/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/140210.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, February 10, 2014, Vol. 18, No. 40 Headlines 710 LONG RIDGE: CBA Modification Order Revised ALABAMA MARBLE: Voluntary Chapter 11 Case Summary ALBRIGHT COLLEGE: Moody's Confirms Ba1 Rating on 2004 Rev. Bonds ALLY FINANCIAL: Reports $104-Mil. Net Income in Fourth Quarter ALLY FINANCIAL: Profit Drops on Charges Tied to ResCap Exit AMERICAN AXLE: BlackRock Stake at 5.1% as of Dec. 31 AMERICAN ORIENTAL: Has $21.18-Mil. Net Loss in Sept. 30 Quarter AMERICAN REALTY: Court Puts Case Dismissal Bid Under Advisement AMERICAN REALTY: Disclosure Statement Hearing Adjourned ANTELOPE VALLEY: Moody's Cuts Bond Rating to Ba2; Outlook Neg ARMORWORKS ENTERPRISES: May Tap Arnold & Porter as Special Counsel ASPEN GROUP: Issues 7 Million Common Shares ATLANTIC LTD: Bondholders Act After Fire Hits Vanadium Mine AVSTAR AVIATION: Suspending Filing of Reports with SEC BAKERCORP INT'L: Moody's Cuts CFR to B3 & Sec. Debt Rating to B1 BAYTEX ENERGY: Moody's Affirms 'Ba3' CFR; Outlook Developing BERNARD L. MADOFF: Big Banks Oppose Trustee in Safe Harbor Appeal BIG RIVERS: Fitch Affirms 'BB' Rating on Series 2010A Rev. Bonds BIOSCRIP INC.: Moody's Rates $200MM Notes Caa2 & Affirms B3 CFR BON-TON STORES: Morgan Stanley Stake Down to 4.5% as of Dec. 31 BON-TON STORES: BlackRock Stake at 7.2% as of Dec. 31 BONDS.COM GROUP: Long Ridge Plans to Submit Acquisition Proposal BR FESTIVALS: Case Summary & 20 Largest Unsecured Creditors BRIGHTSTAR CORP: Moody's Hikes Sr. Unsecured Notes Rating to Ba1 BROWNSVILLE MD: Disclosure Statement Lacks Info, Pineda Claims BROWNSVILLE MD: Stay Modified, Property at Risk of Foreclosure BUILDERS GROUP: Court Converts Bankruptcy Case to Chapter 7 CAMCO FINANCIAL: Posts $7.8 Million Net Earnings in 2013 CARAUSTAR INDUSTRIES: Moody's Assigns B2 Rating on Add-on Loan CAPITOL BANCORP: Liquidating Plan Declared Effective Feb. 3 CELL THERAPEUTICS: BlackRock Stake at 5.9% as of Dec. 31 CELL THERAPEUTICS: GOG Ends Patient Enrollment Clinical Trial CHARTER COMMUNICATIONS: Fitch Affirms 'BB-' Issuer Default Rating CHEBOYGAN LUMBER: Voluntary Chapter 11 Case Summary CHEVAL GOLF CLUB: Voluntary Chapter 11 Case Summary CITIZENS DEVELOPMENT: Calif. Agency Balks at Amended Plan CITIZENS DEVELOPMENT: Ally Financial Agrees to Vote for Plan CLEVER HANS: Case Summary & 20 Largest Unsecured Creditors CNO FINANCIAL: Moody's Reviews 'Ba3' Debt Rating for Downgrade COMMERCIAL VEHICLE: Moody's Affirms B2 CFR; Alters Outlook to Neg COMMUNITY WEST: Earns $3.1 Million in Fourth Quarter DEALERTRACK TECHNOLOGIES: Moody's Assigns Ba3 CFR; Outlook Stable DELPHI CORP: Moody's Hikes Senior Unsecured Notes Rating From Ba1 DELRAY FLORIDA: Case Summary & 5 Unsecured Creditors DETROIT, MI: Governor Must Defend Emergency Manager Law DOTS LLC: Proposes to Auction Off Assets on Feb. 28 DOTS LLC: Wants Until Aug. 18 to Decide on Unexpired Leases DTE ENERGY: Fitch Affirms BB+ Rating on Jr. Subordinated Notes DUTCH GOLD: Tells Shareholders It Would Clean Up Balance Sheet EAST SAILE PROPERTIES: Case Summary & 3 Top Unsecured Creditors EDDIE BAUER: Seen as Ripe for Auction Block EDISON MISSION: Multiple Parties Object to Second Amended Plan EGPI FIRECREEK: Hires Olde Monmouth as New Transfer Agent ELCOM HOTEL: Revised First Amended Liquidation Plan Confirmed ENCORE CAPITAL: Case Summary & 5 Unsecured Creditors ENVISION SOLAR: Appoints Paul Feller as New Director FERRETERIA TESORO: Case Summary & 20 Largest Unsecured Creditors FISKER AUTOMOTIVE: Investors, Executives Hit by Another Lawsuit FOUR SEASONS MALL: Voluntary Chapter 11 Case Summary FREE LANCE-STAR: Sec. 341(a) Meeting Set for Feb. 28 FREE LANCE-STAR: Can Use Cash Collateral Until Feb. 28 GENERAL MOTORS: Profit Falls 13% in Fourth Quarter GENWORTH MORTGAGE: Moody's Raises IFSR to Ba1; Outlook Positive GETTY IMAGES: Bank Debt Trades at 6% Off GILBERT HOSPITAL: Case Summary & 20 Largest Unsecured Creditors GMX RESOURCES: Cancels Registration of Securities GOLDKING HOLDINGS: Alvarez & Marsal to Provide Forensics Services GREEN MOUNTAIN: Moody's Says Coke Partnership is Credit Positive GULF STATES LONG TERM: La. Judge Won't Dismiss Appeal on Plan GYMBOREE CORP: Bank Debt Trades at 10% Off HALSEY MCLEAN: Trustee Selling Bel Air Home for $10 Million HARTWIG TRANSIT: Case Summary & 20 Largest Unsecured Creditors HEALTH CARE REIT: Fitch Affirms 'BB+' Preferred Stock Rating HELLER EHRMAN: Unfinished-Business Suits Remain Unfinished HERON LAKE: Boulay PLLP Raises Going Concern Doubt IASIS HEALTHCARE: Moody's Affirms Ba3 Sr. Secured Debt Rating JC PENNEY: Bank Debt Trades at 4% Off JOHN D. OIL: Court Denied Approval of Disclosure Statement JOHN D. OIL: Hearing on Show Cause Order Moved to Feb. 24 KGCI INC: Case Summary & 20 Largest Unsecured Creditors KRONOS WORLDWIDE: Moody's Lowers CFR to Ba3 & Rates Sr. Loan 'B1' LEE ENTERPRISES: Operating Income Hikes 1.7% to $40MM in Q1 LILY GROUP: Court OKs Redwine Management as Stalking Horse Bidder LIME ENERGY: Court Grants Preliminary OK on Class Action Pact LIME ENERGY: Chief Financial Officer Jeff Mistarz Quits LOEHMANN'S HOLDINGS: Has Final OK to Use Wells' Cash Collateral LOEHMANN'S HOLDINGS: Court OKs Revised Key Employee Bonus Plan LOUISIANA RIVERBOAT: May Use Cash Collateral Until March 31 M.C.R. ENVIRONMENTAL: Voluntary Chapter 11 Case Summary MAPLE GROVER PARK: Voluntary Chapter 11 Case Summary MEDIA GENERAL: Eaton Vance Stake at 4.5% as of Dec. 31 MEDICURE INC: Incurs C$486,00 Net Loss in Nov. 30 Quarter MFM DELAWARE: Has Until March 24 to Decide on Lease MIDLAND UNIVERSITY: Fitch Affirms B Rating on $16MM Revenue Bonds MONTANA ELECTRIC: Court Clarifies Employment Orders MONTANA ELECTRIC: ACES Terminated Consulting Contract MONTREAL MAINE: Ch. 11 Trustee Rejects Victims' Plan MW GROUP: Faces Off With Bank of America on Exit Plans MW GROUP: Proposed Payment Weyland Compensation Plan Questioned NAVISTAR INTERNATIONAL: BNY Mellon Holds 45,000 Pref. Shares NEW YORK LIBERTY: Fitch Affirms 'BB+' Rating on $10MM Cl. A Notes NORD RESOURCES: Extends Maturity of Conv. Note to July 18 NORTHERN BEEF: Enters Stipulation for $254K of Financing OPENLINK INT'L: Moody's Affirms B3 CFR; Alters Outlook to Stable OSHKOSH CORP: Moody's Affirms Ba3 CFR, Alters Outlook to Positive OVERLAND STORAGE: Cyrus Funds Stake at 66.8% as of Jan. 16 OVERLAND STORAGE: Pinnacle Stake at 8.5% as of Dec. 31 OVERSEAS SHIPHOLDING: Selling 5 Ships to GSO, Euronav for $255MM PAYMENT SYSTEMS: Case Summary & 20 Largest Unsecured Creditors PENNSYLVANIA ECONOMIC: Fitch Affirms BB+ Rating on $169MM Bonds PERPETUAL ENERGY: Moody's Retains Caa1 CFR & Unsec. Notes Rating PHYSICIANS TOTAL CARE: RSF Suit Against Silvermine Dismissed PICCADILLY RESTAURANTS: Lakes Medical's Claim Reclassified PICCADILLY RESTAURANTS: Panel Counters Yucaipa's Plan Objection PICCADILLY RESTAURANTS: GlassRatner Designated as Administrator PLATINUM PROPERTIES: Has Green Light to Sell Wynne Farms Assets PLATINUM PROPERTIES: Settlement With Olive Portfolio Approved PREMIER GOLF: Hearing on Case Dismissal Continued Until March 3 PRM FAMILY: DCT, El Paso & Cigna Object to Private Asset Sale Q MERGER: Moody's Assigns 'B2' CFR & Rates New $875MM Loan 'B1' QUALITY DISTRIBUTION: Eagle Asset Stake at 5% as of Dec. 31 R.E. LOANS: Bankr. Court, 5th Cir. Hand Loss to Wells Fargo RAPID AMERICAN: W.Va. Court Remands "Davis" Suit to State Court REEVES DEVELOPMENT: Iberiabank Objects to Disclosure Statement RESIDENTIAL CAPITAL: Abed-Stephens' $1.75-Mil. Claim Expunged SARKIS INVESTMENTS: Plan Filing Deadline Extended to Feb. 27 SENATE INSURANCE AGENCY: Voluntary Chapter 11 Case Summary SHREE MAHALAXMI: Trust Not Entitled to Pre-Bankr. Default Interest SONY CORP: Slashes Forecast to $1.1 Billion Annual Loss SOUTH EDGE: Case Summary & 15 Largest Unsecured Creditors SOUTH FLORIDA SOD: Feb. 10 Plan Confirmation Hearing Canceled SOUTH FLORIDA SOD: Hammock Credit Bid Pegged at $13.9MM SPIRIT AEROSYSTEMS: Moody's Puts Ratings on Review for Downgrade STEF LLC: Case Summary & 6 Largest Unsecured Creditors STOCKTON, CA: Agrees to Be Sued Over Treatment of Animals SURTRONICS INC: Has Until April 7 to Decide on Lease SWA BASELINE: Section 341(a) Meeting Scheduled for March 13 SWA BASELINE: Case Summary & 10 Unsecured Creditors T AND S RESTAURANTS: Case Summary & 5 Top Unsecured Creditors TASC INC: Moody's Cuts Corp. Family Rating to B3; Outlook Stable TARGUS GROUP: Moody's Cuts CFR & $185MM Sr. Loan Rating to Caa1 TECHOS CARIBE: Case Summary & 20 Largest Unsecured Creditors THREE FORKS: Files Amendment to Q3 2013 Report THUNDERVISION LLC: Ch.7 Trustee May Recoup $63,863 From RW Smith TM REAL ESTATE: Failed to Pay Postpetition Interest, TD Bank Says TRANSGENOMIC INC: To Effect a 1-for-12 Reverse Stock Split TRI-STATE FINANCIAL: 8th Cir. Remands Fee Dispute to Bankr. Court TSU YUE WANG: SDNY Court Won't Dismiss "Wu" FLSA Suit TUSCANY INTERNATIONAL: Meeting to Form Creditors' Panel on Feb. 19 TXU CORP: 2014 Bank Debt Trades at 31% Off TXU CORP: 2017 Bank Debt Trades at 32% Off VILLAGE AT NIPOMO: May Continue Cash Collateral Use Until Feb. 28 VERIDIEN CORP: SEC Revokes Registration of Securities WALTER ENERGY: Bank Debt Trades at 4% Off WAYNE COUNTY, MI: Fitch Maintains BB- Rating on $195MM LTGO Bonds WESTLAKE CENTER: Voluntary Chapter 11 Case Summary WJO INC: Owner Balks at Aumiller Lomax Hiring as Special Counsel XTREME POWER: U.S. Trustee et al. Protest Asset Sale YBA NINETEEN: District Court Affirms Chapter 7 Conversion YORK ENTERPRISES: Case Summary & 14 Unsecured Creditors YRC WORLDWIDE: Teamsters Certifies Ratification of Vote Results YRC WORLDWIDE: Amends Agreements with Solus Alternative, et al. * BAPCPA Likely Limited Personal Bankruptcies * Fitch: Expired Tax Relief Adds Pressure to Troubled Borrowers * Ex-SAC Trader Convicted of Securities Fraud * 4th Cir. Appoints Benjamin Kahn as M.D.N.C. Bankruptcy Judge * BOND PRICING: For Week From Feb. 3 to 7, 2014 ********* 710 LONG RIDGE: CBA Modification Order Revised ---------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey issued an amended order that authorizes 710 Long Ridge Road Operating Company II, LLC, et al., to reject the continuing economic terms of the expired collective bargaining agreements with New England Health Care Employees Union, District 1199, SEIU (Union); and implement the terms and conditions of the Modified 1113(b) proposals. As reported by the Troubled Company Reporter on Feb. 5, the Debtors won bankruptcy court approval to: (i) reject the continuing economic terms of the expired collective bargaining agreements with the New England Health Care Employees Union, District 1199, SEIU under 11 U.S.C. Sec. 1113(c); and (ii) implement the terms of the Debtors' proposal under 11 U.S.C Sec. 1113(b). The Amended Order clarifies the permanent modification approved pursuant to the order. A copy of the amended order is available for free at http://bankrupt.com/misc/710long_cbarevision_order2.pdf Cash Collateral Use Slated to End Feb. 14 The Debtors' ability to use cash collateral in which Capital One asserts an interest is slated to expire Feb. 14, unless further extended. In November 2013, the Bankruptcy Court approved a stipulation and order authorizing 710 Long Ridge Road Operating Company II, LLC, et al., to enter into Amendment No. 2 to debtor-in-possesion credit agreement dated April 26, 2013, between the Debtor and Capital One, National Association. Pursuant to the stipulation, the lender waived existing defaults and continue to provide financing to the borrower until Feb. 14, 2014, or the Reorganization Effective Date (as defined in the Credit Agreement), unless sooner terminated as provided in the Credit Agreement. The Amendment No. 2 also provided that the lender will have fully earned and the borrower will unconditionally pay the lender a non- refundable extension fee in the amount of $30,000. The amendment also provides that the final order and all other loan documents will remain in full force and effect. The lender has agreed to provide financing to the borrower consisting of revolving credit loans in the aggregate amount up to $5,000,000. About 710 Long Ridge Road Operating Company II 710 Long Ridge Road Operating Company II, LLC and four affiliates own sub-acute and long-term nursing care facilities for the elderly in Connecticut. The facilities, which are managed by HealthBridge Management LLC, are Long Ridge of Stamford, Newington Health Care Center, Westport Health Care Center, West River Health Care Center, and Danbury Health Care Center. 710 Long Ridge Road Operating Company II and its affiliates sought Chapter 11 protection (Bankr. D.N.J. Case Nos. 13-13653 to 13- 13657) on Feb. 24, 2013, to modify their collective bargaining agreements with the New England Health Care Employees Union, District 1199, SEIU. The Debtors owe $18.9 million to M&T Bank and $7.99 million on loans from the U.S. Department of Housing and Urban Development Federal Housing Administration. Michael D. Sirota, Esq., Gerald Gline, Esq., David Bass, Esq., and Ryan T. Jareck, Esq., serve as counsel to the Debtors. Logan & Company, Inc. is the claims and notice agent. Alvarez & Marsal Healthcare Industry Group, LLC, is the financial advisor. Porzio, Bromberg & Newman, P.C.'s Robert M. Schechter, Esq., and Rachel Segall, Esq., represents the Official Committee of Unsecured Creditors. The Committee retained EisnerAmper LLP as accountant. Levy Ratner's Suzanne Hepner, Esq., and Ryan J. Barbur, Esq., represent the New England Health Care Workers, District 1199 SEIU. Abby Propis Simms, Esq., Julie L. Kaufman, Esq., Nancy E. Kessler Platt, Esq., Dawn L. Goldstein, Esq., Paul Thomas, Esq., and John McGrath, Esq., at the National Labor Relations Board Special Litigation Branch in Washington, D.C., argue for the National Labor Relations Board. ALABAMA MARBLE: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Alabama Marble Co., Inc. 301 East Marble Valley Road Sylacauga, AL 35151 Case No.: 14-40157 Chapter 11 Petition Date: February 7, 2014 Court: United States Bankruptcy Court Northern District of Alabama (Anniston) Judge: Hon. James J. Robinson Debtor's Counsel: Jennifer Brooke Kimble, Esq. RUMBERGER, KIRK & CALDWELL, P.C. Lakeshore Park Plaza 2204 Lakeshore Dr., Suite 125 Birmingham, AL 35209-6739 Tel: 205-572-4927 Fax: 205-326-6786 E-mail: jkimble@rumberger.com - and - Scott R. Williams, Esq. RUMBERGER, KIRK & CALDWELL, P.C. Lakeshore Park Plaza 2204 Lakeshore Dr., Suite 125 Birmingham, AL 35209-6739 Tel: 205-572-4926 Fax: 205-326-6786 E-mail: swilliams@rumberger.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Stephen Musolino, president. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. ALBRIGHT COLLEGE: Moody's Confirms Ba1 Rating on 2004 Rev. Bonds ---------------------------------------------------------------- Moody's has confirmed its Ba1 rating on Albright College's Series 2004 Revenue bonds issued by Berks County Municipal Authority. This concludes Moody's review for downgrade. The outlook is negative. The rating and outlook incorporate Albright's recent successful remarketing of the Series 2008 bonds, reducing near term liquidity risk, pressured student market and uncertainty regarding a new pricing strategy, and satisfactory debt service coverage. Summary Rating Rationale The Ba1 rating is based on Albright's challenged student demand, with some initial success for FY 2014 from a significant change in pricing strategy, continued satisfactory debt service coverage, and modest levels of liquidity. Confirmation of the Ba1 rating also reflects the recent remarketing of the $25.5 million Series 2008 bonds with private placement bonds held by Santander Bank, N.A. (Baa1/P-2), which eliminates the near-term risk of a potential failed remarketing. The negative outlook captures uncertainty regarding the reputational and financial impact of the college's newly implemented financial aid strategy, combined with tightening of operating performance. Challenges: -- Albright operates in a highly competitive student market with many public and private colleges and universities in Pennsylvania, as evidenced by a low yield on admitted students of 17% for fall 2013. -- Operating revenue declined by $3.6 million, or 6.5%, in FY 2013, due to a significantly lower than expected entering class in fall 2012. This revenue decline resulted in breakeven operating performance (down from 3.2% in FY 2012). Management projects slightly stronger operating performance in FY 2014. -- The ultimate impact of a new financial aid strategy, in which the college guarantees full institutionally-determined financial need (so far, approved for fall 2013 and fall 2014), is uncertain and the college faces continued potential enrollment and net tuition volatility as the plan is implemented over the next several years. -- Monthly liquidity of just over $13 million as of FYE 2013 provided a moderate 104 days cash on hand. Unlike wealthier institutions which meet full financial need, Albright has more limited financial resources to support its new financial aid strategy. -- Very high reliance on student charges, which represented 87% of total operating revenue in FY 2013, heightens the need for Albright to meet its enrollment targets. -- Counterparty risk has increased since the college now essentially relies on one key banking partner, Santander Bank (though 25% participation with Vist Bank), for both its long- term debt strategy and its operating lines. Strengths: -- Cash flow provided satisfactory coverage of debt at 2.0 times in FY 2013 and management demonstrated its willingness and ability to cut expenses in order to balance the budget. Debt service coverage should improve moderately in FY2014 based on year to date projections. -- Albright's new financial aid strategy resulted in application growth and a 5.3% increase in full-time equivalent enrollment for fall 2013. Management expects net tuition revenue growth of approximately $2 million for FY 2014, following a $1.2 million decline last year. -- Continued investment in plant, with 2.0 times capital spending ratio in FY 2012 and FY 2013, is expected to help attract students. Future capital projects will be gift funded. -- Successful remarketing of the Series 2008 bonds and replacement with private placement bonds reduces near-term remarketing risk, though there is a tender feature in October 2018 and the college will need to continue to meet various covenants to avoid acceleration of debt. Outlook The negative outlook reflects Moody's expectation that Albright may be challenged to stabilize its net tuition revenue in the mid- term given the change in its financial aid program, and that a failure to meet enrollment targets and grow tuition could result in cash flow pressure and a draw on financial resources. What Could Make The Rating Go DOWN A downgrade could result from deterioration of operating performance, volatility in enrollment and net tuition revenue, or reduction in financial reserves. What Could Make The Rating Go UP Stabilized enrollment and demonstrated ability to manage and grow net tuition revenue with the new financial aid strategy, combined with ongoing healthy debt service coverage, would result in positive rating pressure. The principal methodology used in this rating was U.S. Not-for- Profit Private and Public Higher Education published in August 2011. ALLY FINANCIAL: Reports $104-Mil. Net Income in Fourth Quarter -------------------------------------------------------------- Ally Financial Inc. on Feb. 6 reported net income of $104 million for the fourth quarter of 2013, compared to net income of $91 million in the prior quarter and net income of $1.4 billion for the fourth quarter of 2012. The company reported core pre-tax income of $142 million in the fourth quarter of 2013, compared to core pre-tax income of $269 million in the prior quarter and core pre-tax income of $103 million in the comparable prior year period. Results for the current quarter were impacted by the $98 million charge taken related to the Consumer Financial Protection Bureau (CFPB) and U.S. Department of Justice (DOJ) settlement. In addition, when excluding repositioning items, the company reported core pre-tax income of $161 million for the quarter. Core pre-tax income reflects income from continuing operations before taxes and original issue discount (OID) amortization expense primarily from legacy bond exchanges. Results for the quarter were driven by continued significant improvement to Ally's cost of funds1 which declined 17 basis points from the prior quarter and 50 basis points from the prior year as a result of deposit growth and continued execution of its liability management strategy. As a result, Ally's full year net financing revenue1 improved 36 percent year-over-year. Additionally, auto earning assets grew 8 percent compared to the prior year period. Results for the Auto Finance operations were impacted by a $98 million charge recorded in the fourth quarter related to the settlement reached with the CFPB and DOJ. For the full year 2013, Ally reported net income of $361 million, compared to net income of $1.2 billion in 2012. Core pre-tax income in 2013 totaled $606 million, compared to core pre-tax income of $850 million in the prior year. Excluding repositioning items, Ally reported core pre-tax income of $850 million for 2013. Full year results were also impacted by the $1.4 billion charge related to the ResCap bankruptcy settlement recorded in the second quarter and lower income from the mortgage operations, following the exit of the mortgage origination and servicing business in the second quarter of 2013. "Ally experienced a landmark year in 2013 with the completion of a multi-year strategic transformation that has permanently changed the direction of the company and enhanced its future prospects," said Chief Executive Officer Michael A. Carpenter. "Ally closed the chapter on its legacy mortgage issues, sold substantially all of its international operations, reduced its higher cost unsecured debt and achieved financial holding company status. Today, Ally has a pristine balance sheet and is focused on its strengths with its leading domestic automotive services and direct banking franchises." Mr. Carpenter continued, "Importantly, in recent months, significant progress was made in repaying the U.S. Treasury, with 89 percent of the investment in Ally having been returned thus far. Ally now has a more normalized capital structure that will further benefit from the elimination of an annual dividend payment of more than $530 million associated with the Mandatorily Convertible Preferred stock repurchase." "Looking ahead, Ally is squarely focused on leveraging the competitive strengths of our two premier franchises, continuing to improve profitability and fully exiting the Troubled Asset Relief Program," Mr. Carpenter concluded. Quarterly and Full Year Operating Results Ally's reporting segments include Automotive Finance, Insurance, Mortgage, and Corporate and Other. As previously reported in the fourth quarter of 2012 and first quarter of 2013, respectively, Ally's international businesses and ResCap's historical results are classified as discontinued operations. Highlights Strategic Actions Ally successfully completed its strategic transformation and is positioned for a full exit from TARP. Auto Finance Insurance Ally Bank Financial Profile Liquidity and Capital Ally's consolidated cash and cash equivalents declined to $5.5 billion as of Dec. 31, 2013, compared to $6.5 billion at Sept. 30, 2013. Included in the Dec. 31 balance are: $1.7 billion at Ally Bank and $976 million at the Insurance business. Ally's total equity was $14.2 billion at Dec. 31, 2013, down from the prior quarter's end as a result of the company's repurchase of MCP stock in November offset by the $1.3 billion private placement. The company's preliminary fourth quarter 2013 Tier 1 capital ratio was 11.8 percent, down from the prior quarter also due to the repurchase of MCP stock, which will normalize the capital structure and save more than $530 million in annual dividends. Ally's Tier 1 common ratio increased 90 basis points in the fourth quarter of 2013 to 8.8 percent, largely driven by the $1.3 billion private placement and proceeds from the closing of the Brazil sale. Funding Ally continued to execute a diverse funding strategy during the fourth quarter and full year of 2013. This strategy included strong growth in deposits which now represent more than 40 percent of Ally's funding portfolio, and completion of new U.S. auto securitizations totaling more than $8.6 billion for the year, including approximately $1.8 billion in the fourth quarter. The company issued new fixed unsecured notes totaling approximately $1 billion in the fourth quarter, for a total of $3.1 billion new fixed and floating rate notes during the year. The company called approximately $2.2 billion of debt in the fourth quarter of 2013, in total calling approximately $8.1 billion of debt in 2013. In the weeks following year-end, the company called approximately $700 million in additional debt. The company also renewed or added more than $19.7 billion of secured credit facilities during the year. As a result of these actions, Ally's liability management strategy has improved the cost of funds, excluding OID, 17 basis points since the third quarter of 2013 and 50 basis points year-over-year. The company's Time to Required Funding remains strong at more than two years as of Dec. 31, 2013. This is a liquidity measure expressed as the number of months that the company expects to be able to meet its ongoing liquidity needs as they arise without issuing unsecured debt. It assumes no changes in U.S. asset growth projections and that the auto asset-backed securities market remains open. Deposits The company remains focused on growing quality deposits through its direct banking subsidiary, Ally Bank. Retail deposits at Ally Bank increased to $43.2 billion as of Dec. 31, 2013, compared to $41.7 billion at the end of the prior quarter. Year-over-year, Ally Bank recorded annual retail deposit growth of $8.1 billion. Brokered deposits at Ally Bank totaled approximately $9.7 billion as of Dec. 31, 2013, essentially flat from the prior quarter. At the end of the year, the Ally Bank franchise continued strong expansion of its customer base to approximately 784,000 primary customer accounts, growing 26 percent year-over-year. Ally Bank For purposes of quarterly financial reporting, Ally Bank's operating results are included within Auto Finance, Mortgage and Corporate and Other, based on its underlying business activities. During the fourth quarter of 2013, Ally Bank reported pre-tax income of $336 million, compared to $204 million in the corresponding prior year period. Performance in the quarter continued to be driven by improved net financing revenue, which was positively impacted by lower cost of funds and reduced borrowing costs resulting from the company's actions to retire high-cost FHLB debt in late 2012, and continued growth in automotive lease assets, partially offset by the strategic actions taken to exit all non-strategic mortgage-related activities earlier in the year. Total assets at Ally Bank were $98.7 billion at Dec. 31, 2013, compared to $92.1 billion at Sept. 30, 2013, as the result of seasonal growth in commercial automotive assets and continued growth in lease. Approximately 67 percent of Ally's U.S. assets were funded at Ally Bank as of Dec. 31, 2013. Automotive Finance The Auto Finance segment includes Ally's U.S. auto finance operations. As a result of the completed sales for the company's international operations, including auto finance operations in Canada, Europe and Latin America, and the remaining pending sale agreement for the joint venture in China, these businesses are classified as discontinued operations. For the fourth quarter of 2013, Auto Finance reported pre-tax income of $207 million, compared to $371 million in the corresponding prior year period. Excluding the $98 million charge related to the CFPB and DOJ settlements, the segment reported pre- tax income of $305 million. Results for the quarter were driven by strong net financing revenue, which improved $33 million year- over-year, resulting from growth in the lease, used and diversified channels, despite continued intense competition. This was partially offset by an increase in provision expense as the portfolio continues to shift to a more diversified and higher margin credit mix. U.S. earning assets for Auto Finance, comprised primarily of consumer and commercial receivables, and leases, totaled $108 billion, up 8 percent compared to Dec. 31, 2012. U.S. consumer earning assets totaled $74 billion, up 10 percent year-over-year, due to continued strong origination volume outpacing asset run- off. U.S. commercial earning assets increased slightly to approximately $34 billion, compared to $33 billion as of Dec. 31, 2012, as a result of higher dealer stock and average contract values. U.S. consumer financing originations in the fourth quarter of 2013 were $8.2 billion, compared to $8.9 billion in the corresponding prior year period, and were comprised of $3.6 billion of new retail, $2.3 billion of used and $2.3 billion of leases. U.S. consumer financing origination levels in the fourth quarter of 2013 were driven by strong year-over -year origination growth in used, lease and diversified new retail channels, growing 13 percent, 6 percent and 20 percent respectively, compared to the fourth quarter of 2012. Growth in these channels partially offset lower subvented volumes mostly as the result of the loss of Ally's subvented business from Chrysler. In total, used, lease and diversified new retail originations continue to account for more than 60 percent of total U.S consumer originations. Insurance Insurance, which focuses on dealer-centric products such as extended vehicle service contracts (VSCs) and dealer inventory insurance, reported pre-tax income from continuing operations, excluding repositioning items, of $67 million in the fourth quarter of 2013, compared to $27 million in the corresponding prior year period. Net investment income increased to $37 million in the fourth quarter of 2013, compared to investment income of $34 million in the comparable prior year period due to investment gains resulting from a strong equity market and an other than temporary impairment on certain investment securities for the fourth quarter of 2012 that did not repeat. Underwriting income improved to $30 million excluding repositioning items in the quarter, compared to a loss of $7 million in the corresponding prior year period, which had been significantly impacted by weather losses last year related to Superstorm Sandy. Insurance's Dealer Products and Services group continued to experience strong written premiums despite increasing competition, resulting in written premiums of $225 million during the fourth quarter of 2013, down approximately $11 million compared to the fourth quarter of 2012. The business maintained its high wholesale insurance penetration levels, with approximately 82 percent of U.S. dealers with Ally floorplan financing also carrying floorplan insurance with the company. Mortgage Operations During the fourth quarter of 2013, Mortgage reported a pre-tax loss of $8 million, excluding repositioning items, compared to pre-tax income of $99 million during the fourth quarter of 2012. The decrease from the prior year period was largely due to the decision to exit all non-strategic mortgage-related activities and cease new originations in the second quarter of 2013. The remaining mortgage held-for-investment portfolio has declined to less than $9 billion as of Dec. 31, 2013. As of June 30, 2013, the business has had no further mortgage loan originations, and as a result of the sale of the MSR portfolio in the second quarter has no remaining MSR assets. Corporate and Other Corporate and Other primarily consists of Ally's centralized treasury activities, the residual impacts of the company's corporate funds transfer pricing, asset liability management activities, and the amortization of the discount associated with debt issuances and bond exchanges. Corporate and Other also includes the Commercial Finance business, certain investment portfolio activity and reclassifications, eliminations between the reportable operating segments, and overhead previously allocated to operations that have since been sold or discontinued. Corporate and Other reported a core pre-tax loss (excluding core OID amortization expense and repositioning items) of $105 million, compared to a loss of $183 million in the comparable prior year period. Results were primarily affected by lower interest expense through the company's liability management strategy, a reduction in unsecured debt levels and refinancing other legacy debt prior to maturity. Core OID amortization expense totaled $67 million in the fourth quarter of 2013, compared to $56 million reported in the corresponding prior year period. About Ally Financial Ally Financial Inc., formerly GMAC Inc. -- http://www.ally.com/-- is one of the world's largest automotive financial services companies. The Company offers a full suite of automotive financing products and services in key markets around the world. Ally's other business units include mortgage operations and commercial finance, and the company's subsidiary, Ally Bank, offers online retail banking products. Ally operates as a bank holding company. GMAC obtained a $17 billion bailout from the U.S. government in exchange for a 56.3 percent stake. Private equity firm Cerberus Capital Management LP keeps 14.9 percent, while General Motors Co. owns 6.7 percent. Ally Financial Inc. reported net income of $1.19 billion for the year ended Dec. 31, 2012, as compared with a net loss of $157 million during the prior year. The Company's balance sheet at Sept. 30, 2013, showed $150.55 billion in total assets, $131.49 billion in total liabilities and $19.06 billion in total equity. * * * As reported by the TCR on Dec. 16, 2013, Standard & Poor's Ratings Services said it raised its issuer credit rating on Ally Financial Inc. to 'BB' from 'B+'. "The upgrade reflects the company's release from potential legal and financial liabilities stemming from its ownership of ResCap," said Standard & Poor's credit analyst Tom Connell. In the Dec. 17, 2013, edition of the TCR, Fitch Ratings upgraded Ally Financial's long-term Issuer Default Rating (IDR) and senior unsecured debt rating to 'BB' from 'BB-'. The upgrade of Ally's ratings follows the approval of Residential Capital LLC's (ResCap's) bankruptcy plan by the Bankruptcy Court releasing Ally from all ResCap related claims, which combined with the recent mortgage settlements with the FHFA and the FDIC, essentially removes any mortgage-related contingent liability to Ally. As reported by the TCR on Dec. 23, 2013, Moody's Investors Service upgraded the corporate family rating (CFR) of Ally Financial Inc. to Ba3 from B1. The upgrade of Ally's corporate family rating follows the U.S. Bankruptcy Court's approval of ResCap LLC's (unrated) Chapter 11 plan, which releases Ally from mortgage- related creditor claims originating from its ownership of ResCap. ALLY FINANCIAL: Profit Drops on Charges Tied to ResCap Exit ----------------------------------------------------------- Andrew R. Johnson, writing for Daily Bankruptcy Review, reported that Ally Financial Inc., the auto lender partially owned by the U.S. government, saw its profit plunge in the fourth quarter after recording a $98 million charge to settle federal allegations of lending discrimination and taking several steps last year to exit the mortgage business. According to the report, the Detroit-based company reported a profit of $104 million, down from $1.4 billion a year earlier. The year-ago quarter included an $887 million tax-related benefit. Core pretax income, which reflects continuing operations and the exclusion of some items, was $142 million, up from $106 million a year earlier. About Ally Financial Ally Financial Inc., formerly GMAC Inc. -- http://www.ally.com/-- is one of the world's largest automotive financial services companies. The Company offers a full suite of automotive financing products and services in key markets around the world. Ally's other business units include mortgage operations and commercial finance, and the company's subsidiary, Ally Bank, offers online retail banking products. Ally operates as a bank holding company. GMAC obtained a $17 billion bailout from the U.S. government in exchange for a 56.3 percent stake. Private equity firm Cerberus Capital Management LP keeps 14.9 percent, while General Motors Co. owns 6.7 percent. Ally Financial Inc. reported net income of $1.19 billion for the year ended Dec. 31, 2012, as compared with a net loss of $157 million during the prior year. The Company's balance sheet at Sept. 30, 2013, showed $150.55 billion in total assets, $131.49 billion in total liabilities and $19.06 billion in total equity. * * * As reported by the TCR on Dec. 16, 2013, Standard & Poor's Ratings Services said it raised its issuer credit rating on Ally Financial Inc. to 'BB' from 'B+'. "The upgrade reflects the company's release from potential legal and financial liabilities stemming from its ownership of ResCap," said Standard & Poor's credit analyst Tom Connell. In the Dec. 17, 2013, edition of the TCR, Fitch Ratings upgraded Ally Financial's long-term Issuer Default Rating (IDR) and senior unsecured debt rating to 'BB' from 'BB-'. The upgrade of Ally's ratings follows the approval of Residential Capital LLC's (ResCap's) bankruptcy plan by the Bankruptcy Court releasing Ally from all ResCap related claims, which combined with the recent mortgage settlements with the FHFA and the FDIC, essentially removes any mortgage-related contingent liability to Ally. As reported by the TCR on Dec. 23, 2013, Moody's Investors Service upgraded the corporate family rating (CFR) of Ally Financial Inc. to Ba3 from B1. The upgrade of Ally's corporate family rating follows the U.S. Bankruptcy Court's approval of ResCap LLC's (unrated) Chapter 11 plan, which releases Ally from mortgage- related creditor claims originating from its ownership of ResCap. 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. AMERICAN AXLE: BlackRock Stake at 5.1% as of Dec. 31 ---------------------------------------------------- In a Schedule 13G filed with the U.S. Securities and Exchange Commission, BlackRock, Inc., disclosed that as of Dec. 31, 2013, it beneficially owned 3,823,905 shares of common stock of American Axle & Manufacturing Holdings, Inc., representing 5.1 percent of the shares outstanding. A copy of the regulatory filing is available for free at http://is.gd/8YqKzA About American Axle Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE: AXL) -- http://www.aam.com/-- manufactures, engineers, designs and validates driveline and drivetrain systems and related components and chassis modules for light trucks, sport utility vehicles, passenger cars, crossover vehicles and commercial vehicles. The Company's balance sheet at Sept. 30, 2013, showed $3.11 billion in total assets, $3.16 billion in total liabilities and a $46.8 million total stockholders' deficit. * * * In September 2012, Moody's Investors Service affirmed the 'B1' Corporate Family Rating (CFR) and Probability of Default Rating (PDR) of American Axle. American Axle carries a 'BB-' corporate credit rating from Standard & Poor's Ratings Services. "The 'BB-' corporate credit rating on American Axle reflects the company's 'weak' business risk profile and 'aggressive' financial risk profile, which incorporate substantial exposure to the highly cyclical light- vehicle market," S&P said, as reported by the TCR on Sept. 6, 2012. As reported by the TCR on Sept. 5, 2013, Fitch Ratings has affirmed the 'B+' Issuer Default Ratings of American Axle & Manufacturing Holdings, Inc. (AXL) and its American Axle & Manufacturing, Inc. (AAM) subsidiary. The ratings and Positive Outlook for AXL and AAM are supported by Fitch's expectation that the drivetrain and driveline supplier's credit profile will strengthen over the intermediate term, despite some deterioration over the past year. AMERICAN ORIENTAL: Has $21.18-Mil. Net Loss in Sept. 30 Quarter --------------------------------------------------------------- American Oriental Bioengineering, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q, reporting a net loss of $21.18 million on $17.94 million of revenues for the three months ended Sept. 30, 2013, compared to a net income of $19.13 million on $29.49 million of revenues for the same period in 2012. The Company's balance sheet at Sept. 30, 2013, showed $427.62 million in total assets, $143.95 million in total liabilities, and stockholders' equity of $283.68 million. For the nine months ended Sept. 30, 2013, the Company recorded a loss from operations of $48.31 million and utilized cash in operations of $21.93 million. As of Sept. 30, 2013, the Company had a working capital deficit of $61.54 million. In addition, the Company was in default of its convertible notes due July 15, 2015, which had a balance of $49.16 million as of Sept. 30, 2013. On April 8, 2013, four of the holders of the Notes filed an action claiming a default under the Notes, which allegedly resulted in an acceleration of the maturity of the Notes. The Plaintiffs had previously commenced a similar action in federal court in New Jersey, which action was withdrawn and the present action interposed. The action seeks payment of $20,378,608 plus prejudgment interest and other fees and costs. The Company presently does not have the ability to pay the Notes. The Company's ability to continue as a going concern is dependent upon its ability to return to profitability or to develop additional sources of financing or capital. