERNATIONAL FOREIGN: Gets Court OK to Hire Logan & Company
iQoR US: Moody's Affirms 'B3' CFR & Rates New $730MM Debt 'B2'
IRISH RESTAURANTS: Sec. 341 Creditors Meeting Continued to Feb. 6
IXIA: Nasdaq Accepts Listing Compliance Plan
JAMES CRYSTAL: Case Summary & Largest Unsecured Creditors
JEVIC TRANSPORTATION: Challenge to Ch. 11 Deal Gets Booted
JOHN SHART: Fraud Can't Be Imputed to Spouse
LAFAYETTE YARD: Panel, UST & Wells Fargo Balk at Retention Plan
LEARFIELD COMMUNICATIONS: Add-On Loans No Impact on Moody's CFR
LEHMAN BROTHERS: LBI Trustee's Deal With BP 399 Approved
LEHMAN BROTHERS: LBI Trustee Seeks Disallowance of Cornell Claim
LEHMAN BROTHERS: Court Disallows $543-Mil. in Claims
LEHMAN BROTHERS: LBI Trustee Wants to Disallow $999-Mil. Claims
LEHMAN BROTHERS: Former Adviser Allowed to Keep $1.8MM Bonus
LEHMAN BROTHERS: Court Drops Smith Rocke Suit vs. Venezuela
LILY GROUP: Committee Defends Bid to Limit Credit Bidding
LOEHMANN'S HOLDINGS: Clear Thinking's Diercks Okayed as CRO
LOEHMANN'S HOLDINGS: Court Approves Stroock & Stroock as Counsel
LOEHMANN'S HOLDINGS: Court Okays Epiq as Claims Agent
LOEHMANN'S HOLDINGS: Deadline to File Schedules Moved to Feb. 12
LIBERTY HARBOR: SWJ Objects to Plan, Hearing Moved to March 4
M.A.R. REALTY: Court Temporarily Bars Use of Cash Collateral
M.A.R. REALTY: Banco Popular Requests Relief From Automatic Stay
MJC AMERICA: May Use EWB Cash Collateral Through April 30
MONTREAL MAINE: Derailment Victims' Families File Payment Plan
MOONLIGHT APARTMENTS: Files for Chapter 11 in Kansas City
NORTH AMERICAN PALLADIUM: Obtains Waivers; Initial Default Cured
NORTH TEXAS BANCSHARES: Claims Bar Date Set for Feb. 17
NORTH LAS VEGAS, NV: Ruling Adds to City's Financial Woes
PARADE PLACE: 75 125th Holdings Dismissed From Lawsuit
PARSLEY ENERGY: Moody's Assigns 'Caa1' CFR; Outlook Positive
PARSLEY ENERGY: S&P Assigns 'CCC+' CCR & Rates $325MM Notes 'CCC+'
POLYMER GROUP: Moody's Places B1 CFR on Review For Downgrade
PROSPECT SQUARE: Files for Chapter 11 in Denver
PTM TECHNOLOGIES: 22nd Century to Auction Equipment in February
REFCO INC: Jan. 30 Oral Argument in Suit Against Cantor Fitzgerald
RESIDENTIAL CAPITAL: Jackson's $100MM Unsecured Claim Expunged
RESERVOIR EXPLORATION: Feb. 18 Confirmation Hearing Set
RHYTHM AND HUES: Liquidating Plan Declared Effective Dec. 30
ROSEVILLE SENIOR: Has Court's Nod to Hire Friedman as Accountant
ROSEVILLE SENIOR LIVING: Plan Filing Period Extended to May 25
SCOVILL FASTENERS: Accord in Fasteners Antitrust MDL Has Final OK
SEARS CANADA: To Cut 624 Staff as It Simplifies Labor Structure
SEDGWICK CLAIMS: S&P Puts 'B' ICR on CreditWatch Negative
SEETARAM LLC: Case Summary & 10 Largest Unsecured Creditors
SEGA BIOFUELS: Sobios Objects to $5.5MM Financing Request
SERVICEMASTER COMPANY: Moody's Confirms B3 CFR; Outlook Negative
SFX ENTERTAINMENT: S&P Assigns Prelim. 'B-' CCR; Outlook Negative
SHELBOURNE NORTH: Chicago Spire Developer Seeks Relief from Suits
SOTHEBY'S: Moody's Affirms 'Ba2' CFR; Outlook Stable
SOTHEBY'S: S&P Lowers CCR to 'BB' Following Capital Allocation
SPECIALTY PRODUCTS: PI Committee & FCR Further Finetune Plan
SPIG INDUSTRY: Copeland Law Okayed as Counsel
STAR DYNAMICS: Wants to Extend Loan Maturity Date to March 31
STAR DYNAMICS: Claims Bar Date Set for March 16
STAR DYNAMICS: Files Amended List 20 Top Unsecured Creditors
SYNERGY BRANDS: Auditor Can't Escape Suit Over $1-Bil. Fraud
THELEN LLP: Judge Approves Trustee's Deals With 3 Ex-Partners
VILLAGE GREEN: Fannie Mae Has Partial Victory in Plan Appeal
W.R. GRACE: Wins Approval to Enter Into Exit Financing Commitment
W.R. GRACE: Wins Approval of Deal With Bank Lenders
W.R. GRACE: Payments to OCPs for 4th Quarter 2013
W.R. GRACE: Future Claimants' Representative Files Disclosures
W.R. GRACE: Richards Layton Supplements OCP Disclosure
WARREN RESOURCES: S&P Withdraws 'B-' Corporate Credit Rating
WATERSCAPE RESORT: Court Quashes Assas Subpoena
WATERSTONE AT PANAMA: Secured Lender Negotiates Claim Under Plan
WELLS ENTERPRISES: S&P Revises Outlook to Neg. & Affirms 'B+' CCR
WENTWOOD BAYTOWN: Court Closes Chapter 11 Reorganization Case
WEST ISLE: In Default of CSE Requirements; Trading Halted
WESTERN CAPITAL: Court Approves Hiring of Hatch Ray as Counsel
WILLIAM GREGG: Continuance of Stay Conditioned on House Repairs
WILLOW CREEK: Files List of 20 Largest Unsecured Creditors
WILLOW CREEK: Files Schedules of Assets and Liabilities
XTREME POWER: Proposes March 31 Auction for Assets
XTREME POWER: Has Interim Authority to Obtain $1.4MM DIP Loans
XTREME POWER: Inks Stipulation with First Wind
XTREME POWER: Has Interim Authority to Use SVB Collateral
XTREME POWER: Employs Jordan Hyden as Bankruptcy Counsel
YRC WORLDWIDE: S&P Raises CCR to 'CCC+', Off Negative Watch
* Commercial Bankruptcies Plunged in 2013, New Report Shows
* Right to Choose Atty Key as Fallen Firms Seek Fees in NY
* Banks Aid U.S. Forex Probe, Fulfilling Libor Accords
* Colleague of SAC Leader Was Not Alerted to Trades
* Payday Lender Agrees to Fine, Refunds
* Dan Stewart Joins Patton Boggs' Bankruptcy & Restructuring Team
* Greenberg Glusker Launches New Blog on Bankruptcy Issues
* BOOK REVIEW: Jacob Fugger the Rich: Merchant and Banker of
Augsburg, 1459-1525
*********
1016 WEST HOLLYWOOD: Case Summary & 4 Unsecured Creditors
---------------------------------------------------------
Debtor: 1016 West Hollywood, LLC
1016 West Hollywood Avenue
Chicago, IL 60660-4501
Case No.: 14-02696
Chapter 11 Petition Date: January 29, 2014
Court: United States Bankruptcy Court
Northern District of Illinois (Chicago)
Judge: Hon. Jacqueline P. Cox
Debtor's Counsel: David J. Fischer, Esq.
EDWARDS WILDMAN PALMER LLP
225 W. Wacker Drive
Chicago, IL 60606
Tel: 312-201-2000
Fax: 312-201-2555
Email: dfischer@edwardswildman.com
- and -
Phillip W. Nelson, Esq.
EDWARDS WILDMAN PALMER LLP
225 West Wacker Drive
Chicago, IL 60606
Tel: 312-201-2575
Fax: 855-587-1388
Email: pnelson@edwardswildman.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Leon Petcov, manager.
A list of the Debtor's four largest unsecured creditors is
available for free at http://bankrupt.com/misc/ilnb14-2696.pdf
AB DAC INC: Foreclosure Auction Set for Feb. 28
-----------------------------------------------
Pursuant to judgment of foreclosure and sale dated Jan. 6, 2014,
William F. MacKey, Jr., Esq., as referee, will sell at public
auction in Courtroom #25 on Feb. 28, 2014, at 10:00 a.m. at the
Queens County General Courthouse, 88-11 Sutphin Blvd., Jamaica, NY
prem. k/a Block 12178, Lot 3. The sale is subject to terms and
conditions of filed judgment and terms of sale.
The judgment was entered in the case, NYCTL 1998-2 TRUST AND THE
BANK OF NEW YORK MELLON, AS COLLATERAL AGENT AND CUSTODIAN FOR
NYCTL 1998-2 TRUST, Pltf. vs. AB DAC, INC., et al, Defts. In dex
#14343/2013.
The plaintiffs are represented by:
William F. MacKey, Jr., Esq.
LEVY & LEVY
12 Tulip Dr.
Great Neck, NY
AFA INVESTMENTS: Court Sets March 5 Combined Plan Hearing
---------------------------------------------------------
Judge Mary Walrath approved the Disclosure Statement explaining
the Chapter 11 Plan of AFA Investments Inc., et al., on a
preliminary basis in connection with the solicitation of votes to
accept or reject the Plan, subject to final approval at a Combined
Hearing.
In a Jan. 16, 2014 order, the judge authorized the Debtors to make
conforming changes, corrections and other non-substantive
revisions to the Disclosure Statement and to use the Disclosure
Statement in connection with the solicitation of votes.
Accordingly, the Debtors filed with the Court on Jan. 18, a
version of the Disclosure Statement, with a correction that the
plan voting deadline is 5:00 p.m. on Feb. 21, 2014. A full-text
copy of this version of the Disclosure Statement is available for
free at http://bankrupt.com/misc/AFAINVESTMENT_dsjan17.PDF
A Combined Hearing will be held before the Delaware Bankruptcy
Court on March 5, 2014, at 2:00 p.m., Eastern Time. Objections,
if any, must be in writing and be filed with the Court no later
than Feb. 21.
As previously reported by The Troubled Company Reporter, the Plan
aims to facilitate the continued liquidation and distribution of
the Debtors' remaining assets and the wind-down of their estates,
consistent with a global settlement among the Debtors and its
major stakeholders. The settlement provides that the second lien
lenders will be allowed a claim for approximately $70 million,
among other things.
About AFA Foods
King of Prussia, Pennsylvania-based AFA Foods Inc. was one of the
largest processors of ground beef products in the United States.
AFA had seven facilities capable of producing 800 million pound of
ground beef annually. Revenue in 2011 was $958 million.
Yucaipa Cos. acquired the business in 2008 and currently owns 92%
of the common stock and all of the preferred stock.
AFA Foods, AFA Investment Inc. and other affiliates filed for
Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-11127) on
April 2, 2012, after recent changes in the market for its ground
beef products and the impact of negative media coverage related to
boneless lean beef trimmings (BLBT) affected sales.
Judge Mary Walrath presides over the case. Laura Davis Jones,
Esq., Timothy P. Cairns, Esq., and Peter J. Keane, Esq., at
Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware; Tobias
S. Keller, Esq., at Jones Day, in San Francisco; and Jeffrey B.
Ellman, Esq., and Brett J. Berlin, Esq., at Jones Day, in Atlanta,
Georgia, represent the Debtors. FTI Consulting Inc. serves as the
Debtors' financial advisors and Imperial Capital LLC serves as
marketing consultants. Kurtzman Carson Consultants LLC serves as
noticing and claims agent.
As of Feb. 29, 2012, the Debtors' books and records on a
consolidated basis, reflected approximately $219 million in assets
and $197 million in liabilities. AFA Foods, Inc., disclosed
$615,859,574 in assets and $544,499,689 in liabilities as of the
Petition Date.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed seven
members to the official committee of unsecured creditors in the
Debtors' cases. The Committee has obtained approval to hire
McDonald Hopkins LLC as lead counsel and Potter Anderson & Corroon
LLP serves as co-counsel. The Committee also obtained approval to
retain J.H. Cohn LLP as its financial advisor.
AFA, in its Chapter 11 case, sold plants and paid off the first-
lien lenders and the loan financing the Chapter 11 effort.
Remaining assets are $14 million cash and the right to file
lawsuits.
General Electric Capital Corp. and Bank of America Corp. provided
about $60 million in DIP financing. The loan was paid off in
July 2012.
In October 2012, the Bankruptcy Court denied a settlement that
would have released Yucaipa Cos., the owner and junior lender to
AFA Foods, from claims and lawsuits the creditors might otherwise
bring, in exchange for cash to pay unsecured creditors' claims
under a liquidating Chapter 11 plan. Under the deal, Yucaipa
would receive $11.2 million from the $14 million, with the
remainder earmarked for unsecured creditors. Asset recoveries
above $14 million would be split with Yucaipa receiving 90% and
creditors 10%. Proceeds from lawsuits would be divided roughly
50-50.
ALLIED SECURITY: Moody's Cuts CFR to B2 & Rates 1st Lien Debt B1
----------------------------------------------------------------
Moody's Investors Service has lowered the ratings of security
services provider Allied Security Holdings LLC ("Allied"),
Corporate Family Rating ("CFR") to B2 from B1, and changed the
outlook to negative from stable. At the same time, Moody's has
assigned a B1 rating to the company's proposed senior secured
first lien credit facilities, and a Caa1 rating to its proposed
second lien term loans. The rating actions are in consideration of
increased leverage that will result from the company's planned use
of incremental debt from these transactions to fund a distribution
to its shareholders, as well as to finance a sizeable acquisition.
Ratings and their outlooks are subject to review of final
transaction documentation.
Downgrades:
Issuer: Allied Security Holdings LLC
Probability of Default Rating, Downgraded to B2-PD from B1-PD
Corporate Family Rating, Downgraded to B2 from B1
Assignments:
Issuer: Allied Security Holdings LLC
US$76M Senior Secured First Lien Revolving Credit Facility,
Assigned B1, LGD3, 32 %
US$620M Senior Secured First Lien Term Loan, Assigned B1, LGD3, 32
%
US$220M Senior Secured First Lien Delayed Draw Term Loan, Assigned
B1, LGD3, 32 %
US$265M Senior Secured Second Lien Term Loan, Assigned Caa1, LGD5,
85 %
US$100M Senior Secured Second Lien Delayed Draw Term Loan,
Assigned Caa1, LGD5, 85 %
Outlook Actions:
Issuer: Allied Security Holdings LLC
Outlook, Changed To Negative From Stable
On January 29, 2014, Allied announced that it plans to issue a
senior secured first lien credit facility, comprising a $620
million term loan due 2021 ($30 million of which will be used as
restricted cash to collateralize a synthetic letter of credit
facility) and a $76 million revolving credit that expires in 2019,
as well as a $265 million senior secured second lien term loan due
2021. Proceeds from this offering, along with use of cash
reserves, will be used to repay the company's existing first and
second lien debt, to fund a $222 million distribution to
shareholders (The Blackstone Group), as well as for transaction
fees. The revolver will be undrawn on close. The first and second
lien credit facilities will also include $220 million and $100
million delayed draw term loan facilities, respectively. The
company announced that they intend to use the incremental $320
million raised by the delayed draw facilities to fund the
acquisition of a competitor company, not yet publicly named,
shortly after the refinancing transactions.
Ratings Rationale
Moody's estimates that Allied's planned dividend recap will
materially increase leverage. On close, Allied would undertake an
estimated 25% debt increase to fund a sizeable shareholder
distribution. Debt to EBITDA, which at 5.3 times for the LTM
September 2013 period was high for the B1 CFR prior to this
transaction, will increase to over 6.5 times with the additional
$183 million in debt. Such leverage maps closely to B3-rated
issuers. "Moreover, we view the use of the increased debt to fund
a $222 million distribution to its private equity shareholders as
a continued and accelerated employment of an aggressive financial
policy. The contemplated distribution would represent the largest
such return to Blackstone since its acquisition in 2008, and
occurring within 15 months of a previous debt-financed
distribution ($125 million in November 2012). This illustrates a
willingness on the part of the company to pursue such shareholder
distribution initiatives frequently, and implies an additional
constraint on rapid and permanent deleveraging," said Moody's.
With the subsequent use of the delayed draw term loans to fund the
acquisition, Allied will compound the leveraging impact of the
dividend recap with the increased risk and additional leverage
associated with a sizeable debt-financed acquisition. The $320
million of delayed draw term loans that will be used to fund this
acquisition will represent a further 34% increase over the total
debt resulting from the dividend recap alone. "While we generally
perceive the contemplated acquisition as a logical acquisition
candidate that could eventually contribute operating income that
is adequate to support this investment, near term earnings
prospects are uncertain due to substantial integration hurdles
that must be addressed. We estimate that the acquired company's
earnings are minimal, and pro forma Debt to EBITDA on close would
be in excess of 8 times," Moody's said. However, Moody's
recognizes that Allied could realize substantial costs savings
over a relatively short period after close, primarily by
eliminating much of the overhead costs that had been associated
with the acquired company's current ownership. Assuming Allied's
near term cost reduction targets and operating plan can be met,
Moody's estimates that Allied could achieve pro forma leverage in
the low-6 times range in 2014, with the ability to further de-
lever thereafter. In addition, Moody's notes that these
transactions will have a less dramatic impact on cash flow, as
interest expense is only expected to increase modestly in the
current rate environment, with only a minor impact on cash flow.
Moreover, Allied's track record of steady revenue growth through
the industry cycle at stable, albeit modest, operating margins (4-
5%), along with its ability to consistently generate positive free
cash flow to support debt service are important factors that
support the ratings at the B2 level. Nonetheless, until all
synergies that the company identified are realized, Moody's
believe that the elevated leverage that ensues from these
transactions will remain a persistent constraint on the ratings.
The negative ratings outlook takes into account risks associated
with the acquisition of a company of this size, such as unexpected
integration costs (e.g. higher implementation costs or delays in
realizing cost reductions) or commercial disruption (e.g. loss of
customers). As such, this not only creates uncertainty surrounding
company's ability to quickly de-leverage, but also suggest a
higher likelihood that company's liquidity could be negatively
impacted over the near term. Moody's believe that, should the
company encounter a higher than expected cost structure during the
integration phase, free cash flow could become negative for a
short period. As such, Moody's believe that availability under
Allied's liquidity facility could be drawn upon over the near term
to cover potential cash short falls.
Ratings could be lowered if the company encounters difficulty
meeting revenue growth targets or faces deteriorating operating
margins, resulting in a weakening in liquidity due to negative
free cash flow generation. Ratings could also be lowered if Allied
cannot achieve cost synergies from its acquisition as planned. In
addition, any material shareholder return initiative or another
sizeable acquisition over the near term could result in a
downgrade. Prolonged weak credit metrics, such as Debt to EBITDA
that remains above 6.5 times or Retained Cash to Debt of under 5%,
could also prompt lower rating consideration.
While an upgrade is unlikely in the near term, the ratings or
outlook could be raised if Allied can generate sustainably
positive free cash flow that is employed to substantially repay
debt. Sustaining metrics such as Debt to EBITDA at below 5 times
and Retained Cash Flow to Debt in excess of 10% could support a
higher rating. An upgrade likely would require a commitment to
more conservative long-term financial policies.
Allied Security Holdings LLC ("Allied") is a leading provider of
security services in the US.
The principal methodology used in this rating was Global Business
& Consumer Service Industry Rating Methodology published in
October 2010. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
AMERICAN AIRLINES: Southwest, JetBlue Win Most of Reagan Slots
--------------------------------------------------------------
Jack Nicas, writing for The Wall Street Journal, reported that
Southwest Airlines Co. and JetBlue Airways Corp. will soon be much
bigger players at Reagan National Airport after they won most of
the slots that American Airlines Group Inc. is ceding there in its
antitrust settlement with the government.
According to the report, the winning bids bode well for fliers in
cities such as Chicago and Atlanta and leisure destinations in
Florida, as the two airlines are likely to add flights and lower
fares on routes to Reagan, the closest airport to downtown
Washington, D.C.
But travelers in smaller cities may not be so lucky, the report
said. As part of the divestment, American is eliminating nonstop
service between Reagan and more than a dozen small cities, such as
Islip, N.Y., Little Rock, Ark., and Wilmington, N.C., and
Southwest and JetBlue are unlikely to fill the void, industry
analysts said.
Many of the cuts are to cities with large military populations
that frequent the nonstop service to Reagan, such as Augusta, Ga.,
Fort Walton Beach, Fla., and Jacksonville, N.C., the report
pointed out.
"It didn't really matter to me" who won the slots, said Bradley
Whited, the airport director in Fayetteville, N.C., home to Fort
Bragg, one of the largest U.S. Army bases, the report cited. "I
was disappointed the government negotiated those slots away from
the combined airline because those low-fare carriers aren't
interested in small communities like us."
About American Airlines
AMR Corp. and its subsidiaries including American Airlines 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. It was the third largest airline in the United States
at the time of the bankruptcy filing.
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.
AMR stepped out of Chapter 11 protection after its $17 billion
merger with US Airways was formally completed on Dec. 9, 2013.
ALTEGRITY INC: Debt Maturities May Blow The Whistle on Firm
-----------------------------------------------------------
Lisa Allen, writing for The Deal, reported that Altegrity Inc.,
the private equity-owned background check company that vetted
National Security Agency whistle-blower Edward Snowden before his
rise to international prominence, faces a 2015 debt maturity wall
so steep that sources predict fates ranging from a
recapitalization to a bankruptcy filing.
According to the report, Altegrity's debt is trading at a
discount, but the Department of Justice's fraud allegations
against an Altegrity subsidiary have put a damper on some debt
investors' enthusiasm.
"You could really get your balls blown off in this thing," one
distressed hedge fund manager said, the report cited. "We love
risk, but these risks are too undefinable."
The fund manager, who requested anonymity, is concerned that the
federal government may impose highly punitive monetary damages on
Falls Church, Va.-based Altegrity or otherwise impede its ability
to do business, the report related.
In a complaint filed on Jan. 22 in the U.S. District Court for the
Middle District of Alabama, Northern Division, in Montgomery, the
DOJ suggested penalties of $5,500 to $11,000 per violation of the
firm's quality review protocol for 665,000 cases, or about 40% of
the cases Altegrity subsidiary, US Investigations Services Inc.,
has handled, the report further related.
* * *
Standard & Poor's Ratings Services on Jan. 30 lowered the
corporate credit rating on Falls Church, Va.-based Altegrity Inc.
to 'CCC-' from 'CCC+'. The outlook is negative.
AMERICAN REALTY: 50% Recovery for Gen. Unsecured Claims Under Plan
------------------------------------------------------------------
American Realty Trust, Inc., filed with the U.S. Bankruptcy Court
for the Northern District of Texas a Plan of Liquidation and
Disclosure Statement.
The Plan contemplates the creation of a Liquidating Trust to
liquidate certain Liquidating Trust Assets and distribute any
remaining funds (after payment of certain Allowed Claims), in
accordance with the Plan, to holders of Series A Liquidating Trust
Interests and Series B Liquidating Trust Interests. Under the
Plan, Claims against the Debtor's Estate are classified as:
Class Class Description Status
----- ----------------- ------
Class 1 Secured Claims of Taxing Authorities Unimpaired
Class 2 Intentionally Omitted N/A
Class 3 Unsecured Claims of Atlantic Parties Impaired
Class 4 Unsecured Claims Related to Guarantys Impaired
Class 5 General Unsecured Claims Impaired
Class 6 Subordinated Claims Impaired
Class 7 Equity Interests Impaired
Under the Plan, certain holders of Claims (generally, Allowed
Administrative Claims, Allowed Priority Claims and Allowed Class 1
Claims) will be paid in full by the Liquidating Trust from the ARI
(American Realty Investors, Inc.) Settlement Proceeds.
Holders of Allowed Class 5 Claims will be paid 50% of their
Allowed Claims from the ARI Settlement Proceeds.
Holders of Allowed Class 3 Claims will receive their Pro Holders
of Allowed Class 3 Claims will receive their Pro Rata share of (a)
Series A Liquidating Trust Interests and (b) distributions of
Available Cash from the Series A Distribution Reserve on account
of such Liquidating Trust Interests in accordance with the terms
of the Plan if and when available for distribution. The Series A
Distribution Reserve will be funded solely with the Series A
Liquidating Trust Interest holders' allocable share (75%, after
the Series B Distribution Reserve is funded in the amount of the
ARI Settlement Proceeds and after payment (or reservation for
payment of certain claims entitled to priority and trust expenses)
of Liquidating Cash Assets, if any.
Holders of Class 6 and 7 Claims and Interests will not be entitled
to any recovery.
The Plan sets forth a settlement of certain Causes of Action the
Debtor may have against its former parent, American Realty
Investors, Inc. (ARI) and certain affiliated entities. Pursuant
to the settlement proposed, ARI will pay the Debtor, on or before
the Effective Date, $5,000,000 to obtain a release of any and all
claims and Causes of Action held by the Debtor or the Liquidating
Trust against ARI. In addition to the ARI Settlement Proceeds,
ARI agrees to enter into a contract with Bank of New York Mellon
whereby if GC Merchandise Mart, LLC defaults on the GCMM Note, ARI
will purchase the GCMM Note in accordance with the terms of the
ARI Denver Mart Contract. Furthermore, ARI shall execute the EQK
Put Contract whereby it agrees to purchase the EQK Preferred
Shares for the sum of $10,000,000 at a date five years from the
Effective Date. In addition to the releases, ARI will receive all
assets of the Debtor not included in the Liquidating Trust Assets
and Series B Liquidating Trust Interests.
A full-text copy of the Disclosure Statement, dated Jan. 1, 2014,
is available for free at:
http://bankrupt.com/misc/AMERICANREALTYds.pdf
About American Realty
Dallas, Texas-based American Realty Trust, Inc., is a subsidiary
of the real estate giant American Realty Investors Inc. Coping
with a $73 million legal judgment from an apartment purchase that
collapsed more than a decade ago, American Realty Trust, Inc.,
filed for Chapter 11 protection (Bankr. D. Nev. Case No. 12-10883)
in Las Vegas on Jan. 26, 2012. The case was later dismissed on
Aug. 1, 2012, by Judge Mike K. Nakagawa.
Creditors David M. Clapper, Atlantic XIII, LLC, and Atlantic
Midwest, LLC -- Clapper Parties -- sought the dismissal, citing,
among other things, the Debtor has been stripped off of its assets
prepetition and its ownership structure changed 10 days before the
bankruptcy filing in an admitted effort to avoid disclosures to
the Securities and Exchange Commission.
American Realty Trust then filed for Chapter 11 protection (Bankr.
N.D. Ga. Case No. 12-71453) on Aug. 29, 2012, with Bankruptcy
Judge Barbara Ellis-Monro presiding over the case. The case was
later transferred from Atlanta to Dallas (Bankr. N.D. Tex. Case
No. 13-30891) effective Feb. 22, 2013, at the behest of the
Clapper Parties. The Clapper Parties, who won a $72 million
judgment against the Debtor, again sought to move the case to
Forth Worth and reassign the case to Judge Russell Nelms on
grounds that Judge Nelms has experience with the parties and the
issues raised in the dismissal motion filed by the Atlantic
Parties.
The Debtor has scheduled assets totaling $79,954,551, comprised
of (i) real property valued at $87,884; (ii) equity interests in
affiliated entities of an unknown value; and (iii) litigation
claims valued at $79,866,667. The Debtor has scheduled
liabilities totaling $85,347,587.95, comprised of: (i) $10,437.73
in unsecured priority tax claims; and (ii) unsecured non-priority
claims of $85,336,886.61 (of which at least $77,164,701.14 are
contested litigation claims against the Debtor).
The Bankruptcy Court authorized the Debtor to employ Gerrit M.
Pronske, Esq., and Pronske & Patel, P.C. as counsel.
AMERICAN REALTY: Court to Consider Plan Outline on Feb. 11
----------------------------------------------------------
Dallas Judge Hale is set to convene a hearing on Feb. 11, 2014, at
1:30 p.m. to consider approval of the Disclosure Statement
describing the Plan of Liquidation filed by American Realty Trust,
Inc.
The Plan contemplates the creation of a liquidating trust, a 50%
recovery on general unsecured claims. It also embodies a
settlement of certain causes of action the Debtor has against its
former parent, American Realty Investors, Inc. (ARI) and certain
affiliated entities.
About American Realty
Dallas, Texas-based American Realty Trust, Inc., is a subsidiary
of the real estate giant American Realty Investors Inc. Coping
with a $73 million legal judgment from an apartment purchase that
collapsed more than a decade ago, American Realty Trust, Inc.,
filed for Chapter 11 protection (Bankr. D. Nev. Case No. 12-10883)
in Las Vegas on Jan. 26, 2012. The case was later dismissed on
Aug. 1, 2012, by Judge Mike K. Nakagawa.
Creditors David M. Clapper, Atlantic XIII, LLC, and Atlantic
Midwest, LLC -- Clapper Parties -- sought the dismissal, citing,
among other things, the Debtor has been stripped off of its assets
prepetition and its ownership structure changed 10 days before the
bankruptcy filing in an admitted effort to avoid disclosures to
the Securities and Exchange Commission.
American Realty Trust then filed for Chapter 11 protection (Bankr.
N.D. Ga. Case No. 12-71453) on Aug. 29, 2012, with Bankruptcy
Judge Barbara Ellis-Monro presiding over the case. The case was
later transferred from Atlanta to Dallas (Bankr. N.D. Tex. Case
No. 13-30891) effective Feb. 22, 2013, at the behest of the
Clapper Parties. The Clapper Parties, who won a $72 million
judgment against the Debtor, again sought to move the case to
Forth Worth and reassign the case to Judge Russell Nelms on
grounds that Judge Nelms has experience with the parties and the
issues raised in the dismissal motion filed by the Atlantic
Parties.
The Debtor has scheduled assets totaling $79,954,551, comprised
of (i) real property valued at $87,884; (ii) equity interests in
affiliated entities of an unknown value; and (iii) litigation
claims valued at $79,866,667. The Debtor has scheduled
liabilities totaling $85,347,587.95, comprised of: (i) $10,437.73
in unsecured priority tax claims; and (ii) unsecured non-priority
claims of $85,336,886.61 (of which at least $77,164,701.14 are
contested litigation claims against the Debtor).
The Bankruptcy Court authorized the Debtor to employ Gerrit M.
Pronske, Esq., and Pronske & Patel, P.C. as counsel.
AMERICAN TIRE: Hercules Tire Deal No Impact on Moody's B2 Rating
----------------------------------------------------------------
Moody's Investors Service said that American Tire Holdings, Inc.'s
("ATD", B2 stable, SGL-2) announcement that it had agreed to
acquire Hercules Tire Holdings LLC for $310 million plus up to $10
million of earnout payments, subject to post-closing adjustments,
is a credit positive over the long term but has no impact on ATD's
ratings or outlook.
Ratings Rationale
The principal methodology used in rating American Tire was the
Global Distribution & Supply Chain Services Industry Methodology
published in November 2011. Other methodologies used include Loss
Given Default for Speculative-Grade Non-Financial Companies in the
U.S., Canada and EMEA published in June 2009.
American Tire Distributors, Inc., headquartered in Huntersville,
NC, is a wholesale distributor of tires (over 95% of sales),
custom wheels, and related tools. It operates over 130
distribution centers and generated approximately $3.7 billion in
revenues in the twelve months ended September 28, 2013. Private
equity firm TPG Capital, L.P. (TPG) has owned the company since
May 2010.
ANAREN INC: Moody's Assigns B3 CFR & Rates $165MM Secured Debt B2
-----------------------------------------------------------------
Moody's Investors Service assigned ratings to the debt of Anaren,
Inc. ("Anaren") -- Corporate Family Rating ("CFR") at B3,
Probability of Default at B3-PD, $165 million Senior Secured 1st
Lien debt at B2, and $70 million Senior Secured 2nd Lien debt at
Caa2. The proceeds of the financing will be used to fund Veritas
Capital's acquisition of Anaren for $28.00 per share in cash. The
rating outlook is stable.
Rating Rationale
The B3 Corporate Family Rating ("CFR") reflects Anaren's high
leverage, which will exceed 7x EBITDA (latest twelve months
December 2013, Moody's adjusted) proforma for the new debt. This
leverage is very high given Anaren's small scale relative to
similarly-rated issuers. In both of Anaren's segments, the direct
competition includes much larger, diversified manufacturers with
considerable financial resources and research and development
capabilities. Due to its small scale and large exposure to the
declining US Defense industry, Anaren has a substantial customer
concentration, with three customers accounting for over one third
of revenues, which places Anaren in a weak negotiating position.
Moody's views the purchase price Veritas is paying of 2.3x
revenues (latest twelve months ended 12/31/2013) as rich.
Supporting the rating is Anaren's position as a sole-source
supplier of products comprising over 40% of Anaren's revenues and
the generally long life cycles of Anaren's defense industry
products, which are sold into systems that have production lives
of up to 20 years.
The stable outlook reflects our expectation that Anaren will
increase operating margins (Moody's adjusted) into the low to mid
teen percent and revenues will decline no more than the mid single
digits percent. Moody's expects that Anaren will gradually improve
leverage to below 6.5x EBITDA (Moody's adjusted) over the next
year to 18 months.
The rating could be downgraded if revenues decline by greater than
the mid single digits percent, if Moody's expects free cash flow
to remain negative, or if Anaren is not on-course to reduce
leverage to below the upper 6x EBITDA (Moody's adjusted). The
rating could be upgraded if Anaren's Space & Defense segment
generates revenue growth at least in the low single digits percent
and the Wireless segment generates revenue growth exceeding that
of its competitors, implying market share gains in both the
segments. Moreover, for an upgrade, Moody's would expect Anaren to
refrain from shareholder-friendly actions until leverage is
reduced below 5x EBITDA (Moody's adjusted) and FCF to debt
(Moody's adjusted) is above the mid single digits percent.
Assignments:
Issuer: Anaren, Inc.
Probability of Default Rating, Assigned B3-PD
Corporate Family Rating, Assigned B3
Senior Secured Bank Credit Facility, Assigned B2
Senior Secured Bank Credit Facility, Assigned B2
Senior Secured Bank Credit Facility, Assigned Caa2
Senior Secured Bank Credit Facility, Assigned a range of LGD3, 34%
Senior Secured Bank Credit Facility, Assigned a range of LGD3, 34%
Senior Secured Bank Credit Facility, Assigned a range of LGD5, 85%
Anaren, Inc., based in East Syracuse, New York, develops and
manufactures microelectronics and microwave components and
subsystems for wireless communications systems and space and
defense electronics markets. These components and subsystems are
used in various electronic systems, including wireless
telecommunications infrastructure and military radar applications.
The principal methodology used in this rating was Global
Semiconductor Industry Methodology published in December 2012.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
ANCESTRY.COM HOLDINGS: Moody's Affirms Caa1 Unsecured Debt Rating
-----------------------------------------------------------------
Moody's Investors Service has affirmed all ratings at Ancestry.com
Inc.'s ("Ancestry") and Ancestry.com Holdings LLC ("Holdings")
including Ancestry.com's Corporate Family Rating at B2 and
Probability of Default Rating at B2-PD. This action follows the
proposed $100 million upsizing to the Senior Unsecured PIK Notes
("Notes") issued by Holdings. The outlook is stable.
RATINGS RATIONALE
With the proposed $100 million of additional debt, Ancestry's
resulting financial leverage and other credit metrics will be weak
for the B2 rating level, with adjusted debt to EBITDA of about
6.4x. The rating could be downgraded if Ancestry fails to achieve
growth in EBITDA or increases debt such that Moody's believes debt
to EBITDA (Moody's adjusted) will be sustained above 6.5x.
Ratings Affirmed (and LGD assessment changes):
Ancestry.com Inc.
Corporate Family Rating: B2
Probability of Default Rating: B2-PD
Speculative Grade Liquidity Rating: SGL-2
Senior Secured Rating: Ba2 (LGD2, 20% from LGD2, 22%)
Senior Unsecured Rating: B3 (LGD4, 62% from LGD4, 68%)
Outlook: Stable
Ancestry.com Holdings LLC
Senior Unsecured Rating: Caa1 (to LGD5, 88% from LGD6, 90%)
Outlook: Stable
Ancestry.com, based in Provo, Utah, is the world's largest online
family history resource, including an extensive collection of over
11 billion digitized records that subscribers can use to research
and construct family trees.
The principal methodology used in this rating was Global Business
& Consumer Service Industry Rating Methodology published in
October 2010. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
ANCESTRY.COM HOLDINGS: S&P Keeps 'CCC+' Rating After $100MM Add-On
------------------------------------------------------------------
Standard & Poor's Ratings Services said its 'CCC+' issue-level
rating and '6' recovery rating on Ancestry.com Holdings LLC's
unsecured debt remain unchanged following the company's plan for a
$100 million add-on to its existing unsecured notes due 2018. The
'6' recovery rating on the debt indicates S&P's expectation for
negligible (0% to 10%) recovery for noteholders in the event of a
default.
The 'CCC+' issue-level rating is two notches lower than the 'B'
corporate credit rating on Ancestry.com. The company will use
proceeds from the add-on offering to fund dividend distributions
to its private equity owner. Debt leverage at the company is very
high. Pro forma for the debt issuance, adjusted debt leverage
increased to 7.1x (6.4x pro forma for deferred revenues that were
eliminated as part of the going-private transaction), from 6.5x
for the 12 months ended Sept. 30, 2013. S&P's calculation of
EBITDA does not add back content amortization, which S&P views as
an operating cost.
The rating outlook is stable, reflecting S&P's expectation that
Ancestry.com will generate discretionary cash flow but that debt
leverage will remain high (in excess of 5.5x) because of the
company's aggressive financial policy, as evidenced by the debt-
financed dividend.
RATINGS LIST
Ancestry.com Inc.
Ancestry.com Holdings LLC
Corporate Credit Rating B/Stable/--
Ratings Unchanged
Ancestry.com Holdings LLC
$400M* unsecured notes due 2018 CCC+
Recovery Rating 6
*Following $100M add-on.
ATARI INC: Plan Declared Effective in December
----------------------------------------------
The Joint Plan of Reorganization of Atari, Inc., et al., was
declared effective and deemed consummated as of Dec. 24, 2013.
The deadline for requests for payment of administrative claims was
last Jan. 24, 2014. Requests for payments of professional fees
were also due last Jan. 24, 2014. Objections to any Professional
Fee Claim are due no later than Feb. 14, 2014.
The Plan was confirmed on Dec. 5, 2013. As previously reported by
The Troubled Company Reporter, citing Bloomberg News, the Plan
promises a 25 percent recovery to unsecured creditors over two
years on claims totaling as much as $7 million. Unsecured
creditors are to receive an 8 percent distribution on the
effective date, an 8 percent distribution one year later, and
a final 9 percent distribution on the second anniversary of the
Plan.
About Atari
Atari -- http://www.atari.com/-- is a multi-platform, global
interactive entertainment and licensing company. Atari owns
and/or manages a portfolio of more than 200 games and franchises,
including world renowned brands like Asteroids(R), Centipede(R),
Missile Command(R), Pong(R), Test Drive(R), Backyard Sports(R),
and Rollercoaster Tycoon(R).
Atari Inc. and its U.S. affiliates filed for Chapter 11
bankruptcy (Bankr. S.D.N.Y. Lead Case No. 13-10176) on Jan. 21,
2013, to break away from their unprofitable French parent company
and secure independent capital.
A day after its American unit filed for Chapter 11 bankruptcy
protection, Paris-based Atari S.A. took a similar measure under
Book 6 of that country's commercial code. Atari S.A. said it
was filing for legal protection because its longtime backer
BlueBay has sought to sell its 29% stake and demanded repayment
by March 31 on a credit line of US$28 million that it cut off in
December.
On Feb. 15, 2013, the Court entered the order authorizing the
employment and retention of Hunton & Williams LLP as counsel to
the Debtors. On Feb. 5, 2013, the Debtors' board of directors
was reconstituted. The reconstituted board of directors elected
to retain alternate bankruptcy counsel. Hunton's retention as
the Debtors' counsel terminated on Feb. 6, 2013.
Ira S. Dizengoff, Esq., and Kristine G. Manoukian, Esq., at Akin
Gump Strauss Hauer & Feld LLP, in New York, N.Y.; and Scott L.
Alberino, Esq., at Akin Gump Strauss Hauer & Feld, LLP, in
Washington, D.C., represent the Debtors as counsel.
BMC Group is the claims and notice agent. Guy Davis and Susan
Roski at Protiviti Inc. serve as financial advisors.
Duff & Phelps Securities LLC serves as financial advisor to the
Official Committee of Unsecured Creditors. Cathy Hershcopf,
Esq., Jeffrey L. Cohen, Esq., and Robert B. Winning, Esq., at
Cooley LLP serve as the Committee's counsel.
Ken Coleman, Esq., and Jonathan Cho, Esq., at Allen & Overy LLP,
serve as counsel to Atari S.A.
ATLS ACQUISITION: Wants Plan Exclusivity Extended Through April
---------------------------------------------------------------
ATLS Acquisition, LLC, and its affiliated entities including
National Diabetic Medical Supply, LLC, and Liberty Medical Supply,
Inc., scheduled a hearing for Feb. 13, 2014 at 9:30 a.m., in
Bankruptcy Court in Wilmington, Delaware, on their request for
extension of the exclusive periods to file and solicit acceptances
of a chapter 11 plan of reorganization.
The Debtors are asking the Court to further extend (i) the period
within which only the Debtors may file a plan of reorganization as
set forth in section 1121(b)(2) of the Bankruptcy Code through and
including April 28, 2014, and (ii) the period within which only
the Debtors may solicit acceptances of a plan as set forth in
section 1121(c)(3), through and including July 22, 2014.
The Debtors said they have made tremendous progress to resolve the
complex issues affecting the chapter 11 cases, including:
-- Initiating an exit financing process which is on-going
and has resulted in multiple expressions of interest.
Specifically, the Debtors have executed nondisclosure
agreements with 17 parties and produced a confidential
information memorandum detailing the current situation and
financial overview. As of Jan. 10, 2014, the Debtors had
received preliminary term sheets from eight parties with
indication the a few more may be received in the coming
days. The term sheets are subject to customary business,
financial and legal due diligence which the Debtors intend
to address during the requested extension.
-- Refreshing the business plan to reflect operating
experience since the closing of the management buy-out
transaction in 2012;
-- Continuing to outperform the business plan and
identifying growth opportunities. The Debtors, their
management team, and their professionals have worked
diligently to stabilize operations, to maximize enterprise
value and to resolve the contingencies affecting the
Debtors' operations. As a result of its efforts, the
Debtors have been able to generate a cash balance in
excess of $55 million as of Dec. 31, 2013;
-- Engaging in significant negotiations with the Centers
for Medicare and Medicaid Services. Prior to the Petition
Date, CMS and the Debtors were engaged in an
administrative proceeding to determine the validity of a
large post-pay audit claim asserted by CMS against the
Debtors for audit years 2008, 2009 and 2010, and in
August, CMS filed a proof of claim in the amount of
$160 million. CMS's latest proposal was received on
Jan. 3, 2014 and the Debtors provided a counteroffer on
Jan. 10, 2014. Since the latest exchange of offers, the
Debtors and CMS have continued to discuss the remaining
issues and the Debtors are expecting a revised proposal
from CMS promptly;
-- Engaging in further discussions with Medco and exchanged
informal discovery around the resolution of the disputes
with Medco Health Solutions, Inc. The issues between the
Debtors and Medco include which entity has responsibility
for certain sales and use taxes incurred prior to the
closing of the MBO Transaction;
-- Instituting a process to quantify and resolve the sales
tax issues; and
-- Completing briefing with respect to summary judgment
motion on so-called Relator Claim and awaiting the
Court's decision. Three of the Debtors, Polymedica
Corporation, Liberty Healthcare Group, Inc., and Liberty
Medical Supply, Inc. were among the defendants in a
prepetition lawsuit brought by two plaintiffs (the
"Relators") captioned United States of America, ex. rel.
Lucas W. Matheny and Deborah Loveland v. Medco Health
Solutions, Inc., et al., United States District Court
for the Southern District of Florida, Case No. 08-14201-
CIV-Graham/Lynch.
Initially the Debtors endeavored to emerge from Chapter 11 in late
2013. However, given the complex nature of the myriad issues
impacting the reorganization efforts, the Debtors have taken more
time to resolve certain issues than originally anticipated. Given
the substantial progress made, however, the Debtors believe that
the extensions of the Exclusive Periods provide a realistic
timeframe for the Debtors to resolve the above issues, and file a
plan.
The Debtors' Exclusive Filing Period was slated to terminate on
Jan. 24, 2014. The Debtors are relying on Del. Bankr. L.R. 9006-2
to automatically extend the Exclusive Filing Period until the
Court acts on this Motion.
Objections to the extension request are due Jan. 31.
The Debtors are represented by:
Dennis A. Meloro, Esq.
GREENBERG TRAURIG, LLP
The Nemours Building
1007 North Orange Street, Suite 1200
Wilmington, DE 19801
Telephone: (302) 661-7000
Facsimile: (302) 661-7360
E-mail: melorod@gtlaw.com
- and -
Nancy A. Mitchell, Esq.
Matthew L. Hinker, Esq.
GREENBERG TRAURIG, LLP
MetLife Building
200 Park Avenue
New York, NY 10166
Telephone: (212) 801-9200
Facsimile: (212) 801-6400
E-mail: mitchelln@gtlaw.com
hinkerm@gtlaw.com
About Liberty Medical
Entities that own diabetics supply provider Liberty Medical led by
ATLS Acquisition, LLC, sought Chapter 11 protection (Bankr. D.
Del. Lead Case No. 13-10262) on Feb. 15, 2013, just less than
three months after a management buy-out and amid a notice by the
lender who financed the transaction that it's exercising an option
to acquire the business.
Liberty has been in business for 22 years serving the needs of
both type 1 and type 2 diabetic patients. Liberty is a mail order
provider of diabetes testing supplies. In addition to diabetes
testing supplies, the Debtors also sell insulin pumps and insulin
pump supplies, ostomy, catheter and CPAP supplies and operate a
large mail order pharmacy. Liberty operates in seven different
locations and has 1,684 employees.
Dennis A. Meloro, Esq., at Greenberg Traurig, LLP, serves as the
Debtor's counsel; Ernst & Young LLP to provide investment banking
advice; and Epiq Bankruptcy Solutions, LLC, as claims and noticing
agent for the Clerk of the Bankruptcy Court.
An official committee of unsecured creditors has been appointed in
the case and consists of LifeScan, Inc., Abbott Laboratories, and
Teva Pharmaceuticals USA, Inc. They are represented by Joseph H.
Huston Jr., Esq., Maria Aprile Sawczuk, Esq., and Camille C. Bent,
Esq., of Stevens & Lee P.C. as well as Bruce Buechler, Esq., S.
Jason Teele, Esq., and Nicole Stefanelli, Esq. of Lowenstein
Sandler LLP. The Committee has tapped Mesirow Financial
Consulting, LLC, as financial advisors.
AUTOMATED BUSINESS: PNC Agrees to Use of Cash Through Dec. 31
-------------------------------------------------------------
The Bankruptcy Court in Greenbelt, Maryland, on Jan. 8 entered a
final order authorizing Automated Business Power Inc., to use cash
collateral and provide adequate protection, based on an agreement
between the Debtor and PNC Bank, N.A.
The Debtor is granted the right to use cash collateral in the
ordinary course of the business in accordance with a budget
through the earlier of the occurrence of an event of default under
the Final Cash Collateral Order or 2:00 p.m. on Dec. 31, 2014.
PNC Bank, as lender and administrative agent, had objected to the
use of cash collateral but later withdrew the challenge. The
Final Cash Collateral Order provides that the Debtor and Holding
release any and all claims that they may have against PNC and the
lenders in consideration of the Agent's withdrawal of the
objection to the use of cash collateral.
As of the petition date, the Debtor owed PNC and the lenders
roughly $29.5 million under the Amended and Restated Credit
Agreement dated April 3, 2012. The other members of the lending
consortium are Tristate Bank, National Penn Bank, Sovereign Bank
now Santander Bank, and Citizens Bank of Pennsylvania.
Pursuant to the Final Cash Collateral Order, the Debtor may not
use the lenders' cash collateral to pay:
-- dividends or other payments or distributions on account
of any equity interests;
-- redemptions or repurchases or similar transactions of any
equity interests;
-- any payments of management, consulting or similar fees
or rents to Eyal Halevy or to any entities affiliated
with or owned by Halevy or by the Debtors, including
without limitation UQU General LLC and First Power Group
LLC;
-- any "subordinated debt" as that term is defined in the
Affiliate Subordination Agreement dated Nov. 20, 2008, by
and between the Administrative Agent and Halevy in his
capacity as the "Equity Affiliate" thereunder;
-- any payments on the Promissory Note and Personal
Guaranty dated Nov. 8, 2013, made by the Debtor and
Automated Business Power Holding Co., in favor of
Halevy; and
-- any payments outside of the budget approved by PNC.
The Debtor sought permission from PNC to make a (i) $180,000
distribution to Automated Business Power Holding Co. for
application to the ESOP Non-Recourse Promissory Note dated Oct.
24, 2008, made by Holding to the Automated Business Power Holding
Co. Employee Stock Ownership Trust and (ii) $20,495 payment to the
spouse of a deceased former employee for his ESOP shares.
PNC did not consent to the use of cash collateral to make the ESOP
payments.
The Final Cash Collateral Order also provides that the Debtor must
make payments to PNC:
on or before Jan. 28, 2014, of $100,000;
on or before Feb. 28, 2014, of $200,000;
on or before the 28th day of each month
beginning March 28, 2014, and continuing through
Dec. 28, 2014, of $500,000
on or before the 28th day of each month during the
Cash Collateral Period, all cash of the Debtor in
excess of $2.5 million, as calculated on the last day
of the preceding month;
on or before the 28th day of each month during the
Cash Collateral Period, a monthly interest payment for
the prior month, calculated at the non-default rate.
The Debtor will also reimburse the Agent and the Lenders for fees
and costs, including counsel and financial consultant fees, in
connection with the negotiation, documentation, and approval of
the Final Cash Colalteral Order, subject to a $10,000 cap.
About Automated Business Power
Military supplier Automated Business Power, Inc., and Automated
Business Power Holding Co filed their Chapter 11 petitions (Bankr.
D. Md. Case Nos. 13-27123 and 13-27125) on Oct. 8, 2013.
Automated Business Power has been engaged in the design and
production of advanced filed deployable uninterruptible power
supplies, AC-to-DC power supplier, DC-to-DC converters,
uninterruptible power systems, Power/Voice/Data cases, speakers,
speaker/voice systems and ancillary equipment tactical
transceivers, power amplifiers, SATCOM, and other communications
equipment.
The petitions were signed by Daniel Akman as president. The
Debtors estimated assets of at least $50 million and liabilities
of at least $10 million.
The Debtor is represented by Nelson C. Cohen, Esq., at Zuckerman
Spaeder LLP, in Washington, D.C.
PNC Bank is represented by:
James M. Smith, Esq.
Lisa Bittle Tancredi, Esq.
GEBHARDT & SMITH LLP
One South Street, Suite 2200
Baltimore, MD 21202-3281
E-mail: jsmit@gebsmith.com
ltancredi@gebmith.com
AUTOMATED BUSINESS: Halevy Objects to Releases Granted to PNC
-------------------------------------------------------------
Eyal Halevy, a creditor of Automated Business Power, Inc., is
asking the Bankruptcy Court in Greenbelt, Maryland, to reconsider
its Final Order Approving the Debtor's Use of Cash Collateral and
Providing Adequate Protection Therefor, solely with respect to the
blanket release granted to PNC Bank.
According to Halevy, "of paramount concern, and contrary to
necessary disclosure to the Court and creditors of such important
provisions, no information or description of the types and amounts
of potential claims against PNC is contained in the Final Order.
Moreover, no reference to the release or its effect is provided
either with the proposed Final Order or in an appropriate notice
of submission for consideration by creditors of the Court. Indeed,
it appears that the potential claims against PNC were not
disclosed to the Court at any time during the cash collateral
process."
Halevy believes that there may be substantial other claims which
the Debtors may have against PNC, including but not limited to the
very circumstances that resulted in the Debtors being required to
seek bankruptcy protection to defeat PNC's wrongful or bad faith
efforts to force the Debtors to cease business operations and
liquidate.
"As this case is still in its infancy, neither the Debtors nor
Halevy have had the opportunity to further a legitimate and
thorough investigation for remedies and/or causes of action with
regard to PNC. Such potential claims or remedies may constitute
valuable assets of these estates and the value of these potential
claims will likely far exceed the minimal consideration, if any,
granted by PNC for its demanded release. Indeed, the only
consideration granted by PNC was its consent for the Debtors to
use cash collateral to continue to operate and continue its
business operations. As a result, the release granted to PNC in
the Final Order should be stricken, or at a minimum deferred until
an investigation of possible claims and/or remedies against PNC
can be completed and disclosed to the Court and parties-in-
interest," Halevy said.
On Nov. 27, 2013, the Court granted, in part, and denied, in part,
the Debtor's "Motion for an Order (A) Authorizing the Debtor to
Obtain Post-Petition Financing and Granting Administrative Expense
Status Pursuant to 11 U.S.C. [Sections] 105 and 364(b); and (B)
Authorizing the Debtor to Enter Into the Loan Agreement with Eyal
Halevy." Specifically, the Court authorized the Debtor to borrow
up $500,000 in unsecured postpetition financing from Eyal Halevy
as provided in the Loan Agreement.
Halevy Loan incurs 7% interest rate per annum, payable monthly in
arrears. The loan must be repaid in full on or before Jan. 31,
2015. The loan proceeds may be used for general working capital
purposes.
The Court said the Loan made by Eyal Halevy to the Debtor will not
be entitled to administrative priority pursuant to 11 U.S.C. Sec.
364(c)(1) and any related provisions in the Loan Agreement will be
deleted before being executed by the Debtor. Eyal Halevy also is
not entitled to a release from the Debtor and any related
provisions in the Loan Agreement. Eyal Halevy Loan will be
subject to all provisions in the Affiliate Subordination
Agreement, dated Nov. 20, 2008, executed by and between PNC Bank,
National Association as agent and lender, and Eyal Halevy, and as
amended and/or modified by the Reaffirmation of Affiliate
Subordination Agreement, dated April 3, 2012, executed by and
between PNC, Eyal Halevy, the Debtor and Automated Business Power
Holding Co.
Halevy said in Court papers filed Jan. 21 that, in approving the
DIP financing, and in response to an objection filed by PNC
whereby PNC alleged that the Debtors' estates might have claims
against Halevy, the Court ruled that Halevy should not be provided
a release from the Debtors at this time and that paragraph 11.5 of
the proposed loan agreement which provided for such release must
be deleted before the Debtors executed the Loan Agreement. Halevy
said no evidence regarding alleged claims against Halevy was
presented. Instead, PNC's objections (and the Court's ruling
denying a release) to the release in favor of Halevy are based
upon PNC's mere allegations of potential claims.
PNC is the administrative agent and a lender under a $58,000,000
Term Loan Facility evidenced by that Amended and Restated Credit
Agreement dated as of April 3, 2012, by and among the Debtor, PNC,
Tristate Bank, National Penn Bank, Sovereign Bank, N.A. and
Citizens Bank of Pennsylvania. As of the petition date, the
Debtor owed PNC and the lenders roughly $29.5 million.
Halevy is represented by:
Steven H. Greenfeld, Esq.
COHEN BALDINGER & GREENFELD, LLC
2600 Tower Oaks Boulevard, Suite 103
Rockville, MD 20852
Tel: (301) 881-8300
E-mail: StevenG@CohenBaldinger.com
About Automated Business Power
Military supplier Automated Business Power, Inc., and Automated
Business Power Holding Co filed their Chapter 11 petitions (Bankr.
D. Md. Case Nos. 13-27123 and 13-27125) on Oct. 8, 2013.
Automated Business Power has been engaged in the design and
production of advanced filed deployable uninterruptible power
supplies, AC-to-DC power supplier, DC-to-DC converters,
uninterruptible power systems, Power/Voice/Data cases, speakers,
speaker/voice systems and ancillary equipment tactical
transceivers, power amplifiers, SATCOM, and other communications
equipment.
The petitions were signed by Daniel Akman as president. The
Debtors estimated assets of at least $50 million and liabilities
of at least $10 million.
The Debtor is represented by Nelson C. Cohen, Esq., at Zuckerman
Spaeder LLP, in Washington, D.C.
PNC Bank is represented by James M. Smith, Esq., and Lisa Bittle
Tancredi, Esq., at Gebhardt & Smith LLP.
BATISTA-SANECHEZ: SunTrust Bank's $2-Mil. Claim Allowed
-------------------------------------------------------
Bankruptcy Judge Jack B. Schmetterer ruled that SunTrust Bank will
be substituted for SunTrust Mortgage, Inc., as claimant in the
Chapter 11 case of Jesus Enrique Batista-Sanechez, and SunTrust
Bank's claim for $2,087,581.22 is allowed under 11 U.S.C. Sec.
1111(b)(1)(A) in the case.
SunTrust Mortgage filed its Proof of Claim No. 9 late on May 28,
2013, asserting security consisting of a mortgage on property
located at 6458 Lake Burden View Drive, Windermere, Florida.
The Debtor objects to Proof of Claim No. 9 because (1) SunTrust
Mortgage failed to file its proof of claim by the March 11, 2013
claims bar date, (2) the claim is unenforceable because of the
Debtor's earlier chapter 7 discharge, (3) the mortgage was
purportedly rescinded by Debtor's notice under the Truth in
Lending Act and Regulation Z, (4) lack of standing by SunTrust
Mortgage, and (5) because the amount claimed is wrong. The Debtor
claimed that the "sole issue" was whether SunTrust Mortgage had
timely filed its proof of claim.
A copy of the Court's Jan. 28, 2014 Amended Memorandum Opinion is
available at http://is.gd/oCwgB0from Leagle.com.
Jesus Enrique Batista-Sanechez filed for Chapter 11 bankruptcy
(Bankr. N.D. Ill. Case No. 12-48247) in 2012.
BAY CLUB PARTNERS-472: In Chapter 11, Seeks to Use Cash Collateral
------------------------------------------------------------------
Bay Club Partners-472, LLC, operator of the Midtown on Main Street
apartments in Arizona, has sought bankruptcy protection and will
seek approval at a preliminary hearing on Jan. 31, 2014, at 10:00
a.m. of its request to use cash collateral and other first-day
motions.
According to the docket, the Debtor's exclusive period to propose
a plan expires May 28, 2014. Proofs of claim are due by June 2,
2014. There's a meeting of creditors on March 5, 2014, at 10:00
a.m.
The Debtor seeks authorization to use cash collateral in which
Legg Mason Real Estate CDO I, Ltd. has an interest. The Debtor is
asking approval of the request on a temporary basis until a final
hearing can be held on the motion.
As of the Petition Date, the Debtor was indebted to CDO in the
principal amount of $24 million. In addition, the Debtor has
contingent or unliquidated obligations to CDO for certain fees in
the approximate amount of $3,198,750. The obligations of the
Debtor to CDO are secured by a perfected first security interest
in substantially all of the Debtor's assets, including rents and
certain reserves for insurance, taxes, maintenance, and capital
expenses, held by NorthMarq Capital, LLC, the loan servicer.
To preserve and maintain the assets of the estate, the Debtor
requires cash for the payment of utilities, operating expenses
(including taxes and insurance), and management fees.
The Debtor's budget projects that the Debtor will use
approximately $230,000 to $390,000 per month from February 2014
through April 2014 for normal and usual operating expenses. In
addition, the Debtor will need funds for deposits to utilities, if
such deposits are requested.
To provide adequate protection for the use by the Debtor of cash
in which CDO claims or may claim an interest, the Debtor will
provide CDO with a continuing security interest in all assets of
the Debtor from and after the Petition Date of the same category,
kind, character, priority, and description as was subject to a
perfected and valid security interest in existence on the Petition
Date. As additional adequate protection, commencing on April 28,
2014 and continuing on the 28th day of each month thereafter,
Debtor will pay the sum of $55,000 to CDO. $55,000 is the
approximate average amount of interest at the non-default rate
that the Debtor paid to CDO during the six months preceding the
Petition Date. The adequate protection security interest and
payments will not improve the position of CDO.
As additional adequate protection for the use by the Debtor of
cash in which CDO claims or may claim an interest, the Debtor will
continue to maintain and manage the Property, pay taxes and
insurance on the Property, and protect the Property from
diminution in value from and after the Petition Date.
About Bay Club Partners
Bay Club Partners-472, LLC, was formed to renovate and operate the
residential property at 2121 W. Main St., Mesa, Arizona, known as
Midtown on Main Street. The property has 470 rental units and
offers residents amenities including a fitness center, spa,
clubhouse, three swimming pools, a covered play area, assigned
parking, and 24-hour emergency maintenance services. As of the
bankruptcy filing, the Debtor has leased 91% of the apartments.
Bay Club filed a Chapter 11 bankruptcy petition (Bankr. D. Ore.
Case No. 14-30394) on Jan. 28, 2014. The Debtor estimated assets
and debt of $10 million to $50 million as of the bankruptcy
filing. The case has been assigned to Judge Randall L. Dunn.
Attorneys at Tonkon Torp LLP serve as counsel to the Debtor.
BAY CLUB PARTNERS-472: Wants to Continue MEB Management Agreement
-----------------------------------------------------------------
Bay Club Partners-472, LLC, continues to seek tenants for its
remaining spaces in its Midtown on Main Street property, seeks to
ensure that spaces that become available are leased to new
tenants, and seeks to ensure that the property continues to be
well managed.
Accordingly, Bay Club Partners, on a precautionary basis, asks the
Court for an order authorizing the Debtor to continue operating
under its Management Agreement with Morrison, Ekre, & Bart
Management Services, Inc.
Ava L. Schoen, Esq., at Tonkon Torp LLP, relates that MEB was
formed in 1998 and is currently the largest fee management company
in Arizona. It manages over 90 apartment communities throughout
Arizona and the Southwest. Its services include asset and
facility management for large apartment communities as well as
receivership services for multi-family and commercial real estate
assets.
The Debtor has no ownership interest in MEB, and MEB has no
ownership interest in the Debtor. MEB is not a creditor in this
bankruptcy case. Pursuant to the Management Agreement, MEB's
services include, but are not limited to, collecting rents; paying
operating expenses on Debtor's behalf; maintaining the Property,
including hiring and supervising all labor and employees required
for the operation and maintenance of the Property; and entering
into new and renewal leases for units in the Property.
Pursuant to the Management Agreement, the Debtor pays MEB (i) a
fee, which is equal to 2.75% of gross revenues received each month
for the Property and (ii) an administration fee of 2% of MEB's
gross payroll to cover the cost of employers' liability insurance
and other related administrative costs. To the extent MEB
supervises a major capital project that costs over $5,000, MEB is
entitled to a supervision fee of 4% of the costs of such project.
MEB is not paid an additional commission for the leasing services
it provides to Debtor.
Although the Debtor believes that continued performance under the
Management Agreement is an ordinary course transaction, the Debtor
seeks confirmation that it can continue to perform under the
Management Agreement.
BAY CLUB PARTNERS-472: Seeks Authority to Refund Deposits
---------------------------------------------------------
Bay Club Partners-472, LLC, operator of the Midtown on Main Street
apartments in Arizona, asks the court for an order authorizing it,
in its discretion, to honor prepetition security deposit
obligations to tenants.
The Debtor generates revenue through monthly rent payments. When
a tenant rents an apartment unit in the property, the tenant
typically pays a security deposit. Such deposits range from $0 to
$500.00 per apartment unit, with most of the security deposits
ranging from $150.00 to $300.00.
Ava L. Schoen, Esq., at Tonkon Torp LLP, avers that all creditors
will be better off if the security deposits are repaid. Tenant
loyalty and continued leasing are critical to Debtor's business.
Moreover, prospective tenants will surely choose never to move
into the property if security deposits are not repaid. Simply
put, payment of the security deposits is critical to the Debtor's
reorganization efforts.
About Bay Club Partners
Bay Club Partners-472, LLC, was formed to renovate and operate the
residential property at 2121 W. Main St., Mesa, Arizona, known as
Midtown on Main Street. The property has 470 rental units and
offers residents amenities including a fitness center, spa,
clubhouse, three swimming pools, a covered play area, assigned
parking, and 24-hour emergency maintenance services. As of the
bankruptcy filing, the Debtor has leased 91% of the apartments.
Bay Club filed a Chapter 11 bankruptcy petition (Bankr. D. Ore.
Case No. 14-30394) on Jan. 28, 2014. The Debtor estimated assets
and debt of $10 million to $50 million as of the bankruptcy
filing. The case has been assigned to Judge Randall L. Dunn.
Attorneys at Tonkon Torp LLP serve as counsel to the Debtor.
BAY CLUB PARTNERS-472: Hiring Tonkon Torp as Chapter 11 Counsel
---------------------------------------------------------------
Bay Club Partners-472, LLC, asks for authority to employ Tonkon
Torp LLP as Chapter 11 counsel.
The Debtor has asked Tonkon Torp to advise it on its debt
restructuring and to render general legal services to Debtor as
needed throughout the course of the Chapter 11 case, including
bankruptcy and restructuring, corporate, environmental, finance,
litigation, real estate, regulatory, securities, labor, and tax
assistance and advice.
The Debtor is informed that Albert N. Kennedy and Ava L. Schoen,
the attorneys at Tonkon Torp primarily involved in the Chapter 11
case, are admitted to practice before the Court and they have read
Local Bankruptcy Rule 2016.
The Debtor has agreed to compensate Tonkon Torp on an hourly basis
in accordance with its ordinary and customary hourly rates in
effect on the date services are rendered:
Attorney Name Status Hourly Rate
------------- ------ -----------
Albert N. Kennedy Partner $490
Timothy J. Conway Partner $450
Ava L. Schoen Associate $285
Spencer Fisher Paralegal $150
Larissa Stec Legal Assistant $125
About Bay Club Partners
Bay Club Partners-472, LLC, was formed to renovate and operate the
residential property at 2121 W. Main St., Mesa, Arizona, known as
Midtown on Main Street. The property has 470 rental units and
offers residents amenities including a fitness center, spa,
clubhouse, three swimming pools, a covered play area, assigned
parking, and 24-hour emergency maintenance services. As of the
bankruptcy filing, the Debtor has leased 91% of the apartments.
Bay Club filed a Chapter 11 bankruptcy petition (Bankr. D. Ore.
Case No. 14-30394) on Jan. 28, 2014. The Debtor estimated assets
and debt of $10 million to $50 million as of the bankruptcy
filing. The case has been assigned to Judge Randall L. Dunn.
Attorneys at Tonkon Torp LLP serve as counsel to the Debtor.
BAY CLUB PARTNERS-472: Section 341(a) Meeting Set on March 4
------------------------------------------------------------
A meeting of creditors in the bankruptcy case of Bay Club
Partners-472, LLC, will be held on March 4, 2014, at 10:00 a.m. at
UST1, US Trustee's Office, Portland, Rm 223. Creditors have until
June 2, 2014, to submit their proofs of claim.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
meeting of creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Bay Club Partners-472, LLC, dba Midtown on Main Apartments, filed
a Chapter 11 bankruptcy petition (Bankr. D.Or. Case No. 14-30394)
on Jan. 28, 2014. David Butler signed the petition on behalf of
Bay Club Management, LLC, as manager of the Debtor. The Debtor
estimated assets and debts of at least $10 million. Tonkon Torp
LLP serves as the Debtor's counsel. The Hon. Randall L. Dunn
oversees the case.
Bay Club Partners-472, was formed to renovate and operate
residential property in Arizona known as Midtown on Main Street.
The Property has approximately 470 rental units and offers
residents amenities including a fitness center, spa, clubhouse,
three swimming pools, a covered play area, assigned parking, and
24-hour emergency maintenance services.
BERNARD L. MADOFF: Ex-Aide's Balances Totaled Almost $70-Mil.
-------------------------------------------------------------
Erik Larson, writing for Bloomberg News, reported that the Bernard
Madoff aide who ran his investment advisory business had seven
personal accounts with purported balances totaling almost $70
million when the firm collapsed, far more than she was paid, a
jury was told by prosecutors seeking to show her incentive to hide
the fraud.
According to the report, Annette Bongiorno, hired by Madoff in
1968, when she was 19, earned a total of $3.91 million during the
period from 1993 to 2008, the only years that documentation for
her salary was available, Jason Wake, a Federal Bureau of
Investigation forensic accountant, testified on Jan. 23 in
Manhattan federal court in the trial of five ex-members of
Madoff's inner circle.
Bongiorno "made no attempt to conceal her deposits or
withdrawals," her lawyer, Roland Riopelle, said during his cross-
examination of Wake, the report related. The figures didn't
include the taxes she paid on her earnings or compare the
accounts' rising value to the stock market's performance, Riopelle
said.
The trial, which started in October, is the first stemming from
Madoff's $17 billion Ponzi scheme, which collapsed after his
confession and arrest in December 2008, the report said.
Bongiorno and four other former Madoff employees are accused of
aiding the fraud for decades and getting rich in the process.
Prosecutors allege Bongiorno helped create fake trading
confirmation tickets and false account statements to trick
customers and regulators, the report further related. No trading
took place at the unit, where account holders benefited from back-
dated trades to reach pre-determined annual earnings, the U.S. has
said.
BERNARD L. MADOFF: Investor Who Lost In Fund Deal Can't Sue
-----------------------------------------------------------
Law360 reported that a New York judge refused to allow an investor
in a Bernard Madoff feeder fund run by hedge fund manager J. Ezra
Merkin to sue the fund's receiver for not telling him what he
would've reaped from a $410 million settlement of litigation
against Merkin, finding no basis for any gross negligence by the
receiver.
According to the report, New York Supreme Court Judge Richard B.
Lowe III ruled that the receiver for Ascot Partners LP was under
no obligation to advise investor Joshua M. Berman.
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A.
Stanton of the U.S. District Court for the Southern District of
New York granted the application of the Securities Investor
Protection Corporation for a decree adjudicating that the
customers of BLMIS are in need of the protection afforded by the
Securities Investor Protection Act of 1970. The District Court's
Protective Order (i) appointed Irving H. Picard, Esq., as trustee
for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP
as his counsel, and (iii) removed the SIPA Liquidation proceeding
to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789)
(Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims
agent.
On April 13, 2009, former BLMIS clients filed an involuntary
Chapter 7 bankruptcy petition against Bernard Madoff (Bankr.
S.D.N.Y. 09-11893). The petitioning creditors -- Blumenthal &
Associates Florida General Partnership, Martin Rappaport
Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and
Steven Morganstern -- assert US$64 million in claims against Mr.
Madoff based on the balances contained in the last statements they
got from BLMIS.
On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff
Securities International Limited in London under bankruptcy
protection pursuant to Chapter 15 of the U.S. Bankruptcy Code
(Bankr. S.D. Fla. 09-16751).
The Chapter 15 case was later transferred to Manhattan. In June
2009, Judge Lifland approved the consolidation of the Madoff SIPA
proceedings and the bankruptcy case.
Judge Denny Chin of the U.S. District Court for the Southern
District of New York on June 29, 2009, sentenced Mr. Madoff to
150 years of life imprisonment for defrauding investors in United
States v. Madoff, No. 09-CR-213 (S.D.N.Y.).
From recoveries in lawsuits coupled with money advanced by SIPC,
Mr. Picard has paid about 58 percent of customer claims totaling
$17.3 billion. The most recent distribution was in March 2013.
Mr. Picard has collected about $9.35 billion, not including an
additional $2.2 billion that was forfeit to the government and
likewise will go to customers. Picard is holding almost
$4.4 billion he can't distribute on account of outstanding
appeals and disputes. The largest holdback, almost $2.8 billion,
results from disputed claims.
BIANCHI ORCHARD: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Bianchi Orchard Systems, Inc.
fdba Orchard Equipment Manufacturing
fka Bianchi Orchard Systems LLC
1221 Independence Place
Gridley, CA 95948
Case No.: 14-20795
Chapter 11 Petition Date: January 29, 2014
Court: United States Bankruptcy Court
Eastern District of California (Sacramento)
Judge: Hon. Christopher M. Klein
Debtor's Counsel: Walter R. Dahl, Esq.
DAHL LAW, ATTORNEYS AT LAW
2304 N St
Sacramento, CA 95816-5716
Tel: (916) 446-8800
Total Assets: $6.12 million
Total Liabilities: $6.51 million
The petition was signed by Mahmood Dean, president.
A list of the Debtor's 20 largest unsecured creditors is available
for free at http://bankrupt.com/misc/caeb14-20795.pdf
BROADWAY SELF-STORAGE: Foreclosure Auction Set for Feb. 27
----------------------------------------------------------
Real property of Broadway Self-Storage, Inc. and tangible and
intangible personal property of Broadway Self-Storage, Broadway
Industries Corporation and Ronald F. Blanchard located at 2092
Broadway, South Portland, Maine, will be sold at public auction
sale on-site on Feb. 27, 2014 at 10:30 a.m.
The property serves as collateral to debt owed to Peoples Heritage
Bank, N.A. n/k/a TD Bank, N.A.
The Property will be sold "AS IS, WHERE IS", WITHOUT ANY
WARRANTIES, EXPRESS OR IMPLIED as to the condition of the Property
or the status of title.
A bidder who wishes to bid on the Property must submit as a
qualification to bid at the auction a deposit of $50,000, in cash,
cashier's check or certified check (U.S. funds) to be increased to
10% of the highest bid within five business days following the
execution of a Purchase and Sale Agreement. The remaining balance
of the purchase price shall be due and payable by wire transfer,
bank check, certified check or cashier's check (U.S. funds) at
closing. All checks should be made payable to "Tranzon Auction
Properties", the auctioneer.
In the event that the highest bidder fails to close pursuant to
the Purchase and Sale Agreement, the Property will be sold to the
next highest bidder willing to purchase the Property or
readvertised for sale at the Bank's discretion.
The Bank and Auctioneer reserve the right to modify or add to the
terms of sale.
Any Collateral not sold at the public sale shall be sold by
private sale on or after 10:30 a.m. on Feb. 27, 2014.
The Auctioneer may be reached at:
Tranzon Auction Properties
93 Exchange Street
PO Box 4508
Portland, Maine 04112-4508
Telephone: (207) 775-4300
http://www.tranzon.com/
TD Bank, N.A., is represented by:
HIRSHON LAW GROUP, P.C.
David M. Hirshon, Esq.
208 Fore St.
Portland ME 04101
Tel: (207) 619-8550
BROWNSVILLE MD: Updates Company Mailing Address
-----------------------------------------------
Brownsville MD Ventures Inc. has filed papers with the U.S.
Bankruptcy Court for the Southern District of Texas to inform that
it has a new mailing address:
Former mailing address New mailing address
---------------------- -------------------
Brownsville MD Ventures, LLC Brownsville MD Ventures, Inc.
c/o Chester Gonzalez c/o Chester Gonzalez
4750 North Expressway 117 East Price Road
Brownsville, TX 78520 Brownsville, Texas 78521
About Brownsville MD Ventures
Brownsville MD Ventures, LLC, was formed in 2004 for the purpose
of acquiring real property and improvements in Brownsville, Texas.
The company leased the property to Brownsville Doctors Hospital,
LLC, which operated a hospital on the premises. The tenant has
ceased operations, and the property has been vacant since August
2012.
Brownsville MD Ventures filed a Chapter 11 petition (Bankr. S.D.
Tex. Case No. 13-10341) on Aug. 26, 2013, in Brownsville, Texas.
Chester Gonzalez, the managing member and the chairman of the
board of managers, signed the bankruptcy petition.
The Debtor disclosed $24 million in assets and $14.7 million in
liabilities in its schedules.
The Debtor's property was appraised by Compass Bank in July 2011
with a fair market value in excess of $20,000,000. Pineda Grantor
Trust II, as assignee of Compass Bank (which provided a loan to
finance the acquisition of the property), is the secured lender.
Kell Corrigan Mercer, Esq., at Husch Blackwell, LLP, in Austin,
Texas, serves as the Debtor's counsel. The Debtor tapped The
Rentfro Law Firm PLLC as special counsel to provide legal advice
regarding business matters.
Judge Richard S. Schmidt presides over the case.
BROWNSVILLE MD: Court Approves Rentfro Law as Special Counsel
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas
authorized Brownsville MD Ventures LLC to employ The Rentfro Law
Firm PLLC as special counsel, effective Aug. 26, 2013.
As reported in the Troubled Company Reporter on Dec. 2, 2013,
Rentfro Law will be special counsel to the Debtor regarding
business matters.
Rentfro Law will be paid at these hourly rates:
Daniel Rentfro $275
Attorneys $160
Legal Assistant $90
Rentfro Law will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Prior to the Debtor's bankruptcy filing, Rentfro Law received a
deposit of $20,000. Of that amount, $3,562.48 was used to pay for
pre-petition services.
Daniel Rentfro, Jr., at Rentfro Law, 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.
Rentfro Law can be reached at:
Daniel Rentfro, Jr., Esq.
THE RENTFRO LAW FIRM PLLC
2200 Boca Chica Blvd., Ste 120
Brownsville, TX 78521
Tel: (956) 542-4329
Fax: (956) 542-4320
About Brownsville MD Ventures
Brownsville MD Ventures, LLC, was formed in 2004 for the purpose
of acquiring real property and improvements in Brownsville, Texas.
The company leased the property to Brownsville Doctors Hospital,
LLC, which operated a hospital on the premises. The tenant has
ceased operations, and the property has been vacant since August
2012.
Brownsville MD Ventures filed a Chapter 11 petition (Bankr. S.D.
Tex. Case No. 13-10341) on Aug. 26, 2013, in Brownsville, Texas.
Chester Gonzalez, the managing member and the chairman of the
board of managers, signed the bankruptcy petition.
The Debtor disclosed $24 million in assets and $14.7 million in
liabilities in its schedules.
The Debtor's property was appraised by Compass Bank in July 2011
with a fair market value in excess of $20,000,000. Pineda Grantor
Trust II, as assignee of Compass Bank (which provided a loan to
finance the acquisition of the property), is the secured lender.
Kell Corrigan Mercer, Esq., at Husch Blackwell, LLP, in Austin,
Texas, serves as the Debtor's counsel. The Debtor tapped The
Rentfro Law Firm PLLC as special counsel to provide legal advice
regarding business matters.
Judge Richard S. Schmidt presides over the case.
BUCKEYE STEEL: Ohio Appeals Court Affirms Ruling Against TTA
------------------------------------------------------------
The Court of Appeals of Ohio, Tenth District, Franklin County,
affirmed the Feb. 9 and Oct. 18, 2012 judgments of the Franklin
County Court of Common Pleas in favor of Columbus Steel Castings
Company and against Transportation & Transit Associates, LLC.
The matter stems from a September 2000 purchase order where
Buckeye Steel Castings Company, Inc., agreed to manufacture, sell,
and deliver truck components to Transportation & Transit
Associates for the manufacture of train cars. Buckeye Steel made
155 separate deliveries of parts to TTA, and sent TTA invoices for
each delivery and associated freight costs. TTA accepted and paid
for 134 deliveries, but failed to pay Buckeye Steel for 21
deliveries and freight charges made between September 3, and
November 11, 2002.
In December 2002, Buckeye Steel commenced Chapter 11 bankruptcy
proceedings. After approval from the bankruptcy court, Buckeye
Steel then entered into an asset purchase agreement with Columbus
Steel Castings under the U.S. Bankruptcy Code. CSC would buy the
assets, including accounts receivable, including an account
receivable allegedly owed to Buckeye Steel by TTA. The sale order
enjoined all persons from taking any action against CSC for
recovery on any claim they might have against Buckeye Steel in
respect to the assets sold.
After the sale was final, CSC demanded payment from TTA of the
account receivable. TTA refused, contending it had a right of
recoupment that exceeded the account receivable at issue.
Specifically, TTA indicated Buckeye Steel breached its contract to
supply parts and TTA suffered damages as a result. TTA filed a
proof of claim in the bankruptcy proceeding for breach of contract
to recoup this amount, less the amount of the receivable owed to
Buckeye Steel.
CSC filed a motion in the bankruptcy court to enforce the sale
order -- specifically, to prohibit TTA from seeking recovery on a
claim that arose out of TTA's relationship with Buckeye Steel. CSC
also moved the bankruptcy court to compel TTA to pay the account
receivable. At the motion hearing, CSC withdrew its demand for
payment and, instead, sought a determination that the sale order
enjoined TTA from enforcing its defense to the account receivable.
TTA indicated it applied the recoupment amount in its proof of
claim and waived its right to increase the amount of its claim if
the defense of recoupment was denied in any court. In July 2003,
the bankruptcy court dismissed CSC's motion for lack of subject-
matter jurisdiction. CSC appealed the bankruptcy court's
dismissal. In affirming, the United States Bankruptcy Appellate
Panel for the Sixth Circuit determined that the dispute between
CSC and TTA had no bearing on the bankruptcy estate, since "TTA
had waived its right to amend its proof of claim upwards in the
event its claim of recoupment were later rejected by a court."
In December 2004, CSC filed a complaint against TTA in the
Franklin County Court of Common Pleas to collect on the account
receivable it purchased from Buckeye Steel. In its answer, TTA
admitted the bankruptcy court's February 2003 sale order
authorized CSC to purchase the account receivable owed by TTA to
Buckeye Steel. TTA filed an answer and counterclaim, and raised
recoupment as an affirmative defense. In its counterclaim, TTA
alleged that Buckeye Steel breached its contract to supply parts
and TTA suffered damages in an amount greater than it owed on the
account receivable.
The trial court denied the parties' motions for summary judgment
and granted CSC's motion in limine to preclude TTA from asserting
the affirmative defense of recoupment or from asserting a
counterclaim. The court found that the entry constituted a final
order, since "[p]reventing TTA from asserting its defense of
recoupment affects a substantial right of TTA and effectively
determines the action in favor of Plaintiff Columbus Steel
Casting[s] Company."
TTA appealed from the judgment. On appeal, the Ohio Appeals Court
reversed the judgment and remanded the cause to the trial court
for further proceedings. The Appeals Court found that, pursuant
to the parties' agreement, New York substantive law and Ohio
procedural law applied to resolve the issues in this case. The
Court of Appeals of Ohio determined, in part, that the trial court
erred in precluding TTA from asserting the defense of recoupment
and in entering final judgment in favor of CSC. In CSC I, the
Court of Appeals held that "the trial court incompletely applied
the 'integrated transaction test' when it precluded TTA from
asserting recoupment as a defense, and * * * as a consequence, the
trial court therefore erred as a matter of law by granting summary
judgment in favor of [CSC]."
On remand, CSC and TTA renewed their motions for summary judgment
on the recoupment defense. On February 9, 2012, the trial court
granted CSC's motion and held that TTA had no right of recoupment.
The trial court determined that, consistent with New York
substantive law, the "integrated transaction test" applied to an
analysis of TTA's recoupment defense. The trial court found TTA's
claim did not satisfy the integrated transaction test because the
parties' purchase agreement allowed TTA to reject individual
deliveries and terminate individual orders or parts of orders.
The trial court further determined that it would be inequitable
for TTA to enjoy the benefits of the completed transactions
without meeting its obligations by paying for the parts delivered
to and accepted by it because TTA's recoupment claim was limited
to deliveries that were never made by Buckeye Steel after the
deliveries and acceptance of goods that are the subject of CSC's
action.
In June 2012, TTA sought leave to amend its 2004 answer and
counterclaim to raise a new claim that the account receivable at
issue was never properly assumed by nor assigned to CSC. The
trial court denied the motion as untimely and concluded TTA did
not provide reasonable justification in support of its motion for
leave and, if granted at that late stage of the proceedings, would
be unduly prejudicial to CSC.
After a bench trial, on Oct. 18, 2012, the trial court issued a
decision finding CSC properly pleaded and proved the essential
elements of an account stated. The trial court granted judgment
in favor of CSC on its complaint and against TTA in the amount of
$2,008,969 as of July 25, 2012, plus interest thereafter at a rate
of 3 percent per annum, and court costs.
The appellate case is, Columbus Steel Castings Company, Plaintiff-
Appellee, v. Transportation & Transit Associates, LLC, Defendant-
Appellant, 2014-Ohio-272 (Ohio App. Ct.). A copy of the Appeals
Court's Jan. 28, 2014 decision is available at http://is.gd/5pdCSH
from Leagle.com.
CSC is represented by:
Jonathon M. Yarger, Esq.
Victor D. Radel, Esq.
Andrew J. Yarger, Esq.
YARGER RADEL & PENTZ, LLC
1111 Superior Avenue, Suite 530
Cleveland, Ohio 44114
Tel: 216-539-9600
Fax: 216-539-9609
E-mail: jyarger@yrplaw.com
vradel@yrplaw.com
ayarger@yrplaw.com
TTA is represented by:
David M. Scott, Esq.
Melissa A. Izenson, Esq.
LUPER NEIDENTHAL & LOGAN
50 W. Broad Street, Suite 1200
Columbus, Ohio 43215
Tel: 877-590-6943
E-mail: dscott@LNLattorneys.com
mizenson@LNLattorneys.com
About Buckeye Steel Castings
Buckeye Steel Castings Company, Buckeye Holdings Inc., and GSI
Engineering Inc., filed for chapter 11 protection (Bankr. S.D.
Ohio Case No. 02-66859) on Dec. 20, 2002. Kenneth R. Cookson,
Esq., at Dinsmore & Shohl LLP, represented the Debtors.
When the Debtors delivered their chapter 11 petitions to the
Court, they also sought immediate authority to sell
substantially all of their assets.
Toby L. Gerber, Esq., at Jenkens & Gilchrist and Ronald E. Gold,
Esq., Frost Brown Todd LLC, represented Bank of America NA,
National City Bank, JP Morgan Chase Bank, PNC Bank, the Debtors'
prepetition lenders.
The U.S. Trustee appointed an Official Committee of Unsecured
Creditors on January 6, 2003.
Buckeye Steel Castings manufactured a wide range of casting
sizes and shapes -- including products for railroad, mass
transit, industrial applications such as steel mills,
earthmoving and a variety of markets. Founded in 1881, Buckeye
Steel Castings is located in Columbus, Ohio. Buckeye was sold by
Worthington Industries, Inc., to a management group to a
management group that included Key Equity Capital Corp., a
Cleveland, Ohio-based investment firm, in early 1999. The terms
of the sale were not disclosed at that time.
At the bankruptcy auction held February 2003, Rail Castings Corp.,
guaranteed by Blue Point Capital Partners, L.P. and an affiliate,
was declared the winning bidder for Buckeye's assets. The price
reached in excess of $15,100,000 during the auction from the
original Rail Castings bid of roughly $8,500,000.
BUILDERS GROUP: Noreen Wiscovitch Appointed as Ch.11 Trustee
------------------------------------------------------------
Guy G. Gebhardt, the U.S. Trustee for Region 21, appointed Noreen
Wiscovitch-Rentas as trustee to oversee the Chapter 11 case of
Builders Group & Development Corp. The U.S. Trustee noted that
the Chapter 11 Trustee's bond is fixed under the general blanket
bond.
The trustee can be reached at:
Noreen Wiscovitch-Rentas
P.O. Box 20438
West Palm Beach, Fl 33416
Tel: (561) 655-6909/(787) 946-0132
Fax: (561) 686-9736/(787) 946-0133
About Builders Group
Builders Group & Development Corp. owns and manages the Cupey
Professional Mall, a shopping center located in Cupey, Puerto
Rico. The Company sought Chapter 11 protection (Bankr. D.P.R.
Case No. 13-04867) on June 12, 2013, in San Juan, Puerto Rico, its
home-town. The company sought bankruptcy on the eve of a
foreclosure sale of its property. The Debtor estimated at least
$10 million in assets and liabilities in its petition. Jose M.
Monge Robertin, CPA, and Monge Robertin & Asociados Inc. serve as
the Debtor's CPA/Insolvency and Restructuring Advisor.
C.W. MINING: 10th Circuit Affirms Ruling Approving Sale of Assets
-----------------------------------------------------------------
A three-judge panel of the U.S. Court of Appeals for the Tenth
Circuit composed of Judge Timothy M. Tymkovich, Senior Judge Wade
Brorby and Senior Judge Michael R. Murphy, on Jan. 22, 2014,
affirmed in part and reversed in part a district court's ruling
relating to the Chapter 7 asset sale for the liquidating
bankruptcy estate of C.W. Mining Co., a former coal mining
operation in Emery County, Utah.
Four appellants did business with C.W. Mining before its
involuntary bankruptcy. They now claim various assets that the
bankruptcy estate, Kenneth A. Rushton, sold to an unrelated
entity, Rhino Energy LLC.
Standing in the way of the Appellants' claims is one of the
Bankruptcy Code's mooting provisions, 11 U.S.C. Section 363(m).
Under this statute, the Court can grant the appellants no relief
that would affect the validity of Rushton's sale to Rhino. The
question then for each appellant is whether any relief can be
granted that would not affect the sale's validity. The district
court, which first addressed these appeals from the bankruptcy
court, answered that question in the negative and thus dismissed
the appeals as moot.
The Tenth Circuit dismissed Rhino and its wholly owned subsidiary,
Castle Valley Mining LLC, from the appeals because no appeal seeks
any relief affecting either entity.
As against ANR Co., COP Coal Development Co., and Hiawatha Coal
Co., the Tenth Circuit ruled that their appeals are moot. By
raising only those claims that affect the sale order, ANR and COP
waived any relief besides that which would violate Section 363(m),
the Tenth Circuit said. Hiawatha failed to contest Rushton's
arguments shwing that no theories or relief are available except
those that affect the sale order, the Tenth Circuit added.
In Charles Reynolds' appeal, the Tenth Circuit held that Reynolds
has consistently raised a statutory claim for relief that does not
affect the validity of the sale, and the district court mistakenly
relied on unpublished opinion to decide otherwise. Accordingly,
the Tenth Circuit reversed the appeal and remanded it to the
district court for proceedings consistent with the Tenth Circuit's
opinion.
The case is KENNETH A. RUSHTON, Trustee, Plaintiff-Appellee, v.
ANR COMPANY, INC.; HIAWATHA COAL COMPANY, INC.; CHARLES
REYNOLDS; C.O.P. COAL DEVELOPMENT COMPANY; STANDARD INDUSTRIES,
INC.; ABM, INC.; WORLD ENTERPRISES; SECURITY FUNDING, INC.;
FIDELITY FUNDING, INC.; and P.P.M.C., INC., Defendants-Appellants,
and RHINO ENERGY LLC; CASTLE VALLEY MINING LLC, Interested
Parties-Appellees, Nos. 12-4091, 12-4102, 12-4106,
12-4112, 12-4132, 12-4144 (10th Cir.).
A full-text copy of the Decision penned by Judge Tymkovich is
available at http://bankrupt.com/misc/10thCir124091.pdf
Laura J. Fuller, Esq., at Law Offices of Laura J. Fuller, in Salt
Lake City, Utah, for Appellant ANR Company, Inc. in Case No. 12-
4091.
Peter W. Guyon, Esq., in Salt Lake City, Utah, for Appellant
Hiawatha Coal Company, Inc. in Case Nos. 12-4102 and 12-4144.
Russell S. Walker, Esq. -- rwalker@wklawpc.com -- (David R.
Williams, Esq. -- dwilliams@wklawpc.com -- and Anthony M. Grover,
Esq. -- Tgrover@wklawpc.com -- with him on the briefs), at
Woodbury & Kesler, P.C., in Salt Lake City, Utah, for Appellant
Charles Reynolds in Case No. 12-4106.
David L. Pinkston, Esq. -- dlp@scmlaw.com -- (Kim R. Wilson, Esq.
-- krw@scmlaw.com -- and P. Matthew Cox, Esq. -- pmc@scmlaw.com --
with him on the briefs), at Snow Christensen & Martineau, in Salt
Lake City, Utah, for Appellant C.O.P. Coal Development Company in
Case Nos. 12-4112 and 12-4132.
George B. Hofmann, Esq. -- gbh@pkhlawyers.com -- at Parsons
Kinghorn Harris, A Professional Corporation, in Salt Lake City,
Utah (William F. Dobbs, Jr., Esq. -- wdobbs@jacksonkelly.com --
and William C. Ballard, Esq. -- wcballard@jacksonkelly.com -- at
Jackson Kelly PLLC, in Charleston, West Virginia, with him on the
briefs for Appellees Castle Valley Mining, LLC and Rhino Energy,
LLC), and James C. Swindler, Esq. -- jcs@princeyeates.com --
(Michael N. Zundel, Esq. -- mnz@princeyeates.com -- with him on
the briefs), at Prince, Yeates & Geldzahler, in Salt Lake City,
Utah, for Appellee Kenneth A. Rushton, Trustee in Case Nos. 12-
4091, 12-4102, 12-4106, 12-4112, 12-4132, and 12-4144.
Based in Salt Lake City, Utah, C.W. Mining Co. dba Co-Op Mining
Company operated the Bear Canyon Mine in Emery County, Utah, under
the terms of a lease with C.O.P. Coal Development Company, which
owns the mine. Aquila Inc., Owell Precast, LLC, and House of
Pumps, Inc., filed an involuntary Chapter 11 petition (Bankr. D.
Utah Case No. 08-20105) on Jan. 8, 2008. In November 2008, the
Chapter 11 case was converted to a Chapter 7 liquidation
proceeding. Kenneth A. Rushton serves as the Chapter 7 Trustee,
and is represented by Brent D. Wride, Esq., at Ray Quinney &
Nebeker, in Salt Lake City.
CARECORE NAT'L: Moody's Assigns B2 CFR & Rates 1st Lien Debt B2
---------------------------------------------------------------
Moody's Investors Service assigned a B2 Corporate Family Rating
and B2-PD Probability of Default Rating to CareCore National, LLC
("CareCore"). At the same time, Moody's assigned B2 (LGD3, 47%)
ratings to the company's proposed first lien senior secured credit
facilities, including a $315 million senior secured first lien
term loan and a $75 million senior secured first lien revolver.
The outlook for the ratings is stable. The proceeds from the
senior secured credit facilities will be used, along with a cash
equity contribution, to finance the acquisition of CareCore by an
affiliate of General Atlantic LLC ("General Atlantic"), fund
escrow accounts related to potential tax and other liabilities,
repay existing CareCore debt, and pay transaction fees and
expenses.
The equity contribution includes approximately $116 million of
common equity being made by General Atlantic, approximately $59
million of common rollover equity from management, and
approximately $19 million of rollover equity from other investors.
In addition, General Atlantic has committed an additional $70
million unconditional deferred cash equity contribution in favor
of the escrow accounts related to potential liabilities. This is
the first time Moody's has publicly rated CareCore.
All ratings are subject to review of final documentation.
Moody's assigned the following ratings:
CareCore National, LLC:
$75 million senior secured first lien revolving credit facility,
rated B2 (LGD3, 47%)
$315 million senior secured first lien term loan, rated B2 (LGD3,
47%)
Corporate Family Rating, B2
Probability of Default Rating, B2-PD
RATINGS RATIONALE
CareCore's B2 Corporate Family Rating reflects the company's high
revenue concentration among its top customers and program
segments, its high financial leverage, and uncertainty related to
potential tax and other liabilities which present near-term risk.
The ratings are supported by the company's strong market position,
solid customer relationships, lack of direct Medicare or Medicaid
reimbursement risk, and favorable fundamentals and macro trends
within the market for specialty benefit management services.
On a pro forma basis for the twelve months ended September 30,
2013, CareCore's adjusted debt to EBITDA was approximately of 5.0
times. Moody's expects CareCore's financial leverage to improve
over the next 12 to 18 months due to CareCore's increased focus on
growing its ASO business, cross-selling of specialty programs
across existing clients, and free cash flow generation.
The rating outlook is stable, reflecting our expectation that
financial leverage will improve over the next 12 to 18 months, and
that any adverse outcome related to potential tax and other
liabilities will be funded through existing escrow accounts or
GA's deferred cash equity commitment, preserving available
liquidity sources. The stable outlook also reflects our
expectation that the company will reduce financial leverage to
levels approaching 4.5 times on a Moody's adjusted basis over the
next 12 to 18 months, and that the company will not engage in
debt-financed shareholder initiatives. In addition, the stable
outlook reflects our assumption that the company will not face any
regulatory limitations related to the up-streaming of dividends
from its regulated subsidiaries to service the debt held at
CareCore National, LLC.
The ratings could be downgraded if there is a material contraction
in the level of operating cash flow, such that free cash flow
turns negative, or if the company fails to maintain sufficient
available liquidity sources, including unrestricted cash and
revolver availability. In addition, the ratings could be
downgraded if any adverse event related to potential tax and other
liabilities requires incremental debt, such that adjusted total
debt to EBITDA exceeds 5.0 times on a Moody's adjusted basis. Any
adverse outcome in excess of funded escrow amounts, GA's deferred
cash equity commitment, and other protections could result in a
downgrade of multiple notches.
While not expected over the near-term due to the company's high
customer and program concentration, the ratings could be upgraded
over time if the company significantly reduces the reliance on
revenue from its top customers via new contact wins and adjusted
debt to EBITDA approaches 3.0 times on a Moody's adjusted basis.
The principal methodology used in this rating was the Global
Business & Consumer Service Industry published in October 2010.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
Headquartered in Bluffton, South Carolina, CareCore National, LLC
("CareCore") is a specialty benefits management company that
provides healthcare management and administrative services on
behalf of clients consisting primarily of commercial health
insurers and other third-party payors including Managed Medicaid
and Medicare Advantage plans. For the twelve months ended
September 30, 2013, the company generated total revenues of
approximately $633 million.
CARECORE NATIONAL: S&P Assigns 'B' CCR & Rates $390MM Debt 'B'
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its 'B'
long-term corporate credit rating to CareCore National LLC. The
outlook is stable.
At the same time, S&P assigned its 'B' issue-level ratings with
'4' recovery ratings to CareCore's $390 million in senior secured
first-lien credit facilities, including a five-year $75 million
revolver (unfunded at transaction close) and a seven-year
$315 million term loan. The '4' recovery ratings indicate S&P's
expectations for an average recovery at the high end of 30%-50% in
the event of a payment default.
"We assigned our 'B' corporate credit rating to CareCore based on
its weak business risk profile and aggressive financial risk
profile, as defined by our criteria," said Standard & Poor's
credit analyst James Sung. CareCore is a Bluffton, S.C.-based
health care specialty benefits management company that primarily
provides radiology diagnostic imaging benefits-management services
for health insurance companies.
Based on S&P's criteria, the combination of a weak business risk
profile and an aggressive financial risk profile results in an
anchor rating of 'b+'. However, S&P applies an unfavorable
comparative ratings analysis adjustment that lowers the rating by
one notch from the anchor. S&P believes that CareCore's business
risk profile is at the lower end of the weak category primarily
because of its overall limited business scope and its high client
concentrations.
CareCore is a competitor in the highly fragmented health care
specialty benefits management industry that caters to the health
insurance industry. This business-to-business industry broadly
provides a variety of outsourced cost-containment and
administrative/operational services to health care payors
including health insurers, government entities, health care
providers, and employers. CareCore focuses specifically on
managing health care costs in seven categories: radiology
diagnostic imaging, cardiology, radiation therapy, medical
oncology, musculoskeletal, sleep management, and molecular and
genetic lab testing. CareCore generates revenues from its clients
via two contract types: administrative service only (ASO)
contracts, under which it receives a fixed fee on a per member per
month (PMPM) basis to perform its pre-authorization and related
services; and "risk" contracts, under which it receives a higher
fixed amount, also on a PMPM basis, to cover all medical and
administrative costs.
General Atlantic's $186 million in equity will consist of
$116 million in cash equity at closing and $70 million in an
unconditional cash equity commitment in favor of an escrow account
that will be set up to fund potential liabilities (with expected
resolutions ranging from six to 18 months) that the company has
identified. In S&P's view, the company appears to be adequately
covered for these potential liabilities; however, it's still an
undetermined risk at this point. As protection, the company has
established an escrow account and obtained an insurance policy
that its advisors believe will fully protect it in a worst-case
scenario. Any funds from the escrow accounts not used toward
meeting the liabilities will go directly to CareCore's selling
shareholders upon resolution.
CareCore is relatively well positioned, from a competitive
standpoint, to continue the generally favorable revenue and
earnings trajectory that it has maintained during the past several
years into 2014. The company has built a scalable, specialized
business model with favorable long-term industry growth trends
that should provide a natural tailwind for growth. At the same
time, the company's financial plan, including its delevering plan,
for 2014 appears reasonably achievable.
The keys for this company will be to maintain its high client-
retention levels amidst an increasingly competitive market; to
grow revenues in its newer, underpenetrated product segments; and
to improve efficiency of operating expenses to maintain overall
price competitiveness. Moreover, the company will need to have
the scale and flexibility to meet its clients' evolving service
needs, whether that means meeting any shifts in demand between ASO
and risk contracts, or helping clients consolidate their various
cost-management relationships to those that can offer the broadest
array of services.
S&P would consider a downgrade during the next 12 months if the
company is unable to execute its business strategy and delever
according to plan. Possible downside scenarios could include
general business deterioration, such as the loss of one or two of
its top clients, or a more aggressive financial policy in the form
of a substantial dividend recapitalization or a large, debt-funded
acquisition. S&P would consider a downgrade if leverage increases
to 6.0x or more, or EBITDA interest coverage decreases to 2.0x or
less on a sustained basis.
Rating upside during the next 12 months is limited. However, S&P
would consider an upgrade in the long-term (beyond 12 months) if
the company is able to grow and diversify its business model
profitably and if its financial policies become sustainably less
aggressive, such as if the company were able to maintain leverage
consistently less than 4.0x and maintain EBITDA coverage of at
least 3.0x.
CARIBBEAN DIVERSIFIED: In Default of CSE Requirements
-----------------------------------------------------
Caribbean Diversified Investments Inc. is in default of CSE
requirements. Effective immediately, Caribbean Diversified is
suspended pursuant to CSE Policy 3. The suspension is considered
a Regulatory Halt as defined in National Instrument 23-101 Trading
Rules.
Date: Effective Immediately, January 28, 2014
Symbol: HDC
Caribbean Diversified Investments, Inc.
-- http://www.caribbeaninvestments.ca-- owns and operates St.
Helen University in St. Lucia, that offers medical educational
services. The company was formerly known as Caribbean Diversified
Holdings Inc. and changed its name to Caribbean Diversified
Investments, Inc. in July 2013. The company is headquartered in
Thornhill, Canada.
CENGAGE LEARNING: Gets Court OK for Accounting Services From A&M
----------------------------------------------------------------
Cengage Learning, Inc., et al., sought and obtained a supplemental
court order authorizing the expansion of the scope of employment
of Alvarez & Marsal North America, LLC, as their restructuring
advisors.
A&M's expanded services will include accounting support services.
A&M will utilize the personnel of its affiliate, Alvarez & Marsal
Transaction Advisory Group, LLC, to provide the Accounting Support
Services.
A&M will provide the Accounting Support Services to the Debtors,
on an advisory basis, which will include:
(a) Assistance in preparing and completing its accounting and
financial reporting obligations, including monthly,
quarterly and annual internal and external reporting;
(b) Assistance in coordinating its monthly close-to-reporting
cycle with other locations and departments, as necessary;
(c) Assistance in coordinating and facilitating the audit of its
financial statements by its external auditors; and
(d) Assistance with general accounting and reporting matters,
including, but not limited to, technical research and
documentation of the Company's accounting positions and its
application of fresh start accounting.
However, A&M accounting work will not include verification or
constitute a formal review or audit in accordance with any
applicable accounting standards.
A&M clarifies that it is not a public accounting firm or CPA firm
and does not issue opinions on financial statements or provide
audit or other attestation services. While A&M's work may in
clude an analysis of financial accounting data, A&M's engagement
will not constitute an audit, examination, review of any kind,
compilation or compilation of agreed-upon procedures as defined by
the AICPA, or any other type of financial statement reporting
engagement that is subject to the rules of the AICPA, SEC or other
state or nationa l professional or regulatory body.
A&M intends to charge for the Accounting Support Services based on
the related professionals' standard hourly rates consistent with
the Original Employment Order and therefore does not seek to
modify the compensation terms of its retention.
The Debtors believe that A&M is "disinterested" as such term is
defined in section 101(14) of the Bankruptcy Code.
The Debtors relate that the move to expand A&M's services was due
to their loss of various accounting department personnel.
Jonathan S. Henes, Esq., Christopher Marcus, Esq., and Christopher
T. Greco, Esq., of Kirkland & Ellis LLP, in New York, as wel as
James H.M. Sprayregen, Esq., of the firm's Chicago, Illinois
office represent the Debtors.
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. Hilco Valuation
Services, LLC, serve as valuation consultants to the Debtors.
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: Fiat Plan Takes Advantage of Finance, Tax Benefits
------------------------------------------------------------------
Christina Rogers and Gilles Castonguay, writing for The Wall
Street Journal, reported that Sergio Marchionne's vision to create
a global auto maker out of Fiat SpA and Chrysler Group LLC appears
to be about global finance and taxes as well as sharing chassis
and powertrain technology.
According to the report, Fiat Chrysler Automobiles NV, the new
holding company that will control the operations of Italy's Fiat
and No. 3 U.S. auto maker Chrysler, will be based in the
Netherlands, with a U.K. tax domicile and a New York stock
listing.
The structure crossing national boundaries isn't accidental. Each
geography affords the new entity access to something: generous tax
policy, a favorable board structure or deep financial markets, the
report related. Fiat said the moves won't affect the taxes paid
by the group's companies in the jurisdictions in which they
operate.
"We have succeeded in creating solid foundations for a global auto
maker," Mr. Marchionne said in a written statement, the report
cited. "An international governance structure and listings will
complete this vision and improve the group's access to global
markets bringing obvious financial benefits."
The move comes five years after the U.S. government committed to a
$12.5 billion bailout to save Chrysler from collapse, an
arrangement in which Fiat arrived as the white knight, bringing
management and technical expertise without paying any cash at the
time to gain operational control, the report said. Chrysler has
paid back the federal loans, and Fiat announced this month that it
would gain full control of Chrysler in a $4.35 billion deal.
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.
* * *
Standard & Poor's Ratings Services raised its ratings on U.S.-
based auto manufacturer Chrysler Group LLC, including the
corporate credit rating to 'BB-' from 'B+' in mid-January 2014.
The outlook is stable.
CHRYSLER GROUP: Fiat Scraps Dividend
------------------------------------
Gilles Castonguay and Christina Rogers, writing for The Wall
Street Journal, reported that the newly combined Fiat SpA and
Chrysler Group LLC rolled out a new name, a new logo and plans for
a new corporate structure, but fourth-quarter results and a glum
outlook for 2014 showed the challenges ahead for the world's
seventh largest auto maker.
According to the report, now known as Fiat Chrysler Automobiles
NV, the company reported higher fourth-quarter net profit largely
because of a Chrysler tax benefit. Its operations showed growing
strains as losses in Europe and an earnings decline in South
America offset gains from higher truck and sport-utility vehicle
sales in North America. The company's profit forecast for this
year was below analysts' expectations.
Fiat Chrysler suspended its dividend to save cash in the wake of
its $4.35 billion deal to purchase the rest of Chrysler it didn't
already own, the report related. The company also said it would
seek to raise $4.7 billion in fresh debt to pay off a note held by
a United Auto Workers union health-care trust.
The focus now shifts to May, when Chief Executive Sergio
Marchionne is expected to lay out a plan for building a single
company strong enough to compete with Volkswagen AG, General
Motors Co. and Toyota Motor Corp., rivals that are as much as
twice its size, the report said. Toyota's volume last year passed
the 10-million vehicle mark for the first time. Fiat and Chrysler
sold a combined 4.4 million vehicles last year.
In comments on Jan. 29, Mr. Marchionne acknowledged concerns about
Fiat Chrysler's EUR29.9 billion ($40.88 billion) in debt, saying
the company will take a deeper look at its capital needs after it
completes a U.S. share listing and its incorporation in the
Netherlands, the report further related. The combined company
will have its tax domicile in the U.K., where the main tax
corporate rate is expected to decline to 21% effective April 1.
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.
* * *
Standard & Poor's Ratings Services raised its ratings on U.S.-
based auto manufacturer Chrysler Group LLC, including the
corporate credit rating to 'BB-' from 'B+' in mid-January 2014.
The outlook is stable.
CHRYSLER GROUP: Moody's Rates $2BB Loan 'Ba1' & $2.9BB Notes 'B1'
-----------------------------------------------------------------
Moody's Investors Service assigned ratings to debt securities
being offered by Chrysler Group LLC (Chrysler) in connection with
the refinancing of $4.7 billion of VEBA trust note. Ratings
assigned are: Ba1 to $2 billion of new first-lien term loans that
rank pari passu with the company's existing $2.9 billion in
outstanding term loans (also rated Ba1) and B1 to $2.7 billion of
second-lien secured notes that rank pari passu with the company's
$3.2 billion in outstanding second-lien notes (also rated B1).
Proceeds will be used to refinance $4.7 billion in outstanding
VEBA trust note. The company's B1 Corporate Family Rating (CFR),
B1-PD Probability of Default Rating, and SGL-2 Speculative Grade
Liquidity ratings are unaffected. The rating outlook is stable.
RATINGS RATIONALE
The assignment of the new Chrysler ratings recognizes that the
transaction is a refinancing that will not materially change the
company's level of outstanding debt. Benefits from the transaction
will include a meaningful reduction in interest expense as the
VEBA notes carry an effective interest rate of 11.7%. The interest
rate on the new offerings will be considerably lower. However, the
newly-offered obligations will have a shorter maturity profile
compared with the 2023 maturity of the VEBA note.
Chrysler's B1 CFR anticipates that the just-completed acquisition
of 100% of the company by Fiat S.p.A. (Ba3 under review for
downgrade) will facilitate further integration of the financial
and operating strategies of the two companies. However, the
benefits of this integration to Chrysler are mitigated by the use
of approximately $2 billion of Chrysler's liquidity to facilitate
the acquisition. Future benefits could also be tempered by Fiat's
potential need to access Chrysler's cash flow to fund its product
development efforts, and to contend with the pricing, competitive
and overcapacity challenges plaguing the European auto industry.
No decision has been announced concerning the final legal and
financial reporting structure that Chrysler will maintain as a
result of its being 100%-owned by Fiat. Consequently Moody's is
maintaining separate CFRs for each company.
The B1 CFR is supported by the healthy market acceptance of
Chrysler's new product offerings, favorable market share
performance and continued recovery of demand in the US automotive
market. Moody's expects that US industry shipments during 2014
will grow by 3% to 16.25 million units from approximately 15.8
million units during 2013. These positive factors are tempered by
the company's relatively modest new product introduction schedule
for 2014, and by the challenges faced as it integrates with Fiat.
Ongoing weakness in Fiat's core European and Brazilian markets
will continue to stress the operating performance, credit metrics
and cash generation of the combined group.
Chrysler's liquidity position at December 2013 consisted of
approximately $11.3 billion in cash and securities (pro forma for
Chrysler's payments at the time of the acquisition by Fiat), and
$1.3 billion in available credit facilities. In addition, the
company expects to generate $0.5 to $1.0 billion of free cash flow
during 2014. This gross liquidity position of approximately $13
billion provides adequate capacity to fund major cash
requirements. These requirements include $300 million in current
maturities of long term debt and approximately $3 billion that
Moody's estimate is needed to fund intra period working capital
requirements. It also affords the company the ability to contend
with the pronounced cyclicality of the sector and the need to be
able to fund product development programs through the cycle.
Chrysler's credit metrics for the twelve months through September
2013 (reflecting Moody's standard adjustments) provide adequate
support for the B1 CFR, and include: EBITA margin -- 4.2%;
EBITA/interest -- 1.6x; and debt/EBITDA -- 4.0x.
There could be upward potential for the rating over the long term
if Fiat demonstrates progress in addressing its challenges in
Europe and Brazil, and if Chrysler's legal and priority of claim
structure preserves the interest of its creditors as the company
is further integrated into Fiat. Upward rating movement would also
be contingent upon Chrysler's successful implement its portfolio
revitalization plan. Metrics that could support consideration for
a higher rating include an ability to maintain an EBITA margin of
5%, EBITA/interest above 2x, and free cash flow that approaches $2
billion.
Chrysler's rating could come under downward pressure if the
company's product renewal program stalls due to flawed execution
or poor consumer acceptance. An additional source of pressure on
Chrysler's rating could develop if Fiat's operating performance
continues to erode and causes additional financial or operating
strain on Chrysler as part of the integrated group. Credit metric
levels at Chrysler that might signal pressure on its rating
include EBITA margin of 3.5% and EBITA/interest below 1.5x for a
sustained period.
The principal methodology used in this rating was the Global
Automobile Manufacturer Industry published in June 2011. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
CHRYSLER GROUP: S&P Rates Proposed New Secured Term Loan B 'BB+'
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' issue-level
rating to Chrysler Group LLC's proposed new senior secured term
loan B, with a recovery rating of '1', indicating S&P's
expectation of very high (90% to 100%) recovery in the event of a
payment default.
At the same time, S&P affirmed the 'BB+' rating on company's
senior secured term loan B due 2017, which the company proposes to
upsize as part of the transaction. The '1' recovery rating
remains unchanged. The company has stated the additional term
loans will raise up to an additional $2 billion.
In addition, S&P lowered the issue-level ratings on Chrysler's
senior secured second-lien notes to 'B' from 'B+', and revised the
recovery rating to '6' from '5'. The company is pursuing
aggregate add-ons of up to $2.7 billion to the second-lien notes
due 2019 and 2021. The '6' recovery rating, which indicates the
expectation of negligible (0% to 10%) recovery in the event of a
payment default, results from the proposed increase in priority
debt through the term loan transactions and from the larger
outstanding amount of second-lien notes pro forma for the
transaction, which S&P believes reduces recovery prospects for the
noteholders.
S&P expects the company to use proceeds from the transaction to
refinance the $4.7 billion outstanding VEBA Trust Note and about
$0.3 billion of accrued interest. S&P believes this is likely to
result in pretax cash interest savings for Chrysler of more than
$100 million on an annual basis. S&P expects to publish a
recovery report when more details on the transaction are
disclosed.
S&P raised its corporate credit rating on Chrysler to 'BB-' from
'B+' on Jan. 10, 2014, following the announcement that Fiat SpA
would acquire the remaining portion of Chrysler (41.5%) from the
VEBA Trust to gain full control of Chrysler, and following S&P's
affirmation of the Fiat 'BB-' corporate credit rating. S&P now
designates Chrysler as a "core" subsidiary of Fiat under its group
rating methodology and, therefore, equalize the ratings on both
entities. S&P expects Chrysler to generate the majority of the
group's 2014 profits and believe the operations of Fiat and
Chrysler will be further integrated because Chrysler is integral
to Fiat's global vehicle strategy.
RATINGS LIST
Chrysler Group LLC
Corporate credit rating BB-/Stable/--
Ratings Assigned
Chrysler Group LLC
Senior secured term loan B BB+
Recovery Rating 1
Issue Rating Lowered; Recovery Rating Revised
To From
Chrysler Group LLC
Senior secured B B+
Recovery rating 6 5
Issue Rating Affirmed; Recovery Rating Unchanged
Chrysler Group LLC
Senior secured BB+
Recovery rating 1
COLOREP INC: Executive Sounding Board's Katz Okayed as CRO
----------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
has authorized Colorep, Inc., et al., to employ Executive Sounding
Board Associates Inc., to serve as chief restructuring officer.
In a separate filing, Executive Sounding Board Associates, Inc.,
notified the Court that it has changed its name to Executive
Sounding Board Associates, LLC. The firm said the change does not
alter the persons primarily responsible for acting as CRO on
behalf of the debtors.
As reported in the Troubled Company Reporter on Aug. 20, 2013, the
Debtor requested that Court:
-- approve the agreement with Executive Sounding Board
Associates, Inc., to provide crisis management services and
also to provide Robert D. Katz to serve as the Debtors'
chief restructuring officer, well as any required additional
temporary staff, including, but not limited to, Paul Newton;
and
-- authorize the appointment of Mr. Katz as CRO.
The Debtors have agreed to provide an $85,000 postpetition
retainer to ESBA to be funded from the proceeds of the DIP
Financing Facility or cash collateral.
ESBA will have no obligations to represent the Debtors unless the
proposed postpetition retainer is promptly funded.
Mr. Katz and ESBA will, among other things:
-- act as the CRO and as such ESBA will be appointed CRO and
assume certain duties and responsibilities of the day to
day management and operation of the Debtors' businesses,
during their Chapter 11 cases, including responsibility
for the Debtors' compliance with UST requirements and
regulations;
-- evaluate and develop alternative reorganization strategies;
and
-- working to improve the manufacturing process; enhancing
throughput; and material utilization.
ESBA will be compensated on an hourly basis for fees incurred in
rendering services to the Debtors, and reimbursed for actual and
necessary expenses. The hourly billing rate for Mr. Katz is $525
and the hourly billing rate for Mr. Newton will be $395, which
amounts represent reductions of their normal hourly rates and in
consideration of this engagement. In the unlikely event that Mr.
Newton works more than 40 hours per week, ESBA has agreed to cap
Mr. Newton's fees at $15,000 per week. As an alternative and at
ESBA's sole discretion, ESBA would cap Mr. Newton's fees at
$12,500 per week with a $200,000 "success fee" to be paid by
prepetition lender Meserole LLC upon completion of a
reorganization under Chapter 11 of the Bankruptcy Code or a
Section 363 sale. If the election is made, the ESBA Agreement
provides that the terms and conditions of the success fee will be
formalized in a written addendum to the ESBA Agreement.
To the extent they are not performing other billable work while
traveling, travel time for ESBA consultants will be billed at 1/4
their normal hourly rate.
If other consultants from ESBA be needed, their rates will be
billed between $295 and $480 per hour and will be approved by the
Debtors' boards of director in advance.
If the engagement lasts more than six months, ESBA has reserved
the right to increase the hourly fee rates charged, upon prior
written notice.
ESBA was given a $30,000 retainer to secure payment of its fees
and expenses in the prepetition period.
Additionally, the Debtors have agreed that ESBA will be given the
proposed postpetition retainer in the amount of $85,000, which
will be funded from the first funds available under the
DIP Financing Facility.
To the best of the Debtors' knowledge, ESBA, nor any of its
principals, employees, agents or affiliates holds or represents an
interest materially adverse to the Debtors' estates.
In a November filing, Colorep disclosed to the Court that it has
changed its address of record in the bankruptcy proceeding to:
Colorep, Inc.
c/o Law Offices of Joseph P. Bartlett, P.C.
225 Santa Monica Blvd., 11th Floor
Santa Monica, CA 90401
Colorep Inc., an industrial printer from Harrisonburg, Virginia,
filed for Chapter 11 protection (Bankr. C.D. Calif. Case No.
13-27689) on July 10, 2013, in Los Angeles, owing $17 million to
secured lender Meserole LLC. The company licenses a fabric-dyeing
process known as AirDye. Colorep's subsidiary Transprint USA Inc.
also filed in Chapter 11. Transprint produces transfer-printing
paper.
Gary E. Klausner, Esq., at Stutman, Treister & Glatt, P.C.
represents Colorep as reorganization counsel while Stubbs,
Alderton & Markiles LLP serves as it special corporate counsel.