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern, according to the Company's regulatory filing. A copy of the Form 10-Q is available at: http://is.gd/sqKLCM About American Oriental American Oriental Bioengineering, Inc. -- http://www.bioaobo.com/ -- is a Beijing, China-based, vertically integrated pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of pharmaceutical and healthcare products. A majority of the Company's current products are manufactured using plant based materials. The Company's business is comprised of prescription pharmaceutical products, over-the-counter pharmaceutical products and nutraceutical products. AMERICAN REALTY: Court Puts Case Dismissal Bid Under Advisement --------------------------------------------------------------- The Bankruptcy Court, according to American Realty Trust, Inc.'s case docket, has taken the motion to covert the Chapter 11 case of the Debtor to Chapter 7, or in the alternative appoint chapter 11 trustee or an examiner under advisement, and will rule on the matter in a few weeks. The Court considered the motion at a hearing on Jan. 28, 2014. The motion was filed by Atlantic Limited Partnership XII, Atlantic Midwest, LLC, Atlantic XIII, LLC, and David M. Clapper, asserting bad faith filing or improper venue. Max J. Newman, Esq., at Butzel Long; Andrew W. Mychalowych. Esq., at Siciliano Mychalowych & Van Dusen, PLC; and Jeffrey R. Fine, Esq., at Dykema Gossett PLLC, on behalf David M. Clapper and Atlantic XIII, LLC, et al., said the case should be dismissed because of multiple impermissible purposes -- primarily to protect the Debtor's non-debtor affiliates, a conglomerate of public and private companies run by Pillar Income Asset Management and controlled directly or indirectly by Gene Phillips and his family. There is no legitimate business purpose for the case and no prospect of reorganization. Bank of New York Mellon, as successor to Bank of New York - Global Corporate Trust, also filed a motion to covert the Chapter 11 case of American Realty Trust to Chapter 7, or in the alternative appoint chapter 11 trustee or an examiner. BoNY serves as trustee for the Registered Certificate Holders of Commercial Capital Access One, Inc., Commercial Mortgage Bonds, Series 3 acting through KeyBank Real Estate Capital, its Special Servicer. BoNY submitted with the Court a post-trial brief in support of its motion. According to BoNY, when the Debtor realized that it was about to suffer a negative judgment in litigation, it transferred all of its then-existing assets first to a wholly-owned subsidiary and then to its parent company in the hopes that those assets would not be used to satisfy its creditors' claims. When the transfers did not have the desired effect, the Debtor reacted by filing multiple bankruptcy cases in courts from one end of the country to the other. However, in each case, the Debtor failed to acknowledge the majority of the transfers. Further, the Debtor replaced the management that was responsible for the transfers with a succession of yes-men, all of whom deny that the Debtor has done anything wrong, even though they have no real knowledge of what had happened. The Debtor, according to a post evidentiary brief, asked the Court to deny the motion to dismiss and convert because "cause" does not exist to dismiss or convert the case. On Jan. 23, 2014, the Debtor entered into an agreed order resolving the Atlantic Parties' motion to suspend the case and motion to grant standing to the Atlantic Parties to pursue claims against insiders. The Debtor related that the Bankruptcy Statute of Limitations will be extended for the period of six months, and will expire March 1, 2015, for any claim or cause of action for which the applicable statute of limitations has not already expired as of the entry of the order. The extension of time will apply to any and all claims whose statute of limitations had not already expired as of the entry of the order, even if the bankruptcy case is ultimately dismissed. The agreement order was entered among the Debtors, Transcontinental Realty Investors, Inc., and Income Opportunity Realty Investors, Inc. About American Realty Trust 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, sought the dismissal, citing, among other things, the Debtor has been stripped of 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. Bankruptcy Judge Barbara Ellis-Monro presided over the case. Bryan E. Bates, Esq., and Gary W. Marsh, Esq. at McKenna Long & Aldridge, LLP represented the Debtor in its restructuring effort. The petition was signed by Steven A. Shelley, vice president. 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 case was later transferred from Atlanta to Dallas (Bankr. N.D. Tex. Case No. 13-30891) effective Feb. 22, 2013. Lenders Atlantic XIII, L.L.C., Atlantic Midwest, L.L.C., David M. Clapper, Atlantic Limited Partnership XII, and Regional Properties Limited Partnership sought the transfer of the case because a lawsuit with the Debtor was pending in Dallas. Months later, the Dallas Court authorized American Realty Trust to employ Gerrit M. Pronske and Pronske & Patel, P.C. as counsel. The Court approved the withdrawal of McKenna Long & Aldridge LLP and substitution of counsel. The Debtor engaged Pronske & Patel after the case was transferred to the Northern District of Texas. AMERICAN REALTY: Disclosure Statement Hearing Adjourned ------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas has adjourned the hearing to approve the Disclosure Statement explaining American Realty Trust, Inc.'s Plan of Liquidation to a date after the Court's ruling on the motion to dismiss. The Debtor's counsel is directed to request for a hearing and objection deadline regarding the Disclosure Statement. Creditors David M. Clapper, Atlantic XIII, LLC and Atlantic Midwest, LLC, moved the Court for the adjournment. The hearing was originally set for Feb. 11, 2014, at 1:30 p.m. As reported in the Troubled Company Reporter on Jan. 31, 2014, the Plan contemplates the creation of a liquidating trust, a 50% recovery on general unsecured claims. The Plan 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 Trust 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, sought the dismissal, citing, among other things, the Debtor has been stripped of 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. Bankruptcy Judge Barbara Ellis-Monro presided over the case. Bryan E. Bates, Esq., and Gary W. Marsh, Esq. at McKenna Long & Aldridge, LLP represented the Debtor in its restructuring effort. The petition was signed by Steven A. Shelley, vice president. 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 case was later transferred from Atlanta to Dallas (Bankr. N.D. Tex. Case No. 13-30891) effective Feb. 22, 2013. Lenders Atlantic XIII, L.L.C., Atlantic Midwest, L.L.C., David M. Clapper, Atlantic Limited Partnership XII, and Regional Properties Limited Partnership sought the transfer of the case because a lawsuit with the Debtor was pending in Dallas. Months later, the Dallas Court authorized American Realty Trust to employ Gerrit M. Pronske and Pronske & Patel, P.C. as counsel. The Court approved the withdrawal of McKenna Long & Aldridge LLP and substitution of counsel. The Debtor engaged Pronske & Patel after the case was transferred to the Northern District of Texas. ANTELOPE VALLEY: Moody's Cuts Bond Rating to Ba2; Outlook Neg ------------------------------------------------------------- Moody's Investors Service has downgraded Antelope Valley Healthcare District's bond rating to Ba2 from Baa3. The downgrade is attributable to weak operating performance and greater reliance on supplemental funding and Moody's expectation that AVHD will not begin to realize performance improvement until FY 2015. The outlook is negative at the lower rating level. Summary Ratings Rationale The rating downgrade is based on AVHD's growing reliance on supplemental government funding to meet its debt service coverage covenant, which is a result of weak core operating performance and patient volume declines. Under a new management team, AVHD has begun taking steps to improve financial performance. However, we believe the hospital will not benefit from these actions until FY 2015, and there is significant execution and operational risk in the interim before core operations return to a level of profitability consistent with an investment grade rating. The Ba2 rating reflects AVHD's high reliance on supplemental funding as a source of liquidity and very thin headroom under its debt service coverage covenant of 1.35x and 90 days cash on hand covenant. The negative outlook reflects increased risk of breaching financial covenants and fundamental operating challenges. Challenges -- Supplemental funding payments have been variable and timing of receipt is unpredictable, making accurate budgeting and forecasting difficult. Absent supplemental funding, the hospital would have negative cash flow; growth of supplemental funding relative to internally generated cash flow is the result of declining core operating performance. AVHD may not meet its debt service coverage covenant in FY 2014. -- Through six months FY 2014, patient volumes have fallen with inpatient admissions down 6.6% and surgeries down 3.1% over the prior year. -- Operating cash flow margin remains weak through six months FY 2014 (3.2% operating cash flow margin), following weak cash flow generation in FY 2013. -- Since FYE 2013, unrestricted cash declined by 12% to $97 million (109 days cash on hand) as of December 31, 2013, and is may decline further by year end as a result of weak operating cash flow, planned capital expenditures and the timing of supplemental payment receipts. AVHD may violate its days cash covenant of 90 days at FYE 2014. -- AVHD's defined benefit pension plan is significantly underfunded and will require much higher cash contributions over the next several years. Cash contributions could rise from the current $8 million to $12 - $13 million. Strengths -- Antelope Valley has stabilized the senior management team through the hiring of a permanent chief executive officer and chief financial officer. -- AVHD has received $72 million in supplemental funding over the last three years from a variety of programs including California provider fee and intergovernmental transfer monies, which has helped maintain balance sheet strength. AVHD may receive up to $40 million in supplemental funding in FY 2014. -- Favorable market position with only one smaller hospital (Palmdale Regional Medical Center, 6,000 admissions) competing in the primary service area; AVHD provides a number of unique services. -- AVHD has an all fixed rate debt structure, although there is a $55 million bullet payment in 2017. Outlook The negative outlook reflects the increased risk of breaching financial covenants given current operating performance, the risk that liquidity may decline more than expected and our expectation that the hospital will not begin to realize benefits from the various turnaround initiatives until FY 2015. What Could Make The Rating Go Up An upgrade is unlikely over the near term. Over the long term, the outlook could be revised to stable if the organization is able to demonstrate sustainable improvement in core operating performance and stabilize the liquidity position. What Could Make The Rating Go Down A downgrade is likely if AVHD is unable to sustainably improve core financial performance and increase debt coverage. Likewise, inability to meet the debt service or days cash on hand covenant, could lead to a downgrade. Reduction or volatility in supplemental funding, or delays in funding could also lead to a downgrade. The principal methodology used in this rating was Not-for-Profit Healthcare Rating Methodology published in March 2012. ARMORWORKS ENTERPRISES: May Tap Arnold & Porter as Special Counsel ------------------------------------------------------------------ The Hon. Brenda Moody Whinery of the U.S. Bankruptcy Court for the District of Arizona on Jan. 23 signed off on a stipulated order authorizing Armorworks Enterprises, LLC, et al.'s employment of Arnold & Porter LLP as special government contracts counsel. Arnold & Porter will work with Houlihan Lokey Capital, Inc. and Grant Lyon, solely in his capacity as Independent Debtor Representative throughout the sale process. Arnold & Porter is expected to provide these professional services in relation to the sale process: a. assist and provide legal advice to the Debtors in negotiating, structuring, documenting and closing a transaction or transactions, as contemplated by the Protocol Order and the Plan, as such transaction or transactions relate to or implicate any prime government contracts or government subcontracts of ArmorWorks and its subsidiaries; b. provide legal advice to the Debtors with regard to the duties and obligations of ArmorWorks and its subsidiaries under applicable federal laws and regulations governing the business operations of ArmorWorks and its subsidiaries, including any prime government contracts or government subcontracts of ArmorWorks and its subsidiaries, in relation to the Sale Process and any transactions contemplated or consummated in relation to the Sale Process; and c. provide legal advice to the Debtors with regard to the duties and obligations of ArmorWorks and its subsidiaries under any identified prime contracts or subcontracts involving the U.S. Government in relation to or as implicated by the Sale Process and any transactions contemplated or consummated in relation to the Sale Process. To the best of the Debtors' knowledge, Arnold & Porter does not hold or represent any interest adverse to the Debtors or their estates with respect to the matters for which Arnold & Porter is being retained. Arnold & Porter has an active practice representing government contractors and private equity firms, and has represented and is currently representing several parties that have been identified by the Independent Debtor Representative as potential purchasers of the Debtors or their assets. It is also possible that additional clients and former clients of the firm may in the future express an interest in the Sale Process. However, Arnold & Porter will not represent any of these parties or any other potential purchaser in connection with the Sale Process. Further, Arnold & Porter is the holder of a $95,933 claim against the Debtors for services rendered to the Debtors prior to the Petition Date. The Official Joint Committee of Unsecured Creditors, ArmorWorks, Inc., and William J. Perciballi all have stipulated to the approval of the application. C Squared Capital Partners, LLC and Anchor Management, LLC, previously objected to the Debtors' employment of Arnold & Porter, which objection was overruled by the Court. The C Squared Parties have stipulated to the employment of Arnold & Porter and have agreed to withdraw their objection to the Arnold & Porter interim fee application. Pursuant to the stipulation, Arnold & Porter's substantial knowledge and experience working with the Debtors prepetition and their expertise in the area of law make Arnold & Porter uniquely suited to assist the Debtors. About ArmorWorks Enterprises Military armor systems provider ArmorWorks Enterprises, LLC, and affiliate TechFiber LLC sought Chapter 11 protection (Bankr. D. Ariz. Case Nos. 13-10332 and 13-10333) in Phoenix on June 17, 2013, along with a plan that resolves a dispute with a minority shareholder and $3.5 million of financing that would save the company from running out of cash. ArmorWorks develops advanced survivability technology and designs and manufactures armor and protective products. ArmorWorks has produced over 1.25 million ceramic armor and composite armor protection components for a variety of personnel armor, aircraft, and vehicle applications. The Debtors have tapped Todd A. Burgess, Esq., John R. Clemency, Esq., Lindsi M. Weber, Esq., and Janel M. Glynn, Esq., at Gallagher & Kennedy, as counsel; and MCA Financial Group, Ltd., as financial advisor. ArmorWorks estimated $10 million to $50 million in assets and liabilities. The U.S. Trustee for Region 14 appointed creditors to serve on an Official Committee of Unsecured Creditors. Forrester & Worth, P.L.L.C. represents the Committee as its general counsel. As of May 26, 2012, ArmorWorks had total assets of $30.9 million and total liabilities of $12.04 million. ArmorWorks and TechFiber sought and obtained an order (i) transferring the In re TechFiber, LLC chapter 11 case to the Honorable Brenda Moody Whinery, the judge assigned to the ArmorWorks Chapter 11 case, and (ii) authorizing the joint administration of the Debtors' cases. Judge Whinery approved on Dec. 30, 2013, the disclosure statement explaining the bankruptcy-exit plan for the Debtors. The plan was jointly proposed by the Debtors, C Squared Capital Partners LLC, Anchor Management LLC, ArmorWorks Inc., William Perciballi and the unsecured creditors' committee. The plan proposes to pay all claims against and member equity interests in ArmorWorks and Techfiber through a sale of assets or equity. Proceeds from the sale will be used to pay off creditors and members of ArmorWorks. Judge Whinery also has approved the bid process proposed by ArmorWorks and Techfiber in connection with the sale of their assets or equity of the reorganized companies. Pursuant to the bid procedures, interested buyers were required to submit their bids by Feb. 7. An auction will be held on Feb. 21 at the Phoenix office of Gallagher & Kennedy, P.A. A status hearing regarding the auction will be held on Feb. 19 while a hearing to consider approval of the sale is scheduled for March 4. Judge Whinery was to hold an initial hearing on Jan. 29 in connection with the Debtor's plan. The hearing was to be a non- evidentiary hearing where the ballot report would be considered and any objections would be assessed. ASPEN GROUP: Issues 7 Million Common Shares ------------------------------------------- Aspen Group, Inc., closed an offering to warrant holders whereby it issued a total of 7,006,064 shares of common stock to the holders in exchange for their early exercise of a total of 4,231,840 warrants at the reduced exercise price of $0.19, which was above the current market. Aspen received gross proceeds of approximately $804,000. As part of this offering, Aspen also issued additional shares to an exercising warrant holder who agreed to waive all of his anti- dilution rights, subject to certain conditions. The shares were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933 and Rule 506(b) promulgated thereunder. About Aspen Group Denver, Colo.-based Aspen Group, Inc., was founded in Colorado in 1987 as the International School of Information Management. On Sept. 30, 2004, it was acquired by Higher Education Management Group, Inc., and changed its name to Aspen University Inc. On May 13, 2011, the Company formed in Colorado a subsidiary, Aspen University Marketing, LLC, which is currently inactive. On March 13, 2012, the Company was recapitalized in a reverse merger. Aspen's mission is to become an institution of choice for adult learners by offering cost-effective, comprehensive, and relevant online education. Approximately 88 percent of the Company's degree-seeking students (as of June 30, 2012) were enrolled in graduate degree programs (Master or Doctorate degree program). Since 1993, the Company has been nationally accredited by the Distance Education and Training Council, a national accrediting agency recognized by the U.S. Department of Education. The Company reported a net loss of $6.01 million on $2.68 million of revenues for the year ended Dec. 31, 2012, as compared with a net loss of $2.13 million on $2.34 million of revenues during the prior year. The Company's balance sheet at Oct. 31, 2013, showed $4.49 million in total assets, $5.45 million in total liabilities and a $957,652 total stockholders' deficiency. Salberg & Company, P.A., in Boca Raton, Florida, issued a "going concern" qualification on the consolidated financial statements for the transition period ending April 30, 2013. The independent auditors noted that the Company has a net loss allocable to common stockholders and net cash used in operating activities for the four months ended April 30, 2013, of $1,402,982 and $918,941, respectively, and has an accumulated deficit of $12,740,086 at April 30, 2013. These matters raise substantial doubt about the Company's ability to continue as a going concern. ATLANTIC LTD: Bondholders Act After Fire Hits Vanadium Mine ----------------------------------------------------------- Daniel Stacey, writing for Daily Bankruptcy Review, reported that after encountering problems ranging from floods to plant outages in recent weeks, one of the world's largest vanadium mines is facing its biggest challenge yet: its bondholders. According to the report, trading in shares of Atlantic Ltd . was suspended on Feb. 6 after the company said a fire had materially damaged a processing plant at its Windimurra Vanadium Project in a remote part of the state of Western Australia. AVSTAR AVIATION: Suspending Filing of Reports with SEC ------------------------------------------------------ AvStar Aviation Group, Inc., filed a Form 15 with the U.S. Securities and Exchange Commission to voluntarily terminate the registration of its common stock under Section 12(g) of the Securities Exchange Act of 1934. There were approximately 398 holders of the securities as of Jan. 21, 2014. As a result of the Form 15 filing, the Company is not anymore obligated to file reports with the SEC. About Avstar Aviation Houston, Texas-based AvStar Aviation Group, Inc. (OTC QB: AAVG) -- http://www.avstarinc.com/-- due to acquisitions, is now in two aviation sectors, the maintenance, repair and overhaul ("MRO") of aircraft providing products and services for the general aviation sector, and the charter air service business. Clay Thomas, P.C., in Houston, expressed substantial doubt about Avstar Aviation Group's ability to continue as a going concern following the Company's 2010 results. Mr. Thomas noted that the Company has suffered significant losses and will require additional capital to develop its business until the Company either (1) achieves a level of revenues adequate to generate sufficient cash flows from operations; or (2) obtains additional financing necessary to support its working capital requirements. The Company reported a net loss of $80,502 on $1.75 million of total revenue for the nine months ended Sept. 30, 2011, compared with a net loss of $1 million on $1.12 million of total revenue for the same period during the prior year. The Company's balance sheet at Sept. 30, 2011, showed $1.20 million in total assets, $2.03 million in total liabilities, and a $831,648 total stockholders' deficit. The Company has been unable to file its annual report on Form 10-K for the period ended Dec. 31, 2011, and the subsequent periodic reports. BAKERCORP INT'L: Moody's Cuts CFR to B3 & Sec. Debt Rating to B1 ---------------------------------------------------------------- Moody's Investors Service downgraded BakerCorp. International, Inc.'s Corporate Family Rating (CFR) to B3 from B2 and Probability of Default Rating (PDR) to B3-PD from B2-PD. Moody's also downgraded the ratings on the company's secured credit facilities to B1 from Ba3 and the rating on its senior notes to Caa2 from Caa1. The downgrade takes into considerations the company's increased leverage, weak performance, significant decline in demand from oil & gas companies which represent one of its core end markets, and low equipment utilization. The company's SGL-3 Speculative Grade Liquidity Rating was affirmed at SGL-3 to reflect the expectation for BakerCorp to maintain an adequate liquidity profile over the next 12 months. The rating outlook is stable. Downgrades: Issuer: BakerCorp International, Inc. Corporate Family Rating, Downgraded to B3 from B2 Probability of Default Rating, Downgraded to B3-PD from B2-PD Senior Secured Bank Credit Facility Feb 7, 2020, Downgraded to B1 (LGD2, 29%) from Ba3 (LGD3, 30%) Senior Secured Bank Credit Facility Feb 7, 2018, Downgraded to B1 (LGD2, 29%) from Ba3 (LGD3, 30%) Senior Unsecured Regular Bond/Debenture Jun 1, 2019, Downgraded to Caa2 (LGD5, 84%) from Caa1 (LGD5, 84%) Affirmations: Issuer: BakerCorp International, Inc. Speculative Grade Liquidity Rating, Affirmed SGL-3 Outlook Actions: Issuer: BakerCorp International, Inc. Outlook, Remains Stable Ratings Rationale BakerCorp's B3 rating considers the company's significant concentration in liquid and solid containment, its high leverage, weak free cash flow metrics and its small scale. The company's focus on temporary storage tanks results in limited diversification leading to revenue and earnings being affected by the volatility of demand in this market. Further, the company has meaningful exposure to cyclical end markets including oil & gas, construction, refinery, and environmental remediation. Due in large part to the recent weakness in demand within oil & gas due to factors including an oversupply of tanks and lower than expected drilling activity, in addition to significant investment in fleet growth, the company has experienced large drops in equipment utilization. The market has limited price elasticity of demand as decreases in price do not stimulate incremental demand if the need for liquid and solid containment solutions is not present. Given the high cost to relocate tanks and their commodity like nature, it is difficult to gain market share if a competitor already has a tank closer to a customer. As of October 31, 2013, debt to EBITDA stood at 6.2 times, and pro forma for the $35 million incremental term loan issued during November 2013, in the mid 6 times level. This high leverage limits the company's financial flexibility to significantly diversify its product offering. Moreover, while the company is concentrated within certain products and North American economic activity in particular, it has also worked to diversify geographically by broadening its presence in certain European markets. The company's rating does benefit from its existing customer relationships and established position as a provider of liquid and solid containment solutions used in industrial and other applications. The stable outlook reflects Moody's expectation for relatively consistent performance over the next 12-18 months while the company maintains adequate liquidity with no near-term debt maturities and nominal amortization of the term loan. The rating or outlook could be downgraded if debt to EBITDA does not improve and were expected to remain above 6.0 times, or if EBITDA to interest expense were to decrease below 2.0 times. The ratings could also be adversely impacted if the company's equipment utilization does not improve, if growth capital expenditures remain at high levels relative to operating cash flow or if liquidity were to weaken. The rating or outlook could be upgraded if debt to EBITDA were anticipated to decrease below 4.5 times on a sustained basis while EBITDA to interest expense were above 2.5 times. The ability to achieve a higher rating is linked to the company being able to successfully execute on delivering and sustaining higher equipment utilization and pricing on its expanding fleet due to aggressive capital investment. The principal methodology used in this rating was the Global Equipment and Automobile Rental Industry published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. BakerCorp International, Inc., headquartered in Seal Beach, California, is a provider of liquid and solid containment solutions. The majority of its revenues come from the rental of equipment with the balance from services and equipment sales. As of October 31, 2013, the Company had a fleet of more than 23,000 units. The Company is controlled by funds advised by Permira Advisors L.L.C. which acquired it in June 2011. Revenues for the LTM period ended October 31, 2013 were $312 million. BAYTEX ENERGY: Moody's Affirms 'Ba3' CFR; Outlook Developing ------------------------------------------------------------ Moody's Investors Service changed Baytex Energy Corp.'s outlook to developing from stable. Moody's affirmed Baytex's Ba3 Corporate Family Rating (CFR), Ba3-PD Probability of Default Rating (PDR), and B1 senior unsecured notes rating. The Speculative Grade Liquidity rating was downgraded to SGL-3 from SGL-2. Downgrades: Issuer: Baytex Energy Corp. Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-2 Outlook Actions: Issuer: Baytex Energy Corp. Outlook, Changed To Developing From Stable Affirmations: Issuer: Baytex Energy Corp. Probability of Default Rating, Affirmed Ba3-PD Corporate Family Rating, Affirmed Ba3 Multiple Seniority Shelf, Affirmed (P)B1 Senior Unsecured Regular Bond/Debenture Feb 17, 2021, Affirmed B1 Senior Unsecured Regular Bond/Debenture Jul 19, 2022, Affirmed B1 The change in outlook was prompted by Baytex's agreement to acquire all of Aurora Oil & Gas Limited's shares for a total consideration of C$1.8 billion, plus assumed debt of about US$665 million. Aurora Oil & Gas Limited is the parent of Aurora USA Oil & Gas, Inc. (Aurora, B3). The transaction is expected to close before June 2014 and is subject to Baytex and Aurora shareholder approvals, and customary closing conditions. Concurrent with the closing, Baytex will increase its monthly dividend by 9% to C$0.24 per share. Baytex will issue C$1.3 billion of equity and a C$200 million term loan to finance the transaction with the C$300 million balance funded with a new C$1 billion revolver. There is a bridge facility in place to backstop the equity offering. If the equity offering does not close, the bridge facility will mature one year later. "The developing outlook at Baytex reflects the benefit of added size and diversification of production with light oil and liquids- focused assets acquired from Aurora," stated Paresh Chari, Moody's Analyst. "The significant increase in debt weakens Baytex's strong leverage metrics, but will remain solid for the Ba3 rating. The addition of a non-operated high decline asset, however, will significantly increase Baytex's future capital expenditures." Ratings Rationale Pro forma for the Aurora acquisition, Baytex's Ba3 Corporate Family Rating (CFR) reflects its significant reserves and production base, diverse product mix (90% liquids), geographic diversity, and solid cash margins and leveraged full cycle ratio (LFCR). The rating also considers the high dividend payment compared to cash flow which drives a weak retained cash flow to debt metric, and weaker leverage in term of E&P debt to production and E&P debt to proved developed reserves. Baytex's SGL-3 rating reflects adequate liquidity through 2014. As of September 30, 2013 Baytex had roughly C$600 million available under its C$850 million revolver. Concurrent with the acquisition, the revolver will be increased to C$1 billion. Moody's expect C$300 million will be drawn to fund the acquisition as well as an additional C$175 million of drawings to fund negative free cash flow from Q4 2013 to Q4 2014. At year end 2014 Baytex will have roughly C$300 million available under the C$1 billion revolver. The rating could be upgraded if production exceeds 70,000 boe/d, while maintaining retained cash flow to debt above 40% and E&P debt to production below US$25,000/boe. The rating could be downgraded if E&P debt to production appeared likely to rise above US$40,000/boe or if retained cash flow to debt appeared likely to fall below 20%. 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. Baytex is a Calgary, Alberta based independent exploration and production company that has proved reserves of approximately 119 million barrels of oil equivalent (boe) and average daily production of approximately 47,000 boe/d of which 85% is oil. BERNARD L. MADOFF: Big Banks Oppose Trustee in Safe Harbor Appeal ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Court of Appeals in Manhattan is set to hear oral arguments March 5 over whether customers of Bernard L. Madoff Investment Securities LLC are protected by the so-called safe harbor in bankruptcy. According to the report, a group of U.S. and foreign banks on Jan. 30 filed a friend-of-the-court brief arguing that the trustee's attempt to "erase" the safe harbor is "contrary to the statute's broad language," even though Madoff's firm never actually purchased a single share of stock for customers. The trustee, Irving Picard, is appealing a decision by U.S. District Judge Jed Rakoff, who ruled that the trustee's fraudulent-transfer suits could reach back only two years before bankruptcy, not six, as a consequence of the safe harbor, the report related. Picard, seeking to return money to victims of Madoff's Ponzi scheme, is suing customers who took out more than they invested, among other things. The safe harbor limits or prohibits bankruptcy trustees from filing suits based on securities transactions, the report noted. Judge Rakoff found that it applied here because the customers signed securities contracts, giving them the impression they would have protections afforded to securities transactions. Success on appeal could revive $10 billion in lawsuits that went down the drain as a result of Judge Rakoff's ruling and might also result in a full recovery of the cash that investors entrusted to Madoff, the report said. The appeal is Picard v. Ida Fishman Revocable Trust (In re Bernard L. Madoff Investment Securities LLC), 12-2557, U.S. Court of Appeals for the Second Circuit (Manhattan). 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. BIG RIVERS: Fitch Affirms 'BB' Rating on Series 2010A Rev. Bonds ---------------------------------------------------------------- Fitch Ratings has affirmed the 'BB' rating on Big Rivers Electric Corporation's $83.3 million County of Ohio, KY's pollution control refunding revenue bonds series 2010A. The Rating Outlook remains Negative. The bonds are secured by a mortgage lien on substantially all of the Big Rivers' owned tangible assets, which include the revenue generated from the wholesale sale or transmission of electricity. Big Rivers (BREC) is, and expects to, remain in compliance with all debt covenants associated with both long-term and short-term debt. BREC's indenture and the RUS, CFC and CoBank loan agreements require that margins for interest ratio (MFIR) of at least 1.10x be maintained each year. KEY RATING DRIVERS IMPACT FROM LOSS OF SMELTER AGREEMENTS: Alcan Primary Products Corporation (Alcan) and Century Aluminum Company's (Century) aluminum smelting facilities, served by Big Rivers, through its largest member Kenergy Corp., have historically accounted for approximately 65% and 70% of Big Rivers' total energy sales and revenues, respectively. Termination of these agreements has left the generation and transmission (G&T) cooperative with a significant amount of surplus power. Management is working to implement a long-term mitigation plan. INCREASED RELIANCE ON WHOLESALE MARKETS: Long-term financial stability at Big Rivers will be influenced by the cooperative's ability to make greater off-system sales, both on a contract basis and in the spot market. BREC is in the early stages of developing and implementing this marketing strategy, and has found some success with future, agreed-upon sales to new utilities and sales into the Midcontinent ISO (MISO). Available cash reserves will partially mitigate this risk, but low power prices could stress results. RATE REGULATED; REQUEST PENDING: Electric rates charged by Big Rivers and its members are regulated by the Kentucky Public Service Commission (KPSC). An October 2013 rate order provided BREC with revenues to largely offset the loss of Century. A second rate order relating to the loss of Alcan is currently pending. The outcome of this decision could have a material effect on the cooperative's ability to pay costs, including debt service. LIQUIDITY TO DECLINE BUT SHOULD REMAIN SUFFICIENT: Big Rivers reported unrestricted cash reserves of approximately $107 million at Dec. 31, 2013, excluding $125 million of restricted reserve funds, with a portion to be used primarily for rate stabilization. Over the next few years, BREC expects to use the $125 million of restricted reserves to lessen the impact of rising electric rates due to a reduction in smelter sales; but overall liquidity should remain satisfactory, between cash and a $50 million line of credit with CFC. RATING SENSITIVITIES OUTLOOK HINGES ON STABILIZATION OF REVENUES: Resolution of the Negative Outlook hinges on BREC's ability to stabilize revenue through KPSC-approved rate increases and the implementation of a successful mitigation plan. Revenue stability achieved through rate increases and long-term power sales agreements would likely stabilize the Outlook, while a reliance on volatile short-term sales and possible insufficient regulatory support would put downward pressure on the rating. CREDIT PROFILE Big Rivers provides wholesale electric and transmission service to three electric distribution cooperatives. These distribution members provide service to a total of about 113,000 retail customers located in 22 western Kentucky counties. Kenergy Corporation, the largest of the three systems, serving 55,200 members, is unique in that its electric load and revenues have been dominated by two large aluminum smelters. BREC is a member/owner of ACES Power Marketing, which supports its energy mitigation plan. CENTURY AND ALCAN TERMINATE AGREEMENTS Under the power sales contracts between Kenergy and the smelters, which were to expire on Dec. 31, 2023, the smelters had been required to take-or-pay for specific quantities of energy, irrespective of their needs. The contracts further provided for termination on one years' notice without penalties, subject to certain conditions including the termination and cessation of all aluminum smelting operations at the relevant facilities. Century Termination On Aug. 20, 2012, Century issued a notice to terminate its take- or-pay power contract with Kenergy and Big Rivers stating its intent to close its Hawesville, KY smelter. As a result of the termination notice, Big Rivers began implementing its formal load concentration mitigation plan which included, filing for a $68.6 million general rate increase; pursuing replacement load for Century's 482 MW; and negotiating an arrangement to allow the Hawesville smelter to purchase power at market price and remain in operation. Alcan Termination On Jan. 31, 2013, Alcan delivered notice to Big Rivers' of its decision to terminate its power supply agreement with Big Rivers, noting, in particular, a Feb. 28, 2013 rate filing by Big Rivers, and sizeable anticipated rate increases. Alcan stated that the planned rate increase would make its smelting facility unprofitable, and that all smelting operations would be ceased at the end of the one-year notice period. As a result of this second termination notice, Big Rivers expanded its effort in implementing its mitigation plan which included filing for a $70.4 million general rate increase; pursuing replacement load for Alcan's 368 MW; developing a 2014 budget and 2015-2017 financial plan with Alcan buying its power at market based rates; and using reserve funds to offset the requested rate increase until those funds are depleted in April 2015. CENTURY AGREES TO ACQUIRE ALCAN ASSETS On April 29, 2013, Century announced that its wholly owned subsidiary had entered into a definitive agreement to acquire substantially all of the assets of the Sebree aluminum smelter from a subsidiary of Rio Tinto Alcan, Inc. RATE RELIEF GRANTED; ADDITIONAL RELIEF PENDING On Oct. 29, 2013, a final KPSC order in the Century case was issued which granted $54.2 million of the final requested $68.6 million, equal to a 15.5% base rate increase. Fitch views the KPSC's decision as supportive of credit quality as the decision will enhance cost recovery. Higher rates related to the second $70.4 million rate request (Alcan case) were put into effect by Big Rivers on Feb. 1, 2014, subject to refund. The KPSC has until April 27, 2014 to issue a final rate order. An equally supportive decision will be necessary to stabilize Big Rivers' financial profile. MITIGATION PLAN-ADDITIONAL ELEMENTS Big Rivers provides capacity and energy to its members through a combination of four-owned generation stations, one leased station and contracted capacity from the Southeast Power Administration (SEPA). The generating stations include the Coleman Station (Units 1, 2 and 3), Wilson Station (Unit 1), Green Station (Units 1 and 2) and Reid (Units 1 and 2). Net capacity of owned generation is 1,444 megawatts (MW), net capacity of leased generation equals 197 MW, with contracted capacity from SEPA at 178 MW. Eight of the nine units are scrubbed. Peak demand, net of smelter demand, was recently at 800 MW. BREC is a member of MISO, since December 2010. With a combined net capability of 443 MW, the Coleman plant is located next to the Century smelter. With the new smelter agreements, Big Rivers will no longer have an immediate market for the 482 MW of power that up to now has been sold to Century Kentucky. Since the production cost of Coleman is among the highest on Big River's system, the cooperative has decided to temporarily idle the Station through 2014, or until market prices improve. BREC is also considering idling the Wilson Station (417 MW), given the smelter's plan to rely on alternative power supply purchases. BREC's desire to idle the two plants, rather than employ a shutdown strategy, is that it would provide the coop with greater flexibility to sell power from these units when demand is sufficient and pricing favorable; such as during the recent cold wave, pending the ability to enter into longer-term supply arrangements. Management expects to rely mostly on power from the Green Station, a two unit, 454 MW station, which has the ability to burn high sulfur, low cost coal. As a member of MISO, Big Rivers was required to submit its revised generation plan to MISO for approval. Upon review, MISO determined the Coleman plant was needed for reliability and designated Coleman as a system support resource. The associated cost of keeping the Station open is being recovered from Century. Big Rivers has held discussions with a number of interested parties about possibly contracting for a portion of the cooperative's available capacity. Some future-dated transactions have been contracted for. BREC is also a finalist in several power RFP's. Even with the temporary idling of the Coleman and Wilson stations, BREC expects to have 156 MW of available capacity, which should be sufficient to meet their the members' needs through 2021. Part of the mitigation plan is a reduction in staff. The majority of these employees worked at the power stations. WHOLESALE AND MEMBER RATES WILL INCREASE Non-smelter wholesale member rates (blended rate) approximated $39 per MWH in 2011 and $42.2 per MWH in 2012. Preliminary results were $48.1 per MWH in 2013, and are forecasted at $60.1 per MWH in 2014, before rising to about $99 per MWH by 2017, reflecting the loss of the smelter loads. CAPITAL EXPENDITURES MODERATE Estimated costs for environmental compliance have recently been reviewed and reduced from the prior estimate of $285 million. Elimination of expenditures for Cross State Air Pollution Rule (CSAPR) provided a major cost saving. The total capital cost for MATS compliance plan is now estimated at $24 million. An application to RUS to obtain long-term financing for MATS was submitted in June 2013. Capital expenditures remained low at $29.7 million in 2013, versus $39.8 million in 2012. FINANCIAL RESULTS ADEQUATE Preliminary results for calendar year 2013 show total operating revenues of $552.3 million, net margins of $8.6 million and a times interest earned ratio (TIER) of 1.20x. This compares with 2012 of revenues totaling $568.3 million, net margins of $11.3 million, TIER of 1.25. This is in line with KPSC's allowed TIER allowance of 1.20x. Expenditures in 2013 include all severance costs related to employee terminations. Results for 2013 benefited from higher revenues associated with rates approved by the KPSC, higher off-system sales and patronage capital associated with the 2012 RUS Series 'A' note refinancing. MWH sales to non-members increased significantly, together with a sizeable increase in price. For 2014, which assumes reduced sales by Big Rivers to the smelters and 100% of the current Alcan rate case, revenues would total $374.3 million, net margins are estimated at $6.8 million and TIER would equal 1.16x. Financial results and ratios beyond 2014 are expected to be designed to provide a balance between reasonable financial strength and competitive electric rates. DSC is projected to be around 1.40x in 2013 and is expected to approximate 1.25x or slightly higher in future years. Long-term debt totaled $854 million as of Dec. 31, 2013, compared with $845 million the year earlier. The final debt maturity of different series bonds outstanding ranges from July 2021 to June 2032. In a PSC order issued on March 26, 2013, Big Rivers' was permitted to pay-off the $58.8 million in pollution control floating rate demand bonds, series 1983 coming due by using $60 million of July 2012 proceeds from a secured loan with CoBank. The bonds matured June 1, 2013. BREC plans on trying to implement further options with RUS to spread out annual debt service requirements. Big Rivers was also authorized by the KPSC to use the $35 million Transition Reserve funds for capital expenditures, rather than having to keep these funds set aside to pay potential costs associated with a reduction in loads at the smelters. There currently remains $11 million in this reserve. Big Rivers has a $50 million line of credit with CFC that expires July 2017. A line of credit with CoBank was terminated by BREC in 2013. Long-term forecasts assume a balance of about $100 million of cash and liquid assets. MEMBERS' FINANCIALS REMAIN STEADY Kenergy is the largest of the three member systems, reflecting service to the smelter loads. Excluding the smelters, most of Big Rivers' service is provided to retail customers and a few large industrials. Member debt service coverage for the years 2010-2012 approximated 1.60x, with equity to capitalization approximating 35%. The most recent residential retail rate increase for the three systems ranged between 15.9% and 18.3% in August 2013, and captured the planned loss of revenues from the Century smelter. Overall profits from the smelter sales were relatively modest, but closure of the two facilities could have had an impact on the surrounding communities' economies. BIOSCRIP INC.: Moody's Rates $200MM Notes Caa2 & Affirms B3 CFR --------------------------------------------------------------- Moody's Investors Service assigned a Caa2 (LGD 5, 84%) rating to BioScrip, Inc.'s proposed $200 million senior unsecured note offering. Moody's also affirmed BioScrip's B3 Corporate Family Rating, B3-PD Probability of Default Rating, and SGL-3 Speculative Grade Liquidity Rating. At the same time, Moody's upgraded the company's existing senior secured first lien credit facilities, including the company's revolving credit facility and term loan B, to B1 from B3, reflecting the improved recovery prospects for the senior secured credit facilities in a default scenario due to the loss absorption from the proposed senior unsecured notes. The rating outlook is stable. The proceeds from the senior unsecured note offering will be used to repay outstanding revolver borrowings, repay a portion of the existing senior secured term loan B, and pay related transaction fees and expenses. BioScrip, Inc.: Ratings assigned: $200 million proposed senior unsecured notes, Caa2 (LGD 5, 84%) Ratings affirmed: Corporate Family Rating, B3 Probability of Default Rating, B3-PD Speculative Grade Liquidity Rating, SGL-3 Ratings upgraded: Senior secured revolving credit facility, to B1 (LGD 3, 31%) from B3 (LGD 4, 51%) Senior secured 1st lien term loan B, to B1 (LGD 3, 31%) from B3 (LGD 4, 51%) The rating outlook is stable. The ratings are subject to review of final documentation. Ratings Rationale BioScrip's B3 Corporate Family Rating reflects the company's high financial leverage, aggressive acquisition growth strategy, and small absolute size based on revenue and earnings. The ratings also reflect the portion of BioScrip's revenue derived from Medicare, Medicaid and other government-sponsored healthcare programs, representing roughly one-third of BioScrip's revenue base (prior to the sale of Home Health). However, despite the company's small absolute size, the ratings are supported by BioScrip's solid scale and market position within the highly fragmented market for home infusion services. While Moody's expect the company to realize additional earnings from acquisitions and the opening of new infusion pharmacies, the company is likely to continue to face significant challenges within its remaining non- core segment, PBM Services, following the pending sale of Home Health. The rating outlook is stable, and incorporates Moody's expectation that the company will maintain a disciplined growth strategy and financial policy. The stable outlook also reflects Moody's expectation that BioScrip will achieve margin expansion as a result of savings from eliminating cost redundancies and focusing on higher margin therapies, and that the company's free cash flow generation strengthens over the near-term. The ratings could be downgraded if the company's key credit metrics or liquidity profile further weakens. In addition, the ratings could be downgraded if financial policies become more aggressive or if free cash flow remains negative on a sustained basis. The ratings could be upgraded if the company achieves margin expansion and EBITDA growth alongside a disciplined growth strategy and financial policy. From a credit metrics perspective, Moody's would need to see financial leverage (debt to EBITDA) approaching 5.0 times and free cash flow to debt above 5% for an upgrade to be considered. The principal methodology used in this rating was the Global Healthcare Service Providers published in December 2011. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Elmsford, New York, BioScrip, Inc. is a national provider of home infusion, home healthcare and pharmacy benefit management ("PBM") services. The company's clinical management programs and services provide access to prescription medications and home health services for patients with chronic and acute healthcare conditions, including gastrointestinal abnormalities, infectious diseases, cancer, pain management, multiple sclerosis, organ transplants, bleeding disorders, rheumatoid arthritis, immune deficiencies and heart failure. As of November 12, 2013, BioScrip had a total of 117 locations across 29 states, encompassing 33 home nursing locations and 84 home infusion locations, including two contract affiliated infusion pharmacies. For the twelve months ended September 30, 2013, BioScrip generated total revenues of approximately $779 million. BON-TON STORES: Morgan Stanley Stake Down to 4.5% as of Dec. 31 --------------------------------------------------------------- In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, Morgan Stanley and Morgan Stanley Capital Services LLC disclosed that as of Dec. 31, 2013, they beneficially owned 780,267 shares of common stock of Bon-Ton Stores, Inc., representing 4.5 percent of the shares outstanding. Morgan Stanley previously reported beneficial ownership of 1,225,501 common shares or 7.1 percent equity stake as of Dec. 31, 2012. A copy of the regulatory filing is available for free at: http://is.gd/lHw0Fp About Bon-Ton Stores The Bon-Ton Stores, Inc., with corporate headquarters in York, Pennsylvania and Milwaukee, Wisconsin, operates 273 department stores, which includes 10 furniture galleries, in 25 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner's, Boston Store, Carson Pirie Scott, Elder-Beerman, Herberger's and Younkers nameplates and, in the Detroit, Michigan area, under the Parisian nameplate. For the 39 weeks ended Nov. 2, 2013, the Company reported a net loss of $64.89 million. The Company incurred a net loss of $21.55 million for the year ended Feb. 2, 2013, following a net loss of $12.12 million for the year ended Jan. 28, 2012. The Company's balance sheet at Nov. 2, 2013, showed $1.80 billion in total assets, $1.75 billion in total liabilities and $48.87 million in total shareholders' equity. * * * As reported by the TCR on May 15, 2013, Moody's Investors Service upgraded The Bon-Ton Stores, Inc.'s Corporate Family Rating to B3 from Caa1 and its Probability of Default Rating to B3-PD from Caa1-PD. "The upgrade of Bon-Ton's Corporate Family Rating considers the company's ability to drive modest same store sales growth as well as operating margin expansion beginning in the second half of 2012 and that these positive trends have continued, with the company reporting that its same store were positive, and EBITDA margins expanded, in the first fiscal quarter of 2013," said Moody's Vice President Scott Tuhy. As reported by the TCR on May 17, 2013, Standard & Poor's Ratings Services affirmed the 'B-' corporate credit rating on The Bon-Ton Stores Inc. BON-TON STORES: BlackRock Stake at 7.2% as of Dec. 31 ----------------------------------------------------- BlackRock, Inc., disclosed in a Schedule 13G filed with the U.S. Securities and Exchange Commission that as of Dec. 31, 2013, it beneficially owned 1,269,672 shares of common stock of Bon-Ton Stores, Inc., representing 7.2 percent of the shares outstanding. A copy of the regulatory filing is available for free at: http://is.gd/vUMLEp About Bon-Ton Stores The Bon-Ton Stores, Inc., with corporate headquarters in York, Pennsylvania and Milwaukee, Wisconsin, operates 273 department stores, which includes 10 furniture galleries, in 25 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner's, Boston Store, Carson Pirie Scott, Elder-Beerman, Herberger's and Younkers nameplates and, in the Detroit, Michigan area, under the Parisian nameplate. For the 39 weeks ended Nov. 2, 2013, the Company reported a net loss of $64.89 million. The Company incurred a net loss of $21.55 million for the year ended Feb. 2, 2013, following a net loss of $12.12 million for the year ended Jan. 28, 2012. The Company's balance sheet at Nov. 2, 2013, showed $1.80 billion in total assets, $1.75 billion in total liabilities and $48.87 million in total shareholders' equity. * * * As reported by the TCR on May 15, 2013, Moody's Investors Service upgraded The Bon-Ton Stores, Inc.'s Corporate Family Rating to B3 from Caa1 and its Probability of Default Rating to B3-PD from Caa1-PD. "The upgrade of Bon-Ton's Corporate Family Rating considers the company's ability to drive modest same store sales growth as well as operating margin expansion beginning in the second half of 2012 and that these positive trends have continued, with the company reporting that its same store were positive, and EBITDA margins expanded, in the first fiscal quarter of 2013," said Moody's Vice President Scott Tuhy. As reported by the TCR on May 17, 2013, Standard & Poor's Ratings Services affirmed the 'B-' corporate credit rating on The Bon-Ton Stores Inc. BONDS.COM GROUP: Long Ridge Plans to Submit Acquisition Proposal ---------------------------------------------------------------- Michel Daher, Abdallah Daher, Daher Bonds Investment Company, and Mida Holdings disclosed in a regulatory filing with the U.S. Securities and Exchange Commission that they are currently reconsidering and evaluating all of their options with respect to their investment in Bonds.com Group, Inc., and intend to have discussions with the Company regarding a possible change of control transaction or other business combination or refinancing transaction involving the Company. Accordingly, in a letter dated Jan. 27, 2014, Long Ridge Equity Partners, LLC, on behalf of one or more funds managed by it and its affiliates and on behalf of Mr. Michel Daher and one or more of his affiliates, submitted an indication of interest to acquire all capital stock of the Company. Confidential Treatment has been requested with respect to certain portions of the Letter. "We have spent considerable time working with our advisors to arrive at a fair and competitive value for the Company that is compelling for the Company and its stockholders," Long Ridge stated. "We believe your stockholders are aware of, and fully appreciate, the risks and challenges confronting the Company given its current competitive environment and financial condition, and will find the certainty in the value of our proposal to be highly attractive. We also are prepared to work with the Company to structure the Transaction to minimize the period to closing." The investment in the Company will be financed with committed equity provided by Long Ridge Equity Partners I and affiliates (including Mr. Michel Daher and other potential coinvestors from Long Ridge's current LP base). Long Ridge Equity Partners I had its final close in February of 2013 with $100 million in capital commitments, of which 34 percent currently invested or committed. The exact form of the transaction contemplated by the Proposal has not yet been determined, but it may take the form of a merger, tender offer or other corporate transaction. If such a transaction is consummated, the Common Stock would no longer be traded on the OTC Bulletin Board and the registration of the Common Stock under Section 12 of the Exchange Act would be terminated. Michel Daher and his affiliates disclosed that as of Jan. 27, 2014, they beneficially owned 767,716 shares of common stock of Bonds.com Group, Inc., representing 75.9 percent of the shares outstanding. Founded in 2007, Long Ridge Equity Partners is a private investment firm focused on the financial services industry. Leveraging deep sector knowledge and an extensive network of industry resources, Long Ridge serves as a value-added partner to high-growth financial services businesses. Over the last decade, Long Ridge's principals have sponsored some of the most successful growth companies in the financial sector, providing strategic resources and capital to drive profitable expansion. Long Ridge places a strong emphasis on partnership with management, focusing heavily on aligned incentives through equity participation. A full-text copy of the confidential letter is available at: http://is.gd/x98JMG About Bonds.com Group Based in Boca Raton, Florida, Bonds.com Group, Inc. (OTC BB: BDCG) -- http://www.bonds.com/-- through its subsidiary Bonds.com, Inc., serves institutional fixed income investors by providing a comprehensive zero subscription fee online trading platform. The Company designed the BondStation and BondStationPro platforms to provide liquidity and competitive pricing to the fragmented Over- The-Counter Fixed Income marketplace. The Company differentiates itself by offering through Bonds.com, Inc., an inventory of more than 35,000 fixed income securities from more than 175 competing sources. Asset classes currently offered on BondStation and BondStationPro, the Company's fixed income trading platforms, include municipal bonds, corporate bonds, agency bonds, certificates of deposit, emerging market debt, structured products and U.S. Treasuries. Bonds.com Group disclosed a net loss of $6.98 million in 2012, as compared with a net loss of $14.45 million in 2011. The Company's balance sheet at Sept. 30, 2013, showed $6.05 million in total assets, $4.09 million in total liabilities and $1.95 million in total stockholders' equity. EisnerAmper LLP, in New york, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012, citing recurring losses and negative cash flows from operations, and a working capital deficiency and a stockholders' deficiency that raise substantial doubt about its ability to continue as a going concern. BR FESTIVALS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: BR Festivals, LLC P.O. Box 236 Napa, CA 94559 Case No.: 14-10175 Chapter 11 Petition Date: February 5, 2014 Court: United States Bankruptcy Court Northern District of California (Santa Rosa) Judge: Hon. Alan Jaroslovsky Debtor's Counsel: John H. MacConaghy, Esq. MACCONAGHY AND BARNIER, PLC 645 1st St. W #D Sonoma, CA 95476 Tel: (707) 935-3205 Email: macclaw@macbarlaw.com Total Assets: $610,000 Total Liabilities: $4.51 million The petition was signed by Gabe Meyers, manager. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/canb14-10175.pdf BRIGHTSTAR CORP: Moody's Hikes Sr. Unsecured Notes Rating to Ba1 ---------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of Brightstar Corporation's senior unsecured notes to Ba1 from B1 based on SOFTBANK CORP.'s unconditional guarantee of payment. Moody's also withdrew Brightstar's corporate family and probability of default ratings following completion of Softbank's acquisition of approximately 57% ownership in Brightstar. The outlook is stable. Moody's has taken the following rating actions: Upgrades: Senior Unsecured Regular Bond/Debenture, Ba1-LGD4 64% from B1- LGD4 63% on Review for Upgrade Outlook Actions: Outlook, Changed To Stable from Rating Under Review Withdrawal Corporate Family Rating (CFR) WR, from Ba3 Review for Upgrade Probability of Default Rating (PDR) WR from Ba3-PD Review for Upgrade Ratings Rationale The acquisition improves Brightstar's credit profile with SoftBank unconditionally and irrevocably guaranteeing Brightstar's rated senior unsecured notes and by augmenting the company's cash balances by approximately $150 million, before transaction related fees and expenses. Due to the ongoing support that Moody's expects SoftBank to provide to Brightstar, Moody's has withdrawn Brightstar's Ba3 stand alone corporate family rating and the Ba3- PD, probability of default rating, and moved its bond ratings under SoftBank's CFR umbrella. The capital contribution from Softbank improves Brightstar's near term liquidity, which will aid the Company's strategy to broaden its product and services portfolio beyond mobile distribution. Brightstar has significant scale and presence as a global services company providing distribution and diversified services to the wireless telecommunications industry participants. Moody's expects Brightstar to pick up distribution and diversified services from SoftBank's portfolio companies and other telecom operators in the US and around the world. In addition to the unconditional and irrevocable guarantee, SoftBank will hold warrants which may increase its ownership stake to approximately 70%, over the next five years. Moody's currently expects Brightstar to retain its management team, issue financial statements and operate as a stand-alone subsidiary of SoftBank. The rating of the Brightstar notes will depend on the senior unsecured debt rating of SoftBank. Please refer to www.moodys.com for the research on Softbank. SoftBank could face upward pressure if, among other things, it continues to improve its profitability and reduces leverage such that adjusted EBITDA margin stays above 35% and adjusted debt/EBITDA remains below 2.5x. In addition, SoftBank will need to demonstrate a continued trend of excellent liquidity and access to capital markets. Any upgrade will also be dependent on the successful implementation of SoftBank's business plan for Sprint and a reduction in potential support from SoftBank. Downward rating pressure could emerge if, among other things, SoftBank's adjusted EBITDA margin falls below 30%, or if the company's adjusted debt/EBITDA does not trend down to below 3x from Moody's current expectation of between 3-4x for the coming three years. A significant change in SoftBank's position in the Japanese mobile communications market would also lead to negative pressure, as would any significant acquisitions or share buybacks. The principal methodology used in this rating was Global Distribution & Supply Chain Services published in November 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Miami, Florida, Brightstar Corp. is a leading global distributor of wireless handsets, smartphones, tablets and their related accessories. The company is expanding beyond its legacy value-added distribution business into complete line of life cycle wireless device management, device insurance, supply chain optimization, multi-channel retail, buy-back, trade-in, reverse logistics, and cell phone and wireless device protection and replacement. The company is 57%-owned by SOFTBANK Corp. BROWNSVILLE MD: Disclosure Statement Lacks Info, Pineda Claims -------------------------------------------------------------- Pineda Grantor Trust II, a secured creditor of Brownsville MD Ventures, LLC, filed with the U.S. Bankruptcy Court for the Southern District of Texas an objection to the Debtor's disclosure statement, claiming that it lacks adequate information creditors need to vote on the Debtor's Chapter 11 Plan of Reorganization. As reported by the Troubled Company Reporter on Dec. 2, 2013, the Debtor filed a Plan that contemplates a sale of the property by the end of 2014 or, absent a sale, a transfer of the ownership of the property to Pineda Grantor on the Outside Date free and clear of all Liens claims and encumbrances except for the lien of Cameron County. According to the Disclosure Statement dated Nov. 22, 2013, on the effective date of the Plan, the reorganized Debtor will continue to be managed by Chester Gonzalez. Pineda Grantor, in a filing dated Dec. 30, 2013, claims that the Debtor fails to provide in its disclosure statement: (1) the name or even the mechanism for the appointment of the trustee of the Brownsville MD Ventures Equity Trust; (2) any information as to how the property will be marketed, including disclosing the name and compensation of any real estate Broker, if any, that will market the property; (3) any information as to who will decide when an offer made on the property will be pursued or accepted or even the criteria as to the acceptance of an offer; (4) adequate information of the expected cost to maintain the property while the property is being held in trust. (5) disclosure to whether the equity owners will contribute monies to allow the trust to pay expense associated with the property incurred post-confirmation (6) disclosure as to the contingency if the property's value is below the amount of Pineda Grantor's debt; (7) sufficient information as to estimated administrative fees that will likely be incurred through the confirmation of the Plan; and (8) information on how the Debtor will fund the likely cost of attorney fees and other administrative costs incurred post-confirmation either in the prosecution of avoidance claims, in the handling of any proposed sale of the property, or in representing the Trustee in administering the trust. In a Jan. 9, 2014 court filing, unsecured creditors and claimants in a Federal Warn Act Case claim that the Disclosure Statement fails to provide adequate information necessary for creditors to vote on the Plan. Cary M. Toland, Esq., at the Law Office of Cary M Toland PC, the attorney for the claimants, said in the filing that, among other things, the "the disclosure at Section 5.04, Discharge of Claims, purports to designate all pending litigation including the pending federal lawsuit, as resolved and restructured at the time of the effective date of this Plan. This description fails to fully inform Claimants or make it clear the effects of this provision." The attorney for the claimants can be reached at: LAW OFFICE OF CARY M TOLAND PC 855 East Harrison Street Brownsville, Texas 78520 Tel: (956) 544-4607 Fax: (956) 541-2117 E-mail: cary@carytolandlaw.com 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: Stay Modified, Property at Risk of Foreclosure -------------------------------------------------------------- The Hon. Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas entered an agreed order modifying the automatic stay filed by Brownsville MD Ventures, LLC's secured creditor, Pineda Grantor Trust II. The Court permitted Pineda Grantor to commence foreclosure steps and to foreclose on the Debtor's real property located at 4750 North Expressway, Brownsville, Texas 78520, unless the Debtor provides Pineda Grantor proof of insurance for the Property within 14 days from the entry of the Jan. 15 court order. In the event the Debtor does not obtain insurance for the Property by the 14th day, it will file a notice with the Court and serve that notice on all creditors and parties in interest. Should the Debtor provide Pineda Grantor proof of insurance for the Property within 14 days from the entry of the Jan. 15 court order, the automatic stay will remain in effect and Pineda Grantor won't be permitted to commence foreclosure steps and to foreclose on the Property, absent further court order. On Dec. 23, 2013, Pineda Grantor filed its motion to lift stay in order for it to enforce its lien against the real property described as Lot One (1), Block One (1), C.B.C SUBDIVISION NO. 2, a subdivision in the City of Brownsville, Cameron County, Texas, according to the map or plat thereof recorded in Cabinet 1, slot 1755-B, Map Records, Cameron County, Texas. Prior to Dec. 23, Pineda Grantor learned that the Debtor did not have insurance on the Property. Pineda Grantor's Dec. 23 motion sought to lift the stay for cause based on the Debtor's failure to obtain insurance on the property. On Jan. 10, 2014, Pineda Grantor requested that the Court consider on an emergency basis the Dec. 23 motion to lift stay it filed, saying that its security interest is in peril because of the lack of insurance. Since the filing of the motion to lift stay, the Debtor has been unable to obtain insurance and every day that passes without insurance, creates an unnecessary risk that Pineda Grantor's collateral could be significantly impaired. The Debtor asked the Court on Jan. 13, 2014, to deny Pineda Grantor's motion to lift stay because (i) the Court entered an order on Jan. 9, 2014, permitting the Debtor to maintain the status quo pending issuance of a replacement policy; and (ii) the Debtor is in the process of obtaining a replacement policy for the Property. Kell C. Mercer, Esq., at Husch Blackwell LLP, the attorney for the Debtor, stated in the Jan. 13 court filing that "the Debtor has found an insurer willing to insure the Property, has received a price quote for a replacement policy, and is making arrangements to finance the premium payments for such replacement policy. The Debtor intends to seek approval, on an emergency basis, for the financing of this replacement policy. Once the Debtor has obtained a replacement policy for the Property, Pineda will be adequately protected." Key Equipment Finance, Inc., also filed a response to Pineda Grantor's stay motion on Jan. 13, 2014. KEF has an interest in the equipment located in the building on the real estate that is the subject of Pineda Grantor's motion, and KEF wants to protect its interest. KEF said in its Jan. 13 court filing that it has a joint motion with Wells Fargo Equipment Finance, Inc., and the Debtor for entry of agreed order terminating automatic stay as to equipment. KEF asked that the Court take into consideration KEF's interest in its personal property collateral, and for other and further relief to which KEF may show itself entitled. KEF is represented by: Mark A. Twenhafel, Esq. Walker & Twenhafel, L.L.P. McAllen, Texas 78502-3766 Tel: (956) 687-6225 ext. 203 Fax: (956) 686-1276 E-mail: markt@rgvlawyers.com 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. BUILDERS GROUP: Court Converts Bankruptcy Case to Chapter 7 ----------------------------------------------------------- The Hon. Enrique S. Lamoutte of the U.S. Bankruptcy Court for the District of Puerto Rico has converted the Chapter 11 bankruptcy case of Builders Group & Development Corp. to one under Chapter 7 of the Bankruptcy Code. As reported by the Troubled Company Reporter on Dec. 2, 2013, CPG/GS NPL LLC sought for the dismissal of the Debtor's case or its conversion to one under Chapter 7, asserting that the Debtor has no equity in CPG/GS' collateral, nor does it have any prospects for reorganization. CPG/GS did not consent to the Debtor's use of its cash collateral, and the Court had not allowed the Debtor to use the same. Cupey Bowling & Entertainment Center, Inc., a party-in-interest to the restructuring case, on Nov. 13 filed a joinder to CPG/GS' motion to convert case, stating the present condition of the Cupey Mall is one of extreme deterioration of the physical plant which threatens the health of tenants, its employees and customers alike. On Nov. 27, 2013, Court entered the opinion and order granting CPG/GS' motion for relief from stay upon a finding, among others, that there is "no reasonable possibility of reorganization within a reasonable time." The Debtor filed on Dec. 11, 2013, a motion asking the Court to reconsider its decision. The Debtor asserted in its filing that numerous errors caused the Court to grant CPG/GS relief from the automatic stay. According to the Debtor, CPG/GS was allowed to present its appraisal after it failed to produce it until essentially the morning of the hearing, having filed it on Friday evening at 8:12 p.m. for a Monday morning hearing. The Debtor believed that the Court should have denied the motion for relief outright for failure to comply with the Local Bankruptcy Rules. According to the Debtor, the Mall was generating enough rental income to cover both monthly adequate protection payments to CPG/GS and cover the Debtor's expenses. "But, the periodic cash payments offered, are to guarantee CPG's receipt of whatever amount the Court determines to be adequate and otherwise, to be used for necessary maintenance and repairs. If the Court determined that the offered guarantee covered less than ten months of adequate protection, so be it. The Court was invited to determine the amount that would be required, if the offer was determined to be inadequate, and has declined, even though CPG has never indicated that the amount offered is inadequate, per se, only that Builders does not generate sufficient receipts," the Debtor stated. On Dec. 30, 2013, CPG/GS responded, calling the Debtor's motion for reconsideration of order granting relief from stay "a legally impermissible attempt to relitigate the same issues which have already been presented to this Honorable Court, and which this Court, after substantial effort, ruled against the Debtor." CPG/GS said in its Dec. 30, 2013 filing that the Debtor's untimely arguments fail to establish any qualified circumstance which merit reconsideration, and which cause are solely and exclusively attributable to Debtor's conscious decisions in the handling and strategic management of the instant case. CPG/GS is represented by: O'NEILL & BORGES, LLC Hermann D. Bauer, Esq. Nayuan Zouairabani, Esq. David P. Freedman, Esq. American International Plaza 250 Munoz Rivera Avenue, Suite 800 San Juan, Puerto Rico 00918-1813 Tel: (787) 764-8181 Fax: (787) 753-8944 E-mail: hermann.bauer@oneillborges.com nayuan.zouairabani@oneillborges.com David.Freedman@oneillborges.com 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. The Debtor is represented by Kendra Loomis, Esq. at G A Carlo-Altieri & Associates. Jose M. Monge Robertin, CPA, and Monge Robertin & Asociados Inc. serve as the Debtor's CPA/Insolvency and Restructuring Advisor. CAMCO FINANCIAL: Posts $7.8 Million Net Earnings in 2013 -------------------------------------------------------- Camco Financial Corporation reported net earnings of $7.83 million on $27.91 million of total interest income for the 12 months ended Dec. 31, 2013, as compared with net earnings of $4.16 million on $31.62 million of total interest income for the 12 months ended Dec. 31, 2012. Net earnings were $0.5 million, or $0.03 per diluted share, for the three months ended Dec. 31, 2013, versus $2.8 million, or $0.26 per diluted share, for the same period in 2012. As of Dec. 31, 2013, the Company had $774.38 million in total assets, $704.13 million in total liabilities and $70.24 million in stockholders' equity. James E. Huston, president and CEO, said, "Our full-year 2013 financial results represent the highest amount of net earnings since 2005 and also reflect the progress we have achieved during the past several years to return Advantage Bank to a sound financial position. During this period credit quality has significantly improved, noninterest income is more diversified and our balance sheet is much stronger. Underscoring these achievements, on November 1, 2013, we announced the termination of the consent order by federal and state regulators related to Advantage Bank." A copy of the press release is available for free at: http://is.gd/Jdd09D About Camco Financial Cambridge, Ohio-based Camco Financial Corporation is a bank holding company that was organized under Delaware law in 1970. Camco is engaged in the financial services business in Ohio, Kentucky and West Virginia, through its wholly-owned subsidiary, Advantage Bank, an Ohio bank. On March 31, 2011, Camco divested activities related to Camco Title Agency and decertified as a financial holding company. Camco remains a bank holding company and continues to be regulated by the Federal Reserve Board. Plante & Moran PLLC, in Auburn Hills, Michigan, in their report on the consolidated financial statements for the year ended Dec. 31, 2012, noted that the Corporation's bank subsidiary is not in compliance with revised minimum regulatory capital requirements under a formal regulatory agreement with the banking regulators, and that failure to comply with the regulatory agreement may result in additional regulatory enforcement actions. Camco's wholly-owned subsidiary Advantage Bank's Tier 1 capital does not meet the requirements set forth in the 2012 Consent Order. As a result, the Corporation will need to increase capital levels. The Corporation reported net earnings of $4.2 million on net interest income (before provision for loan losses) of $23.9 million in 2012, compared with net earnings of $214,000 on net interest income of $214,000 on net interest income (before provision for loan losses) of $25.9 million in 2011. CARAUSTAR INDUSTRIES: Moody's Assigns B2 Rating on Add-on Loan -------------------------------------------------------------- Moody's Investors Service changed the outlook on Caraustar Industries Inc. to negative from stable following the company's announcement that it will issue a one time shareholder dividend of roughly $80 million, financed by an add-on of an equal amount to its existing senior secured term loan facility. Moody's affirmed Caraustar's Corporate Family Rating (CFR) at B2 along with the existing B2 rating on the company's Senior Secured Term Loan due 2019, and the existing Ba2 rating on its Senior Secured ABL Revolving Credit Facility. At the same time, Moody's assigned a B2 rating to the $80 million add-on to the existing term loan. Caraustar was first assigned public ratings in April 2013, when it was acquired by a private investment firm H.I.G. Capital from Wayzata Investment Partners for approximately $470 million. Ratings Rationale The negative outlook reflects the increase in leverage and weakening of the credit profile following the debt-financed dividend. Moody's estimate that pro-forma for the transaction, the company's Debt/ EBITDA as of the end of 2013 and incorporating Moody's standard adjustments, stood at roughly 5.5x. Caraustar's B2 corporate family rating reflects concentration in paper packaging products and its relatively small size, as well as its limited operating history following its emergence from Chapter 11 bankruptcy in mid-2009. The company is concentrated in one product segment - the production of packaging papers and related products, including recycled fiber, uncoated and coated recycled paperboard, folding cartons and tubes and cores. Caraustar's mills and converting plants are located throughout North America. In 2013, the company generated approximately $730 million in revenues. Caraustar generates relatively strong and stable EBITDA margins (expected to track at 12% - 13%, as adjusted, over the next 12-18 months), which is a function of the company's integrated business model, as well as relatively stable, diversified end markets, including both industrials (e.g., housing, paper mills, textiles and film), as well as consumer packaging (predominantly food and beverage). The company's recovered paper division supplies 100% of the fiber needed for internal paperboard production and sells roughly 70% of its fiber to third parties. That said, only 15% of the company's recovered fiber is physically processed internally; the rest is procured from third parties, which leaves the company exposed to OCC price volatility. Given our expectation of upward- creeping OCC prices and energy costs, the company's margins could come under pressure. Caraustar's six uncoated recycled board (URB) mills supply roughly 90% of internal needs at the tube and core converting plants, while 60% of the uncoated board is sold to third parties. The company's folding carton converting facilities source a significant percentage of paper needs externally. Most of the company's mills have dual energy source, including access to low- cost natural gas. While the company has efficient, relatively low cost operations with a diverse product mix, it must compete against larger and better capitalized rivals such as Sonoco Products Company (Baa2, Stable), Rock Tenn Company (Baa3, Stable), and Graphic Packaging (Ba2, Stable), which dominate the recycled paperboard market. The company's ownership structure, and the potential for further shareholder-friendly activities or leveraging transactions, is a constraining factor for the ratings. Moody's note that following the announced dividend, H.I.G. Capital will return a lion share of its original investment of roughly $120 million, not counting management fees. Moody's expect that Caraustar's cash generation and leverage metrics will map in the high-B range over the next twelve to eighteen months, with Debt/ EBITDA, as adjusted, expected to be in the 5x - 6x range. Moody's standard adjustments to debt include pensions and operating leases. The Ba2 rating on the ABL revolving credit facility and B2 rating on the first lien term loan reflect their relative seniority position with the ABL secured by a first lien on all current assets and a second lien on all non-ABL collateral and the term loan secured with a first on all non-working capital assets and a second on the balance. Although an upgrade is unlikely at this time, the ratings outlook could be stabilized if Debt/EBITDA is expected to track towards 5x while RCF-Capex/Debt is sustained above 3%. The ratings could be downgraded if the company's margins contract or if liquidity deteriorates. Specifically, a downgrade would be considered if Debt/EBITDA increases above 6.0x on a sustained basis or if RCF- Capex/Debt turns negative. The principal methodology used in this rating was the Global Paper and Forest Products Industry published in October 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.. Caraustar Industries, Inc. is an integrated manufacturer of 100% recycled paperboard and converted paperboard products. Caraustar serves the four principal recycled boxboard product end-use markets: tubes and cores; folding cartons; gypsum facing paper and specialty paperboard products. The company is based in Austell, Georgia