Meserole, LLC, is represented by Frank T. Pepler, Esq., and Stuart
M. Brown, Esq., at DLA Piper LLP (US).
COMMUNITY TOWERS I: San Jose Office Complex to Liquidate in Ch. 7
-----------------------------------------------------------------
Community Towers I LLC, Community Towers II LLC, Community Towers
III LLC and Community Towers IV LLC failed to persuade the
Bankruptcy Court in San Jose, California, to allow them to
reorganize in Chapter 11.
On Jan. 24, 2014, Bankruptcy Judge Stephen L. Johnson converted
the Debtors' Chapter 11 cases to a liquidation in Chapter 7.
According to the case docket, Fred Hjelmeset has been appointed
Chapter 7 Trustee and a meeting of creditors has been scheduled
for Feb. 7.
Tracy Hope Davis, United States Trustee for Region 17, sought
conversion of the Debtors' cases, citing three grounds: (a) the
Debtors have lost their real property to foreclosure; (b) the
Debtors have overdue quarterly fees; and (c) the Debtors have no
incentive to pursue potential affirmative claims against insiders.
The Debtors, however, argue that there is no cause to convert
pursuant to 11 U.S.C. Section 1112(b)(4)(A); all fees due to the
U.S. Trustee have been paid; and Chapter 7 conversion at this time
will not benefit unsecured creditors. The Debtors said in court
papers filed earlier this month that they are still evaluating
their options to conclude the bankruptcy cases, including whether
there are any means to cost-effectively provide a return to
creditors. This evaluation requires additional time, however,
especially in light of the recent foreclosure and the unresolved
Objection to Claims and Turnover Motion involving San Jose Towers
Corporation, successor to pre-bankruptcy lender CIBC, Inc. If
after the Debtors complete their evaluation and determine it is in
the best interests of the estates to convert these bankruptcy
cases, the Debtors said they will cooperate with the U.S. Trustee
and any chapter 7 trustee to effect the transition. However,
there is neither any reason nor any cause to convert these
bankruptcy cases at this time.
Until the foreclosure, the Debtors continued to operate and lease
the Property, generating revenues therefrom. Since the
foreclosure, the Debtors have cooperated in turning over the
Property to SJTC. The remaining focus of the Debtors' efforts has
been with respect to the Objection to Claims and the Turnover
Motion. As set forth the Turnover Motion, SJTC contends that it
is owed a deficiency claim of $17,383,446 and that it is entitled
to all cash in the Debtors' possession. The Debtors have argued
that that SJTC is only entitled to $377,992.00 from the Debtors'
debtor-in-possession bank account, on account of the CIBC Claims.
The Debtors have endeavored to retain funds over SJTC's demands
and to minimize the amount of CIBC Claims, in an effort to protect
the bankruptcy estates and maximize return to creditors.
The Debtors said they and their professionals have intimate
knowledge of the CIBC Claims and the loan with CIBC. In addition,
regardless of the outcome of the Turnover Motion, the Debtors
contend they are in the best position to administer their bank
accounts and to complete the final administration of any remaining
assets. A chapter 7 trustee, on the other hand, would have a
steep learning curve to familiarize itself with the
particularities of the Bankruptcy Cases and with all issues
pertaining to CIBC and SJTC.
While the Debtors do not dispute that conversion may be
appropriate in the future, at this time, there is no indication
that the Debtors have acted in any fashion other than to continue
with their duties in endeavoring to minimize any diminishment to
the estate.
The UST Motion indicates that as of Oct. 31, 2013, the Debtors
were delinquent on UST fees in the amount of $2,282.09.
The Debtors said that since November 2013, they -- through their
counsel -- have cooperated and communicated with the UST's
representatives regarding all outstanding UST fees. On Dec. 18,
2013, the Debtors, through their counsel, were notified that only
fees due from Community Towers III in the amount of $976.65
remained due and unpaid, and the Debtors immediately paid such
amount. Accordingly, the Debtors are current with all outstanding
amounts.
The UST Motion points out that certain transfers to insiders
within one year of the commencement of the Bankruptcy Cases, as
indicated in the Debtors' Statement of Financial Affairs,
represent potential recoverable assets for the estate. This
reasoning is flawed, however, because even if the alleged
transfers were avoidable, a chapter 7 trustee would have no
standing to bring any such actions.
Even in the instance of a converted case, the Debtors said the
two-year deadline under 11 U.S.C. section 546(a)(1)(A) begins at
the date of the original order for relief and not at the
conversion date. The Debtors cited Bergquist v. Vista Dev., Inc.
(In re Quality Pontiac Buick GMC Truck, Inc.), 222 B.R. 865
(Bankr. D. Minn. 1998). Because two years have passed since the
Petition Date, any avoidance actions brought by a chapter 7
trustee appointed at this time, would be time-barred.
Even assuming, arguendo, that a chapter 7 trustee had standing to
pursue avoidance actions at this time, other factors militate
against conversion at this time. Professional fees exceed
$1,600,000 in these cases. The appointment of a chapter 7 trustee
and the necessary retention of professionals to investigate,
evaluate and potentially prosecute avoidance claims will only
increase the amount of administrative fees in the bankruptcy
cases. Thus, even if the Debtors prevail on the Turnover Motion,
less than $1 million would remain in the estates and almost all,
if not all, of any recovery from avoidance actions likely would be
exhausted to pay administrative expenses.
Moreover, even if nominal amounts remained after payment of
administrative expenses, the benefit to trade creditors would be
minimal at best, according to the Debtors. The UST Motion
references general unsecured claims in the amount of $573,978.
The body of general unsecured claims is much greater than the
amount referenced in the Motion by virtue of the Debtors' First
Amended Schedule F filed on Nov. 15, 2011, which added the debt of
John and Rosalie Feece to Schedule F and increased the pool of
general unsecured claims in the amount of $6,621,000.
Accordingly, distributions, if any, to general trade creditors and
to parties holding lease deposits would be minimal in amount.
The Debtors are represented by:
John Walshe Murray, Esq.
Robert A. Franklin, Esq.
Thomas T. Hwang, Esq.
DORSEY & WHITNEY LLP
305 Lytton Avenue
Palo Alto, CA 94301
Telephone: (650) 857-1717
Facsimile: (650) 857-1288
E-mail: murray.john@dorsey.com
franklin.robert@dorsey.com
hwang.thomas@dorsey.com
The Litigation Counsel for the Debtors is:
William L. Conti, Esq.
LAW OFFICES OF WILLIAM L. CONTI
100 E San Marcos Blvd #404
San Marcos, CA 92069
Telephone: (760) 780-1700
Facsimile: (760) 705-1335
About Community Towers I
Community Towers I LLC is a real estate investment company.
Community Towers I LLC and various affiliates -- Community Towers
II, LLC, Community Towers III, LLC, Community Towers IV, LLC --
filed a Chapter 11 petition (Bankr. N.D. Cal. Lead Case No.
11-58944) on Sept. 26, 2011, in San Jose, California.
Each of the Debtors is a limited liability company formed under
the laws of the State of Delaware on June 1, 2006 for the purpose
of acquiring a 305,000-square foot office complex located at 111
West Saint John Street and 111 North Market Street, San Jose,
California commonly known as the Community Towers. The Property
was owned by the Debtors as tenants in common with Community
Towers I owning an undivided 54.4% interest, Community Towers II
owning an undivided 17.9% interest, Community Towers III owning an
undivided 12.7% interest, and Community Towers IV owning an
undivided 15% interest. The multiple entities and ownership
interests reflect prior investment projects of John Feece and
Rosalie Feece, the proceeds of which were invested in the
Property. The Debtors purchased the Property for $41,500,000.
Community Towers I disclosed $51,939,720 in assets and $39,479,784
in liabilities as of the Chapter 11 filing.
John Walshe Murray, Esq., at Dorsey & Whitney LLP, represents the
Debtor as counsel, in substitution for Murray & Murray, A
Professional Corporation. ACM Capital serves as financial
advisor.
Community Towers I, LLC, et al., submitted to the U.S. Bankruptcy
Court for the Northern District of California a Disclosure
Statement explaining the Second Amended Joint Plan of
Reorganization dated Aug. 16, 2013.
As reported in the Troubled Company Reporter on March 5, 2013, the
Court denied confirmation of the prior version of the Debtors'
Joint Chapter 11 Plan. CIBC Inc., voted against the Joint Plan
and opposed confirmation contending that the Joint Plan (1)
improperly includes a third party release in violation of 11
U.S.C. Section 524; violates Section 1129(a)(11) because it is not
feasible; and is not fair and equitable to CIBC because the
interest rate proposed to be paid is inadequate to compensate CIBC
for the risk inherent in its loan to Debtors.
COMMUNITY TOWERS I: Must Turn Over Postpetition Rent to SJTC
------------------------------------------------------------
San Jose Towers Corporation, successor to CIBC, Inc., the
foreclosing lender on real estate owned by Community Towers I
through IV, filed a motion for the turnover of roughy $1 million
in the Debtors' bank account. SJTC contends this money from rent
and profits is the remainder of its cash collateral but the
Debtors disagree. The Debtors contend that CIBC did not have an
enforceable security interest in the Rents and Profits. The
matter came on for hearing on Dec. 18, 2013.
In a Jan. 21 Order, U.S. Bankruptcy Judge Stephen L. Johnson finds
that SJTC is entitled to the Rents and Profits generated post-
petition but not those generated pre-petition.
This case involved an office building in downtown San Jose,
California. In June 2006, the Debtors purchased the Property for
$41,500,000. To facilitate the transaction, the Debtors borrowed
$33,500,0002 from CIBC, a Chicago, Illinois based subsidiary of
Canadian Imperial Bank of Commerce. Principal of $6,000,000 plus
fees and interest of the CIBC loan is guaranteed by John and
Rosalie Feece.
The Debtors sought to confirm a chapter 11 plan to refinance the
real property but the court denied confirmation. Thereafter, the
court granted the lender (then, CIBC), relief from the automatic
stay to foreclose on the property.
On Nov. 5, 2013, as CIBC's assignee, SJTC foreclosed on the
property, making a credit bid of $22.5 million. Because the
original loan balance was $33.5 million, SJTC has a substantial
deficiency balance owing.
Following the foreclosure sale SJTC requested through counsel that
the Debtors turn over roughly $1 million in cash collateral in
three separate Debtor In Possession bank accounts. The Debtors
refused to return the portion of the funds consisting of
prepetition rents because they claimed the funds were not SJTC's
cash collateral. The Debtors would agree to return approximately
$377,992, which the Debtors contend is the cash generated
postpetition by the Debtors' building operations, net of expenses.
Judge Johnson said:
-- SJTC is entitled to $377,992, representing the balance of
postpetition rents net expenses, and the Debtors must
turnover this amount to SJTC within 14 days from the entry
of the court order;
-- The motion is denied as to prepetition Rents and Profits;
-- To the extent SJTC disputes the amount of expenses
deducted from the postpetition rents, it may contact the
courtroom deputy to schedule a status conference, at which
time the court will consider setting a briefing schedule
and/or evidentiary hearing.
About Community Towers I
Community Towers I LLC is a real estate investment company.
Community Towers I LLC and various affiliates -- Community Towers
II, LLC, Community Towers III, LLC, Community Towers IV, LLC --
filed a Chapter 11 petition (Bankr. N.D. Cal. Lead Case No.
11-58944) on Sept. 26, 2011, in San Jose, California.
Each of the Debtors is a limited liability company formed under
the laws of the State of Delaware on June 1, 2006 for the purpose
of acquiring a 305,000-square foot office complex located at 111
West Saint John Street and 111 North Market Street, San Jose,
California commonly known as the Community Towers. The Property
was owned by the Debtors as tenants in common with Community
Towers I owning an undivided 54.4% interest, Community Towers II
owning an undivided 17.9% interest, Community Towers III owning an
undivided 12.7% interest, and Community Towers IV owning an
undivided 15% interest. The multiple entities and ownership
interests reflect prior investment projects of John Feece and
Rosalie Feece, the proceeds of which were invested in the
Property. The Debtors purchased the Property for $41,500,000.
Community Towers I disclosed $51,939,720 in assets and $39,479,784
in liabilities as of the Chapter 11 filing.
John Walshe Murray, Esq., at Dorsey & Whitney LLP, represents the
Debtor as counsel, in substitution for Murray & Murray, A
Professional Corporation. ACM Capital serves as financial
advisor.
Community Towers I, LLC, et al., submitted to the U.S. Bankruptcy
Court for the Northern District of California a Disclosure
Statement explaining the Second Amended Joint Plan of
Reorganization dated Aug. 16, 2013.
As reported in the Troubled Company Reporter on March 5, 2013, the
Court denied confirmation of the prior version of the Debtors'
Joint Chapter 11 Plan. CIBC Inc., voted against the Joint Plan
and opposed confirmation contending that the Joint Plan (1)
improperly includes a third party release in violation of 11
U.S.C. Section 524; violates Section 1129(a)(11) because it is not
feasible; and is not fair and equitable to CIBC because the
interest rate proposed to be paid is inadequate to compensate CIBC
for the risk inherent in its loan to Debtors.
COOPER TIRE: Moody's Confirms B1 CFR & Alters Outlook to Negative
-----------------------------------------------------------------
Moody's Investors Service revised Cooper Tire & Rubber Company's
rating outlook to negative. In a related action, the company's
credit ratings were confirmed, including Corporate Family and
Probability of Default rating at B1 and B1-PD, respectively, and
senior unsecured notes at B2. This action concludes the review for
downgrade initiated on June 17, 2013. The company's Speculative
Grade Liquidity Rating was lowered to SGL-4 from
SGL-2.
Ratings confirmed:
B1, Corporate Family Rating;
B1-PD, Probability of Default;
B2 (LGD4, 62%) Senior unsecured Notes due 2019;
B2 (LGD4, 62%) Senior unsecured Notes due 2027;
The following rating was lowered:
Speculative Grade Liquidity Rating, to SGL-4 from SGL-2
Rating outlook to Negative
RATINGS RATIONALE
The impetus for the review initiated on June 17, 2013 was the
question as to the final capital structure at Cooper Tire
following the completion of the proposed merger with Apollo Tyres
under which Moody's estimated that Cooper Tire's pro forma
Debt/EBITDA leverage could nearly triple to approximately 4.5x
inclusive of Moody's standard adjustments. With the termination of
the merger agreement the prospects for a significant increase in
financial leverage have been reduced. However, the work stoppages
at the Cooper Chengshan Tire joint venture driven by the proposed
merger resulted in a disrupted relationship between the joint
venture and Cooper Tire. As a result, Cooper Tire has been unable
to obtain financial information needed to file its 10Q for the
period ending September 30, 2013. Additionally, Cooper Tire's
second quarter 2013 sales and operating profit also were adversely
impacted by reduced unit volumes and less favorable pricing and
mix due to inventory adjustments by U.S. customers, and reduced
prices reflecting lower raw material costs at the end of the
quarter to respond to earlier actions by several competitors.
"We anticipate that the termination of the merger agreement will
resolve issues with the Cooper Chengshan Tire joint venture. In
addition, Cooper's management has indicated that it is expecting
to be profitable for the second half of 2013 and for full-year
2013 with a strong balance sheet. However, the negative rating
outlook reflects Moody's concern that the work stoppage and the
operating trends in the company's second quarter 2013 results may
have continued to impact results, and the degree to which the
company's inability to produce timely financial statements may
impact the company's financing agreements," Moody's said.
Cooper Tire's Speculative Grade Liquidity rating was lowered to
SGL-4 from SGL-2 indicating a weak liquidity profile resulting
from the company's current inability to produce financial
statements. As such, Moody's cannot determine Cooper Tire's cash
balances nor the availability under the company's ABL revolving
credit facility and receivable securitization facility.
As of June 30, 2013, cash balances were approximately $244 million
and the company's $200 million asset based revolving credit
facility maturing in 2016 was undrawn. The facility is governed by
a borrowing base formula on receivables and inventory and does not
have material financial maintenance covenants. The $125 million
accounts receivable securitization facility has a maturity of June
2015, and was undrawn at June 30, 2013. However, the inability to
produce financial statements may impact Cooper Tire's ability to
access the asset based revolving credit and accounts receivable
securitization facilities and creates uncertainty around
predicting free cash flow generation.
Developments that could lead to a lower rating include: the
inability to produce timely financial statements over the coming
months, any indication that access to the company's asset based
revolving credit facility has been interrupted, any indication of
a deterioration in market share, or an acceleration of payments
under the company's debt facilities. Total debt at June 30, 2013
was approximately $396 million.
Cooper Tire's rating outlook could stabilize upon the resumption
of producing timely financial statements demonstrating credit
metrics consistent with recent historical trends.
The principal methodology used in this rating was the Global
Automotive Supplier Industry published in May 2013. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Cooper Tire & Rubber Company, headquartered in Findlay, OH, is the
fourth largest tire manufacturer in North America and is focused
on the replacement markets for passenger cars and light and medium
duty trucks. Revenues for the LTM period ending June 30, 2013 were
$3.9 billion.
CORRECTION CORP: Fitch Affirms 'BB+' IDR & Unsec. Notes Rating
--------------------------------------------------------------
Fitch Ratings has affirmed the credit ratings of Corrections
Corporation of America (CCA) as follows:
-- Issuer Default Rating (IDR) at 'BB+';
-- $900 million secured revolving credit facility at 'BBB-';
-- $675 million senior unsecured notes at 'BB+'.
The Rating Outlook is Stable.
Key Rating Drivers
The affirmation of CCA's IDR at 'BB+' reflects the company's
strong credit metrics offset by declining occupancy rates and
contract losses. Over the last year, the company has benefited
from refinancing its unsecured bonds at a lower cost, thus
improving its fixed-charge coverage ratio. The company also
upsized its secured revolving credit facility, improving its
liquidity. CCA converted to a Real Estate Investment Trust (REIT)
with a Taxable REIT Subsidiary (TRS) structure in 2013. The REIT
tax election reduces the company's ability to retain meaningful
amounts of cash flow, a credit negative.
Strong Financial Metrics
CCA has leverage that is low relative to Fitch's rated REIT
universe, but in-line with broader corporates at the same rating
level. Leverage was 2.9x for the Trailing Twelve Months (TTM)
ended Sept. 30, 2013 versus 2.6x and 2.8x for full year 2012 and
2011, respectively. The increase was due primarily to declines in
EBITDA due to lost contracts. CCA targets leverage of 3.0x with a
maximum level of 4.0x. Fitch projects that leverage will rise
moderately as the company moves forward with development projects
but will remain below 3.5x. Fitch defines leverage as net debt
plus operating leases and guarantees divided by recurring
operating EBITDA.
Fitch does not expect the company to engage in meaningful
shareholder-friendly activities such as share repurchases and
would expect the company to allocate any free cash flow towards
development and debt reduction.
CCA also has a high level of fixed-charge coverage. Coverage was
7.6x for the TTM ended Sept. 30, 2013 versus 6.7x and 5.6x in full
years 2012 and 2011, respectively. Coverage has improved
significantly in recent years as a result of refinancing debt at
lower costs. Fitch projects that coverage will remain strong in
2014 and 2015. Fitch defines coverage as recurring operating
EBITDA less recurring maintenance capital expenditures divided by
interest expense incurred.
Falling Occupancies
Average compensated occupancy was 84.1% for the quarter ended
Sept. 30, 2013, down from a high of 99% for the quarter ended June
30, 2007. While CCA desires a certain level of vacancy in order
to meet potential demand, occupancy has fallen steadily over the
past six years. This trend has been driven by the company
increasing its available beds from to 90,000 from 73,000 over the
same time period coupled with contract losses which have resulted
in idled facilities. Despite falling occupancies, CCA has grown
its revenue per compensated man-day steadily and maintained its
operating margin.
Solid Competitive Position
The long-term credit characteristics of the private correctional
facilities industry are attractive. Public prisons are generally
overcrowded and the supply of new prisons has been modest over the
past five years. The private sector accounts for approximately
10% of the U.S. prison market, and CCA is the market leader with
43% market share of all private prison beds. CCA's largest
competitor, The GEO Group, controls 30% of private prison beds,
but relatively high barriers of entry exist for other potential
competitors. Despite slight declines in prison populations since
2009, the U.S. private correctional facilities should continue to
exhibit modest growth in the long-run but may experience periods
of weakness due to cyclical factors such as long lead-time state
budget decision making.
Limited Real Estate Value
CCA's real estate holdings provide only modest credit support.
There are limited to no alternative uses of prisons and the
properties are often in rural areas. The company has never
obtained a mortgage on any of its owned properties and there is
minimal track record of secured debt for prison properties
broadly. However, the facilities do provide essential
governmental services, so there is inherent value in the
contracts. Additionally, prisons have a long depreciable life of
50 years with a practical useful life of approximately 75 years.
CCA has a young owned portfolio with a median age of approximately
16 years.
Limited Secured Debt Market
The secured debt market for prisons remains undeveloped and is
unlikely to become as deep as that for other commercial real
estate asset classes, weakening the contingent liquidity provided
by CCA's unencumbered asset pool. Fitch would view increased
secured lender institutional interest for prisons throughout
business cycles as a positive credit characteristic. Despite
limited secured debt access, Fitch expects that the company will
retain strong access to capital through the bank, bond and equity
markets to fund its business and address debt maturities.
Relatively Stable Contractual Income
CCA enters into contracts with federal agencies as well as state
and local governments. These customers typically guarantee
contracts either at a per inmate per day ('per diem') rate or
utilize a 'take or pay' arrangement which guarantees minimum
occupancy levels. Contracts with these government authorities are
generally for three to five years with multiple renewal terms but
can be terminated at any time without cause. Terms are typically
exposed to a legislative bi-annual or annual appropriation of
funds process. Since contracts are subject to appropriation of
funds, strained budget situations at federal, state, and local
levels could pressure negotiated rates.
The company received multiple requests for assistance with
contracts from its government customers throughout the downturn.
CCA was able to adjust cost items in contracts to compensate for
reduced revenue levels such that the contracted profit and margins
did not deteriorate. As a result, the company had strong relative
financial performance through the recent recession.
Concentrated, But Credit Worthy Customer Base
CCA's customer base is highly credit worthy but slightly
concentrated as evidenced by the top 10 tenants accounting for 81%
of YTD revenues in 2013. The company's top three customers are
large federal correctional and detention authorities, which
collectively made up 43% of revenues for the nine months ended
Sept. 30, 2013. The United States Marshals accounts for 18% of
revenue, the U.S. Immigration and Customs Enforcement accounts for
13% of revenue and the Bureau of Prisons accounts for 12% of
revenue. California, Georgia and Tennessee are the three largest
state customers and collectively account for 24% of YTD revenue.
The risk of revenue loss from the California corrections
realignment program has been mitigated by recent actions from the
state including new leases signed in 2013.
Conservative Financial Policies
Management has stated a leverage target equivalent to 3.0x, with a
cap at 4.0x. CCA maintains good financial flexibility as it
generates annualized AFFO of nearly $300 million. Approximately
75% of AFFO will be used to support the dividend while the
remaining 25% will go towards prison construction, debt reduction
or other corporate activities. The company's ROI hurdle rate is
13-15% cash-on-cash, pre-tax EBITDA returns to all capital
investments. CCA does not have any debt maturing until 2017.
Adequate Liquidity Coverage
CCA's liquidity coverage is 1.5x for the period Oct. 1, 2013 to
Dec. 31, 2015. Sources of liquidity include unrestricted cash,
availability under the company's credit facility and projected
retained cash flows from operating activities after dividends.
Uses of liquidity include development and other capital
expenditures. CCA benefits from not having any debt maturities
until 2017.
Secured Credit Facility Notching
The secured credit facility is rated at 'BBB-', one notch above
the IDR. The secured credit facility is effectively senior to the
unsecured bonds. CCA's accounts receivables are pledged as
collateral for the secured credit facility. Accounts receivables
were $220 million as of Sept. 30, 2013. Equity in the company's
domestic operating subsidiaries and 65% of international
subsidiaries are also pledged as collateral. The long-term fixed
assets are not pledged.
As of Sept. 30, 2013, leverage through the secured credit facility
was approximately 1.3x based on the drawn amount, and 2.3x on a
fully-drawn basis.
Rating Sensitivities
Considerations for an investment grade IDR include:
-- Increased privatization of the correctional facilities
industry;
-- An acceleration of market share gains and/or contract wins;
-- Adherence to more conservative financial policies (2.0x
leverage target; 4.0x minimum fixed charge coverage);
-- Increased mortgage lending activity in the private prisons
sector.
Considerations for downward pressure on the IDR/Outlook include:
-- Fitch's projection of leverage sustaining above 3.5x coupled
with continued fundamental business headwinds. Should
operating fundamentals improve, indicating current operating
weakness is more cyclical than secular in nature, leverage
sustaining above 4.0x would be considered for downward
pressure on the IDR or Outlook;
-- Increased pressure on per diem rates from customers;
-- Decreasing market share or profitable contract losses;
-- Material political decisions negatively affecting the long-
term dynamics of the private correctional facilities industry.
COEUR MINING: Moody's Cuts CFR to B3 & Unsec Notes Rating to Caa1
-----------------------------------------------------------------
Moody's Investors Service downgraded the Corporate Family and
Probability of Default Ratings of Coeur Mining, Inc. ("Coeur",
formerly known as Coeur d'Alene Mines Corporation) to B3 from B2
and B3-PD from B2-PD, respectively. At the same time, Moody's
downgraded Coeur's senior unsecured notes rating to Caa1 from B3.
The Speculative Grade Liquidity Rating is unchanged at SGL-2. The
ratings outlook is stable.
Ratings Rationale
The downgrade to a B3 Corporate Family Rating reflects the
challenges confronting Coeur which will likely result in operating
and financial performance and debt protection metrics tracking
meaningfully below our original expectations, particularly should
silver and gold prices continue to decline from current levels.
Coeur's average realized prices for silver and gold dropped 32%
and 20%, respectively during the third quarter of 2013 compared
with fiscal 2012. Profit margins and credit metrics (including
Moody's standard accounting adjustments) have similarly weakened
with EBIT margin, EBIT-to-interest and debt-to-EBITDA hitting
1.9%, 0.4 times and 2.1 times, respectively, for the 12 months
ended September 30, 2013 versus 18.3%, 4.9 times and 0.9 times,
respectively, in 2012. Coeur anticipates a further decline in
realized prices in the fourth quarter of 2013, when silver and
gold prices are expected to approach $20.54/oz and $1,249/oz,
respectively versus $21.06/oz and $1,329/oz reported in the third
quarter.
Given the company's relatively high cost position, Moody's expects
the company's production volumes and margins to come under further
pressure if gold and silver prices continue to weaken. The cash
operating cost at the company's Kensington gold mine were
estimated to be $949 per ounce of gold in fiscal 2013, while
average production costs for silver were estimated at $9.87/ oz
after gold by-product credits. Moody's estimates average cash cost
across all mines at $850-$875 per gold equivalent ounce.
The company is implementing a number of measures to reduce costs
and improve liquidity, including deferring development projects,
focusing on mining higher margin ore sources and reducing planned
capital expenditures. Moody's believes that the company can take
additional steps to reduce costs should gold and silver prices
continue to fall. However, it is uncertain whether these
initiatives can provide enough cushion against the headwinds that
will continue to put pressure on the company's operating
performance over the medium term. The price environment for
precious metals has weakened significantly in 2013 and Moody's
believes that further decline in prices over the next 12 to 18
months is possible. In the event that silver and gold prices slide
toward $19/oz and $1,100/oz, respectively, Moody's anticipates
that debt-to-EBITDA will exceed 5x and Coeur would generate
operating losses, with operating cash flows marginally sufficient
to cover the scaled-down capital investments.
"Despite these headwinds, we believe that Coeur possesses a
sufficient level of liquidity to help the company withstand a
weaker price environment while it executes its announced cost-
cutting measures. The SGL-2 Speculative Grade Liquidity rating
reflects our view that the company will maintain good liquidity
over the next four quarters, highlighted by modestly positive free
cash flows in spite of the recent decline in metal prices. The
company has indicated CAPEX in 2014 of below $80 million, which is
expected to be lower than 2013 spending. The company's liquidity
position consists of over $200 million of cash (as of December 31,
2013) as well as an undrawn $100 million revolver. Furthermore,
after amending its financial covenants under the revolver in
January 2014, we expect Coeur to maintain compliance under these
covenants with sufficient cushion over the next four quarters,"
said Moody's.
"The stable outlook reflects our expectation that the company will
maintain modestly positive free cash flows, with Debt/ EBITDA, as
adjusted, tracking below 5.5x on a sustained basis," according to
Moody's.
The Caa1 rating on Coeur's senior unsecured notes reflects their
junior position in the capital structure relative to the secured
revolver.
Ratings could be downgraded if prices of gold and silver decline
sharply, and if the company's cost position remains high such that
profit margins, debt protection metrics and the company's
liquidity position deteriorate significantly. Quantitatively,
metrics could be lowered if debt-to-EBITDA is likely to exceed and
be sustained above 5.5 times, EBIT-to-interest likely to fall and
be sustained below 1.0 times, EBIT margins likely to fall and be
sustained below 2% and the company generates negative free cash
flow on a sustained basis.
Given the near term price and cost headwinds facing Coeur, an
upward movement in the rating is unlikely at this point. The
ratings could be upgraded if the company can improve its cost
position and demonstrate stable operating performance even at
lower gold and silver prices. Quantitatively, ratings could be
upgraded if debt-to-EBITDA were sustained below 4.0 times, EBIT-
to-interest above 3.0 times and EBIT margins above 4%.
The principal methodology used in this rating was the Global
Mining Industry published in May 2009. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.
Coeur Mining, Inc. (Coeur) is a mid-tier silver and gold producer
whose properties include the Kensington gold mine in Alaska,
Rochester silver and gold mine in Nevada, Palmarejo silver and
gold mine in Mexico, and the San Bartolome silver mine in Bolivia.
The company also has additional assets in Mexico, Argentina and
Australia. For the 12 months ending September 30, 2013, the
company generated revenues of approximately $783 million and had
silver and gold production of roughly 16.5 million ounces and
242,000 ounces, respectively.
CYNERGY GROUP: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Cynergy Group International, LLC
4316 Marina City Drive
Penthouse 29
Marina Del Rey, CA 90292
Case No.: 14-11637
Chapter 11 Petition Date: January 29, 2014
Court: United States Bankruptcy Court
Central District Of California (Los Angeles)
Judge: Hon. Julia W. Brand
Debtor's Counsel: Adam W Pollock, Esq.
POLLOCK LAW FIRM
31225 La Baya Dr Ste 215
Westlake Village, CA 91362
Tel: 818-991-7760
Fax: 818-991-7708
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The Debtor did not file a list of its largest unsecured creditors
when it filed the petition.
DENVER MERCHANDISE: 5th Cir. Affirms Prepayment Ruling v. BoNY
--------------------------------------------------------------
The United States Court of Appeals, Fifth Circuit, affirmed a
district court judgment which disallowed Bank of New York Mellon's
claim for a contractual prepayment consideration in the Chapter 11
case of Denver Merchandise Mart, a large exposition center in
Denver, Colorado.
GC Merchandise Mart, LLC, owner of the Denver Merchandise Mart,
executed a promissory note dated Sept. 30, 1997 in favor of Dynex
Commercial, Inc., a predecessor in interest to Bank of New York
Mellon in exchange for a $30 million loan. The Note bore interest
at a non-default rate of 8.3% and contained several clauses, only
two of which are at issue in this appeal: Article 4 and Article 6.
Article 4 provides that "if any payment required in this Note is
not paid prior to the tenth (10th) day after the date when due or
on the Maturity Date or on the happening of any other default,"
certain sums become immediately due and payable, including the
principal balance, interest, default interest, "other sums, as
provided in this Note," and "all other moneys agreed or provided
to be paid by Borrower in this Note, the Security Instrument or
the Other Security Documents," among other things.
Article 6 provides that the Borrower may prepay the Note under
certain circumstances but must also pay a Prepayment
Consideration, which is essentially a penalty for prepayment.
GCMM stopped making payments on the Note in October 2010 and thus
defaulted under its terms. The Lender issued a notice of default,
which GCMM failed to cure. Though GCMM made two more partial
payments, it made no payment whatsoever after December 2010. As
permitted by its security instruments, the Lender obtained an ex
parte order appointing a receiver of the Merchandise Mart, at
which point GCMM, its parent company is Hawthorn Lakes Associates,
Ltd., and affiliate, Denver Merchandise Mart Inc., filed for
bankruptcy.
At that time, GCMM owed the Lender approximately $24 million.
The Lender argued that payment of the Prepayment Consideration
under Article 6, valued at $1.8 million, is required by Article
4's acceleration clause, notwithstanding the fact that GCMM
stopped making payments under the Note after December 2010 and
never paid the Note prior to the maturity date.
The bankruptcy court disagreed on four grounds. First, it found
that some payment, whether voluntary or involuntary, must actually
be made to trigger the obligation to pay the Prepayment
Consideration. Second, it found that the rationale for requiring
a Prepayment Consideration did not apply here. Third, it found
that the cases cited by the Lender were inapposite because in each
of those cases, the acceleration clause specifically provided that
acceleration of the note would trigger the obligation to pay the
prepayment consideration. Fourth and finally, the bankruptcy
court noted that it would have been easy to expressly provide for
payment of the Prepayment Consideration in the event of
acceleration.
Thus, although the bankruptcy court allowed the Lender to recover
a $25 million secured claim under the Note in conjunction with
confirming the reorganization plan, it disallowed the $1.8 million
claim for the Prepayment Consideration under Article 6 of the
Note.
The Lender appealed the bankruptcy court's order to the district
court. The district court affirmed the bankruptcy court in full.
The Lender timely appealed to the Fifth Circuit. The only issue
the Lender presents on appeal is whether or not GCMM became liable
for the $1.8 Prepayment Consideration upon the pre-bankruptcy
acceleration of the Note.
Circuit Judge W. Eugene Davis, who penned the Fifth Circuit's
decision, held that under general Colorado law, a lender is not
entitled to a prepayment penalty when the lender chooses to
accelerate the note. Absent a clear contractual provision to the
contrary or evidence of the borrower's bad faith in defaulting to
avoid a penalty, the lender's decision to accelerate acts as a
waiver of a prepayment penalty. In DMM's case, that general rule
controls.
Judge Davis also held that the plain language of the contract does
not require the payment of the Prepayment Consideration in the
event of mere acceleration. Quite the opposite, in fact: the
plain language plainly provides that no Prepayment Consideration
is owed unless there is an actual prepayment, whether voluntary or
involuntary. Bank of New York Mellon, Judge Davis said, has
advanced no viable alternative interpretation of the Note.
The appellate case is, BANK OF NEW YORK MELLON, as successor to
Bank of New York Global Capital Access One, Inc., Commercial
Mortgage Bonds, Series 3, care of Berkadia Commercial Mortgage
L.L.C., Appellant, v. GC MERCHANDISE MART, L.L.C., DENVER
MERCHANDISE MART, INC., and HAWTHORN LAKES ASSOCIATES, LTD.,
Appellees (5th Cir.).
A copy of the Fifth Circuit's Jan. 27, 2014 decision is available
at http://is.gd/Q4revefrom Leagle.com.
About GC Merchandise Mart
Dallas, Texas-based GC Merchandise Mart LLC and its affiliates
collectively operate the Denver Merchandise Mart, which is the
Rocky Mountain region's premier wholesale market center and a site
for international, national and regional trade shows, consumer
shows, and special events.
GC Merchandise filed for Chapter 11 bankruptcy protection on
March 1, 2011 (Bankr. N.D. Tex. Case No. 11-31563). The Debtor
estimated its assets and debts at $10 million to $50 million.
Affiliate American Mart Hotel Corporation, dba Comfort Inn of
Denver, filed a separate Chapter 11 petition on Aug. 26, 2010
(Bankr. N.D. Tex. Case No. 10-36776).
Parent Hawthorn Lakes Associates, Ltd., and affiliate Denver
Merchandise Mart, Inc., filed separate Chapter 11 petitions
(Bankr. N.D. Tex. Case Nos. 11-31617 and 11-31615) on March 4,
2011. Each of the petitions listed under $1 million in both
assets and debts.
DETROIT, MI: Wants 50,000 Visas to Bring Immigrants to City
-----------------------------------------------------------
Joseph Lichterman, writing for Reuters, reported that Michigan
Governor Rick Snyder called for the U.S. government to set aside
50,000 special visas over the next five years to attract highly
skilled immigrants to live and work in the bankrupt city of
Detroit.
According to the report, the proposal by the Republican governor
would have to be implemented by the federal government at a time
when immigration reform is one of the most contentious political
issues.
Snyder hopes that a pool of talented workers would encourage
companies to bring new jobs by relocating to the financially
struggling city, which has seen its population decline to about
700,000 from a peak of 1.8 million in 1950, the report related.
The EB-2 visas would be aimed at individuals with advanced degrees
and exceptional skills in fields such as the auto industry,
information technology, healthcare and life sciences, Snyder said
at an event announcing the proposal, the report further related.
EB-2 visas allow individuals with special talents to enter the
country without a job offer, the report said.
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.
The Hon. Steven Rhodes oversees the bankruptcy case. 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. Lazard Freres & Co. LLC serves as the Retiree Committee's
financial advisor.
Daniel M. McDermott, U.S. Trustee for Region 9, on Dec. 23, 2013,
appointed five creditors to serve on the Official Committee of
Unsecured Creditors.
DETROIT, MI: Governor Defends State Money for City Pensions
-----------------------------------------------------------
Reuters reported that as retirees and lawmakers began leveling
criticism at Michigan Governor Rick Snyder's plan to use $350
million of state money to reduce cuts in pension benefits for
Detroit workers, Snyder set out to defend the proposal as a way to
help ease the impact of the city's bankruptcy on its retired
workers.
"I think it will be a lot of work, but I wouldn't propose it if I
didn't think it was possible," the Republican governor said in an
interview with Reuters. "But I wouldn't describe it as an easy
exercise."
The proposal Snyder sketched out would need approval from the
Republican-controlled Michigan legislature, where Snyder
anticipates challenges from lawmakers who have opposed a "bailout"
of the city, the report related.
Snyder also said he would not release any state funds unless
Detroit's unions, workers and retirees agree to halt litigation
seeking to challenge Detroit's bankruptcy, the report further
related.
Tina Bassett, a spokeswoman for Detroit's General Retirement
System, which has been fighting the city's bankruptcy and pension
cuts in court, raised doubts about whether a settlement can be
reached, the report said. "There are still a lot of i's to dot
and t's to cross before an agreement can be reached by all
parties," she said in a statement.
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.
The Hon. Steven Rhodes oversees the bankruptcy case. 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. Lazard Freres & Co. LLC serves as the Retiree Committee's
financial advisor.
Daniel M. McDermott, U.S. Trustee for Region 9, on Dec. 23, 2013,
appointed five creditors to serve on the Official Committee of
Unsecured Creditors.
DETROIT, MI: May File $18 Billion Bankruptcy Plan in Two Weeks
--------------------------------------------------------------
Steven Church, writing for Bloomberg News, reported on Jan 30.
that Detroit's emergency financial manager may file a proposed
debt-adjustment plan in federal court in about two weeks, an
action that would start the final phase in the city's record $18
billion municipal bankruptcy.
According to the report, the manager, Kevyn Orr, has given a copy
of the plan to creditors, his spokesman, Bill Nowling, said on
Jan. 29 in a statement. Creditors will have a chance to vote on
the proposal once it's filed in U.S. Bankruptcy Court in Detroit
and the judge determines it gives enough information.
The plan reflects details already presented to creditors who have
been negotiating with the city since it filed for bankruptcy in
July, Orr said, the report related. U.S. Bankruptcy Judge Steven
Rhodes had told the city he wanted it to file a plan by March 1.
"The longer we remain entrenched in our positions and fail to
reach an agreement, the worse life gets for Detroit's 700,000
residents and the greater our collective challenges become," the
report cited Orr as saying in the statement, which didn't provide
any details of the proposal.
Since it filed the biggest municipal bankruptcy in U.S. history,
the city has fought in court with municipal unions, retired city
workers and bondholders over potential cuts, while also meeting
them in confidential mediation sessions overseen by Gerald Rosen,
the chief federal judge in Detroit, the report related.
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.
The Hon. Steven Rhodes oversees the bankruptcy case. 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. Lazard Freres & Co. LLC serves as the Retiree Committee's
financial advisor.
Daniel M. McDermott, U.S. Trustee for Region 9, on Dec. 23, 2013,
appointed five creditors to serve on the Official Committee of
Unsecured Creditors.
DIAMOND FOODS: S&P Assigns 'B-' CCR & Rates New $415MM Loan 'B-'
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' corporate
credit rating to San Francisco-based Diamond Foods Inc. The
outlook is stable.
At the same time, S&P assigned a 'B-' issue-level rating to the
company's proposed $415 million first-lien term due 2019. The
recovery rating is '3', indicating that lenders could expect
meaningful (50% to 70%) recovery in the event of a payment
default. S&P assigned a 'CCC+' issue-level rating to the
company's proposed $230 million senior unsecured notes due 2019.
The recovery rating is '5', indicating that lenders could expect
modest (10% to 30%) recovery in the event of a payment default.
All ratings are subject to review upon receipt of final
documentation.
"The ratings on Diamond Foods Inc. reflect our view that the
company has a 'vulnerable' business risk profile and a 'highly
leveraged' financial risk profile," said Standard & Poor's credit
analyst Bea Chiem.
Proceeds from the new $415 million first-lien term loan and
$230 million senior unsecured notes along with $29 million of
proceeds from the existing Oaktree warrants being exercised are
expected to refinance about $617 million of Diamond's existing
debt, cover a roughly $33 million call premium related to the
repayment of the Oaktree notes, and cover fees and expenses.
DOLAN COMPANY: NYSE Commences Stock Delisting Proceedings
---------------------------------------------------------
The Dolan Company on Jan. 28 disclosed that it has received
written notice from NYSE Regulation, Inc. that trading of The
Dolan Company's common stock and preferred stock on the New York
Stock Exchange will be suspended before the NYSE opens on
January 29, 2014. The Company expects to commence trading on the
over-the-counter (OTC) market that same day under the symbol
"DOLN" for its common stock and "DOLNP" for its preferred stock.
NYSE Regulation reached its decision to commence delisting
proceedings with respect to the Common Stock and the Preferred
Stock pursuant to Listed Company Manual ("LCM") Section 802.01C
(minimum share price) because the average closing price of the
Common Stock reported on the Consolidated Tape had fallen below
$1.00 per share over a consecutive 30 trading-day period.
Headquartered in Minneapolis, Minnesota, The Dolan Company --
http://www.thedolancompany.com-- is a provider of professional
services and business information to legal, financial and real
estate sectors in the United States. The Company operates through
two operating divisions: its Professional Services Division and
its Business Information Division. Its Professional Services
Division consists of two segments: mortgage default processing
services and litigation support services. Its Business
Information Division produces legal publications, business
journals, court and commercial media, other online information
products and services, and operates Websites and produces events
for targeted professional audiences in 21 geographic markets
across the United States.
DONALD E. WILKINSON: Feb. 13 Hearing on Bid to Sell Assets
----------------------------------------------------------
Brian C. Thompson, counsel to debtor Donald E. Wilkinson, has
filed a Motion to Sell Real Estate Free and Clear of Third Party
Interests, Liens, Claims, Charges and/or Encumbrances.
Mr. Wilkinson has received and offer of $330,000 for the Debtor's
real property at 131-133 West Front Street, Berwick, Columbia
County, Pennsylvania, free and divested of all liens and
encumbrances.
A hearing will be held in Courtroom C, 54th Floor U.S. Steel
Tower, 600 Grant Street, Pittsburgh, PA 15219, on Feb. 13, 2014,
at 2:30 p.m. for the purpose of passing on the Sale Motion when
and where all objections will be heard when and where the public
is invited; and when and where higher and better offers will be
accepted.
The Debtors' counsel may be reached at:
Brian C. Thompson, Esq.
400 Penn Center Blvd., Suite 360
Pittsburgh, PA 15235
Tel: 412-823-8080
Donald E. Wilkinson filed for Chapter 11 bankruptcy (Bankr. W.D.
Pa. Case No. 11-20124) in 2011.
DOTS LLC: Donlin Recano Retained as Ch. 11 Claims & Noticing Agent
------------------------------------------------------------------
Donlin, Recano & Company, Inc., a division of DF King Worldwide
and a provider of claims, noticing, balloting, solicitation and
technology solutions, disclosed that it has been retained to
provide claims and noticing agent services in the Dots, LLC
Chapter 11 cases.
The Glenwillow, Ohio based, 400-store women's retailer filed
Chapter 11 petitions in the United States Bankruptcy Court for the
District of New Jersey, Newark Division on January 20, 2014.
Lowenstein Sandler LLP is counsel for the debtor. The company's
financial advisor is PricewaterhouseCoopers LLP.
Case information can be found by visiting DRC's website.
http://www.donlinrecano.com/dots
About Donlin Recano
Donlin Recano -- http://www.donlinrecano.com-- is a division of
DF King Worldwide -- http://www.king-worldwide.com-- and a leader
in claims, noticing, balloting and technology solutions, also
provides bondholder identification services, pre-pack bankruptcy
solicitation and balloting, crisis communications, financial
printing services and call center services through one of the
largest and most technologically advanced call centers in the
country. King Worldwide is a financial communications, proxy
solicitation and stakeholder management company, serving over
1,000 public company, mutual fund family and private equity firm
clients domiciled in North America, Europe and Asia.
About DOTS LLC
Dots is a retailer of fashionable clothing, accessories, and
footwear for price-conscious women. Dots provides missy and plus
size choices to fashion savvy 25 to 35 year old women at
approximately 400 retail stores throughout the Midwest, East, and
South United States. Dots' workforce includes 3,500 individuals
in their stores, distribution center, and corporate headquarters.
Dots, LLC, and its affiliates sought bankruptcy protection under
Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Lead Case No.
14-11016) on Jan. 20, 2014, to sell some or all of their assets.
Lowenstein Sandler LLP serves as counsel to the Debtors.
PricewaterhouseCoopers LLP is financial advisor and investment
banker. Donlin, Recano & Company, Inc., is the claims and notice
agent.
As of the Petition Date, the Debtors have outstanding secured debt
owed to senior lender Salus Capital Partners, LLC, of which
$14.5 million remains outstanding under a revolving facility and
$16.1 million is owed under a term facility. The Debtors also
have not less than $17 million outstanding under subordinated term
loan agreements with Irving Place Capital Partners III L.P. ("IPC)
and related entities. Moreover, the Debtors have aggregate
unsecured debts of $47.0 million.
Salus, the prepetition senior lender and the DIP lender, is
represented by Morgan, Lewis & Bockius, LLP. The prepetition
subordinated lenders are represented by Okin Hollander & DeLuca,
LLP.
The Company has arranged to borrow $36 million to keep operating
as it reorganizes under court protection.
EARL GAUDIO: Jan. 28 Hearing on Claim Objection Vacated
-------------------------------------------------------
In the chapter 11 case of Earl Gaudio & Son, Inc., Bankruptcy
Judge Gerald D. Fines approved a "Stipulation Regarding Debtor's
Objection to Amended Claim Number 4 Filed by Regions Bank" filed
by the Debtor and Regions Bank. The hearing scheduled for Jan.
28, 2014 at 10:00 a.m on the Debtor's objection to Regions claim
is vacated. A copy of the Court's Jan. 28, 2014 Order is
available at http://is.gd/LXslOFfrom Leagle.com.
About Earl Gaudio & Son, Inc.
Earl Gaudio & Son, Inc., filed a Chapter 11 petition (Bankr. C.D.
Ill. Case No. 13-90942) on July 19, 2013. The petition was signed
by Angela E. Major Hart, as authorized signer of First Midwest
Bank, custodian. Judge Gerald D. Fines presides over the case.
The Debtor disclosed $11,849,187 in assets and $8,489,291 in
liabilities as of the Chapter 11 filing. John David Burke, Esq.,
and Ben T. Caughey, Esq., at Ice Miller, LLP, serve as the
Debtor's counsel.
The U.S. Trustee appointed five creditors to serve in the Official
Committee of Unsecured Creditors. The Committee retained Evans,
Forehlich, Beth & Chamley as its local counsel, and Rubin & Levin,
P.C., as its counsel.
EDISON MISSION: Has Until March 31 to Decide on Leases
------------------------------------------------------
The Hon. Jacqueline Cox of the U.S. Bankruptcy Court for the
Northern District of Illinois has granted Edison Mission Energy,
et al.'s request to extend until March 31, 2014, the Debtors' time
to assume or reject certain unexpired leases of nonresidential
real property.
As reported by the Troubled Company Reporter on Jan. 17, 2014,
certain of the Debtors are parties to (a) three office leases that
serve as home to the Debtors' regional operations in Bolingbrook,
Illinois, Chicago, Illinois, and Santa Ana, California; and (b) a
quarry lease pursuant to which Lincoln Stone Quarry, Inc. leases
certain premises located at the Joliet, Illinois facility to
Midwest Generation, LLC.
About Edison Mission
Santa Ana, California-based Edison Mission Energy is a holding
company whose subsidiaries and affiliates are engaged in the
business of developing, acquiring, owning or leasing, operating
and selling energy and capacity from independent power production
facilities. EME also engages in hedging and energy trading
activities in power markets through its subsidiary Edison Mission
Marketing & Trading, Inc.
EME was formed in 1986 and is an indirect subsidiary of Edison
International. Edison International also owns Southern California
Edison Company, one of the largest electric utilities in the
United States.
EME and its affiliates sought Chapter 11 protection (Bankr. N.D.
Ill. Lead Case No. 12-49219) on Dec. 17, 2012.
EME has reached an agreement with the holders of a majority of
EME's $3.7 billion of outstanding public indebtedness and its
parent company, Edison International EIX, that, pursuant to a plan
of reorganization and pending court approval, would transition
Edison International's equity interest to EME's creditors, retire
existing public debt and enhance EME's access to liquidity.
The Company's balance sheet at Sept. 30, 2012, showed
$8.17 billion in total assets, $6.68 billion in total liabilities
and $1.48 billion in total equity.
In its schedules, Edison Mission Energy disclosed total assets of
assets of $5,721,559,170 and total liabilities of $6,202,215,094
as of the Petition Date.
The Debtors, other than Camino Energy Company, are also
represented by James H.M. Sprayregen, P.C., Sarah Hiltz Seewer,
Esq., and Seth A. Gastwirth, Esq., at Kirkland & Ellis LLP, in
Chicago, Illinois; and Joshua A. Sussberg, Esq., at Kirkland &
Ellis LLP, in New York. Debtor Camino Energy Company is
represented by David A. Agay, Esq., and Joshua Gadharf, Esq., at
McDonald Hopkins LLC, in Chicago, Illinois.
Perella Weinberg Partners is acting as the Debtors' financial
advisor and McKinsey & Company Recovery and Transformation
Services is acting as restructuring advisor. GCG, Inc., is the
claims and notice agent.
An official committee of unsecured creditors has been appointed in
the case and is represented by Ira S. Dizengoff, Esq., Stephen M.
Baldini, Esq., Arik Preis, Esq., and Robert J. Boller, Esq., at
Akin Gump Strauss Hauer & Feld LLP in New York; James Savin, Esq.,
and Kevin M. Eide, Esq., at Akin Gump Strauss Hauer & Feld LLP in
Washington, DC; and David M. Neff, Esq., and Brian Audette, Esq.,
at Perkins Coie LLP. The Committee also has tapped Blackstone
Advisory Partners as investment banker and FTI Consulting as
financial advisor.
EME's Second Amended Joint Plan of Reorganization is up for
approval at a Feb. 19, 2014 confirmation hearing, and provides for
the sale of all or substantially all of Debtors MWG, EME, and
Midwest Generation EME, LLC, will be sold to NRG Energy, Inc.
EDWARD J WILLIAMS DMD: Case Summary & 9 Top Unsecured Creditors
---------------------------------------------------------------
Debtor: Edward J. Williams, D.M.D., P.A.
6958 Shimmering Drive
Lakeland, FL 33813
Case No.: 14-01009
Chapter 11 Petition Date: January 29, 2014
Court: United States Bankruptcy Court
Middle District of Florida (Tampa)
Debtor's Counsel: Tanya M Comparetto, Esq.
LAW OFFICE OF TANYA M COMPARETTO, PA
1937 East Edgewood Drive
Lakeland, FL 33803
Tel: 863-686-6883
Fax: 863-616-9143
Email: Tanya@tmclaw.net
Total Assets: $39,445
Total Liabilities: $1.20 million
The petition was signed by Edward Williams, president.
A list of the Debtor's nine largest unsecured creditors is
available for free at http://bankrupt.com/misc/flmb14-1009.pdf
ENDICOTT INTERCONNECT: Amends Sale Deal with Integrian Holdings
---------------------------------------------------------------
Endicott Interconnect Technologies, Inc., et al., sought and
obtained a Bankruptcy Court order approving an amendment to an
asset purchase agreement with Integrian Holdings, LLC, for the
sale of substantially all of their assets.
The APA Amendment, dated Oct. 31, 2013, involves the revision of
some term definitions like "Administrative Expense Reserve,"
"Estate Note," and "Priority Vacation Obligations." Estate Note
is amended to substitute $850,000 in place of $1.5 million.
As previously reported by The Troubled Company Reporter, Integrian
Holdings was the highest bidder for Endicott Interconnect, et al.,
assets at a Sept. 24, 2013 auction. The deal with Integrian
includes assumption of more than $6.1 million in liabilities, an
$850,000 note, $1 million in debt forgiveness and at least
$350,000 in cash.
The purchase price paid by Integrian under the APA, as amended, is
composed of:
(i) a credit bid of $1,000,000;
(ii) the assumption by Integrian of the Integrian Term Note;
(iii) the assumption by Integrian of the Maines Term Note;
(iv) the creation of an Administrative Expense Reserve in the
approximate amount of $2,113,000;
(v) the assumption by Integrian of "Priority Vacation
Obligations" owed to the Debtor's employees for vacation
benefits accrued during the 180-day period of January 10,
2013 through July 9, 2010 as allowable under section
507(a)(4) of the Bankruptcy Code, but only to the extent
such benefits remain unused or unpaid as of October 31,
2013; and
(vi) the execution of the Estate Note in the amount of
$850,000.
A copy of the APA Amendment is available for free at:
http://bankrupt.com/misc/ENDICOTT_APAamendment.pdf
Stephen A. Donato, Esq., and Camille W. Hill, Esq., of Bond,
Schoeneck & King, PLLC, serve as attorneys to the Debtor.
About Endicott Interconnect
Endicott Interconnect Technologies, Inc., and its affiliates filed
a Chapter 11 petition (Bankr. N.D.N.Y. Case No. 13-bk-61156) in
Utica, New York, on July 10, 2013, to sell the business before
cash runs out by the end of September. David W. Van Rossum is the
Debtors' sole officer. Bond, Schoeneck & King, PLLC, is counsel
to the Debtor. The Debtor retained Davidson Fox & Company, LLP,
as its general accountants and auditors, and Feather Lane
Advisors, LLC, to act as its financial advisor and business
broker.
Based in Endicott, New York, and formed in 2002, EIT is the
successor to the microelectronics division of IBM Corp. The
products are used in aerospace, defense and medication
applications, among others.
The Company sought Chapter 11 bankruptcy protection after
suffering $100 million in operating losses in the last four years.
In addition to $16 million in secured claims, trade suppliers are
owed $34 million. There is another $32 million owing for loans
made by shareholders. The Company said the book value of property
is $36 million.
An official committee of unsecured creditors was appointed in
the case in July 2013 with Avnet Electronics Marketing, Arrow
Electronics,Inc., Acbel Polytech, Inc., Cadence Design Systems,
Inc., Orbotech, Inc., Tyco Electronics, and High Performance
Copper Foil, Inc. as members. The committee is represented by
Arent Fox LLP. The committee retained GlassRatner Advisory &
Capital Group, LLC, as its financial advisor.
As of Dec. 23, 2013, the Bankruptcy Court has authorized, and the
Debtor has paid, $1,165,725 to bankruptc professionals for their
fees and expenses incurred in connection with the Chapter 11 case.
The official creditors' committee said there could be
$20.8 million in claims to bring against insiders. In August, the
judge authorized the committee to conduct an investigation of the
insiders.
On Oct. 31, 2013, substantially all of Endicott's assets were sold
to Integrian Holdings, LLC.
ENDICOTT INTERCONNECT: Plan Outline Hearing Set for Feb. 27
-----------------------------------------------------------
A hearing will be convened on Feb. 27, 2014, at 10:30 a.m. before
the U.S. Bankruptcy Court for the Northern District of New York to
consider the adequacy of the disclosure statement accompanying
Endicott Interconnect Technologies, Inc.'s Chapter 11 Plan.
Objections, if any, are due no later than Feb. 20.
The Disclosure Statement reveals that the Plan is a plan of
liquidation hinged on the sale of all of the Debtor's assets to
secured creditor Integrian Holdings, LLC. The sale closed at the
end of October last year. The sale deal contemplated (1) a $1
million credit bid by Integrian on the assets; (2) the assumption
of the Integrian Term Note and Maines Term Note by Integrian; (3)
the creation of a $2.1 million Administrative Expense Reserve; (4)
Integrian's assumption of certain vacation obligations owed to the
Debtor's employees; and (5) the execution of an $850,000 Estate
Note. Proceeds and any other assets the Debtor may recover will
be available for distribution to creditors under the Chap. 11
case.
Under the Plan, holders of General Unsecured Claims are expected
to recover 1 to 2% of their allowed claims, to be funded from the
proceeds of the Estate Note and to be paid in annual installments
over five years without interest. General Unsecured Claims are
estimated to total $35 million.
Prepetition loans made by the current and former shareholders to
the Debtor, totaling about $32 million, will be subordinated to
General Unsecured Claims and will not be paid.
A copy of the Disclosure Statement, dated Dec. 23, 2013, is
available for free at http://bankrupt.com/misc/ENDICOTT_ds1223.PDF
Stephen A. Donato, Esq., and Camille W. Hill, Esq., of Bond,
Schoeneck & King, PLLC, serve as attorneys to the Debtor.
About Endicott Interconnect
Endicott Interconnect Technologies, Inc., and its affiliates filed
a Chapter 11 petition (Bankr. N.D.N.Y. Case No. 13-bk-61156) in
Utica, New York, on July 10, 2013, to sell the business before
cash runs out by the end of September. David W. Van Rossum is the
Debtors' sole officer. Bond, Schoeneck & King, PLLC, is counsel
to the Debtor. The Debtor retained Davidson Fox & Company, LLP,
as its general accountants and auditors, and Feather Lane
Advisors, LLC, to act as its financial advisor and business
broker.
Based in Endicott, New York, and formed in 2002, EIT is the
successor to the microelectronics division of IBM Corp. The
products are used in aerospace, defense and medication
applications, among others.
The Company sought Chapter 11 bankruptcy protection after
suffering $100 million in operating losses in the last four years.
In addition to $16 million in secured claims, trade suppliers are
owed $34 million. There is another $32 million owing for loans
made by shareholders. The Company said the book value of property
is $36 million.
An official committee of unsecured creditors was appointed in
the case in July 2013 with Avnet Electronics Marketing, Arrow
Electronics,Inc., Acbel Polytech, Inc., Cadence Design Systems,
Inc., Orbotech, Inc., Tyco Electronics, and High Performance
Copper Foil, Inc. as members. The committee is represented by
Arent Fox LLP. The committee retained GlassRatner Advisory &
Capital Group, LLC, as its financial advisor.
As of Dec. 23, 2013, the Bankruptcy Court has authorized, and the
Debtor has paid, $1,165,725 to bankruptc professionals for their
fees and expenses incurred in connection with the Chapter 11 case.
The official creditors' committee said there could be
$20.8 million in claims to bring against insiders. In August, the
judge authorized the committee to conduct an investigation of the
insiders.
On Oct. 31, 2013, substantially all of Endicott's assets were sold
to Integrian Holdings, LLC.