and had revenues of over $730 million in 2013. CAPITOL BANCORP: Liquidating Plan Declared Effective Feb. 3 ----------------------------------------------------------- Capitol Bancorp Ltd., disclosed in a regulatory filing with the Securities and Exchange Commission that, following an uncontested confirmation hearing on Jan. 21, 2014, the U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, on Jan. 29, 2014, entered an order confirming the Amended Joint Liquidating Plan of Capitol Bancorp Ltd. and debtor-affiliate Financial Commerce Corporation, as modified to include certain immaterial modifications, which did not require resolicitation of voting on the Plan, as provided in the Confirmation Order. The Debtors were able to resolve all objections to the Plan and, notwithstanding that only Capitol's Class 3 voted to accept the Plan, the Plan was confirmed through satisfaction of the "cram down" requirements of Bankruptcy Code Sec. 1129(b). The Plan has an Effective Date of February 3, 2014. As of December 31, 2013, Capitol had 41,171,479 shares of common stock, no par value per share outstanding. Classification of Claims The Plan places holders of all Claims and Equity Security Interests, except for Administrative Claims and Priority Tax Claims, in separate classes, for all purposes under the Plan, including voting. Classified Claims and Equity Security Interests for Capitol Bancorp Class 1 - Senior Note Claims: Class 1 consists of all Senior Note Claims, which are Impaired by the Plan. Holders of Class 1 Senior Note Claims voted to reject the Plan. Class 2 - Trust Preferred Securities Claims: Class 2 consists of all Trust Preferred Securities Claims, which are Impaired by the Plan. Holders of Class 2 Trust Preferred Securities Claims voted to reject the Plan. Class 3 - Other Priority Claims: Class 3 consists of all Claims entitled to priority under Section 507(a) of the Bankruptcy Code other than Priority Tax Claims and Administrative Claims. The rights of each Priority Creditor are Impaired by the Plan. Holders of Class 3 Other Priority Claims were the only voting Class that voted to accept the Plan. Class 4 - General Unsecured Claims: Class 4 consists of all Claims that are not Administrative Claims, Senior Note Claims, Trust Preferred Securities Claims, Secured Claims, Impaired Claims, Other Priority Claims or Priority Tax Claims. The rights of each Holder of an Allowed General Unsecured Claim are Impaired by the Plan. Holders of Class 4 General Unsecured Claims voted to reject the Plan. Class 5 - Company's Series A Preferred Stock: Class 5 consists of all of the Company's Series A Preferred Stock Equity Security Interests in Capitol. The Company's Series A Preferred Stock Equity Security Interests are Impaired by the Plan. Holders of Class 5 Company's Series A Preferred Stock Equity Security Interests were not solicited for voting purposes and were deemed to have rejected the Plan. Class 6 - Company's Common Stock: Class 6 consists of all of the Company's Common Stock Equity Security Interests in Capitol. The Company's Common Stock Equity Security Interests are Impaired by the Plan. Holders of Class 6 Company's Common Stock Equity Security Interests were not solicited for voting purposes and were deemed to have rejected the Plan. Class 7 - Intercompany Claims: Class 7 consists of Claims that would otherwise be General Unsecured Claims but for the fact that they are owed by Capitol to FCC. Holders of Class 7 Intercompany Claims are Impaired by the Plan. No ballots were cast by holders of Class 7 Intercompany Claims. Classified Claims and Equity Security Interests for Financial Commerce Class 1 - Intercompany Claims: Class 1 consists of all Intercompany Claims against FCC. Class 1 Intercompany Claims against FCC are Impaired by the Plan. No ballots were cast by Holders of Class 1 Intercompany Claims. Class 2 - FCC's Equity Security Interests: Class 2 consists of the Equity Security Interests in FCC. Class 2 Equity Security Interests in FCC are Impaired by the Plan. No ballots were cast by Holders of Class 2 Equity Security Interests in FCC. The Debtors are unable to estimate a recovery for any of the Classes of Claims and Equity Security Interests of Capitol or FCC. The extent of such recovery, if any, will be dependent on the results of the Sale Process and/or Reorganization. To the extent the Sale Process and/or Reorganization results in Proceeds or other value, which any Bank Regulators may, to the extent of their authority, have the power to restrict and permit the Debtors to distribute in furtherance of the Plan, such distribution(s), if any, shall be made upon completion of the Sale Process and liquidation of any remaining assets of the Debtors' Estates pursuant to the provisions of the Liquidating Trust (assuming no Reorganization) or forthwith upon the closing effecting the Reorganization, and in the following order of priorities: (i) pro rata to pay Administrative Creditors; (ii) pro rata to pay Priority Creditors; (iii) pro rata to pay General Unsecured Creditors, Allowed Senior Note Claims and Allowed Trust Preferred Securities Claims; provided, however, that Holders of Allowed Trust Preferred Securities Claims shall be deemed to have contributed any and all pro rata distributions to which they would otherwise be entitled to the payment of Allowed Senior Note Claims until such time, if any, as Holders of Allowed Senior Note Claims have been paid in full. The Debtors do not expect any recovery in respect of Equity Security Interests, which will be canceled on the Effective Date. Following are the categories of Unclassified Claims: Administrative Claims Other Than Fee Claims: The rights of each Holder of an Allowed Administrative Claim are Unimpaired by the Plan. Each Holder of an Allowed Administrative Claim shall receive Cash equal to the unpaid portion of its Allowed Administrative Claim on the date on which its Allowed Administrative Claim becomes payable under applicable law or any agreement relating thereto. Persons asserting the right to payment of an unpaid Administrative Claim arising prior to Confirmation must file and serve on the Debtors and such other Persons who are designated by the Bankruptcy Rules, the Confirmation Order, or other Order of the Court an application for final allowance of such Administrative Claim no later than 45 days after the Effective Date. Fee Claims: Professionals or other Persons asserting a Fee Claim for services rendered before the Confirmation Date must file and serve on the Debtors and such other Persons who are designated by the Bankruptcy Rules, the Confirmation Order, or other order of the Court, an application for final allowance of such Fee Claim no later than 45 days after the Effective Date. Objections to any Fee Claim must be filed and served on the Debtors and the requesting party by 30 days after the filing of the applicable request for payment of the Fee Claim. Priority Tax Claims: The rights of each Priority Tax Creditor are Unimpaired by the Plan. Each Priority Tax Creditor shall receive Cash equal to the unpaid portion of its Allowed Priority Tax Claim on the date on which its Allowed Priority Tax Claim becomes payable under applicable law or any agreement relating thereto. There are also certain provisions regarding agreements between the Debtors and the Michigan Department of Treasury and the IRS relating to, among other things, the applicable interest rate on taxes, curing or waiving defaults, and limiting the scope of exculpation. Sale to Talmer Prepetition, the Debtor arranged a reorganization plan that was accepted by the requisite majorities of creditors and equity holders in all classes. Problems arose when affiliates of Valstone Partners LLC declined to proceed with a tentative agreement to fund the reorganization by paying $50 million for common and preferred stock while buying $207 million in face amount of defaulted commercial and residential mortgages. On Jan. 1, 2014, Capitol Bancorp and its affiliate, Financial Commerce Corporation, completed the sale, assignment and transfer of assets to Talmer Bancorp, Inc. Immediately prior to the completion of the transaction, Indiana Community Bank, an Indiana state-chartered bank, Bank of Las Vegas, a Nevada state-chartered bank and Sunrise Bank of Albuquerque, a New Mexico state-chartered bank were merged with and into Michigan Commerce Bank, a Michigan state-chartered bank, with Michigan Commerce Bank as the surviving entity -- the "Surviving Bank". Capitol, through its affiliate FCC, previously owned all of the issued and outstanding shares of capital stock of each of Indiana Community Bank, Michigan Commerce Bank, Bank of Las Vegas, and Sunrise Bank of Albuquerque. Capitol, FCC and Talmer, owned by Wilbur Ross, entered into a Stock Purchase Agreement on October 11, 2013, to sell, assign and transfer to Talmer: (i) all of the issued and outstanding shares of common stock of the Surviving Bank; (ii) all bank related contracts; (iii) all right, title and interest to any proceeds received or to be received after December 31, 2012 related to any such contract; (iv) all of the trademarks and service marks registered to Capitol; and (v) certain other assets of Capitol and FCC for a cash purchase price of $4.0 million. Talmer also agreed to make an equity contribution into the Surviving Bank at closing in the amount of up to $90 million and to pay $2.5 million of certain post-petition administrative fees and expenses incurred in Capitol and FCC's bankruptcy cases, and with respect to any contract or agreement to which Capitol or FCC is a party, pay the amount required to be paid with respect to such contract or agreement to cure all monetary defaults under such contract or agreement to the extent required by Section 365(b) of Chapter 11 of the Bankruptcy Code. Implementation of the Confirmed Plan The confirmed Plan includes the creation and operation of a Liquidating Trust. The Liquidating Trust shall become effective on the Effective Date. On the Effective Date, the Debtors shall contribute the following assets to the Liquidating Trust: (i) the Debtors' or Estates' share of the proceeds of the sale of certain of the Debtors' subsidiary banks to Talmer Bancorp, Inc., which sale was approved previously by Bankruptcy Court order, (ii) all causes of action belonging to the Debtors, including causes of action against directors, officers and Insiders of the Debtors, (iii) that certain loan owned by either or both of the Debtors secured by real property in the Lansing, Michigan area and in the approximate amount of $446,008.04, which amount includes principal and accrued but unpaid interest, (iv) upon request of the Liquidation Trustee, copies of, or access by the Liquidation Trustee and his agents to, the Debtors' books, records, and files, and (v) all other assets of the Debtors, except (a) the Debtors' cash on hand in excess of the proceeds of the sale to Talmer (but only up to a maximum of $1,500,000,), (b) furniture, fixtures and equipment, (c) the Debtors' indirect ownership interest in Summit Bank of Kansas City ("Summit Bank"), and (d) other assets of the Debtors reasonably required by the Debtors to operate during the period of the Wind Down Budget (January 21, 2014 - July 21, 2014) (e.g., software and other intellectual property, and the Debtors' books, records and files). Once the sum of the Debtors' cash on hand as of January 21, 2014 plus cumulative cash receipts during the period of the Wind Down Budget (not including Debtors' or Estates' share of the proceeds of the sale to Talmer, the proceeds of the sale of Summit Bank, the $160,000 funded by the Debtors pursuant to Article XIII.N of the Plan and any amounts received by the Debtors as pay agent or payor for any present or former non-debtor subsidiary banks) exceeds $1,500,000, the Debtors shall pay any amounts in excess of the $1.5 Million Threshold to the Liquidating Trust no later than the 15th day of each month following the month in which such proceeds are received, provided that the failure to do so will not impair any release or exculpation provision of the Plan or the Settlement Agreement dated as of December 31, 2013 by and among Capitol Bancorp Ltd. and Financial Commerce Corporation and the Official Committee of Unsecured Creditors of Capitol Bancorp Ltd., et al., provided, further, that in the event that the Debtors fail to timely turnover any amounts in excess of the $1.5 Million Threshold, the Liquidating Trustee may file an action for turnover of such funds and the Debtors will not oppose expedited consideration of such action. The proceeds of the sale of Debtors' indirect interest in Summit Bank shall be contributed to the Liquidating Trust within five business days after the Debtors' receipt of such proceeds. The Debtors shall use commercially reasonable efforts to liquidate their indirect ownership interest in Summit Bank and shall file a motion pursuant to section 363 of the Bankruptcy Code for authorization to sell such interest in Summit Bank (and shall provide notice of such motion to the Liquidation Trustee and other parties that have requested notice in the Chapter 11 Cases). Assets (or proceeds thereof) not contributed to the Liquidating Trust on the Effective Date shall be contributed to the Liquidating Trust as soon as reasonably practicable after they are no longer necessary for the Wind Down or are liquidated by the Debtors. Except as provided in this paragraph, the Debtors shall not be required to contribute any cash or assets to the Trust. Notwithstanding anything to the contrary in the Liquidating Trust or the Plan, no cash or other assets (or proceeds of such other assets, including proceeds of causes of action) contributed to the Liquidating Trust at any time shall thereafter be available for or used to pay Administrative Claims, Fee Claims, Priority Tax Claims, post-Confirmation expenses of the Debtors, or claims of the Debtors' or Committee's Case Professionals for fees and expenses. Although the Plan does have a Toggle Option, whereby prior to, or during, the Sale Process, the Debtors may convert from a liquidation to a Reorganization, provided that certain conditions specified in the Plan are satisfied, it is not contemplated that the Toggle Option will be implemented. Moreover, the Liquidation Trustee has the right to veto the implementation of any Toggle Option that the Debtors may propose. As of the Effective Date, all assets other than those included in the Bankruptcy Court-approved budget were transferred to the Liquidating Trust. Effective upon the later to occur of (a) Sept. 30, 2014 and (b) one Business Day after the closing of the sale of the Debtors' indirect ownership interest in Summit Bank of Kansas City, the Debtors shall be automatically dissolved pursuant to the Michigan Business Corporation Act and applicable nonbankruptcy law without the need for approval of any shareholders of the Debtors or further order of the Bankruptcy Court. Upon the Effective Date, Cristin K. Reid, Corporate President of the Debtors, is authorized take all actions for and on behalf of the Debtors, relating to the Wind Down and dissolution of the Debtors, that may otherwise require approval of the shareholders of the Debtors. Periodic Reporting Capitol intends to file a Form 15 with the Securities and Exchange Commission to provide notice of the suspension of its reporting obligation under Section 15(d) of the Securities Exchange Act of 1934, as amended. Upon filing a Form 15, Capitol will immediately cease filing any further periodic reports under the Exchange Act. Material Modification to Rights of Security Holders Pursuant to the Plan, all issued and outstanding securities of Capitol will automatically be cancelled on the Effective Date and the holders of such securities will be entitled to distributions only to the extent provided for in the Plan in respect of such securities. About Capitol Bancorp Capitol Bancorp Ltd. and Financial Commerce Corporation filed voluntary Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case Nos. 12-58409 and 12-58406) on Aug. 9, 2012. Capitol Bancorp -- http://www.capitolbancorp.com/-- is a community banking company with a network of individual banks and bank operations in 10 states and total consolidated assets of roughly $2.0 billion as of June 30, 2012. CBC owns roughly 97% of FCC, with a number of CBC affiliates owning the remainder. FCC, in turn, is the holding company for five of the banks in CBC's network. CBC is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, 12 U.S.C. Sec. 1841, et seq., and trades on the OTCQB under the symbol "CBCR." Lawyers at Honigman Miller Schwartz and Cohn LLP represent the Debtors as counsel. John A. Simon, Esq., at Foley & Lardner LLP, represents the Official Committee of Unsecured Creditors as counsel. In its petition, Capitol Bancorp scheduled $112,634,112 in total assets and $195,644,527 in total liabilities. The petitions were signed by Cristin K. Reid, corporate president. The Company's balance sheet at Sept. 30, 2012, showed $1.749 billion in total assets, $1.891 billion in total liabilities, and a stockholders' deficit of $141.8 million. CELL THERAPEUTICS: BlackRock Stake at 5.9% as of Dec. 31 -------------------------------------------------------- In a Schedule 13G filed with the U.S. Securities and Exchange Commission, BlackRock, Inc., disclosed that as of Dec. 31, 2013, it beneficially owned 8,653,975 shares of common stock of Cell Therapeutics Inc. representing 5.9 percent of the shares outstanding. A copy of the regulatory filing is available for free at http://is.gd/yUUcEH About Cell Therapeutics Headquartered in Seattle, Washington, Cell Therapeutics, Inc. (NASDAQ and MTA: CTIC) -- http://www.CellTherapeutics.com/-- is a biopharmaceutical company committed to developing an integrated portfolio of oncology products aimed at making cancer more treatable. The Company's balance sheet at Sept. 30, 2013, showed $47.23 million in total assets, $33.39 million in total liabilities, $13.46 million in common stock purchase warrants, and $387,000 in total shareholders' equity. Going Concern The Company's independent registered public accounting firm included an explanatory paragraph in its reports on the Company's consolidated financial statements for each of the years ended Dec. 31, 2007, through Dec. 31, 2011, regarding their substantial doubt as to the Company's ability to continue as a going concern. Although the Company's independent registered public accounting firm removed this going concern explanatory paragraph in its report on the Company's Dec. 31, 2012, consolidated financial statements, the Company expects to continue to need to raise additional financing to fund its operations and satisfy obligations as they become due. "The inclusion of a going concern explanatory paragraph in future years may negatively impact the trading price of our common stock and make it more difficult, time consuming or expensive to obtain necessary financing, and we cannot guarantee that we will not receive such an explanatory paragraph in the future," the Company said in its quarterly report for the period ended Sept. 30, 2013. The Company added that it may not be able to maintain its listings on The NASDAQ Capital Market and the Mercato Telematico Azionario stock market in Italy, or the MTA, or trading on these exchanges may otherwise be halted or suspended, which may make it more difficult for investors to sell shares of the Company's common stock. Bankruptcy Warning "We have acquired or licensed intellectual property from third parties, including patent applications relating to intellectual property for pacritinib, PIXUVRI, tosedostat, and brostallicin. We have also licensed the intellectual property for our drug delivery technology relating to Opaxio which uses polymers that are linked to drugs, known as polymer-drug conjugates. Some of our product development programs depend on our ability to maintain rights under these licenses. Each licensor has the power to terminate its agreement with us if we fail to meet our obligations under these licenses. We may not be able to meet our obligations under these licenses. If we default under any license agreement, we may lose our right to market and sell any products based on the licensed technology and may be forced to cease operations, liquidate our assets and possibly seek bankruptcy protection. Bankruptcy may result in the termination of agreements pursuant to which we license certain intellectual property rights," the Company said in its Form 10-Q for the period ended Sept. 30, 2013. CELL THERAPEUTICS: GOG Ends Patient Enrollment Clinical Trial ------------------------------------------------------------- The Gynecologic Oncology Group informed Cell Therapeutics, Inc., it has completed patient enrollment in the GOG-0212 Phase 3 clinical trial of investigational agent paclitaxel poliglumex (OpaxioTM) as maintenance therapy in ovarian cancer. "Although initial treatment is effective in putting this disease in remission, there is a high relapse rate for patients with ovarian cancer and there are limited treatment options when their cancer returns," said Larry J. Copeland, M.D., Department of Obstetrics and Gynecology, Ohio State University Comprehensive Cancer Center, Group Vice Chair of the GOG and chair of the GOG- 0212 study. "This study was designed to investigate whether Opaxio when used in a maintenance setting could keep these women in remission and as a result extend the lives of these patients. We are very pleased to have completed enrollment in this important study." "This is a significant achievement for the GOG being the largest maintenance study for patients with ovarian cancer ever conducted having enrolled 1,150 patients," said James A. Bianco, M.D., president and CEO of CTI. "There is a significant unmet need in keeping a patient's cancer from returning following initial treatment, and we are hopeful that Opaxio has the potential to serve this role in ovarian cancer." The trial is being conducted and managed by the GOG, which is one of the National Cancer Institute's (NCI) funded cooperative cancer research groups focused on the study of gynecologic malignancies. The GOG-0212 study is a randomized, multicenter, open label Phase 3 trial of either monthly Opaxio or paclitaxel for up to 12 consecutive months compared to surveillance among women with advanced ovarian cancer who have no evidence of disease following first-line platinum-taxane based therapy. For purposes of registration, the primary endpoint of the study is overall survival of patients treated with Opaxio compared to no maintenance therapy. Secondary endpoints are progression-free survival, safety and quality of life. The statistical analysis plan calls for up to four interim analyses and one final analysis, each with boundaries for early closure for superior efficacy or for futility. The first interim analysis was conducted in January 2013, which passed the futility boundary and continued with no changes. Additional information about GOG-0212 may be found at www.clinicaltrials.gov, study ID NCT00108745. About Cell Therapeutics Headquartered in Seattle, Washington, Cell Therapeutics, Inc. (NASDAQ and MTA: CTIC) -- http://www.CellTherapeutics.com/-- is a biopharmaceutical company committed to developing an integrated portfolio of oncology products aimed at making cancer more treatable. The Company's balance sheet at Sept. 30, 2013, showed $47.23 million in total assets, $33.39 million in total liabilities, $13.46 million in common stock purchase warrants, and $387,000 in total shareholders' equity. Going Concern The Company's independent registered public accounting firm included an explanatory paragraph in its reports on the Company's consolidated financial statements for each of the years ended Dec. 31, 2007, through Dec. 31, 2011, regarding their substantial doubt as to the Company's ability to continue as a going concern. Although the Company's independent registered public accounting firm removed this going concern explanatory paragraph in its report on the Company's Dec. 31, 2012, consolidated financial statements, the Company expects to continue to need to raise additional financing to fund its operations and satisfy obligations as they become due. "The inclusion of a going concern explanatory paragraph in future years may negatively impact the trading price of our common stock and make it more difficult, time consuming or expensive to obtain necessary financing, and we cannot guarantee that we will not receive such an explanatory paragraph in the future," the Company said in its quarterly report for the period ended Sept. 30, 2013. The Company added that it may not be able to maintain its listings on The NASDAQ Capital Market and the Mercato Telematico Azionario stock market in Italy, or the MTA, or trading on these exchanges may otherwise be halted or suspended, which may make it more difficult for investors to sell shares of the Company's common stock. Bankruptcy Warning "We have acquired or licensed intellectual property from third parties, including patent applications relating to intellectual property for pacritinib, PIXUVRI, tosedostat, and brostallicin. We have also licensed the intellectual property for our drug delivery technology relating to Opaxio which uses polymers that are linked to drugs, known as polymer-drug conjugates. Some of our product development programs depend on our ability to maintain rights under these licenses. Each licensor has the power to terminate its agreement with us if we fail to meet our obligations under these licenses. We may not be able to meet our obligations under these licenses. If we default under any license agreement, we may lose our right to market and sell any products based on the licensed technology and may be forced to cease operations, liquidate our assets and possibly seek bankruptcy protection. Bankruptcy may result in the termination of agreements pursuant to which we license certain intellectual property rights," the Company said in its Form 10-Q for the period ended Sept. 30, 2013. CHARTER COMMUNICATIONS: Fitch Affirms 'BB-' Issuer Default Rating ----------------------------------------------------------------- Fitch Ratings has affirmed the 'BB-' Issuer Default Rating (IDR) assigned to CCO Holdings, LLC (CCOH) and Charter Communications Operating, LLC (CCO). Each of CCOH and CCO are indirect wholly owned subsidiaries of Charter Communications, Inc. (Charter). Fitch has also affirmed the specific issue ratings assigned to Charter's various subsidiaries. The Rating Outlook for all of Charter's ratings is Stable. Approximately $14.4 billion of debt (principal value) outstanding as of Sept. 30, 2013 is affected by Fitch's action. Key Rating Drivers: -- Growing free cash flow generation improving Charter's overall financial flexibility within the current ratings; -- Fitch anticipates that Charter's credit profile will strengthen during 2014 with consolidated leverage declining to 4.6x by the end of 2014; -- Market share focused operating strategy is strengthening Charter's operating profile; -- Event risks related to Charter's potential participation in cable industry consolidation are elevated. Changes to Charter's operating strategies currently implemented by management are expected to further improve Charter's operating profile and strengthen the company's overall competitive position in the market. The market share driven strategy, which is focused on enhancing the overall competitiveness of Charter's video service and executing on its all-digital infrastructure, is improving subscriber metrics, growing revenue and ARPU trends, stabilizing operating margins and increasing free cash flow generation. The company's all-digital conversion initiative along with anticipated enhancements to the user interface, expected to be largely completed by the end of 2014, will certainly improve the video service offering and lead to lower video subscriber churn in Fitch's estimation. Fitch anticipates these initiatives will alleviate residential video subscriber losses and increase triple- play service penetration while boosting video service ARPU, which will position the company to accelerate revenue growth during 2014. Event risks related to Charter's participation in cable industry consolidation are elevated. A potential merger agreement between Charter and Time Warner Cable, Inc. (TWC) could have negative rating implications for Charter. TWC's board of directors unanimously rejected Charter's most recent informal cash and stock offer of $132.50 per share setting the stage for a more public negotiation which potentially can lead to a change in the price or consideration mix. Fitch estimates the cash requirements related to Charter's proposal total approximately $23.3 billion (excluding any potential cash contribution from Liberty Media). Assuming Charter debt finances its entire cash requirement related to its proposal, Fitch believes the pro forma debt of the combined entity would approximate $62.6 billion translating to pro forma leverage of 5.8x before consideration of any potential cost or operating synergies (based on data as of Sept. 30, 2013). Fitch has previously indicated that negative rating actions would likely coincide with a transaction that increases leverage beyond 5.5x in the absence of a credible deleveraging plan. Fitch further notes that additional rating considerations including but not limited to financial strategy and capital structure policy, operating strategy and expectations as well as execution risks will also weigh on any potential rating action. Charter's debt structure has evolved into a more traditional hold- co/op-co structure, with senior unsecured debt issued by CCOH and senior secured debt issued by CCO. Total debt outstanding as of Sept. 30, 2013 was approximately $14.4 billion (principal value), of which 28% was secured. Total debt increased 11.1% relative to year-end 2012 largely attributable to the acquisition of Bresnan Broadband Holdings. Management's leverage target remains between 4x and 4.5x. The Bresnan Broadband Holdings LLC acquisition completed during July 2013 slowed the pace of the improvement expected in Charter's credit profile. Fitch anticipates Charter's leverage will remain within the expectations for the rating and approximate 5x at the end of 2013 before declining somewhat to 4.6x by the end of 2014. Consolidated leverage was 5.15x as of the LTM period ended Sept. 30, 2013 reflecting an increase from 4.75x as of year-end 2012. Fitch regards Charter's liquidity position and overall financial flexibility as satisfactory given the rating category. Charter's financial flexibility will improve in step with the growth of free cash flow generation. Charter generated $340 million of free cash flow during the LTM period ended Sept. 30, 2013 reflecting a 160% increase relative to free cash flow generated during the year ended Dec. 31, 2012. Fitch anticipates that free cash flow generation will exceed $400 million annually during the current ratings horizon with free cash flow as a percent of lease adjusted debt exceeding 3.5% by year-end 2015 when stronger operating margins return. The company's liquidity position is primarily supported by available borrowing capacity from its $1.3 billion revolver and anticipated free cash flow generation. Commitments under the company's revolver will expire on April 22, 2018. As of Sept. 30, 2013, approximately $978 million was available for borrowing. Charter has done a good job of extending its maturity profile as only 4% of outstanding debt matures before 2017, including $414 million and $65 million during 2014 and 2015, respectively. Fitch believes that Charter has the financial flexibility to retire near-term maturities with cash on hand and future free cash flow, however, Fitch anticipates that Charter will refinance the CCOH maturity ($350 million) scheduled during 2014. Outside of an event driven merger and acquisition activity, rating concerns center on Charter's elevated financial leverage (relative to other large cable MSOs), and a comparatively weaker subscriber clustering and operating profile. Moreover, Charter's ability to adapt to the evolving operating environment while maintaining its relative competitive position given the challenging competitive environment and soft housing and employment trends remains a key rating consideration. Considering the mature nature of video services and growing penetration of high speed data services, Charter's ability to grow consumer revenues while maintaining operating margins also remains a concern. Rating Sensitivities: -- Positive rating actions would be contemplated as leverage declines below 4.5x; -- The company demonstrates progress in closing gaps relative to its industry peers on service penetration rates and strategic bandwidth initiatives; -- Operating profile strengthens as the company captures sustainable revenue and cash flow growth envisioned when implementing the current operating strategy. -- Fitch believes negative rating actions would likely coincide with a leveraging transaction or the adoption of a more aggressive financial strategy that increases leverage beyond 5.5x in the absence of a credible deleveraging plan; -- Adoption of a more aggressive financial strategy; -- A perceived weakening of Charter's competitive position or failure of the current operating strategy to produce sustainable revenue and cash flow growth along with strengthening operating margins. Fitch has affirmed the following ratings with a Stable Outlook: CCO Holdings, LLC -- IDR at 'BB-'; -- Senior secured term loan at 'BB+'; -- Senior unsecured debt at 'BB-'. Charter Communications Operating, LLC -- IDR at 'BB-'; -- Senior secured credit facility at 'BB+'. CHEBOYGAN LUMBER: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Cheboygan Lumber Company dba St. Ignace Do-It Center dba Mackinaw Building Center 829 N. Huron Street Cheboygan, MI 49721 Case No.: 14-20232 Chapter 11 Petition Date: February 6, 2014 Court: United States Bankruptcy Court Eastern District of Michigan (Bay City) Judge: Hon. Daniel S. Opperman Debtor's Counsel: Adam Daniel Bruski, Esq. LAMBERT, LESER, ISACKSON, COOK & GIUNTA, P.C. 916 Washington Avenue, Suite 309 Bay City, MI 48708 Tel: 989-893-3518 Email: abruski@lambertleser.com - and - Susan M. Cook, Esq. LAMBERT, LESER, ISACKSON, COOK & GIUNTA, P.C. 916 Washington Avenue, Suite 309 Bay City, MI 48708 Tel: 989-893-3518 Email: smcook@lambertleser.com Total Assets: $2.14 million Total Debts: $1.90 million The petition was signed by Roy A. Schryer, president. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. CHEVAL GOLF CLUB: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Cheval Golf Club, LLC, Debtor 545 Frederica Lane Dunedin, FL 34698 Case No.: 14-01346 Chapter 11 Petition Date: February 6, 2014 Court: United States Bankruptcy Court Middle District of Florida (Tampa) Judge: Hon. Rodney May Debtor's Counsel: Christopher C. Todd, Esq. MCINTYRE, PANZARELLA, THANASIDES, ET AL 6943 East Fowler Avenue Temple Terrace, FL 33617 Tel: 813-899-6059 Fax: 813-899-6069 Email: chris@mcintyrefirm.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Michael Sheeks, manager. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. CITIZENS DEVELOPMENT: Calif. Agency Balks at Amended Plan --------------------------------------------------------- The California State Board of Equalization objects to the First Amended Chapter 11 Plan of Reorganization filed by Citizens Development Corporation with the U.S. Bankruptcy Court for the Southern District of California, saying that the Debtor's Plan is unconfirmable in its present state, and fails to conform with the provision pursuant to Section 1123(a)4 and 1146(a) of the Bankruptcy Code. SBE wants the Court to deny confirmation of the Debtor's plan. The Hon. Laura Taylor will consider confirmation of the Debtor's Plan at a hearing on Feb. 27, 2014, at 2:00 p.m. Plan objections will be considered during the hearing. SBE is charged with administering certain taxes under the Revenue and Taxation code of the State of California, including taxes under California's sales and use tax law. The Debtor holds a California retail seller's permit with SBE. Leslie Branman Smith, Esq., deputy attorney general of SBE, says the agency has an administrative claim for taxes incurred during the pendency of the bankruptcy proceedings. On Nov. 7, 2013, SBE filed a proof of claim amounting $85,363 for tax periods from July 1, 2011, to June 30, 2013, against the Debtor. About Citizens Development San Marcos, California-based Citizens Development Corp., owns and operates the Lake San Marcos Resort and Country Club located in San Diego County. The Company filed a voluntary petition for relief under Chapter 11 (Bankr. S.D. Cal. Case No. 10-15142) on August 26, 2010. Ron Bender, Esq., and Krikor Meshefejian, Esq., at Levene, Neale, Bender, Yoo & Brill LLP, represent the Debtor. The Debtor estimated its assets and debts at $10 million to $50 million. Chapter 11 petitions were also filed by affiliates LSM Executive Course, LLC (Bankr. S.D. Cal. Case No. 10-07480), and LSM Hotel, LLC (Bankr. S.D. Cal. Case No. 10-13024). Tiffany L. Carroll, Acting U.S. Trustee for Region 15, was unable to appoint an official committee of unsecured creditors in the Chapter 11 case of Citizens Development Corp. CITIZENS DEVELOPMENT: Ally Financial Agrees to Vote for Plan ------------------------------------------------------------ Ally Financial Inc., a secured creditor of Citizens Development Corporation, has agreed to withdraw its objection to the Amended Plan and, instead, vote in favor of that plan after reaching an agreement with Citizens wherein the Debtor would pay Ally Financial's balance loan of $4,561 with a per diem of $0.82. As reported in the Troubled Company Reporter, Ally Financial asked the Court to deny the Debtor's exit plan. Ally Financial questioned a provision of the plan that proposes to not pay the "post-petition interest" on its claim. "In order to confirm the plan over secured creditor's objection, the plan must provide for secured creditor to receive post- petition interest on its claim," said Ally's lawyer, Toriana Holmes, Esq., at Severson & Werson P.C., in San Francisco, California. The bankruptcy judge on Dec. 20, 2013, approved the disclosure statement explaining Citizen's Plan. According to the disclosure statement, the plan will be funded by LSM Lender LLC, which has agreed to provide up to $2.5 million in additional financing. The funding will also come from a new value contribution in the amount of $400,000 to be made to the reorganized company by Atlantica; from Citizens Development's cash on hand which is estimated to be about $25,000; from revenue generated from its business operations and other sources. Under the Plan: * LSM Lender's secured claim in the amount of $7.81 million will be repaid. The claim, including the $2.5 million loan, will be secured by a "first priority lien" on all assets of Citizens Development subsequent to substantive consolidation. * General unsecured creditors will receive a pro rata distribution of cash totaling 10% of the amount of their claims, with the total distribution of cash to all creditors collectively not to exceed $100,000. * The company's equity holders won't receive payments or retain any property. All of the existing equity interests in Citizens Development will be deemed cancelled when the company officially exits bankruptcy. A full-text copy of the Disclosure Statement is available for free at http://is.gd/Ak0Zmn About Citizens Development San Marcos, California-based Citizens Development Corp., owns and operates the Lake San Marcos Resort and Country Club located in San Diego County. The Company filed a voluntary petition for relief under Chapter 11 (Bankr. S.D. Cal. Case No. 10-15142) on August 26, 2010. Ron Bender, Esq., and Krikor Meshefejian, Esq., at Levene, Neale, Bender, Yoo & Brill LLP, represent the Debtor. The Debtor estimated its assets and debts at $10 million to $50 million. Chapter 11 petitions were also filed by affiliates LSM Executive Course, LLC (Bankr. S.D. Cal. Case No. 10-07480), and LSM Hotel, LLC (Bankr. S.D. Cal. Case No. 10-13024). Tiffany L. Carroll, Acting U.S. Trustee for Region 15, was unable to appoint an official committee of unsecured creditors in the Chapter 11 case of Citizens Development Corp. CLEVER HANS: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Clever Hans, L.L.C. dba Toy Joy 403 W 2nd St. Austin, TX 78701 Case No.: 14-10197 Chapter 11 Petition Date: February 6, 2014 Court: United States Bankruptcy Court Western District of Texas (Austin) Judge: Hon. Christopher H. Mott Debtor's Counsel: Patrick C. Hargadon, Esq. PATRICK C. HARGADON, P.C. P.O. Box 1675 Dripping Springs, TX 78620 Tel: (512) 264-1033 Fax: 264-0947 Email: pharglaw@aol.com Total Assets: $70,295 Total Liabilities: $1.15 million The petition was signed by Trevor Yopp, manager. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/txwb14-10197.pdf CNO FINANCIAL: Moody's Reviews 'Ba3' Debt Rating for Downgrade -------------------------------------------------------------- Moody's Investors Service has placed on review for upgrade, the credit ratings of CNO Financial Group (CNO, NYSE: CNO, senior secured at Ba3). In addition, Moody's placed the Baa3 insurance financial strength (IFS) ratings of CNO's primary life insurance subsidiaries on review for possible upgrade. As part of the rating action, Moody's also affirmed the Ba1 IFS rating, with a stable outlook, of Conseco Life Insurance Company (CLIC). Ratings Rationale Moody's said that the review for upgrade is driven by improvements in CNO's ability to sustain and improve revenue and earnings growth in its core business segments in light of investments in its business platform as well as improving trends in the economy. Moody's Vice President, Ann Perry, said: "The review for upgrade of CNO's credit ratings reflects positive pressure on the company's credit profile including its asset quality, profitability and financial flexibility. The review will focus on the risk profile and future profitability of the company's long term care business in addition to the company's strategy to balance capital growth and policyholder needs with shareholder friendly activities including share repurchases and common stock dividends. The rating agency said that it will also consider the company's possible strategies for managing its run-off businesses. Moody's noted that CNO's financial flexibility has strengthened, with financial leverage in the 20% range as of September 30, 2013. The company's capital structure benefited from its last recapitalization in 2012 by lowering interest expense and lengthening its debt maturity schedule. As CNO targets the "middle America" market - primarily middle income individuals at or near retirement - CNO avoids the more crowded and more ratings sensitive upper income market segment as it markets individual life and health insurance products. In recent quarters, CNO's earnings and profit picture have improved, and Moody's expects continued earnings expansion for 2014. However, the rating agency commented that the company faces challenges in managing its legacy long term care portfolio and its exposure to interest sensitive liabilities, even with recent increases in interest rates. Moody's added that CLIC's Ba1 IFS rating is based on its runoff status and its poor credit fundamentals. CLIC's operations consist primarily of a closed block of interest sensitive life insurance, a portion of which was the subject of recently settled class action litigations. The company, which Moody's considers "non- core", no longer writes new business and is managed at a capital level considerably below that of CNO's main operating life insurance subsidiaries. According to Moody's, the following could result in an upgrade of CNO's and its operating subsidiaries' (other than CLIC) ratings: consistent ROC of at least 5%; earnings coverage of five times; and consolidated NAIC RBC ratio (without diversification benefit) of at least 320%. Conversely, the following could result in a confirmation of CNO's and its operating subsidiaries' (except for CLIC) ratings with a stable outlook: ROC of less than 5%; earnings coverage of less than five times; and a consolidated NAIC RBC ratio (without diversification benefit) of less than 320%. Given CLIC's effective runoff status and low capitalization, an upgrade is unlikely. CLIC's ratings could be downgraded if: the NAIC RBC ratio falls below 150% or the company incurs material losses on the runoff block of business. The following ratings have been placed on review for upgrade: CNO Financial, Inc - LT corporate family ratings at Ba3, senior secured debt at Ba3 and senior unsecured debt at B1; Bankers Life and Casualty Company - insurance financial strength rating at Baa3; Colonial Penn Life Insurance Company - insurance financial strength rating at Baa3; Washington National Life Insurance Company - insurance financial strength rating at Baa3. The following rating was affirmed with a stable outlook: Conseco Life Insurance Company - insurance financial strength rating at Ba1. CNO Financial Group is a specialized financial services holding company that operates primarily in the life and health insurance sectors through its subsidiaries. As of September 30, 2013, CNO, which is headquartered in Carmel, Indiana, reported total assets of approximately $34 billion and shareholders' equity of $4.8 billion. The principal methodology used in this rating was Moody's Rating Methodology for U.S. Life Insurers published in December 2013. Moody's insurance financial strength ratings are opinions of the ability of insurance companies to pay punctually senior policyholder claims and obligations. COMMERCIAL VEHICLE: Moody's Affirms B2 CFR; Alters Outlook to Neg ----------------------------------------------------------------- Moody's Investors Service has affirmed all long-term ratings of Commercial Vehicle Group, Inc. ("CVGI"), including the B2 Corporate Family Rating ("CFR"), and revised the rating outlook to negative. "The outlook revision to negative reflects the potential risk that expected improvement in very weak credit measures from an announced operational restructuring program may not be enough to offset only modest growth in Class 8 build rates over the near term," said Ben Nelson, Moody's Assistant Vice President and lead analyst for Commercial Vehicle Group, Inc. Moody's upgraded the company's Speculative Grade Liquidity Rating to SGL-2 from SGL-3 in acknowledgement of a strong cash balance and recent maturity extension of its revolving credit facility. CVGI amended the credit agreement to extend the maturity from April 2014 to November 2018. According to Nelson, "good liquidity was the primary reason Moody's affirmed CVGI's long term ratings." The actions: Issuer: Commercial Vehicle Group, Inc. Corporate Family Rating, Affirmed B2 Probability of Default, Affirmed B2-PD $250 million Senior Secured Notes due 2019, Affirmed B2 (LGD4 50%) Speculative Grade Liquidity Rating, Upgraded SGL-2 from SGL-3 Outlook, Changed to Negative from Stable Ratings Rationale CVGI's B2 CFR is constrained primarily by weak credit measures, modest size relative to rated automotive supplier peers, geographic and customer concentration, and exposure to highly cyclical commercial vehicle and construction end markets. Moody's believes that modest growth in commercial vehicle builds and the implementation of operational improvement initiatives will drive down pro-forma adjusted financial leverage from the high single digits debt/EBITDA at September 30, 2013, but potentially not sufficiently in the near term to support the B2 rating. At present the company's leverage remains quite high for the rating category. The rating acknowledges the company's demonstrated ability to manage its cost structure in challenging times and flexibility associated with high cash balances and a covenant-lite financing structure, a notable improvement from previous financing structures that required a series of covenant-related amendments in response to weakening operating performance during 2007-2009. The SGL-2 Speculative Grade Liquidity Rating reflects good liquidity to support operations for at least the next four quarters with available liquidity of over $100 million at September 30, 2013. While Moody's anticipates that the company will generate sufficient EBITDA to easily cover interest and maintenance capital spending, the rating agency expects that investment in operational improvement initiatives, expansion of working capital, and expansionary capital spending will result in modest cash consumption in 2014, resulting in a modest erosion of cash from the $75 million cash balance reported at September 30, 2013. Moody's does not expect the company to draw down on its $40 million asset-based revolving credit facility in the near-term, though $27 million was available after considering borrowing base restrictions and letters of credit at September 30, 2013. The amended credit agreement contains a springing fixed charge covenant if availability falls below $7.5 million. The negative outlook incorporates execution risk associated with the operational improvement initiatives and concerns that the magnitude of improvement in credit measures will not be adequate to maintain the rating. Moody's could downgrade the rating if the company does not evidence sufficient sequential improvement to reduce leverage to below 5.5 times by year end or maintain a good liquidity position. Given the company's weak position in the rating category, an upgrade is unlikely in the near-term. Moody's could stabilize the rating outlook with expectations for leverage sustained below 5.5 times and continued good liquidity. Upward momentum would require a sustained improvement in operating performance with expectations for leverage below 4 times, interest coverage above 2 times (EBITA/Interest), and free cash flow approaching 10% of debt. 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. Commercial Vehicle Group, Inc. is a provider of customized products for the commercial vehicle market, including the heavy- duty truck, construction, agricultural, specialty and military transportation markets. The company is an amalgamation of several predecessor organizations whose products include cab structures & assembly, seats & seating systems, trim systems & components, wire harnesses, wipers, controls and mirrors. Headquartered in New Albany, Ohio, the company generated $738 million of revenue for the twelve months ended September 30, 2013. COMMUNITY WEST: Earns $3.1 Million in Fourth Quarter ---------------------------------------------------- Community West Bancshares reported net income of $3.13 million on $6.76 million of total interest income for the three months ended Dec. 31, 2013, as compared with net income of $2.33 million on $7.46 million of total interest income for the same period during the prior year. For the 12 months ended Dec. 31, 2013, the Company reported net income of $8.98 million on $27.86 million of total interest income as compared with net income of $3.17 million on $31.36 million of total interest income during the prior year. As of Dec. 31, 2013, the Company had $539 million in total assets, $471.44 million in total liabilities and $67.55 million in stockholders' equity. "Our operational restructuring plan is delivering favorable results, with our fourth quarter results marking our sixth consecutive quarter of profitability. Our team's success in executing this plan enabled us to end 2013 on a high note, with nonaccrual loans and net loan charge-offs declining substantially compared to 2012, while net REO and repossessed assets also decreased. As a result of this improvement in profitability and asset quality, we reversed the deferred tax asset valuation allowance in the fourth quarter, reflecting our expectation of sustainable profitability in the future," stated Martin E. Plourd, president and chief executive officer. "Another highlight of the quarter was our balance sheet growth. The loan portfolio increased 5% during the quarter compared to three months earlier, and core deposits remained strong at 82% of total deposits. We continue to improve our capital ratios and credit quality metrics compared to a year ago, while maintaining a strong net interest margin. We will continue to increase our marketing outreach in the communities we serve while focusing on increasing shareholder value." As a result of improvement of its financial condition over the past 24 months, and the Bank's effective compliance with the Written Consent Agreement (Agreement), the Office of the Comptroller of the Currency (OCC), its primary regulator, has terminated its Agreement with Community West Bank entered into on Jan. 26, 2012. Effective immediately, the Bank will no longer be subject to the terms and conditions of the Agreement. "The termination of our Agreement with the OCC is an independent confirmation of the improvements we have achieved over the past two years. This important milestone substantiates that our efforts to reduce problem assets, document the allowance for loan losses and return to profitability have been successful," said Plourd. On Jan. 26, 2012, the Bank entered into a consent agreement with the Comptroller of the Currency, the Bank's primary banking regulator, which requires the Bank to take certain corrective actions to address certain deficiencies in the operations of the Bank, as identified by the OCC. The Bank has taken action to comply with the terms of the OCC Agreement, which actions have been discussed in previous filings with the Securities and Exchange Commission. In addition to the actions so identified, the Bank has taken the following actions: The Bank has achieved the required minimum capital ratios required by Article III of the OCC Agreement, and as of Sept. 30, 2013, the Bank's Tier 1 Leverage Capital ratio was 12.06% and the Total Risk-Based Capital ratio was 17.11%. The Bank's Board of Directors continues to prepare a written evaluation of the Bank's performance against the capital plan on a quarterly basis, including a description of actions the Bank will take to address any shortcomings, which is documented in Board meeting minutes. At its monthly meetings, the Compliance Committee continues to review the Bank's processes, personnel and control systems to ensure they are adequate in accordance with the Article IV of the OCC Agreement. While the Bank believes that it is in substantial compliance with the OCC Agreement, no assurance can be given that the OCC will concur with the Bank's assessment. Failure to comply with the provisions of the OCC Agreement may subject the Bank to further regulatory action, including but not limited to, being deemed undercapitalized for purposes of the OCC Agreement, and the imposition by the OCC of prompt corrective action measures or civil money penalties which may have a material adverse impact on the Company's financial condition and results of operations. A copy of the press release is available for free at: http://is.gd/R9ufak About Community West Community West Bancshares is a financial services company headquartered in Goleta, California, that provides full service banking and lending through its wholly owned subsidiary Community West Bank, which has five California branch banking offices in Goleta, Santa Barbara, Santa Maria, Ventura and Westlake Village. * * * This concludes the Troubled Company Reporter's coverage of Community West until facts and circumstances, if any, emerge that demonstrate financial or operational strain or difficulty at a level sufficient to warrant renewed coverage. DEALERTRACK TECHNOLOGIES: Moody's Assigns Ba3 CFR; Outlook Stable ----------------------------------------------------------------- Moody's Investors Service assigned a Ba3 first-time Corporate Family Rating (CFR) and a Ba3-PD Probability of Default Rating (PDR) to Dealertrack Technologies, Inc. Moody's also assigned Ba2, LGD3-38% rating to the company's $775 million first lien senior secured credit facilities, consisting of a $200 million revolving credit and a $575 million term loan. As part of the rating action, Moody's assigned an SGL-2 rating indicating good liquidity. The term loan borrowings, cash on hand, in conjunction with about $400 million in new stock issuance will be used to fund the $1 billion purchase of Dealer.com. The rating outlook is stable. Assignments: Corporate Family Rating at Ba3 Probability of Default Rating at Ba3-PD First Lien Senior Secured Facilities at Ba2 (LGD 3 -38%) Short Term Liquidity -- Assigned SGL-2 Outlook: Stable RATINGS RATIONALE Ratings Rationale Dealertrack's Ba3 CFR is supported by the company's strong revenue growth profile and broad reach across auto dealerships, financial institutions and state motor vehicle agencies. Over the past decade, the company has deepened its relationships with a critical mass of auto dealerships and OEMs in the United States and Canada to expand its role beyond its historic strength of facilitating customer financing to handle the entire flow of automobile sales, inventory management and operations for the dealers. With its pending acquisition of Dealer.com, Dealertrack will further expand its product portfolio to run the dealers' Internet marketing and digital commerce efforts. The company's relatively small scale in the large and fragmented auto dealership services market constrains the rating, along with heightened financial leverage due to substantial purchase price paid for Dealer.com. The pro forma debt/EBITDA leverage (subject to Moody's standard adjustments) at closing is expected to be about 5.5 times, although Moody's anticipates leverage to decrease to the mid 4.0 times levels at year end 2014, and falling below 4.0 times in 2015, based on expected revenue growth and cost synergies. The rating is also supported by the company's long-standing customer base and contractual relationships through increased product subscriptions which engender high recurring revenues, as well as an asset-light business model which could provide a platform for strong free cash flow generation in a tightly managed operating cost environment. Moody's views Dealertrack to have good liquidity, and expects the company to be modestly free cash flow positive over the next 12 to 18 months, as it digests the Dealer.com acquisition. In addition, the company has seasonal cash swings as it incurs added sales costs to grow its business. Moody's expects the company to operate with cash balances of about $50 million, which is far lower than the historic balances of above $100 million. The company maintains a $200 million revolving credit facility as a source for external liquidity, which Moody's expects to be undrawn over the next 12 months. The ratings for Dealertrack debt instruments comprise both the overall probability of default to which Moody's assigned a PDR of Ba3-PD and an average family loss given default assessment. Moody's rates the company's senior secured credit facilities Ba2, LGD3-38%. The Ba2 rating on the senior secured term loan facility reflects the instruments' position in the capital structure relative to the unrated $200 million convertible note, trade payables and pension and operating lease obligations. The ratings of the senior secured credit facility also benefit from the superior collateral package that includes all assets and upstream guarantees of subsidiaries, and a pledge of stock of the Canadian subsidiaries. Rating Outlook The stable outlook reflects Moody's expectations that the company will successfully integrate Dealer.com and will grow revenues and operating margins in the near term. What Could Change the Rating UP As Dealertrack's rating is prospective for expected operating synergies and rapid deleveraging, an upgrade is unlikely in the near term. Dealertrack's rating could be upgraded if the company exhibits strong revenue growth, and maintains expense discipline such that adjusted operating margins consistently stay above 17% and demonstrate consistently high levels of free cash flow. The rating could also be considered for an upgrade if the company maintains adjusted leverage below 3.0 times. What Could Change the Rating DOWN Dealertrack's ratings could be downgraded if the company suffers integration issues, its operating margins do not improve as anticipated, the company loses market share, or there is a change in Dealertrack's competitive position as evidenced by adjusted operating margins staying below 9%. In addition, the rating may be downgraded if Dealertrack's adjusted leverage remains above 4.0 times. Headquartered in Lake Success, NY, Dealertrack provides web-based software solutions and services for major segments of the automotive retail industry, including dealers, lenders, OEMs, third party retailers, agents and aftermarket providers across US and Canada. 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. DELPHI CORP: Moody's Hikes Senior Unsecured Notes Rating From Ba1 ----------------------------------------------------------------- Moody's Investors Service upgraded Delphi Corporation's senior unsecured notes, moving to Baa3 from Ba1. Delphi Corporation is the U.S. based subsidiary of Delphi Automotive PLC (Delphi). In a related action, the ratings of the senior bank credit facilities were lowered to Baa3 from Baa2, reflecting the release of collateral supporting the facilities. Delphi's Corporate Family, Probability of Default, and Speculative Grade Ratings have been withdrawn. The rating outlook is stable. The following ratings were raised: $800 million senior unsecured notes due 2023, to Baa3 from Ba1 (LGD4, 62%); $500 million senior unsecured notes due 2019, to Baa3 from Ba1 (LGD4, 62%); $500 million senior unsecured notes due 2021, to Baa3 from Ba1 (LGD4, 62%). The following ratings were lowered: $1.5 billion revolving credit facility due 2018, to Baa3 from Baa2 (LGD2 16%); $564 million (remaining amount) term loan A due 2018, to Baa3 from Baa2 (LGD2 16%). The following ratings were withdrawn: Ba1, Corporate Family Rating; Ba1, Probability of Default Rating; SGL-2 Speculative Graded Liquidity Rating. Ratings Rationale The upgrade reflects Moody's expectations that Delphi will embrace financial disciplines that support an investment-grade rating level as it executes its share repurchase program and contemplates acquisitions that will expand its position in related businesses. Since emerging from bankruptcy Delphi has demonstrated a highly competitive and profitable operating structure that has supported high profit margins, strong free cash generation and investment- grade credit metrics. Moody's also continues to anticipate that the majority of Delphi's profitability will be generated out of the company's foreign entities compared to the entities under the domestic issuer of the company's debt. Yet, Delphi's operating and financial strengths afford the capacity to maintain an investment grade profile while undertaking share repurchases and acquisitions in a paced and prudent manner. Delphi's strong profit margins and free cash flow generating capacity should sustain investment grade credit metrics as growth in the global automotive industry moderates. For the fiscal year ending December 31, 2013 Delphi's EBITA margin approximated 11.2% inclusive of Moody's standard adjustments. Delphi's electrical/electronics architecture and electronics and safety segments (which represent about 65% of revenues), have supported strong growth trends with increasing electrical and connectivity content in passenger cars. Profit margins in these segments also have shown improving trends. As such, Moody's believes that Delphi is well positioned to increase its penetration in these markets and profit trends despite softening overall growth trends in the global automotive industry. Delphi's recently announced increase in shareholder friendly policies are viewed as balanced given the company's strong operating margins and resulting strong free cash flow generation. The stable rating outlook reflects Delphi's strong operating margins and $26.6 billion new business bookings balanced by higher levels of shareholder friendly activities and Moody's view that additional acquisitions may be required for further market penetration in the company's electrical/electronics architecture and electronics and safety segments. Delphi is expected to maintain excellent liquidity over the near- term supported by cash balances of $1.4 billion at December 31, 2013 and an undrawn $1.5 billion revolving credit facility maturing in 2018. The revolving credit facility had about $10 million of letters of credit outstanding. The only financial covenant under the bank credit facilities is a net leverage ratio test for which the company has ample covenant cushion over the intermediate-term. Moody's expects Delphi to continue to generate positive free cash flow over the intermediate-term, supported by strong EBITA margins, sufficient to support the company's recently announced upsized dividend and upsized share repurchase authorization. Near-term debt maturities are expected to be modest while capital expenditure levels are expected to increase to support new platform growth. The execution of Delphi share repurchase authorization is expected to be balanced against Moody's anticipation that the company may need to acquire technology through acquisitions in order to bolster growth in the company's electronics and safety segment, or execute other acquisitions in the electrical/electronics architecture segment. Alternate liquidity is available to the company under additional debt baskets of the financing facilities. Factors that have the potential to raise Delphi's rating or outlook include: improvements in market penetration and profitability while continuing to demonstrate balanced shareholder return activities with reinvestments in business growth and acquisitions. Consideration for a higher outlook or rating could result if any of these factors lead to EBITA margins approaching 14%, Debt/EBITDA sustained below 2x, EBITA/interest sustained above 6x, while maintaining an excellent liquidity profile. Factors that have the potential to lower Delphi's rating or outlook include: deterioration of automotive demand or greater raw material cost pressures resulting in EBITA margins deteriorating to 8%; debt funded acquisitions or shareholder actions which result in Debt/EBITDA approaching 2.5x or EBITA/interest approaching 5x; or a deterioration in liquidity. The principal methodology used in this rating was the Global Automotive Supplier Industry published in May 2013. Delphi Automotive PLC is a supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. Delphi operates globally and has a diverse customer base, including every major vehicle manufacturer. Revenues in 2013 were approximately $16.5 billion. DELRAY FLORIDA: Case Summary & 5 Unsecured Creditors ---------------------------------------------------- Debtor: Delray Florida Properties, LLC Parkway Plaza 200 Campbell Drive. #200 Willingboro, NJ 08046 Case No.: 14-12952 Chapter 11 Petition Date: February 7, 2014 Court: United States Bankruptcy Court Southern District of Florida (West Palm Beach) Judge: Hon. Paul G Hyman Jr. Debtor's Counsel: Daniel R. Brinley, Esq. LAW OFFICES OF DANIEL R. BRINLEY, PA 712 US Hwy One #400 North Palm Beach, FL 33408 Tel: 561-844-3600 E-mail: drb@fcohenlaw.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $10 million to $50 million The petition was signed by Thomas E. Juliano, manager. A list of the Debtor's five unsecured creditors is available for free at http://bankrupt.com/misc/flsb14-12952.pdf DETROIT, MI: Governor Must Defend Emergency Manager Law ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that although Detroit succeeded in barring lawsuits that would remove the emergency manager, the bankruptcy judge is allowing a lawsuit to proceed where the plaintiffs allege that Michigan's emergency manager law was unconstitutional. According to the report, before the city's bankruptcy, a lawsuit called Phillips v. Snyder was initiated in federal district court in Detroit seeking a declaration that the emergency manager law violates the rights of citizens by taking municipal government away from voters. At first, U.S. Bankruptcy Judge Steven Rhodes blocked the lawsuit from going ahead. He changed his mind and allowed the suit to proceed when the plaintiffs agreed not to seek the ouster of emergency manager Kevyn Orr, the report said. Michigan Governor Rick Snyder filed papers asking Judge Rhodes to bar the suit from proceeding while he appeals, the report said. Judge Rhodes denied the stay pending appeal in a three-page opinion on Jan. 29. Although the appeal "is probably not frivolous," Judge Rhodes said the governor doesn't have a "reasonable likelihood of success" because he has a "difficult hurdle" to overcome in showing that denial of a stay was an "abuse of discretion," the report further 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. DOTS LLC: Proposes to Auction Off Assets on Feb. 28 --------------------------------------------------- Dots, LLC, et al., ask the U.S. Bankruptcy Court for the District of New Jersey to approve bidding and sale procedures that will govern the sale of substantially all of their assets. The procedures, the Debtors said, are designed to maximize the value received for the assets. The terms of the bidding procedures are: Bid Deadline: Feb. 17, 2014 Auction: Feb. 28, 2014, at 10:00 a.m. Venue: Offices of Lowenstein Sandler LLP 65 Livingston Avenue (East Building) Roseland, New Jersey Sale Objection Deadline: March 1 at 4:00 p.m. Objections must be filed and served pursuant to the auction procedures order. Sale Hearing: March 3, at 2:00 p.m. The Debtors relate that if they select a stalking horse bidder, the Debtors will file the stalking horse notice within two days after the bid deadline. 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 the 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. No trustee, examiner, or creditors' committee has been requested or appointed. DOTS LLC: Wants Until Aug. 18 to Decide on Unexpired Leases ----------------------------------------------------------- Dots, LLC, et al., ask the U.S. Bankruptcy Court for the District of New Jersey to extend until Aug. 18, 2014, the Debtors' time to assume or reject unexpired leases of non-residential real property pursuant to Sec. 365(d)(4) of the Bankruptcy Code. The Debtors operate a chain of roughly 400 retail clothing stores in 28 states located throughout the Midwest, East, and Southeast. The Debtors have leasehold interests in these 400 locations. The Debtors' current deadline to assume or reject the leases is May 20, 2014. According to the Debtors, pursuant to the terms of their post- petition financing arrangement with their pre- and post-petition secured lender, Salus Capital Partners, LLC, the Debtors are required to obtain Court approval of a 90-day extension of the 365(d)(4) Deadline by no later than Feb. 21, 2014. 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 the 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. No trustee, examiner, or creditors' committee has been requested or appointed. DTE ENERGY: Fitch Affirms BB+ Rating on Jr. Subordinated Notes -------------------------------------------------------------- Fitch Ratings has affirmed the existing ratings of DTE Energy Co. (DTE) and its regulated utility subsidiaries, DTE Electric Co. (DECo) and DTE Gas Co. (DTEGas), as follows: DTE -- Long-term Issuer Default Rating (IDR) at 'BBB'; -- Senior unsecured notes at 'BBB'; -- Junior subordinated notes at 'BB+'; -- Short-term IDR at 'F2'; -- Commercial paper at 'F2'. DTE Gas Co. -- Long-term IDR at 'BBB+'; -- Senior secured at 'A'; -- Short-term IDR at 'F2'; -- Commercial paper at 'F2'. DECO -- Long-term IDR at 'BBB+'; -- Senior secured at 'A' '; -- Secured pollution control revenue bonds at 'A' '; -- Short-term IDR at 'F2'; -- Commercial paper at 'F2'. The Rating Outlooks for all entities is Stable, which reflects the stable earnings and cash flows generated by DECo and DTEGas. DECo is the primary driver of consolidated cash flows and comprised approximately 80% of consolidated EBITDA for DTE for the last 12 months (LTM) ending Sept. 30, 2013. More than $7 billion of consolidated long-term debt is affected by today's rating action. DTE's 'F2' short-term rating is largely driven by the stability in cash flows from its higher rated utility subsidiaries. Key Rating Drivers -- Constructive regulatory environment; -- Over 90% of consolidated earnings derived from regulated activities; -- Large but manageable capex program including environmental upgrades at coal plants; -- Attractive midstream investment opportunities; -- Sufficient liquidity; and -- Improving service area economy. DTE's current ratings reflect the low risk of its utility businesses and a constructive state regulatory environment in Michigan. The company also benefits from a sufficient liquidity position, manageable debt maturities, and an improving economy in Michigan, albeit from a depressed base. Credit concerns considered in the rating include a still weak service-area economy with above-average unemployment in the Detroit area, high level of parent only debt (approximately $1.8 billion), and the future effects of more stringent environmental regulations on DECo's predominantly coal-fired power generation portfolio. The ability to recover capital and operating costs in the future is also a concern if the developing turnaround in the Michigan economy does not continue. The ratings also consider the solid operating performance of the company's regulated and non-regulated operations, and the expectation that the company will continue to effectively manage the risks associated with its modestly growing non-regulated businesses. The municipal bankruptcy in Detroit is not expected to impact DTE directly, nor further impair the service area economy. Constructive Regulatory Environment: Since 2008, the regulatory environment in Michigan has been supportive of utility investment and has led to stable earnings and cash flows at DECo and DTEGas. The regulatory framework allows for full pass-through of fuel and purchased power costs, reasonable return on equity (ROE), and a timely resolution of rate proceedings. In addition, DECo and DTEGas have the ability to file rate cases with self- implementation if ROE dips below the authorized level (currently at 10.5%). Furthermore, a revenue decoupling mechanism at DTEGas helps to reduce exposure to regulatory lag. Fitch expects DECo to file its 2013 General Rate Case (GRC) with the Michigan Public Service Commission (MPSC) by the end of this year and to self-implement new rates in early 2015, subject to refund. The expiration of securitization charges and continued low commodity environment provides DECo sufficient headroom to seek base rate increases without any pressure on the retail rates. For DTEGas, the MPSC approved a five-year annual infrastructure recovery tracking mechanism (IRM) as part of its 2012 GRC settlement. The IRM allows DTEGas to recover $77 million of annual infrastructure investments associated with meter move-out, main renewal, and pipeline integrity programs through 2017. Fitch believes that the IRM will help reduce future regulatory lag, lead to timely rate base and earnings growth, and obviates the need for new rate filings through 2016. Growth in Other Businesses: The growth in non-utility businesses will be driven by growth in the Power and Industrial (P&I) business segment and the Gas, Storage, and Pipeline (GSP) segments. The P&I segment is supported by long-term PPA contracts with limited commodity risk. Fitch notes that the P&I segment remains a small part of consolidated operations and for the LTM period ending Sept. 30, 2013 comprised less that 10% of consolidated net income. Fitch expects this business segment to contribute up to 15% of consolidated net income by 2016. Strong shipper demand has been driving growth opportunities for DTE's regulated GSP segment in the Marcellus Shale and Utica Basin. DTE's Bluestone lateral and gathering System, a natural gas pipeline that connects the Millennium and Tennessee Pipelines to gas from the Marcellus Shale basin, serving Southwestern Energy's natural gas production, is currently undergoing lateral expansions. For the LTM period ending Sept. 30, 2013, DTE's GSP segment approximated 10% of net income. Large Capital Expenditure Program: DTE plans to spend $2.2 billion on capex this year and approximately $2 billion each year in 2015 and 2016, a level that is significantly higher than prior years. Capital spending will be primarily focused at the regulated utilities and includes environmental and renewable generation investments at DECo; distribution system enhancements, and storage and transportation projects at DTEGas; and pipeline and gathering development in the Marcellus Shale basin at DTE. A significant portion of capital spending will be on emissions compliance and renewable investments to meet renewable portfolio standards in the state. Fitch expects DTE to fund the majority of forecasted capex internally and the balance with external financing. Solid Credit Metrics: DTE's current credit metrics are consistent with Fitch's 'BBB' IDR guidelines for utility parent companies (UPCs). Fitch calculates DTE's EBITDA and funds from operations (FFO) coverage ratios at 4.9x and 5.3x, respectively, for the LTM period ending Sept. 30, 2013. DTE's debt-to-EBITDA ratio was slightly high at 3.7x. Fitch expects credit metrics for consolidated operations to weaken through 2016 due to large capex programs at the utilities, moderate regulatory lag, and conservative assumptions regarding anticipated rate increases. Fitch anticipates debt to EBITDA to approach 4.0x in 2016. DECo: For the LTM period ending Sept. 30, 2013, DECo's EBITDA coverage trended flat at 6.9x as compared to 2012. Leverage, as measured by debt-to-EBITDA, was 3.1x for the same period. Going forward, Fitch expects EBITDA coverage ratios to remain above 5.0x and anticipates leverage, as measured by debt-to-EBITDA, to weaken to 3.3x by 2016 due to increased capital spending needs associated with emissions compliance and renewable generation investments. Fitch notes that DECo's earned ROE for the LTM ending Sept. 30, 2013 approximated 10.3%, close to its authorized ROE of 10.5%. DTEGas: For the LTM period ending Sept. 30, 2013, DTEGas' EBITDA coverage ratio increased to 6.2x as compared to 5.4x for 2012 and primarily reflects new rates effective Jan. 1, 2013. Leverage, as measured by debt-to-EBITDA, was 2.9x for the same period. Going forward, Fitch expect EBITDA coverage measures to remain above 5.0x and anticipates leverage, as measured by debt-to-EBITDA, to remain under 4.0x, through 2016. Sufficient Liquidity: DTE had approximately $1.5 billion of total liquidity available under its respective credit agreements as of Sept. 30, 2013, including $71 million of cash and cash equivalents. DTE's consolidated $1.8 billion five-year unsecured revolving credit facilities mature in 2018 and are comprised of $1.2 billion at DTE, $300 million at DECo, and $300 million at DTEGas. The facilities have a maximum debt-to-capitalization covenant of 65% and, as of Sept. 30, 2013, DTE was in compliance with a consolidated debt to capitalization ratio of 47.8% under its credit agreement. Manageable Maturities: Debt maturities over the next five years are manageable and are as follows (excluding securitization maturities): $684 million in 2014, $350 million in 2015, $451 million in 2016, no maturities in 2017 and $400 million in 2018. Fitch expects maturing debt to be funded through a combination of internal cashflows and external debt refinancings. Rating Sensitivities Positive Rating Action: No positive rating actions are expected at this time. Negative Rating Action: An unexpected change in the regulatory environment that limits the utility's ability to recover cost of capital investments in a timely manner and sustained FFO/debt metrics below 20% at the regulated utilities could cause negative rating actions. Fitch expects consolidated credit metrics to be pressured through 2016 as a result of high capex at the utilities. Persistently weak consolidated leverage metrics beyond Fitch's current forecast period could lead to negative rating action for DTE. DUTCH GOLD: Tells Shareholders It Would Clean Up Balance Sheet -------------------------------------------------------------- The Board of Directors has authorized the release of a Letter to Shareholders on Jan. 30, 2014. To our Shareholders: On December 17, 2013, we sent out a letter outlining the status of the Company. This letter is written to provide information on the direction of the Company for 2014, and not as a substitute for other reporting. What does the Company do going forward? In order to begin to rebuild shareholder value, we must rationalize our capital structure and clean up our balance sheet. Most importantly, we must change our business model to one that can generate near term cash flow and requires only modest amounts of capital. 1. Over the next three months, management will take active steps to rationalize our capital structure and clean up our balance sheet. We will complete a spin-out of the remaining mining interests and we will aggressively pursue the clean up of our balance sheet. We expect to focus all of our energy on new subsidiaries in a corporate structure that will reward our new operational partners and our current shareholders. In so doing, it is our intention to catch up our filings with the Securities & Exchange Commission as quickly as financing allows. We expect that these tasks will be completed by April 15, at which time the Company will declare a stock dividend of ten percent to shareholders of record as of that date. What business sectors are of particular focus to the Company? Management believes that the best opportunities for growth with modest capital requirements are found in the business services sector. We intend to focus on digital marketing and financial services for small to medium size businesses. Our intention is to leverage business relationships through joint ventures, strategic partnerships and acquisitions to offer business acceleration services to small and medium size businesses. The Company acknowledges and appreciates the contribution of the Officers who have served Dutch Gold. We hope to attract high caliber management as we reposition the Company in the coming months. Sincerely, DUTCH GOLD RESOURCES, INC. Dan Hollis Daniel Hollis, CEO About Dutch Gold Based in Atlanta, Ga., Dutch Gold Resources, Inc. (OTC: DGRI) -- http://www.dutchgoldresources.com/-- is a junior gold miner focused on developing its existing mining properties in North America and acquiring and developing new mines that can enter into production in 12 to 24 months. After auditing the 2011 results, Hancock Askew & Co., LLP, in Norcross, Georgia, noted that the Company has limited liquidity and has incurred recurring losses from operations and other conditions exist which raise substantial doubt about the Company's ability to continue as a going concern. The Company reported a net loss of $4.58 million on $0 of sales in 2011, compared with a net loss of $3.69 million on $0 of revenue in 2010. The Company's balance sheet at Sept. 30, 2012, showed $2.65 million in total assets, $7.17 million in total liabilities and a $2.23 million total stockholders' deficit. EAST SAILE PROPERTIES: Case Summary & 3 Top Unsecured Creditors --------------------------------------------------------------- Debtor: East Saile Properties, LLC 4736 East Saile Drive Batavia, NY 14020 Case No.: 14-10251 Chapter 11 Petition Date: February 5, 2014 Court: United States Bankruptcy Court Western District of New York (Buffalo) Judge: Hon. Michael J. Kaplan Debtor's Counsel: David H. Ealy, Esq. TREVETT, CRISTO, SALZER & ANDOLINA P.C. 2 State Street, Suite 1000 Rochester, NY 14614 Tel: (585) 454-2181 Fax: (585) 454-4026 Email: dealy@trevettlaw.com Estimated Assets: $100,000 to $500,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Nash A. Dsylva, sole member. A list of the Debtor's three largest unsecured creditors is available for free at http://bankrupt.com/misc/nywb14-10251.pdf EDDIE BAUER: Seen as Ripe for Auction Block ------------------------------------------- Richard Collings, writing for The Deal, reported that as a result of Jos. A. Bank Clothiers Inc.'s window-shopping Eddie Bauer LLC, the outdoor clothing seller could also be an attractive target to a number of suitors, according to industry sources. According to the report, sources confirmed that the Hampstead, Md.