ENDICOTT INTERCONNECT: Court Grants Final Cash Collateral Order
---------------------------------------------------------------
Endicott Interconnect Technologies, Inc., et al., obtained a final
order from the Bankruptcy Court to use the cash collateral of
prepetition secured lenders Integrian Holdings LLC, M&T Bank, and
William and David Maines.
As adequate protection, but subject to the rights if any of the
Official Committee of Unsecured Creditors and other parties-in-
interest, M&T will receive payments of principal and interest in
accordance with the terms of its Prepetition Loan Documents.
The Other Prepetition Secured Lenders will not receive adequate
protection payments.
About Endicott Interconnect
Endicott Interconnect Technologies, Inc., and its affiliates filed
a Chapter 11 petition (Bankr. N.D.N.Y. Case No. 13-bk-61156) in
Utica, New York, on July 10, 2013, to sell the business before
cash runs out by the end of September. David W. Van Rossum is the
Debtors' sole officer. Bond, Schoeneck & King, PLLC, is counsel
to the Debtor.
Based in Endicott, New York, and formed in 2002, EIT is the
successor to the microelectronics division of IBM Corp. The
products are used in aerospace, defense and medication
applications, among others.
The Company sought Chapter 11 bankruptcy protection after
suffering $100 million in operating losses in the last four years.
In addition to $16 million in secured claims, trade suppliers are
owed $34 million. There is another $32 million owing for loans
made by shareholders. The Company said the book value of property
is $36 million.
An official committee of unsecured creditors has been appointed in
the case with Avnet Electronics Marketing, Arrow Electronics,
Inc., Acbel Polytech, Inc., Cadence Design Systems, Inc.,
Orbotech, Inc., Tyco Electronics, and High Performance Copper
Foil, Inc. as members. The committee is represented by Arent Fox
LLP.
The official creditors' committee said there could be
$20.8 million in claims to bring against insiders. In August, the
judge authorized the committee to conduct an investigation of the
insiders.
EVERGREEN SOLAR: Court Interprets Release Provision
---------------------------------------------------
Bankruptcy Judge Mary F. Walrath rejected DHL Global Forwarding's
motion for judgment on the pleadings on the preference Complaint
filed by U.S. Bank National Association.
DHL asserts that the Complaint against it is partially barred by
the release of certain preference claims. The Court, however,
held that the claim against DHL was not released.
The dispute stemmed from Evergreen Solar, Inc.'s chapter 11
bankruptcy. U.S. Bank, on behalf of itself and certain
unaffiliated holders of senior secured notes, asserted security
interests in substantially all of the Debtor's assets. In
February 2012, the Debtor, the official committee of unsecured
creditors, the Noteholders, and U.S. Bank entered into a
stipulation settling U.S. Bank's claims against the Debtor's
estate. As part of the Settlement Agreement, the Debtor agreed to
transfer to U.S. Bank all preference claims of $60,000 or greater,
while releasing all preference claims less than $60,000. The
Court later approved the deal. Evergreen Solar's Plan of
Liquidation, which was confirmed and approved by Order dated July
13, 2012, and the Confirmation Order also incorporate the
settlement.
U.S. Bank on Jan. 23, 2013, initiated the adversary proceeding to
avoid 11 allegedly preferential transfers totaling $200,960. DHL
seeks dismissal of the suit for ten of the transfers because each
amounts to less than $60,000. DHL argues that the Release
Provision should be read to prevent U.S. Bank from asserting any
preference claim to avoid an individual transfer of less than
$60,000. This interpretation of the Release Provision would
protect ten of the 11 transfers identified by the adversary
complaint, each of which falls below the $60,000 threshold.
To support this argument DHL calls attention to the use of the
word "transfers" in the Release Provision and the failure of the
parties to specify that the threshold amount was an aggregate of
all transfers to be avoided in a particular case.
U.S. Bank interprets the Release Provision to apply a $60,000
threshold for the aggregate of all transfers sought to be avoided
in a particular adversary proceeding. This interpretation would
allow U.S. Bank to proceed with its adversary proceeding, which
seeks to recover an aggregate of $200,960, without excluding any
of the subject transfers. U.S. Bank argues that the Release
Provision transfers or releases "claims" as opposed to transfers
and that a claim can include multiple transfers.
In a Jan. 28, 2014 Memorandum Opinion available at
http://is.gd/7CtsiXfrom Leagle.com, the Court agrees with U.S.
Bank. While each transfer can constitute a separate claim under
section 547, Judge Walrath said the Release Provision applies to
claims (plural) which are below $60,000. The plain language of the
Release Provision, Judge Walrath explained, releases "claims for
the avoidance or recovery of transfers," which fall below $60,000.
The phrase "of $59,999.99 or less" modifies "claims" not
"transfers." This is clear from the next sentence, where
"preference claims in the amount of $60,000 or greater" are
transferred to U.S. Bank. Therefore, the Court finds that U.S.
Bank's interpretation of the Release Provision is the most
logical. The intent was to release claims against a defendant if
the aggregate preference claims against that defendant were less
than $60,000. Consequently, the Court concludes that U.S. Bank's
claim against DHL to recover $200,960.62 in preferential transfers
was not released.
The case is, U.S. BANK N.A., Plaintiff, v. DHL GLOBAL FORWARDING,
Defendant, Adv. Proc. No. 13-50486 (Bankr. D. Del.).
About Evergreen Solar
Evergreen Solar, Inc. -- http://www.evergreensolar.com/--
developed, manufactured and marketed String Ribbon solar power
products using its proprietary, low-cost silicon wafer technology.
The Marlboro, Mass.-based Company filed for Chapter 11 bankruptcy
(Bankr. D. Del. Case No. 11-12590) on Aug. 15, 2011, before Judge
Mary F. Walrath. The Company's balance sheet at April 2, 2011,
showed $373,972,000 in assets, $455,506,000 in total liabilities,
and a stockholders' deficit of $81,534,000.
Ronald J. Silverman, Esq., and Scott K. Seamon, Esq., at Bingham
McCutchen LLP, serve as general bankruptcy counsel to the Debtor.
Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski
Stang Ziehl & Jones LLP, serve as co-counsel. Hilco Industrial
LLC serves as exclusive marketing and sales agent. Klehr Harrison
Harvey Branzburg serves as special conflicts counsel. Zolfo
Cooper LLC is the financial advisor. UBS Securities, LLC, serves
as investment banker. Epiq Bankruptcy Solutions has been tapped
as claims agent.
In conjunction with the Chapter 11 filing, the Company entered
into a restructuring support agreement with certain holders of
more than 70% of the outstanding principal amount of the Company's
13% convertible senior secured notes. As part of the bankruptcy
process the Company will undertake a marketing process and will
permit all parties to bid on its assets, as a whole or in groups
pursuant to 11 U.S.C. Sec. 363. An entity formed by the
supporting noteholders, ES Purchaser, LLC, entered into an asset
purchase agreement with the Company to serve as a 'stalking-horse"
and provide a "credit-bid" pursuant to the Bankruptcy Code for
assets being sold.
The supporting noteholders are represented by Michael S. Stainer,
Esq., and Natalie E. Levine, Esq., at Akin Gump Strauss Hauer &
Feld LLP, in New York.
An official committee of unsecured creditors has retained Pepper
Hamilton and Kramer Levin Naftalis & Frankel as counsel. The
Committee tapped Garden City Group as communications services
agent.
At the time of the bankruptcy filing, Evergreen Solar was at least
the fourth solar company to seek protection from creditors since
August 2011. Other solar firms are start-up Spectrawatt Inc.,
which also filed in August, Solyndra Inc., which filed early in
September, and Stirling Energy Systems Inc., which filed for
Chapter 7 bankruptcy late in September.
Evergreen sold the assets piecemeal in three auctions. Max Era
Properties Ltd. from Hong Kong paid $6 million cash and
$3.2 million in stock of China Private Equity Investment Holdings
Ltd. for the company name, intellectual property, and wafermaking
assets. Kimball Holdings LLC paid $3.8 million for solar panel
inventory while the secured lenders exchanged $21.5 million of
their $165 million claim for a $171 million claim against Lehman
Brothers Holdings Inc. Max Era Properties Limited and Sovello AG
bought equipment and machinery located at the Debtor's Devens,
Massachusetts facility for $8.9 million.
The U.S. Bankruptcy Court confirmed Evergreen Solar's Plan of
Liquidation. The Plan became effective on July 16, 2012.
FIBERTOWER NETWORK: Court Confirms 4th Amended Plan
---------------------------------------------------
Bankruptcy Judge D. Michael Lynn confirmed the Fourth Amended
Joint Chapter 11 Plan, dated Jan. 17, 2014, of FiberTower Network
Services Corp. in its affiliated debtors. A copy of Judge Lynn's
Findings of Fact, Conclusions of Law and Order Confirming Debtors'
Fourth Amended Joint Chapter 11 Plan dated Jan. 27, is available
at http://is.gd/upZfAgfrom Leagle.com.
The Confirmation Hearing was held Jan. 15, 2014.
The Debtors filed with the Bankruptcy Court a Third Amended
Chapter 11 Plan on Jan. 13 and the Fourth Amended Chapter 11 Plan
on Jan. 17. A Disclosure Statement explaining the amended plans
was not filed as a result of the Dec. 12, 2013 Court order
approving the Disclosure Statement for the Company's Second
Amended Joint Chapter 11 Plan.
The Fourth Amended Plan provides, "On the Effective Date, except
to the extent that a Holder of an Allowed 2016 Claim agrees to
less favorable treatment, each Holder of an Allowed 2016 Claim
shall be entitled to receive, in full satisfaction of such Claim,
(i) its Pro Rata share of one hundred percent (100%) of the New
FiberTower Common Stock and (ii) its Pro Rata share (together with
the other Beneficiaries, but without duplication of the Allowed
2016 Guaranty Deficiency Claims) of the Litigation Trust Interests
to the extent of its 2016 Deficiency Claim. The 2016 Claims shall
be Allowed in the aggregate amount of $131,779,772.00 plus accrued
and unpaid interest, fees, expenses and other charges accruing
prior to the Petition Date, less any amounts applied as payment of
principal from the Petition Date through the Effective Date. The
2016 Deficiency Claims shall be Allowed in the aggregate amount of
$65,000,000.00. Class 1B is impaired by the Plan. Class 1B is
impaired by the Plan. Each Holder of an Allowed 2016 Claim is
entitled to vote to accept or reject the Plan."
The Third Amended Plan provides, "On the Effective Date, except to
the extent that a Holder of an Allowed 2016 Claim agrees to less
favorable treatment, each Holder of an Allowed 2016 Claim shall be
entitled to receive, in full satisfaction of such Claim, (i) its
Pro Rata share of one hundred percent (100%) of the New FiberTower
Common Stock and (ii) its Pro Rata share (together with the other
Beneficiaries, but without duplication of the Allowed 2016
Guaranty Deficiency Claims) of the Litigation Trust Interests to
the extent of its 2016 Deficiency Claim. The 2016 Claims shall be
Allowed in the aggregate amount of $131,779,772.00 plus accrued
and unpaid interest, fees, expenses and other charges accruing
prior to the Petition Date, less any amounts applied as payment of
principal from the Petition Date through the Effective Date. The
2016 Deficiency Claims shall be Allowed in the aggregate amount of
$89,529,772. Class 1B is impaired by the Plan. Class 1B is
impaired by the Plan." In addition, "On the Effective Date, all
FiberTower Equity Interests shall be cancelled and extinguished.
Holders of such FiberTower Equity Interests shall not receive nor
retain any property under the Plan on account of such FiberTower
Equity Interests. Class 1G is impaired by the Plan."
The Plan does not provide for the substantive consolidation of the
Debtors' estates.
A full-text copy of the Fourth Amended Plan is available for free
at http://bankrupt.com/misc/FIBERTOWER4thplan0117.pdf
A full-text copy of the Third Amended Plan is available for free
at http://bankrupt.com/misc/FIBERTOWER3rdplan0113.pdf
About FiberTower Corp.
FiberTower Corporation, FiberTower Network Services Corp.,
FiberTower Licensing Corp., and FiberTower Spectrum Holdings
LLC filed for Chapter 11 protection (Bankr. N.D. Tex. Case Nos.
12-44027 to 12-44031) on July 17, 2012, together with a plan
support agreement struck with prepetition secured noteholders.
FiberTower is an alternative provider of facilities-based backhaul
services, principally to wireless carriers, and a national
provider of millimeter-band spectrum services. Backhaul is the
transport of voice, video and data traffic from a wireless
carrier's mobile base station, or cell site, to its mobile
switching center or other exchange point. FiberTower provides
spectrum leasing services directly to other carriers and
enterprise clients, and also offer their spectrum services through
spectrum brokerage arrangements and through fixed wireless
equipment partners.
FiberTower's significant asset is the ownership of a national
spectrum portfolio of 24 GHz and 39 GHz wide-area spectrum
licenses, including over 740 MHz in the top 20 U.S. metropolitan
areas and, in the aggregate, roughly 1.72 billion channel pops
(calculated as the number of channels in a given area multiplied
by the population, as measured in the 2010 census, covered by
these channels). FiberTower believes the Spectrum Portfolio
represents one of the largest and most comprehensive collections
of millimeter wave spectrum in the U.S., covering areas with a
total population of over 300 million.
As of the Petition Date, FiberTower provides service to roughly
5,390 customer locations at 3,188 deployed sites in 13 markets
throughout the U.S. The fixed wireless portion of these hybrid
services is predominantly through common carrier spectrum in the
11, 18 and 23 GHz bands. FiberTower's biggest service markets are
Dallas/Fort Worth and Washington, D.C./Baltimore, with additional
markets in Atlanta, Boston, Chicago, Cleveland, Denver, Detroit,
Houston, New York/New Jersey, Pittsburgh, San Antonio/Austin/Waco
and Tampa.
As of June 30, 2012, FiberTower's books and records reflected
total combined assets, at book value, of roughly $188 million and
total combined liabilities of roughly $211 million. As of the
Petition Date, FiberTower had unrestricted cash of roughly $23
million. For the six months ending June 30, 2012, FiberTower had
total revenue of roughly $33 million. With the help of FTI
Consulting Inc., FiberTower's preliminary valuation work shows
that the Company's enterprise value is materially less than $132
million -- i.e., the approximate principal amount of the 9.00%
Senior Secured Notes due 2016 outstanding as of the Petition Date.
The preliminary valuation work is based upon the assumption that
FiberTower's spectrum licenses will not be terminated. Fibertower
Spectrum disclosed $106,630,000 in assets and $175,501,975 in
liabilities as of the Chapter 11 filing.
Judge D. Michael Lynn oversees the Chapter 11 case. The Debtors
are represented by Paul N. Silverstein, Esq., and Jonathan I.
Levine, Esq., at Andrews Kurth LLP, in New York. Lawyers at
Hogan Lovells and Willkie Farr and Gallagher LLP serve as special
FCC counsel. FTI Consulting serve as financial advisor. BMC
Group Inc. serve as claims and noticing agent. The petitions were
signed by Kurt J. Van Wagenen, president.
Wells Fargo Bank, National Association -- as indenture trustee and
collateral agent to the holders of 9.00% Senior Secured Notes due
2016 owed roughly $132 million as of the Petition Date -- is
represented by Eric A. Schaffer, Esq., at Reed Smith LLP. An Ad
Hoc Committee of Holders of the 9% Secured Notes Due 2016 is
represented by Kris M. Hansen, Esq., and Sayan Bhattacharyya,
Esq., at Stroock & Stroock & Lavan LLP. Wells Fargo and the Ad
Hoc Committee also have hired Stephen M. Pezanosky, Esq., and Mark
Elmore, Esq., at Haynes and Boone, LLP, as local counsel.
U.S. Bank, National Association -- in its capacity as successor
indenture trustee and collateral agent to holders of the 9.00%
Convertible Senior Secured Notes due 2012, owed $37 million as of
the Petition Date -- is represented by Michael B. Fisco, Esq., at
Faegre Baker Daniels LLP, as counsel and J. Mark Chevallier, Esq.,
at McGuire Craddock & Strother PC as local counsel.
William T. Neary, the U.S. Trustee for Region 6 appointed five
members to the Official Committee of Unsecured Creditors in the
Debtors' cases. The Committee is represented by Otterbourg, P.C.,
and Cole, Schotz, Meisel, Forman & Leonard, P.A. Goldin
Associates, LLC serves as its financial advisors.
On March 15, 2013, the Court entered an order authorizing the
Debtors to sell assets that are primarily utilized by the Debtors
to provide wireless backhaul services in the State of Ohio to
Cellco Partnership (dba Verizon Wireless) free and clear for $1.5
million.
In May 2013, FiberTower sought and obtained Court authority to
sell their telecommunications equipment and employ American
Communications, LLC, as telecommunications equipment reseller.
According to the Debtors, the telecommunications equipment, which
was a part of their backhaul business, is no longer necessary in
the conduct of their business. They, however, believe that the
equipment may have resale value that would benefit their estates.
FREEDOM INDUSTRIES: Bankruptcy Judge Approves Loan of Up to $5MM
----------------------------------------------------------------
Linda Harris, writing for The State Journal, reported that a
federal bankruptcy judge approved a loan of as much as $5 million
to help Freedom Industries pay for cleaning up the spill site and
other remediation expenses that are the result of the Jan. 9, 2014
chemical leak into the Elk River.
According to the report, U.S. Bankruptcy Judge Ronald Pearson said
during a Jan. 21 hearing in Charleston, WV, that this case is
unique in that the parties are basically predicting future
litigation.
Gary Southern, president of Freedom Industries, testified during
the hearing, the report related.
"The days since Jan. 9 have been completely chaotic," Southern
said about the customer relations aspect of the incident, the
report cited. "Generally speaking, there is a level of mass
hysteria."
Southern also testified that business not related to the Etowah
terminal, where the leak occurred, is continuing, the report
further related. All business that was being conducted prior to
Jan. 9 continues except for bringing in new materials into that
storage facility.
Kris Maher, writing for The Wall Street Journal, reported that a
company controlled by a Pennsylvania coal-mining executive paid
$20 million last month to acquire Freedom Industries, Mr. Southern
testified on Jan. 21. Mr. Southern told the U.S. Bankruptcy Court
that Chemstream Holdings Inc., controlled by J. Clifford Forrest,
closed the deal on Dec. 6 and hired him as president of Freedom.
The Journal related that the bankruptcy filing has set up a fight
between the company and West Virginia American Water Co., a
subsidiary of American Water Works Co. and the operator of the
treatment plant. The water company said that it faces at least 23
lawsuits related to the spill and expects to have large claims
against Freedom.
According to the Journal, the initial point of contention was the
$5 million loan. In court filings, the water company and lawyers
for people suing Freedom over the spill alleged close connections
between the lender and Freedom and said the loan could allow
company insiders to protect their money before creditors were
paid. The lender would have been granted special status that
typically puts it first in line to be repaid.
The lender is WV Funding LLC, an entity formed on Jan. 17 whose
managing member is Mountaineer Funding LLC, according to documents
filed with the West Virginia Secretary of State, the Journal
related. Similar documents list J. Clifford Forrest as the only
named member of Mountaineer, the report said.
About Freedom Industries
Charleston, West Virginia-based Freedom Industries, Inc., the
company connected to a chemical spill that tainted the water
supply in West Virginia, on Jan. 17, 2014, filed for Chapter 11
bankruptcy protection (Case No. 14-20017, Bankr. S.D.W.Va.). The
case is before Judge Ronald G. Pearson.
The Debtor's counsel is Mark E Freedlander, Esq., at MCGUIRE WOODS
LLP, in Pittsburgh, Pensylvania; and Stephen L. Thompson, Esq., at
BARTH & THOMPSON, in Charleston, West Virginia.
The Debtor has estimated assets ranging from $1 million to $10
million and estimated liabilities ranging from $1 million to $10
million.
The petition was signed by Gary Southern, president.
FREEDOM INDUSTRIES: Reveals 2nd Contaminant in Tank Spill
---------------------------------------------------------
Law360 reported that the bankrupt chemical producer blamed for
polluting hundreds of thousands of West Virginians' drinking water
failed to reveal a second contaminant with unknown toxicological
potential until 12 days after the spill, state environmental
regulators said.
According to the report, the surprise revelation by Freedom
Industries Inc. came in response to a demand that same morning
from the West Virginia Department of Environmental Protection for
a breakdown of all materials in the 7,500-gallon release from the
company's Charleston storage tank farm.
About Freedom Industries
Charleston, West Virginia-based Freedom Industries, Inc., the
company connected to a chemical spill that tainted the water
supply in West Virginia, on Jan. 17, 2014, filed for Chapter 11
bankruptcy protection (Case No. 14-20017, Bankr. S.D.W.Va.). The
case is before Judge Ronald G. Pearson.
The Debtor's counsel is Mark E Freedlander, Esq., at MCGUIRE WOODS
LLP, in Pittsburgh, Pensylvania; and Stephen L. Thompson, Esq., at
BARTH & THOMPSON, in Charleston, West Virginia.
The Debtor has estimated assets ranging from $1 million to $10
million and estimated liabilities ranging from $1 million to $10
million.
The petition was signed by Gary Southern, president.
FRESH & EASY: Court Extends Plan Filing Deadline to April 1
-----------------------------------------------------------
The Hon. Kevin J. Carey of the U.S. Bankruptcy Court for the
District of Delaware has extended, at the behest of Old FENM
Inc., et al., the exclusive periods to file a Chapter 11 plan to
April 1, 2014, and solicit acceptances for that plan to May 30,
2014.
As reported by the Troubled Company Reporter on Jan. 17, 2014, the
Debtors explained that, among other things, they needed to
facilitate the closing of the assets sale which is scheduled to
close within the month. The Debtors related they have received
authority to sell roughly 53 parcels of real property that were
excluded from the going concern sale. The Debtors expect to
receive in excess of $40 million upon closing.
In a filing dated Jan. 14, 2014, the Official Committee of
Unsecured Creditors stated that it does not object to the
extension, but is concerned that the Committee, the Debtors and
their parent Tesco PLC have not made sufficient progress toward
negotiating a consensual plan.
Bradford J. Sandier, Esq., at Pachulski Stang Ziehl & Jones LLP,
the attorney for the Committee, stated in the court filing that
his client's primary focus since its appointment has been to
confirm a plan that would promptly provide for the distribution of
sale proceeds to creditors. "Agreement on the terms of a
liquidating plan in these cases should not be complicated. The
parties made significant progress towards an agreement in October
and November but unfortunately negotiations stalled in December.
Negotiations appear to be back on track with the Debtors and Tesco
having recently provided the Committee with a draft plan. The
Committee hopes that the parties will agree on the terms of a plan
shortly. If the parties are unable to promptly reach an
agreement, the Committee expects that it will oppose any further
extensions of exclusivity and seek authority to file its own
plan," Mr. Sandier said.
About Fresh & Easy Neighborhood
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. Pachulski Stang Ziehi & Jones LLP serves as
counsel to the Committee. FTI Consulting, Inc. serves as its
financial advisor.
The Debtors closed, on or about Nov. 26, 2013, the sale of about
150 supermarkets plus a production facility in Riverside,
Califorinia, to Ron Buckle's Yucaipa Cos. Pursuant to the sale
terms, the bankruptcy company changed its name, and the name of
the case, to Old FENM Inc.
FRESH & EASY: Has Until Feb. 28 to Decide on Unexpired Leases
-------------------------------------------------------------
The Hon. Kevin J. Carey of the U.S. Bankruptcy Court for the
District of Delaware has extended, at the behest of Old FENM Inc.,
et al., the time to assume or reject unexpired leases of
nonresidential real property until Feb. 28.
As reported by the Troubled Company Reporter on Jan. 17, 2014, the
Debtors requested the extension because they are liquidating the
remainder of their assets. The Debtors' sale of substantially all
of their operating assets, including, but not limited to, the
Debtors' fee and leasehold interests in their operating stores to
YFE Holdings, Inc., closed on Nov. 26, 2013. After closing the
YFE sale, the Debtors remain party to 33 non-operating store
leases. The Debtors originally intended to reject the store
leases but withdrew their motion after entering into an agreement
with Alamo Group, LLC. Under the DRA, the Debtors agreed to sell
the right to designate an assignee for their remaining real
property leases to Alamo.
About Fresh & Easy Neighborhood
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. Pachulski Stang Ziehi & Jones LLP serves as
counsel to the Committee. FTI Consulting, Inc. serves as its
financial advisor.
The Debtors closed, on or about Nov. 26, 2013, the sale of about
150 supermarkets plus a production facility in Riverside,
Califorinia, to Ron Buckle's Yucaipa Cos. Pursuant to the sale
terms, the bankruptcy company changed its name, and the name of
the case, to Old FENM Inc.
FRIENDFINDER NETWORKS: SSG Served as Investment Banker
------------------------------------------------------
SSG Capital Advisors, LLC, an independent special situations
investment bank, on Jan. 30 disclosed that it served as the
investment banker and financial advisor to FriendFinder Networks
Inc. in the restructuring of FFN's $234.3 million senior secured
notes and $329.6 million second lien notes pursuant to a
Chapter 11 Plan of Reorganization in the U.S. Bankruptcy Court for
the District of Delaware.
Headquartered in Sunnyvale, CA, FFN is an internet and technology
company providing services in the social networking and web-based
video sharing markets. FFN's business consists of creating and
operating technology platforms which run thousands of websites
throughout the world appealing to users of diverse cultures and
interest groups. The Company is also engaged in entertainment
activities consisting of publishing, licensing, studio production
and distribution of adult-oriented entertainment and materials.
The Company publishes Penthouse and other magazines and digests.
Additionally, the Company licenses the Penthouse name for the
international publication of various adult magazines and for use
on various products. FFN also provides multimedia entertainment
products and services, including content for pay-per-view
programming.
As a result of a highly levered capital structure coupled with
declining financial performance and pending debt maturities, the
Company filed for protection under Chapter 11 of the U.S.
Bankruptcy Code in September, 2013 in order to effectuate a
restructuring transaction that would delever the business and
provide for greater financial stability.
The Company retained SSG to provide various services to support
the proposed Plan, including a liquidation valuation, enterprise
valuation, equity valuation and feasibility analysis. The Plan
was confirmed and closed in December, 2013. The Plan will reduce
the Company's annual interest expense by over $50 million,
eliminate over $300 million of secured debt and return control of
the Company to the FFN founder, Andrew Conru.
About FriendFinder Networks Inc.
FriendFinder Networks and affiliates, including lead debtor PMGI
Holdings Inc., sought bankruptcy protection (Bankr. D. Del. Lead
Case No. 13-12404) on Sept. 17, 2013, estimating assets of
$465.3 million and debt totaling $662 million.
The Debtors are represented by Nancy A. Mitchell. Esq., Matthew L.
Hinker, Esq., and Paul T. Martin, Esq., at Greenberg Traurig, LLP,
in New York, as lead bankruptcy counsel; and Dennis A. Meloro,
Esq., in Wilmington, Delaware, as local Delaware counsel. Akerman
Senterfitt serves as the Debtors' special and conflicts counsel.
The Debtors' financial advisor is SSG Capital Advisors LLC. BMC
Group, Inc., is the Debtors' claims and noticing agent.
GANNETT INC: Moody's Hikes Rating on Unsec. Notes Due 2027 to Ba1
-----------------------------------------------------------------
Moody's Investors Service upgraded the 7.75% senior notes due 2027
and 7.25% senior notes due 2027 issued by Belo Corp. ("Belo") in
1997 each to Ba1 from Ba3 with Gannett, Inc.'s ("Gannett")
assuming the notes. Moody's withdrew Belo's CFR, PDR and SGL
rating to reflect the acquisition of Belo by Gannett in December
2013. In addition, Moody's affirmed all other credit ratings of
Gannett, including the Ba1 Corporate Family Rating (CFR) and Ba1-
PD Probability of Default Rating (PDR). Gannett's SGL-1
Speculative Grade Liquidity (SGL) Rating was also affirmed and the
company's outlook remains negative.
Upgraded:
Issuer: Gannett Co., Inc.
7.75% Senior Debentures due June 2027 ($200 million outstanding):
Upgraded to Ba1, LGD3 -- 44% from Ba3, LGD5 -- 70%
7.25% Debentures due September 2027 ($240 million outstanding):
Upgraded to Ba1, LGD3 -- 44% from Ba3, LGD5 -- 70%
Affirmed:
Issuer: Gannett Co., Inc.
Corporate Family Rating: Affirmed Ba1
Probability of Default Rating: Affirmed Ba1-PD
Commercial Paper: Affirmed NP
$1,200 million guaranteed senior unsecured revolver due 2018:
Affirmed Ba1, LGD3 -- 44% (from LGD3 -- 40%)
$155 million guaranteed senior unsecured term loan due 2018:
Affirmed Ba1, LGD3 -- 44% (from LGD3 -- 40%)
Guaranteed Senior Unsecured Regular Bonds/Debentures: Affirmed
Ba1, LGD3 -- 44% (from LGD3 -- 40%)
Speculative Grade Liquidity Rating: Affirmed SGL -- 1
Outlook Actions:
Issuer: Gannett Co., Inc.
Outlook is Negative
Withdrawals:
Issuer: Gannett Co., Inc.
Issuer Rating: Ba2
Senior Unsecured Shelf: (P)Ba2
Issuer: Belo Corp.
Corporate Family Rating: Ba2
Probability of Default Rating: Ba2-PD
Speculative Grade Liquidity Rating: SGL -- 2
Outlook Actions:
Issuer: Belo Corp.
No Outlook
RATINGS RATIONALE
Gannett's Ba1 Corporate Family Rating (CFR) incorporates the
increased debt balance as a result of the $2.2 billion Belo Corp.
acquisition ($1.5 billion of new notes and the assumption of $0.7
billion of existing debt including the 7 3/4% and 7 1/4% senior
notes due 2027). On January 28, 2014, Gannett became an obligor
with respect to payment of the assumed 7 3/4% and 7 1/4% senior
notes due 2027, and the assigned Ba1 instrument ratings reflect
Moody's ranking of these notes in line with Gannett's existing
senior unsecured credit facilities and note obligations. Although
not guaranteed, these debt instruments benefit from Belo's note
obligation. Ratings are supported by sizable cash flow generated
from a large and geographically diverse portfolio of
newspaper/publishing, broadcast and digital businesses, above
average industry margins, high leverage, and good local brand
recognition, content infrastructure, and advertiser relationships.
These strengths are tempered by ongoing competition for consumers
and advertising that Moody's believes will continue to create
revenue challenges despite Gannett's efforts to exploit content
across a broad range of traditional and digital channels.
Advertising also accounts for the majority of revenues and is
exposed to cyclical downturns. The revenue pressure in publishing
is a significant rating overhang.
Gannett's debt-to-EBITDA leverage (LTM 9/30/13 incorporating
Moody's standard adjustments and the average of the last two years
of broadcast operations, excluding the minority interest share of
CareerBuilder's estimated EBITDA, and prior to synergies)
increased to an estimated 3.7x from 2.7x as a result of the
acquisition of Belo Corp. (ratings withdrawn due to transaction).
Moody's projects debt-to-EBITDA will decline to a mid-to-low 3x
range within two years of the December 2013 closing through debt
repayment, meaningful reductions in unfunded pension liabilities,
and modest EBITDA gains resulting from the company's growth
initiatives and acquisition synergies. Moody's expects the pace of
acquisitions in the local television broadcast industry to remain
brisk due to a combination of factors including the potential to
realize scale, diversity and synergy benefits, historically modest
borrowing costs, and a number of willing sellers. Moody's
anticipates Gannett will remain opportunistic with possible future
transactions potentially slowing the pace of leverage reduction.
Moody's expects Gannett to continue to generate significant free
cash flow (roughly $500 million annually), although ongoing share
repurchases will utilize cash that could otherwise fund
acquisition debt repayment. The SGL-1 Speculative Grade Liquidity
(SGL) Rating reflects strong liquidity with $811 million of
balance sheet cash and only $250 million of debt maturities in the
next 12 months.
The negative rating outlook reflects the potential for a downgrade
if additional acquisitions, deterioration in the publishing
business, or delays in realizing planned synergies prevent Gannett
from reducing elevated leverage as a result of the Belo
acquisition. The negative rating outlook also factors in Moody's
expectation for moderate U.S. economic growth and a continued good
liquidity position. Gannett's ratings could be lowered if
liquidity weakens, free cash flow-to-debt falls below 10% or debt-
to-EBITDA is sustained above 3.25x (metrics incorporating Moody's
standard adjustments and broadcast operations on a two-year
average, and excluding the minority interest share of
CareerBuilder's estimated EBITDA). The aforementioned credit
metrics to maintain the Ba1 CFR could be tightened if publishing
revenue declines more quickly than expected. An increase in
leverage due to acquisitions, share repurchases or asset
separations could create downward rating pressure. An upgrade is
unlikely over the next 12-18 months due to the elevated leverage.
Moody's could change the rating outlook to stable if Gannett is
able to reduce and sustain debt-to-EBITDA leverage below 3.25x and
maintain a minimum 10% free cash flow-to-debt. The company would
also need to maintain good liquidity including a meaningful
cushion under its credit facility financial covenants, proactively
manage its debt maturities, and demonstrate revenue stability.
The principal methodology used in this rating was the Global
Broadcast and Advertising Related Industries Methodology published
in May 2012. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
Gannett Co., Inc., headquartered in McLean, VA, is a diversified
local newspaper/publisher and broadcaster that also has ownership
interests in a number of digital ventures including a 52.9% stake
in CareerBuilder, which is fully consolidated in Gannett's
financial statements. Gannett closed the Belo acquisition on
December 23, 2013 for approximately $2.2 billion (including debt
assumed) in an all-cash transaction. Revenue for the LTM 9/30/13
period pro forma for the Belo acquisition was approximately $6.0
billion.
GATEWAY CLUB: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Gateway Club, Inc.
37 Church Street
Waynesville, NC 28786
Case No.: 14-10047
Chapter 11 Petition Date: January 29, 2014
Court: United States Bankruptcy Court
Western District of North Carolina (Asheville)
Judge: Hon. George R. Hodges
Debtor's Counsel: Benson T. Pitts, Esq.
PITTS, HAY & HUGENSCHMIDT, P.A.
137 Biltmore Avenue
Asheville, NC 28801
Tel: 828-255-8085
Fax: 828-251-2760
Email: ben@phhlawfirm.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Arthur Morse O'Neil, III, president.
A list of the Debtor's 20 largest unsecured creditors is available
for free at http://bankrupt.com/misc/ncwb14-10047.pdf
GLENDALE RANCH: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Glendale Ranch Market, Inc.
13506 Sherman Way
Van Nuys, CA 91405
Case No.: 14-10459
Chapter 11 Petition Date: January 29, 2014
Court: United States Bankruptcy Court
Central District Of California (San Fernando Valley)
Judge: Hon. Victoria S. Kaufman
Debtor's Counsel: Sandford Frey, Esq.
CREIM MACIAS KOENIG & FREY LLP
633 W Fifth St 51st Fl
Los Angeles, CA 90071
Tel: 213-614-1944
Email: Sfrey@cmkllp.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
A list of the Debtor's 20 largest unsecured creditors is available
for free at http://bankrupt.com/misc/cacb14-10459.pdf
GMG CAPITAL: Court Denies Motion to Extend Plan Filing Period
-------------------------------------------------------------
Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern
District of New York has entered a memorandum decision denying the
motion of GMG Capital Partners III, L.P., and GMG Capital Partners
III Companion Fund, L.P., to extend their (i) exclusive filing
period by 90 days through and including April 22, 2014; and
(ii) exclusive solicitation period by 90 days through and
including June 19, 2014.
As reported by the Troubled Company Reporter on Jan. 13, 2014, the
Debtors sought the extensions in order to allow for more
information to develop regarding a sale transaction for Open Peak
or Lancope. Michael S. Fox, Esq., at Olshan Frome Wolosky LLP,
the attorney for the Debtors, said in a Jan. 8, 2014 court filing
that the Debtors are fully committed to maximizing recoveries for
all stakeholders, including its largest creditor, Athenian Venture
Partners I, L.P., and Athenian Venture Partners II, L.P., other
general unsecured creditors, as well as the limited partners who
have over $100 million at risk. The Debtors believe that they are
bookvalue solvent. Recoveries are dependent upon the near-to mid-
term performance of two of its investments: Open Peak and Lancope.
The Debtors have an approximate 5% equity position in Open Peak
and its management sits on the Open Peak Board, as does J.
Tomilson Hill III, Vice Chairman of the Blackstone Group.
On Jan. 15, 2014, Athenian Venture Partners I, L.P., and Athenian
Venture Partners II, L.P., filed objections to the Debtors'
requested extensions. "As the monthly operating reports filed by
the Debtors demonstrate, the Debtors are not operating entities --
they have no employees, create no goods, provide no services, make
no sales, and collect no revenues. Additionally, they are not
actively investing in any companies or properties -- they have no
investment capital or any liquid assets. Instead, they are fully-
invested venture capital vehicles whose sole purpose is to hold
certain speculative investments, namely stock in several unproven
technology companies -- including Open Peak and Lancope. The
Debtors have held the stock of Open Peak and Lancope for over ten
years at this point. Yet, after over ten years of holding these
investments, the Debtors now proclaim that 'the first quarter of
2014 will be highly indicative of the performance and values to
be realized from these two private entities' as grounds for
extending their exclusive periods," AVP said in a Jan. 15 court
filing. AVP stated that the only sensible path forward is for the
Debtors to promptly sell sufficient assets to meet their debt
obligations without further delay.
On Jan. 24, 2014, the Court concluded that the Debtors failed to
sustain their burden of demonstrating cause. The Court found
that, among other things: (i) GMG has had sufficient time to enter
into good faith negotiations with its creditors, principally AVP,
but has not even commenced plan negotiations; (ii) despite its
minimal operations, GMG is not paying its bills as they become
due, and is hurtling deeper into insolvency; and (iii) GMG has not
demonstrated reasonable prospects for proposing a viable plan that
AVP will support. AVP controls nearly 90% of the unsecured debt
in this case, and the unsecured class appears to be the only
impaired class that would be entitled to vote.
AVP is represented by:
HALPERIN BATTAGLIA RAICHT, LLP
Alan D. Halperin, Esq.
Carrie E. Essenfeld, Esq.
40Wall Street, 37th Floor
New York, NY 10005
Tel: (212) 765-9100
Fax: (212) 765-0964
and
Derek C. Abbott, Esq.
Daniel B. Butz, Esq.
Morris, Nichols, Arsht & Tunnell LLP
1201 North Market Street
Post Office Box 1347
Wilmington, Delaware 19899-1347
Tel: (302) 658-9200
Fax: (302) 658-3989
About GMG Capital Partners
GMG Capital Partners III, L.P., and GMG Capital Partners III
Companion Fund, L.P., sought Chapter 11 protection (Bankr.
S.D.N.Y. Case No. 13-12937 and 13-12939) in Manhattan on Sept. 10,
2013. GMG Capital Partners III disclosed $21,696,757 in assets
and $7,877,498 in liabilities as of the Chapter 11 filing.
GMX RESOURCES: Looper Reed Firm Changes Name
--------------------------------------------
Jason S. Brookner, Esq., informs the Bankruptcy Court in the cases
of GMX Resources Inc., et al., that his firm Looper Reed & McGraw,
P.C., has changed its name effective Jan. 1, 2014 to Gray Reed &
McGraw, P.C.
Gray Reed serves as counsel to the Official Committee of Unsecured
Creditors in the Chapter 11 cases of GMX Resources, et al.
Aside from Mr. Brookner, Michael W. Bishop, Esq., and Lydia R.
Webb, Esq., of Gray Reed also represent the Creditors Committee.
About GMX Resources
GMX Resources Inc. -- http://www.gmxresources.com/-- is an
independent natural gas production company headquartered in
Oklahoma City, Oklahoma. GMXR has 53 producing wells in Texas &
Louisiana, 24 proved developed non-producing reservoirs, 48 proved
undeveloped locations and several hundred other development
locations. GMXR has 9,000 net acres on the Sabine Uplift of East
Texas. GMXR has 7 producing wells in New Mexico.
GMX filed a Chapter 11 petition in its hometown (Bankr. W.D. Okla.
Case No. 13-11456) on April 1, 2013, so secured lenders can buy
the business in exchange for $324.3 million in first-lien notes.
GMX listed assets for $281.1 million and liabilities totaling
$458.5 million.
GMX missed a payment due in March 2013 on $51.5 million in second-
lien notes. Other principal liabilities include $48.3 million in
unsecured convertible senior notes.
The DIP financing provided by senior noteholders requires court
approval of a sale within 75 days following approval of sale
procedures. The lenders and principal senior noteholders include
Chatham Asset Management LLC, GSO Capital Partners, Omega Advisors
Inc. and Whitebox Advisors LLC.
David Zdunkewicz, Esq., Timothy A. Davidson II, Esq., and Joseph
Rovira, Esq., at ANDREWS KURTH LLP, serves as the Debtors'
counsel. Special Local Counsel, Conflicts Counsel and Litigation
Counsel for the Debtors are William H. Hoch, Esq., and Christopher
M. Staine, Esq., at CROWE & DUNLEVY, P.C.
Counsel to Backstop Lenders under DIP Financing and Steering
Committee of Holders of Senior Secured Notes are Brian Hermann,
Esq., and Sarah Harnett, Esq., at PAUL, WEISS, RIFKIND, WHARTON &
GARRISON LLP.
Counsel to the Unsecured Creditors Committee is Jason Brookner,
Esq., at GRAY REED & MCGRAW P.C. Gray Reed replaced Winston &
Strawn LLP, effective as of April 25, 2013. The Committee tapped
Conway MacKenzie, Inc., as financial advisor.
GORDON PROPERTIES: Has OK to Borrow Up to $500,000 From Owners
--------------------------------------------------------------
The Hon. Robert G Mayer of the U.S. Bankruptcy Court for the
Eastern District of Virginia has granted Gordon Properties, LLC,
and Condominium Services, Inc., authorization to borrow up to
$500,000 from one or more of its owners on a subordinated secured
basis.
As reported by the Troubled Company Reporter on Dec. 16, 2013, the
Debtor related that their owners and operators -- family members
Bryan Sells, Elizabeth Sells (Bryan's sister), Lindsay Wilson
(Bryan's and Elizabeth's cousin), and Julie Langdon (Lindsay's
sister) -- have committed to lend up to $500,000 on an ongoing
basis as and when funds may be required, to Gordon Properties for
its ongoing cash needs, pursuant to the terms of a Commercial
Credit Line Promissory Note and Credit Line Deed of Trust, similar
in form and content to the Note and Deed of Trust utilized in the
prior borrowing motions.
The collateral intended to secure the loan will be one or more of
the unencumbered condominium units owned by Gordon Properties at
The Forty Six Hundred Condominium.
As with the previous borrowings, the owners have agreed to
subordinate their right to payment under the Note and Deed of
Trust to all allowed claims, that is, the owners agree to
subordinate their right to payment under the Notes and Deed of
Trust to the rights of all allowed claimants in the Gordon
Properties case. Accordingly, no creditor in Gordon Properties'
case will be adversely affected by the loan.
As reported in the Troubled Company Reporter, the owners may
decide amongst themselves, in their discretion, which of them will
provide the funding, when the funding will be provided, and how
much any particular owner will fund, provided, however, that the
total amount of the loan outstanding at any one time will not
exceed $500,000.
About Gordon Properties, LLC
Alexandria, Va.-based Gordon Properties, LLC, owns 40 condominium
units in a high-rise apartment building with both residential and
commercial units and two commercial units adjacent to the high-
rise building. Gordon Properties' ownership of these condos
represents about a 20% interest in the Forty Six Hundred
Condominium project -- http://foa4600.org/-- in Alexandria.
Gordon Properties also owns one of the adjacent commercial units,
a restaurant. Gordon Properties sought Chapter 11 protection
(Bankr. E.D. Va. Case No. 09-18086) on Oct. 2, 2009, and is
represented by Donald F. King, Esq., at Odin, Feldman & Pittleman
PC in Fairfax, Va. Gordon Properties disclosed $11,149,458 in
assets and $1,546,344 in liabilities.
Condominium Services filed its chapter 11 petition (Bankr. E.D.
Va. 10-10581) on Jan. 26, 2010. It scheduled one creditor, the
condominium association, with a disputed claim of $436,802.00.
The association filed a proof of claim asserting a claim of
$453,533.12. A second proof of claim was filed by the Internal
Revenue Service for $1,955.45. According to its schedules, if
both claims are allowed, it has a net deficit of about $426,900.
CSI is wholly owned by Gordon Properties.
In February 2012, Judge Mayer denied the motion of the association
to substantively consolidate the chapter 11 bankruptcy cases of
Gordon Properties and Condominium Services, Inc., the condominium
management company.
Gordon Properties and CSI opposed the motion. The two cases were
previously administratively consolidated.
GORDON PROPERTIES: Court OKs Settlement Agreement With Stites
-------------------------------------------------------------
The Hon. Robert G Mayer of the U.S. Bankruptcy Court for the
Eastern District of Virginia has approved Gordon Properties, LLC's
settlement agreement with creditor Stites & Harbison, PLLC.
On Nov. 8, 2013, the Debtor and Stites jointly sought the Court's
approval of the Settlement Agreement, with essential terms
contingent upon: (i) the Court's approval of the terms of the
Settlement Agreement, (ii) allowance of the Stites Proof of Claim
in a reduced amount, and (iii) approval of a loan from one or more
of the owners to the Debtors to fund the settlement payment. In
the event all three conditions are satisfied, the Debtor will (i)
pay Stites $185,000 in full and final satisfaction of the Stites
Claim against the Debtor, and (ii) agree with Stites to mutually
and reciprocally release and discharge all claims against one
another arising out of or relating to the Proof of Claim, the
objection, and the legal services provided.
Following commencement of the Debtor's Chapter 11 case, Stites
filed a proof of claim in the amount of $237,755.40, representing
fees for legal services rendered to the Debtor in litigation that
occurred prior to its bankruptcy petition. Four years later,
Stites filed a motion to convert the Debtor's Chapter 11 case to
Chapter 7, which the Court denied.
The Debtor objected to the Stites Proof of Claim, seeking an
offset in the amount of $82,236.85 and stipulated to an allowed
claim in the amount of $155,518.55. The offset claim was based on
the alleged professional negligence of Robert Scully, Esq., an
attorney and member at Stites.
After entering into negotiations to resolve that claim and the
objection which lasted more than a month and involved several
offers and counteroffers, the parties eventually reached a
conditional compromise, and subsequently reduced their conditional
compromise to writing and executed it in the form of a Settlement
Agreement.
Stites is represented by:
Robert E. Scully, Esq.
STITES & HARBISON, PLLC
1199 North Fairfax Street, Suite 900
Alexandria, Virginia 22314
Tel: (703) 739-4900
Fax: (703) 739-9577
E-mail: rscully@stites.com
About Gordon Properties, LLC
Alexandria, Va.-based Gordon Properties, LLC, owns 40 condominium
units in a high-rise apartment building with both residential and
commercial units and two commercial units adjacent to the high-
rise building. Gordon Properties' ownership of these condos
represents about a 20% interest in the Forty Six Hundred
Condominium project -- http://foa4600.org/-- in Alexandria.
Gordon Properties also owns one of the adjacent commercial units,
a restaurant. Gordon Properties sought Chapter 11 protection
(Bankr. E.D. Va. Case No. 09-18086) on Oct. 2, 2009, and is
represented by Donald F. King, Esq., at Odin, Feldman & Pittleman
PC in Fairfax, Va. Gordon Properties disclosed $11,149,458 in
assets and $1,546,344 in liabilities.
Condominium Services filed its chapter 11 petition (Bankr. E.D.
Va. 10-10581) on Jan. 26, 2010. It scheduled one creditor, the
condominium association, with a disputed claim of $436,802.00.
The association filed a proof of claim asserting a claim of
$453,533.12. A second proof of claim was filed by the Internal
Revenue Service for $1,955.45. According to its schedules, if
both claims are allowed, it has a net deficit of about $426,900.
CSI is wholly owned by Gordon Properties.
In February 2012, Judge Mayer denied the motion of the association
to substantively consolidate the chapter 11 bankruptcy cases of
Gordon Properties and Condominium Services, Inc., the condominium
management company.
Gordon Properties and CSI opposed the motion. The two cases were
previously administratively consolidated.
GORDON PROPERTIES: Appointment of Stephen Leach as Examiner Denied
------------------------------------------------------------------
The Hon. Robert G Mayer of the U.S. Bankruptcy Court for the
Eastern District of Virginia has denied the motion of Judy A.
Robbins, U.S. Trustee for Region 4, to appoint Stephen E. Leach as
examiner in the bankruptcy cases of Gordon Properties, LLC, and
Condominium Services, Inc.
On June 2, 2013, the Court entered an order directing the U.S.
Trustee to appoint a disinterested person to serve as examiner.
As reported by the Troubled Company Reporter on June 18, 2013, the
US Trustee consulted with Donald F. King (counsel for the Debtors)
and John T. Donelan (counsel for First Owner's Association of
Forty Six Hundred Condominium, Inc.). Mr. Leach attested that he
is a "disinterested person" as the term is defined in Section
101(14) of the Bankruptcy Code.
In May 2013, the Debtors filed an objection to the appointment of
an examiner, saying that the U.S. Trustee "has not alleged, and it
cannot establish, facts necessary to support appointment of an
examiner. The Debtors have previously set forth in their filings
in this case their explanation of why they believe appointment of
either an amicus or an examiner is not warranted." The Debtors
asked the Court in April 2013 to reconsider its memorandum opinion
and order appointing amicus curiae of April 16, 2013, for these
reasons: (i) the Court doesn't have the power to appoint an amicus
to act as fact finder or de facto special master; (ii) that even
if the Court has the power, the broad unlimited direction is
unwarranted; and (iii) there is no authority to require the
Debtors to bear the costs of that extraordinary measure.
About Gordon Properties, LLC
Alexandria, Va.-based Gordon Properties, LLC, owns 40 condominium
units in a high-rise apartment building with both residential and
commercial units and two commercial units adjacent to the high-
rise building. Gordon Properties' ownership of these condos
represents about a 20% interest in the Forty Six Hundred
Condominium project -- http://foa4600.org/-- in Alexandria.
Gordon Properties also owns one of the adjacent commercial units,
a restaurant. Gordon Properties sought Chapter 11 protection
(Bankr. E.D. Va. Case No. 09-18086) on Oct. 2, 2009, and is
represented by Donald F. King, Esq., at Odin, Feldman & Pittleman
PC in Fairfax, Va. Gordon Properties disclosed $11,149,458 in
assets and $1,546,344 in liabilities.
Condominium Services filed its chapter 11 petition (Bankr. E.D.
Va. 10-10581) on Jan. 26, 2010. It scheduled one creditor, the
condominium association, with a disputed claim of $436,802.00.
The association filed a proof of claim asserting a claim of
$453,533.12. A second proof of claim was filed by the Internal
Revenue Service for $1,955.45. According to its schedules, if
both claims are allowed, it has a net deficit of about $426,900.
CSI is wholly owned by Gordon Properties.
In February 2012, Judge Mayer denied the motion of the association
to substantively consolidate the chapter 11 bankruptcy cases of
Gordon Properties and Condominium Services, Inc., the condominium
management company.
Gordon Properties and CSI opposed the motion. The two cases were
previously administratively consolidated.
HAMPTON LAKE: Gets Chapter 11 Plan Confirmed
--------------------------------------------
The U.S. Bankruptcy Court for the District of South Carolina
entered an order confirming the Chapter 11 Plan of Hampton Lake,
LLC, on Jan. 14, 2014.
The confirmed Amended Plan of Liquidation was filed on Dec. 2,
2013.
Joshua Tillman filed an objection to confirmation. At the
confirmation hearing, Mr. Tillman agreed to withdraw his objection
and vote in favor of the Plan. Mr. Tillman has further agreed to
dismiss the Debtor from a state court litigation captioned Civil
Action No. 2011-CP-07-4251. Mr. Tillman is represented by Marilyn
E. Gartley, Esq. -- marilyn@andersonlawfirm.net -- of Anderson &
Associates, P.A., of Columbia, S.C.
Also, prior to the confirmation hearing, a group of property
owners also wrote the Court that they support the Debtor's Amended
Plan. They are Stephen M. Sorett, Jeffrey B. Toker, Michael R.
Calvert, John J. McAndris, Frederick C. Chitty, Peter T. Bromley,
Richard C. Nettles, and Charles R. Rudd.
Noting that the parties-in-interest voted unanimously voted to
accept the Plan, and after notice to all interested parties of the
Jan. 8, 2014 confirmation, the Bankruptcy Court finds that the all
the requirements of confirmation under the Bankruptcy Code have
been satisfied.
About Hampton Lake
Hampton Lake, LLC, filed a Chapter 11 petition (Bankr. D. S.C.
Case No. 13-02482) in Charleston, South Carolina, on April 29,
2013. G. William McCarthy, Jr., Esq. and Daniel J. Reynolds, Jr.,
Esq., at McCarthy Law Firm, LLC, serve as counsel to the Debtor.
The Debtor operates the Hampton Lake Subdivision in Bluffton,
South Carolina. The Debtor disclosed $23.4 million in total
assets and $48.4 million in liabilities in its schedules.
The Debtor has a Chapter 11 plan that contemplates selling the
remaining 235 lots over the next three years to generate cash
covering payments to creditors under the plan. The plan calls for
paying about 88.5 percent of the first-lien debt by selling out
the project in the next three years. The noteholders are slated
for an 8.75 percent recovery.
The Court approved the Disclosure Statement explaining the Plan on
June 24, 2013.
The Office Committee of Unsecured Creditors is represented by
J. Ronald Jones, Jr., Esq., at Clawson And Staubes, LLC, as
counsel.
HEALTH MANAGEMENT: Fitch Withdraws 'BB+' Rating on 2016 Notes
-------------------------------------------------------------
Fitch Ratings has withdrawn the ratings of Health Management
Associates, Inc., including the 'BB-' Issuer Default Rating (IDR).
Effective Jan. 27, 2014, Health Management was acquired by
Community Health Systems. Borrowings under the bank facility were
paid down and the agreement was cancelled; most of the rest of the
existing debt has been refinanced.
The following ratings of Health Management have been withdrawn:
-- IDR 'BB-';
-- Senior secured bank facility 'BB+';
-- Senior secured notes due 2016 'BB+';
-- Senior unsecured notes due 2020 'BB-';
-- Senior subordinated convertible notes due 2028 'B'
HIBU INC: Seeks U.S. Recognition of UK Restructuring
----------------------------------------------------
hibu Inc. and related entities commenced Chapter 15 bankruptcy
proceedings in the United States to seek recognition of their UK
restructuring that would reduce debt by about GBP800 million
($1.29 billion).
hibu is subject to two primary secured debt facilities, each
governed by English law: (a) a secured credit facility, dated July
27, 2006, that matured Oct. 29, 2012, and retired with the
exception of an intercompany obligation, and (b) a credit
agreement, dated November 30, 2009, of which:
GBP584,940,917,
$1,909,491,989, and
EUR679,409,640
were outstanding as of Dec. 31, 2013.
Over the last 18 months, hibu and the coordinating committee of
its 2009 Facility lenders have engaged in extensive, good faith,
arm's-length negotiations regarding a financial restructuring of
hibu's funded debt aimed at right-sizing hibu's balance sheet.
Ultimately hibu and the CoCom have reached a comprehensive
agreement, the terms of which are serving as the foundation for
the English Proceedings and the chapter 15 cases.
Beginning in September 2012, the Debtors commenced negotiations
with lenders to both the 2006 and 2009 Facilities in an effort to
reduce their debt burden. In December 2012, hibu reached an
agreement with each of the 2006 External Lenders, whereby those
lenders agreed to receive a payment in cash equal to 39% of the
total amount outstanding to them in full and final settlement of
all amounts due. This payment was made on December 11, 2012.
Despite the settlement at a discount of all amounts due under the
2006 Facility to the 2006 External Lenders, the Debtors remained
significantly overleveraged. As of Dec. 31, 2013, approximately
GBP2.3 billion remained outstanding under the 2009 Facility.
Portions of the 2009 Facility are set to mature on March 31, 2014,
and April 30, 2014, with the remaining amount due on July 31,
2014. hibu has not made any payments under the 2009 Facility
since October 25, 2012.
After months of negotiations, hibu and the CoCom announced the
principal terms of the Restructuring on July 25, 2013. Under the
Restructuring, among other things, indebtedness will be reduced by
approximately GBP800 million. In addition, the 2009 Facility
lenders will acquire (directly or indirectly) 100% of the equity
of the key hibu entities through a newly created holding company
structure.
To effectuate the restructuring, hibu commenced the English
Proceedings and the chapter 15 cases.
As of Jan. 17, 2014, all of the members of the CoCom representing
approximately 29.54% of the total loans outstanding under the 2009
Facility had executed a Lock-Up and Restructuring Framework
Agreement binding them to, among other things, execute and take
all action reasonably necessary in order to support and facilitate
the Restructuring. Other than the restructuring of the 2009
Facility, the Restructuring does not impact hibu's other
creditors, including employees, trade vendors, customers, or
others except as otherwise agreed; rather, it serves to benefit
all of hibu's stakeholders by allowing hibu to emerge a stronger
and healthier company.
The foreign representative requests the entry of an order
(a) recognizing the English Proceedings as "foreign nonmain
proceedings" under section 1517 of the Bankruptcy Code,
(b) finding that the foreign representative is a person who
meets the definitional requirements of Section 101(24) of the
Bankruptcy Code, (c) finding that the Chapter 15 petition meets
the requirements of section 1515 of the Bankruptcy Code and
(d) granting additional relief under Sections 1521 and 1507 of
the Bankruptcy Code.
hibu seeks a Feb. 27 hearing on its motion to recognize its scheme
of arrangement in the UK.
About hibu Inc.
hibu is one of the largest multinational providers of print and
digital directories and digital services connecting local
consumers and merchants. While headquartered in Reading, U.K.,
hibu has approximately one million small and medium-sized business
("SMB") customers located around the world. hibu's main operations
are located in the U.K., U.S., and Spain, with operations also in
Argentina, Chile, and Peru along with shared service functions in
India and the Philippines. hibu seeks to transform itself from
being a leading supplier of print and online advertising for SMBs
to becoming a leader in providing a portfolio of print and digital
marketing solutions for SMBs to reach consumers.
hibu Inc. and related entities commenced restructuring proceedings
under Part 26 of the United Kingdom Companies Act 2006 before the
High Court of Justice of England and Wales (Chancery Division) on
Jan. 17, 2014.
hibu Inc. and related entities filed Chapter 15 bankruptcy
petitions (Bankr. S.D.N.Y. Lead Case No. 14-70323) in Central
Islip, New York on Jan. 28, 2014, to seek recognition of
reorganization proceedings in the United Kingdom.
Christian Henry Wells, the foreign representative, is represented
by attorneys at Kirkland & Ellis LLP, in Chicago, Illinois.
hibu estimated at least $1 billion in assets and liabilities in
its Chapter 15 petition.
HOUSTON REGIONAL: Creditors Want Termination of Exclusivity
-----------------------------------------------------------
Houston SportsNet Finance, LLC, Comcast Sports Management
Services, LLC, National Digital Television Center, LLC, and
Comcast SportsNet California LLC ask the U.S. Bankruptcy Court for
the Southern District of Texas to terminate exclusivity period of
Houston Regional Sports Network, L.P., and to appoint an examiner
with expanded powers.
In a court filing dated Jan. 10, 2014, the Comcast Petitioning
Creditors claim that "the very governance crisis that precipitated
this involuntary bankruptcy filing operates to render the period
of exclusivity useless to the Debtor. The Network will be unable,
acting as a debtor-in-possession, to formulate a plan of
reorganization or otherwise restructure its business affairs at
any time during the 120-day exclusivity period established by the
Code. It is precisely the need to break through that crisis that
presumably led the Court first to appoint the Astros (Astros HRSN
LP Holdings LLC, Astros HRSN GP Holdings, LLC, and Houston Astros,
LLC), and then the Rockets (Rocket Ball, Ltd., and Clutch City
Sports & Entertainment, L.P.), as lead negotiator for the
Network."