-based Jos. A. Bank is looking over Eddie Bauer for its acquisition possibilities. The potential target is backed by private equity firm Golden Gate Capital. Golden Gate and Jos. A. Bank declined to comment, the report said. But Eddie Bauer has largely struggled since the private equity firm acquired the retailer out of bankruptcy in 2010 for nearly $290 million, a source said, the report related. Even after it brought retail apparel veteran Mike Egeck on board in 2012, doubts remained that it could recover enough to be sold. Over the past 12 months, consumer spending has been anything but kind to apparel retailers, the report pointed out. There was a lackluster second quarter followed by a difficult back-to-school, ending with a disappointing holiday, and a January that some analysts have described as nothing short of a disaster. Yet Eddie Bauer had positive Ebitda last year with revenue greater than $1 billion, a source familiar with the company said. The brand, with cultural roots in the Northwest United States, had a strong 2013 that included a good holiday season, as well as a solid start to 2014, the source said. About Eddie Bauer Eddie Bauer -- http://www.eddiebauer.com/-- is a specialty retailer that sells outerwear, apparel and accessories for the active outdoor lifestyle. Eddie Bauer participates in a joint venture in Japan and has licensing agreements across a variety of product categories. Eddie Bauer, founded in Bellevue, Wash., in 1920, was acquired by General Mills Inc. in 1971 and then sold to catalog retailer Spiegel Inc. in 1988. Eddie Bauer Inc. emerged from Spiegel's 2003 Chapter 11 case as a separate, reorganized entity under the control and ownership of Eddie Bauer Holdings, Inc. Eddie Bauer Holdings, Inc. (now known as EBHI Holdings, Inc.) and eight affiliates filed for bankruptcy (Bankr. D. Del. Lead Case No. 09-12099) on June 17, 2009. Judge Mary F. Walrath presides over the case. David S. Heller, Esq., Josef S. Athanas, Esq., and Heather L. Fowler, Esq., at Latham & Watkins LLP, serve as the Debtors' general counsel. Kara Hammond Coyle, Esq., and Michael R. Nestor, Esq., at Young Conaway Stargatt & Taylor LLP, serve as local counsel. The Debtors' restructuring advisors are Alvarez and Marsal North America LLC. Their financial advisors are Peter J. Solomon Company. Kurtzman Carson Consultants LLC acts as claims and notice agent. As of April 4, 2009, Eddie Bauer had $525,224,000 in total assets and $448,907,000 in total liabilities. Eddie Bauer Canada, Inc., and Eddie Bauer Customer Services filed for protection from their creditors in Canada on June 17, 2009, the same day the U.S. Debtors filed for creditor protection. The Canadian Debtors have obtained an initial order of the Canadian Court staying the proceedings against the Canadian Debtors and their property in Canada. RSM Richter Inc. was appointed as monitor in the Canadian proceedings. On Aug. 4, 2009, Golden Gate Capital closed a deal to acquire Eddie Bauer Holdings for $286 million. Golden Gate will maintain the substantial majority of Eddie Bauer's stores and employees in a newly formed going concern company. Golden Gate beat an affiliate of CCMP Capital Advisors, LLC, at the auction. The CCMP unit's $202 million cash offer served as stalking horse bid. Golden Gate Capital -- http://www.goldengatecap.com/-- is a San Francisco-based private equity investment firm with roughly $9 billion of assets under management. EDISON MISSION: Multiple Parties Object to Second Amended Plan -------------------------------------------------------------- Multiple parties -- the United States of America, on behalf of the Department of Treasury, Internal Revenue Service; the Illinois Department of Revenue; Commonwealth Edison Company and its affiliates; the California Department of Water Resources; Peabody COALSALES, LLC; Chevron Kern River Company and Chevron Sycamore Cogeneration; and KeyBank National Association -- objected to Edison Mission Energy, et al.'s Second Amended Joint Chapter 11 Plan of Reorganization. The IRS complains that the Plan is defective because it improperly sets a bar date for administrative-expense tax claims and bars the late-filed claims. The IDOR echoes the IRS's objection, pointing out that an administrative tax claimant like itself is not required to file a request for allowance and payment of an administrative expense claim as condition to allowance and payment. The IRS also complains that the Plan does not properly provide for its unsecured priority claim. ComEd objects to the Plan to obtain clarification that where the Debtors admit liability or are otherwise found to be liable to any asbestos claimant, nothing in the Plan or forthcoming confirmation order will preclude, prejudice or impair ComEd's rights to assert that liability in any action against ComEd by any claimant. CDWR objects to the Plan because the Debtors to refuse to respond to discovery, which would inform the agency whether its claim against a non-debtor subsidiary, Sunrise Power, is an excluded liability to be released and enjoined under the Joint Plan. CDWR also complains that the release provisions in the Joint Plan are broader than what the Bankruptcy Code, the 7th Circuit, and the Bankruptcy Court permit. Peabody points out that while the proposed Plan effectively equates confirmation with the assumption of the assumed executory contracts, it makes no provision for any adjudication on or before the confirmation hearing of those disputes regarding the cure costs owing under the contracts. Peabody and Debtor Midwest Generation, LLC, are parties to a long-term coal supply agreement. Peabody asserts the Court withhold confirmation of the Plan until there is proper and full adjudication of the cure costs owing to Peabody. Chevron objects to the Plan only as it applies to Debtors Southern Sierra Energy Company and Western Sierra Energy Company (the "Gas Partnership Debtors"). Chevron objects to (a) the proposed "limited" substantive consolidation of the Debtor Subsidiaries for voting and confirmation purposes, and submits that (b) when taken debtor-by-debtor, the joint Plan cannot be confirmed as to the Gas Partnership Debtors due to the lack of acceptance by an impaired class for each Debtor. Chevron additionally objects to the Plan to the extent that (c) the Plan enjoins or may be deemed to moot or otherwise prejudice the Chevron Litigation, and (d) the Plan Supplement includes the Partnership Agreements in the Schedule of Contracts to be assumed under the Plan. KeyBank says it does not object to the confirmation of the Plan or the consummation of the sale of the Debtors' assets in principle. However, in its capacity as administrative and collateral agent under the a number of non-debtor projects, KeyBank must ensure that the Sale is properly implemented and that all of the rights and interests of KeyBank with respect to the projects are protected and preserved following the sale. KeyBank says it intends to continue to work with the Debtors on its issues and is hopeful that all of its points will be resolved well in advance of the confirmation hearing. These objections will be tackled during the confirmation hearing on Feb. 17, 2014, before the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reported that EME's $1.2 billion in 7 percent senior unsecured notes maturing in 2017 traded at 12:21 p.m. on Jan. 30 for 76.39 cents on the dollar, up 44.5 percent from immediately before bankruptcy, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The IRS is represented by SARAH T. MAYHEW -- Sarah.T.Mayhew@tax.usdoj.gov -- Trial Attorney, Tax Division U.S. Department of Justice, in Washington, D.C. The IDOR is represented by Lisa Madigan, Illinois Attorney General, and James D. Newbold -- James.Newbold@illinois.gov -- Assistant Attorney General. ComEd is represented by Matthew A. Clemente, Esq., and Michael T. Gustafson, Esq., at SIDLEY AUSTIN LLP, in Chicago, Illinois. CDWR is represented by Irene K. Tamura, Esq., Deputy Attorney General. Peabody is represented by Lauren Newman, Esq. -- lnewman@thompsoncoburn.com -- and David D. Farrell, Esq. -- dfarrell@thompsoncoburn.com -- at THOMPSON COBURN LLP, in Chicago, Illinois. Chevron is represented by David M. Stahl, Esq., and Ronit C. Barrett, Esq., at EIMER STAHL LLP, in Chicago, Illinois; Richard L. Epling, Esq., and Samuel S. Cavior, Esq., at PILLSBURY WINTHROP SHAW PITTMAN LLP, in New York; and Philip S. Warden, Esq., at PILLSBURY WINTHROP SHAW PITTMAN LLP, in San Francisco, California. KeyBank is represented by Thomas R. Kreller, Esq. -- tkreller@milbank.com -- Julian I. Gurule, Esq. -- jgurule@milbank.com -- and Fanny Dusastre-Martinez, Esq. -- fdusastre-martinez@milbank.com -- at MILBANK, TWEED, HADLEY & McCLOY LLP, in Los Angeles, California. 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. EGPI FIRECREEK: Hires Olde Monmouth as New Transfer Agent --------------------------------------------------------- The Board of Directors of EGPI Firecreek, Inc., appointed Olde Monmouth Stock Transfer Co., Inc., as Transfer Agent and Dividend Disbursing Agent replacing Computershare, Inc. The transition period for the changeover process is expected to complete on or about Feb. 10, 2014. Contact information for the Company's new Transfer Agent: Olde Monmouth Stock Transfer Co., Inc. Attention: Matthew J. Troster 200 Memorial Parkway Atlantic Highlands, NJ 07716 Phone (732) 872-2727, Ext 101 Fax (732) 872-2728 matt@oldemonmouth.com About EGPI Firecreek Scottsdale, Ariz.-based EGPI Firecreek, Inc. (OTC BB: EFIR) was formerly known as Energy Producers, Inc., an oil and gas production company focusing on the recovery and development of oil and natural gas. The Company has been focused on oil and gas activities for development of interests held that were acquired in Texas and Wyoming for the production of oil and natural gas through Dec. 2, 2008. Historically in its 2005 fiscal year, the Company initiated a program to review domestic oil and gas prospects and targets. As a result, EGPI acquired non-operating oil and gas interests in a project titled Ten Mile Draw located in Sweetwater County, Wyoming for the development and production of natural gas. In July 2007, the Company acquired and began production of oil at the 2,000 plus acre Fant Ranch Unit in Knox County, Texas. This was followed by the acquisition and commencement in March 2008 of oil and gas production at the J.B. Tubb Leasehold Estate located in the Amoco Crawar Field in Ward County, Texas. EGPI Firecreek disclosed a net loss of $6.08 million on $124,157 of total revenue for the year ended Dec. 31, 2012, as compared with a net loss of $4.97 million on $293,712 of total revenue for the year ended Dec. 31, 2011. The Company's balance sheet at March 31, 2013, showed $1.31 million in total assets, $6.92 million in total liabilities, all current, $1.86 million in series D preferred stock, and a $7.48 million total shareholders' deficit. M&K CPAS, PLLC, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that he Company has suffered recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. ELCOM HOTEL: Revised First Amended Liquidation Plan Confirmed ------------------------------------------------------------- Judge Robert A. Mark of the U.S. Bankruptcy Court for the Southern District of Florida, Miami Division, confirmed on Jan. 24, 2014, the Revised First Amended Joint Plan of Liquidation of Elcom Hotel & Spa, LLC, and Elcom Condominium, LLC, after determining that the Plan satisfies the confirmation requirements laid out in the Bankruptcy Code. All objections that have not been withdrawn, waived, or settled, and all reservations of rights pertaining to confirmation of the Plan, are overruled on the merits for reasons stated on the record of the confirmation hearing. Michael Goldberg, Esq., is appointed as the initial liquidating trustee. He is required to post a bond in the amount of 150% of Cash on hand, with the expenses of the bond authorized to be paid by the Trust. All notices to the Liquidating Trustee must be addressed as follows: Michael Goldberg Akerman LLP 350 East Las Olas Boulevard Suite 1600 Fort Lauderdale, FL 33301 Tel: 954-463-2700 Fax: 954-463-2224 Email: michael.goldberg@akerman.com The Court will conduct a confirmation status conference on April 22, 2014, at 2:00 p.m. About Elcom Hotel Elcom Hotel & Spa LLC and Elcom Condominium LLC sought Chapter 11 protection (Bankr. S.D. Fla. Case Nos. 13-10029 and 13-10031) on Jan. 2, 2013, with plans to sell their hotel and condominium property. Elcom Condominium owns nine of the hotel condominium units at the One Bal Harbor Resort & Spa. The resort is located on five acres of land in Bal Harbor, Florida. The building and improvements consist of 185 luxury residential condominium units and 124 hotel condominium units. Elcom Hotel owns the hotel lot. Elcom Hotel disclosed $10,378,304 in assets and $20,010,226 in liabilities as of the Chapter 11 filing. The Debtor owes OBH Funding, LLC, $1.8 million on a mortgage and F9 Properties, LLC, formerly known as ANO, LLC, $9 million on a mezzanine loan secured by a lien on the ownership interests in the project's owner. OBH Funding and ANO are owned by Thomas D. Sullivan, the manager of the Debtors. Corali Lopexz-Castro, Esq., of Kozyak Tropin & Throckmorton, P.A., represent the Debtors as bankruptcy counsel. Duane Morris LLP is the special litigation, real estate, and hospitality counsel. Algon Capital, LLC, d/b/a Algon Group's Troy Taylor is the Debtors' chief restructuring officer. Barry E. Mukamal and Marcum, LLP, serve as accountants and financial advisors. The Barthet Firm is the special litigation collections counsel. Barry E. Somerstein and Greenspoon Marder Law serve as special real estate counsel. Elcom Hotel & Spa and Elcom Condominium have submitted a revised disclosure statement filed in conjunction with the proposed liquidating plan. The revised disclosure statement indicates that unsecured creditors are still divided into two classes under the Plan. The Plan contemplates that holders of general unsecured claims (expected to total $14 million to $79.1 million) will have a recovery of 0% to 18%, which will be funded from the pro rata distribution of "net free cash" and proceeds of causes of action and remaining assets. Holders of general unsecured vendor claims (estimated at $500,000 to $971,000) -- those vendors who have unsecured claims who agree to continue do business with the Debtors -- will have a recovery of 50%, which will be funded from the 50% distribution from "net free cash." In December 2013, the Florida bankruptcy judge signed off on a $13.4 million sale of the building's common areas to the homeowners' association. U.S. Bankruptcy Judge Robert A. Mark approved the result of the auction in which the One Bal Harbour residential association beat out an entity owned by Thomas Sullivan, who is the largest shareholder of Elcom Hotel, and stalking horse bidder Stoneleigh Capital LLC. ENCORE CAPITAL: Case Summary & 5 Unsecured Creditors ---------------------------------------------------- Debtor: Encore Capital Corporation 3635 Ruffin Road, Suite 100 San Diego, CA 92123 Case No.: 14-00843 Chapter 11 Petition Date: February 5, 2014 Court: United States Bankruptcy Court Southern District of California (San Diego) Judge: Hon. Margaret M. Mann Debtor's Counsel: Mark A. Nelson, Esq. LAW OFFICE OF MARK A. NELSON 3645 Ruffin Road, Suite 100 San Diego, CA 92123 Tel: 858-300-0030 Email: markanelson605@gmail.com Total Assets: $1.50 million Total Liabilities: $703,394 The petition was signed by Alan Carrington, secretary. A list of the Debtor's five largest unsecured creditors is available for free at http://bankrupt.com/misc/casb14-843.pdf ENVISION SOLAR: Appoints Paul Feller as New Director ---------------------------------------------------- Mr. Paul H. Feller accepted his appointment as a new director of Envision Solar International, Inc., effective Jan. 23, 2014. In consideration for Paul H. Feller's acceptance to serve as a director of the Company, the Company agreed to grant 1,000,000 restricted shares of its common stock to Mr. Feller. Paul H. Feller, age 48, has been involved with the management of live entertainment events for over 18 years. Since August 2012, Mr. Feller has been an independent consultant to various public companies. From 2008 to 2012, he was the Chairman of the Board of Directors, president, and chief executive officer of Stratus Media Group, Inc., a global live entertainment company that owned and operated such premier events as the Mille Miglia, Perugia International Film Festival, Elite XC MMA, and Concours d' Elegance. Mr. Feller was the Chairman and CEO of Pro Elite, Inc., from 2010 from 2012. In 2001, Mr. Feller founded Pro Sports & Entertainment. During 1999, he served as the M&A officer at SFX Entertainment, Inc. He has been a member of the Los Angeles Sports Council, Orange County Sports Association, Asia International Business and Entertainment Association, US Professional Cycling Association, and the UK Professional Cycling Association. Prior to 1999, Mr. Feller was a senior engineer of advance military design at McDonnell Douglas and was a licensed professional cyclist with USPRO Cycling Federation, BCA European Cycling Federation, and the UCI Union Cycliste Internationale having spent much of his pro career racing in Europe. Mr. Feller was knighted in 2011 by the Swedish monarchy. He attended Purdue University for Mechanical Engineering with an Aerospace emphasis and currently is attending Lincoln/Northwestern Law School for a Juris Doctorate. About Envision Solar Envision Solar International, Inc., is a developer of solar products and proprietary technology solutions. The Company focuses on creating high quality products which transform both surface and top deck parking lots of commercial, institutional, governmental and other customers into shaded renewable generation plants. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $2.07 million on $237,810 of revenues as compared with a net loss of $1.81 million on $617,827 of revenues for the same period a year ago. The Company's balance sheet at Sept. 30, 2013, showed $1.13 million in total assets, $3.10 million in total liabilities, all current, and a $1.96 million total stockholders' deficit. "As reflected in the accompanying unaudited condensed consolidated financial statements for the nine months ended September 30, 2013, the Company had net losses of $2,078,745. Additionally, at September 30, 2013, the Company had a working capital deficit of $2,073,269, an accumulated deficit of $26,900,933 and a stockholders' deficit of $1,964,668. These factors raise substantial doubt about the Company's ability to continue as a going concern," the Company said in its quarterly report for the period ended Sept. 30, 2013. FERRETERIA TESORO: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Ferreteria Tesoro Del Ebanista Inc. Calle Guayama Numero 251 Hato Rey, PR 00917 Case No.: 14-00796 Chapter 11 Petition Date: February 5, 2014 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Judge: Hon. Mildred Caban Fores Debtor's Counsel: Wanda I. Luna Martinez, Esq. PMB 389 PO Box 194000 San Juan, PR 00919-4000 Tel: 787-998-2356 Fax: 787-200-8837 Email: quiebra@gmail.com Total Assets: $4.25 million Total Liabilities: $6.22 million The petition was filed by Jesus Morales Velez, president. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/prb14-796.pdf FISKER AUTOMOTIVE: Investors, Executives Hit by Another Lawsuit --------------------------------------------------------------- Yuliya Chernova, writing for The Wall Street Journal, reported that Kleiner Perkins Caufield & Byers, its partner emeritus Ray Lane, and several others connected to Fisker Automotive have been named in a new lawsuit that alleges they misled investors in the now-bankrupt hybrid car company. According to the report, several plaintiffs filed a lawsuit on Jan. 31 in U.S. District Court in Delaware claiming that the defendants violated securities law by allegedly misleading the plaintiffs into investing in the company while withholding pertinent information about the condition of Fisker's business. This is at least the second lawsuit against Fisker executives and investors filed in recent weeks, the report pointed out. In late December, Atlas Capital Management filed a lawsuit with similar claims. Plaintiffs in the latest lawsuit include David W. Raisbeck, who invested $4.2 million into Fisker securities; Pinnacle Family Office Investments, which bought $8 million worth of securities, and others, the report related. The lawsuit seeks to recover about $20 million that the plaintiffs invested in Fisker. Besides Kleiner Perkins and Mr. Lane, defendants include Henrik Fisker, Bernhard Koehler and Joe DaMour, who are former Fisker executives; Peter McDonnell and Keith Daubenspeck, executives at brokerage firm Advanced Equities, which solicited investments for Fisker from individuals; and Richard Li Tzar Kai and his investment vehicle Ace Strength Ltd., which is currently the controlling shareholder in Fisker, the report added. About Fisker Automotive Fisker Automotive Holdings, Inc., developer of the Karma plug-in hybrid electric sedan, filed a petition for Chapter 11 protection (Bankr. D. Del. Case No. 13-13087) on Nov. 22, 2013. Fisker estimated assets of more than $100 million and listed debt of $500 million in its bankruptcy petition. The assets include an assembly plant purchased for $21 million from General Motors Corp. The plant never operated. The cars were assembled in Finland. Fisker now has 21 employees. Fisker received a $529 million loan from the Department of Energy's Advanced Technology Vehicles Manufacturing Loan Program and drew down about $192 million before the department froze the loan after Fisker failed to hit several development targets. The company defaulted on its loan in April 2013. Bankruptcy Judge Kevin Gross presides over the case. The Debtors have tapped James H.M. Sprayregen, P.C., Esq., Anup Sathy, P.C., Esq., and Ryan Preston Dahl, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, as co-counsel; Laura Davis Jones, Esq., James E. O'Neill, Esq., and Peter J. Keane, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, as co-counsel; Beilinson Advisory Group as restructuring advisors; and Rust Consulting/Omni Bankruptcy, as notice and claims agent and administrative advisor. On November 5, 2013, the Official Committee of Unsecured Creditors was appointed. The members are: (a) David M. Cohen; (b) Sven Etzelsberger; (c) Kuster Automotive Door Systems GmbH; (d) Magna E-Car USA, LLC; (e) Supercars & More SRL; and (f) TK Holdings Inc. The Committee is represented by William R. Baldiga, Esq., and Sunni P. Beville, Esq., at Brown Rudnick LLP; and Mark Minuti, Esq., at Saul Ewing LLP. Fisker sought bankruptcy protection to pursue a private sale of its business to Hybrid Tech Holdings, LLC. The Committee, however, wants a sale public sale, and has identified Wanxiang America Corporation as stalking horse bidder. Hybrid was initially under contract to buy Fisker in exchange for $75 million of the $168.5 million government loan it acquired immediately before the Debtor's Chapter 11 filing. Hybrid later raised its offer by adding an additional $1 million cash and agreeing to share proceeds from the sale of a facility in Delaware it doesn't intend to operate. Hybrid also offered to pay real estate taxes on the Delaware plant. Hybrid also will waive $90 million in deficiency claims that otherwise would dilute unsecured creditors' recovery. Wanxiang, as stalking horse bidder, initially offered $25.8 million in cash. However, Wanxiang has said it has raised its offer by $10 million and is willing to go higher. After the hearings on Jan. 10 and 13, the Court directed a public auction, and capped Hybrid's credit bid to $25 million. In response, Hybrid raised its offer to $55 million. Hybrid is represented by Tobias Keller, Esq., and Peter Benvenutti, Esq., at Keller & Benvenutti LLP, in San Francisco, California. Wanxiang, which bought A123 Systems, Inc., a manufacturer of lithium-ion batteries used in electric vehicles such as the Fisker Karma, in a bankruptcy auction early in 2013 for $256.6 million, is represented in Fisker's case by Sidley Austin LLP's Bojan Guzina, Esq., and Andrew F. O'Neill, Esq.; and Young Conaway Stargatt & Taylor, LLP's Edmon L. Morton, Esq., Robert S. Brady, Esq., and Kenneth J. Enos, Esq. FOUR SEASONS MALL: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Four Seasons Mall Fee LP 205 S. Chancelor Street Newtown, PA 18940 Case No.: 14-10959 Chapter 11 Petition Date: February 7, 2014 Court: United States Bankruptcy Court Eastern District of Pennsylvania (Philadelphia) Judge: Hon. Jean K. FitzSimon Debtor's Counsel: Albert A. Ciardi, III, Esq. CIARDI CIARDI & ASTIN, P.C. One Commerce Square 2005 Market Street, Suite 1930 Philadelphia, PA 19103 Tel: (215) 557-3550 Fax: 215-557-3551 E-mail: aciardi@ciardilaw.com - and - Jennifer E. Cranston, Esq. CIARDI CIARDI & ASTIN, P.C. One Commerce Square 2005 Market Street, Suite 1930 Philadelphia, PA 19103 Tel: 215 557 3550 E-mail: jcranston@ciardilaw.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Jason Glazler, president of Four Seasons Mall Holdings, LLC, general partner. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. FREE LANCE-STAR: Sec. 341(a) Meeting Set for Feb. 28 ---------------------------------------------------- The U.S. Trustee for Region 4 will hold a meeting of creditors of The Free Lance-Star Publishing Co. of Fredericksburg, Va., and William Douglas Properties, LLC, pursuant to Section 341(a) of the Bankruptcy Code on Feb. 28, 2014, at 10:00 a.m., at the Office of the U.S. Trustee, at 701 East Broad St., Suite 4300, in Richmond, Virginia. This is the first meeting of creditors under Section 341(a) of the Bankruptcy Code. The meeting offers creditors a one-time opportunity to examine the Debtors' representative under oath about the Debtors' financial affairs and operations that would be of interest to the general body of creditors. Attendance by the Debtor's creditors at the meeting is welcome, but not required. The meeting may be continued and concluded at a later date specified in a notice filed with the United States Bankruptcy Court Eastern District of Virginia (Richmond). Proof of claims are due by May 29, 2014. Complaint for determination of dischargeability of debt due by April 29. About The Free Lance-Star Publishing The Free Lance-Star Publishing Co. of Fredericksburg, Va., is a publishing, newspaper, radio and communications company based in Fredericksburg, Virginia and owned by the family of Josiah P. Rowe III. FLS's single, seven-day a week newspaper, The Free Lance- Star was first published in 1885 when a group of local Fredericksburg merchants and businessmen created the paper to serve the news and advertising needs of the community. FLS also owns radio stations WFLS-AM, FLS-FM, and WVBX. FLS owns the community and news portal http://www.fredericksburg.com/ FLS filed a Chapter 11 bankruptcy petition (Bankr. E.D. Va. Case No. 14-30315) in Richmond, Virginia, on Jan. 23, 2014. William Douglas Properties, L.L.C., a related entity that owns a portion of the land pursuant to which FLS operates certain aspects of its business, also sought bankruptcy protection. Judge Keith L. Phillips was initially assigned to the cases, but the cases were reassigned to Judge Kevin R. Huennekens on the Petition Date. The Debtors have tapped Tavenner & Beran, PLC, as counsel; and Protiviti, Inc., as financial advisor. FREE LANCE-STAR: Can Use Cash Collateral Until Feb. 28 ------------------------------------------------------ Judge Kevin R. Heunnekens of the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division, gave The Free Lance-Star Publishing Co. of Fredericksburg, Va., and William Douglas Properties, LLC, interim authority to use cash collateral until Feb. 28, 2014, to pay amounts approved by the Court and to provide working capital for the Debtors. DSP is entitled to adequate protection of its interests in the cash collateral in an amount equal to the aggregate diminution in value of DSP's cash collateral. As adequate protection, DSP is granted the following: (a) valid, perfected and enforceable continuing replacement security interests and liens; and (b) a payment of the first day of each month in the amount of $70,000. The final hearing is scheduled for Feb. 27, 2014, at 11:00 a.m. Objections must be submitted prior to Feb. 20. A full-text copy of the Interim Cash Collateral Order with 13-week budget is available at: http://bankrupt.com/misc/FREELANCEcashcollord0203.pdf About The Free Lance-Star Publishing The Free Lance-Star Publishing Co. of Fredericksburg, Va., is a publishing, newspaper, radio and communications company based in Fredericksburg, Virginia and owned by the family of Josiah P. Rowe III. FLS's single, seven-day a week newspaper, The Free Lance- Star was first published in 1885 when a group of local Fredericksburg merchants and businessmen created the paper to serve the news and advertising needs of the community. FLS also owns radio stations WFLS-AM, FLS-FM, and WVBX. FLS owns the community and news portal http://www.fredericksburg.com/ FLS filed a Chapter 11 bankruptcy petition (Bankr. E.D. Va. Case No. 14-30315) in Richmond, Virginia, on Jan. 23, 2014. William Douglas Properties, L.L.C., a related entity that owns a portion of the land pursuant to which FLS operates certain aspects of its business, also sought bankruptcy protection. Judge Keith L. Phillips was initially assigned to the cases, but the cases were reassigned to Judge Kevin R. Huennekens on the Petition Date. The Debtors have tapped Tavenner & Beran, PLC, as counsel; and Protiviti, Inc., as financial advisor. GENERAL MOTORS: Profit Falls 13% in Fourth Quarter -------------------------------------------------- Jeff Bennett, writing for The Wall Street Journal, reported that General Motors Co. reported a 13% decline in its fourth-quarter profit as strength in North America and China failed to offset declines elsewhere, with currency problems and costs related to plant closings eroding profitability. According to the report, the results offered little grace period to new Chief Executive Mary Barra, who took over a company in January that faces pressures outside of North America that may prove greater than previously suggested. The Detroit-based auto maker has said it would spend $1.1 billion this year to fix problems in its international operations outside of China. "This was a relatively noisy quarter," said Edward Jones equity analyst Christian Mayes, the report cited. "There were a lot of one-time items, but stripping those out, GM missed earnings expectations by a wide amount. International operations looked weak, with Europe still losing money for GM and South America barely breaking even. Perhaps what we're seeing is an element of clearing the decks for the new management team coming on board with some of the restructuring charges." GM shares initially slipped on Feb. 6 before edging into positive territory after the company reaffirmed its earnings will improve "modestly" this year, the report related. For the fourth quarter, GM posted a North America profit margin of 7.5%, compared with 5% for the same period a year earlier. For the fourth quarter, GM reported a profit before dividends of $1.04 billion, compared with $1.19 billion a year earlier, the report further related. Excluding some charges, the company earned 67 cents a share, lagging behind analysts' estimate of 88 cents a share. Revenue was $40.5 billion. Net income, after dividends, increased to $913 million from $892 million. About Motors Liquidation General Motors Corporation and three of its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 09-50026) on June 1, 2009. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Garden City Group is the claims and notice agent of the Debtors. The U.S. Trustee appointed an Official Committee of Unsecured Creditors and a separate Official Committee of Unsecured Creditors Holding Asbestos-Related Claims. Lawyers at Kramer Levin Naftalis & Frankel LLP served as bankruptcy counsel to the Creditors Committee. Attorneys at Butzel Long served as counsel on supplier contract matters. FTI Consulting Inc. served as financial advisors to the Creditors Committee. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represented the Asbestos Committee. Legal Analysis Systems, Inc., served as asbestos valuation analyst. The Bankruptcy Court entered an order confirming the Debtors' Second Amended Joint Chapter 11 Plan on March 29, 2011. The Plan was declared effect on March 31. On Dec. 15, 2011, Motors Liquidation Company was dissolved. On the Dissolution Date, pursuant to the Plan and the Motors Liquidation Company GUC Trust Agreement, dated March 30, 2011, between the parties thereto, the trust administrator and trustee -- GUC Trust Administrator -- of the Motors Liquidation Company GUC Trust, assumed responsibility for the affairs of and certain claims against MLC and its debtor subsidiaries that were not concluded prior to the Dissolution Date. GENWORTH MORTGAGE: Moody's Raises IFSR to Ba1; Outlook Positive --------------------------------------------------------------- Moody's Investors Service has upgraded the insurance financial strength ratings of Genworth's US mortgage insurance subsidiaries, Genworth Mortgage Insurance Corporation (GMICO), the flagship insurer, and Genworth Residential Mortgage Insurance Corporation of North Carolina (GRMIC), to Ba1, from Ba2. The outlook on the ratings is positive. The rating action was prompted by the announcement by Genworth that it invested the proceeds of its December 2013 $400 million senior notes issued by Genworth Holding, Inc.'s (Baa3 senior debt, stable) in its US mortgage insurance business in December 2013. It contributed $300 million to Genworth Mortgage Holdings, LLC, and another $100 million to GMICO. The investments are in anticipation of higher capital requirements under the government-sponsored enterprises' (GSEs) new eligibility standards to become public sometime in 2014. Genworth also indicated that some or all of the $300 million at Genworth Mortgage Holdings, LLC could be allocated for the benefit of GMICO, subject to various considerations including the finalized GSEs eligibility standards. Ratings Rationale Moody's says the ratings upgrade reflects the improving capital profile of the US mortgage insurance operations (US MI) following the capital contribution, the group's anticipated continued support , improving business fundamentals, a return to profitability in 2013, and a continued reduction in legacy losses. The $100 million capital injection reduced the estimated combined US MI statutory risk-to-capital ratio (RTC) to 19.5:1 and GMICO's RTC to 19.3:1, as of 31 December 2013. An additional $300 million contribution would reduce RTC by approximately four points, and further enhance the mortgage insurer's ability to meet the new tighter GSEs eligibility criteria. Moody's said that while a capital contribution to GMICO is clearly credit positive, it is uncertain if GMICO would need capital beyond the current capital raise in order to meet the new eligibility criteria. Beyond the lack of current visibility about the capital charge for mortgage risks, Moody's says a distinct source of uncertainty for GMICO is the GSE treatment of affiliated investments. GMICO's assets comprise approximately $1.2 billion of statutory value from affiliated investments, such as shares of affiliates and stacked mortgage insurance operations. A portion of those could be meaningfully discounted under the new GSEs criteria. However, Moody's stated that Genworth appears committed to meet the new eligibility criteria of the GSEs and the company has indicated they would consider a variety of funding options, including the use of reinsurance, and funds from a proposed partial initial public offering if its Australian mortgage business to address a potential capital shortfall at GMICO. Moody's says GMICO's capital position and profitability prospects have been strengthening as the firm writes high quality new business and as its legacy exposures wind down. Additionally, improving housing market conditions have reduced the downside risks of the company's insured portfolio. However, these strengths are moderated by the firm's still modest capital position and weak profitability. Although Moody's does not give credit for full parental support to GMICO in times of severe stress, recent developments demonstrated a degree of parental support amid an improving mortgage insurance profitability outlook. Moody's cited that the following factors could lead to an upgrade: (1) substantial improvement in capital adequacy; (2) full compliance with the new GSEs eligibility criteria; (3) continued improvement in profitability. The following factors could lead to a downgrade: (1) inability or unwillingness to meet the GSEs new eligibility criteria; (2) losses for the full year 2014. Ratings Outlook The positive rating outlooks reflect the mortgage insurers' improving capital adequacy and profitability combined with the group's efforts and, in our opinion, its ability, to meet the forthcoming GSEs eligibility standards through further strengthening of its capital adequacy profile. The following ratings have been upgraded: Genworth Mortgage Insurance Corporation -- Insurance financial strength rating to Ba1, from Ba2. Genworth Residential Mortgage Insurance Corporation of North Carolina -- Insurance financial strength rating to Ba1, from Ba2. Genworth Financial, Inc., headquartered in Richmond, Virginia, is the holding company for Genworth Mortgage Holdings, LLC. (parent of GMICO), reported total assets of $108.0 billion and total stockholders' equity, excluding non-controlling interests of $14.4 billion as of 31 December 2013. The principal methodology used in rating Genworth mortgage insurance operations was"Moody's Global Methodology for Rating Mortgage Insurers" published on December 2012. Moody's insurance financial strength ratings are opinions of the ability of insurance companies to pay punctually senior policyholder claims and obligations. GETTY IMAGES: Bank Debt Trades at 6% Off ---------------------------------------- Participations in a syndicated loan under which Getty Images Inc. is a borrower traded in the secondary market at 93.71 cents-on- the-dollar during the week ended Friday, February 7, 2014, according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. This represents a decrease of 0.46 percentage points from the previous week, The Journal relates. Getty Images Inc. pays 350 basis points above LIBOR to borrow under the facility. The bank loan matures on Oct. 14, 2019, and carries Moody's B2 rating and Standard & Poor's B- rating. The loan is one of the biggest gainers and losers among 205 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. As reported in the Troubled Company Reporter on Sept. 5, 2013, Moody's Investors Service placed the ratings of Getty Images on review for downgrade based on weaker than expected results through 2Q2013 and Moody's revised expectations for the next 12 months. According to Moody's, Corporate Family Rating of Getty Images, Inc. and Abe Investment Holdings, Inc., currently B2, is placed on review for possible downgrade. GILBERT HOSPITAL: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Gilbert Hospital, LLC 5656 South Power Road Gilbert, AZ 85295 Case No.: 14-01451 Chapter 11 Petition Date: February 5, 2014 Court: United States Bankruptcy Court District of Arizona (Phoenix) Judge: Hon. Randolph J. Haines Debtor's Counsel: Pernell W. McGuire, Esq. DAVIS MILES MCGUIRE GARDNER, PLLC 320 N. Leroux Street, Suite A Flagstaff, AZ 86001 Tel: 928-779-1173 Fax: 877-715-7366 Email: pmcguire@davismiles.com - and - Bryce A. Suzuki, Esq. BRYAN CAVE LLP 2 N. Central Ave., #2200 Phoenix, AZ 85004 Tel: 602-364-7285 Fax: 602-364-7070 Email: bryce.suzuki@bryancave.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Bradley Newswander, board chair. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/azb14-1451.pdf GMX RESOURCES: Cancels Registration of Securities ------------------------------------------------- GMX Resources Inc. on Feb. 6 filed with the Securities and Exchange Commission a Form 15 "CERTIFICATION AND NOTICE OF TERMINATION OF REGISTRATION UNDER SECTION 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR SUSPENSION OF DUTY TO FILE REPORTS UNDER SECTIONS 13 AND 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934," with respect to these securities: * Common Stock, par value $.001 per share * Rights to purchase Series A Junior Participating Preferred Stock * 9.25% Series B Cumulative Preferred Stock * Units to purchase 1 share of Common Stock and 1 Class A Warrant * Class A Warrants to purchase Common Stock According to GMX, there are no holders of record as of the certification or notice date. On Dec. 5, 2013, the Debtors filed the First Amended Joint Plan of Reorganization of GMX Resources Inc. and its Debtor Subsidiaries under Chapter 11 of the Bankruptcy Code. On Jan. 22, 2014, the Bankruptcy Court entered an Order Confirming First Amended Joint Plan of Reorganization. The Plan was declared effective Feb. 3, 2014. The reorganization of the Debtors' capital structure under the Plan reduces the total amount of outstanding indebtedness by approximately $505,000,000 under four separate indentures. Secured claims under the senior-most indenture, allowed by the Bankruptcy Court in the amount of $338,000,000 have been exchanged for equity interests in Thunderbird Resources Equity Inc. -- Reorganized GMXR -- and/or Thunderbird Resources LP -- New GMXR. As of the Effective Date, the Company will enter into a Second Amended and Restated Certificate of Incorporation of GMX Resources, Inc., whereby, among other things, the Company's name will change to Thunderbird Resources Equity Inc. The Thunderbird Charter authorizes the issuance of 20,000,000 shares of common stock of the par value of $0.001 per share. The number of shares of common stock to be issued by Thunderbird Resources Equity Inc., as Reorganized GMXR, out of its authorized shares, as well as the number of New GMXR Interests, will be determined as of, and issued on, the Effective Date in accordance with Section 4.01 of the Plan. All priority non-tax claims have been paid off Feb. 3 or will be paid as soon as reasonably practical. General unsecured creditors received a pro rata share of (1) interests in a creditor trust created as of the Effective Date; and (2) $1.5 million in cash. At the option of the Debtors (with certain required consents), intercompany claims were either reinstated or eliminated, in full or in part. As of the Effective Date, all rights and interests of holders of the Company's common and preferred stock have been terminated. Finally, equity interests in the debtor subsidiaries are now held directly by Reorganized GMXR for the benefit of the holders of Reorganized GMXR common stock. A copy of the Order Confirming First Amended Joint Plan of Reorganization of GMX Resources Inc. and its Subsidiaries Under Chapter 11 of the Bankruptcy Code entered on January 22, 2014, is available at http://is.gd/gL6WOZ A copy of the First Amended Joint Plan of Reorganization of GMX Resources Inc. and its Debtor Subsidiaries Under Chapter 11 of the Bankruptcy Code (confirmed by the Bankruptcy Court), is available at http://is.gd/hlsWbW A copy of Schedules disclosing the Company's assets and liabilities as of Dec. 31, 2013, is available at http://is.gd/EWUJkj 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. GOLDKING HOLDINGS: Alvarez & Marsal to Provide Forensics Services ----------------------------------------------------------------- Goldking Holdings, LLC, et al., ask the U.S. Bankruptcy Court for the Southern District of Texas for authorization to enter into a postpetition agreement with Alvarez & Marsal Global Forensic and Dispute Services, LLC to provide computer forensics and related services. An expedited hearing on the matter has been requested for Feb. 10, 2014, at 2:00 p.m. Prior to the bankruptcy cases, Gibbs & Bruns LLP, as counsel, and the Debtors required the services of an electronic data specialist like A&M in connection with the litigation because of the sheer volume of electronic data in the Debtors' possession that was subject to the Debtors' discovery obligations. On Feb. 1, 2013, Gibbs & Bruns, the Debtor and A&M entered into a letter agreement pursuant to which, among other things, Gibbs & Bruns agreed to retain A&M to provide computer forensics, electronic discovery and forensic data mining services to Gibbs & Bruns and Holdings, in connection with the litigation. On June 3, Gibbs & Bruns, Holdings and A&M entered into a revised letter agreement, which was identical to the Original A&M Agreement in all substantive respects except that it was addressed to, and executed by, Eddie Herbert, the new chief executive officer of Holdings. On Feb. 13, 2013, the Debtors commenced litigation against, among others, Leonard C. Tallerine and certain entities that he owns in the 61st District Court of Harris County, Texas for, among other things, theft, conversion, fraud, unjust enrichment, breach of fiduciary duty, and breach of contract. The Debtors and Gibbs & Bruns continue to require the services of A&M in connection with the litigation to, among other things: a) host the current electronic document database; b) create and host any other databases necessary to prosecute the litigation; and c) assist in the production of certain electronic documents to the defendants in the litigation. The Gibbs & Bruns application states that it is also seeks approval of a litigation support firm which, while not identified by name, is A&M. Edwin Lee, managing director of the firm, assures the Court that A&M's services for other clients do not relate to the Debtor's Chapter 11 cases or the litigation. If any new relevant facts or relationships are discovered or arise, A&M will promptly file a supplemental declaration. A copy of the agreements is available for free at: http://bankrupt.com/misc/GOLDKINGHOLDINGSa_magreement2.pdf About Goldking Holdings Goldking Holdings LLC, an oil-and-gas exploration company based in Houston, sought bankruptcy protection (Bankr. D. Del. Case No. 13-12820) in Wilmington, Delaware, on Oct. 30, 2013, from creditors with plans to sell virtually all its assets. Goldking Onshore Operating, LLC, and Goldking Resources, LLC, also sought creditor protection. The cases were initially assigned to Delaware Judge Brendan Linehan Shannon. On Nov. 20, 2013, Judge Shannon granted the request of Goldking's former CEO Leonard C. Tallerine Jr. to move the Chapter 11 case to Houston, Texas (Bankr. S.D. Tex. Case No. 13-37200). Mr. Tallerine owns a nearly 6% stake in the company through an entity called Goldking LT Capital Corp. The Debtors are represented by Scott W. Everett, Esq., and Christopher L. Castillo, Esq., at Haynes And Boone, LLP. Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, serves as the Debtors' co-counsel. The Debtors' notice, claims, solicitation and balloting agent is Epiq Bankruptcy Solutions, LLC. Lantana Oil & Gas Partners was initially hired as the Debtors' financial advisors. In December 2013, the Debtors won Court approval to employ E-Spectrum Advisors LLC, led by its CEO Coy Gallatin, as asset sale advisor. Goldking Holdings disclosed $16,170 in assets and $11,484,881 in liabilities as of the Chapter 11 filing. Judy A. Robbins, the U.S. Trustee was unable to appoint a committee of unsecured creditors. GREEN MOUNTAIN: Moody's Says Coke Partnership is Credit Positive ---------------------------------------------------------------- Moody's Investors Service said that the announcement of a long term strategic partnership between The Coca-Cola Company ("Coke", Aa3, stable) and Green Mountain Coffee Roasters, Inc. ("GMCR", Ba2, stable) is a credit positive for both companies. On February 5th, the companies jointly announced that they will be entering into a ten-year agreement to collaborate on the development and introduction of The Coca-Cola Company's global brand portfolio for use in GMCR's planned Keurig Cold(TM) at-home beverage system. As part of the agreement, GMCR and The Coca-Cola Company will cooperate to bring the new Keurig Cold(TM) beverage system to consumers around the world. In order to align their long-term interests, the companies also entered into a Common Stock Purchase Agreement under which The Coca-Cola Company will purchase a 10% minority equity position in GMCR and have the option to increase its stake to up to 16%. "For Coca-Cola, the benefits of the partnership include the ability to compete in the prepared in home segment of the cold beverage industry" said Linda Montag, Moody's SVP. "This is particularly important given a long-term decline in traditional carbonated soft beverage (CSD) category in the U.S. Furthermore, the partnership offers Coca the potential to diversify its beverage offerings and distribution model to benefit from the growing at home pod coffee market", added Ms. Montag. "For GMCR, the transaction is an even bigger boost as the company will benefit from Coca-Cola's R&D, sales & marketing capabilities and global distribution in addition to the exclusive right to use Coke's world leading brands in its pod system" said Brian Weddington, Moody's VP -- Senior Credit Officer. The $1.25 billion investment by Coke for a 10% stake is manageable given that the company had over $17 billion in cash and short term investments as of the end of its 2013 third quarter. GMCR said that it intends to use proceeds from Coke's investment both for share buybacks under its existing $1.1 billion share repurchase authorization and to fund investment in the new cold beverage system. Green Mountain Coffee Roasters, Inc. ("GMCR") based in Waterbury, Vermont, is a manufacturer of Keurig(R) single serve brewing systems and beverages, including specialty coffee, tea and other beverages, in single serve packs for use with its brewers. For the twelve months ended December 28, 2013 the company generated net sales of $4.4 billion. The Coca-Cola Company ("Coca-Cola"), based in Atlanta, Georgia, is the world's largest manufacturer, marketer and distributor of nonalcoholic beverage concentrates and syrups. Coke and its rated bottlers had aggregated system sales of over $85 billion in 2012. The key methodology used to analyze GMCR is the Global Packaged Goods Methodology (published in June 2013). The key methodology used to analyze Coca-Cola is the Global Soft Beverage Methodology (published in May 2013). GULF STATES LONG TERM: La. Judge Won't Dismiss Appeal on Plan ------------------------------------------------------------- Louisiana District Judge Jane Triche Milazzo denied the request of David Adler, as disbursing agent for Gulf States Long Term Acute Care of Covington, L.L.C., to dismiss an appeal from a bankruptcy court order clarifying the terms of the confirmed plan for the Debtor. The bankruptcy court confirmed Debtor's Third Amended Plan of Reorganization on Feb. 22, 2010. Mr. Adler filed a motion for clarification of the Plan. The bankruptcy court granted the motion in part and ordered as follows: -- that . . . Disbursing Agent . . . may not pursue any claims against Robert A. Maurin; Gregory Frost; Breazeale, Sachse & Wilson, LLP; Jamestown, Inc.; Jamestown Gaming, L.L.C.; Gulf States Meadows, LP; Gulf States Healthcare Properties of Dallas, L.L.C.; Gulf States of Dallas Holdings, L.L.C.; New Braunfels Healthcare Properties, L.L.C. ["Part 1"] -- that . . . Disbursing Agent . . . may pursue claims against Gulf States of Dallas Holdings, L.L.C.; B & G Healthcare Properties, L.L.C.; Jamestown Healthcare Properties of Dallas, L.L.C.; and Gregory Walker. ["Part 2"] -- that [Disbursing Agent] may also pursue, if successful on any retained causes of action, all means of collection, including, but not limited to, the assertion of veil piercing or alter ego theories of recovery against Maurin. ["Part 3"] The Clarification Order was reported in the Troubled Company Reporter on March 1, 2013. Robert Maurin, Jamestown, Inc., Jamestown Gaming, L.L.C., Gulf States Meadows, LP, Gulf States Healthcare Properties of Dallas, L.L.C., and New Braunfels Healthcare Properties, L.L.C. took an appeal from Part 2 and Part 3 of the bankruptcy court's order. Mr. Adler responded with a motion to dismiss, arguing that the Appellants lack standing to appeal. According to the Court, given that Mr. Adler has filed an adversary complaint against, inter alia, the parties listed in Part 2, the Court finds that the Appellants are sufficiently aggrieved by the bankruptcy order to establish appellate standing. A copy of the District Court's Feb. 3, 2014 Order and Reasons is available at http://is.gd/0Mi7Mcfrom Leagle.com. Based in Covington, Louisiana, Gulf States Long Term Acute Care of Covington, LLC, filed for Chapter 11 bankruptcy protection (Bankr. E.D. La. Case No. 09-11116) on April 20, 2009. William E. Steffes, Esq., at Steffes Vingiello & McKenzie LLC, in Baton Rouge, Louisiana, served as the Debtor's counsel. In its petition, the Debtor estimated $0 to $50,000 in assets, and $1 million to $10 million in debts. The Debtor's plan of reorganization was confirmed on Feb. 22, 2010. GYMBOREE CORP: Bank Debt Trades at 10% Off ------------------------------------------ Participations in a syndicated loan under which Gymboree Corp is a borrower traded in the secondary market at 89.75 cents-on-the- dollar during the week ended Friday, February 7, 2014, according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. This represents a decrease of 0.71 percentage points from the previous week, The Journal relates. Gymboree Corp pays 350 basis points above LIBOR to borrow under the facility. The bank loan matures on Feb. 23, 2018. The bank debt carries Moody's B2 and Standard & Poor's B- rating. The loan is one of the biggest gainers and losers among 204 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. Headquartered in San Francisco, California, The Gymboree Corporation is a retailer of infant and toddler apparel. The company designs and distributes infant and toddler apparel through its stores which operates under the "Gymboree", "Gymboree Outlet", "Janie and Jack" and "Crazy 8" brands in the United States, Canada and Australia. Revenues are approximately $1.2 billion. The company is owned by affiliates of Bain Capital Partners LLC. HALSEY MCLEAN: Trustee Selling Bel Air Home for $10 Million ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the trustee for Halsey Minor is selling a 7,500- square-foot home on Sarbonne Road in the Bel Air section of Los Angeles for $10 million, unless a higher offer turns up before the approval hearing on Feb. 19. According to the report, the trustee previously listed Minor's mansion in San Francisco for sale at about $20 million. About Halsey McLean Minor Halsey McLean Minor, who sold CNET Networks Inc. to CBS Corp. in 2008 for $1.8 billion, filed a liquidating Chapter 7 bankruptcy petition (Bankr. C.D. Cal. Case No. 13-bk-23787) on May 24, 2013 in Los Angeles. Dawn McCarty and Ari Levy, writing for Bloomberg News, reported that Mr. Minor made sure that he won't be the only one who's uncomfortable. There's no money for his unsecured creditors, he said in his bankruptcy petition, which seeks to hand over all his eligible assets to a court official who will sell them to the highest bidder and wipe Minor's finances clean for whatever he decides to do next. "Choosing Chapter 7 is clearing the slate," Bob Rattet, a bankruptcy lawyer in White Plains, New York, told the news agency. "He isn't required like Middle America to pay his debts, because they're mostly business-related." The Bloomberg report discloses that Mr. Minor is yet to file lists of his assets and liabilities. He also hasn't made the required disclosure about his income and transactions before bankruptcy. The petition claims that assets total less than $50 million while debt is more than $50 million. HARTWIG TRANSIT: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Hartwig Transit, Inc. 3833 Industrial Avenue Rolling Meadows, IL 60008 Case No.: 14-03843 Chapter 11 Petition Date: February 7, 2014 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Hon. Donald R Cassling Debtor's Counsel: Gregory K Stern, Esq. GREGORY K. STERN, P.C. 53 West Jackson Blvd., Suite 1442 Chicago, IL 60604 Tel: 312 427-1558 Fax: 312 427-1289 E-mail: gstern1@flash.net Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Gerald Hartwig, president. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/ilnb14-3843.pdf HEALTH CARE REIT: Fitch Affirms 'BB+' Preferred Stock Rating ------------------------------------------------------------ Fitch Ratings has affirmed the following credit ratings of Health Care REIT, Inc. (NYSE: HCN): -- Issuer Default Rating (IDR) at 'BBB'; -- Senior unsecured lines of credit at 'BBB'; -- Senior unsecured term loans at 'BBB'; -- Senior unsecured notes at 'BBB'; -- Senior unsecured convertible notes at 'BBB'; -- Preferred stock at 'BB+'. The Rating Outlook is Stable. Key Rating Drivers The ratings reflect HCN's broad healthcare real estate platform, which generates largely predictable cash flow principally from private pay sources in markets with strong demographics. The company has projected fixed charge coverage and leverage appropriate for a 'BBB' rated healthcare REIT. HCN also has strong access to capital and a solid liquidity position, including contingent liquidity from unencumbered assets, and a strong management team. Credit concerns center on operational volatility associated with the company's REIT Investment Diversification and Empowerment Act of 2007 (RIDEA)-related investments, modest operator concentration, and impact on future growth financing given broad equity underperformance in the healthcare real estate sector. Stable Cash Flow HCN's portfolio features long-term leases that create a recurring stream of cash flows to service fixed charges and fund external growth. The company's weighted average lease maturity was 12 years at Sept. 30, 2013, and only 6.8% of revenue (excluding RIDEA investments) expires through 2016. Further, the company's leases have structural protections including parent guarantees, letters of credit/security deposits, and master leases/cross- collateralization agreements, which limit operators' ability to selectively renew leases for better performing assets. Favorable Portfolio Characteristics Approximately 91% of the portfolio is located in the top 31 domestic metropolitan statistical areas or on the East or West coasts, based on data from the National Investment Center for the Seniors Housing & Care Industry. The company's RIDEA investments (33% of NOI) also exhibit favorable demographics including household incomes and home values that are 63% and 31% above the broader United States, respectively. These favorable qualities mitigate inherent volatility in the RIDEA portfolio and have led to strong quarterly same store net operation income (SSNOI) growth averaging 4% across the aggregate portfolio since 2011. Modest Government Reimbursement Risk HCN has a favorable payor mix with private pay sources representing 82% of third quarter (3Q) NOI. As a result, Fitch does not expect that rules by the Centers for Medicare and Medicaid Services (CMS) for fiscal year 2014 will have a material impact on the company's cash flow. Prospective payment system (PPS) payment growth rates for Medicare in skilled nursing facilities are 1.3% for fiscal year (FY) 2014 following 1.8% in FY2013, and 1.3% for long-term acute care hospitals in FY2014 following 1.7% in FY2013. In addition, sequestration that was effective April 1, 2013 lowered Medicare reimbursements by 2% per the Budget Control Act of 2011, but should have an immaterial impact on HCN's tenant's EBITDARM coverage over the near term. Strong SSNOI Growth to Decelerate in 2014 SSNOI growth has been solid in a range of 3.5%-5% on a quarterly basis since the fourth quarter of 2010 (4Q'10) and up 3.7% in 3Q'13, led by the seniors housing operating portfolio at 9.4%. Fitch expects that SSNOI growth will moderate in 2014-2015 to the low-single digits, driven by deceleration in RIDEA-driven growth to approximately 4-5%. Appropriate Credit Metrics for 'BBB' Leverage of 6.9x at Sept. 30, 2013 is elevated, yet overstated given timing of the final phase of the Sunrise acquisition, which closed in July 2013. Leverage calculated with 3Q'13 EBITDA is 6.2x and appropriate for the rating. Fitch expects that leverage will stabilize in the 6.3x-6.4x range over the longer term, which is consistent with the 'BBB' IDR. Fixed charge coverage (FCC) was 2.8x for both the trailing 12 months (TTM) and quarter ended Sept. 30, 2013. Fitch expects that HCN's FCC will remain around this level over the next 12-24 months, as accretive growth from acquisitions and developments is mitigated by increasing capital expenditures and higher cost of capital. Fitch defines fixed- charge coverage as recurring operating EBITDA, less recurring capital expenditures and straight-line rent adjustments, divided by total interest incurred and preferred dividends. Projected coverage is appropriate for the rating. Strong Access to Capital HCN raised approximately $3.6 billion of capital in 2013, including unsecured bonds, term loans, and follow-on common equity. The company also upsized its credit facility while extending the term and lowering the LIBOR spread to 117.5 basis points (bps) from 135 bps. Robust Financial Flexibility HCN's liquidity position pro forma for recent capital transactions is adequate, with total sources of liquidity covering uses by 1.5x for the period Oct. 1, 2013 to Dec. 31, 2015. Sources of liquidity include unrestricted cash, availability under the unsecured revolving credit facility, and projected retained cash flow from operating activities after dividends. Uses of liquidity include pro rata debt maturities, recurring capital expenditures, and remaining development costs. Only 13.9% of pro-rata debt matures through 2015 and no more than 13% of total debt matures in any given year through 2017, limiting refinancing risk. HCN also has strong contingent liquidity with unencumbered asset coverage of unsecured debt (UA/UD) based on a stressed 8.5% capitalization of 2.3x, pro forma for recent unsecured debt transactions and upcoming secured debt repayment. Elevated AFFO Payout Ratio Health Care REIT has paid out more than 90% of AFFO as common dividends since 2010, indicating moderate internally generated liquidity. The company's AFFO payout ratio was 94% through Sept. 30, 2013 and Fitch expects the ratio will remain relatively flat over the near term as accretive investments should be offset by the 3.9% dividend increase announced for 2014 and increasing capex from RIDEA investments. Underperforming Equity HCN and the broader healthcare REIT sector have underperformed indices over the past 12 months, driven by market factors (sizable NAV premiums beginning to normalize) and fundamental issues (growth deceleration and elevated levels of new supply). HCN has historically taken advantage of richly priced equity to finance its sizable growth, issuing more than $10 billion of common equity since 2006 at an average 28% premium to NAV. The recent underperformance (the company currently trades at a 5% premium) raises uncertainty about future equity financing and whether the company will be able to grow in a leverage-neutral manner without diluting equity holders. Modest Tenant Concentration As of Sept. 30, 2013, Sunrise Senior Living was the company's largest tenant at 18% of invested capital, with the five largest tenants representing 43%. This concentration is high relative to other asset classes but strong relative to peers Ventas, Inc. ('BBB+'/Outlook Stable) and HCP, Inc. ('BBB+'/Outlook Stable), whose five largest tenants comprise 56% and 59%, respectively. The concentration is also mitigated by the solid performance of these tenants, which operate in well-diversified, attractive high- barrier-to-entry markets, and with cross-collateralized lease structures. International Expansion Presents Event Risk HCN has accelerated its growth in Canada and the United Kingdom via various acquisitions over the past 12 months, highlighted by Revera and the final phase of Sunrise Senior Living. The cash flow diversification and favorable demographics underlying the transactions are credit positives. However, event risk arises from future uncertainties related to regulatory and entitlement risk in these markets. Fitch expects that the company will continue to grow in Canada and the UK and potentially enter new markets over the next 12-24 months, which further exacerbates these risks. That being said, Fitch has a favorable view of HCN's management team, which has prudently entered new markets in a disciplined, well-executed manner. Stable Outlook The Stable Outlook centers on HCN's normalized credit metrics that are appropriate for the rating coupled with strong liquidity and access to capital. In addition, Fitch expects healthcare real estate to continue to benefit from positive demographic trends over the near to medium term. Preferred Stock Notching The two-notch differential between HCN's IDR and its preferred stock rating is consistent with Fitch's criteria for corporate entities with a 'BBB' IDR. These preferred securities are deeply subordinated and have loss absorption elements that would likely result in poor recoveries in the event of a corporate default. Rating Sensitivities The following factors may result in positive momentum in the ratings and/or Outlook: -- Fitch's expectation of fixed-charge coverage sustaining above 3.0x (TTM coverage at 3Q'13 was 2.8x); -- Fitch's expectation of leverage sustaining below 5.5x (3Q'13 annualized leverage was 6.2x); -- Fitch's expectation of unencumbered assets to unsecured debt based on an 8.5% capitalization rate sustaining above 2.5x (pro forma UA/UD is 2.3x). The following factors may result in negative momentum in the ratings and/or Rating Outlook: -- Fitch's expectation of fixed charge coverage sustaining below 2.5x; -- Fitch's expectation of leverage sustaining above 6.5x; -- Fitch's expectation of unencumbered assets to unsecured debt sustaining below 2.0x. HELLER EHRMAN: Unfinished-Business Suits Remain Unfinished ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the liquidated law firm Heller Ehrman LLC must conduct a trial before a bankruptcy judge in San Francisco can decide whether four law firms are liable to hand over fees generated completing work left unfinished when California-based Heller went out of business. According to the report, U.S. Bankruptcy Judge Dennis Montali wrote decisions in April 2011 and March 2013 on the question of whether a law firm that completes a failed firm's unfinished business must pay income or profit to the trustee for the defunct firm. Judge Montali said in March that firms taking on lawyers from a failing practice are automatically liable to the failed firm for profits on business the lawyers bring with them, the report related. Judge Montali didn't set down a rule to calculate how much each firm must pay, the report noted. The four law firms still in the fight are Davis Wright Tremaine LLP, Foley & Lardner LLP, Jones Day and Orrick Herrington & Sutcliffe LLP. The lawsuits include Heller Ehrman LLP v. Jones Day (In re Heller Ehrman LLP), 10-3221, U.S. Bankruptcy Court, Northern District of California (San Francisco). About Heller Ehrman Headquartered in San Francisco, California, Heller Ehrman, LLP -- http://www.hewm.com/-- was an international law firm of more than 730 attorneys in 15 offices in the United States, Europe, and Asia. Heller Ehrman filed a voluntary Chapter 11 petition (Bankr. N.D. Cal., Case No. 08-32514) on Dec. 28, 2008. Members of the firm's dissolution committee led by Peter J. Benvenutti approved a plan dated Sept. 26, 2008, to dissolve the firm. The Hon. Dennis Montali presides over the case. Pachulski Stang Ziehl & Jones LLP assisted the Debtor in its restructuring effort. The Official Committee of Unsecured Creditors is represented by Felderstein Fitzgerald Willoughby & Pascuzzi LLP. The firm estimated assets and debts at $50 million to $100 million as of the Petition Date. According to reports, the firm had roughly $63 million in assets and 54 employees at the time of its filing. On Aug. 13, 2010, the Court confirmed Heller's Joint Plan of Liquidation. HERON LAKE: Boulay PLLP Raises Going Concern Doubt -------------------------------------------------- Heron Lake BioEnergy, LLC, filed with the U.S. Securities and Exchange Commission on Jan. 29, 2014, its annual report on Form 10-K for the fiscal year ended Oct. 31, 2013. Boulay PLLP expressed substantial doubt about the Company's ability to continue as a going concern, citing that the Company has incurred losses due to difficult market conditions and had lower levels of working capital than was desired. The Company reported a net income of $2.27 million on $163.76 million of revenues for the fiscal year ended Oct. 31, 2013, compared with a net loss of $32.35 million on $168.66 million of revenues for the year ended Oct. 31, 2012. The Company's balance sheet at Oct. 31, 2013, showed $60.79 million in total assets, $33.24 million in total liabilities, and stockholders' equity of $27.55 million. A copy of the Form 10-K is available at: http://is.gd/AevXHt About Heron Lake Heron Lake BioEnergy, LLC, operated a dry mill, coal fired ethanol plant in Heron Lake, Minnesota. After completing a conversion in November 2011, the Company is now a natural gas fired ethanol plant. Its subsidiary, HLBE Pipeline Company, LLC, owns 73 percent of Agrinatural Gas, LLC, the pipeline company formed to construct, own, and operate a natural gas pipeline that provides natural gas to the Company's ethanol production facility through a connection with the natural gas pipeline facilities of Northern Border Pipeline Company in Cottonwood County, Minnesota. Its subsidiary, Lakefield Farmers Elevator, LLC, has grain facilities at Lakefield and Wilder, Minnesota. At nameplate, the Company's ethanol plant has the capacity to process approximately 18.0 million bushels of corn each year, producing approximately 50 million gallons per year of fuel-grade ethanol and approximately 160,000 tons of distillers' grains with soluble. In its report on the Company's financial statements for the fiscal year ended Oct. 31, 2012, Boulay, Heutmaker, Zibell & Co. P.L.L.P., in Minneapolis, Minnesota, expressed substantial doubt about Heron Lake BioEnergy's ability to continue as a going concern. The independent auditors noted that the Company has incurred losses due to difficult market conditions and the impairment of long-lived assets. "The Company is out of compliance with its master loan agreement and is operating under a forbearance agreement whereby the Company agreed to sell substantially all of its assets." The Company reported a net loss of $32.35 million for the year ended Oct. 31, 2012, as compared with net income of $543,017 for the year ended Oct. 31, 2011. The Company's balance sheet at July 31, 2013, showed $60.75 million in total assets, $35.47 million in total liabilities and $25.27 million total members' equity. Bankruptcy Warning At Jan. 31, 2013, the Company's total indebtedness to AgStar was approximately $41.1 million. All of the Company's assets and real property are subject to security interests and mortgages in favor of AgStar as security for the obligations of the master loan agreement. The Company's failure to pay any required installment of principal or interest or any other amounts payable under the Company's Term Loan or Term Revolving Loan or the Company's failure to perform or observe any covenant under the Sixth Amended and Restated Master Loan Agreement would result in an event of default, entitling AgStar to accelerate and declare due all amounts outstanding under the Company's Term Loan and its Term Revolving Loan. "Upon the occurrence of any one or more Events of Default, as defined under the Sixth Amended and Restated Forbearance Agreement, including failure to observe any of the financial or affirmative covenants...AgStar may accelerate all of our indebtedness and may seize the assets that secure our indebtedness, causing us to lose control of our business. We may also be forced to sell our assets, restructure our indebtedness, submit to foreclosure proceedings, cease operations or seek bankruptcy or reorganization protection," according to the Company's quarterly report for the three months ended Jan. 31, 2013. IASIS HEALTHCARE: Moody's Affirms Ba3 Sr. Secured Debt Rating ------------------------------------------------------------- Moody's Investors Service affirmed the ratings of IASIS Healthcare LLC, including the Ba3 rating on its senior secured bank debt, and Caa1 rating on its senior unsecured notes. IASIS Healthcare LLC is a wholly owned subsidiary of IASIS Healthcare Corporation (collectively IASIS). Moody's also reassigned the company's B2 Corporate Family Rating and B2-PD Probability of Default Rating to IASIS Healthcare LLC, the highest organizational level with rated debt, from IASIS Healthcare Corporation. The outlook for the ratings is stable. Ratings assigned: IASIS Healthcare LLC: Corporate Family Rating at B2 Probability of Default Rating at B2-PD Ratings affirmed/LGD assessments revised: IASIS Healthcare LLC: Senior secured revolving credit facility at Ba3 (LGD 2, 25%) from Ba3 (LGD 2, 23%) Senior secured term loan at Ba3 (LGD 2, 25%) from Ba3 (LGD 2, 23%) 8.375% senior notes due 2019 at Caa1 (LGD 5, 80%) from Caa1 (LGD 5, 78%) Speculative Grade Liquidity Rating at SGL-2 Ratings withdrawn: IASIS Healthcare Corporation: Corporate Family Rating at B2 Probability of Default Rating at B2-PD Ratings Rationale IASIS' B2 Corporate Family Rating reflects Moody's expectation that while financial leverage will decline over the next year, it will remain very high. While the company has garnered a considerable cash balance through the sale of its Florida facilities and a sale leaseback transaction, Moody's expects that the majority of cash will be used to reinvest in the business or pursue acquisitions. While growth in EBITDA from these initiatives may reduce leverage modestly, an inability to redeploy these proceeds may require the repayment of debt. Moody's believes that IASIS will continue to operate with limited free cash flow, and therefore it does not expect a meaningful reduction in leverage through debt repayment, aside from the potential sweep of excess cash proceeds from the sale transactions. Furthermore, the company will continue to operate with significant concentrations in a few highly competitive markets. However, Moody's anticipates that the company will maintain good liquidity, aided in part by considerable revolver availability and Moody's expectation that the company will maximize its ability to reinvest available cash into the growth of the business. The stable outlook incorporates Moody's expectation that leverage will decline over the next 12 months through either investment in income producing assets or a required debt payment at the end of fiscal 2014.The outlook also reflects Moody's expectation that the company will look to supplement modest organic growth with acquisitions or continued investment in existing markets. However, given the significant amount of available cash, Moody's anticipates that the company will be disciplined regarding the use of additional leverage. The Speculative Grade Liquidly Rating of SGL-2 reflects Moody's expectation the company will maintain good liquidity, characterized by a considerable cash balance and revolver availability. Given Moody's expectation that leverage will remain very high and that the majority of available cash will be used to reinvest in the business in lieu of debt repayment, the rating agency does not anticipate an upgrade of the ratings in the near term. However, Moody's could consider upgrading the rating if adjusted debt/EBITDA improves and is expected to be sustained below 5.0 times through either debt repayment or growth in EBITDA. Moody's could downgrade the rating if the company does not reduce leverage to below 6.0 times over the next 12 to 18 months. Moody's could also downgrade the ratings if cash flow coverage of debt declines and results in sustained negative free cash flow. This could transpire from things such as continued weak volumes or market specific issues such as changes to reimbursement in any of the company's markets. The principal methodology used in this rating was the Global Healthcare Service Providers published in December 2011. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. IASIS Healthcare LLC, a wholly owned subsidiary of IASIS Healthcare Corporation, is headquartered in Franklin, Tennessee. IASIS is an owner operator of acute care hospitals in high growth urban and suburban markets. IASIS operates 16 hospitals in six states. The company also operates Health Choice, a Medicaid and Medicare managed health plan in Arizona and Utah. JC PENNEY: Bank Debt Trades at 4% Off ------------------------------------- Participations in a syndicated loan under which JC Penney is a borrower traded in the secondary market at 96.00 cents-on-the- dollar during the week ended Friday, February 7, 2014, according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. This represents a decrease of 1.21 percentage points from the previous week, The Journal relates. JC Penney pays 500 basis points above LIBOR to borrow under the facility. The bank loan matures on April 29, 2018 and carries Moody's B2 rating and Standard & Poor's B- rating. The loan is one of the biggest gainers and losers among 205 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. About J.C. Penney J.C. Penney Company, Inc. is one of the U.S.'s largest department store operators with about 1,100 locations in the United States and Puerto Rico. * * * As reported in the Troubled Company Reporter on Oct. 4, 2013, Fitch Ratings has downgraded the Issuer Default Ratings (IDRs) on J.C. Penney Co., Inc. and J.C. Penney Corporation, Inc. to 'CCC' from 'B-'. JOHN D. OIL: Court Denied Approval of Disclosure Statement ---------------------------------------------------------- The Hon. Thomas P. Agresti of the U.S. Bankruptcy Court for the Western District of Pennsylvania denied approval of the Disclosure Statement explaining John D. Oil & Gas Co., et al.'s Third Amended Chapter 11 Plan. The Court, prior to the Jan. 21, 2014 hearing, stated that based on the history of the cases, the Court thought it would be best to convene an informal telephone status hearing conference among the key players before deciding what to do. Representatives of the Debtor, the U.S. Trustee, the Official Committee of Unsecured Creditors, RBS, and Wells Fargo participated in the status conference. It was the unanimous view of all participants that, because there is no proposed private sale in existence at this time, the Disclosure Statement cannot be approved and the Plan cannot be confirmed. About John D. Oil & Gas Co. Mentor, Ohio-based John D. Oil & Gas Co., is in the business of acquiring, exploring, developing, and producing oil and natural gas in Northeast Ohio. The Company has 58 producing wells. The Company also has one self storage facility located in Painesville, Ohio. The self-storage facility is operated through a partnership agreement between Liberty Self-Stor Ltd. and the Company. John D. Oil's affiliated entities -- Oz Gas, LTD., and Great Plains Exploration, LLC -- filed voluntary Chapter 11 petitions (Bankr. W.D. Pa. Case Nos. 12-10057 and 12-10058) on Jan. 11, 2012. Two days later, John D. Oil filed its own Chapter 11 petition (Bankr. W.D. Pa. Case No. 12-10063). On Nov. 21, 2011, at the request of the lender RBS Citizens, N.A., dba Charter One, a receiver was appointed for all three corporate Debtors, in the United States District Court for the Northern District of Ohio at case No. 11-cv-2089-CAB. District Judge Christopher A. Boyko issued an order appointing Mark E. Dottore as receiver. The Receivership Order was appealed to the Sixth Circuit Court of Appeals on Dec. 19, 2011, and the appeal is currently pending. Judge Thomas P. Agresti oversees the Chapter 11 cases. Robert S. Bernstein, Esq., at Bernstein Law Firm P.C., serves as counsel to the Debtors. Each of Great Plains and Oz Gas estimated $10 million to $50 million in assets and debts. John D. Oil's balance sheet at Dec. 31, 2011, showed $6.98 million in total assets, $13.26 million in total liabilities, and a stockholders' deficit of $6.28 million. The petitions were signed by Richard M. Osborne, CEO. The United States Trustee said a committee under 11 U.S.C. Sec. 1102 has not been appointed because no unsecured creditor responded to the U.S. Trustee's communication for service on the committee. JOHN D. OIL: Hearing on Show Cause Order Moved to Feb. 24 --------------------------------------------------------- The Hon. Thomas P. Agresti of the U.S. Bankruptcy Court for the Western District of Pennsylvania rescheduled until Feb. 24, 2014, at 10:00 a.m., John D. Oil & Gas Co., et al.'s compliance to the order to show cause why THE Chapter 11 trustees should not be appointed in the Debtors' cases, or alternatively, convert the cases to Chapter 7. The hearing on compliance to the Order to Show Cause was previously scheduled for Feb. 19. The Court, in its Order to Show Cause, stated that the three related cases have obviously stalled, with seemingly little reasonable prospect of the Debtors being able to obtain confirmed plans of reorganization. About John D. Oil & Gas Co. Mentor, Ohio-based John D. Oil & Gas Co., is in the business of acquiring, exploring, developing, and producing oil and natural gas in Northeast Ohio. The Company has 58 producing wells. The Company also has one self storage facility located in Painesville, Ohio. The self-storage facility is operated through a partnership agreement between Liberty Self-Stor Ltd. and the Company. John D. Oil's affiliated entities -- Oz Gas, LTD., and Great Plains Exploration, LLC -- filed voluntary Chapter 11 petitions (Bankr. W.D. Pa. Case Nos. 12-10057 and 12-10058) on Jan. 11, 2012. Two days later, John D. Oil filed its own Chapter 11 petition (Bankr. W.D. Pa. Case No. 12-10063). On Nov. 21, 2011, at the request of the lender RBS Citizens, N.A., dba Charter One, a receiver was appointed for all three corporate Debtors, in the United States District Court for the Northern District of Ohio at case No. 11-cv-2089-CAB. District Judge Christopher A. Boyko issued an order appointing Mark E. Dottore as receiver. The Receivership Order was appealed to the Sixth Circuit Court of Appeals on Dec. 19, 2011, and the appeal is currently pending. Judge Thomas P. Agresti oversees the Chapter 11 cases. Robert S. Bernstein, Esq., at Bernstein Law Firm P.C., serves as counsel to the Debtors. Each of Great Plains and Oz Gas estimated $10 million to $50 million in assets and debts. John D. Oil's balance sheet at Dec. 31, 2011, showed $6.98 million in total assets, $13.26 million in total liabilities, and a stockholders' deficit of $6.28 million. The petitions were signed by Richard M. Osborne, CEO. The United States Trustee said a committee under 11 U.S.C. Sec. 1102 has not been appointed because no unsecured creditor responded to the U.S. Trustee's communication for service on the committee. KGCI INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: KGCI, Inc. 717 Summer Street Lynnfield, MA 01940 Case No.: 14-10458 Chapter 11 Petition Date: February 6, 2014 Court: United States Bankruptcy Court District of Massachusetts (Boston) Judge: Hon. Joan N. Feeney Debtor's Counsel: David C. Crossley, Esq. CROSSLEY LAW OFFICES 25 North Main Street, 1st Fl Natick, MA 01760 Tel: 508-655-6085 Email: crossleylaw@yahoo.