"Even if the filing of a plan under the Network's current
governance structure were hypothetically possible, the Network's
precarious financial condition renders it impractical to permit
the passage of 120 days before a plan of reorganization can be
filed. In view of the urgent need to proceed promptly towards a
reorganization of the Network, cause certainly exists to terminate
exclusivity and permit the filing of a plan of reorganization,"
Vincent P. Slusher, Esq., at DLA Piper LLP, the attorney for the
Comcast Petition Creditors stated in the Jan. 10 court filing.
The Comcast Petitioning Creditors further move for the appointment
of an examiner with expanded powers. Mr. Slusher said that in
view of the governance problems faced by the Debtor, it is in the
estate's interest to have a disinterested party conduct an auction
for the Network's equity pursuant to court-approved auction
procedures and report to the Court on the bids received at the
auction, so that the Court can determine which bid for the equity
of the reorganized Debtor is highest and best. According to Mr.
Slusher, the disinterested examiner can distribute the proceeds of
the sale to the holders of claims and interests.
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.
INNKEEPERS USA: Hotel Portfolio From Chatham, Cerberus for Sale
---------------------------------------------------------------
Law360 reported that about three years after purchasing bankrupt
Innkeepers USA Trust's assets for $1.02 billion, a joint venture
of Chatham Lodging Trust and private equity firm Cerberus Capital
Management LP has decided to put the portfolio's remaining 51
hotels on the sales block, the companies announced on Jan. 24.
According to the report, the companies have hired Eastdil Secured
LLC to market the portfolio of properties, which has been whittled
down from its original size of 64 hotels.
About Innkeepers USA Trust
Innkeepers USA Trust is a self-administered Maryland real estate
investment trust with a primary business focus on acquiring
premium-branded upscale extended-stay, mid-priced limited service,
and select-service hotels.
Innkeepers, through its indirect subsidiaries, owns and operates
an expansive portfolio of 72 upscale and mid-priced extended-stay
and select-service hotels, consisting of approximately 10,000
rooms, located in 20 states across the United States.
Apollo Investment Corporation acquired Innkeepers in June 2007.
Innkeepers USA Trust and 91 affiliates filed for Chapter 11
protection (Bankr. S.D.N.Y. Case No. 10-13800) on July 19, 2010.
The Company's consolidated assets for 2009 totaled approximately
$1.5 billion. As of July 19, 2010, the Company and its affiliates
have incurred $1.29 billion of secured debt.
Paul M. Basta, Esq., at Kirkland & Ellis LLP, in New York; Anup
Sathy, P.C., Esq., Marc J. Carmel, Esq., at Kirkland & Ellis in
Chicago; and Daniel T. Donovan, Esq., at Kirkland & Ellis in
Washington, D.C., serve as counsel to the Debtors. AlixPartners
is the restructuring advisor and Marc A. Beilinson is the chief
restructuring officer. Moelis & Company is the financial advisor.
Omni Management Group, LLC, is the claims and notice agent.
Attorneys at Morrison & Foerster, LLP, represent the Official
Committee of Unsecured Creditors.
In October, Innkeepers USA Trust and its affiliates disclosed that
the company had successfully completed its restructuring and
emerged from Chapter 11.
The Company emerged following the closing of the $1.02 billion
sale of 64 Innkeepers' hotels to a joint venture between the
private equity firm Cerberus Capital Management, L.P. and the real
estate investment trust Chatham Lodging that was approved by the
U.S. Bankruptcy Court, Southern District of New York. Chatham
Lodging had previously purchased five of the Company's hotels that
served as collateral for loan trusts serviced by LNR Partners,
LLC, for approximately $195 million.
A substantial majority of the Company's unsecured creditors are
expected to receive a recovery of more than 90 cents on the
dollar.
INTERNATIONAL FOREIGN: Gets Court OK to Hire Logan & Company
------------------------------------------------------------
Judge Robert Gerber authorized International Foreign Exchange
Concepts Holdings, Inc., et al., to retain Logan & Company, Inc.,
as administrative advisor nunc pro tunc to Oct. 18, 2013.
Among other things, Logan & Co will assist the Debtors in the
preparation of schedules of assets and liabilities and statements
of financial affairs; assist in managing claims reconciliation;
and providing balloting and solicitation services to the Debtors
as proponents of a plan of reorganization.
As previously reported by The Troubled Company Reporter, Logan &
Company will be paid at these hourly rates:
Senior Account Manager $225-$300
Analyst and Project Manager $125-$205
Technology, Telecommunication
and Programming Specialist $140-$165
Clerical and Administrative
Support $50-$77
Logan will not charge the Debtors' estates for time spent
preparing or reviewing the invoices or time records submitted in
support of any monthly fee statements or fee applications.
About International Foreign Exchange
International Foreign Exchange Concepts Holdings, Inc., and
International Foreign Exchange Concepts, L.P., sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No.
13-13380) on Oct. 17, 2013.
Judge Robert Gerber oversees the case. Counsel to the Debtors is
Henry P. Baer, Jr., Esq., at Finn Dixon & Herling LLP, in
Stamford, Connecticut. The Debtors' restructuring advisors is CDG
Group. DiConza Traurig LLP serves as conflicts counsel. The
Debtors' special counsel is Withers Bergman LLP. The Debtors'
notice, claims, solicitation and balloting agent is Logan &
Company, Inc.
Counsel to AMF-FXC Finance LLC, the DIP lender, is Michael L.
Cook, Esq., and Christopher Harrison, Esq., at Schulte Roth &
Zabel LLP, in New York.
International Foreign Exchange Concepts Holdings Inc., the parent
of investment adviser FX Concepts LLC, sold assets for
$7.48 million to Ruby Commodities Inc., at an auction held
Nov. 25, 2013. The sale was an old-fashioned auction with the
assets first offered in six lots and then in bulk. The piecemeal
auction fetched combined bids of $3.38 million. When the assets
were offered in bulk, Ruby came out on top with an offer of $7.48
million, which the bankruptcy court in New York approved Nov. 26.
iQoR US: Moody's Affirms 'B3' CFR & Rates New $730MM Debt 'B2'
--------------------------------------------------------------
Moody's Investors Service affirmed iQor US, Inc.'s B3 Corporate
Family Rating ("CFR") and B3-PD Probability of Default Rating. At
the same time, a B2 rating has been assigned to a proposed $730
million first lien credit facility and a Caa2 rating assigned to a
proposed $220 million term loan. The term loans will be used to
refinance iQor's existing debt and partially fund the $725 million
acquisition of Jabil Circuit's aftermarket services ("AMS") unit.
The ratings outlook is stable.
Ratings (and loss given default assessments) assigned:
Proposed $100 million first lien revolver due 2019, B2 (LGD3,
38%)
Proposed $630 million first lien term loan due 2021, B2 (LGD3,
38%)
Proposed $220 million second lien term loan due 2022, Caa2
(LGD5, 85%)
Ratings affirmed:
Corporate Family Rating, B3
Probability of Default Rating, B3-PD
These ratings are subject to Moody's review of final
documentation. Ratings on iQor's existing debt will be withdrawn
upon closing.
Ratings Rationale
The B3 CFR partly reflects the intrinsic risk in a business
focused on repair services for electronics makers and retailers,
which can experience volume fluctuations due to evolving consumer
preferences for particular brands. As such, Moody's views iQor's
client base as somewhat volatile with meaningful customer
concentration. Partly due to known contract losses, Jabil AMS's
revenues are expected to decline in 2014, more than offsetting
anticipated revenue growth at the legacy iQor customer care
business. Recent contract losses were reportedly unprofitable and
underscore the competiveness and price sensitivity within the
fragmented aftermarket repairs industry.
"The rating is further constrained by execution risk inherent in
acquiring a carve-out of a much larger company. While iQor
executives have familiarity with the Jabil AMS business,
uncertainty exists regarding the cost structure going forward.
Initial cash outlays will be needed to complete the integration,
planned cost improvements, and synergies; as such, we expect free
cash flow to be modest in 2014. However, if the plan is executed
well, the combined company should benefit from increased scale, a
greater global presence and broader diversification of service
lines," said Moody's.
"The stable outlook reflects Moody's expectation that a potential
purchase price adjustment will be used to reduce debt. We expect
revenues to stabilize in the second half of 2014 as organic
revenue growth offsets known contract losses," Moody's said.
What Could Move The Rating -- UP
The ratings could be upgraded if the AMS business is smoothly
integrated such that the combined company's cost structure and
cash generation meet expectations. An upgrade would also require:
(i) revenue stabilization, (ii) profitability improvement with
limited addbacks, and (iii) debt reduction such that Moody's
expects free cash flow/debt and interest coverage (EBITDA-
capex/pro forma interest) to exceed 5% and 2x, respectively.
What Could Move The Rating -- DOWN
The outlook or ratings could be lowered if: (i) iQor loses a
material contract or revenues decline more than expected, (ii)
margins compress, (iii) free cash flow or liquidity deteriorates,
or (iv) total debt / EBITDA approaches 5x or interest coverage
(EBITDA-capex / pro forma interest) approaches 1x.
The principal methodology used in this rating was Global Business
& Consumer Service Industry Rating Methodology published in
October 2010. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
IRISH RESTAURANTS: Sec. 341 Creditors Meeting Continued to Feb. 6
-----------------------------------------------------------------
In the Chapter 11 case of Irish Restaurants LP, d/b/a Coakley's
Restaurant and Pub, the Meeting of Creditors held on Jan. 9, 2014
at 1:00 p.m. has been continued until Feb. 6, 2014 at 3:00 p.m.
The meeting will take place on the 11th Floor, Federal Building,
228 Walnut Street, Harrisburg, PA 17101.
The Debtor is represented by:
Lawrence G. Frank, Esq.
Law Office of Lawrence G. Frank
100 Aspen Drive
Dillsburg, PA 17019-9621
Tel: (717) 234-7455
Fax: (717) 432-9065
E-mail: lawrencegfrank@gmail.com
Irish Restaurants LP, dba Coakley's Restaurant & Pub, filed for
Chapter 11 bankruptcy (Bankr. M.D. Pa. Case No. 13-05990) on Nov.
21, 2013, listing under $1 million in both assetse and debts. A
copy of the petition is available at no extra charge at
http://bankrupt.com/misc/pamb13-05990.pdf
IXIA: Nasdaq Accepts Listing Compliance Plan
-------------------------------------------
Ixia on Jan. 30 disclosed that The Nasdaq Stock Market LLC has
accepted the company's plan to regain compliance with Nasdaq
Listing Rule 5250(c)(1), which acceptance will permit the
continued listing of Ixia's common stock on the Nasdaq Global
Select Market.
As previously reported, on November 19, 2013, Ixia received a
letter from Nasdaq stating that the company is not in compliance
with the Rule because the company had not filed its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2013 with
the Securities and Exchange Commission. In its letter, Nasdaq
notified the company that it had 60 days to submit to Nasdaq a
plan to regain compliance with the Rule.
On January 17, 2014, Ixia timely submitted to Nasdaq a plan to
regain compliance with the Rule. After reviewing the company's
plan, Nasdaq accepted the plan and granted an exception to enable
the company to regain compliance with the Rule. Under the terms
of the exception, the company is required to file the Form 10-Q
with the SEC on or before March 18, 2014 as required by the Rule.
Nasdaq has advised the company that a failure to file the Form 10-
Q within the extension period may result in a notice of delisting
of the company's common stock.
About Ixia
Ixia -- http://www.ixiacom.com-- delivers information technology
solutions to a wide variety of organizations, through real-time
monitoring, real-world testing, and rapid assessment of networks
and systems.
JAMES CRYSTAL: Case Summary & Largest Unsecured Creditors
---------------------------------------------------------
Debtor affiliates filing separate Chapter 11 cases:
Debtor Case No.
------ --------
James Crystal Enterprises II, LLC 14-12166
2100 Park Central Blvd., North, Suite 100
Pompano Beach, FL 33064
James Crystal Enterprises, LLC 14-12165
2100 Park Central Blvd., North, Suite 100
Pompano Beach, FL 33064
James Crystal Holdings, Inc. 14-12163
2100 Park Central Blvd., North, Suite 100
Pompano Beach, FL 33064
James Crystal Licenses, LLC 14-12168
2100 Park Central Blvd., North, Suite 100
Pompano Beach, FL 33064
James Crystal Orlando, Inc. 14-12158
2100 Park Central Blvd., North, Suite 100
Pompano Beach, FL 33064
James Crystal South Florida, Inc. 14-12155
2100 Park Central Blvd., North, Suite 100
Pompano Beach, FL 33064
James Crystal, Inc. 14-12151
2100 Park Central Blvd., North, Suite 100
Pompano Beach, FL 33064
JCE Licenses, LLC 14-12170
2100 Park Central Blvd., North, Suite 100
Pompano Beach, FL 33064
James Crystal Farms, Inc. 14-12171
2100 Park Central Blvd., North, Suite 100
Pompano Beach, FL 33064
Chapter 11 Petition Date: January 29, 2014
Court: U.S. Bankruptcy Court
Southern District of Florida (Fort Lauderdale)
Judge: Raymond B Ray
Debtor's Counsel: Chad P Pugatch, Esq.
RICE PUGATCH ROBINSON & SCHILLER, P.A.
101 NE 3 Ave Suite 1800
Ft. Lauderdale, FL 33301
Tel: (954) 462-8000
Email: cpugatch.ecf@rprslaw.com
Estimated Estimated
Debtor Assets Liabilities
------ -------- --------------
James Crystal Farms, Inc. $100,000 to $10,000,000 to
$500,000 $50,000,000
JCE Licenses, LLC $0 to $10,000,000 to
$50,000 $50,000,000
James Crystal Licenses, LLC $0 to $10,000,000 to
$50,000 $50,000,000
James Crystal Enterprises II $500,000 to $10,000,000 to
$1 million $50 million
James Crystal Enterprises, LLC $0 to $10,000,000 to
$50,000 $50,000,000
James Crystal Holdings, Inc. $500,000 to $10,000,000 to
$1,000,000 $50,000,000
James Crystal Orlando, Inc. $100,000 to $10,000,000 to
$500,000 $50,000,000
James Crystal South Florida, Inc. $50,000 to $10,000,000 to
$100,000 $50,000,000
James Crystal, Inc. $1,000,000 to $10,000,000 to
$10,000,000 $50,000,000
James Crystal Farms listed Star Farms Corp. as its largest
unsecured creditor holding a trade claim of $6,684.
A list of James Crystal Holdings, Inc.'s 20 largest unsecured
creditors is available for free at:
http://bankrupt.com/misc/flsb14-12163.pdf
A list of James Crystal Orlando, Inc.'s 11 largest unsecured
creditors is available for free at:
http://bankrupt.com/misc/flsb14-12158.pdf
A list of James Crystal South Florida, Inc.'s 13 largest unsecured
creditors is available for free at:
http://bankrupt.com/misc/flsb14-12155.pdf
A list of James Crystal, Inc.'s 20 largest unsecured creditors is
available for free at http://bankrupt.com/misc/flsb14-12151.pdf
The following Debtors did not file a list of their largest
unsecured creditors when they filed the petitions:
* James Crystal Licenses
* James Crystal Enterprises
* James Crystal Enterprises
* JCE Licenses
The petitions were signed by James W. Hilliard, vice president.
JEVIC TRANSPORTATION: Challenge to Ch. 11 Deal Gets Booted
----------------------------------------------------------
Law360 reported that a Delaware federal judge dismissed laid-off
employees' appeal of a settlement that ended Jevic Transportation
Inc.'s Chapter 11 case, ruling that the bankruptcy court did not
err by approving the deal and that it would be "irreversibly
scrambled" if overturned.
According to the report, U.S. District Judge Sue L. Robinson wrote
that a 2012 settlement, among parties including the debtors, their
private-equity owners -- units of Sun Capital Partners Inc. -- a
group of secured lenders led by The CIT Group/Business Credit
Inc., and the official committee of unsecured creditors.
About Jevic Transportation
Based in Delanco, New Jersey, Jevic Transportation Inc. --
http://www.jevic.com/-- provided trucking services. Two
affiliates -- Jevic Holding Corp. and Creek Road Properties --
have no assets or operations. Jevic et al. sought Chapter 11
protection (Bankr. D. Del. Case No. 08-11008) on May 20, 2008.
Domenic E. Pacitti, Esq., and Michael W. Yurkewicz, Esq., at Klehr
Harrison Harvey Branzburg & Ellers, in Wilmington, Del., represent
the Debtors. The U.S. Trustee for Region 3 appointed five
creditors to serve on an Official Committee of Unsecured
Creditors. Robert J. Feinstein, Esq., Bruce Grohsgal, Esq., and
Maria A. Bove, Esq., at Pachulski Stang Ziehl & Jones LLP, in
Wilmington, Del., represent the Official Committee of Unsecured
Creditors.
Before filing for bankruptcy, the Debtors initiated an orderly
wind-down process. As a part of the wind-down process, the
Debtors ceased substantially all of their business and
terminated roughly 90% of their employees. The Debtors continue
to manage the wind-down process in an attempt to deliver all
freight in their system and to retrieve their assets.
When the Debtors sought protection from their creditors, they
estimated assets and debts between $50 million and $100 million.
At Oct. 31, 2010, the Debtor had total assets of $424,567, total
liabilities of $12.2 million, and a stockholders' deficit of
$11.8 million. The Debtor ended the period with $362,104 in cash,
which includes restricted cash of $66,977.
JOHN SHART: Fraud Can't Be Imputed to Spouse
--------------------------------------------
Bankruptcy Judge Barry Russell in Los Angeles, California, said
the imputation of fraud of debtor John Shart to his wife Elke
Gordon-Schardt is unwarranted under 11 U.S.C. Sec. 523(a)(2)(A)
and is hostile to the well accepted principle that Congress
intended to enact bankruptcy law "by which the honest citizen may
be relieved from the burden of hopeless insolvency," citing Neal
v. Clark, 95 U.S. 704, 709 (1877).
Judge Russell added that due to the development of the law
regarding exceptions to discharge, both statutory and decisions of
the Supreme Court, that Strang v. Bradner, 114 U.S. 555 (1885), is
no longer good law. Nevertheless, to the extent that Strang is
still viable, it should be strictly limited to its facts, and
facts do not support the imputation of Mr. Shart's fraud to his
wife. According to the Court, the facts are that the involvement
of Ms. Schardt with the affairs of Mr. Shart took place
approximately two years after Mr. Shart's fraud. Even if the
debtor magically became the partner of her husband in 2009, she
was clearly not his partner when the fraud occurred in 2007.
Mr. Shart lives in Lynville, Tennessee; Ms. Schardt resides in
Acton, California. Mr. Shart is the 100% owner of Malibu
Equestrian Estates, Inc. Mr. Shart and MEE operated a horse-
related business under the business name Greystone Equestrian
Center in Lynville, Tennessee. The 85-acre parcel where Greystone
operates is owned jointly by Mr. Shart and Ms. Schardt. Ms.
Schardt is an attorney with a law practice in Acton, California.
The adversary case is, Wendy Haig, Greg Sadler, and Showcase 81,
LLC, Plaintiff(s), v. John Shart and Elke Gordon-Schardt,
Defendant(s), Adv. No. 2:10-ap-02555-BR (Bankr. C.D. Calif.). The
bankruptcy case is, In re: John Shart and Elke Gordon-Schardt,
Chapter 7, Case No. 2:10-bk-29973-BR (Bankr. C.D. Calif.).
A copy of Judge Russell's Jan. 29, 2014 Memorandum of Decision is
available at http://is.gd/zVdn8Kfrom Leagle.com.
LAFAYETTE YARD: Panel, UST & Wells Fargo Balk at Retention Plan
---------------------------------------------------------------
The Official Committee of Unsecured Creditors and Roberta A.
DeAngelis, U.S. Trustee for Region 3, lodged objections to
Lafayette Yard Community Development Corporation's proposed key
employee retention plan.
The Committee said the Debtor failed to establish the basis to
support the payment of a $40,000 stipend to the volunteer
chairperson of the Debtor's Board of trustees, who is an insider
of the Debtor. Moreover, the Debtor fails to provide any
justification to provide the proposed stipend retroactively to the
Petition Date.
The U.S. Trustee said the Debtor has not met its burden of proof
to support the approval of the retention plan that provides for
compensation to Joyce Kersey, the chairwoman of the Debtor's board
of directors. The U.S. Trustee added that the KERP Motion avoids
the strict standard of Section 503(c)(1) of the Bankruptcy Code by
asserting that Ms. Kersey is not an insider of the Debtor under
the definition set forth in Section 101(31)(B) of the Bankruptcy
Code.
The Committee also adopted and incorporated arguments by the
Office of the U.S. Trustee.
Valerie A. Hamilton, Esq., at Sills Cummis & Gross P.C., and
William W. Kannel, Esq., at Mintz, Levin, Cohn, Ferris, Glovsky
And Popeo, P.C., on behalf of Wells Fargo Bank, National
Association, as indenture trustee for the hotel bonds, also
objected to the retention program, stating that the plan must
reflect the economic and procedural status of the proceedings.
Wells Fargo also related that any relief on the KERP Motion must
also reflect that the Debtor first proposed to compensate
Mrs. Kersey at the Nov. 25, 2013 auction in the case, reflect the
services of the professionals that are assisting the Debtor, and
be scaled to reflect the actual and documented number of hours
Mrs. Kersey has reasonably expended on the Debtor's behalf.
The Debtor, in its motion, related that Ms. Kersey has literally
worked seven days a week, unpaid to date, to ensure that the
Debtor's hotel was sold for a maximum dollar, and supervised every
single expense incurred by the Debtor, to ensure that there were
no unwarranted, unearned payments, and that the Debtor's sale
proceeds were maximized in a fair manner to the Debtor's
creditors.
Since the Debtor sold the Hotel and is no longer an operating
entity, it has disengaged the services of its management company.
The Debtor, as a not-for-profit public entity, does not have any
employees and its board consists of unpaid volunteers. Ms. Kersey
has been chosen, and has accepted the task, of being the sold
executive to complete the wind-down of the Debtor's affairs.
Under the KERP, Ms. Kersey would be compensated $50 per hour for
her time committed throughout the case, up to $40,000. At a rate
of $50 per hour, 40 hours a week, for 22 weeks, the total
estimated compensation due to Ms. Kersey would total just over the
$40,000, at $44,000.
Edison Broadcasting LLC acquired the Lafayette Yard Hotel &
Conference Center for $6 million, after a competing bid at a
Nov. 25 auction pushed Edison to raise its initial $5.53 million
offer. The bid of VBCE LLC in the amount of $5,665,000 was
declared the next highest and best bid.
Although there were only two bidders at auction, the owner had
said that a dozen "interested parties have recently expressed
an interest in buying the hotel."
The Bankruptcy Court approved the sale at a Nov. 26 hearing. Net
proceeds from the sale was $5.94 million.
Following its Chapter 11 filing, the hotel had to be sold because
financing to operate the property would have run out by year-end.
About Lafayette Yard
Lafayette Yard Community Development Corporation, owner of the
Lafayette Yard Hotel & Conference Center, previously called the
Trenton Marriott, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.N.J. Case No. 13-30752) on Sept. 23,
2013. The hotel went into bankruptcy when the city of Trenton and
the state declined to continue covering losses.
The 197-room hotel opened in 2002 and needs renovation, according
to court papers. Situated on 3.7 acres, it's owned by not-for-
profit Lafayette Yard Community Development Corp. There is $29.9
million in long-term debt, including $14.4 million in tax-exempt
bonds.
The Debtor is represented by Gregory G. Johnson, Esq., at
Wong Fleming, Attorneys At Law, in Princeton, New Jersey; and
Robert L. Rattet, Esq., Dawn Kirby, Esq., and Julie Cvek Curley,
Esq., at Delbello Donnellan Weingarten Wise & Wiederkehr, LLP, in
White Plains, New York.
Lafayette Yard Development Corporation $432,633 in assets and
$33,583,834 in liabilities as of the Chapter 11 filing.
The U.S. Trustee has selected three creditors to serve on the
Official Committee of Unsecured Creditors.
LEARFIELD COMMUNICATIONS: Add-On Loans No Impact on Moody's CFR
---------------------------------------------------------------
Moody's says Learfield Communications, Inc.'s $60 million first
lien add-on and $25 million second lien add-on term loan will not
impact the current B3 Corporate Family Rating, the B2 facility
rating on the revolver and first lien term loan, or the Caa2
second lien term loan rating. The LGD point estimates change for
the second lien term loan to LGD5- 86% from LGD5-85%. The outlook
remains stable.
Ratings Rationale
Learfield Communications, Inc.'s ratings were assigned by
evaluating factors that Moody's considers relevant to the credit
profile of the issuer, such as the company's (i) business risk and
competitive position compared with others within the industry;
(ii) capital structure and financial risk; (iii) projected
performance over the near to intermediate term; and (iv)
management's track record and tolerance for risk. Moody's compared
these attributes against other issuers both within and outside
Learfield Communications, Inc.'s core industry and believes
Learfield Communications, Inc.'s ratings are comparable to those
of other issuers with similar credit risk. Other methodologies
used include Loss Given Default for Speculative-Grade Non-
Financial Companies in the U.S., Canada and EMEA published in June
2009.
Learfield Communications, Inc. is an operator in the collegiate
sports multimedia rights and marketing industry. The Company is
under contract for multimedia rights with 56 universities,
conferences, and arenas. The Company has approximately 400
employees and is headquartered in Dallas, TX with satellite sales
offices located on or near college campuses across the country.
LEHMAN BROTHERS: LBI Trustee's Deal With BP 399 Approved
--------------------------------------------------------
The trustee liquidating Lehman Brothers Inc. won court approval
of a deal he made with BP 399 Park Avenue LLC to settle the
company's claim against the brokerage.
Under the deal, BP 399 Park can assert a $45.22 million general
unsecured claim against the brokerage, down from the $45.27
million it originally wanted. Both sides also agreed a mutual
release of claims against each other. A copy of the agreement
can be accessed for free at http://is.gd/RKbKh6
BP 399 Park is represented by:
Douglas B. Rosner, Esq.
Goulston & Storrs P.C.
400 Atlantic Avenue
Boston, Massachusetts 02110
Tel: (617) 482-1776
Fax: (617) 574-4112
Email: drosner@goulstonstorrs.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. (http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: LBI Trustee Seeks Disallowance of Cornell Claim
----------------------------------------------------------------
James W. Giddens, the trustee liquidating Lehman Brothers
Holdings Inc.'s brokerage, asked the U.S. Bankruptcy Court in
Manhattan to disallow the claim of Cornell Companies Inc.
The company previously hired the Lehman brokerage as financial
adviser and underwriter for a 2001 sale and leaseback
transaction. The deal was reportedly designed to move some of
its assets and liabilities off its balance sheet.
In 2009, Cornell filed a $57.95 million claim after the Lehman
brokerage allegedly did not fulfill its obligations under a
retainer agreement, and gave the company "false accounting
advice" regarding the effect on the 2001 deal of the $3.65
million retainer fee it received.
Prior to the filing of its claim, Cornell filed a case against
the brokerage in Texas state court in which it blamed the
collapse of the transaction from the brokerage's alleged failure
to disclose that payment of the retainer fee of $3.65 million
would destroy the off-balance sheet accounting of the transaction.
A court hearing is scheduled for Feb. 27. Objections are due by
Jan. 31.
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. (http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: Court Disallows $543-Mil. in Claims
----------------------------------------------------
The U.S. Bankruptcy Court in Manhattan disallowed 107 claims,
which assert more than $543 million against Lehman Brothers
Holdings Inc. The claims are listed at:
http://bankrupt.com/misc/LBHI_198thOO_1Untimely.pdf
http://bankrupt.com/misc/LBHI_275thOO_1Duplicative.pdf
http://bankrupt.com/misc/LBHI_388thOO_3NoLiability.pdf
http://bankrupt.com/misc/LBHI_391stOO_2Settled.pdf
http://bankrupt.com/misc/LBHI_393rdOO_3Duplicative.pdf
http://bankrupt.com/misc/LBHI_395thOO_1Duplicative.pdf
http://bankrupt.com/misc/LBHI_395thOO_4Duplicative.pdf
http://bankrupt.com/misc/LBHI_397thOO_6NoLiability.pdf
http://bankrupt.com/misc/LBHI_399thOO_3Duplicative.pdf
http://bankrupt.com/misc/LBHI_400thOO_29NoLiability.pdf
http://bankrupt.com/misc/LBHI_403rdOO_24NoLiability.pdf
http://bankrupt.com/misc/LBHI_404thOO_4Employment.pdf
http://bankrupt.com/misc/LBHI_405thOO_9NoLiability.pdf
http://bankrupt.com/misc/LBHI_407thOO_17InsuffDocs.pdf
Meanwhile, the bankruptcy court ordered the modification of six
claims, which seek to recover more than $14.3 million. The
claims are listed at:
http://bankrupt.com/misc/LBHI_182ndOO_1Overstated.pdf
http://bankrupt.com/misc/LBHI_389thOO_1Overstated.pdf
http://bankrupt.com/misc/LBHI_394thOO_2Overstated.pdf
http://bankrupt.com/misc/LBHI_401stOO_2Overstated.pdf
The bankruptcy court also ordered the reclassification of four
claims as equity interests. A list of the claims can be accessed
at http://is.gd/qKy00q
Meanwhile, Lehman obtained court approval to reassign seven
claims asserted against Lehman Brothers OTC, which should have
been filed against the holding company.
The claims are based on warrants that Lehman issued to investors
prior to its bankruptcy. A list of the claims is available at
http://is.gd/irZ3ef
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. (http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: LBI Trustee Wants to Disallow $999-Mil. Claims
---------------------------------------------------------------
James Giddens, the trustee liquidating Lehman Brothers Holdings
Inc.'s brokerage, asked the U.S. Bankruptcy Court in Manhattan to
disallow 311 claims, which seek total payment of $998.8 million.
Many of those claims are claims by former employees for deferred
compensation payments based upon pre-bankruptcy agreements with a
predecessor to the Lehman brokerage. The claims are listed at:
http://bankrupt.com/misc/LBHI_sipa186thoo_25insuffdocs.pdf
http://bankrupt.com/misc/LBHI_sipa189thoo_86insuffdocs.pdf
http://bankrupt.com/misc/LBHI_sipa190thoo_41noliability.pdf
http://bankrupt.com/misc/LBHI_sipa191stoo_159compensation.pdf
The trustee also proposed to reduce the amounts asserted in 139
secured claims and reclassify them as general unsecured.
Mr. Giddens said the amount asserted in each of the claims
contradicts the brokerage's books and records. The claims, he
said, also do not meet the statutory requirements for secured
status under U.S. bankruptcy law.
The claims stemmed from unperformed forward contracts for the
future purchase or sale of "to be announced" U.S. agency debt
obligations. Lists of those claims can be accessed for free at:
http://bankrupt.com/misc/LBHI_sipa184thoo_47tbaclaims.pdf
http://bankrupt.com/misc/LBHI_sipa185thoo_71tbaclaims.pdf
http://bankrupt.com/misc/LBHI_sipa187thoo_14tbaclaims.pdf
http://bankrupt.com/misc/LBHI_sipa188thoo_7tbaclaims.pdf
Meanwhile, Mr. Giddens dropped his objection to seven claims,
which seek to recover $121,489 from the brokerage. The Lehman
trustee previously opposed the claims on grounds that they were
filed without supporting documents.
Court Disallows $79.9 Million in Claims
Separately, Judge James Peck disallowed 268 claims, which assert
payment of $79.9 million. The claims are listed at:
http://bankrupt.com/misc/LBHI_sipa159thoo_70insuffdocs.pdf
http://bankrupt.com/misc/LBHI_sipa163rdOO_86NoLiability.pdf
http://bankrupt.com/misc/LBHI_sipa164thOO_112NoLiability.pdf
Lehman had said it is not liable for those claims and that the
creditors did not file documents supporting the validity of their
claims.
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. (http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: Former Adviser Allowed to Keep $1.8MM Bonus
------------------------------------------------------------
Lehman Brothers Holdings Inc. lost its bid to recoup $1.8 million
from a former private wealth adviser who received a lucrative
signing bonus before the company collapsed, according to a Jan. 9
report by Reuters.
A Financial Industry Regulatory Authority arbitration panel ruled
in favor of William Gourd who was allowed to keep the signing
bonus he received when he joined Lehman in 2005. Mr. Gourd's
original bonus was over $2 million.
Lehman filed its arbitration case against Mr. Gourd in 2012 over
alleged breach of contract. The case hinged on a clause in the
bonus contracts that required employees to repay amounts they
owed on the bonuses if they left the firm, the report said.
"Nobody left Lehman," Reuters quoted Daniel Dwyer, a lawyer in
Boston who represented Mr. Gourd, as saying in an interview. "On
the contrary, the people who stayed to the bitter end were loyal
employees," he said.
The arbitration panel, however, ruled against Mr. Gourd in a
counterclaim he filed seeking $5.5 million in damages, which
included unpaid commissions and restricted stock.
Lehman has been pursuing roughly 50 of its former licensed
securities professionals to return portions of the bonuses they
received when hired.
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. (http://bankrupt.com/newsstand/or 215/945-7000).
LEHMAN BROTHERS: Court Drops Smith Rocke Suit vs. Venezuela
-----------------------------------------------------------
Diaz Reus & Targ LLP scored a stunning victory in the U.S.
District Court for the Southern District of New York this week on
behalf of the government of Venezuela, obtaining complete and
final dismissal with prejudice of a suit brought by Smith Rocke
Ltd., a purported creditor in the Lehman Bros. bankruptcy.
The suit was predicated on Smith Rocke's allegation that
Venezuelan government agencies had expropriated the company's
entitlement to payments from the Lehman Bros. bankruptcy estate
worth more than $400 million. In a comprehensive opinion handed
down by U.S. District Court Judge Lorna Schofield, the Court
soundly rejected all of the Plaintiff's expropriation and
conversion claims, and dismissed the suit with prejudice.
Smith Rocke, a BVI company, is controlled by its Venezuelan
shareholders who were previously associated with a Venezuelan
bank, Banco Canarias, and another affiliated Venezuelan entity,
Credican. Both Banco Canarias and Credican were placed into
receivership several years ago by Venezuelan banking regulators.
Shortly thereafter, Smith Rocke facilitated an unauthorized
?assignment? of the right to receive payments from the defunct
entities to Smith Rocke, in an effort to gain control of assets
valued in the hundreds of millions of dollars. Regulators are
seeking to recover these assets in order to satisfy depositors and
creditors of the failed financial institution.
?Once the Venezuelan government learned of the diversion of assets
by the Smith Rocke shareholders, they notified the Lehman
bankruptcy trustee so that no payments from the Lehman estate
would be made to them. That action resulted in the filing of this
suit by Smith Rocke against our client,? said Diaz. ?The problem
for Smith Rocke, of course, is that these shareholders never had a
legitimate legal claim to these assets, and now the court has told
them so.?
In addition to Diaz, the Diaz Reus legal team on this case also
included partners Chad Purdie, Gary Davidson, Brant Hadaway, and
Carlos Gonzalez.
The case is Smith Rocke, Ltd. v. Republica Vliviariana De
Venezuela, No. 12 Cv. 7316 (LGS)., 2014 BL 20749 (S.D.N.Y. Jan.
27, 2014).
About Diaz Reus
Diaz, Reus & Targ, LLP -- http://www.diazreus.com-- is a full-
service international law firm offering comprehensive legal
services to U.S.-based and international clients around the world.
The firm's global reach extends from its Miami, Fla., headquarters
to its 12 international offices, strategically located in dynamic
business centers throughout Latin America, the Middle East, and in
Asia and Europe.
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. (http://bankrupt.com/newsstand/or 215/945-7000).
LILY GROUP: Committee Defends Bid to Limit Credit Bidding
---------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
case of Lily Group, Inc., asks the Bankruptcy Court to overrule
the objection of secured creditor LC Energy Holdings LLC, assignee
of Platinum Partners Master Credit Opportunities Fund LP, to the
Committee's motion to limit credit bidding in any sale of the
Debtor's assets.
According to the Committee, Platinum, in its objection, described
the persons whom the Committee represents as "creditors who did
not bargain for or obtain a security interest in Lily Group's
assets . . . with the goal of forcing Platinum to either bargain
to payoff lesser priority claims or suffer significant additional
damages."
The Committee acknowledged that it is true that the employees,
businesses and governments who provided labor, goods and services,
and public benefits to the Debtor helped maintain and preserve the
Debtor's value and did not get paid did not bargain for security
interests. But it is also true that these creditors did not have
the advice of professional advisors, review of financial
statements, cash flows, and pro forma budgets as Platinum did when
it decided to loan $13 million at an effective initial interest
rate of 22 percent that provided less than $800,000 in operating
funds to a company that had been and remained undercapitalized and
whose operating liabilities continued to exceed its operating
assets.
As reported in the Troubled Company Reporter on Jan. 29, 2014, LC
Energy asked the Court to deny the motion of the Committee to
limit credit bidding in the sale of the Debtor's assets. LC
Energy said the Committee's motion is filled with illogical leaps,
unsupported conclusions, and general misstatements, with the goal
of forcing Platinum Partners credit Opportunity Fund, LP, to
either bargain to payoff lesser priority claims or suffer
potentially significant additional damages.
LC Energy is the successor, by assignment to Platinum. Platinum
is owed the prepetition sum of $18,317,700 from Lily Group, and is
further owed $675,000 from the Debtor for postpetition Debtor-in-
Possession financing to preserve and protect the assets of the
bankruptcy estate.
The Committee had asked the Court to deny the ability of parties
or any assignees asserting a security interest in the Debtor's
assets from credit bidding at the auction. The Committee said
that to allow any credit bidding when the actual amount of the
allowed secured claim is unknown could result in a sale that is
unable to be closed or that does not comply with the requirements
or purposes of the Bankruptcy Code.
About Lily Group Inc.
Lily Group Inc., the developer of an open-pit coal mine in Green
County, Indiana, filed a petition for Chapter 11 reorganization
(Bankr. S.D. Ind. Case No. 13-81073) on Sept. 23, 2013, in Terre
Haute, estimating assets and debt both exceeding $10 million.
The Debtor is represented by Courtney Elaine Chilcote, Esq., and
David R. Krebs, Esq., at Tucker, Hester, Baker & Krebs, LLC, in
Indianapolis, Indiana.
U.S. Trustee Nancy J. Gargula appointed four members to the
official committee of unsecured creditors in the Chapter 11 cases
of Lily Group Inc. Faegre Baker Daniels LLP represents the
Committee.
LOEHMANN'S HOLDINGS: Clear Thinking's Diercks Okayed as CRO
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized Loehmann's Holdings Inc. and its debtor-affiliates to
employ Clear Thinking Group LLC to provide the Debtors with
financial restructuring services and to designate Lee Diercks as
chief restructuring officer and Joseph Marchese as chief financial
officer, nunc pro tunc to the Dec. 15, 2013 petition date.
As reported in the Troubled Company Reporter on Jan. 16, 2014, the
relationship between the Debtors and CTG is governed by a Services
Agreement. Pursuant to the terms of the Services Agreement, the
activities of Mr. Diercks, Mr. Marchese and CTG would include, but
not be limited to, reviewing, analyzing, and making
recommendations to the Debtors in the following areas:
(a) CTG shall provide services to the Debtors by acting as CRO
and CFO. These roles will include serving as an appointed
officer of the Debtors, however they are not employees of
the Debtors, but of CTG, and the understanding that the CRO
and CFO will be named under the Debtors' D&O policy if they
are not already under said policy. CTG acknowledges and
accepts the Debtors' D&O policy including appropriate tail
coverage;
(b) Subject to the approval of the Board, and counsel, Mr.
Diercks, Mr. Marchese, and CTG shall be authorized to make
decisions with respect to all aspects of the Debtors'
restructuring, consistent with their roles as CRO and CFO,
in such manner as they deem necessary or appropriate, in a
manner consistent with the business judgment rule and the
provisions of state and Federal law, subject to governance
by the Board; and
(c) The CTG Parties shall not have any authority to make any
decision committing the Debtors or their resources other
than in the ordinary course of business unless approved by
the Board and, if required, the Bankruptcy Court.
As set forth in the Services Agreement, CTG's compensation shall
consist of hourly fees and reimbursement of expenses, as follows:
-- Hourly Rates: Fees for CTG's services will be based on the
hours charged at the following hourly rates:
Partner $350
Managing Director $275
Manager $250
CTG employee/consultant $200
Analyst $175
-- Expense Reimbursement: Reimbursement of CTG's, Mr. Diercks's
and Mr. Marchese's reasonable, documented and ordinary out-
of-pocket expenses including, travel, lodging, postage and
phone.
Prior to the Petition Date, the Debtors provided CTG with an
additional retainer of $125,000. From that retainer, CTG was paid
approximately $51,000 for services provided prior to the Petition
Date, and CTG is now holding approximately $74,000 as a retainer
for the post-petition services. The Retainer will be held by CTG
until the conclusion of the Debtors' chapter 11 cases and will be
applied to fees and expenses authorized pursuant to CTG's final
fee application.
Lee Diercks, partner of CTG, 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.
CTG can be reached at:
Lee Diercks
Clear Thinking Group LLC
401 Towne Centre Drive
Hillsborough, NJ 08844
Tel: (908) 431-2121
Fax: (908) 359-5940
E-mail: ldiercks@clearthinkinggrp.com
About Loehmann's
Discount retailer Loehmann's Holdings Inc., and two affiliates
sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No.
13-14050) on Dec. 15, 2013.
This is Loehmann's third bankruptcy filing, but this time it will
be a liquidation with going-out-of-business sales.
The first bankruptcy was a 14-month Chapter 11 reorganization
completed in September 2000. At the time the chain had 44 stores
in 17 states. The second bankruptcy culminated in a
reorganization plan implemented in March 2011. It was acquired by
Istithmar in July 2006 in a $300 million transaction.
Loehmann's, based in the Bronx borough of New York City, operated
39 stores in 11 states as of the 2013 bankruptcy filing.
In the new Chapter 11 case, Loehmann's disclosed assets and debt
both totaling $96.7 million. The debt includes $4.3 million on a
first-lien credit agreement with Wells Fargo Bank NA as agent, not
including about $9 million in letters of credit.
Kristopher M. Hansen, Esq., at Stroock & Stroock & Lavan LLP,
serves as counsel to the Debtors; Canaccord Genuity Inc. is the
investment banker; Clear Thinking Group LLC is the restructuring
advisor; and Epiq Bankruptcy Solutions LLC is the claims and
notice agent.
On Dec. 23, 2013, the Office of the United States Trustee for
Region 2 appointed the Committee, consisting of C2 Imaging LLC,
DDR Corp., Fownes Brothers & Co., Juicy Couture, National Retail
Consolidators, Regency Centers L.P., and Rutherford JV. On Dec.
30, 2013, Fownes Brothers & Co. resigned from the Committee. On
Jan. 2, 2014, the U.S. Trustee filed a notice adding CHL Design
Forum Ltd. to the Committee. The Committee selected James S.
Carr, Esq., Robert L. LeHane, Esq., and Benjamin D. Feder, Esq.,
at Kelley Drye & Warren LLP as its proposed legal advisors and FTI
Consulting, Inc. as its financial advisors.
Loehmann's held auctions on Jan. 3 and 4, 2014. A joint venture
among SB Capital Group LLC, Tiger Capital Group LLC and A&G Realty
Partners LLC acquired the rights to conduct going-out-of-business
sales by buying inventory, furniture, fixtures, accounts
receivable and cash. They bid $19 million.
Madison Capital Holdings LLC won the auction for the lease-
designation rights, and can look for other retailers to take over
Loehmann's leases. Esopus Creek Advisors LLC won the auction for
intellectual property.
Loehmann's hasn't disclosed the size of the winning bids,
according to Bloomberg News.
On Jan. 7, 2014, the U.S. Bankruptcy Court authorized the joint
venture of SB Capital, Tiger Capital and A & G Realty to conduct
"Going Out of Business" sales in each of Loehmann's 39 locations
in 11 states and the District of Columbia. The GOB sales began
Jan. 9.
LOEHMANN'S HOLDINGS: Court Approves Stroock & Stroock as Counsel
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized Loehmann's Holdings Inc. and its debtor-affiliates to
employ Stroock & Stroock & Lavan LLP as counsel, nunc pro tunc to
the Dec. 15, 2013 petition date.
As reported in the Troubled Company Reporter on Jan. 16, 2014, the
Debtors require Stroock & Stroock to:
(a) advise the Debtors with respect to their powers and duties
as debtors-in-possession in the continued management and
operation of their business and properties;
(b) advise and consult on the conduct of these Chapter 11
cases, including all of the legal and administrative
requirements of operating in Chapter 11;
(c) attend meetings and negotiating with representatives of
creditors and other parties-in-interest;
(d) take all necessary action to protect and preserve the
Debtors' estates, including prosecuting actions on the
Debtors' behalf, defending actions commenced against the
Debtors and representing the Debtors' interests in
negotiations concerning litigation in which the Debtors are
involved, including objections to claims filed against the
Debtors' estates;
(e) prepare, on behalf of the Debtors, pleadings, including
motions, applications, answers, orders, reports and papers
necessary or otherwise beneficial to the administration of
the Debtors' estates;
(f) advise the Debtors in connection with obtaining post-
petition financing and the use of cash collateral;
(g) advise the Debtors in connection with any sale of their
assets;
(h) consult with the Debtors regarding employee and tax
matters;
(i) appear before the Court and any appellate courts to
represent the interests of the Debtors' estates before
those courts; and
(j) perform all other necessary or otherwise beneficial legal
services and providing legal advice to the Debtors in these
Chapter 11 Cases.
Stroock & Stroock will be paid at these hourly rates:
Partners $795-$1,085
Associates $375-$820
Paraprofessionals $215-$405
Gabriel Sasson $550
Jonathan D. Canfield $675
Matthew G. Garofalo $675
Sayan Bhattacharyya $730
Kristopher Hansen $1,085
Stroock & Stroock will also be reimbursed for reasonable out-of-
pocket expenses incurred.
The Debtors paid $675,000 to Stroock & Stroock as retainer,
delivered in three installments, $75,000 on Nov. 21, 2013, $75,000
on Dec. 3, 2013 and $525,000 on Dec. 13, 2013.
Kristopher M. Hansen, partner of Stroock & Stroock, 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 Executive Office for United States Trustees recently adopted
new Guidelines for Reviewing Applications for Compensation and
Reimbursement of Expenses Filed under 11 U.S.C. Sec. 330 by
Attorneys in Larger Chapter 11 Cases -- so-called Appendix B
Guidelines. By their terms, the Appendix B Guidelines "apply to
the USTP's review of applications for compensation filed by
attorneys in larger chapter 11 cases," and are intended as an
update to the original Guidelines adopted by the EOUST in 1996.
It is the Debtors' and Stroock's intention to work cooperatively
with the U.S. Trustee Program to address the concerns that
prompted the EOUST to adopt the Appendix B Guidelines; however, in
doing so, the Debtors and Stroock reserve all rights as to the
relevance and substantive legal effect of the Appendix B
Guidelines in respect of any application for employment or
compensation in these cases that falls within the ambit of the
Appendix B Guidelines.
In a declaration filed together with the Application, William
Thayer, the Chief Operating Officer of Loehmann's Holdings Inc.,
said he has confirmed with Stroock that, while Stroock's billing
rates vary from attorney to attorney based on such factors as the
individual attorney's rank (e.g., partner, associate), years of
experience, and the demand for services in the attorney's
particular area of expertise, their billing rates do not vary as a
function of whether the services performed relate to a bankruptcy
engagement or a nonbankruptcy engagement.
Mr. Thayer also said that the Debtors first retained Stroock in
the fall of 2013 to represent the Debtors in connection with a
potential sale transaction. In the course of their representation
of the Debtors, Stroock became familiar with the Debtors' general
business operations and particular financing structure. When the
Debtors' board of directors determined in October 2013 that it was
necessary to retain counsel to assist in a broader restructuring
effort, including a possible chapter 11 filing, the board decided
to retain Stroock as bankruptcy and restructuring counsel on the
basis of its existing familiarity with the Debtors' business and
financial structure, as well as its significant experience in
complex chapter 11 cases. Two other large law firms were
interviewed before the board of directors decided to retain
Stroock. On the basis of the Debtors' prior experience with
Stroock, as well as the experience of certain individual board
members who have worked with Stroock in other bankruptcy cases,
the board concluded that it was not necessary to interview any
other law firms.
Stroock & Stroock can be reached at:
Kristopher M. Hansen, Esq.
STROOCK & STROOCK & LAVAN LLP
180 Maiden Lane
New York, NY 10038-4982
Tel: (212) 806-5400
Fax: (212) 806-6006
About Loehmann's
Discount retailer Loehmann's Holdings Inc., and two affiliates
sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No.
13-14050) on Dec. 15, 2013.
This is Loehmann's third bankruptcy filing, but this time it will
be a liquidation with going-out-of-business sales.
The first bankruptcy was a 14-month Chapter 11 reorganization
completed in September 2000. At the time the chain had 44 stores
in 17 states. The second bankruptcy culminated in a
reorganization plan implemented in March 2011. It was acquired by
Istithmar in July 2006 in a $300 million transaction.
Loehmann's, based in the Bronx borough of New York City, operated
39 stores in 11 states as of the 2013 bankruptcy filing.
In the new Chapter 11 case, Loehmann's disclosed assets and debt
both totaling $96.7 million. The debt includes $4.3 million on a
first-lien credit agreement with Wells Fargo Bank NA as agent, not
including about $9 million in letters of credit.
Kristopher M. Hansen, Esq., at Stroock & Stroock & Lavan LLP,
serves as counsel to the Debtors; Canaccord Genuity Inc. is the
investment banker; Clear Thinking Group LLC is the restructuring
advisor; and Epiq Bankruptcy Solutions LLC is the claims and
notice agent.
On Dec. 23, 2013, the Office of the United States Trustee for
Region 2 appointed the Committee, consisting of C2 Imaging LLC,
DDR Corp., Fownes Brothers & Co., Juicy Couture, National Retail
Consolidators, Regency Centers L.P., and Rutherford JV. On Dec.
30, 2013, Fownes Brothers & Co. resigned from the Committee. On
Jan. 2, 2014, the U.S. Trustee filed a notice adding CHL Design
Forum Ltd. to the Committee. The Committee selected James S.
Carr, Esq., Robert L. LeHane, Esq., and Benjamin D. Feder, Esq.,
at Kelley Drye & Warren LLP as its proposed legal advisors and FTI
Consulting, Inc. as its financial advisors.
Loehmann's held auctions on Jan. 3 and 4, 2014. A joint venture
among SB Capital Group LLC, Tiger Capital Group LLC and A&G Realty
Partners LLC acquired the rights to conduct going-out-of-business
sales by buying inventory, furniture, fixtures, accounts
receivable and cash. They bid $19 million.
Madison Capital Holdings LLC won the auction for the lease-
designation rights, and can look for other retailers to take over
Loehmann's leases. Esopus Creek Advisors LLC won the auction for
intellectual property.
Loehmann's hasn't disclosed the size of the winning bids,
according to Bloomberg News.
On Jan. 7, 2014, the U.S. Bankruptcy Court authorized the joint
venture of SB Capital, Tiger Capital and A & G Realty to conduct
"Going Out of Business" sales in each of Loehmann's 39 locations
in 11 states and the District of Columbia. The GOB sales began
Jan. 9.
LOEHMANN'S HOLDINGS: Court Okays Epiq as Claims Agent
-----------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized Loehmann's Holdings Inc. and its debtor affiliates to
employ Epiq Bankruptcy Solutions, LLC, as claims and noticing
agent.
The firm is expected to:
a) assist with, among other things, solicitation, balloting,
tabulation and calculation of votes, as well as preparing any
appropriate reports, as required in furtherance of
confirmation of chapter 11 plan(s);
b) generate an official ballot certification and testify, if
necessary, in support of the ballot tabulation results;
c) gather data in conjunction with the preparation, and assist
with the preparation, of the Debtors' schedules of assets and
liabilities and statements of financial affairs;
d) generate, provide and assist with claims reports, claims
objections, exhibits, claims reconciliation, and related
matters;
e) manage any distributions pursuant to a confirmed chapter 11
plan; and
f) provide such other claims processing, noticing, solicitation,
balloting and other administrative services described in the
services agreement, but not included in the Section 156(c)
application, as may be requested from time to time by the
Debtors, the Court or the clerk of the Court.
The Debtors told the Court the Epiq received a retainer of $20,000
prior to their bankruptcy filing.
The Debtors said they agreed to pay the firm fees, charges and
costs on a monthly basis. The Debtors noted the firm reserves the
right to make reasonable increases to the unit prices, charges and
professional service rates on an annual basis effective Jan. 2,
2015.
James Katchadurian, executive vice President of Epiq, assured the
Court the the firm is a "Disinterested Person" pursuant to Section
101(14) of the Bankruptcy Code.
About Loehmann's
Discount retailer Loehmann's Holdings Inc., and two affiliates
sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No.
13-14050) on Dec. 15, 2013.
This is Loehmann's third bankruptcy filing, but this time it will
be a liquidation with going-out-of-business sales.
The first bankruptcy was a 14-month Chapter 11 reorganization
completed in September 2000. At the time the chain had 44 stores
in 17 states. The second bankruptcy culminated in a
reorganization plan implemented in March 2011. It was acquired by
Istithmar in July 2006 in a $300 million transaction.
Loehmann's, based in the Bronx borough of New York City, operated
39 stores in 11 states as of the 2013 bankruptcy filing.
In the new Chapter 11 case, Loehmann's disclosed assets and debt
both totaling $96.7 million. The debt includes $4.3 million on a
first-lien credit agreement with Wells Fargo Bank NA as agent, not
including about $9 million in letters of credit.
Kristopher M. Hansen, Esq., at Stroock & Stroock & Lavan LLP,
serves as counsel to the Debtors; Canaccord Genuity Inc. is the
investment banker; Clear Thinking Group LLC is the restructuring
advisor; and Epiq Bankruptcy Solutions LLC is the claims and
notice agent.
On Dec. 23, 2013, the Office of the United States Trustee for
Region 2 appointed the Committee, consisting of C2 Imaging LLC,
DDR Corp., Fownes Brothers & Co., Juicy Couture, National Retail
Consolidators, Regency Centers L.P., and Rutherford JV. On Dec.
30, 2013, Fownes Brothers & Co. resigned from the Committee. On
Jan. 2, 2014, the U.S. Trustee filed a notice adding CHL Design
Forum Ltd. to the Committee. The Committee selected James S.
Carr, Esq., Robert L. LeHane, Esq., and Benjamin D. Feder, Esq.,
at Kelley Drye & Warren LLP as its proposed legal advisors and FTI
Consulting, Inc. as its financial advisors.
Loehmann's held auctions on Jan. 3 and 4, 2014. A joint venture
among SB Capital Group LLC, Tiger Capital Group LLC and A&G Realty
Partners LLC acquired the rights to conduct going-out-of-business
sales by buying inventory, furniture, fixtures, accounts
receivable and cash. They bid $19 million.
Madison Capital Holdings LLC won the auction for the lease-
designation rights, and can look for other retailers to take over
Loehmann's leases. Esopus Creek Advisors LLC won the auction for
intellectual property.
Loehmann's hasn't disclosed the size of the winning bids,
according to Bloomberg News.
On Jan. 7, 2014, the U.S. Bankruptcy Court authorized the joint
venture of SB Capital, Tiger Capital and A & G Realty to conduct
"Going Out of Business" sales in each of Loehmann's 39 locations
in 11 states and the District of Columbia. The GOB sales began
Jan. 9.
LOEHMANN'S HOLDINGS: Deadline to File Schedules Moved to Feb. 12
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
extended the deadline for Loehmann's Holdings Inc. and its debtor-
affiliates to file their schedules of assets and liabilities, and
statements of financial affairs to Feb. 12, 2014.
About Loehmann's
Discount retailer Loehmann's Holdings Inc., and two affiliates
sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No.
13-14050) on Dec. 15, 2013.
This is Loehmann's third bankruptcy filing, but this time it will
be a liquidation with going-out-of-business sales.
The first bankruptcy was a 14-month Chapter 11 reorganization
completed in September 2000. At the time the chain had 44 stores
in 17 states. The second bankruptcy culminated in a
reorganization plan implemented in March 2011. It was acquired by
Istithmar in July 2006 in a $300 million transaction.
Loehmann's, based in the Bronx borough of New York City, operated
39 stores in 11 states as of the 2013 bankruptcy filing.
In the new Chapter 11 case, Loehmann's disclosed assets and debt
both totaling $96.7 million. The debt includes $4.3 million on a
first-lien credit agreement with Wells Fargo Bank NA as agent, not
including about $9 million in letters of credit.
Kristopher M. Hansen, Esq., at Stroock & Stroock & Lavan LLP,
serves as counsel to the Debtors; Canaccord Genuity Inc. is the
investment banker; Clear Thinking Group LLC is the restructuring
advisor; and Epiq Bankruptcy Solutions LLC is the claims and
notice agent.
On Dec. 23, 2013, the Office of the United States Trustee for
Region 2 appointed the Committee, consisting of C2 Imaging LLC,
DDR Corp., Fownes Brothers & Co., Juicy Couture, National Retail
Consolidators, Regency Centers L.P., and Rutherford JV. On Dec.
30, 2013, Fownes Brothers & Co. resigned from the Committee. On
Jan. 2, 2014, the U.S. Trustee filed a notice adding CHL Design
Forum Ltd. to the Committee. The Committee selected James S.
Carr, Esq., Robert L. LeHane, Esq., and Benjamin D. Feder, Esq.,
at Kelley Drye & Warren LLP as its proposed legal advisors and FTI
Consulting, Inc. as its financial advisors.
Loehmann's held auctions on Jan. 3 and 4, 2014. A joint venture
among SB Capital Group LLC, Tiger Capital Group LLC and A&G Realty
Partners LLC acquired the rights to conduct going-out-of-business
sales by buying inventory, furniture, fixtures, accounts
receivable and cash. They bid $19 million.
Madison Capital Holdings LLC won the auction for the lease-
designation rights, and can look for other retailers to take over
Loehmann's leases. Esopus Creek Advisors LLC won the auction for
intellectual property.
Loehmann's hasn't disclosed the size of the winning bids,
according to Bloomberg News.
On Jan. 7, 2014, the U.S. Bankruptcy Court authorized the joint
venture of SB Capital, Tiger Capital and A & G Realty to conduct
"Going Out of Business" sales in each of Loehmann's 39 locations
in 11 states and the District of Columbia. The GOB sales began
Jan. 9.
LIBERTY HARBOR: SWJ Objects to Plan, Hearing Moved to March 4
-------------------------------------------------------------
The hearing on the confirmation of Liberty Harbor Holding, LLC, et
al.'s plan of reorganization has been rescheduled to March 4,
2014, at 10:00 a.m.
As reported by the Troubled Company Reporter on Dec. 10, 2013, the
Hon. Novalyn L. Winfield of the U.S. Bankruptcy Court for the
District of New Jersey approved on Nov. 26, 2013, the Disclosure
Statement accompanying the Plan and the confirmation hearing was
initially set for Dec. 26. The hearing was prescheduled to
Jan. 28, 2014.
The Plan, according to the Disclosure Statement, will be funded by
the Debtors. To the extent required, the Moccos and entities
controlled by the Moccos will provide the Debtors with the funding
necessary to consummate the Plan, including, but not limited to,
all payments due under the Kerrigan Settlement. The Moccos have
already advanced the Debtors the sum of $3 million, which amounts
were necessary to deliver the initial two payments under the
Kerrigan Settlement Agreement between the Debtors, the JCRA, the
City of Jersey City and the Kerrigans.
On Dec. 19, 2013, creditor SWJ Management, LLC, filed an objection
to the confirmation of the Plan, claiming that the Plan is not
feasible because, among other things, the Mocco v. Licata
litigation will not be resolved at confirmation. "The Debtors'
plans are patently unconfirmable and unfeasible because the Debtor
owns nothing unless awarded an ownership interest by the Court in
the Mocco v. Licata ligation," SWJ said in the Dec. 19 court
filing.
According to SWJ, the Mocco parties are not likely to be
successful on the merits of the Mocco v. Licata litigation. The
Mocco parties case, SWJ stated, relies on forged documents and
forged signatures produced by a convicted felon Peter de Jong.
"Mr. Dejong, who acted as if he were Mr. Licata's attorney, was
shown to have received massive payoffs from the Mocco parties
through an entity known as AQM and was also shown to have actually
been an attorney for Peter Mocco. The entire Mocco parties case
is based on rank fraud and intimidation of every attorney who
dared challenge them," SWJ said.
SWJ is represented by:
LAW OFFICES OF DAVID CARLEBACH, ESQ.
P. Peter Shahram, Esq.
David Carlebach, Esq.
40 Exchange Place, Suite 1306
New York, New York 10005
Tel: (212) 785-3041
Fax: (646) 355-1916
E-mail: david@carlebachlaw.com
peter@carlebachlaw.com
About Liberty Harbor
Jersey City, New Jersey-based Liberty Harbor Holding, LLC, along
with two affiliates, sought Chapter 11 protection (Bankr. D.N.J.
Lead Case No. 12-19958) in Newark on April 17, 2012. Each of the
Debtors is solely owned by Peter Mocco.
Liberty, as of April 16, 2012, had total assets of $350.08
million, comprising of $350 million of land, $75,000 in accounts
receivable and $458 cash. The Debtor says that it has
$3.62 million of debt, consisting of accounts payable of $73,500
and unsecured non-priority claims of $3,540,000. The Debtor's
real property consists of Block 60, Jersey City, NJ 100% ownership
Lots 60, 70, 69.26, 61, 62, 63, 64, 65, 25H, 26A, 26B, 27B, 27D.
Affiliates that filed separate petitions are: Liberty Harbor II
Urban Renewal Co., LLC (Case No. 12-19961) and Liberty Harbor
North, Inc. (Case No. 12-19964). The three cases are
administratively consolidated.
Judge Novalyn L. Winfield presides over the case. Wasserman,
Jurista & Stolz, P.C. serves as insolvency counsel and Scarpone &
Vargo serves as special litigation counsel. The petition was
signed by Peter Mocco, managing member.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed three
creditors to the Official Committee of Unsecured Creditors in the
Chapter 11 cases of the Debtor.
M.A.R. REALTY: Court Temporarily Bars Use of Cash Collateral
------------------------------------------------------------
The Hon. Mildred Caban Flores of the U.S. Bankruptcy Court for the
District of Puerto Rico has granted secured creditor Banco Popular
de Puerto Rico's motion to prohibit M.A.R. Realty Corp. from using
the cash collateral, subject to no oppositions being filed by
Feb. 10, 2014, at 10:00 a.m. If an objection is timely filed, a
hearing will be scheduled on Feb. 12, 2014, at 09:00 a.m.
Prior to the Petition Date, the Debtor entered into various loan
agreements with BPPR, pursuant to which BPPR provided certain
credit facilities to the Debtor. The loans are secured by, among
other things, commercial real estate buildings, parcels of land
and residential real estate properties. As part of the Loan
Documents and collateral for the loans, the Debtor granted to BPPR
a lien over its cash collateral; specifically, the pre and post-
petition rents generated by the Debtor from the real estate
collateral. As of the Petition Date, the amounts due under the
loans total $9,740,587.87, which amounts are secured by the real
estate collateral and the cash collateral.
Due to certain procedural issue, the Court dismissed without
prejudice the filed by BPPR's Dec. 17, 2013 motion for entry of
order prohibiting the use of BPPR's cash collateral. BPPR re-
filed its request to prohibit the use of its cash collateral on
Jan. 22, 2014, since the Debtor has not provided BPPR with
adequate protection nor has BPPR consented the use of its cash
collateral.
On Jan. 6, 2014, the Debtor filed a response to BPPR's motion to
prohibit cash collateral, saying that four of the properties are
not covered by the contracts of assignment of rents since they
were acquired by the Debtor after the constitution of the
agreement and that "at the time of the meeting of the minds and
execution of the assignment the above mentioned property were not
owned by the debtor. The Debtor was not the owner of the property
listed afore at the time of the execution of the first loan in
2004, thus the bank cannot allege to have a security interest upon
rents that were not in existence at the time of the execution of
the loan documents."
BPPR is represented by:
O'Neill & Borges LLC
Luis C. Marini-Biaggi, Esq.
Sheila M. Rodriguez-Figueroa, Esq.
American International Plaza
250 Munoz Rivera Avenue, Suite 800
San Juan, PR 00918-1813
Tel: (787) 764-8181
Fax: (787) 753-8944
E-mail: luis.marini@oneillborges.com
sheila.rodriguez@oneillborges.com
About M.A.R. Realty
M.A.R. Realty Corp. filed a Chapter 11 petition (Bankr. D.P.R.
Case No. 13-09752) on Nov. 25, 2013. Edwin Ramos signed the
petition as president. The Debtor disclosed $11.16 million in
total assets and $10.14 million in total liabilities. Isabel M
Fullana, Esq., at Garcia Arregui & Fullana PSC serves as the
Debtor's counsel. Hon. Mildred Caban Flores presides over the
case.
M.A.R. REALTY: Banco Popular Requests Relief From Automatic Stay
----------------------------------------------------------------
M.A.R. Realty Corp.'s secured creditor, Banco Popular de Puerto
Rico, filed with the U.S. Bankruptcy Court for the District of
Puerto Rico a motion for relief from the automatic stay.
Prior to the Petition Date, the Debtor entered into various loan
agreements with BPPR, pursuant to which BPPR provided certain
credit facilities to the Debtor. The loans are secured by, among
other things, commercial real estate buildings, parcels of land
and residential real estate properties. As part of the Loan
Documents and collateral for the loans, the Debtor granted to BPPR
a lien over its cash collateral; specifically, the pre and post-
petition rents generated by the Debtor from the real estate
collateral. As of the Petition Date, the amounts due under the
loans total $9,740,587.87, which amounts are secured by the real
estate collateral and the cash collateral.
BPPR requests the lifting of the automatic stay to continue and
conclude the foreclosure process over the real estate collateral,
claiming that (a) the Debtor has failed to provide BPPR adequate
protection; (b) the Debtor has no equity in the real estate
collateral which is fully encumbered in favor of BPPR; and (c) the
real estate collateral is not necessary for the Debtor's effective
reorganization, assuming, that Debtor's reorganization may even
possible in this case.
Prior to the Petition Date, the Debtor defaulted on its
obligations under the loans. On July 8, 2013, BPPR commenced a
civil action for foreclosure of mortgages and collection of monies
in the Puerto Rico Court of First Instance, San Juan Section.
BPPR submits that no effective reorganization is possible due to,
among other things:
(i) given that the real estate collateral has a current
market value of $5,975,000 whereas BPPR's claims exceed
the market value by over $3 million, it is clear that
any potential proceeds and distribution generated from
the real estate collateral would go in full to BPPR,
without any benefit to any other constituency. This,
since the Debtor has no equity in the Real Estate
Collateral and any potential exit financing that the
Debtor is considering, or may consider, would only yield
a payment that would be substantially less than the
amount of BPPR's claim (and, all proceeds would be paid
to BPPR); and
(ii) upon information and belief the Debtor generates
approximately $4,000 per month, which is insufficient to
provide payments as required under the Bankruptcy Code
to the secured claim of BPPR (let alone to those of
other secured creditors).
About M.A.R. Realty
M.A.R. Realty Corp. filed a Chapter 11 petition (Bankr. D.P.R.
Case No. 13-09752) on Nov. 25, 2013. Edwin Ramos signed the
petition as president. The Debtor disclosed $11.16 million in
total assets and $10.14 million in total liabilities. Isabel M
Fullana, Esq., at Garcia Arregui & Fullana PSC serves as the
Debtor's counsel. Hon. Mildred Caban Flores presides over the
case.
BPPR is represented by:
O'Neill & Borges LLC
Luis C. Marini-Biaggi, Esq.
Sheila M. Rodriguez-Figueroa, Esq.
American International Plaza
250 Munoz Rivera Avenue, Suite 800
San Juan, PR 00918-1813
Tel: (787) 764-8181
Fax: (787) 753-8944
E-mail: luis.marini@oneillborges.com
sheila.rodriguez@oneillborges.com
About M.A.R. Realty
M.A.R. Realty Corp. filed a Chapter 11 petition (Bankr. D.P.R.
Case No. 13-09752) on Nov. 25, 2013. Edwin Ramos signed the
petition as president. The Debtor disclosed $11.16 million in
total assets and $10.14 million in total liabilities. Isabel M
Fullana, Esq., at Garcia Arregui & Fullana PSC serves as the
Debtor's counsel. Hon. Mildred Caban Flores presides over the
case.
MJC AMERICA: May Use EWB Cash Collateral Through April 30
---------------------------------------------------------
Bankruptcy Judge Sandra R. Klein on Dec. 30, 2013, approved a
stipulation between MJC America, Ltd. and East West Bank over the
Debtor's use of cash collateral.
The parties agree that the Stipulation will expire by its own
terms at the close of business on April 30, 2014, unless earlier
terminated or superseded by a Court order or the case is dismissed
or converted to Chapter 7; or extended by agreement of the
parties.
The Stipulation, which was filed Dec. 18, provides that as
adequate protection, EWB is granted by the Debtor, effective as of
the petition date, a "replacement lien" in all assets of the
Debtor in the same priority, force and effect as the prepetition
collateral liens. EWB, however, does not concede that the
adequate protection constitutes sufficient adequate protection of
the bank's interests, and reserves the right to seek any further
or different adequate protection of its interests in the
collateral. Nothing in the stipulation precludes EWB from seeking
relief from the automatic stay, further adequate protection or any
other relief at any time.
As of the petition date, the Debtor owed EWB roughly $2.17 million
secured by the Debtor's personal property assets, including
inventory, accounts receivable and deposit accounts.
Less than 90 days prior to the petition date, the Superior Court
for State of California, County of Los Angeles, issued a Writ of
Attachment, which writ was levied upon EWB and sought to attach
the Deposit Accounts. Upon receiving the Writ, EWB declared a
default and accelerated the obligation owed to EWB by MJC, and
exercised its lien rights against the Deposit Accounts, asserting
a senior lien to the funds on deposit with EWB.
An hour after the Stipulation was filed, the Court issued an order
authorizing MJC to use cash collateral on an interim basis through
the completion of the continued hearing on Jan. 30. Pursuant to
the Court's Dec. 18 Order, the Court said it would conduct a
further hearing on Jan. 30 at 8:30 a.m.
The Dec. 18 Order was issued around 4:15 p.m. The Stipulation was
filed 3:29 p.m.
The Court's Dec. 30 Order provides that the further hearing on the
Cash Collateral Motion set for Jan. 30 is "taken off calendar".
MJC America, Ltd., doing business as Soleus Air System, --
http://www.soleusair.com/-- which sells Soleus-branded air
conditioners and heaters in the U.S., filed for Chapter 11
bankruptcy protection (Bankr. C.D. Cal. Case No. 13-39097) in Los
Angeles on Dec. 10, 2013.
MJC disclosed $14.0 million in total assets and $15.9 million in
liabilities in its schedules. Accounts receivable of $9.22
million and inventory of $4.12 million comprise most of the
assets. East West Bank has a scheduled secured claim of
$2.1 million on a line of credit, and Hong Kong Gree Electric
Appliances Sales, Ltd., is owed $4.07 million, but only $288,000
is secured.
The Debtor is represented by:
David A. Tilem, Esq.
Michael Avanesian, Esq.
LAW OFFICES OF DAVID A. TILEM
206 N. Jackson Street, Suite 201
Glendale, CA 91206
Tel: (818) 507-6000
Fax: (818) 507-6800
E-mail: davidtilem@tilemlaw.com
MichaelAvanesian@tilemlaw.com
malissamurguia@tilemlaw.com
dianachau@tilemlaw.com
joanfidelson@tilemlaw.com
EWB is represented by:
Scott O. Smith, Esq.
Brian T. Harvey, Esq.
BUCHALTER NEMER
E-mail: ssmith@buchalter.com
bharvey@buchalter.com
IFS_filing@buchalter.com
rreeder@buchalter.com
MONTREAL MAINE: Derailment Victims' Families File Payment Plan
--------------------------------------------------------------
Jacqueline Palank, writing for The Wall Street Journal, reported
that the relatives of those killed in last summer's train
derailment in Quebec are turning to former U.S. Senator George
Mitchell to make sure they get paid in the railway company's
bankruptcy.
According to the report, attorneys representing holders of
wrongful death claims against Montreal, Maine & Atlantic Railway
Ltd. in connection with last July's derailment on Jan. 29 filed a
creditor-payment plan on the railway's behalf with the U.S.
Bankruptcy Court in Bangor, Maine.
Court papers show Sen. Mitchell, a Democrat who represented Maine
in the U.S. Senate from 1980 to 1995, would administer the plan
and lead the effort to wrap up MM&A's Chapter 11 bankruptcy
following the railway's $15.85 million sale to a unit of Fortress
Investment Group, the report related.
With much of the sale proceeds going to secured creditors, the
relatives of the derailment victims say few assets are left for
them other than the company's insurance policies, the report said.
Sen. Mitchell, now chairman emeritus of law firm DLA Piper LLP,
"will use his good offices to try to forge a consensus among U.S.
and Canadian parties on issues relating to the wrap-up, and assist
in negotiations to settle the insurance policies and such other
matters that will serve to expedite the conclusion of this case,"
court papers say, the report further related.
About Montreal Maine
Montreal, Maine & Atlantic Railway Ltd., the railway company that
operated the train that derailed and exploded in July 2013,
killing 47 people and destroying part of Lac-Megantic, Quebec,
sought bankruptcy protection in U.S. Bankruptcy Court in Bangor,
Maine (Case No. 13-10670) on Aug. 7, 2013, with the aim of selling
its business. Its Canadian counterpart, Montreal, Maine &
Atlantic Canada Co., meanwhile, filed for protection from
creditors in Superior Court of Quebec in Montreal.
Robert J. Keach, Esq., at Bernstein, Shur, Sawyer, and Nelson,
P.A., has been named as chapter 11 trustee. His firm serves as
his chapter 11 bankruptcy counsel, led by Michael A. Fagone, Esq.
Development Specialists, Inc., serves as the Chapter 11 trustee's
financial advisor. Gordian Group, LLC, serves as the Chapter 11
Trustee's investment banker.
U.S. Bankruptcy Judge Louis H. Kornreich has been assigned to the
U.S. case. The Maine law firm of Verrill Dana served as counsel
to MM&A. It now serves as counsel to the Chapter 11 Trustee.
Justice Martin Castonguay oversees the case in Canada.
The Canadian Transportation Agency suspended the carrier's
operating certificate after the accident, due to insufficient
liability coverage.
The town of Lac-Megantic, Quebec, has sought financial aid to
restore the gutted community and a civil complaint alleges a
failure to take steps to prevent a derailment.
In the Canadian case, Andrew Adessky at Richter Consulting has
been appointed CCAA monitor. The CCAA Monitor is represented by
Sylvain Vauclair at Woods LLP.
MM&A Canada is represented by Patrice Benoit, Esq., at Gowling
LaFleur Henderson LLP.
The U.S. Trustee appointed a four-member official committee of
derailment victims. The Official Committee is represented by:
Richard P. Olson, Esq., at Perkins Olson; and Luc A. Despins,
Esq., at Paul Hastings LLP.
There's also an unofficial committee of wrongful death claimants
consisting of representatives of the estates of the 46 victims.
This group is represented by George W. Kurr, Jr., Esq., at Gross,
Minsky & Mogul, P.A.; Daniel C. Cohn, Esq., at Murtha Cullina LLP;
Peter J. Flowers, Esq., at Meyers & Flowers, LLC; Jason C.
Webster, Esq., at The Webster Law Firm; and Mitchell A. Toups,
Esq., at Weller, Green Toups & Terrell LLP.
After the U.S. Trustee formed the Official Committee, the ad hoc
committee filed papers asking the U.S. Court to have the official
committee disbanded. The ad hoc group said it represents 46
victims of the disaster.
On Jan. 23, 2014, the Debtors won authorization to sell
substantially all of their assets to Railroad Acquisition Holdings
LLC, an affiliate of New York-based Fortress Investment Group, for
$15.7 million. The Bankruptcy Courts in the U.S. and Canada
approved the sale.
The Fortress unit is represented by Terence M. Hynes, Esq., and
Jeffrey C. Steen, Esq., at Sidley Austin LLP.
MOONLIGHT APARTMENTS: Files for Chapter 11 in Kansas City
---------------------------------------------------------
Moonlight Apartments, LLC, filed a Chapter 11 bankruptcy petition
(Bankr. D. Kansas Case No. 14-20172) in Kansas City on Jan. 28,
2014.
The Overland Park, Kansas-based company estimated $10 million to
$50 million in assets and debt.
The Debtor is represented by attorneys at Jochens Law Office,
Inc., in Kansas City.
According to the docket, the Debtor's Chapter 11 plan and
disclosure statement are due May 28, 2014. The schedules of
assets and liabilities, statement of financial affairs and other
documents are due Feb. 11, 2014.
NORTH AMERICAN PALLADIUM: Obtains Waivers; Initial Default Cured
----------------------------------------------------------------
North American Palladium Ltd. on Jan. 28 provided an update on its
previously announced proposed public offering of securities,
including an amendment to the terms and expected closing schedule.
The Company also highlighted some recent developments that are
described in the prospectus supplement that was filed on Jan. 28,
which includes preliminary and unaudited financial information for
the year ended December 31, 2013 currently available to NAP as of
the date of the final prospectus supplement.
Financing Update
The Company has amended the terms of its previously announced
proposed Offering of up to $75 million principal amount of 7.5%
convertible unsecured subordinated debentures in two tranches
(including warrants). The amendments include, among other things,
an increase in the size of the first tranche of the Offering from
$30 million to up to $32 million (with the second tranche targeted
to raise up to $43 million); the addition of warrants to the first
tranche; and the inclusion of full ratchet/anti-dilution
provisions in the warrants in both tranches and the second tranche
debentures (subject to TSX, NYSE MKT and disinterested shareholder
approval).
There can be no assurance that the Offering will close when
anticipated or at all, or that the terms will not change.
The anticipated conversion price of the C$32 million first tranche
convertible debentures is C$0.724, and the expected exercise price
of the first tranche warrants (the exercise of which remains
subject to disinterested shareholder approval) is C$0.869 (both of
which are subject to adjustment under certain circumstances).
It is anticipated that the first tranche will close on or around
January 30, 2014. As required by the TSX, the second tranche of
the Offering (as well as the exercise of the warrants issued in
the first tranche) is subject to disinterested shareholder
approval. The Company expects to hold a shareholder meeting on or
around March 18, 2014, or on such other date as the Company
determines. The completion of each tranche of the Offering is
subject to the approval of the TSX, NYSE MKT, all other necessary
regulatory approvals and the settlement of definitive
documentation, among other conditions. If approved by
shareholders, the Company expects to close the second tranche of
the Offering on or around March 30, 2014.
The Company has filed a final base shelf prospectus and a final
prospectus supplement with the securities regulatory authorities
in each of the provinces of Canada and a prospectus supplement and
registration statement (including a base prospectus) and a final
prospectus supplement with the U.S. Securities and Exchange
Commission for the Offering. The offering in Canada will be made
only by the base shelf prospectus and the final prospectus
supplement. Before you invest, you should read the base shelf
prospectus, the registration statement and the prospectus
supplement and other documents the Company has filed with the
securities regulatory authorities in Canada and the SEC for more
complete information about the Company and this Offering. You may
get these documents for free by visiting SEDAR at www.sedar.com or
EDGAR at www.sec.gov. Alternatively, the lead agent (Edgecrest
Capital Corporation) can arrange to send you the Offering
documents if you so request by calling toll-free 1 (877) 257-7366
at 70 York Street, Suite 1500, Toronto, Ontario, M5J 1S9.
Recent Developments
The Company also highlighted the following recent developments
which are discussed in the final prospectus supplement, mainly
pertaining to the Company's operations and financial condition.
On a preliminary and unaudited basis, and subject to change, based
on the information currently available to NAP as of the date of
the final prospectus supplement, the Company anticipates the
following results for the 2013 fiscal year end:
-- Capital expenditures are expected to total
approximately $116 million (excluding capitalized interest), of
which approximately $92 million was spent on the LDI Phase I of
the mine expansion, approximately $17 million on the tailings
management facility, and approximately $7 million on other capital
expenditures;
-- Production is expected to total approximately 135,000
ounces of payable palladium for fiscal 2013, at a cash cost per
ounce of approximately US$560 (net of by-product revenue);
-- Excluding the effect of the term debt becoming
classified as a current liability, the working capital deficit as
at December 31, 2013 is expected to be approximately $2 million,
which incorporates approximately $49 million in accounts payable,
$18 million under the credit facility and $9 million in cash and
cash equivalents. However, the $179 million term debt became
classified as a current liability under IFRS as at December 31,
2013 as a result of a construction lien that was placed on the LDI
mine and, accordingly, the working capital deficit is expected to
be approximately $181 million as at December 31, 2013. The
Company has obtained formal waivers and the initial event of
default has been cured;
-- $30 million of the Company's US$60 million credit
facility was available and fully utilized as at December 31, 2013;
and
-- NAP previously disclosed that it expected to record a
non-cash loss of approximately $14.5 million in the fourth quarter
of 2013 related to the accounting treatment of the amendment to
the Brookfield debt. However, due to a review of the accounting
requirements, the Company no longer expects to incur this loss.
To date in January, operations continue to make good progress
ramping up production, with underground mining currently averaging
approximately 3,125 tonnes per day (consistent with the Company's
operating guidance).
Looking ahead to 2014, before working capital changes, the Company
expects to generate positive cash flow from operations at LDI.
After including working capital changes in 2014, the expected cash
flow from operations is expected to be negative, primarily as a
result of an expected decrease in accounts payable as the Company
transitions away from intensive construction activity and an
expected increase in accounts receivable as production ramps up.
The Company is required to begin paying cash interest on the
Brookfield debt before the end of the second quarter of 2015,
which would reduce interest rates to 15% per annum from the
current 19% annual rate.
As a result of the Company's ongoing review of its development
strategy, management currently believes that continued development
of the LDI mine at depth will be critical to satisfying NAP's
financial obligations and for its long-term profitability. As per
the 2014 guidance, the Company intends to conduct more diamond
drilling at depth and commission technical studies to determine
the economic viability and capital costs related to pursuing the
Phase II expansion. The technical studies will investigate
deepening the shaft and developing the mine at depth, the
potential of alternative mining methods, and several lateral
development opportunities. Based on management's preliminary
internal review and estimates to date, it is apparent that
significant additional capital expenditures will be required to
expand the mine at depth, and that additional financing will be
required starting in 2015 (even if the Offering of both tranches
of securities are completed for aggregate proceeds of $70
million).
Although the Company believes that the proceeds of the proposed
Offering would be sufficient to fund the Company's activities for
the next 12 months (assuming that both tranches are completed for
proceeds of not less than $70 million), there can be no assurance
that such financings will be completed in a timely manner, or that
alternative financing will be available on acceptable terms, if at
all. Failure to obtain necessary financing in the near future may
force NAP to pursue strategic alternatives, which may include,
among other things, a recapitalization of its debt.
About North American Palladium
NAP is an established precious metals producer that has been
operating its Lac des Iles mine ("LDI") located in Ontario, Canada
since 1993. LDI is one of only two primary producers of palladium
in the world, offering investors leverage to the rising price of
palladium. The Company's shares trade on the NYSE MKT under the
symbol PAL and on the TSX under the symbol PDL.
NORTH TEXAS BANCSHARES: Claims Bar Date Set for Feb. 17
-------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware entered an
order establishing Feb. 17, 2014 at 5:00 p.m. (Prevailing Eastern
Time) as the deadline for filing proofs of claim on account of
claims arising prior to the Oct. 16, 2013 Petition Date in the
Chapter 11 cases of North Texas Bancshares of Delaware, Inc. and
North Texas Bancshares, Inc.
The Bar Date Order also provides that April 14, 2014 at 5:00 p.m.
(Prevailing Eastern Time) is the deadline for governmental units
to file Prepetition Proofs of Claim in the Chapter 11 cases.
A HOLDER OF A POSSIBLE CLAIM AGAINST THE DEBTORS SHOULD CONSULT AN
ATTORNEY AS TO WHETHER THE HOLDER SHOULD FILE A PROOF OF CLAIM.
About North Texas Bancshares and Park Cities Bank
North Texas Bancshares of Delaware, Inc. and North Texas
Bancshares, Inc., the parent company of Park Cities Bank, a Texas
banking chain with four branches, sought Chapter 11 bankruptcy
protection (Bankr. D. Del. Case Nos. 13-12699 and 13-12700) in
Wilmington, Delaware, on Oct. 16, 2013. The jointly administered
cases are before Judge Kevin Gross.
The Debtors are represented by Tobey M. Daluz, Esq., Leslie C.
Heilman, Esq., and Matthew Summers, Esq., at Ballard Spahr LLP, in
Wilmington, Delaware. The Debtors' special counsel is Bracewell &
Giuliani LLP. Commerce Street Capital, LLC, serves as the
Debtors' financial advisors.
In December 2013, the Bankruptcy Court approved the acquisition of
Park Cities Bank (NTBS/PCB), by Olney Bancshares of Texas, Inc.
During the court-supervised auction, Olney's $11.4 million bid was
deemed the highest or otherwise best offer received, beating a
stalking horse bid by Park Cities Financial Group, an independent
group of investors unaffiliated with NTBS/PCB. As part of the
transaction, Park Cities Bank will merge with and into Interbank,
the wholly owned banking subsidiary of Olney. Interbank operates
36 banking locations in Texas and Oklahoma while Park Cities Bank
operates four branches in the Dallas/Fort Worth area. The merger
is expected to take place during the first quarter of 2014.
NORTH LAS VEGAS, NV: Ruling Adds to City's Financial Woes
---------------------------------------------------------
Lisa Allen, writing for The Deal, reported that the City of North
Las Vegas, Nev., is running out of cards to play as it tries to
contain a gaping budget deficit and a labor lawsuit that could
leave the city, which has about $421 million in outstanding debt,
tapped out.
According to the report, the Las Vegas suburb grew quickly during
a development boom in the 2000s, but property values have since
sunk to about 50% of their 2006 levels, precipitating a 58% drop
in the tax base between 2009 and 2013, according to Fitch Ratings
Inc.'s calculations.
The city government has stayed in the game by repurposing utility
funds for its general fund, laying off 35% of its workforce, and
declaring a state of fiscal emergency in June 2012 to get around
wage increases stipulated in unionized workers' contracts, the
report related.
But Judge Susan H. Johnson of the District Court for Clark County,
Nev., ruled on Jan. 21 that the city's fiscal emergency measures
were unconstitutional, which could cost the city up to $41 million
in back wages and cumulative wage increases, the report said.
"[North Las Vegas'] ability to make a payment of this size is
highly questionable," Fitch warned in a Jan. 24 report that
knocked the city's credit rating down to B from BB+, the report
cited.
PARADE PLACE: 75 125th Holdings Dismissed From Lawsuit
------------------------------------------------------
75 125th Holdings LLC is substituted as defendant in place of
Valley National Bank, a named defendant in the adversary
proceeding, Samuels Temple Church of God in Christ, Plaintiff, v.
Parade Place, LLC, Saadia Shapiro, Marla Shapiro, Valley National
Bank, Defendants, Adv. Proc. Case No. 13-01556 (MG)(Bankr.
S.D.N.Y.).
The Church is the prior owner of property located at 75 East 125th
Street, New York, New York. The Church sold the Property to
Parade Place on August 17, 2006. Parade Place and its affiliate
75 East 125th LLC are debtors in chapter 11 proceedings under
joint administration.
In the complaint, the Church claims that it was fraudulently
induced to convey the Property to Parade Place by intentional
misrepresentations made by Parade Place and Shapiro. The Church
further contends that the Shapiros concealed the Church's valid
lease on the Property when they applied for and obtained a loan
from Valley. The Church claims that Valley knew that the Church
maintained an interest in the Property and that a voidable deed
existed between the Debtor and the Church. As to Valley's pending
foreclosure on the Property, the Church asserts that Valley has no
standing to prosecute any foreclosure action. The Church seeks a
Court order declaring that Valley is not a valid holder in due
course of the Note and Mortgage. The Church also seeks to set
aside conveyance of the Property and to invalidate liens placed on
the Property by the Debtor or Shapiro.
Holdings asked the Court (1) that it be substituted as defendant
in place of Valley, or, in the alternative, to intervene in the
adversary proceeding as a matter of right; and (2) for an order
dismissing the Adversary Complaint. Holdings is the party
currently holding the Note and Mortgage, and is actively pursuing
its rights under those instruments.
Bankruptcy Judge Martin Glenn granted Holdings' request to be
substituted as defendant in place of Valley, and dismissed the
adversary complaint as against Holdings with prejudice on grounds
of res judicata, pursuant to an order dated Jan. 27, 2014
Memorandum Opinion and Order available at http://is.gd/fiI3Pbfrom
Leagle.com.
Kriss & Feurstein LLP's Jerold Feurstein, Esq., in New York,
represents 75 125th Holdings LLC.
Christopher Peter McDonnell, Esq., at The Law Offices of
Christopher Peter McDonnell, in Flushing, New York, represents
Samuels Temple Church of God in Christ.
About Parade Place
Parade Place LLC, which owns properties in New York, sought
Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No.
13-13160) on Sept. 27, 2013, blaming the economy and Harlem real
estate market. Judge Judge Martin Glenn presides over the case.
Arnold Mitchell Greene, Esq., at Robinson Brog Leinwand Greene
Genovese & Gluck, P.C., serves as the Debtor's counsel. The
Company listed debt of $24.6 million and assets of about $3.7
million. The petition was signed by Saadia Shapiro, managing
member.
Parade owns property located at 69 East 125th St., which it
estimates is valued at $1.6 million, 71 East 125th St., which it
believes is worth, $1.3 million and 58 East 126th St., which has
an estimated value of $800,000, court papers show. The properties
are vacant.
An affiliate, 75 East 125th LLC, which sought bankruptcy
protection Sept. 23, owns property at 75 East 125th St. The
properties comprise a partially completed development site.
PARSLEY ENERGY: Moody's Assigns 'Caa1' CFR; Outlook Positive
------------------------------------------------------------
Moody's Investors Service assigned first time ratings to Parsley
Energy, LLC, including a Caa1 Corporate Family Rating (CFR), a
Caa2 rating to the company's proposed $325 million senior
unsecured notes, and an SGL-3 Speculative Grade Liquidity Rating
reflecting adequate liquidity through 2014. Parsley Finance Corp.
is the co-issuer of the proposed notes. The rating outlook is
positive.
Net proceeds from the notes issuance will be used to repay all of
its outstanding borrowings under the company's second lien credit
facility, which will be terminated once repaid. Remaining proceeds
will be used to pay down borrowings under Parsley's senior secured
revolving credit facility due 2018.
Parsley Energy, LLC (Parsley) is an oil and gas exploration and
production (E&P) company with all of its properties located in the
Midland and Delaware Basins in west Texas, which are sub-areas of
the Permian Basin. Parsley was founded in August 2008 when the
company acquired operator rights to approximately 109 gross wells
from Joe Parsley, co-founder of Parker and Parsley Petroleum
Company.
Assignments:
Issuer: Parsley Energy, LLC
Corporate Family Rating, Assigned Caa1
Probability of Default Rating, Assigned Caa1-PD
Speculative Grade Liquidity Rating, Assigned SGL-3
Senior Unsecured Regular Bond/Debenture, Assigned Caa2 (LGD5, 74%)
RATINGS RATIONALE
Parsley's Caa1 Corporate Family Rating reflects its relatively
modest scale and early stage upstream operations, high leverage in
terms of production and proved developed (PD) reserves,
concentrated geographic presence, and significant capital
requirements as it ramps up drilling and development of its
acreage. The CFR is supported by Parsley's liquids-rich
production, strong cash margins, multiple years of drilling
inventory, and the high degree (99%) of operational control over
its leasehold acreage that should allow flexible capital
allocation and development.
The proposed unsecured notes are notched below the Caa1 CFR given
the significant size of the priority claim senior secured
revolving credit facility in the liability structure. The $246
million borrowing base revolver, pro forma for the notes issuance,
has first-lien claims to substantially all of Parsley's assets.
Parsley's current pro-forma production base of about 8 mboe/day
and proved reserves of 40.8 million boe are modest compared to
many higher rated E&P companies. Pro forma for the $325 million
debt issue, Parsley's debt to average daily production approaches
$52,000 per boe and debt to PD reserves $18 per boe, which is
considered high.
While Parsley's core assets are located in one of the most
productive and oil-endowed US basins featuring multiple stacked
pay zones, where horizontal drilling and completion technologies
can be applied to enhance production, recovery, and returns,
transitioning from vertical development to horizontal development
will significantly increase Parsley's capital spending. Well costs
for vertical wells average approximately $2 million whereas well
costs for horizontal wells average approximately $8 million. The
company will have to spend a significant amount of capital through
the next couple of years to drill and develop its acreage and move
toward break-even cash flow.
Moody's expects Parsley to have adequate liquidity to cover its
cash needs through 2014, which is reflected in Moody's SGL-3
Speculative Grade Liquidity Rating. The company is expected to
have roughly $20 million of cash and $100 million available under
its senior secured revolving credit facility due September 2018,
pro-forma for the notes issuance. With the company planning to
ramp up drilling, and especially with more horizontal drilling,
its capital spending will exceed its cash flows. Its liquidity
should be sufficient to cover its outspend for 2014. Parsley's
borrowing base is currently $246 million pro-forma for the notes
issuance, and will likely be higher on its next re-determination
in April 2014 as it currently does not include drilling that the
company has done in the fourth quarter of 2013. The revolving
credit facility has two financial covenants -- a current ratio of
at least 1.0x and a minimum interest coverage of 2.5x. "We expect
the company to be in compliance with these covenants," said
Moody's.
The positive outlook reflects Parsley's production growth
trajectory, good acreage in the Permian Basin, oil-weighted
production, and a high likelihood that leverage will improve
gradually in the coming quarters.
An upgrade will be considered if production volumes approach
10,000 boe/d on a consistent basis with a debt to average daily
production ratio under $45,000 per boe.
A negative rating action is possible if debt to average daily
production remains above $60,000 per boe over a sustained period,
or if liquidity profile of the company deteriorates dramatically.
The principal methodology used in this rating was the Global
Independent Exploration and Production Industry published in
December 2011. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
Based in Midland, Texas, Parsley Energy, Inc. is an oil and gas
exploration and production company.
PARSLEY ENERGY: S&P Assigns 'CCC+' CCR & Rates $325MM Notes 'CCC+'
------------------------------------------------------------------
Standard & Poor's Ratings Services said it assigned its 'B-'
corporate credit rating to Midland, Texas-based Parsley Energy
LLC. The outlook is positive.
At the same time, S&P assigned its 'CCC+' issue rating (one notch
below the corporate credit rating) to Parsley's proposed
$325 million senior unsecured notes due 2022. The recovery rating
is '5', indicating S&P's expectation of modest (10% to 30%)
recovery in the event of a payment default.
S&P expects Parsley will use proceeds from the proposed notes to
fully repay term loan borrowings and pay down a portion of the
outstanding revolving credit facility balance.
"The positive outlook reflects the potential for an upgrade within
the next 12 months if Parsley can successfully execute its
drilling program and increase production to about 10,000 barrels
per day on a sustained basis, while maintaining debt leverage
below 5x and adequate liquidity," said Standard & Poor's credit
analyst Vishal Merani.
S&P could stabilize the rating if Parsley's drilling program
failed to meet its current expectation or if debt leverage
breached 5x. S&P could also stabilize the rating if liquidity
were to fall to less than adequate.
POLYMER GROUP: Moody's Places B1 CFR on Review For Downgrade
------------------------------------------------------------
Moody's Investors Service has placed on review for downgrade all
long-term ratings for Polymer Group, Inc., including the B1
Corporate Family Rating ("CFR") and B1 ratings on the company's
senior secured notes and term loan. The review follows Monday's
announcement that PGI will acquire Brazilian nonwoven producer
Companhia Providencia Industria e Comercio.
The actions:
Issuer: Polymer Group, Inc.
Corporate Family Rating, Placed on Review for Downgrade, currently
B1
Probability of Default Rating, Placed on Review for Downgrade,
currently B1-PD
$295 million Senior Secured Term Loan B due 2019, Placed on Review
for Downgrade, currently B1 (LGD3 45%)
$560 million Senior Secured Notes due 2019, Placed on Review for
Downgrade, currently B1 (LGD3 45%)
Outlook, Changed to Rating Under Review from Stable
Ratings Rationale
The review will consider the prospective benefits of the strategic
acquisition of a similar business in an emerging market against
the risks associated with its integration and financial risks
associated with the financing structure. The transaction remains
subject to customary closing conditions, including receipt of
appropriate regulatory approvals. PGI has not disclosed the
expected closing date for the acquisition.
PGI plans to purchase 71.25% of the company for total
consideration of R$555.9 million including a deferred component of
R$106.9 million pending resolution of certain existing and
potential tax claims. The company would subsequently launch a
tender offer on substantially the same terms and conditions for
the remaining 28.75% of the company, or another R$225 million at
R$9.75 per share outstanding, and refinance approximately R$524
million of outstanding debt at Providencia. Excluding the deferred
component, this equates to approximately USD$500 million in cash
ultimately required assuming the tender offer proceeds as planned
and within the USD$570 million of committed financing disclosed in
PGI's 8K filing.
However, the terms and conditions of the transaction have not been
finalized. PGI has disclosed the existence of $570 million in
committed secured and unsecured financing, but the terms and
conditions of the debt have not been finalized. An incremental
debt raise would mark a quick return to the markets shortly after
completing an add-on term loan to fund the acquisition of
Fiberweb, a UK-based nonwovens company, in December 2013. With pro
forma credit measures already weak for the B1 rating level, the
addition of substantial debt to the company's balance sheet would
likely result in a negative rating action.
The principal methodology used in this rating was Global Chemical
Industry Rating Methodology published in December 2013. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Polymer Group Inc. produces non-woven materials sold to makers of
consumer and industrial products. These products include
disposable diapers, feminine hygiene products, cleaning wipes,
surgical gowns & drapes, and furniture & bedding, among others.
The Blackstone Group acquired PGI in January 2011. Headquartered
in Charlotte, N.C., the company generated revenues of $1.1 billion
(reported) or $1.6 billion (pro forma for Fiberweb) for the twelve
months ended September 29, 2013.
PROSPECT SQUARE: Files for Chapter 11 in Denver
-----------------------------------------------
Prospect Square 07 A, LLC, and related entities sought Chapter 11
bankruptcy protection from creditors (Bankr. D. Colo. Lead Case
No. 14-10896) in Denver on Jan. 29, 2014.
Prospect Square 07 A, a Single Asset Real Estate as defined in
11 U.S.C. Sec. 101(51B) with principal assets located at 9690
Colerain Avenue, Cincinnati, Ohio, estimated $10 million to $50
million in assets and debt.
The Debtors' Chapter 11 plan and disclosure statement are due
May 29, 2014.
The Debtor is represented by Lee M. Kutner, Esq., in Denver.
PTM TECHNOLOGIES: 22nd Century to Auction Equipment in February
---------------------------------------------------------------
22nd Century Group, Inc. on Jan. 30 disclosed that on
September 17, 2013, the Company entered into a Membership Interest
Purchase Agreement to purchase all of the issued and outstanding
membership interests of NASCO Products, LLC, a North Carolina
tobacco manufacturer and member of the Tobacco Master Settlement
Agreement known as the MSA. Consummation of the NASCO Transaction
is subject to conditions including consents from the attorneys
general of the settling states of the MSA. NAAG has been
discussing the NASCO Transaction with a small working group of
settling states of the MSA for which the Company has answered
various rounds of questions. The working group has presented the
matter to all the settling states with a recommended course of
action which the settling states are evaluating. Upon the entry
of a revised adherence agreement of NASCO Products, LLC reflecting
the NASCO Transaction, the Company believes it will be able to
close the NASCO Transaction.
In the fourth quarter 2013, Goodrich Tobacco purchased cigarette
manufacturing equipment and equipment parts, factory items, office
furniture and fixtures, vehicles and computer software from the
bankruptcy estate of PTM Technologies, Inc. and additional
equipment and equipment parts, vehicles, and additional factory
items from the bankruptcy estate of Renegade Tobacco Co. for a
total of approximately $3.4 million. PTM and Renegade are related
companies located in Mocksville, North Carolina undergoing
Chapter 7 liquidation proceedings in the United States Bankruptcy
Court for the Middle District of North Carolina. The Company has
had no relationship in the past, nor intends to have any
relationship going forward, with the former principals of PTM or
Renegade.
An auction will be held by the EttinGroup in late February for a
portion of the manufacturing equipment not required by the
Company.
Upon the closing of the NASCO Transaction, Goodrich Tobacco will
ramp up distribution of its premium brands to various wholesalers.
Since the launch of the products in 2011, sales and marketing of
Goodrich Tobacco's commercial cigarettes have been curtailed in
order to limit the complexity and costs associated with becoming a
participating manufacturer of the MSA.
About 22nd Century Group, Inc.
22nd Century is a plant biotechnology company whose proprietary
technology allows for the levels of nicotine and other nicotinic
alkaloids (e.g., nornicotine, anatabine and anabasine) in the
tobacco plant to be decreased or increased through genetic
engineering and plant breeding. 22nd Century owns or is the
exclusive licensee of 114 issued patents in 78 countries plus an
additional 38 pending patent applications. Goodrich Tobacco
Company, LLC and Hercules Pharmaceuticals, LLC are wholly-owned
subsidiaries of 22nd Century. Goodrich Tobacco is focused on
commercial tobacco products and potential less harmful cigarettes.
Hercules Pharmaceuticals is focused on X-22, a prescription
smoking cessation aid in development.
About Renegade Holdings
Renegade Holdings and two subsidiaries -- Alternative Brands, Inc.
and Renegade Tobacco Company -- filed for Chapter 11 protection
(Bankr. M.D.N.C. Lead Case No. 09-50140) on Jan. 28, 2009, and
exited bankruptcy on June 1, 2010. They were put back into
bankruptcy July 19, 2010, when Judge William L. Stocks vacated the
reorganization plan, in part because of a criminal investigation
of owner Calvin Phelps and the companies regarding what
authorities called "unlawful trafficking of cigarettes."
Alternative Brands is a federally licensed manufacturer of tobacco
products consisting primarily of cigarettes and cigars. Renegade
Tobacco distributes the tobacco products produced by ABI through
wholesalers and retailers in 19 states and for export. ABI also
is a contract fabricator for private label brands of cigarettes
and cigars which are produced for other licensed tobacco
manufacturers.
The stock of RHI is owned indirectly by Calvin A. Phelps through
his ownership of the stock of Compliant Tobacco, LLC which, in
turn, owns all of the stock of RHI which in turn owns all of the
stock of RTC and ABI. Mr. Phelps was the chief executive officer
of all three companies. All three of the Debtors' have their
offices and production facilities in Mocksville, North Carolina.
In August 2010, the Bankruptcy Court approved the appointment of
Peter Tourtellot, managing director of turnaround-management
company Anderson Bauman Tourtellot Vos & Co., as Chapter 11
trustee.
Gene Tarr also has been appointed as bankruptcy examiner.
About PTM Technologies
PTM Technologies Inc. is a wholly owned subsidiary of Renegade
Holdings, and an affiliate of Alternative Brands, Inc. and
Renegade Tobacco Company, which also are wholly owned subsidiaries
of Renegade Holdings. The Mocksville, North Carolina-based
company filed for bankruptcy (Bankr. M.D.N.C. Case No. 10-50980)
on May 26, 2010. Judge William L. Stocks presides over the case.
Charles M. Ivey III, Esq. -- jlh@imgt-law.com -- at Ivey,
McClellan, Gatton, & Talcott, LLP, serves as bankruptcy counsel.
According to its schedules, the Company has $3,953,216 in assets
and $7,199,424 in debts.
REFCO INC: Jan. 30 Oral Argument in Suit Against Cantor Fitzgerald
------------------------------------------------------------------
Cantor Fitzgerald's motion to dismiss a lawsuit commenced by the
bankruptcy estate of collapsed futures broker Refco against the
financial services firm and its CEO Howard Lutnick was scheduled
for argument Thursday, Jan. 30 at 4:15 p.m. at the U.S. District
Court for the Southern District of New York in Manhattan, before
Judge Ronnie Abrams.
Grant & Eisenhofer managing director Jay Eisenhofer was slated to
appear before the Court to argue for the case to go forward on
behalf of Refco bankruptcy estate representative Marc Kirschner.
The suit was filed in July 2013, and alleges that Cantor's Nevada
gaming businesses acquired proprietary technology and other assets
from a subsidiary in which Refco held a 10% stake, without ever
compensating the subsidiary (thereby depriving Refco of its
interest in that technology). The lawsuit was filed ahead of
Cantor's pursuit of a potential initial public offering of its
subsidiary in the mobile gaming space, Cantor Entertainment
Technology, Inc.
Refco's ownership portion of the gaming technology is estimated at
tens of millions of dollars.
The suit contends that in 2002, Refco invested $8 million in a
Cantor Fitzgerald subsidiary, Cantor Index Holdings ("CIH"), in
exchange for a 10% partnership interest. Over the next several
years, CIH developed successful gaming technology, such as devices
for remote gambling and other betting techniques.
The bankruptcy estate alleges that after CIH and its subsidiaries
successfully developed and deployed these technologies, Cantor
Gaming ultimately shut down CIH and took the rights of CIH's key
assets and intellectual property for its own development and
profit. The suit alleges that this was done for the benefit of
Cantor's Nevada businesses, without properly compensating the
subsidiary (and through its ownership interest in the subsidiary,
Refco's bankruptcy estate). In one instance, the defendants in
2010 took Cantor Index's profitable betting business in the U.K.,
by transferring it to a Nevada affiliate, for nominal
consideration of GBP1.00. At another point, Cantor transferred
valuable patents for a price to be set later, yet after nearly six
years, never set a price or paid any compensation.
The Refco estate's lawsuit contends that having taken assets and
business lines from CIH, Cantor used them to create highly
valuable businesses in Nevada and elsewhere. The suit asserts
claims of breach of contractual and fiduciary duty, conversion,
and waste.
The complaint also contends that Cantor has repeatedly admitted to
regulators, analysts and the press that the technology developed
by CIH and its subsidiaries in the U.K. was critical to the build-
out of Cantor's Nevada operations.
Among defendants named in the suit are Cantor G&W (Nevada) L.P.,
as well as Cantor Fitzgerald CEO Howard Lutnick and Cantor Gaming
president Lee Amaitis.
Plaintiffs are seeking millions of dollars in compensatory and
punitive damages. An IPO of Cantor Entertainment Technology could
potentially value the company in the hundreds of millions of
dollars.
"Cantor drained CIH of its assets, and then co-opted the
intellectual property for its gambling businesses," Grant &
Eisenhofer co-managing director Jay Eisenhofer said in a statement
at the time the lawsuit was filed. "The brazenness of the Cantor
scheme is illustrated in the sham transaction valued at barely a
dollar, and the company's public admissions that significant
capital was put into developing remote gambling technology key to
Cantor's Nevada businesses."
Mr. Eisenhofer continued: "The company still owes its subsidiary,
and indirectly Refco's bankruptcy estate, for these technologies
and other assets which Refco helped finance a decade ago. Cantor
Entertainment Technology's success in the mobile gaming industry
and its potential IPO rely heavily on these technologies, and we
seek recovery for the bankruptcy estate the fair value of Refco's
investment."
In addition to Mr. Eisenhofer, Grant & Eisenhofer directors
Geoffrey Jarvis and Matthew Morris and associates Nathan Cook and
Ned Weinberger are special litigation counsel to plaintiff
bankruptcy estate.
The case is captioned as: Refco Group LTD., LLC v. Cantor
Fitzgerald, L.P., et al.
Grant & Eisenhofer P.A. -- http://www.gelaw.com/-- represents
plaintiffs in a wide range of complex financial litigation. The
firm has played a central role in some of the largest bankruptcies
in recent years, including Parmalat, Global Crossing, Delphi,
Refco and others. G&E's clients include institutional investors,
whistleblowers and other stakeholders in bankruptcy litigation,
securities class actions, derivative lawsuits, consumer class
actions, antitrust suits, and cases involving the False Claims Act
. G&E has recovered more than $13 billion for investors in the
last five years and has consistently been cited by RiskMetrics for
securing the highest average investor recovery in securities class
actions. Grant & Eisenhofer has been named one of the country's
top plaintiffs' law firms by The National Law Journal for the past
eight years.
About Refco Inc.
Headquartered in New York, Refco Inc. -- http://www.refco.com/--
was a diversified financial services organization with operations
in 14 countries and an extensive global institutional and retail
client base. Refco's worldwide subsidiaries were members of
principal U.S. and international exchanges, and were among the
most active members of futures exchanges in Chicago, New York,
London and Singapore. Refco was also a major broker of cash
market products, including foreign exchange, foreign exchange
options, government securities, domestic and international
equities, emerging market debt, and OTC financial and commodity
products. Refco was one of the largest global clearing firms for
derivatives. The Company had operations in Bermuda.
The Company and 23 of its affiliates filed for Chapter 11
protection on October 17, 2005 (Bankr. S.D.N.Y. Case No.
05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate,
Meagher & Flom LLP, represented the Debtors in their restructuring
efforts. Milbank, Tweed, Hadley & McCloy LLP, represented the
Official Committee of Unsecured Creditors. Refco reported
US$16.5 billion in assets and US$16.8 billion in debts to the
Bankruptcy Court on the first day of its Chapter 11 cases.
The Court confirmed the Modified Joint Chapter 11 Plan of
Refco Inc. and certain of its Direct and Indirect Subsidiaries,
including Refco Capital Markets, Ltd., and Refco F/X Associates,
LLC, on December 15, 2006. That Plan became effective on Dec. 26,
2006. Pursuant to the plan, RJM, LLC, was named plan
administrator to reorganized Refco, Inc., and its affiliates, and
Marc S. Kirschner as plan administrator to Refco Capital Markets,
Ltd.
RESIDENTIAL CAPITAL: Jackson's $100MM Unsecured Claim Expunged
--------------------------------------------------------------
At the behest of Residential Capital, LLC, Bankruptcy Judge Martin
Glenn disallowed and expunged Corla Jackson's $100,000,000 general
unsecured claim (Claim No. 4443) against GMAC Mortgage, LLC in a
Jan. 27, 2014 Memorandum Opinion and Order available at
http://is.gd/GvgZzdfrom Leagle.com.
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.
Judge Martin Glenn in December 2013 confirmed the Joint Chapter 11
Plan co-proposed by Residential Capital and the Official Committee
of Unsecured Creditors.
RESERVOIR EXPLORATION: Feb. 18 Confirmation Hearing Set
-------------------------------------------------------
A hearing to consider confirmation of the Plan of Liquidation
proposed by Reservoir Exploration Technology, Inc., is scheduled
to commence on Feb. 18, 2014, at 1:30 p.m. prevailing Central
Time, before the Honorable D. Michael Lynn in Fort Worth, Texas.
Formal written objections, if any, are due no later than Feb. 11.
In an amended order dated Jan. 7, 2014, the U.S. Bankruptcy Court
for the Northern District of Texas approved the Disclosure
Statement explaining the Plan as containing "adequate information"
as required by 11 U.S.C. Sec. 1125.
The deadline for voting on the Plan is Feb. 11, 2014.
As previously reported by The Troubled Company Reporter, the Plan
incorporates a settlement and compromise with the liquidator on
behalf of parent Reservoir Exploration Technology ASA, under which
RXT ASA has agreed to expeditiously liquidate the Debtor's
Receivable Asset -- which is the Debtor's aliquot share of a
receivable owed by Shell E&P Ireland Limited in the total amount
of US$10.8 million -- and other unliquidated
intercompany receivables by taking an assignment of the Debtor's
interests in these assets and providing immediate Plan funding to
the Debtor to ensure its ability to presently propose and perform
its Plan.
Under the Liquidating Plan, Holders of Allowed Administrative
Claims, Allowed Priority Tax Claims, Class 1-Allowed Priority
Non-Tax Claims, Class 2-Secured Tax Claims, Class 3-Allowed Other
Secured Claims, and Class 4-Allowed General Unsecured Claims are
estimated to recover 100 cents on the dollar.
Holders of Class 5-Subordinated Claims, with an estimated
allowable claim of US$18,544,591, will be paid after satisfaction
of Allowed Claims in senior classes. Holders of Class 6-Equity
Interests will recover nothing.
A full-text copy of the Disclosure Statement dated Nov. 5, 2013,
is available at http://bankrupt.com/misc/RESERVOIRds1105.pdf
About Reservoir Exploration
Reservoir Exploration Technology, Inc., a provider of seismic data
and related geophysical services to the oil and gas industry and
specializing in multi-component sea-floor acquisition of seismic
data, sought protection under Chapter 11 of the Bankruptcy Code on
Nov. 5, 2013 (Case No. 13-45148, Bankr. N.D. Tex.). The case is
assigned to Judge Michael Lynn.
The Debtor's parent, Reservoir Exploration Technology ASA, filed
for bankruptcy protection under the laws of Norway on June 13,
2013. Mr. Jon Skjorshammer of The Selmer Law Firm, with offices
in Oslo, Norway, has been appointed by the Norwegian bankruptcy
court as the liquidator for RXT ASA in the Parent's Foreign
Bankruptcy Case.
The Debtor's counsel are Jay Ong, Esq., Joseph J. Wielebinski,
Esq., and Thomas D. Berghman, Esq., at Munsch Hardt Kopf & Harr,
P.C., in Dallas, Texas. Lain Faulkner & Co., P.C., serves as
financial advisor, and Jason A. Rae acts as chief restructuring
officer.
The petition was signed by Mr. Rae. The Debtor's Schedules of
Assets and Liabilities disclosed $13,660,336 in assets and
$18,823,697 in liabilities.
RHYTHM AND HUES: Liquidating Plan Declared Effective Dec. 30
------------------------------------------------------------
Rhythm and Hues, Inc., which provided visual effects ("VFX") and
computer-generated ("CG") animation in more than 150 feature
films, including Babe, The Golden Compass, The Chronicles of
Narnia, and Life of Pi, won approval of a liquidating Chapter 11
plan last month and had the Plan declared effective.
The Joint Chapter 11 Plan of Liquidation, which was proposed by
Rhythm and Hues and the Official Committee of Unsecured Creditors
appointed in its bankruptcy case, was confirmed by the Bankruptcy
Court in Los Angeles, California, in an order dated Dec. 13, 2013.
The Plan became effective on Dec. 30, 2013.
At the end of March 2013, the Debtor sold the business to 34x118
Holdings Inc., an affiliate of competitor Prana Studios Inc. The
buyer agreed to pay $1.2 million cash, take over payment of the
loan financing the Chapter 11 effort, pay defaults on contracts
going along with the sale, and assume liabilities to employees for
as much as $5 million.
On May 24, 2013, the Debtor obtained Court permission to change
its corporate name to AWTR Liquidation, Inc.
As reported in the TCR on Oct. 3, 2013, under the Plan, all
holders of claims against the Debtors, excluding administrative
claims, ordinary course administrative claims, professional fee
claims, U.S. Trustee Fees, and priority claims, are impaired and
are entitled to vote. Holders of general unsecured claims will
each become a holder of a liquidation trust interest and will
receive from the Liquidation Trust a Pro Rata share of the
Liquidation Net Proceeds based on the amount of the Liquidation
Trust Interest to the extent provided in the Plan.
A full-text copy of the Disclosure Statement, dated Sept. 24,
2013, is available at http://bankrupt.com/misc/RHYTHMds0924.pdf
Peter Kravitz has been named the Liquidation Trustee. He may be
reached at:
AWTR Liquidation Trust
c/o Solution Trust
Attn: Peter Kravitz, Liquidation Trustee
29209 Canwood St., Suite 210
Agoura Hills, CA 91301
Counsel for Liquidation Trustee is:
Gary E. Klausner, Esq.
STUTMAN TREISTER & GLATT PC
1901 Avenue of the Stars, 21st Floor
Los Angeles, CA 90067
E-mail: gklausner@stutman.com
Stutman Treister & Glatt PC also served as counsel to the official
committee of unsecured creditors.
Pursuant to the Notice of the Plan effective date, any claim
against the Debtor for damages arising from the rejection of an
executory contract or unexpired lease under the Plan must be filed
with the Court and served upon counsel to the Liquidation Trust by
Jan. 29, 2014.
All requests for payment of an Administrative Claim, except for
U.S. Trustee Fees, Professional Fee Claims, Claims subject to 11
U.S.C. Sec. 503(b)(1)(D), and Ordinary Course Administrative
Claims, were to be filed with the Court and served upon counsel to
the Liquidation Trust no later than Jan. 21, 2014.
All objections to the allowance of Administrative Claims subject
the Administrative Claims Bar Date must be filed by parties in
interest by March 24, 2014. The Administrative Claim Objection
Deadline may be extended for a one-time 60-day period by the
Liquidation Trustee.
Each Holder of a Professional Fee Claim seeking an award by the
Court of compensation for services rendered or reimbursement of
expenses incurred through and including the Effective Date must
file with the Court and serve on counsel for the Liquidation Trust
and the United States Trustee that Holder's interim (if
applicable) and final applications for the allowance of
compensation for services rendered and the reimbursement of
expenses incurred through the Effective Date no later than Feb.
13, 2014. All objections to the allowance of Professional Fee
Claims through the Effective Date must be filed and served by
March 5, 2014.
About Rhythm and Hues
Rhythm and Hues, Inc., aka Rhythm and Hues Studios Inc., filed its
Chapter 11 petition (Bankr. C.D. Cal. Case No. 13-13775) in Los
Angeles on Feb. 13, 2013, estimating assets ranging from $10
million to $50 million and liabilities ranging from $50 million to
$100 million. Judge Neil W. Bason oversees the case. Brian L.
Davidoff, Esq., C. John M Melissinos, Esq., and Claire E. Shin,
Esq., at Greenberg Glusker, serve as the Debtor's counsel.
Houlihan Lokey Capital Inc., serves as investment banker.
The petition was signed by John Patrick Hughes, president and CFO.
Key clients Universal City Studios LLC and Twentieth Century Fox,
a division of Twentieth Century Fox Film Corporation, provided DIP
financing. They are represented by Jones Day's Richard L. Wynne,
Esq., and Lori Sinanyan, Esq.
The Official Committee of Unsecured Creditors tapped Stutman,
Treister & Glatt Professional Corporation as its counsel. The
firm's Gary E. Klausner, Esq., George C. Webster II, Esq., and
Eric D. Goldberg, Esq., worked on the case.
ROSEVILLE SENIOR: Has Court's Nod to Hire Friedman as Accountant
----------------------------------------------------------------
Roseville Senior Living Properties LLC obtained authorization from
the Hon. Donald H. Steckroth of the U.S. Bankruptcy Court for the
District of New Jersey to employ Friedman LLP as accountant.
As reported by the Troubled Company Reporter on Jan. 2, 2014, the
Debtor requires Friedman LLP to, among other things, assist the
Debtor in preparing the analyses as the Debtor may request to
assist in connection with the Debtor's negotiations, meetings, and
telephone conference with creditors or other parties.
About Roseville Senior
Roseville Senior Living Properties, LLC, filed for Chapter 11
bankruptcy (Bankr. D.N.J. Case No. 13-31198) on Sept. 27, 2013, in
Newark. Judge Donald H. Steckroth presides over the case. Walter
J. Greenhalgh, at Duane Morris, LLP, represents Roseville Senior
Living Properties as counsel. Friedman LLP serves as the Debtor's
accountant.
Roseville Senior Living Properties estimated $10 million to $50
million in assets, and $1 million to $10 million in liabilities.
In its schedules filed with the Bankruptcy Court, the Debtor
indicated total assets and total debts as "Unknown". A copy of
the Schedules is available at:
http://bankrupt.com/misc/rosevillesenior.doc54.pdf
The petition was signed by Michael Edrel, managing director,
Meecorp Capital Markets, Inc.
The United States Trustee for Region 3 appointed Joseph Rodrigues,
State Long Term Care Ombudsman, California Department of Aging, as
the Patient Care Ombudsman in the Debtor's case.
ROSEVILLE SENIOR LIVING: Plan Filing Period Extended to May 25
--------------------------------------------------------------
The Hon. Donald H. Steckroth of the U.S. Bankruptcy Court for the
District of New Jersey has extended, at the behest of Roseville
Senior Living Properties, LLC, the exclusive periods within which
the Debtor may file a plan of reorganization and solicit
acceptances thereto to May 25, 2014, and July 24, 2014,
respectively.
As reported by the Troubled Company Reporter on Jan. 2, 2014, the
Debtor sought the extension as it has not been able to formulate
its reorganization plan and needs additional time to examine all
of its potential exit strategies.
On Jan. 9, 2014, CapitalSource Finance LLC, the holder of first
priority liens and security interests in the primary assets of the
Debtor, filed an objection to the Debtor's extension motion.
CapitalSource complained in its filing that although Debtor has
had over three months to formulate and propose a Plan, the
Debtor's extension motion offered no evidence of any progress and
was devoid of any explanation regarding why any additional time
was needed. "The absence of any explanation for the need for
additional time is more alarming given that on numerous occasions,
including in pleadings filed with and hearings before this Court,
Debtor has repeatedly assured this Court and CapitalSource that
this bankruptcy proceeding (which was filed on the eve of a
judicial foreclosure sale of Debtor's sole material asset -- its
senior living housing facility located in Roseville, California)
would be expeditiously brought to a close with the sale of the
Facility in early 2014," CapitalSource stated.
CapitalSource is represented by:
KATTEN MUCHIN ROSENMAN LLP
Kenneth J. Ottaviano, Esq.
William S. Dorsey, Esq.
Karin H. Berg, Esq.
525 W. Monroe Street
Chicago, IL 60661
Tel: (312) 902-5200
Fax: (312) 902-1061
E-mail: kenneth.ottaviano@kattenlaw.com
william.dorsey@kattenlaw.com
karin.berg@kattenlaw.com
About Roseville Senior
Roseville Senior Living Properties, LLC, filed for Chapter 11
bankruptcy (Bankr. D.N.J. Case No. 13-31198) on Sept. 27, 2013, in
Newark. Judge Donald H. Steckroth presides over the case. Walter
J. Greenhalgh, at Duane Morris, LLP, represents Roseville Senior
Living Properties as counsel. Friedman LLP serves as the Debtor's
accountant.
Roseville Senior Living Properties estimated $10 million to $50
million in assets, and $1 million to $10 million in liabilities.
In its schedules filed with the Bankruptcy Court, the Debtor
indicated total assets and total debts as "Unknown". A copy of
the Schedules is available at:
http://bankrupt.com/misc/rosevillesenior.doc54.pdf
The petition was signed by Michael Edrel, managing director,
Meecorp Capital Markets, Inc.
The United States Trustee for Region 3 appointed Joseph Rodrigues,
State Long Term Care Ombudsman, California Department of Aging, as
the Patient Care Ombudsman in the Debtor's case.
SCOVILL FASTENERS: Accord in Fasteners Antitrust MDL Has Final OK
-----------------------------------------------------------------
District Judge R. Barclay Surrick approved, on a final basis,
Plaintiffs' (i) Proposed Settlements with the Prym, YKK and Coats
Defendants and Proposed Plan for Distribution of Settlement Funds
in In re FASTENERS ANTITRUST LITIGATION, No. 08-md-1912 (E.D.
Pa.).
The multi-district litigation is based on allegations that four
groups of corporate defendants engaged in a global "conspiracy to
fix prices and allocate customers and markets in the United States
and worldwide for 'Fasteners,'" in violation of Section 1 of the
Sherman Act, 15 U.S.C. Sec. 1. The term "Fasteners" includes
zippers, snap fasteners, buttons, hooks, and other similar
products used primarily in the textile, apparel, footwear, and
luggage industries.
The Plaintiffs' Motion seeks final approval of the proposed
settlements involve three groups of Defendants:
(1) the "Prym Defendants," which include William Prym
GmbH & Co. KG, Prym Consumer USA, Inc., Prym Fashion,
Inc., Prym Inovan GmbH & Co., Prym Consumer GmbH,
EP Group S.A., Inovan GmbH & Co. KG, Prym Fashion GmbH,
Prym Consumer Europe GmbH, and William Prym Inc.;
(2) the "YKK Defendants," which include YKK Corporation,
YKK Corporation of America, Inc., YKK (U.S.A.) Inc.,
and YKK Snap Fasteners America, Inc.; and
(3) the "Coats Defendants," which include Coats Holdings,
Ltd., Coats Holdings, Inc., Coats American, Inc.,
d.b.a. Coats North America, Coats North America
de Republica Dominicana, Inc., and Coats & Clark, Inc.
The Plaintiffs -- Fishman & Tobin, Greco Apparel, Inc., Jolna
Apparel Group LLC, and Norman Shatz Co., U.S.A. -- brought the
consolidated class action on behalf of themselves and others who
purchased fasteners in the United States from Defendants from
January 1, 1991, until September 19, 2007.
Scovill Fasteners, Inc. was originally a named Defendant in the
action. On April 19, 2011, Scovill filed for Chapter 11
bankruptcy. Subsequently, on July 30, 2013, the Plaintiffs
voluntarily dismissed the action against Scovill pursuant to
Federal Rule 41(a)(1)(A)(i).
Pursuant to the proposed settlements, the Prym, YKK, and Coats
Defendants will make payments totaling $17.55 million:
$1.1 million from Prym Defendants,
$6.6 million from the YKK Defendants, and
$9.85 million the Coats Defendants
Each Defendant has already made these required payments into an
escrow account that has been accruing interest.
The Court appointed four law firms to serve as Co-Lead Counsel for
the Settlement Class. These firms are Barrack, Rodos & Bacine,
Kaplan, Fox & Kilsheimer LLP, Kohn, Swift & Graf, P.C., and Law
Offices of Bernard M. Gross, P.C.
A fairness hearing was held Jan. 10, 2014.
A copy of the Court's Jan. 24, 2014 Memorandum is available at
http://is.gd/rDOxpHfrom Leagle.com.
About Scovill Fasteners
Scovill Fasteners Inc. -- dba Scovill Apparel Fasteners Inc. and
Scovill Manufacturing Co. -- produced snap fasteners and tack
buttons. It manufactured the majority of its products at its
300,000 square foot factory located in Clarkesville, Georgia.
Clarkesville is also its headquarters location.
Scovill Fasteners along with affiliates filed for Chapter 11
bankruptcy protection (Bankr. N.D. Ga. Lead Case No. 11-21650) in
Gainesville on April 19, 2011. Heather N. Byrd, Esq., and John C.
Weitnauer, Esq., at Alston & Bird LLP, served as the Debtors'
bankruptcy counsel. BMC Group Inc. is the claims and notice
agent.
In its formal schedules, Scovill listed $20,323,118 in total
assets and $250,042,579 in total liabilities.
An Official Committee of Unsecured Creditors was appointed in the
case. The Committee is represented by Greenberg Traurig, LLP, as
its counsel.
The Chapter 11 case was converted July 12, 2011, to a liquidation
in Chapter 7 after Scovill completed the sale of the fasteners
manufacturing business in June that year to Gores Group LLC.
Donald F. Walton, U.S. Trustee, Region 21, appointed S. Gregory
Hays as Chapter 7 trustee in the case to take over the Debtor's
estate. The Chapter 7 Trustee tapped Hays Financial Consulting
LLC as accountants.
SEARS CANADA: To Cut 624 Staff as It Simplifies Labor Structure
---------------------------------------------------------------
David George-Cosh, writing for The Wall Street Journal, reported
that Sears Canada Inc. said on Jan. 29 it will simplify the labor
structure at its stores, resulting in the reduction of another 624
jobs at the struggling retailer.
According to the report, the company said it plans to eliminate a
"midtier level" of employees within its full-line stores, leading
to an average loss of five employees per location. Some related
regional and head-office positions will also be cut.
Earlier this month, Sears Canada said it would outsource its
customer-support business and revamp its logistics operations, the
report said. It said those moves would affect more than 1,600
employees. Those cuts were in addition to nearly 800 job cuts
announced back in November.
"Our current structure results in inefficiencies and barriers to
effective communication among store associates and the changes we
are making are designed to result in better store execution and
consistency of presentation and standards," Chief Executive Doug
Campbell said in a statement, the report cited.
Sears Canada, which is 51%-owned by Sears Holdings Corp., has been
working to turn itself around in a competitive Canadian retail
market made even tougher in recent years by the arrival of Target
Corp. and other U.S.-based retailers, the report further related.
SEDGWICK CLAIMS: S&P Puts 'B' ICR on CreditWatch Negative
---------------------------------------------------------
Standard & Poor's Ratings Services said that it has placed its
ratings, including the 'B' issuer credit rating, on Sedgwick
Claims Management Services Inc. on CreditWatch with negative
implications.
The CreditWatch placement follows Sedgwick CMS' announcement that
private equity firm KKR & Co. L.P., together with management, will
be acquiring majority ownership of the company for about
$2.4 billion. The CreditWatch placement reflects S&P's limited
information regarding the details of the transaction. It also
reflects the possibility that the acquisition will increase debt
in the capital structure, with deterioration in debt leverage and
fixed-charge coverage. As of Sept. 30, 2013, Sedgwick CMS has
adjusted debt of about $1.3 billion and adjusted EBITDA of about
$192 billion.
"We will meet with management, and new ownership, to better
understand the transaction financing, as well any changes in the
direction of the company's business plans," said Standard & Poor's
credit analyst Robert Green. "We expect to resolve the
CreditWatch placement within the next 30 to 60 days. We could
affirm the ratings if the new capital structure results in the
company maintaining credit metrics that we consider appropriate
for the current rating. We could lower the ratings if the
transaction results in significantly weaker credit ratios."
SEETARAM LLC: Case Summary & 10 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Seetaram LLC
DBA Putnam Fuel Depot
2 Grove Street
Putnam, CT 06260
Case No.: 14-20161
Chapter 11 Petition Date: January 29, 2014
Court: United States Bankruptcy Court
District of Connecticut (Hartford)
Judge: Hon. Albert S. Dabrowski
Debtor's Counsel: Peter L. Ressler, Esq.
GROOB, RESSLER & MULQUEEN, PC
123 York Street, Ste 1B
New Haven, CT 06511-0001
Tel: (203) 777-5741
Fax: 203-777-4206
Email: ressmul@yahoo.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Daya Singh, managing member.
A list of the Debtor's 10 largest unsecured creditors is available
for free at http://bankrupt.com/misc/ctb14-20161.pdf
SEGA BIOFUELS: Sobios Objects to $5.5MM Financing Request
---------------------------------------------------------
In the Chapter 11 case of Sega Biofuels LLC, Sobios1 LLC has asked
the Bankruptcy Court in Waycross, Georgia, for a rehearing and has
filed an objection to the Debtor's "Emergency Motion to Allow
Debtor to Incur Post-Petition Secured Debt Pursuant to 11 U.S.C.
Sec. 364(c)(2)."
Sobios requests the Court to grant a rehearing on the financing
motion due to the Debtor's failure to comply with Fed.R.Bankr.P.
Rule 4001 and the inconsistent terms of the proposed promissory
note and loan agreement filed after the original hearing with the
Debtor's other obligations.
Sobios objects to the Debtor's financing request because the
Debtor's Motion "woefully falls short" of the required provisions
Rule 4001(c); the Motion fails to provide creditors notice of what
precisely is being proposed and an opportunity to evaluate the
factual significance and the legal sufficiency of the Debtor's
request; the Motion does not discuss the ability of Biofuels
Holdings, LLC to fund an "improvement loan" for $5,500,000; and
the Motion was not properly served on the 20 largest unsecured
creditors in accordance with Rule 4001(c)(1)(C). Sobios said
Biofuels Holdings should be required to show that it has the
ability to fund the balance of the loan.
As reported by the Troubled Company Reporter on Jan. 20, 2014, the
Debtor has sought Court approval to incur postpetition secured
debt from Biofuels Holdings, the managing member and 99% owner of
the Debtor. The Debtor has secured a loan amounting to
$5,500,000, from its managing member. The proceeds of the so-
called Improvement Loan will be used to:
a. secure a letter of credit for $1,000,000 which will be
used as collateral for a contract with RWE Supply and
Trading GmbH to purchase 100,000 metric tonnes of wood
pellets from the Debtor's facility -- a wood pellet
production facility in Nahunta, Georgia starting in
September 2014; and
b. fund, along with vendor financing the initial improvements
that Debtor has determined are necessary to increase the
production of the facility to approximately 171,000 metric
tonnes of wood pellets per year which include: an increase
in the drying capacity for the facility, improvements to
the woodyard operations, an increase in the capacity of the
Facility to deliver raw material through the Facility's
systems, improvements to the capacity of the facility to
load finished products on to trucks, upgrade the control
systems and monitoring systems, addition of a spark
detection system, re-orientation of the production line
for the Facility, a relocation of the entrance to the
facility and pay for engineering and other soft costs.
The Debtor said in court papers the loan will be secured by
postpetition receivables generated by the Debtor and not pledged
to any other creditor and by any new equipment or other personal
property which are purchased with the proceeds of the Improvement
Loan.
The Improvement Loan will bear interest at the annual rate of
eight percent and is payable interest only until Sept. 15, 2014.
After confirmation of the plan of reorganization, net cash flow
from the facility will be the cash flow that is available after
the payment of all operating expenses, the repayment of any
applicable administrative claims and, any installment on the
various creditor claims under the plan of reorganization except
for the any rights of SOBIOS 1, LLC to distributions of cash flow
from the Debtor.
The TCR also reported that The Heritage Bank, the holder of a
secured claim, filed an objection to Sega Biofuels' financing
request, and asked the Bankruptcy Court to convene a hearing
concerning the interest rate as requested by insider SOBIOS 1,
LLC, and to determine the proper priority of payments.
There's a Court hearing on Feb. 13, 2014, at 10:30 a.m. in
Brunswick, Georgia, to consider the matter.
Sobios is represented in the case by:
Ward Stone, Jr., Esq.
Matthew S. Cathey, Esq.
STONE & BAXTER, LLP
Fickling & Co. Building, Suite 800
577 Mulberry Street
Macon, GA 31201
Telephone: (478) 750-9898
Facsimile: (478) 750-9899
E-mail: wstone@stoneandbaxter.com
mcathey@stoneandbaxter.com
SERVICEMASTER COMPANY: Moody's Confirms B3 CFR; Outlook Negative
----------------------------------------------------------------
Moody's Investors Service confirmed the debt ratings of The
Servicemaster Company and its subsidiaries that had been under
review, including the B3 Corporate Family, B1 secured and Caa1
senior unsecured ratings. This concludes the rating review
initiated on November 15, 2013. The SGL-2 Speculative Grade
Liquidity rating was affirmed. The rating outlook was revised to
negative.
Ratings Rationale
"Moody's expects Servicemaster to remain profitable and to
generate at least $100 million of free cash flow as it continues
to work to stabilize its business, although very high leverage
limits financial flexibility with little room for operational mis-
steps", said Edmond DeForest, Moody's Senior Analyst. Any
disruption in operating or financial performance, especially at
Terminix, could impair value or liquidity and could lead to lower
ratings.
The distribution of TruGreen to the private equity owners without
any debt reduction at Servicemaster highlights aggressive,
shareholder friendly financial policies, which Moody's anticipates
will continue. At this time, valuation comparables suggest
principal is not impaired despite the high debt amount, while good
liquidity, accommodative credit terms and several years before the
next scheduled debt maturity (in 2017) give Servicemaster time to
pursue alternatives for debt reduction.
Moody's anticipates a 3% to 5% revenue growth rate, leading to
revenues above $2.4 billion, and EBITDA margins to expand to about
20% in 2014, driven by price increases and acquisitions at
Terminix and American Home Shield. Servicemaster enjoys solid
market positions and scale in these two key business segments
(pest control and home warranty policies). However, Moody's
expects debt to EBITDA to remain above 8 times until 2015,
reducing to approach an 8 times level through EBITDA expansion
only. Moody's expects Servicemaster to use cash to make
opportunistic acquisitions and to acquire franchises as they
become available, rather than to repay debt. Liquidity is
considered good, with unrestricted cash expected to be above $250
million throughout 2014, although the revolving credit facility
will decline below $200 million in 2014.
The negative ratings outlook reflects Moody's concerns that recent
customer count declines at Terminix could herald a lower than
expected revenue growth rate and diminished profits, threatening
Moody's expectation for at least $100 million of annual free cash
flow in 2014 and reducing Moody's estimate for ServiceMaster's
enterprise value. The ratings could be downgraded if
ServiceMaster's steady revenue and profit growth trajectory is
interrupted, or if free cash flow declines or liquidity is
diminished, or if there is an interruption in the expected decline
in leverage. The outlook could be stabilized if Moody's
anticipates steady revenue and profitability growth in all
businesses, and Servicemaster reduces financial leverage and grows
free cash flow, while maintaining good liquidity and balanced
financial policies.
Issuer: ServiceMaster Company (The)
Confirmations:
Corporate Family Rating, confirmed B3
Probability of Default Rating, confirmed B3-PD
Senior Secured Revolving Credit Facility due Jul 24, 2014,
confirmed B1 (LGD3, 32% from LGD2, 29%)
Senior Secured Revolving Credit Facility due Jan 31, 2017,
confirmed B1 (LGD3, 32% from LGD2, 29%)
Senior Secured Term Loan due Jan 31, 2017, confirmed B1 (LGD3, 32%
from LGD2, 29%)
Senior Unsecured Notes due Feb 15, 2020, confirmed Caa1 (LGD4, 68%
from LGD5, 71%)
Senior Unsecured Notes due Aug 15, 2020, confirmed Caa1 (LGD4, 68%
from LGD5, 71%)
Affirmation:
Speculative Grade Liquidity Rating, affirmed SGL-2
Outlook Action:
Outlook, Changed To Negative From Ratings Under Review
Issuer: ServiceMaster Company (The) (Old)
Confirmations:
Senior Unsecured Notes due Mar 1, 2038, confirmed Caa2 (LGD6, 95%
from 94%)
Senior Unsecured Notes due Mar 1, 2018, confirmed Caa2 (LGD6, 95%
from 94%)
Outlook Action:
Outlook, Changed To Negative From Under Review
Issuer: ServiceMaster Company Limited Partnership (The)
Confirmation:
Senior Unsecured Notes due Aug 15, 2027, confirmed Caa2 (LGD6, 95%
from 94%)
Outlook Action:
Outlook, Changed To Negative From Under Review
The principal methodology used in this rating was Global Business
& Consumer Service Industry Rating Methodology published in
October 2010. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
Servicemaster, based in Memphis, TN, is a national provider of
termite and pest control, home service contracts, cleaning and
disaster restoration, house cleaning, furniture repair and home
inspection products and services through company-owned operations
and franchise licenses. Brands include: Terminix, American Home
Shield (AHS), ServiceMaster Clean, Merry Maids, Furniture Medic
and AmeriSpec.
SFX ENTERTAINMENT: S&P Assigns Prelim. 'B-' CCR; Outlook Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned live entertainment
company SFX Entertainment Inc. (SFXE) a preliminary corporate
credit rating of 'B-'. The outlook is negative.
At the same time, S&P assigned the company's $200 million senior
secured second-lien notes a preliminary issue-level rating of
'B-', with a preliminary recovery rating of '3', indicating S&P's
expectation for meaningful (50% to 70%) recovery for lenders in
the event of a payment default.
"We base the preliminary 'B-' corporate credit rating on our
assessment of SFXE as a company rapidly expanding through
acquisitions in the Electronic Dance Music (EDM) live event niche.
Our business risk assessment of SFXE is "vulnerable," because of
the company's limited track record, acquisitive growth strategy,
lack of business diversity, risks associated with having the
company's founder leading the company's strategy (key personnel
risk), and headline risks related to substance abuse at its
events. We assess the company's financial risk profile as "highly
leveraged," based on SFXE's proposed financing and current free
cash flow deficit," S&P said. S&P's management and governance
assessment of SFXE is "fair."
SFXE is the first live event company to establish significant
scale in the fragmented yet popular EDM live event niche. This
genre is well-established in Europe and has become increasingly
prevalent in the U.S., but nevertheless has aspects of a
generational sensation, in our view. Electronic music is generally
characterized as compositions of digitally produced instrumental
(non-vocal) music tracks. As part of its growth strategy, SFXE
continues to acquire leading EDM event brands and has introduced
existing EDM events to new geographic regions. The company also
aims to build marketing and sponsorship relationships with leading
consumer brands and media companies. S&P regards sponsorships as
effective but highly discretionary marketing spending that is
extremely sensitive to the reputation of affiliated content or
personalities. Separately, the company's digital Beatport
platform has the potential to drive further growth through its
online delivery channel, but has yet to be fully monetized, in
S&P's view.
Despite its position as the leading EDM live event company, there
are significant risks to the business that could limit its future
growth prospects. The company lacks business diversity and is
dependent on the sustained popularity of EDM events. Although
live EDM events have been popular for more than a decade, it
predominately resonates with the millennial generation and may not
have enduring appeal as this generation is known to be the most
open to change. S&P believes that a shift in consumer taste could
hurt SFXE. Also, while the company has quickly acquired leading
EDM brands, it lacks an extended history of consistent operating
performance including the significant acquisitions completed since
mid-2012, and has generated substantial EBITDA losses prior to
2013. If the company's business model proves successful, S&P
believes it will face intense competition from well-established
live entertainment companies that have substantially more
financial resources at their disposal. Additionally, while SFXE
has a management team with experience in the live events industry,
S&P views the company as vulnerable to key personnel risk, as the
company's strategy appears to be largely driven by its founder,
Robert Sillerman. Mr. Sillerman has also guaranteed certain
financial obligations of the company during its start-up phase.
The company also risks, in our opinion, adverse publicity and
potential litigation if substance abuse-related injuries and
fatalities recur at its events, despite its preventive efforts.
S&P believes this could result in withdrawal of sponsorships,
and/or erosion of interest from potential marketing partners, and
even could lead to new regulations that affect its business.
SHELBOURNE NORTH: Chicago Spire Developer Seeks Relief from Suits
-----------------------------------------------------------------
Tom Corrigan, writing for Daily Bankruptcy Review, reported that
Irish developer Garrett Kelleher, the man behind the now-bankrupt
Chicago Spire project, is seeking to use the automatic stay
provision of U.S. bankruptcy law that would buy him enough time to
reorganize and aid in the construction of the 2,000-foot tall
skyscraper.
About Shelbourne North Water Street L.P.
A group of creditors filed an involuntary Chapter 11 petition
against Chicago, Illinois-based Shelbourne North Water Street L.P.
on Oct. 10, 2013 (Bankr. D. Del. Case No. 13-12652). 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.
The Debtor consented on Nov. 8, 2013, to being in Chapter 11
reorganization.
FrankGecker LLP represents the Debtor in its restructuring
efforts.
SOTHEBY'S: Moody's Affirms 'Ba2' CFR; Outlook Stable
----------------------------------------------------
Moody's Investors Service affirmed Sotheby's long term ratings
including its Ba2 Corporate Family Rating. At the same time,
Moody's assigned Sotheby's a Speculative Grade Liquidity rating of
SGL-1 (very good). The rating outlook remains stable. This rating
action follows Sotheby's announcement which outlined its detailed
capital allocation and financial policy plan.
Sotheby's announcement included a $300 million special dividend, a
five year $150 million share repurchase program, a cost reduction
program, and the proposed refinancing of its revolving credit
facility. Sotheby's intends to replace its existing $300 million
revolving credit facility(unrated) with a new $450 million
revolving credit facility dedicated to its finance segment and a
$150 million revolving credit facility dedicated to its agency
(auction) segment. The company intends to initially borrow $170
million under the $450 million revolving credit facility. At the
same time Sotheby's announced that its financial policy will
target a lease adjusted debt to EBITDAR ratio of 3.5 times to 4.0
times through the cycle for its agency segment. Moody's notes that
this target does not include the amount of leverage Sotheby's
intends to borrow against its finance segment which Moody's
estimates will modestly increase this ratio.
Typically, Moody's views special dividends and incremental
borrowings as a credit negative event. However, the affirmation of
Sotheby's Ba2 Corporate Family Rating and its stable outlook
reflect that the special dividend is primarily being funded with
excess cash (both overseas and domestically) and that the share
repurchase program will be spread over five years. Thus the level
of share repurchases in any given year will be fairly modest. In
addition, while Sotheby's is increasing its debt levels by the
initial $170 million borrowing under its revolving credit
facility, its leverage and coverage metrics will only modestly
weaken. Pro forma for the incremental borrowings, Moody's
estimates that debt to EBITDA will increase to about 3.0 times at
fiscal year end from about 2.6 times for the lagging twelve months
ended September 30, 2014. EBITA to interest expense will fall to
about 3.8 times from 3.9 times.
In addition, the affirmation reflects that Moody's views
positively the outlined cost reduction program and Sotheby's
intention to ensure adequate liquidity during a market downturn
given the cyclical nature of the global art market. The
affirmation also acknowledges that Moody's believes Sotheby's
leverage target is appropriate for a Ba2 Corporate Family Rating,
albeit at the lower end of the range tolerated by the rating.
The assignment of the Speculative Grade Liquidity rating of SGL-1
reflects that Moody's expects Sotheby's to maintain very good
liquidity over the next twelve months, after considering the
payment of the $300 million special dividend. Sotheby's cash flow
is highly seasonal and generated in the second and fourth quarter
(spring and fall auction seasons). Pro forma for the proposed
dividend, Moody's expects Sotheby's cash balances to fall to about
$160 million at the end of the first quarter. However, Sotheby's
cash balances will increase to over $400 million by the end of the
year. Sotheby's currently has a $300 million asset- based
revolving credit facility which it intends to replace with two
facilities totaling $600 million. The current $300 million asset-
based revolving credit facility only requires the testing of
financial covenants when availability falls below certain
thresholds. "We do not expect the company to fall below these
thresholds or for its financial covenants to be tested. Sotheby's
has limited alternative sources of liquidity as all of its non-
real estate assets and York Avenue property are pledged," Moody's
said.
The following rating is assigned:
Speculative Grade Liquidity rating of SGL-1
The following ratings are affirmed and LGD point estimates
changed:
Corporate Family Rating at Ba2
Probability of Default Rating at Ba2-PD
$300 million senior unsecured notes due 2022 at Ba3 ( to LGD 5,
81% from 75%)
RATINGS RATIONALE
Sotheby's Ba2 Corporate Family Rating continues to be supported by
the company's strong qualitative factors which include its well
known expertise in a highly specialized industry characterized by
high barriers to entry. The Ba2 also reflects Sotheby's solid
credit metrics with debt to EBITDA of 3.0 times and EBITA to
interest expense of nearly 4.0 times. The Ba2 Corporate Family
Rating considers our view that Sotheby's will maintain enough
liquidity and financial flexibility to weather future cyclical
downturns and the temporary declines in operating performance and
credit metrics that typically accompany these downturns. Also
considered is the company's clearly stated lease adjusted debt to
EBITDAR leverage target of 3.5 times to 4.0 times at its agency
segment through the cycle. However, ratings improvement, is
limited due to our opinion that Sotheby's performance remains
exposed to dramatic swings due to the high cyclicality of the art
auction market.
In addition, the ratings are limited by our concern that Sotheby's
financial policy may continue shift to more of a focus on
returning value to shareholders given the pressure the company is
facing from Marcato Capital and Third Point.
The stable outlook reflects Moody's belief that Sotheby's will
maintain good liquidity and balanced financial policies providing
the company with the ability to weather the high cyclicality of
the international auction market.
A downgrade could result should Moody's become concerned that
Sotheby's presently good liquidity weaken and become insufficient
to support the company through a cyclical downturn in the auction
market. Ratings could also be downgraded should financial policy
become more aggressive as evidenced by Sotheby's increasing its
current 3.5 times to 4.0 times leverage target. Ratings could also
be downgraded should Sotheby's market position erode, or should
Moody's have reason to believe that the auction market is likely
to face a protracted structural downturn.
Given the high cyclicality of the international auction market,
upwards rating pressure is limited. Since there is a direct
correlation between Sotheby's operating performance and the size
of the total auction market, an upgrade would require the auction
market to demonstrate greater stability that results in more
resilience in Sotheby's operating performance. In addition, an
upgrade would require Sotheby's to maintain good liquidity and
balanced financial policies.
Sotheby's ratings were assigned by evaluating factors that Moody's
considers relevant to the credit profile of the issuer, such as
the company's (i) business risk and competitive position compared
with others within the industry; (ii) capital structure and
financial risk; (iii) projected performance over the near to
intermediate term; and (iv) management's track record and
tolerance for risk. Moody's compared these attributes against
other issuers both within and outside Sotheby's core industry and
believes Sotheby's ratings are comparable to those of other
issuers with similar credit risk. Other methodologies used include
Loss Given Default for Speculative-Grade Non-Financial Companies
in the U.S., Canada and EMEA published in June 2009.
Sotheby's, headquartered in New York NY, is one of the two largest
auction houses in the world. Total revenues are over $800 million.
SOTHEBY'S: S&P Lowers CCR to 'BB' Following Capital Allocation
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
Sotheby's following its capital allocation and financial policy
review. S&P lowered the corporate credit rating to 'BB' from
'BB+'. The outlook is negative. S&P removed all of the ratings
from CreditWatch with negative implications, where it placed them
on Sept. 11, 2013.
"We revised our assessment of Sotheby's financial risk profile to
"significant" from "intermediate" given the more aggressive
financial policy committed to returning a significant amount of
excess capital to its shareholders and increased debt borrowings
against its secured loan portfolio," said credit analyst Ana Lai.
"Our rating on Sotheby's also reflects our assessment of its
"fair" business risk profile."
The negative outlook reflects S&P's view that credit measures
could deteriorate further as Sotheby's pursues a more aggressive
financial policy and could increase debt to fund shareholder
returns and/or pursue a sale/leaseback transaction that would lead
to significantly higher lease commitments.
Downside Scenario
S&P could lower the rating if increased debt levels or a
sale/leaseback transaction contributes to total debt/EBITDA
increase toward the low-3.0x area -- for example, if incremental
borrowings approach $200 million under the Finance segment
facility. A downgrade could also occur if operating results are
much weaker than our expectations because of a sharp decline in
demand for art such that EBITDA declines by more than 20%.
Upside Scenario
S&P could revise the outlook to stable if it believes Sotheby's
will maintain a significant financial risk profile supported by
stable debt levels and that the review of its real estate holdings
will not result in a significant increase in its lease
commitments.
SPECIALTY PRODUCTS: PI Committee & FCR Further Finetune Plan
------------------------------------------------------------
The Official Committee of Asbestos Personal Injury Claimants and
the Future Claimants' Representative for Specialty Products
Holding Corp. made some revisions to their Third Amended Plan and
Disclosure Statement for the Debtor.
The Revised Third Amended Plan includes certain revisions
pertaining to asbestos personal injury claims.
The definition of Asbestos PI Trust Contributions is revised to
collectively refer to (i) 100% of the New SPHC Stock; (ii) Pro
Rata net recoveries from any Causes of Action pursued by
Reorganized SPHC; and (iii) any Claims or Cause of Action held
against third parties . . . provided further that, to the extent
any Claim or Cause of Action contributed to the Asbestos PI Trust
results in a recovery, then the net recovery (after fees,
expenses, and other post-Effective Date costs of administration
incurred by the Asbestos PI Trust in connection with such Claim or
Cause of Action) will be distributed Pro Rata among Classes 3, 4,
and 5.
Class 3 is General Unsecured Claims against SPHC, Class 4 are
Asbestos PI Trust Claims, and Class 5 are Intercompany Claims
against SPHC.
A comparative copy of the Revised Third Amended Plan, dated
Dec. 17, 2013, is available for free at:
http://bankrupt.com/misc/SPECIALTYPRODUCTS_1217Planred.pdf
As reported in the Oct. 25, 2013 edition of The Troubled Company
Reporter, the Third Amended Plan proposed by the PI Committee and
the FTCR provides that: (i) SPHC and the Reorganized SPHC
Companies will be separated from their non-Debtor direct or
indirect parent Bondex International as well as all Bondex
International Affiliates and all Asbestos PI Trust Assets will be
contributed to the Asbestos PI Trust; (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 the Asbestos PI Trust in accordance with the Asbestos
PI Trust Distribution Procedures; and (v) current SPHC Equity
Interests will be cancelled, annulled, and extinguished.
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., Zachary
I. Shapiro, Esq., Paul N. Heath, Esq., and Tyler D. Semmelman,
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.
On May 14, 2012, the Official Committee of Unsecured Creditors and
the Future Claimants' Representative filed a Joint Plan for the
Debtors. Since then, the Plan has undergone three revisions --
with the second revision filed on Aug. 2, 2013 and the third
revision filed on Oct. 15 being a plan only for Specialty Products
Holdings Corp.
Counsel to the Official Committee of Asbestos PI Claimants are
Natalie D. Ramsey, Esq., and Mark A. Fink, Esq. of Montgomery,
Mccracken, Walker & Rhoads, LLP, in Wilmington Delaware, and Mark
B. Sheppard, Esq. of the firm's Philadelphia, Pennsylvania
division.
Counsel to the Future Claimants' Representative are James L.
Patton, Jr., Esq., Edwin J. Harron, Esq., Edmon Morton, Esq.,
Sharon Zieg, Esq., and Erin Edwards, Esq. of Young Conaway
Stargatt & Taylor LLP, in Wilmington, Delaware.
SPIG INDUSTRY: Copeland Law Okayed as Counsel
---------------------------------------------
The U.S. Bankruptcy Court for the Western District of Virginia
entered an order resolving the U.S. Trustee's objection to SPIG
Industry LLC's request to employ Copeland Law Firm, P.C., as its
counsel. The objection is withdrawn without prejudice and the
application to employ counsel is granted.
As reported by the Troubled Company Reporter on Nov. 8, 2013, the
U.S. Trustee was objecting to the proposed employment of Robert
T. Copeland, Esq., a member of the firm. The U.S. Trustee said
Mr. Copeland established a pattern of, among other things, taking
actions and providing assistance to clients that brings disrepute
upon the bankruptcy system; advising clients regarding actions
that hinder, delay, or defraud creditors and trustees; failing to
properly assist clients in filing accurate documents, and failing
to properly prosecute their cases; all in violation of certain
applicable ethical rules. Additionally, Copeland's has
demonstrated an inability to comply with the duties imposed upon
him as counsel.
The parties have settled the objection.
About SPIG Industry
SPIG Industry, LLC, filed a Chapter 11 petition (Bankr. W.D. Va.
Case No. 13-71469) in Roanoke on Sept. 11, 2013, and is
represented by Robert Copeland, Esq., at Copeland Law Firm, P.C.,
in Abingdon, Virginia. Bankruptcy Judge William F. Stone, Jr.
oversees the case.
In its petition, SPIG estimated $1 million to $10 million in both
assets and liabilities.
In November 2013, the U.S. Trustee for Region 4 notified the
Bankruptcy Court that the Trustee was unable to appoint an
official committee of unsecured creditors in the Chapter 11 case
of SPIG Industry because the number of persons eligible or willing
to serve on such a committee is presently insufficient to form an
unsecured creditors committee.
STAR DYNAMICS: Wants to Extend Loan Maturity Date to March 31
--------------------------------------------------------------
The Hon. Charles M. Caldwell of the U.S. Bankruptcy Court for the
Southern District of Ohio will hold a final hearing
STAR Dynamics Corporation seeks authorization from the Hon.
Charles M. Caldwell of the U.S. Bankruptcy Court for the Southern
District of Ohio to enter into an agreement with Whitney Bank
extending the maturity date of a certain term loan facility,
through March 31, 2014, as contemplated and referenced in the
interim order authorizing use of cash collateral and authorizing
limited post-petition secured financing with priority as an
allowed administrative expense.
The Court entered the Interim Cash Collateral Order on Jan. 9,
2014. Therein, the Court referenced the Debtor's agreement that
it would, upon request by Whitney, file a motion seeking authority
from the Court for the Debtor to agree to an extension of the
Jan. 31, 2014 maturity date of the Debtor's term loan facility
with Whitney. Whitney has requested that the Debtor file the
contemplated motion and request approval of a maturity date
extension of the Whitney Term Loan through March 31, 2014.
All terms and conditions of the Whitney Term Loan would remain
unchanged except that (a) the final maturity would be extended to
and through March 31, 2014; and (b) pursuant to the terms of the
Interim Cash Collateral Order, the Debtor would continue making,
and Whitney Bank would accept, normal payments of principal and
interest until the maturity date.
In a Jan. 9, 2014 court order, the Debtor was granted interim
authorization to (i) use cash collateral to provide working
capital to the Debtor for use in its operations; and (ii) obtain
dip financing in an aggregate principal amount of up to
$2,525,000, from Thomas Becnel.
The Debtor, in a court filing dated Jan. 7, 2014, submitted that,
as of the commencement of the Chapter 11 case, the indebtedness
due to Whitney in the approximate amount of $12,100,000 is secured
by security interests and liens held by Whitney in all of the
Debtor's present and hereafter acquired accounts, chattel paper,
equipment, general intangibles, inventory and all proceeds and
products therefrom. The Debtor further submitted that, as of the
commencement of the case, a portion of the indebtedness due to
Mr. Becnel, in the approximate amount of $200,000, is secured by a
security interest, junior to Whitney, in virtually all of the
Debtor's present and hereafter acquired assets.
The loan has an interest of 6.00% per annum. The term will expire
upon the earlier of (i) the expiration of the period reflected in
the budget (March 28), or (ii) the closing of any sale of all, or
substantially all of the Debtor's assets pursuant to a transaction
approved in this case. A copy of the budget is available for free
at http://bankrupt.com/misc/STARDYNAMICSbudget.pdf
The respective security interests and liens of Whitney and Mr.
Becnel in cash collateral are continued and re-granted.
A final hearing to consider the cash collateral use and DIP
financing motion will be held on Jan. 29, 2014, at 4:00 p.m.,
Eastern Time.
STAR Dynamics Corp., a developer and provider of radar systems for
the military, filed a petition for Chapter 11 protection on Dec.
10 in Columbus, Ohio, in part to halt a lawsuit by BAE Systems
Plc. The case is In re STAR Dynamics Corp., 13-59657, U.S.
Bankruptcy Court, Southern District of Ohio (Columbus).
STAR DYNAMICS: Claims Bar Date Set for March 16
-----------------------------------------------
Creditors of STAR Dynamics Corp. must file their proofs of debt
not later than March 16, 2014.
STAR Dynamics Corp., a developer and provider of radar systems for
the military, filed a petition for Chapter 11 protection on Dec.
10, 2013, in Columbus, Ohio, in part to halt a lawsuit by BAE
Systems Plc. The case is In re STAR Dynamics Corp., 13-59657,
U.S. Bankruptcy Court, Southern District of Ohio (Columbus).
Thomas R. Allen, Esq., and Richard K. Stovall, Esq., at Allen
Kuehnle Stovall & Neuman LLP serve as the Debtor's bankruptcy
counsel. Michael J. Sullivan, Esq., Russell A. Williams, Esq.,
Julie E. Adkins, Esq., Louis T. Isaf, Esq., and Nanda K. Alapati,
Esq., at Womble Carlyle Sandridge & Rice LLP, serve as special
counsel with respect to litigation involving BAE Systems and with
respect to the completion of prepetition patent work.
In its schedules, the Debtor listed $12,138,334 in total assets
and $50,740,343 in total liabilities.
STAR DYNAMICS: Files Amended List 20 Top Unsecured Creditors
------------------------------------------------------------
STAR Dynamics Corporation submitted a list that identifies its top
20 unsecured creditors.
Creditors with the three largest claims are:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Womble Carlyle Business debt $525,583
Sandridge &Rice LLP
Attn: Thomas W.
Waldrep,Jr.
One West Fourth Street
Winston Salem, NC 27101
Vorys Sater Seymour & Business debt $454,189
Pease
Attn: Richard D. Schuster
52 East Gay Street
Columbus, OH 43215
Germane Systems Business debt $178,730
3680 Centerview Dr.
Chantilly, VA 20151
Wenzel Associates Inc. Business debt $135,220
2215 Kramer Lane
Austin, TX 78758
Herley-CTI, Inc. Business debt $99,000
c/o Danny Puckett
840 Franklin Court SE
Marietta, GA 30067
Gigacom, Inc. Business debt 86,595
103 Waynel Cir SE
Fort Walton Beach,
FL 32548
Pegasi Systems Business debt 55,769
International
1380 Du Mouleur
Trois-Rivieres
Quebec CANADA G8Y 6N9
Stillwater Business debt $55,025
Technologies Inc.
1040 South Dorset Rd.
Troy, OH 45373
Renew Data Business debt $51,714
9500 Arboretum
Blvd L2-120
Austin, TX 78759
Spacek Business debt $40,490
212 East Gutierrez St.
Santa Barbara, CA 93101
Craters & Freighters Business debt $38,805
Global Logistics
331 Corporate Cir, Suite J
Golden, CO 80401
Actions Et Services
Business debt Business debt $32,122
47 Chemin De Loree
De Ssy91450 Soisy
Sur Sein, FRANCE
DY 4 Inc. Business debt $31,790
Attn: 223184
500 Ross Street, 154-0455
Pittsburgh, PA 15262-0001
K&L Microwave Business debt $30,460
2250 Northwood Drive
Salisbury, MD 21801
Hicks Partners LLC Business debt $30,000
21 E. State St.,Ste.
2200 Columbus,
OH 43215
Steve S. Monas Business debt $27,877
200 Mimosa Dr.
Roslyn, NY 11576
RSFi Business debt $27,456
401 East Wilson Bridge
Road
Columbus, OH 43085
Allied Electronics, Inc. Business debt $26,497
7151 Jack Newell Blvd.
S Fort Worth, TX 76118
Dynamic Sensor Systems Business debt $26,000
6160 Olentangy Blvd.
Worthington, OH 43085
Parametric Technology Business debt $24,630
Corp.
127 Technology Drive
Waltham, MA 02453
STAR Dynamics Corp., a developer and provider of radar systems for
the military, filed a petition for Chapter 11 protection on Dec.
10, 2013, in Columbus, Ohio, in part to halt a lawsuit by BAE
Systems Plc. The case is In re STAR Dynamics Corp., 13-59657,
U.S. Bankruptcy Court, Southern District of Ohio (Columbus).
Thomas R. Allen, Esq., and Richard K. Stovall, Esq., at Allen
Kuehnle Stovall & Neuman LLP serve as the Debtor's bankruptcy
counsel. Michael J. Sullivan, Esq., Russell A. Williams, Esq.,
Julie E. Adkins, Esq., Louis T. Isaf, Esq., and Nanda K. Alapati,
Esq., at Womble Carlyle Sandridge & Rice LLP, serve as special
counsel with respect to litigation involving BAE Systems and with
respect to the completion of prepetition patent work.
In its schedules, the Debtor listed $12,138,334 in total assets
and $50,740,343 in total liabilities.
SYNERGY BRANDS: Auditor Can't Escape Suit Over $1-Bil. Fraud
------------------------------------------------------------
Law360 reported that a New York judge shot down Holtz Rubenstein
Reminick LLP's bid to quash a creditor's lawsuit that claims the
auditor should have caught bankrupt food products company Synergy
Brands Inc.'s $1 billion check-kiting scheme that led to the
arrest of its CEO, ruling the creditor has standing to bring the
action.
As previously reported by The Troubled Company Reporter, the
largest secured creditor of Synergy Brands sued Holtz Rubenstein
in New York state court alleging the auditor failed to catch the
company's $1 billion check-kiting scheme, which eventually landed
Synergy's CEO in prison for bank fraud.
Plaintiff Lloyd I. Miller and his company Milfam I LP say they
relied on Holtz Rubenstein's audit reports, which showed the
company's books were in order, when they loaned at least $3
million to Synergy in 2010.
About Synergy Brands
Synergy Brands, Inc. -- http://www.synergybrands.com/-- develops
Internet properties that strategically partner with off-line and
on-line media companies to capture e-commerce markets within the
B2B and B2C Internet arena. The company has developed the
following Web sites: Netcigar.com, BeautyBuys.com, and
DealByNet.com/
Synergy Brands Inc. filed a Chapter 7 liquidation petition (Bankr.
E.D.N.Y. Case No. 11-70412) on Jan. 28 in Central Islip, New York.
Two of its subsidiaries, PHS Group Inc. and SYBR.com Inc., also
filed for bankruptcy under Chapter 7 of Title 11 of the United
States Bankruptcy Code.
According to Bill Rochelle, the bankruptcy columnist for Bloomberg
News, the petition listed assets of $21.7 million and debt
totaling $44.7 million. Liabilities include $23.7 million in
secured debt.
THELEN LLP: Judge Approves Trustee's Deals With 3 Ex-Partners
-------------------------------------------------------------
Law360 reported that a New York bankruptcy judge signed off on a
settlement between the trustee overseeing Thelen LLP's wind-down
and three former equity partners, resolving claims surrounding
their compensation and capital requirements.
According to the report, U.S. Bankruptcy Judge Allan L. Gropper
signed off on Chapter 7 Trustee Yann Geron's deals with former
Thelen partners Robert T. Hall III, Paul C. Lacourciere and
Jonathan E. Polonsky during a court hearing, where no objections
were raised.
The amounts of the settlements are being withheld from the public,
the report related.
About Thelen LLP
Thelen LLP, formerly known as Thelen Reid Brown Raysman & Steiner
-- http://thelen.com/-- is a bi-coastal American law firm in
process of dissolution. It was formed as a product between two
mergers between California and New York-based law firms, mostly
recently in 2006. Its headcount peaked at roughly 600 attorneys
in 2006, and had 500 early in 2008, with offices in eight cities
in the United States, England and China.
In October 2008, Thelen's remaining partners voted to dissolve the
firm. As reported by the Troubled Company Reporter on Sept. 22,
2009, Thelen LLP filed for Chapter 7 protection. The filing was
expected due to the timing of a writ of attachment filed by one of
Thelen's landlords, entitling the landlord to $25 million of the
Company's assets. The landlord won approval for that writ in June
2009, but Thelen could void the writ by filing for bankruptcy
within 90 days of that court ruling. Thelen, according to AM Law
Daily, has repaid most of its debt to its lending banks.
VILLAGE GREEN: Fannie Mae Has Partial Victory in Plan Appeal
------------------------------------------------------------
District Judge S. Thomas Anderson affirmed, in part, and denied,
in part, the decision of the Bankruptcy Court for the Western
District of Tennessee, confirming the Fifth Amended Plan of
Reorganization and Supplemental Amendment proposed by Village
Green I, GP.
Federal National Mortgage Association took an appeal, its second,
from the Confirmation Order.
Fannie Mae raises two issues on appeal. Fannie Mae first argues
that the Bankruptcy Court erroneously found that Village Green
proposed its plan in good faith under 11 U.S.C. Sec. 1129(a)(3).
The Bankruptcy Court determined on remand that Village Green had
shown economic justification for delaying payments to its
accountant and attorney, in part because Village Green did not
know whether it would have access post-confirmation to the
replacement reserve funds held by Fannie Mae. Fannie Mae contends
that this finding was clearly erroneous and inconsistent with the
Bankruptcy Court's previous orders. The Bankruptcy Court awarded
Village Green the funds at the same time that it confirmed the
plan. In fact, the Bankruptcy Court found that Village Green's
plan was feasible largely because Village Green would have control
of the reserve funds. The Bankruptcy Court's finding on remand
then that Village Green had no assurance it would have the reserve
funds fails to account for the Bankruptcy Court's earlier order
that Village Green was entitled to the funds.
Fannie Mae adds that even if some uncertainty existed about the
fate of the reserve funds, Fannie Mae tendered the $2,400 owed to
Village Green's accountant and attorney, simply to satisfy the
claims and remove them from the plan. When these creditors refused
Fannie Mae's tender, Fannie Mae filed a motion with the Bankruptcy
Court to remove the claims from Village Green's schedule of
liabilities. The Bankruptcy Court denied the motion. Moreover,
Village Green simply had no justification for impairing claims
totaling only $2,400. Based on its own feasibility analysis,
Village Green projected gross effective income of $2,012,449.67
and net operating income of $865,696.75 in 2011. According to
Fannie Mae then, there was no economic justification for impairing
the "de minimis claims," and the Court should reverse the
Bankruptcy Court's supplemental order.
In its second assignment of error, Fannie Mae contends that the
Bankruptcy Court erroneously held that the plan modifications to
certain loan covenants were "fair and equitable" to Fannie Mae as
required by Sec. 1129(b)(1). As an initial matter, Fannie Mae
objects that the Bankruptcy Court's analysis of this issue was too
cursory and improperly focused on the fairness of the plan to
Village Green, not Fannie Mae. As for its substantive objections,
Fannie Mae asserts that Village Green is no longer required to
maintain the property "in good repair" and that Fannie Mae has no
recourse or right to demand repairs. The plan further eliminates
Fannie Mae's control over escrow funds and Fannie Mae's right to
approve the property manager and the property management contract.
Instead the plan gives Village Green full discretion over the
appointment of a property manager and permits Village Green to
escrow funds for insurance, taxes, and reserves "independently."
Village Green also has absolute authority to approve the operating
budget and plan for capital expenditures and repairs to the
property. Fannie Mae cautions that such discretion poses a risk
of self-dealing and abuse that could result in harm to the value
of the property and leaves Fannie Mae with no reasonable assurance
that Village Green will adequately maintain the property. Nor does
the new management agreement require Village Green to maintain
books and records for inspection by Fannie Mae. Fannie Mae argues
that both parties' experts testified before the Bankruptcy Court
that these modifications shift risk to Fannie Mae. Fannie Mae
contends that "[t]he plan and the New Management Agreement remove
so many of the protections provided by the Loan Documents and the
original Fannie Mae-approved 2008 Management Agreement that Fannie
Mae's interest in the Property could be severely harmed during the
ten-year term of the plan." For these reasons, Fannie Mae claims
that the plan is not fair and equitable under Sec. 1129(b)(1).
In a Jan. 27, 2014 Opinion available at http://is.gd/CG7xjjfrom
Leagle.com, the District Court held that the Bankruptcy Court
abused its discretion by finding that all of Village Green's
proposed modifications to Fannie Mae's contractual rights were
fair and equitable. Village Green persuasively argues that the
modifications approved in the plan fall into two categories: (1)
transfer of control of funds for taxes, insurance, and capital
expenditures; and (2) the removal of Fannie Mae's right to consent
to the management of the property. Although the plan modified
contractual rights of two distinct types, the Bankruptcy Court
addressed only the equities of giving Village Green greater
control over escrowed funds for property taxes, property
insurance, and improvements and repairs. The Bankruptcy Court
found that Fannie Mae had withheld escrowed funds from Village
Green and "arbitrarily accounted for the funds" in the past, a
determination which would support the Bankruptcy Court's
modification of Fannie Mae's contractual right to control the
escrowed funds. However, the Bankruptcy Court did not address the
modification of Fannie Mae's other contractual rights to consent
to the management of the property. The Bankruptcy Court did not
specifically make an equitable determination about those
modifications or even findings to support such a determination.
The Bankruptcy Court only referred to Village Green's "greater
autonomy" under the plan, which would free it "to be more
efficient in operating the property without interference from
Fannie Mae." The Bankruptcy Court never made any findings to
establish how Fannie Mae had perhaps interfered in management
decisions at the property in the past or how the plan's
modifications to the parties' contracts would prevent such
interference in the future. To the extent that the Bankruptcy
Court concluded that the plan was fair and equitable without
addressing the modification of Fannie Mae's right to consent to
certain aspects of property management, the Bankruptcy Court
abused its discretion. Therefore, the Bankruptcy Court's order is
reversed on this issue.
With respect to the plan's transfer of control over the escrowed
funds, the Court holds that the Bankruptcy Court did not abuse its
discretion in modifying the rights of the parties. Fannie Mae
objects only to Village Green's right under the plan to
"independently escrow funds" and argues that it has no assurance
Village Green will actually fund the escrows or use the funds for
their intended purpose. The District Court finds this argument to
be without merit in light of the plan's other requirements that
Village Green "use the escrowed funds solely for payment for
property taxes and insurance when these expenses become due and
payable." Village Green is also required to provide Fannie Mae
with quarterly accounting and operating reports. Nothing in these
terms of the plan would reasonably suggest that Village Green will
not actually fund the escrows or apply the funds as required. The
Court expresses its doubts about the meaning of the ambiguous
phrase "independently escrow." It is not clear whether this means
Village Green is required to deposit the funds with an independent
escrow agent such as a financial institution or whether Village
Green has discretion over the funds and simply holds them itself
until they are due and payable. The District Court said it has
some misgivings about the fairness and equity of the latter
scenario. To the extent that Village Green continues to propose
the term "independently escrow" as part of its plan in further
proceedings, the Bankruptcy Court should resolve this ambiguity.
Otherwise, the District Court finds no abuse of discretion in the
Bankruptcy Court's equitable determination of the escrowed funds
issue. Therefore, the Bankruptcy Court's order is affirmed on
this point.
The Bankruptcy Court's decision is remanded, in part, for further
proceedings consistent with the District Court's opinion.
The appellate case is, FEDERAL NATIONAL MORTGAGE ASSOCIATION,
Appellant, v. VILLAGE GREEN I, GP, a Nevada General Partnership,
Defendant, No. 13-2643-STA (W.D. Tenn.).
About Village Green I GP
Village Green I GP is the owner of the Village Green Apartments
located at 3450 Fescue Lane, Memphis, Tennessee. The property is
a 314-unit apartment complex situated in the Hickory Hill
neighborhood of Memphis, Tennessee. Village Green sought Chapter
11 protection (Bankr. W.D. Tenn. Case No. 10-24178) on April 16,
2010. John L. Ryder, Esq., at Harris Shelton Hanover Walsh, PLLC,
in Memphis, Tenn., represents the single-asset real estate debtor.
The debtor estimated its assets and debts at less than $10 million
in its bankruptcy petition. Fannie Mae is owed about $9.2
million.
W.R. GRACE: Wins Approval to Enter Into Exit Financing Commitment
-----------------------------------------------------------------
W.R. Grace & Co. cut the rate it is paying on a $900 million loan
to support its bankruptcy exit, according to a report by
Bloomberg News.
The chemical manufacturer will pay interest at 2.25 percentage
points more than the London interbank offered rate on the debt
that includes a $200 million portion denominated in euros,
compared with 2.5 percentage points more than the lending
benchmark initially proposed, the news agency reported, citing
people familiar with the transaction as its source.
The loans will have a 0.75 percent minimum on Libor, according to
the report.
The Debtor said its exit financing is "likely to include" a $700
million senior secured term loan, a $200 million euro equivalent
senior secured term loan, and a $250 million senior secured
delayed draw term loan. It also includes a senior secured
revolving loan of up to $250 million and a senior secured
multi-currency revolving loan of up to a $150 million.
Proceeds of the term loans will be used to pay in full "all
outstanding claims," make cash contributions to the trusts that
were created to pay off asbestos-related claims, and provide
working capital to the reorganized debtors for their business
operations and other general corporate purposes.
The revolving loan likely won't be drawn down on the effective
date of the Chapter 11 plan, but it will be available after
Grace's bankruptcy exit to fund operating needs.
Goldman Sachs Bank USA, Deutsche Bank Securities Inc., Merrill
Lynch, Pierce, Fenner & Smith Inc. and HSBC Securities (USA) Inc.
are arranging the financing. They will be paid about $21.25
million in fees for arranging the loans. If Grace obtains exit
loans from other lenders, it would pay a break-up fee of less
than 1% of the overall size of the exit loan.
Judge Kevin Carey of the U.S. Bankruptcy Court for the District
of Delaware will hold a hearing on Jan. 29 to consider approval
of Grace's request to enter into the exit financing commitment.
Grace anticipates emerging from bankruptcy by the end of the
month.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally. Grace employs
approximately 6,500 people in over 40 countries and had 2012 net
sales of $3.2 billion.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
The Debtors are represented by Adam Paul, Esq., and John Donley,
P.C., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois; Roger
Higgins, Esq., at The Law Offices of Roger Higgins, in Chicago,
Illinois; and Laura Davis Jones, Esq., James E. O'Neill, Esq.,
and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones,
LLP, in Wilmington, Delaware.
The Debtors hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice.
Roger Frankel serves as legal representative for victims of
asbestos exposure who may file claims against W.R. Grace. Mr.
Frankel, a partner at Orrick Herrington & Sutcliffe LLP, replaces
David Austern, who was appointed to that role in 2004. Mr.
Frankel has served as legal counsel for Mr. Austern who passed
away in May 2013. The FCR is represented by Orrick Herrington &
Sutcliffe LLP as counsel; Phillips Goldman & Spence, P.A., as
Delaware co-counsel; and Lincoln Partners Advisors LLC as
financial adviser.
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
W.R. Grace obtained confirmation of a plan co-proposed with the
Official Committee of Asbestos Personal Injury Claimants, the
Official Committee of Equity Security Holders, and the Asbestos
Future Claimants Representative. The Chapter 11 plan is built
around an April 2008 settlement for all present and future
asbestos personal injury claims, and a subsequent settlement for
asbestos property damage claims.
District Judge Ronald Buckwalter on Jan. 31, 2012, entered an
order affirming the bankruptcy court's confirmation of the Plan.
Bankruptcy Judge Judith Fitzgerald had approved the Plan on
Jan. 31, 2011.
W.R. Grace defeated four appeals from approval of the Plan. A
fifth appeal was by secured bank lenders claiming the right to
$185 million of interest at the contractual default rate.
Pursuant to a settlement announced in December 2013, lenders are
to receive $129 million in settlement of the claim for additional
interest.
Bankruptcy Creditors' Service, Inc., publishes W.R. Grace
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000).
W.R. GRACE: Wins Approval of Deal With Bank Lenders
---------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved a
settlement agreement between W.R. Grace & Co. and its debtor
affiliates and certain holders of claims under their prepetition
credit facilities.
Under the deal, the Debtors are required to transfer these
amounts in cash to the administrative agent for the Bank Lender
Group on the effective date of the Chapter 11 plan:
(i) $971 million of principal/undisputed interest through
Dec. 31, 2013;
(ii) $129 million; and
(iii) interest on the plan payment and the settlement payment
for the period from Jan. 1, 2014, to the effective date.
Beginning on Jan. 1, 2014, and continuing until the earlier of
Feb. 1, 2014, or the effective date, simple interest will accrue
on the plan payment and the settlement payment at the rate of
3.25% per annum.
If the effective date has not occurred by Jan. 31, 2014, then
beginning on Feb. 1, 2014, and continuing until the effective
date, simple interest will accrue on the plan payment and the
settlement payment at the rate of 5% per annum. To the extent
the interest paid exceeds the plan rate, the supplemental
interest is paid by Grace in settlement of its objection to the
proofs of claim and appeal filed by the Bank Lender Group.
The lender payment will be in full and final satisfaction of all
amounts due and owing under the prepetition credit facilities,
the proofs of claim, the plan, or otherwise.
With the approval of the settlement agreement, Grace has resolved
the only remaining issue standing in the way of their emergence
from bankruptcy protection.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally. Grace employs
approximately 6,500 people in over 40 countries and had 2012 net
sales of $3.2 billion.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
The Debtors are represented by Adam Paul, Esq., and John Donley,
P.C., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois; Roger
Higgins, Esq., at The Law Offices of Roger Higgins, in Chicago,
Illinois; and Laura Davis Jones, Esq., James E. O'Neill, Esq.,
and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones,
LLP, in Wilmington, Delaware.
The Debtors hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice.
Roger Frankel serves as legal representative for victims of
asbestos exposure who may file claims against W.R. Grace. Mr.
Frankel, a partner at Orrick Herrington & Sutcliffe LLP, replaces
David Austern, who was appointed to that role in 2004. Mr.
Frankel has served as legal counsel for Mr. Austern who passed
away in May 2013. The FCR is represented by Orrick Herrington &
Sutcliffe LLP as counsel; Phillips Goldman & Spence, P.A., as
Delaware co-counsel; and Lincoln Partners Advisors LLC as
financial adviser.
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
W.R. Grace obtained confirmation of a plan co-proposed with the
Official Committee of Asbestos Personal Injury Claimants, the
Official Committee of Equity Security Holders, and the Asbestos
Future Claimants Representative. The Chapter 11 plan is built
around an April 2008 settlement for all present and future
asbestos personal injury claims, and a subsequent settlement for
asbestos property damage claims.
District Judge Ronald Buckwalter on Jan. 31, 2012, entered an
order affirming the bankruptcy court's confirmation of the Plan.
Bankruptcy Judge Judith Fitzgerald had approved the Plan on
Jan. 31, 2011.
W.R. Grace defeated four appeals from approval of the Plan. A
fifth appeal was by secured bank lenders claiming the right to
$185 million of interest at the contractual default rate.
Pursuant to a settlement announced in December 2013, lenders are
to receive $129 million in settlement of the claim for additional
interest.
Bankruptcy Creditors' Service, Inc., publishes W.R. Grace
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000).
W.R. GRACE: Payments to OCPs for 4th Quarter 2013
-------------------------------------------------
W.R. Grace & Co. submitted with the U.S. Bankruptcy Court in
Delaware a statement of amounts paid to ordinary course
professionals from October 1 to December 31, 2013. A full-text
copy of the statement of amounts is available for free at
http://bankrupt.com/misc/grace_ocpfees123113.pdf
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally. Grace employs
approximately 6,500 people in over 40 countries and had 2012 net
sales of $3.2 billion.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
The Debtors are represented by Adam Paul, Esq., and John Donley,
P.C., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois; Roger
Higgins, Esq., at The Law Offices of Roger Higgins, in Chicago,
Illinois; and Laura Davis Jones, Esq., James E. O'Neill, Esq.,
and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones,
LLP, in Wilmington, Delaware.
The Debtors hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice.
Roger Frankel serves as legal representative for victims of
asbestos exposure who may file claims against W.R. Grace. Mr.
Frankel, a partner at Orrick Herrington & Sutcliffe LLP, replaces
David Austern, who was appointed to that role in 2004. Mr.
Frankel has served as legal counsel for Mr. Austern who passed
away in May 2013. The FCR is represented by Orrick Herrington &
Sutcliffe LLP as counsel; Phillips Goldman & Spence, P.A., as
Delaware co-counsel; and Lincoln Partners Advisors LLC as
financial adviser.
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
W.R. Grace obtained confirmation of a plan co-proposed with the
Official Committee of Asbestos Personal Injury Claimants, the
Official Committee of Equity Security Holders, and the Asbestos
Future Claimants Representative. The Chapter 11 plan is built
around an April 2008 settlement for all present and future
asbestos personal injury claims, and a subsequent settlement for
asbestos property damage claims.
District Judge Ronald Buckwalter on Jan. 31, 2012, entered an
order affirming the bankruptcy court's confirmation of the Plan.
Bankruptcy Judge Judith Fitzgerald had approved the Plan on
Jan. 31, 2011.
W.R. Grace defeated four appeals from approval of the Plan. A
fifth appeal was by secured bank lenders claiming the right to
$185 million of interest at the contractual default rate.
Pursuant to a settlement announced in December 2013, lenders are
to receive $129 million in settlement of the claim for additional
interest.
Bankruptcy Creditors' Service, Inc., publishes W.R. Grace
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000).
W.R. GRACE: Future Claimants' Representative Files Disclosures
--------------------------------------------------------------
Roger Frankel, the lawyer appointed to represent victims of
asbestos exposure who may file claims against W.R. Grace & Co.,
disclosed that Kirkland & Ellis LLP employed Orrick, Herrington &
Sutcliffe LLP on a matter regarding a financing, which is
unrelated to the company's bankruptcy case.
Orrick and Kirkland serve as legal counsel to Mr. Frankel and
the company, respectively.
Debra Felder, Esq., at Orrick, made the same disclosure in a
separate declaration she filed with the U.S. Bankruptcy Court in
Delaware.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally. Grace employs
approximately 6,500 people in over 40 countries and had 2012 net
sales of $3.2 billion.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
The Debtors are represented by Adam Paul, Esq., and John Donley,
P.C., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois; Roger
Higgins, Esq., at The Law Offices of Roger Higgins, in Chicago,
Illinois; and Laura Davis Jones, Esq., James E. O'Neill, Esq.,
and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones,
LLP, in Wilmington, Delaware.
The Debtors hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice.
Roger Frankel serves as legal representative for victims of
asbestos exposure who may file claims against W.R. Grace. Mr.
Frankel, a partner at Orrick Herrington & Sutcliffe LLP, replaces
David Austern, who was appointed to that role in 2004. Mr.
Frankel has served as legal counsel for Mr. Austern who passed
away in May 2013. The FCR is represented by Orrick Herrington &
Sutcliffe LLP as counsel; Phillips Goldman & Spence, P.A., as
Delaware co-counsel; and Lincoln Partners Advisors LLC as
financial adviser.
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
W.R. Grace obtained confirmation of a plan co-proposed with the
Official Committee of Asbestos Personal Injury Claimants, the
Official Committee of Equity Security Holders, and the Asbestos
Future Claimants Representative. The Chapter 11 plan is built
around an April 2008 settlement for all present and future
asbestos personal injury claims, and a subsequent settlement for
asbestos property damage claims.
District Judge Ronald Buckwalter on Jan. 31, 2012, entered an
order affirming the bankruptcy court's confirmation of the Plan.
Bankruptcy Judge Judith Fitzgerald had approved the Plan on
Jan. 31, 2011.
W.R. Grace defeated four appeals from approval of the Plan. A
fifth appeal was by secured bank lenders claiming the right to
$185 million of interest at the contractual default rate.
Pursuant to a settlement announced in December 2013, lenders are
to receive $129 million in settlement of the claim for additional
interest.
Bankruptcy Creditors' Service, Inc., publishes W.R. Grace
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000).
W.R. GRACE: Richards Layton Supplements OCP Disclosure
------------------------------------------------------
C. Stephen Bigler, director of Richards Layton & Finger P.A.,
disclosed that the firm served as legal counsel to The Chase
Manhattan Bank under certain credit agreements in connection with
W.R. Grace & Co.'s bankruptcy case before it was retained by the
company as an ordinary course professional.
Richards Layton's employment with the bank concluded in 2004 and
that the work it performed for JPMorgan is unrelated to the work
being performed by the firm for Grace, Mr. Bigler said in a
supplemental affidavit filed with the U.S. Bankruptcy Court in
Delaware.
Mr. Bigler also disclosed that the firm began representing The
Scotts Co. in October 2008 in connection with Grace's bankruptcy
case and a related adversary proceeding. This representation,
however, has already concluded, he further said.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally. Grace employs
approximately 6,500 people in over 40 countries and had 2012 net
sales of $3.2 billion.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
The Debtors are represented by Adam Paul, Esq., and John Donley,
P.C., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois; Roger
Higgins, Esq., at The Law Offices of Roger Higgins, in Chicago,
Illinois; and Laura Davis Jones, Esq., James E. O'Neill, Esq.,
and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones,
LLP, in Wilmington, Delaware.
The Debtors hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice.
Roger Frankel serves as legal representative for victims of
asbestos exposure who may file claims against W.R. Grace. Mr.
Frankel, a partner at Orrick Herrington & Sutcliffe LLP, replaces
David Austern, who was appointed to that role in 2004. Mr.
Frankel has served as legal counsel for Mr. Austern who passed
away in May 2013. The FCR is represented by Orrick Herrington &
Sutcliffe LLP as counsel; Phillips Goldman & Spence, P.A., as
Delaware co-counsel; and Lincoln Partners Advisors LLC as
financial adviser.
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
W.R. Grace obtained confirmation of a plan co-proposed with the
Official Committee of Asbestos Personal Injury Claimants, the
Official Committee of Equity Security Holders, and the Asbestos
Future Claimants Representative. The Chapter 11 plan is built
around an April 2008 settlement for all present and future
asbestos personal injury claims, and a subsequent settlement for
asbestos property damage claims.
District Judge Ronald Buckwalter on Jan. 31, 2012, entered an
order affirming the bankruptcy court's confirmation of the Plan.
Bankruptcy Judge Judith Fitzgerald had approved the Plan on
Jan. 31, 2011.
W.R. Grace defeated four appeals from approval of the Plan. A
fifth appeal was by secured bank lenders claiming the right to
$185 million of interest at the contractual default rate.
Pursuant to a settlement announced in December 2013, lenders are
to receive $129 million in settlement of the claim for additional
interest.
Bankruptcy Creditors' Service, Inc., publishes W.R. Grace
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000).
WARREN RESOURCES: S&P Withdraws 'B-' Corporate Credit Rating
------------------------------------------------------------
Warren Resources Inc. Corporate Credit Rating Withdrawn At The
Company's Request
Standard & Poor's Ratings Services said it withdrew its 'B-'
corporate credit rating on Warren Resources Inc. at the company's
request.
WATERSCAPE RESORT: Court Quashes Assas Subpoena
-----------------------------------------------
Bankruptcy Judge Stuart M. Bernstein granted the request of Salim
Assa and Ezak Assa to quash the subpoena from Pavarini McGovern
LLC, as part of its lawsuit, PAVARINI McGOVERN, LLC, Plaintiff, v.
WATERSCAPE RESORT LLC, et al. Defendants, Adv. Proc. No. 11-02248
(Bankr. S.D.N.Y.).
In 2007, Waterscape embarked on a plan to construct a hotel and
condominium building in Manhattan. Waterscape hired Pavarini as
its general contractor, and Pavarini, in turn, hired
subcontractors to do the work. The project was funded with loans
from U.S. Bank, National Association and USB Capital Resources,
Inc. f/k/a USB Capital Funding Corp. Pavarini was required to
submit monthly requisitions to Waterscape, and during the life of
the project, Pavarini submitted 42 requisitions. Waterscape, in
turn, submitted 40 draw requests to US Bank based on Pavarini's
requisitions. US Bank funded all or part of the 40 draw requests,
but Waterscape did not turn over the entire funded portion to
Pavarini. Pavarini contends that the shortfall, $4,458,616, was
diverted in violation of Article 3-A of the New York Lien Law.
On June 10, 2011, Pavarini commenced the adversary proceeding.
Count II alleged, inter alia, that the "Waterscape Defendants"
diverted the Shortfall, and Pavarini sought to recover the
Shortfall for the benefit of Pavarini and the subcontractors. The
subpoena at issue concerns this claim. According to Pavarini, it
is seeking to trace the diversion of the Shortfall, and argues
that the documents pursuant to the subpoena are relevant to that
inquiry.
Between 2007 and 2011, Michael Jast, CPA and his accounting firm,
Skwiersky, Alpert & Bressler LLP -- Subpoenaed Parties -- rendered
professional accounting and tax services to several affiliated
parties and non-parties -- Targets -- to the adversary proceeding.
The Targets moved to quash the subpoena. Following a hearing, the
Court directed the Subpoenaed Parties to produce the documents
relating to the non-individual Targets to Pavarini, and reserved
decision with respect to the individual Targets, the Assas.
The Assas argue that the documents are protected by the marital
privilege, and have also asserted their personal financial
information should remain private.
The Court instructed the Assas to file a privilege log within
seven days and directed the Subpoenaed Parties to deliver the Assa
documents to the judge's chambers for in camera review. Upon
receipt, the Court reviewed the Assa documents in camera.
Although the Assas did not carry their burden on the issue of the
marital privilege, their motion to quash the subpoena on privacy
grounds is granted, Judge Bernstein said.
"The tax returns are relevant to the subject matter of the
diversion claim to the extent they show that the Assas or any
other non-trust fund beneficiary received trust assets from
Waterscape. However, there is no compelling need to disclose the
Assas' individual tax information to Pavarini. The documents do
not show that the Assas received trust funds from Waterscape.
Furthermore, while the documents include a few references to pass
through additions to and subtractions resulting from Waterscape-
related income or losses attributed to Gemstone for tax purposes,
information regarding transfers from Waterscape to Gemstone is
presumably obtainable from Gemstone's records, which the Court
ordered to be produced, or from Waterscape's general ledger.
Accordingly, the subpoena is quashed as to the Assas," Judge
Bernstein said in a Jan. 28, 2014 Memorandum Decision and Order
available at http://is.gd/2C404hfrom Leagle.com.
Barton Barton & Plotkin LLP's Eric W. Sleeper, Esq. --
esleeper@bartonesq.com -- argues for Pavarini.
Richard J. Migliaccio, Esq., argues for Defendants Salim Assa
a/k/a Solly Assa and Ezak Assa.
About Waterscape Resort
Waterscape Resort LLC, aka Cassa NY Hotel and Residences, filed
for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No.
11-11593) on April 5, 2011. Waterscape acquired property
consisting of three contiguous buildings at 66, 68 and 70 West
45th Street in Manhattan, for the sum of $20 million, and
developed the property into a 45-storey condominium project
including a luxury hotel, a restaurant and luxury residential
apartments. The purchase was financed with a $17 million
acquisition loan and mortgage from U.S. Bank Association. The
Cassa NY Hotel and Residences features 165 hotel rooms, and above
the hotel units, 57 residences.
Brett D. Goodman, Esq., and Lee William Stremba, Esq., at Troutman
Sanders LLP, represented the Debtor as bankruptcy counsel.
Holland & Knight LLP served as its special litigation counsel.
The Debtor disclosed $214,285,027 in assets and $158,756,481 in
liabilities as of the Chapter 11 filing.
Schiff Hardin LLP served as counsel to a 3-member Official
Committee of Unsecured Creditors.
U.S. Bankruptcy Judge Stuart Bernstein confirmed Waterscape's
reorganization plan in July 2011, which calls for repaying much of
the company's debt with proceeds from the $128 million sale of the
hotel section of the development. The Plan was filed May 6, 2011.
WATERSTONE AT PANAMA: Secured Lender Negotiates Claim Under Plan
----------------------------------------------------------------
Waterstone At Panama City Apartments, LLC, filed with the U.S.
Bankruptcy Court for the District of Nebraska a Plan of
Liquidation and accompanying Disclosure Statement.
The Plan proposes to satisfy the Secured Claim of the Debtor's
secured lender, Lenox Mortgage XVII I, LLC, by transferring all of
the Property securing the Claim to Lenox in exchange for a credit
bid of its Secured Claim and $125,000 in cash.
The Secured Claim arises from a non-recourse mortgage note in the
face amount of $25.08 million dated Sept. 4, 2008.
It is anticipated that a portion of the Lenox claim would be an
Unsecured Claim (approximately $3 million). Lenox however has
agreed to waive any distribution on its unsecured deficiency claim
to the extent the Plan is confirmed. Thus, the Pro Rata recovery
to holders of Unsecured Claims will be enhanced.
General Unsecured Claims, estimated to total about $1.3 million,
will receive, on a pro rata basis, a share of the Unsecured
Creditors Fund.
A full-text copy of the Disclosure Statement, dated Jan. 7, 2014,
is available for free at:
http://bankrupt.com/misc/WATERSTONEATPANAMAds.pdf
About Waterstone at Panama City Apartments, LLC
Omaha, Nebraska-based Waterstone at Panama City Apartments, LLC,
is a single-asset real estate entity located in Panama City,
Florida, and owned by a non-profit corporation called Tapestry
Group, Inc., which is the sole member of Waterstone at Panama City
Apartments, LLC.
Waterstone at Panama City Apartments filed for Chapter 11
protection (Bankr. D. Neb. Case No. 13-80751) on April 9, 2013.
Bankruptcy Judge Timothy J. Mahoney presides over the case.
William L. Biggs, Jr., Esq., and Frederick D. Stehlik, Esq., at
Gross & Welch P.C., L.L.O., represent the Debtor in its
restructuring efforts. The Debtor disclosed $26,159,064 in assets
and $26,120,989 in liabilities as of the Chapter 11 filing.
The petition was signed by Edward E. Wilczewski, manager. Mr.
Wilczewski is presently the interim president of Tapestry.
WELLS ENTERPRISES: S&P Revises Outlook to Neg. & Affirms 'B+' CCR
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Le Mars,
Iowa-based Wells Enterprises Inc. to negative from stable. S&P
also affirmed the 'B+' corporate credit rating, as well as the
'B+' issue-level rating on Wells' senior secured notes.
"The outlook revision reflects our belief that continued
deterioration of Wells' operating performance could lead to
weakening credit protection measures," said Standard & Poor's
credit analyst Jeff Burian. "It also reflects our view that
Wells' cash flow protection measures may not strengthen to levels
previously expected over the next year."
The corporate credit rating on Wells reflects S&P's assessment of
the company's business risk profile as "vulnerable" and financial
risk profile as "significant." Wells reported operating
performance for the first nine months of 2013 below the company's
budget and Standard & Poor's expectations, primarily due to a
decline in the overall ice cream category coupled with volume
impacts resulting from the company's price increase on some
products and increased input costs.
WENTWOOD BAYTOWN: Court Closes Chapter 11 Reorganization Case
-------------------------------------------------------------
The Hon. Jeff Bohm of the U.S. Bankruptcy Court for the Southern
District of Texas entered a final decree on Dec. 11, 2013, closing
the Chapter 11 case of Wentwood Baytown, L.P.
The Court on Sept. 19, 2013, entered an order confirming the
Debtor's Third Modified Plan of Reorganization. Pursuant to
Bankruptcy Rule 3022, the estate has been fully administered.
A copy of the Third Amended Plan is available for free at
http://bankrupt.com/misc/WENTWOOD_BAYTOWN_plan_modified.pdf
About Wentwood Baytown, L.P.
Wentwood Baytown, L.P., filed a Chapter 11 petition in Houston,
Texas (Bankr. S.D. Tex. Case No. 13-32151) on April 9. The
petition was signed by Gary M. Gray as president of general
partner. The Debtor estimated assets and debts of at least $10
million. Judge Letitia Z. Paul presides over the case. The
Debtor is represented by Matthew Hoffman, Esq., at Law Offices of
Matthew Hoffman, P.C.
The Debtor, which also uses the names Marina Club Apartments,
Briarwood Apartments, and The Dickinson Arms, owns properties in
Bayton and Dickinson, Texas. The Debtor disclosed $14,599,753 in
assets and $14,813,172 in liabilities as of the Chapter 11 filing.
Judy A. Robbins, U.S. Trustee for Region 7, has notified the
Bankruptcy Court that she was unable to obtain a sufficient number
of eligible creditors interested in serving on the official
committee of unsecured creditors and has therefore been unable to
appoint a proper committee in the case.
WEST ISLE: In Default of CSE Requirements; Trading Halted
---------------------------------------------------------
West Isle Energy Inc. is in default of CSE requirements.
Effective immediately, West Isle is suspended pursuant to CSE
Policy 3. The suspension is considered a Regulatory Halt as
defined in National Instrument 23-101 Trading Rules.
Date: Effective Immediately, January 28, 2014
Symbol: WEI
Headquartered in Calgary, Canada, West Isle Energy Inc. --
http://www.westisleenergy.com-- acquires, explores, develops, and
produces petroleum and natural gas reserves in Western Canada.
Its assets include oil and natural gas producing properties
located in Alberta, Saskatchewan, and British Columbia.
WESTERN CAPITAL: Court Approves Hiring of Hatch Ray as Counsel
--------------------------------------------------------------
Western Capital Partners LLC sought and obtained authority from
the U.S. Bankruptcy Court for the District of Colorado to expand
the scope of employment of Hatch Ray Olsen Sandberg LLC as
counsel.
Western Capital wants Hatch Ray to handle litigation initiated
against First American Title Insurance Company that relates to,
and stems from, certain litigation for which the Bankruptcy Court
has already approved Hatch Ray as counsel for the Debtor.
Hatch Ray will be paid at these hourly rates:
Robert W. Hatch, II, Attorney $375
Brian T. Ray, Attorney $310
Joseph J. Novak, Attorney $240
Jake J. Tiernan, Attorney $190
Hatch Ray will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Robert W. Hatch, II, attorney of Hatch Ray, 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.
Hatch Ray can be reached at:
Robert W. Hatch, II, Esq.
HATCH RAY OLSEN SANDBERG LLC
730 Seventeenth St., Suite 200
Denver, CO 80202
Tel: (303) 298-1800
Fax: (303) 298-1804
About Western Capital
Western Capital Partners LLC filed a bare-bones Chapter 11
petition (Bankr. D. Col. Case No. 13-15760) in Denver on April 10,
2013. The Englewood-based company estimated assets and debt of
$10 million to $50 million. Judge Michael E. Romero presides over
the case.
The Debtor is represented by Jeffrey A. Weinman, Esq., at Weinman
& Associates, P.C. Eason Rohde, LLC, is litigation counsel to the
Debtor. Strauss & Malk, LLP, is also litigation counsel to the
Debtor pertaining to a foreclosure case in the Circuit Court of
Cook County, Illinois.
WILLIAM GREGG: Continuance of Stay Conditioned on House Repairs
---------------------------------------------------------------
Bankruptcy Judge David R. Duncan denied the request of Russell
Brands, LLC, formerly Russell Corporation, for relief from the
automatic stay in William Maxwell Gregg II's Chapter 11 case to
foreclose on a historic home at 486 Rutledge Drive in Flat Rock,
North Carolina.
The North Carolina property, together with two parcels in Richland
County, South Carolina, secures a settlement between the parties.
Russell Brands had sued the Debtor in state court in South
Carolina on a personal guarantee of accounts for merchandise it
supplied. The parties reached a settlement wherein Russell Brands
and the Debtor agreed to a compromise of $1,000,000 as the amount
due. Russell Brands seeks relief from stay with respect to the
North Carolina property only.
The North Carolina property is in a state of disrepair, and the
Debtor's counsel agrees the historic home is a "wreck." The
Debtor does not live on the property but has camped there a few
times and had a party for the local historic society shortly after
he purchased it. The Debtor last visited the property in
September or October 2013.
The Debtor purchased the North Carolina property in 1995 for a
$1,050,000. An expert hired by Russell Brands indicated that the
property has a value of $1,447,026 if it is repaired. The Debtor
agrees with this, but also believes the property could be brought
to a reasonable standard with between $300,000 and $350,000 in
repairs. The Debtor has restored two other historic houses in
different geographic areas than the North Carolina property.
Consequently, assuming it would cost $350,000 to restore the
property, the Debtor testified that the "as is" value is
approximately $1,100,000.
Russell Brands has filed a proof of claim for $1,125,000.
The Debtor has indicated to the Court he does not have funds to
make repairs, and the property is uninsured.
The Debtor objects to Russell Brands' motion, arguing that Russell
Brands is adequately protected as a result of the other pieces of
real property securing its claim. On of the properties in the
South Carolina area is valued at $3,600,000 in the Debtor's
schedules and the other is valued at $326,000,000 in the
schedules. The $3.6 million property may be owned by an entity
other than the Debtor, and the Debtor's schedules indicate there
may be some "environmental questions" related to this property.
As for the $326 million property, this value is based on the
property being used as quarry, a use for which it is not currently
zoned. In 2005 when the Debtor was going through a divorce, the
Debtor valued the $326 million property at $400,000 based on its
use at that time. Part of the $326 million property is in a flood
zone.
According to Judge Duncan, the fact that Russell Brands is
arguably adequately protected by its other collateral does not
mean it has to stand by and watch while it potentially loses this
collateral because of the continuing water damage and lack of
insurance. However, because Russell Brands appears to have some
equity cushion in its other collateral, Judge Duncan said the
Court will not terminate the automatic stay with respect to the
North Carolina property but rather condition its continued
applicability on certain contingencies, including repairing the
roof, as the Debtor testified this would be done within two weeks
of the final hearing on Russell Brands' motion.
Judge Duncan conditioned the continuation of the automatic stay
with respect to the North Carolina property as follows:
1. Because the Debtor indicated he is unable to obtain
insurance on the property, Russell Brands may obtain insurance and
provide a copy of the policy and a statement of the cost for the
policy to Debtor and Debtor's counsel. Within 21 days of
receiving the policy and the statement of cost, the Debtor shall
reimburse Russell Brands for the cost;
2. A qualified individual must be at the property repairing
the roof on the historic house and painting the exterior within
seven days of the entry date of the Court's Order. The Debtor
also must continue to take necessary steps to prevent any further
deterioration of the property during the pendency of this
bankruptcy. Within two days of the commencement of the repairs to
the roof and the painting, the Debtor's counsel must report said
commencement to Russell Brands' counsel; and
3. The Debtor must remain current on the local property taxes
for the property. If the Debtor fails to meet any of these
conditions, Russell Brands may file an affidavit of default
indicating such with the Bankruptcy Court and serve the affidavit
on Debtor and Debtor's counsel. The Debtor shall then have seven
days to object to the affidavit. If an objection is filed, the
Court may hold a hearing. If no objection is filed, the Court will
terminate the stay with respect to the property without further
notice or hearing.
A copy of Judge Duncan's Jan. 21 Order is available at
http://www.leagle.com/decision?q=In%20BCO%2020140123964.xml/IN%20R
E%20GREGG from Leagle.com.
William Maxwell Gregg, II, filed a Chapter 11 petition (Bankr. D.
S.C. Case No. 13-00665) on Feb. 1, 2013.
WILLOW CREEK: Files List of 20 Largest Unsecured Creditors
----------------------------------------------------------
Willow Creek San Martin Building LLC filed with the U.S.
Bankruptcy Court for the District of Nevada a list of its 20
largest unsecured creditors, disclosing:
Name of Creditor Nature of Claim Amount
---------------- --------------- ------
Clayton Mortgage Willow Creek San $17,952,908
3041 W. Horizon Ridge Martin Building
Parkway, Nov. 155
Henderson, NV 89052
KE Farmer Willow Creek San $12,373,342
1600 South Empire Road Martin Building
Salt Lake, UT 84121
Home Care Investments Loan $1,919,000
1697 Havenbrrok Circle
Salt Lake City, UT 84121
SHG Resources, LP $400,000
27442 Portola Parkway, Suite 200
Foothill Ranch, CA 92610
Jim Hammer Loan $343,187
2990 S. Durango Drive
Las Vegas, NV 89117
About Willow Creek San Martin Building
Willow Creek San Martin Building LLC sought Chapter 11 bankruptcy
protection (Bankr. D. Nev. Case No. 14-10041) in Las Vegas, on
Jan. 5, 2014. The Debtor, a Single Asset Real Estate as defined
in 11 U.S.C. Sec. 101(51B), estimated $10 million to $50 million
in assets and debt.
The case is assigned to Judge Laurel E. Davis. The Debtor is
represented by Ogonna M. Atamoh, Esq., and James D. Boyle, Esq.,
at Cotton, Driggs, Walch, Holley, Woloson & Thompson, in Las
Vegas, Nevada.
WILLOW CREEK: Files Schedules of Assets and Liabilities
-------------------------------------------------------
Willow Creek San Martin Building LLC filed with the U.S.
Bankruptcy Court for the District of Nevada its schedules of
assets and liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $32,500,000
B. Personal Property $8,174,094
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $30,726,250
E. Creditors Holding
Unsecured Priority
Claims $0
F. Creditors Holding
Unsecured Non-priority
Claims $2,262,187
----------- -----------
TOTAL $40,674,094 $32,988,437
A copy of the schedules is available for free at
http://bankrupt.com/misc/WILLOWCREEKsal.pdf
About Willow Creek San Martin Building
Willow Creek San Martin Building LLC sought Chapter 11 bankruptcy
protection (Bankr. D. Nev. Case No. 14-10041) in Las Vegas, on
Jan. 5, 2014. The Debtor, a Single Asset Real Estate as defined
in 11 U.S.C. Sec. 101(51B), estimated $10 million to $50 million
in assets and debt.
The case is assigned to Judge Laurel E. Davis. The Debtor is
represented by Ogonna M. Atamoh, Esq., and James D. Boyle, Esq.,
at Cotton, Driggs, Walch, Holley, Woloson & Thompson, in Las
Vegas, Nevada.
XTREME POWER: Proposes March 31 Auction for Assets
--------------------------------------------------
Xtreme Power Inc., and its debtor affiliates seek authority from
the U.S. Bankruptcy Court for the Western District of Texas,
Austin Division, to sell substantially all of their assets by
public auction.
According to the Debtors' counsel, Shelby A. Jordan, Esq., at
Jordan, Hyden, Womble, Culbreth & Holzer, P.C., in Austin, Texas,
consummation of a sale transaction is in the best interests of all
of the Debtors' estates and is a condition of the Debtors' DIP
Credit Facility. Under the terms of the DIP Facility, Horizon
Technology Finance Corporation, the DIP Lender, will serve as an
initial stalking horse bidder that will purchase substantially all
assets for the price of its pre- and postpetition debt, plus the
debt of Silicon Valley Bank, the Debtors' senior-most secured
lender. As of the Petition Date, the outstanding amount under the
Prepetition Note with Horizon was approximately $6.8 million. As
of the Petition Date, the outstanding amount under the Loan
Agreement with Silicon Valley was approximately $500,000.
Mr. Jordan says, neither the Debtors nor the DIP Lender desire to
close the back-up sale transaction since it was intended to
initiate the competitive sale under Section 363 of the Bankruptcy
Code.
The Debtors propose that any qualified bidder interested in
purchasing the assets must submit a bid prior to 4:00 p.m.
prevailing Central time on March 28; provided, however, that if a
substitute DIP closing occurs, the Bid Deadline will be April 28.
If more than one qualified bid has been submitted for the assets,
the Debtors will conduct an auction on March 31, or April 30, in
the event of the substitute DIP closing occurs. The auction will
be organized and conducted by the Debtors at Baker Botts L.L.P.,
at 98 San Jacinto Boulevard, Suite 1500, in Austin, Texas. The
hearing to consider approval of the sale will be held on April 4,
or May 5 if the substitute DIP closing occurs.
In the event that the Debtors do not timely identify a substitute
stalking horse or if a substitute DIP closing does not occur, the
Debtors ask that a hearing be held on Feb. 21, 2014, at 1:30 p.m.,
authorizing (a) the sale of the assets to Horizon free and clear
of all clients, and (b) the assumption and assignment of certain
executory contracts and unexpired leases intended to be acquired
by Horizon as part of any asset acquisition transaction.
A hearing to consider approval of the bidding procedures will be
held on Feb. 6, 2014, at 1:30 p.m.
The Debtors are also represented by Nathaniel Peter Holzer, Esq.,
at JORDAN, HYDEN, WOMBLE, CULBRETH & HOLZER, P.C., in Corpus
Christi, Texas; Antonio Ortiz, Esq., at JORDAN, HYDEN, WOMBLE,
CULBRETH & HOLZER, P.C., in Brownsville, Texas; and Steve Tyndall,
Esq., and Omar J. Alaniz, Esq., at Baker Botts L.L.P., in Austin,
Texas.
Counsel for the DIP Lender is Charles A. Dale III, Esq. --
chad.dale@klgates.com -- and A. Lee Hogewood III, Esq. --
lee.hogewood@klgates.com -- at K&L Gates.
About Xtreme Power
Xtreme Power focuses on the design, engineering, installation, and
monitoring of integrated energy storage systems for power
generators, grid operators and commercial and industrial end
users, among others. Xtreme Power claims to be one of the world's
leading grid-scale power control technology provider capable of
integrating the full spectrum of energy generation sources and
battery technologies.
Xtreme Power Inc. and two affiliates filed Chapter 11 bankruptcy
petitions (Bankr. W.D. Tex. Lead Case No. 14-10096) in Austin,
Texas, on Jan. 22, 2014.
Judge Christopher H. Mott presides over the case.
The Debtors have tapped Jordan Hyden Womble & Culbreth & Holzer,
P.C., as bankruptcy attorneys, Baker Botts L.L.P. as special
counsel, Gordian Group, LLC, as investment banker and financial
advisor.
Xtreme Power Inc. estimated assets of at least $10 million and
liabilities of at least $50 million.
XTREME POWER: Has Interim Authority to Obtain $1.4MM DIP Loans
--------------------------------------------------------------
Judge H. Christopher Mott of the U.S. Bankruptcy Court for the
Western District of Texas, Austin Division, gave Xtreme Power
Inc., and its debtor affiliates interim authority to obtain a
secured postpetition DIP financing facility from Horizon
Technology Finance Corporation or an affiliated designee.
The DIP Lender has agreed to advance $1,479,651 as the "Initial
DIP Availability" under the DIP Term Sheet. The DIP Lender has
agreed to provide up to $2.5 million in DIP financing.
All of the DIP Obligations will constitute allowed superpriority
administrative expense claim. As security for the DIP
Obligations, the DIP Lender is granted a perfected lien on all
collateral, a perfected first-priority lien on all currently-owned
property, a perfected lien on all collateral, subject only to
valid, perfected and non-avoidable liens in existence as of the
Petition Date, and a senior secured perfected lien on all
collateral.
The DIP Superpriority Claim and Liens are subject to a carve out
for the following: (a) allowed administrative expenses and (b)
allowed fees and expenses incurred by Court-approved estate
professionals retained pursuant to Sections 327 and 1103 of the
Bankruptcy Code.
The Debtors are also authorized to grant adequate protection to
Silicon Valley Bank and the DIP Lender on account of their
prepetition liens, claims, and security interests being primed by
the DIP Credit Facility.
The Debtors state in court papers that the DIP Credit Facility
will ensure that they have the funds necessary to pay taxes and
salaries, and to the extent possible, preserve their going concern
value through the contemplated sale process.
A hearing to consider entry of a final order and final approval of
the DIP Credit Facility is scheduled for Feb. 21, 2014, at 1:30
p.m. Objections are due on or before Feb. 19.
Shelby A. Jordan, Esq., Nathaniel Peter Holzer, Esq., and Antonio
Ortiz, Esq., at JORDAN, HYDEN, WOMBLE, CULBRETH & HOLZER, P.C., in
Corpus Christi, Texas, represent the Debtors.
A. Lee Hogewood, III, Esq., at K&L Gates LLP, in Raleigh, North
Carolina, represents the DIP Lender.
About Xtreme Power
Xtreme Power focuses on the design, engineering, installation, and
monitoring of integrated energy storage systems for power
generators, grid operators and commercial and industrial end
users, among others. Xtreme Power claims to be one of the world's
leading grid-scale power control technology provider capable of
integrating the full spectrum of energy generation sources and
battery technologies.
Xtreme Power Inc. and two affiliates filed Chapter 11 bankruptcy
petitions (Bankr. W.D. Tex. Lead Case No. 14-10096) in Austin,
Texas, on Jan. 22, 2014.
Judge Christopher H. Mott presides over the case.
The Debtors have tapped Jordan Hyden Womble & Culbreth & Holzer,
P.C., as bankruptcy attorneys, Baker Botts L.L.P. as special
counsel, Gordian Group, LLC, as investment banker and financial
advisor.
Xtreme Power Inc. estimated assets of at least $10 million and
liabilities of at least $50 million.
XTREME POWER: Inks Stipulation with First Wind
----------------------------------------------
Judge H. Christopher Mott of the U.S. Bankruptcy Court for the
Western District of Texas, Austin Division, approved the
stipulation among Xtreme Power Inc., and its debtor affiliates,
Horizon Technology Finance Corporation or an affiliated designee,
and First Wind Holdings LLC.
First Wind claims rights in or to use certain intellectual
property of the Debtors pursuant to, among other things, a Turnkey
Equipment Purchase and Installation Agreement between Kaheawa Wind
Power II, LLC, and XPower Solutions, LLC, dated November 30, 2010;
a Service and Maintenance Agreement between KWP II and Xtreme
Power Systems, LLC dated November 16, 2011; and a Three-Party
Escrow Service Agreement between KWP II and Xtreme Power Systems,
LLC dated August 26, 2011. First Wind Holdings, LLC, owns the
majority interest in KWP II.
First Wind also asserts certain claims against the Debtors for
damages it alleges were caused by the Debtors when First Wind?s
Kahuku plant located in Kahuku, Hawaii, was destroyed by fire in
August 2012. First Wind has also asserted claims against the
Debtors in connection with damages it alleges were caused by
Debtors at First Wind?s KWP II plant located in Maui, Hawaii.
To the extent, and only to the extent that First Wind has rights
in or rights to use the Debtors? intellectual property, then the
Debtors and the Lender stipulate and agree with First Wind that
the rights created in favor of the Lender under the terms of the
Interim DIP Order are not intended to interfere with First Wind?s
rights to use the Debtors? intellectual property, and that the
Lender has not been granted any priming lien that would allow for
or permit those interference.
To the extent, and only to the extent that First Wind has rights
in and to any insurance policy or its proceeds owned by the
Debtors or which may be property of the Debtors? estates, then the
Debtors and the Lender stipulate and agree with First Wind that
the rights created in favor of the Lender under the terms of the
Interim Financing Order are not intended to interfere with First
Wind?s claimed rights in and to the policy or its proceeds and
Lender has not been granted any priming lien that would allow for
or permit that interference.
A. Lee Hogewood, III, Esq., at K&L GATES LLP, in Raleigh, North
Carolina, represents the DIP Lender. Shelby A. Jordan, Esq., at
JORDAN, HYDEN, WOMBLE, CULBRETH & HOLZER, P.C., in Austin, Texas,
represents the Debtors. Deborah D. Williamson, Esq., at Cox Smith
Matthews Incorporated, in San Antonio, Texas, represents First
Wind.
About Xtreme Power
Xtreme Power focuses on the design, engineering, installation, and
monitoring of integrated energy storage systems for power
generators, grid operators and commercial and industrial end
users, among others. Xtreme Power claims to be one of the world's
leading grid-scale power control technology provider capable of
integrating the full spectrum of energy generation sources and
battery technologies.
Xtreme Power Inc. and two affiliates filed Chapter 11 bankruptcy
petitions (Bankr. W.D. Tex. Lead Case No. 14-10096) in Austin,
Texas, on Jan. 22, 2014.
Judge Christopher H. Mott presides over the case.
The Debtors have tapped Jordan Hyden Womble & Culbreth & Holzer,
P.C., as bankruptcy attorneys, Baker Botts L.L.P. as special
counsel, Gordian Group, LLC, as investment banker and financial
advisor.
Xtreme Power Inc. estimated assets of at least $10 million and
liabilities of at least $50 million.
XTREME POWER: Has Interim Authority to Use SVB Collateral
---------------------------------------------------------
Judge H. Christopher Mott of the U.S. Bankruptcy Court for the
Western District of Texas, Austin Division, gave Xtreme Power
Inc., and its debtor affiliates, interim authority to use the cash
collateral securing their prepetition indebtedness from Silicon
Valley Bank.
The Debtors' cash collateral use is conditioned upon the following
terms:
(a) the Debtors will, as funded from the DIP Financing
Facility, pay to SVB the cure payment of principal and
interest due December 31, 2013, and will pay principal and
interest payments thereafter as set forth in the budget
through April 2014;
(b) SVB will be entitled to have the automatic stay lifted and
annulled to the extent that any demand is made by Duke
Energy on the current Letter of Credit secured by cash
funds of the Debtors, to allow SVB to resort to the cash
deposit which serves as collateral for any draws on the
letter of credit to offset any draw against that letter of
credit to the extent of payment by SVB on the Letter of
Credit, without prejudice to any further request of SVB to
further relief; and
(c) SVB will have a replacement lien on the accruing accounts
and accounts receivables subject to the terms and
provisions of the Interim DIP Order.
A final hearing is set on the motion for Feb. 21, 2014, at 1:30
P.M.
The Debtors are represented by Shelby A. Jordan, Esq., Nathaniel
Peter Holzer, Esq., and Antonio Ortiz, Esq., at JORDAN, HYDEN,
WOMBLE, CULBRETH & HOLZER, P.C., in Corpus Christi, Texas.
SVB is represented by Leo D. Plotki, Esq., at LEVY, SMALL &
LALLAS, in Los Angeles, California.
A full-text copy of the Interim Cash Collateral Order with
accompanying budget is available for free at:
http://bankrupt.com/misc/XTREMEcashcol0127.pdf
About Xtreme Power
Xtreme Power focuses on the design, engineering, installation, and
monitoring of integrated energy storage systems for power
generators, grid operators and commercial and industrial end
users, among others. Xtreme Power claims to be one of the world's
leading grid-scale power control technology provider capable of
integrating the full spectrum of energy generation sources and
battery technologies.
Xtreme Power Inc. and two affiliates filed Chapter 11 bankruptcy
petitions (Bankr. W.D. Tex. Lead Case No. 14-10096) in Austin,
Texas, on Jan. 22, 2014.
Judge Christopher H. Mott presides over the case.
The Debtors have tapped Jordan Hyden Womble & Culbreth & Holzer,
P.C., as bankruptcy attorneys, Baker Botts L.L.P. as special
counsel, Gordian Group, LLC, as investment banker and financial
advisor.
Xtreme Power Inc. estimated assets of at least $10 million and
liabilities of at least $50 million.
XTREME POWER: Employs Jordan Hyden as Bankruptcy Counsel
--------------------------------------------------------
Xtreme Power Inc., and its debtor affiliates, seek authority from
Judge H. Christopher Mott of the U.S. Bankruptcy Court for the
Western District of Texas, Austin Division, to employ Jordan,
Hyden, Womble, Culbreth & Holtzer, P.C., as bankruptcy counsel.
The following Jordan Hyden professionals will take primary roles
in the firm's representation of the Debtors and will be paid the
following hourly rates:
Attorneys Hourly Rate
--------- -----------
Shelby A. Jordan, Esq. $525
Harlin C. Womble, Jr., Esq. $475
Nathaniel Peter Holzer, Esq. $425
Brennon Gamblin, Esq. $300
Susan M. Womble, Esq. $250
Antonio Ortiz, Esq. $250
Legal Assistants Hourly Rate
---------------- -----------
Shaun Jones $155
Chrystal Mason $125
Melba Ramirez $95
Mr. Holzer, a shareholder of Jordan, Hyden, Womble, Culbreth &
Holzer, P.C., assures the Court that his firm is a "disinterested
person" as the term is defined in Section 101(14) of the
Bankruptcy Code and does not represent any interest adverse to the
Debtors and their estates.
Mr. Holzer relates that the Debtors first contacted Jordan Hyden
on or about December 19, 2013, seeking financial advice, and
Jordan Hyden was retained on December 26, 2013. The firm received
an initial retainer of $45,000 on December 26, 2013; another
$56,455, on January 15, 2014; and $130,000 on January 21, 2014.
As of the Petition Date Jordan Hyden holds in its trust account a
retainer of $83,335.
Mr. Holzer discloses that Jordan Hyden was co-counsel with estate
creditor Baker Botts, L.L.P., in two Chapter 11 cases, In Re:
Pacific Lumber Company and In Re: Asarco, LLC. Both of those
bankruptcy cases were concluded with confirmed plans some time ago
and the two law firms are no longer co-counsel in those cases or
on any other matter; however, in the Asarco case, Jordan Hyden and
Baker Botts, L.L.P., are co-appellees in an appeal that is
currently pending in the U.S. Court of Appeals for the 5th
Circuit, which has been fully briefed and argued and is pending
decision from that Court. No referral fee, shared compensation,
or consideration of any kind exists as between Jordan Hyden and
Baker Botts, L.L.P., Mr. Holzer tells the Court.
About Xtreme Power
Xtreme Power focuses on the design, engineering, installation, and
monitoring of integrated energy storage systems for power
generators, grid operators and commercial and industrial end
users, among others. Xtreme Power claims to be one of the world's
leading grid-scale power control technology provider capable of
integrating the full spectrum of energy generation sources and
battery technologies.
Xtreme Power Inc. and two affiliates filed Chapter 11 bankruptcy
petitions (Bankr. W.D. Tex. Lead Case No. 14-10096) in Austin,
Texas, on Jan. 22, 2014.
Judge Christopher H. Mott presides over the case.
The Debtors have tapped Jordan Hyden Womble & Culbreth & Holzer,
P.C., as bankruptcy attorneys, Baker Botts L.L.P. as special
counsel, Gordian Group, LLC, as investment banker and financial
advisor.
Xtreme Power Inc. estimated assets of at least $10 million and
liabilities of at least $50 million.
YRC WORLDWIDE: S&P Raises CCR to 'CCC+', Off Negative Watch
-----------------------------------------------------------
Standard & Poor's Ratings Services said that it raised its ratings
on Overland Park, Kansas-based less-than-truckload (LTL) trucker
YRC Worldwide Inc. (YRCW), including the corporate credit rating
to 'CCC+' from 'CCC', and removed them from CreditWatch negative,
where they were placed on Jan. 10, 2014. At the same time, S&P
assigned its 'CCC+' issue-level rating to YRCW's $700 million term
loan, with a '4' recovery rating, indicating S&P's expectation of
an average (30%-50%) recovery of principal in a payment default
scenario.
"The upgrades reflect YRCW's improved liquidity position and
minimal debt maturities as a result of its proposed refinancing,"
said Standard & Poor's credit analyst Anita Ogbara. Following the
completion of the proposed transaction, YRCW's nearest significant
debt maturity will be in 2019. In addition, S&P expects further
cost savings from the extended labor agreement (which now runs
through 2019) to result in improved operating performance.
The rating on YRCW reflects its substantial off-balance-sheet
contingent obligations related to its multiemployer pension plans
(MEPP; the current underfunding is estimated at $10 billion),
historically weak profitability, and overall highly leveraged
financial profile. S&P considers YRCW's substantial market
position in the LTL sector, which has fairly high barriers to
entry, as a positive rating factor. S&P assess YRCW's business
risk profile as "vulnerable," its financial risk profile as
"highly leveraged," and its liquidity as "less than adequate,"
according to its criteria.
The outlook is developing. "We expect YRCW's proposed refinancing
and labor agreements to address near-term liquidity challenges,
extend debt maturities to 2019, and contribute to improving credit
metrics," said Ms. Ogbara. "We also expect the company to improve
its operations as a result of cost savings and further
rationalization of its LTL network."
S&P could lower the rating if YRCW's earnings and cash flow worsen
such that it believes a default is likely to occur within six
months, absent unexpected favorable events.
S&P believes an upgrade is unlikely, given YRCW's sizeable MEPP
liabilities. However, S&P could raise the rating if the company
successfully generates cost savings as a result of its new labor
agreement, resulting in improving earnings, "adequate" liquidity
under S&P's criteria, FFO to debt in the mid-single-digits percent
area, and EBITDA interest coverage that exceeds 2.5x on a
sustained basis.
* Commercial Bankruptcies Plunged in 2013, New Report Shows
-----------------------------------------------------------
Law360 reported that business bankruptcy petitions continued to
shrink in 2013 as 25 percent fewer were filed last year than in
2012 thanks to more easily accessible credit, according to a
report released on Jan. 23.
The overall trends of commercial bankruptcies in 2013 fall in line
with what experts have been predicting ? that companies are less
inclined to seek bankruptcy as a result of low interest rates and
widespread belt-tightening, according to the Bankruptcydata.com
report.
"Most experts feel that low interest rates, combined with the
ongoing perception that bankruptcy...
* Right to Choose Atty Key as Fallen Firms Seek Fees in NY
----------------------------------------------------------
Law360 reported that as New York's highest court considers whether
defunct law firms' estates may collect hourly fees made by other
firms that take up the collapsed firm's client matters, experts
say the decision will boil down to how heavily the judges value a
client's right to choose its lawyers.
According to the report, the provision of the Uniform Partnership
Act known as the unfinished business rule says collapsed firms are
entitled to "any property, profit or benefit" a partner receives
that derived from the firm after that partner leaves.
* Banks Aid U.S. Forex Probe, Fulfilling Libor Accords
------------------------------------------------------
Tom Schoenberg and David McLaughlin, writing for Bloomberg News,
reported that banks bound by cooperation agreements in an
interest-rate rigging probe are providing a windfall of
information to U.S. prosecutors investigating possible currency
manipulation, according to a Justice Department official and a
person familiar with the matter.
"The cooperation that we have been able to secure as part of our
agreements in the Libor investigation has been very helpful to us
in terms of holding banks' feet to the fire," Mythili Raman, the
acting head of the Justice Department's criminal division, said in
an interview on Jan. 24, the report cited. Raman, who declined to
name the banks or comment further on the probe, said banks are
"providing us with information about any new or ongoing conduct --
even old conduct -- that might be coming to light now."
The accords have compelled some lenders to conduct internal
examinations of their foreign-exchange businesses and share
findings with the Justice Department, speeding the government's
criminal probe into the $5.3 trillion-a-day market, according to a
person with knowledge of the investigation, the report related.
According to the report, some banks are handing over lists of
potential witnesses, making employees available for interviews and
giving up documents without subpoenas, said the person, who asked
not to be identified because the inquiry is confidential.
Investigators are holding weekly and sometimes daily phone calls
with the banks, the person said.
UBS AG, Barclays Plc and Royal Bank of Scotland Group Plc resolved
a Justice Department investigation into how the London interbank
offered rate, or Libor, was set, paying more than $800 million in
criminal fines and penalties and agreeing to cooperate in other
inquiries, the report further related. The three lenders are
among the largest currency traders in the world.
* Colleague of SAC Leader Was Not Alerted to Trades
---------------------------------------------------
Matthew Goldstein, writing for The New York Times' DealBook,
reported that the billionaire investor Steven A. Cohen kept one of
his closest associates at SAC Capital Advisors in the dark about
the hedge fund's rapid selling of a substantial stock position in
two drug companies, just days before the companies reported
disappointing results of a clinical trial for an Alzheimer's drug.
According to the report, Chandler Bocklage, who for nearly a
decade sat next to Mr. Cohen and helped the SAC founder make
trades in his own multibillion-dollar account at the firm, said he
learned about the big trade only after it had happened.
Mr. Bocklage, testifying on Jan. 29 at the insider trading trial
of Mathew Martoma, a former SAC portfolio manager, said that when
the results of the clinical trial were made public in July 2008,
he thought the hedge fund had incurred big losses in shares of
Elan and Wyeth, the report related.
"I was told after the fact that we weren't involved anymore," said
Mr. Bocklage, who was called as a defense witness for Mr. Martoma,
the report cited. When asked how he learned of the trade, Mr.
Bocklage said he believed he was told by Mr. Cohen. "I think Steve
did, but I'm not sure."
Federal prosecutors have charged Mr. Martoma with using inside
information about the clinical trial to help Mr. Cohen's firm
avoid losses and generate profits totaling $276 million in shares
of Elan and Wyeth, the report further related. Prosecutors have
said that Mr. Martoma was involved in the most lucrative insider
trading scheme on record and that the scheme was indicative of a
pattern of insider trading at the hedge fund.
* Payday Lender Agrees to Fine, Refunds
---------------------------------------
Andrew R. Johnson, writing for The Wall Street Journal, reported
that online lender Western Sky Financial LLC has agreed to pay a
$1.5 million fine and refund interest payments to borrowers under
an agreement reached with New York Attorney General Eric
Schneiderman.
According to the report, Mr. Schneiderman had accused the Timber
Lake, S.D., firm, along with affiliates CashCall Inc. and WS
Funding LLC, of charging triple-digit interest rates, a violation
of New York's lending laws.
The settlement, which comes amid a multistate crackdown on
"payday" lenders offering short-term, high-rate loans over the
Internet, requires the firms to stop collecting interest on loans
to residents and refund to borrowers any interest above the 16%
state limit, which could result in as much as $35 million in
relief for New York consumers, a spokesman for Mr. Schneiderman's
office said, the report related.
"As individuals in New York and across the country continue to
face tough economic times, we must keep up the fight against those
who exploit and scam them," Mr. Schneiderman said, the report
cited. "Illegal collectors and lenders, in particular, must pay a
price for their behavior."
An attorney for Western Sky declined to comment, the report
further related.
* Dan Stewart Joins Patton Boggs' Bankruptcy & Restructuring Team
-----------------------------------------------------------------
Patton Boggs LLP has added leading attorney Daniel C. Stewart to
its bankruptcy and restructuring team in Dallas. Mr. Stewart
brings more than four decades of bankruptcy law experience to
Patton Boggs, where he plans to help the firm build a top-flight
bankruptcy practice. He joins the firm from Vinson & Elkins,
where he was a partner in the Dallas office and founder of that
firm's Restructuring and Reorganization practice in 1999.
Mr. Stewart's practice spans all aspects of debtor/creditor
relationships. His major creditor representations have included
agent bank, bank group, and creditor committee work. His borrower
representations have included major out-of-court restructurings of
public and private corporations and significant Chapter 11 debtor
cases and trustee representation. Mr. Stewart has represented
sellers, buyers and bidders in structuring and consummating a
multitude of transactions. He has also served as Bankruptcy
Trustee in hundreds of Chapter 7 and Chapter 11 cases.
"Dan brings tremendous experience and a track record of building
successful practices to Patton Boggs. We are energized to start
the new year by adding a lawyer of his caliber to our team, and we
look forward to introducing him to our clients," said Michael S.
Forshey, managing partner of the Dallas office of Patton Boggs.
The addition of Mr. Stewart continues a string of key hires made
by Patton Boggs over the past several months. In Dallas, these
include business lawyers Gina Betts, Ken Betts and Laurie Lang.
Last fall, Patton Boggs added five attorneys in New York and
Washington DC, which strengthened the firm's capabilities in
public finance, infrastructure and private investment funds.
About Patton Boggs
Patton Boggs -- http://www.pattonboggs.com-- is a leader in
public policy, litigation and business law. The firm's core
practice areas are government relations and lobbying,
administrative and regulatory, commercial and transactional,
litigation and dispute resolution, intellectual property and
international law.
From offices in Anchorage, Dallas, Denver, New Jersey, New York,
and Washington DC, and internationally in Abu Dhabi, Doha, Dubai
and Riyadh, nearly 450 lawyers and professionals provide
comprehensive, practical legal counsel to clients around the
globe.
* Greenberg Glusker Launches New Blog on Bankruptcy Issues
----------------------------------------------------------
Greenberg Glusker on Jan. 28 disclosed that it launched a new blog
that will offer a fresher and more conversational perspective on
timely bankruptcy and insolvency issues than is commonly published
in law firm bankruptcy blogs or newsletters.
Small Enough to Fail: Wisdom and Wit about the World of
Insolvency, located at www.SmallEnoughToFailBlog.com, will be
produced by a team of contributing attorneys from the Bankruptcy,
Reorganization and Capital Recovery Practice at Greenberg Glusker.
Reflecting the firm's culture, the blog will use a fun and
approachable tone in the way it addresses the serious business
content that will be published for readers. For example, a few of
the articles to be published on the blog feature titles such as:
"Our blog is focused on timely bankruptcy and reorganization
issues impacting mid-sized companies that are at risk of
insolvency," said James Behrens, an associate at Greenberg Glusker
and the editor of Small Enough to Fail. "The purpose of the blog
is to educate readers with the latest information affecting their
businesses and to provide them with practical ideas for how to
navigate the legal challenges they encounter."
"Attorneys, business advisors, and corporate executives who are
less familiar with bankruptcy issues need timely information
presented to them in a format that is brief and easy to read,"
said Brian Davidoff , chair of Greenberg Glusker's Bankruptcy,
Reorganization and Capital Recovery Practice. "A blog is the
ideal platform for us to deliver valuable content with a fresh and
entertaining approach."
Greenberg Glusker bankruptcy attorneys provide counsel to clients
on matters ranging from early-stage evaluations and pre-petition
planning to out-of-court reorganizations, Chapter 11 bankruptcy
reorganizations and Chapter 7 liquidations. The firm represents
the many parties involved in reorganization and liquidation
bankruptcies including debtors, creditors, equity holders,
creditors' committees, secured creditors, purchasers and sellers
of distressed assets, and indenture trustees. To better service
clients, the bankruptcy attorneys at Greenberg Glusker closely
collaborate with other attorneys in related areas, such as
securities law, environmental law, corporate law, and mergers and
acquisitions, all in the context of serving middle market
businesses.
About Greenberg Glusker
For nearly 55 years, Greenberg Glusker --
http://www.GreenbergGlusker.com-- has held a unique position in
Los Angeles as a full-service law firm. Greenberg Glusker
maximizes client potential by providing strategic business and
legal counsel in matters involving bankruptcy, corporate,
employment, entertainment, environmental, intellectual property,
litigation, real estate, taxation and trusts and estates.
* BOOK REVIEW: Jacob Fugger the Rich: Merchant and Banker of
Augsburg, 1459-1525
------------------------------------------------------------
Author: Jacob Streider
Publisher: Beard Books
Hardcover: 227 pages
List Price: $34.95
Review by Gail Owens Hoelscher
Buy a copy for yourself and one for a colleague on-line at
http://is.gd/UAP0Zb
Quick, can you work out how much $75 million in sixteenth
century dollars would be worth today? Well, move over Croesus,
Gates, Rockefeller, and Getty, because that's what Jacob Fugger
was worth.
Jacob Fugger was the chief embodiment of early German
capitalistic enterprise and rose to a great position of power in
European economic life. Jacob Fugger the Rich is more than just
a fascinating biography of a powerful and successful
businessman, however. It is an economic history of a golden age
in German commercial history that began in the fifteenth
century. When the book was first published, in 1931, The Boston
Transcript said that the author "has not tried to make an
exhaustive biography of his subject but rather has aimed to let
the story of Jacob Fugger the Rich illustrate the early
sixteenth century development of economic history in which he
was a leader."
Jacob Fugger's family was one of the foremost family in Augsburg
when he was born in 1459. They got their start by importing raw
cotton, by mule, from Mediterranean ports. They later moved into
silk and herbs and, for a long while, controlled much of
Europe's pepper market.
Jacob Fugger diversified into copper mining in Hungary and
transported the product to English Channel and North Sea ports
in his own ships. A stroke of luck led to increased mining
opportunities. Fugger lent money to the Holy Roman Emperor
Maximilian I to help fund a war with France and Italy. Mining
concessions were put up as collateral. The war dragged on, the
Emperor defaulted, and Fugger found himself with a European
monopoly on copper.
Fugger used his extensive business network in service of the
Pope. His branches all over Europe collected payments due the
Vatican and issued letters of credit that were taken to Rome by
papal agents. Fugger is credited with creating the first
business newsletter. He collected news of evolving business
climate as well as current events from his agents all across
Europe and distributed them to all his branches.
Fugger's endeavors wee not universally applauded. The sin of
usury was still hotly debated, and Fugger committed it
wholesale. He was sued over his monopoly on copper. He was
involved in some messy bribes in bringing Charles V to the
throne. And, his lucrative role as banker in the sale of
indulgences, those chits that absolve the buyer of sin, raised
the ire of Martin Luther himself. Luther referred to Fugger
specifically in his Open Letter to the Christian Nobility of the
German nation Concerning the Reform of the Christian Estate just
before being excommunicated in 1521. Fugger went on, however, to
fund Charles V's war on Protestanism and became even richer.
Fugger built many churches and buildings in Augsburg. He was
generous to the poor and designed the world's first housing
project. These buildings and lovely gardens, called the
Fuggerei, are still in use today.
A New York Times reviewer said that Jacob Fugger the Rich, a
book "concerned with the most famous, most capable, and most
interesting of all [the members of the Fugger family] will be as
interesting for the general reader as for the special student of
business history." This observation is just as true today as in
1931, when first made.
Jacob Streider was a professor of economic history at the
University of Munich.
*********
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 by e-mail.
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 the nation's bankruptcy courts. The
list includes links to freely downloadable of these small-dollar
petitions in Acrobat PDF documents.
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.
*********
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, 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 2014. 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 ***