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Gautam Chitnis, president. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/mab14-10458.pdf KRONOS WORLDWIDE: Moody's Lowers CFR to Ba3 & Rates Sr. Loan 'B1' ----------------------------------------------------------------- Moody's Investors Service lowered Kronos Worldwide Inc.'s Corporate Family Rating (CFR) to Ba3 from Ba2 and assigned a B1 rating to its proposed $275 million senior secured term loan B. The proceeds from the new term loan will be used to repay the existing intercompany loan from Kronos' indirect parent (Contran Corporation), repay revolver borrowings and add about $87 million of cash to its balance sheet. The outlook is stable. The following summarizes the ratings activity: Kronos Worldwide, Inc. Ratings Downgraded: Corporate Family Rating -- Ba3 from Ba2 Probability of Default Rating - Ba3-PD from Ba2-PD Ratings Assigned: Senior Secured Term Loan B due 2020 - B1 (LGD5, 74%) Ratings affirmed: Speculative Grade Liquidity Assessment - SGL-3 Ratings to be Withdrawn: Senior Unsecured Bank Credit Facility -- B2 (LGD6, 91%) from B1 (LGD6, 96%)** Outlook -- Stable from Negative Rating will be withdrawn after repayment of the loan. Ratings Rationale The downgrade in Kronos' CFR reflects the slow recovery in its titanium dioxide (TiO2) profitability following trough industry conditions experienced in the first half 2013, uncertainty around the timing and pace of the recovery, lagging credit metrics relative to its competitors, the volatile nature of the industry and management's decision to increase debt prior to a more meaningful improvement in operating margins. Furthermore, the magnitude of the potential improvement in the TiO2 industry's margins in 2014 is unclear, given the strong volume recovery in the second half of 2013 with minimal price appreciation. Moody's expects that Kronos' 2014 profit margins will remain well below levels achieved in 2011-2012. However, Moody's believes that Kronos could potentially improve its margins and cash flow to levels more in-line with long-term historical averages over the next two to three years. While the industry believes that downstream inventories remain at low levels and the increase in volumes reflects stronger demand, the TiO2 industry has seen slow progress on price increases over the past year and Moody's is skeptical how quickly further price increases will be implemented. If the industry is unable to make headway on price increases in the first half of 2014, Moody's believes that margins will remain depressed through the end of 2014, at least. However, Moody's also believes that ore prices are likely to track the trend in TiO2 prices allowing producers higher margins than those experienced in 2000-2005. Kronos' Ba3 CFR reflects its modest leverage and management's move to a more conservative financial philosophy (the $275 million of debt is about half of the amount of debt (EUR400mm) placed at subsidiary Kronos International in 2006). Kronos will have total third party debt of $278 million, although the terms of the proposed term loan B will allow for incremental term loans of $100 million or more, subject to a secured leverage test. Kronos benefits from good market positions in TiO2 and customer diversity. The ratings reflect the company's product concentration (mostly titanium dioxide pigments), the cyclical commodity nature of this industry, and its geographic concentration in the developed markets of North America and Europe. The rating outlook is stable. Moody's expects Kronos' profitability to improve in 2014 following the decline in raw material ore costs such that the firm's credit metrics will support the Ba3 rating. The ratings could be downgraded if debt to EBITDA exceeded 5x on a sustained basis. There is limited upside to the rating, given the volatile nature of the TiO2 business, but Moody's could consider upgrading the ratings if leverage fell below 3x on a sustained basis. The Speculative Grade Liquidity rating of SGL-3 reflects an adequate liquidity position supported by cash balances ($141 million as of December 31, 2013, pro forma for the proposed financing), positive cash flow from operations and availability under its revolving credit facilities. The company has two revolving credit facilities - a $125 million ABL revolver due 2017 that supports its North American operations and a EUR120 million revolving credit facility that supports Kronos' European operations -- which will be undrawn following the proposed financing. The $125 million North American revolver due June 2017 is subject to a borrowing base and $46.2 million was drawn as of September 30, 2013. The facility has no maintenance financial covenants, but there is a requirement that Kronos' fixed charge coverage ratio be at least 1:1, in order to draw above a certain level. The EUR120 million European revolving credit facility due September 2017 was undrawn at year-end 2013. The volatile EBITDA generation in 2012-2013 required the company to obtain a waiver to the Euro revolver's financial covenants, which Moody's expect it to remain in compliance with during 2014. The senior secured term loan B due 2020 has no maintenance financial covenants. The senior secured term loan B due 2020 is rated one notch below the Kronos CFR, as a result of being structurally subordinated to the revolver debt at its European subsidiaries and its non-debt obligations at its subsidiaries. Additionally, the senior secured term loan B has a second priority claim on certain assets after the ABL credit facility. Kronos's operating assets are outside the US or, in the case of one plant, part of a joint venture in the US. As a result, the collateral coverage for the senior secured term loan B is low. The principal methodology used in this rating was the 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. Kronos Worldwide, Inc., headquartered in Dallas, TX, produces and markets TiO2 pigments in the U.S., Canada and Europe. The company reported sales of $1.8 billion for the twelve months ended September 30, 2013. LEE ENTERPRISES: Operating Income Hikes 1.7% to $40MM in Q1 ----------------------------------------------------------- Lee Enterprises, Incorporated on Feb. 6 reported preliminary earnings of 22 cents per diluted common share for its first fiscal quarter ended December 29, 2013, compared with 28 cents a year ago. Excluding unusual matters, adjusted earnings per diluted common share totaled 24 cents, compared with earnings of 20 cents a year ago. Mary Junck, chairman and chief executive officer, said: "Lee is off to a solid start in 2014. We grew digital revenue and audiences at a double-digit clip, continued to reduce operating expenses, again posted strong cash flow and carved off another chunk of debt. We expect overall revenue trends to improve for January and February. In the months ahead, we plan more digital and audience initiatives and we expect continued expense benefit from business transformation initiatives under way. Beginning in April, we plan to launch new subscription models in several markets, providing audiences with the printed newspaper along with full access to all of our digital platforms, including web, app and digital replica across desktop, mobile and tablet. We anticipate good reception to this full-access approach and expect to add additional markets as the year progresses. She added: "Also, we have begun steps to refinance our long-term debt, beginning with an agreement announced earlier this week that will lower the interest rate on our second lien facility and give us an even longer runway to continue reducing debt aggressively. We are now turning our attention to the first lien as a high priority and expect another successful outcome." FIRST QUARTER OPERATING RESULTS Operating revenue for the 13 weeks ended December 29, 2013 totaled $177.4 million, a decrease of 3.9% compared with a year ago. Combined print and digital advertising and marketing services revenue decreased 5.0% to $122.4 million, improved from 2013 trends, with retail advertising down 3.7%, classified down 9.2% and national down 3.6%. Combined print and digital classified employment revenue decreased 6.2%, while automotive decreased 12.8%, real estate decreased 5.0% and other classified decreased 10.1%. Digital advertising and marketing services revenue on a stand-alone basis increased 9.8% to $18.6 million and now totals 15.2% of total advertising and marketing services revenue. Print advertising and marketing services revenue on a stand-alone basis decreased 7.3%. Subscription revenue decreased 1.1%. Total digital revenue, including advertising, marketing services, subscriptions and digital businesses, totaled $21.6 million in the quarter, up 12.7% compared with the quarter a year ago. Mobile advertising revenue increased 37.6%, to $1.7 million. Digital audiences continued to grow. Mobile, tablet, desktop and app page views increased 12.8% to 209.7 million, and monthly unique visitors increased 19.9% to 25.6 million. Increases from branded editions resulted in a 10.6% increase in Sunday circulation during the quarter. Daily circulation decreased 4.3%. Operating expenses, excluding depreciation, amortization and unusual matters, decreased 3.4% for the 13 weeks ended December 29, 2013. Compensation decreased 5.8%, with the average number of full-time equivalent employees down 5.9%. Newsprint and ink expense decreased 13.2%, primarily a result of a reduction in newsprint volume of 10.1%. Other operating expenses increased 1.7%. For the full year, 2014 cash costs are expected to decrease 0.5- 1.5%, excluding the impact of circulation-related expense reclassification as a result of moving to fee-for-service delivery contracts at several of our newspapers. This reclassification will increase both revenue and operating expenses beginning in the June quarter, with no impact on operating cash flow or operating income. Operating cash flow decreased 4.3% from a year ago to $49.3 million. Operating cash flow margin was 27.8%, compared to 27.9% a year ago. Including equity in earnings of associated companies, depreciation and amortization, as well as other unusual matters in both years, operating income increased 1.7% to $40.2 million in the current year quarter, compared with $39.5 million a year ago. Operating income margin increased to 22.7% up from 21.4% a year ago. Non-operating expenses, primarily interest expense and debt financing costs, increased 26.1%, as an 11.2% reduction in interest expense was partially offset by a $6.9 million gain on sale of an investment in the prior year quarter. Lower debt balances and the refinancing of the Pulitzer Notes in May 2013 contributed to the interest expense reduction. Income attributable to Lee Enterprises, Incorporated for the quarter totaled $11.9 million, compared with $14.6 million a year ago. DEBT AND FREE CASH FLOW Debt was reduced $14.5 million in the quarter and $83.9 million in the last twelve months. The principal amount of debt totaled $833.0 million at December 29, 2013 and stands at $828 million at the end of January. Free cash flow increased to $30.6 million for the quarter compared with $29.9 million a year ago. Liquidity at the end of the quarter totaled $42.6 million, compared to required debt principal payments of $13.9 million in the next 12 months. As previously announced, the Company reached an agreement to refinance the $175,000,000 2nd Lien Agreement with a new $200,000,000 facility. The size of the facility may be reduced by up to $75,000,000 with the proceeds of a refinancing of the 1st Lien Agreement. The New 2nd Lien Agreement, which is subject to customary closing conditions, will bear interest at a reduced rate of 12.0%, payable quarterly, and mature in December 2022. About Lee Enterprises Lee Enterprises, Incorporated, headquartered in Davenport, Iowa, publishes the St. Louis Post Dispatch and the Arizona Daily Star along with more than 40 other daily newspapers and about 300 weekly newspapers and specialty publications in 23 states. Revenue for the 12 months ended December 2010 was $780 million. The Company has 6,200 employees, with 4,650 working full-time. Lee Enterprises and certain of its affiliates filed for Chapter 11 (Bankr. D. Del. Lead Case No. 11-13918) on Dec. 12, 2011, with a prepackaged plan of reorganization. The Debtor selected Sidley Austin LLP as its general reorganization and bankruptcy counsel, and Young Conaway Stargatt & Taylor LLP as co-counsel; The Blackstone Group as Financial and Asset Management Consultant; and The Debtor disclosed total assets of $1.15 billion and total liabilities of $1.25 billion at Sept. 25, 2011. Deutsche Bank Trust Company Americas, as DIP Agent and Prepetition Agent, is represented in the Debtors' cases by Sandeep "Sandy" Qusba, Esq., and Terry Sanders, Esq., at Simpson Thacher & Bartlett LLP. Certain Holders of Prepetition Credit Agreement Claims, Goldman Sachs Lending Partners LLC, Mutual Quest Fund, Monarch Master Funding Ltd, Mudrick Distressed Opportunity Fund Global, LP and Blackwell Partners, LLC have committed to acquire up to a maximum amount of $166.25 million of loans under a New Second Lien Term Loan Facility pursuant to the Reorganization Plan. This commitment also includes the potential payment of up to $10 million as backstop cash to Reorganized Lee Enterprises to acquire the loans. The Initial Backstop Lenders are represented by Matthew S. Barr, Esq., and Brian Kinney, Esq., at Milbank, Tweed, Hadley & McCloy LLP. On Jan. 23, 2012, Lee Enterprises, et al., won confirmation of a second version of their prepackaged Chapter 11 reorganization plan. Lee Enterprises declared the prepackaged plan effective on Jan. 30. LILY GROUP: Court OKs Redwine Management as Stalking Horse Bidder ----------------------------------------------------------------- Judge Frank J. Otte of the U.S. Bankruptcy Court for the Southern District of Indiana, Terre Haute Division, approved the selection of Redwine Management Company, Inc., as stalking horse bidder for substantially all of Lily Group, Inc.'s assets. Judge Otte, at the behest of the Official Committee of Unsecured Creditors, issued another order limiting any credit bid for the Debtors' assets. The order applies to the asserted debt and security interests set forth in Claim No. 33 in the amount of $18,371,000. Claim No. 33 is filed by LC Energy Holdings, LLC, as successor-in-interest to Platinum Partners Credit Opportunity Fund, LP. Judge Otte said the debt may be bid up to its filed face amount at the auction subject to the following conditions: (a) Any credit bid made at the Auction using the Debt will be a bid for all the Debtor's assets being auctioned and will be deemed to include the amount of the current outstanding balance as of the time of the Auction of the financing provided under the DIP Loan; (b) The Debt remains subject to objection and all objections to the Debt are preserved without limitation; (c) To the extent the Debt is subsequently reduced to an amount below the amount of the credit bid, the difference less the DIP Loan Balance will be paid in cash to the Debtor's estate by the holder of the Debt; (d) Notwithstanding any credit bid of the Debt, the distribution of proceeds attributable to the value of the Non-lien Assets from the Auction sale will be determined by the Court at a later hearing. To the extent the proceeds attributable to the Non-lien Assets exceed the DIP Loan Balance, the difference will be paid in cash to the Debtor's estate by the holder of the Debt; and (e) Any balance due under the DIP Loan that exceeds the DIP Loan Balance will be paid from the proceeds of the Auction sale attributable to the Non-lien Assets, subject to the DIP Loan orders. Judge Otte authorizes the Debtor to pay Redwine a break-up fee in the amount of $225,000 payable from the sales proceeds in the event of a sale to another bidder; provided, however, that any break-up fee attributable to a credit bid is limited to the sum of $100,000. In any event, a break-up fee is only payable if Redwine is ready, willing and able to close and further demonstrate compliance with certain provisions of the Redwine Agreement. The Overbid is approved so that any further initial bid for the purchase of substantially all of the Debtor's assets must exceed Redwine's offer by no less than $325,000. Judge Otte held that nothing in his order will affect the rights of Indianapolis Power & Light Company to object to the assumption or assumption and assignment of the coal supply agreement between the Debtor and IPL on any grounds whatsoever under applicable bankruptcy or non-bankruptcy law. 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. LIME ENERGY: Court Grants Preliminary OK on Class Action Pact ------------------------------------------------------------- Judge Sara Ellis entered an order granting preliminary approval of a class action settlement and notice to the settlement class in the matter Satterfield v. Lime Energy Co. et al., Case No. 12-cv- 05704. As part of the settlement, Defendants agreed to pay $2.5 million into a settlement fund, the entire amount of which they anticipate will be covered by insurance. Further details of the settlement may be obtained from the Stipulation of Settlement filed with the Court, which is available online through the Court's Public Access to Court Electronic Records system ("PACER"), accessible at http://www.ilnd.uscourts.gov/. The settlement remains subject to final approval by the court. The final approval hearing has been set for May 13, 2014. About Lime Energy Headquartered in Huntersville, North Carolina, Lime Energy Co. -- http://www.lime-energy.com-- is engaged in planning and delivering clean energy solutions that assist its clients in their energy efficiency and renewable energy goals. The Company's solutions include energy efficient lighting upgrades, energy efficient mechanical and electrical retrofit and upgrade services, water conservation, building weatherization, on-site generation and renewable energy project development and implementation. The Company provides energy solutions across a range of facilities, from high-rise office buildings, distribution facilities, manufacturing plants, retail sites, multi-tenant residential buildings, mixed use complexes, hospitals, colleges and universities, government sites to small, single tenant facilities. Lime Energy disclosed in regulatory filings in July 2013 it is in discussions with PNC Bank about entering into a forbearance agreement in which they would agree not to accelerate a loan for a period of time while the Company attempts to correct the gas flow issue and sell its landfill-gas facility. The bank is considering the Company's request. As of Sept. 30, 2013, the Company had $33.15 million in total assets, $26.70 million in total liabilities and $6.45 million in total stockholders' equity. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $12.58 million. The Company incurred a net loss of $31.81 million in 2012 as compared with a net loss of $18.93 million in 2011. BDO USA, LLP, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has suffered recurring losses and negative cash flow from operations that raise substantial doubt about its ability to continue as a going concern. LIME ENERGY: Chief Financial Officer Jeff Mistarz Quits ------------------------------------------------------- Jeffrey Mistarz, the chief financial officer, treasurer and secretary of Lime Energy Co. informed the Company's Board of Directors by letter on Jan. 29, 2014, of his decision to resign from the Company after the 2013 financial statements have been completed and his successor has been hired. Mr. Mistarz did not provide a date for his resignation, but expressed an expectation that it would be in late March or early April of 2014. The Board has initiated a search for an experienced chief financial officer to replace Mr. Mistarz. About Lime Energy Headquartered in Huntersville, North Carolina, Lime Energy Co. -- http://www.lime-energy.com-- is engaged in planning and delivering clean energy solutions that assist its clients in their energy efficiency and renewable energy goals. The Company's solutions include energy efficient lighting upgrades, energy efficient mechanical and electrical retrofit and upgrade services, water conservation, building weatherization, on-site generation and renewable energy project development and implementation. The Company provides energy solutions across a range of facilities, from high-rise office buildings, distribution facilities, manufacturing plants, retail sites, multi-tenant residential buildings, mixed use complexes, hospitals, colleges and universities, government sites to small, single tenant facilities. Lime Energy disclosed in regulatory filings in July 2013 it is in discussions with PNC Bank about entering into a forbearance agreement in which they would agree not to accelerate a loan for a period of time while the Company attempts to correct the gas flow issue and sell its landfill-gas facility. The bank is considering the Company's request. As of Sept. 30, 2013, the Company had $33.15 million in total assets, $26.70 million in total liabilities and $6.45 million in total stockholders' equity. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $12.58 million. The Company incurred a net loss of $31.81 million in 2012 as compared with a net loss of $18.93 million in 2011. BDO USA, LLP, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has suffered recurring losses and negative cash flow from operations that raise substantial doubt about its ability to continue as a going concern. LOEHMANN'S HOLDINGS: Has Final OK to Use Wells' Cash Collateral --------------------------------------------------------------- The Hon. Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York has granted Loehmann's Holdings Inc., et al., final approval to use cash collateral of Wells Fargo Bank, National Association, as administrative agent and collateral agent. As reported by the Troubled Company Reporter on Jan. 15, 2014, the Court granted the Debtor interim authorization to use cash collateral until Jan. 17, 2013. The Debtors separately sought and received entry of an order of the Court to use the cash collateral of the (i) first lien secured creditor -- Wells Fargo Bank, National Association, as administrative agent and collateral agent, and the lenders from time to time party thereto; (ii) the second lien secured creditor -- Law Debenture Trust Company of New York, in its capacity as administrative agent and collateral agent, and the other lenders party thereto; and (iii) the third lien secured creditor -- Law Debenture Trust Company of New York, in its capacity as administrative agent and collateral agent, and the other lenders party thereto. In the interim court order, the secured creditors were granted replacement liens and if, and to the extent that, the replacement liens and adequate protection payments were insufficient to provide adequate protection for the secured creditors, the secured creditors would be granted allowed superpriority claims against the Debtors' estates. The Court ruled on Jan. 16, 2014, that the Secured Creditor is entitled to the grant of adequate protection for the adequate protection obligations. The Court's grant of adequate protection for the adequate protection obligations under the first priority interim order is ratified and affirmed on a final basis. The Secured Creditor will be granted authorization to charge, without further court order, the L/C Reserve, Cash Management Reserve, and Prepetition Indemnity Account, as applicable, for obligations, fees and charges due or becoming due the Secured Creditor under the Wells Fargo prepetition loan documents, as applicable. On Jan. 21, 2014, Whippoorwill Associates, Inc., in its capacity as investment manager for certain holders of the Debtors' second lien debt, replied to the Official Committee of Unsecured Creditors' objection to the Debtors' cash collateral motion. The TCR reported on Jan. 15 that the Committee filed on Jan. 13, 2013, an objection to the Debtors' use of cash collateral, claiming that it has not seen a draft of the proposed junior priority final order or a proposed final budget that allows the Debtors to use the cash collateral of entities related to Whippoorwill, the majority holder of the Debtors' second and third lien debt and the Debtors' controlling equity holders. The Committee objection asserts that the proposed use of cash collateral does not adequately allocate estate administration costs among the second lien collateral and what the Committee believes to be substantial unencumbered assets. The Committee sounded the same argument in connection with the Debtors' asset sales and the Committee's motion to reconsider the interim order, Whippoorwill stated in its Jan. 21 court filing. "There, however, is a fundamental flaw in the Committee's argument which undermines its entire objection; the underlying premise -- that the proceeds of the Debtors' lease designation rights are unencumbered and available for unsecured creditors -- is wrong. The lease designation rights and all proceeds thereof constitute second lien collateral. As this Court knows, the Debtors exited their most recent Chapter 11 in 2011, and the second lien facility was a component of the exit financing in that case," Whippoorwill said. According to Whippoorwil, the Court expressly ordered in the confirmation order that "the lien of the lenders under the exit facility on the proceeds of any leases of the Debtors or reorganized Debtors will be deemed perfected without the necessity of any filings. In addition, applicable statutory guidance and case law inside and outside of this district demonstrate that all cash derived from the lease designation rights is subject to the lenders' liens. Accordingly, the Committee's demand that secured lenders agree to the Committee's purported 'equitable' allocation of administrative costs ignores both secured lenders' rights and the practical and legal realities of this case." Whippoorwil is represented by: Gibson, Dunn & Crutcher LLP Matthew J. Williams, Esq. Joshua Weisser, Esq. Alan Moskowitz, Esq. 200 Park Avenue New York, New York 10166-0193 Tel: (212) 351-4000 Fax: (212) 351-5274 E-mail: mjwilliams@gibsondunn.com jweisser@gibsondunn.com amoskowitz@gibsondunn.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 OKs Revised Key Employee Bonus Plan -------------------------------------------------------------- The Hon. Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York entered on Jan. 16, 2014, a consent order approving Loehmann's Holdings Inc., et al.'s revised Key Employee Incentive Plan for Certain Insiders. The Debtor entered into a stipulation with Law Debenture Trust Company of New York, in its capacity as administrative agent and collateral agent under that certain amended and restated second lien subordinated credit agreement, and the Official Committee of Unsecured Creditors modifying the KEIP. As reported by the Troubled Company Reporter on Jan. 15, 2014, the Bankruptcy Court on Jan. 10 entered an order denying the request of the Debtors to implement a KEIP. The Debtors proposed to pay Chief Operating Officer William Thayer and the General Counsel up to $650,000 in bonuses. The Debtors' bankruptcy lawyers said Mr. Thayer had been "working the equivalent of three jobs" as the company prepares to hold a Jan. 3 auction for the right to liquidate Loehmann's stores, which employ about 1,600 people. KEIP had the support of Whippoorwill Associates, Inc., the investment manager for holders of Loehmann's Holdings Inc.'s second lien and third lien debt, and the Official Committee of Unsecured Creditors. The United States Trustee, however, found the bonus plan unnecessary. The Court's approval of the revised KEIP allows the Debtors to make payments contemplated thereunder. Payments due under the further revised KEIP will be included in the "carve-out" under the junior priority interim court order only. Paragraph 4(a)(ii)(1) of the junior priority cash collateral order will only be revised to add a new subclause "(d)", which subclause will apply to any payments due under the further revised KEIP, and the definition of "Carve-Out" under the junior priority cash collateral order will only be revised to mean, collectively, the carve-outs provided for in paragraph 4(a)(ii)(1)(a) through paragraph 4(a)(ii)(1)(d). Payments due under the further revised KEIP will be payable by the Debtors' estates on the time frames set forth in the further revised KEIP, a copy of which is available for free at: http://bankrupt.com/misc/LOEHMANNSHOLDINGSrevisedkeip.pdf Law Debenture is represented by: Dickstein Shapiro LLP Steven B. Smith, Esq. 1633 Broadway New York, New York 10019 Tel: (212) 277-6500 Fax: (212) 277-6501 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. LOUISIANA RIVERBOAT: May Use Cash Collateral Until March 31 ----------------------------------------------------------- Louisiana Riverboat Gaming Partnership, et al., and the ad hoc group of first lien lenders have agreed to extend the term of the Debtors' use of cash collateral from Dec. 31, 2013, through March 31, 2014, on the same terms and conditions as provided in the final cash collateral court order. The Debtors' budget from Jan. 1, 2014, through March 31, 2014, is available for free at: http://bankrupt.com/misc/LOUISIANARIVERBOATcashcollextbudget.pdf As reported by the Troubled Company Reporter on Oct. 2, 2012, the Hon. Stephen V. Callaway of the U.S. Bankruptcy Court for the Western District of Louisiana authorized, on a final basis, the Debtors to use of the cash collateral of the first lien lenders and second lien lenders. According to the Debtors, as of the Petition Date they were liable to: -- Wilmington Trust Company, as administrative agent for the First Lien Lenders in respect of obligations under the First Lien Credit Agreement and related agreements and documents for the aggregate amount of not less than $181,182,013; and -- Wells Fargo Bank, N.A., as administrative agent for the Second Lien Lenders in respect of obligations under the Second Lien Credit Agreement and related agreements and documents for the aggregate amount of not less than $116,252,898. As adequate protection from any diminution in value of the lender's collateral, the final cash collateral order allowed the Debtor to: 1. grant first priority replacement security interests in and liens upon all postpetition property of the Debtors and their estates and all proceeds and products of such property subject only to the carve-out; and 2. grant second priority replacement security interests and pay a total of $40,000 to the Second Lien Agent to be applied to outstanding and future agency, administrative and transaction fees of the Second Lien Agent during the Chapter 11 cases. The ad hoc group of first lien lenders is represented by: Michael Riela, Esq. Latham &Watkins LLP 885 Third Avenue, Suite 1000 New York, New York, 10022 Tel: (212) 906-1200 Fax: (212) 751-4864 About Legends Gaming Legends Gaming LLC, owns gaming facilities located in Bossier City, Louisiana, and Vicksburg, Mississippi, operating under the DiamondJack's trade name. Legends Gaming LLC, and five related entities, including Louisiana Riverboat Gaming Partnership, filed Chapter 11 petitions (Bankr. W.D. La. Case No. 12-12013) in Shreveport, Indiana, on July 31, 2012, to sell the business for $125 million to Global Gaming Solutions LLC, absent higher and better offers. Legends Gaming acquired the business from Isle of Capri Casinos Inc., in 2006 for $240 million. After breaching covenant with lenders, the Debtors in March 2008 sought Chapter 11 protection, jointly administered under Louisiana Gaming Partnership (Case No. 08-10824). The Debtors emerged from bankruptcy in September 2009 and retained ownership and operation of two "DiamondJacks" hotels and casinos in Bossier City and Vicksburg. The Plan restructured $162.1 million owed to the first lien lenders and $75 million owed to secured lien lenders, which would be paid in full, with interest, over time. The Debtors' properties comprise 60,000 square feet of gaming space with 1,913 slot machines, 48 table games and 693 hotel rooms. Revenues in fiscal 2011 were $99.8 million in Louisiana and $39.7 million in Mississippi. As of July 31, 2012, first lien lenders are owed $181.2 million and second lien lenders are owed $114.7 million. Louisiana Riverboat Gaming Partnership disclosed $104,846,159 in assets and $298,298,911 in liabilities as of the Chapter 11 filing. Attorneys at Heller, Draper, Hayden Patrick & Horn serve as counsel to the Debtors. Sea Port Group Securities, LLC is the financial advisor. Kurtzman Carson Consultants LLC as is the claims and notice agent. The Debtors have tapped Jenner & Block LLP as special counsel. The primary purposes of the Plan are: (i) to provide for the sale of substantially all of the Debtors' assets to Global Gaming Legends, LLC, a Delaware limited liability company, Global Gaming Vicksburg, LLC, a Delaware limited liability company and Global Gaming Bossier City, LLC, a Delaware limited liability company, pursuant to a certain Purchase Agreement dated as of July 25, 2012; and (ii) to provide for payments and distributions to creditors. M.C.R. ENVIRONMENTAL: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: M.C.R. Environmental Services, Inc. PO Box 866336 Plano, TX 75086-6336 Case No.: 14-40290 Chapter 11 Petition Date: February 7, 2014 Court: United States Bankruptcy Court Eastern District of Texas (Sherman) Judge: Hon. Brenda T. Rhoades Debtor's Counsel: Vickie L. Driver, Esq. COFFIN & DRIVER, PLLC 7577 Rambler Road, Suite 200 Dallas, TX 75231 Tel: 214-377-4848 Fax: 214-377-4858 E-mail: vdriver@coffindriverlaw.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Martin C. Reamy, president. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. MAPLE GROVER PARK: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Maple Grove Park Cemetery Association 535 Hudson Street Hackensack, NJ 07601 Case No.: 14-12207 Chapter 11 Petition Date: February 7, 2014 Court: United States Bankruptcy Court District of New Jersey (Newark) Judge: Hon. Rosemary Gambardella Debtor's Counsel: John O'Boyle, Esq. NORGAARD O'BOYLE 184 Grand Ave Englewood, NJ 07631 Tel: (201) 871-1333 Fax: (201) 871-3161 E-mail: joboyle@norgaardfirm.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Barbara Kirby, president. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. MEDIA GENERAL: Eaton Vance Stake at 4.5% as of Dec. 31 ------------------------------------------------------ In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, Eaton Vance Management disclosed that as of Dec. 31, 2013, it beneficially owned 3,987,192 shares of common stock of Media General representing 4.51 percent of the shares outstanding. A copy of the regulatory filing is available for free at http://is.gd/J8GuXE About Media General Richmond, Virginia-based Media General Inc. (NYSE: MEG) -- http://www.mediageneral.com/-- is an independent communications company with interests in newspapers, television stations and interactive media in the United States. The Company's balance sheet at Sept. 30, 2013, showed $749.87 million in total assets, $967.06 million in total liabilities, and a $217.18 million in total stockholders' deficit. * * * As reported by the Troubled Company Report on July 10, 2013, Moody's Investors Service upgraded Media General, Inc.'s Corporate Family Rating to B1 from Caa1 reflecting the marked improvement in credit metrics pro forma for the pending stock merger with New Young Broadcasting Holding Co., Inc. In the July 12, 2013, edition of the TCR, Standard & Poor's Ratings Services raised its corporate credit rating on Richmond, Va.-based local TV broadcaster Media General Inc. to 'B+' from 'B'. "The rating action reflects the improvement in discretionary cash flow from the refinancing and our expectation that trailing- eight-quarter leverage will remain at 6x or below over the intermediate term," said Standard & Poor's credit analyst Daniel Haines. MEDICURE INC: Incurs C$486,00 Net Loss in Nov. 30 Quarter ---------------------------------------------------------- Medicure Inc. reported a net loss of C$486,422 on C$871,457 of net product sales for the three months ended Nov. 30, 2013, as compared with a net loss of C$493,391 on C$720,913 of net product sales for the same period a year ago. For the six months ended Nov. 30, 2013, Medicure incurred a net loss of C$988,824 on C$1.61 million of net product sales as compared with a net loss of C$790,135 on C$1.38 million of net product sales for the same period a year ago. The Company's balance sheet at Nov. 30, 2013, showed C$3.25 million in total assets, C$8.52 million in total liabilities and a C$5.27 million total deficiency. "The ability of the Company to continue as a going concern and to realize the carrying value of its assets and discharge its liabilities when due is dependent on many factors, including but not limited to the actions taken or planned ... which are intended to mitigate the adverse conditions and events which raise doubt about the validity of the going concern assumption used in preparing these consolidated financial statements," the Company said in the Report. A copy of the Form 6-K is available for free at: http://is.gd/K2gxOt A copy of the press release announcing the results is available for free at http://is.gd/xtp8LA About Medicure Inc. Based in Winnipeg, Manitoba, Canada, Medicure Inc. (TSX/NEX: MPH.H) -- http://www.medicure.com/-- is a biopharmaceutical company engaged in the research, development and commercialization of human therapeutics. The Company has rights to the commercial product, AGGRASTAT(R) Injection (tirofiban hydrochloride) in the United States and its territories (Puerto Rico, U.S. Virgin Islands, and Guam). AGGRASTAT(R), a glycoprotein GP IIb/IIIa receptor antagonist, is used for the treatment of acute coronary syndrome (ACS) including unstable angina, which is characterized by chest pain when one is at rest, and non-Q-wave myocardial infarction. Medicure Inc. incurred a net loss of C$2.57 million on C$2.60 million of net product sales for the year ended May 31, 2013, as compared with net income of C$23.38 million on C$4.79 million of net product sales during the prior fiscal year. Ernst & Young, LLP, in Winnipeg, Canada, issued a "going concern" qualification on the consolidated financial statements for the year ended May 31, 2013. The independent auditors noted that Medicure Inc. has experienced losses and has accumulated a deficit of $125,877,356 since incorporation and a working capital deficiency of $2,065,539 as at May 31, 2013 that raises substantial doubt about its ability to continue as a going concern. MFM DELAWARE: Has Until March 24 to Decide on Lease --------------------------------------------------- The Hon. Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware has approved the stipulation between MFM Delaware, Inc., MFM Industries, Inc., and landlord Paddock Park Office Investors, LLC, extending the deadline to assume or reject unexpired lease of the Debtors until March 24, 2014. On the Petition Date, MFM Industries was a lessee party to an unexpired lease of office space with the Landlord. The Debtors previously requested an extension of the 120-day statutory period. On Sept. 10, 2013, the Court granted the Debtors' request, extending the period until Dec. 24, 2013. Following the sale of MFM Industries' assets, the Debtors continued to evaluate whether the estate would benefit from assumption or rejection of the lease and will not be in a position to make a fully-informed decision thereon prior to the expiration of the deadline. Accordingly, the Debtors conferred with the Landlord and have obtained the Landlord's written consent to an extension of the deadline for 90 day, through and including March 24. The Debtors said in their Dec. 4, 2013 court filing that they are "still evaluating whether to assume the lease and anticipate that they will not be able to make a decision prior to" the Dec. 24 deadline. About MFM Industries Cat litter maker MFM Delaware, Inc., and affiliate MFM Industries, Inc., sought Chapter 11 protection (Bankr. D. Del. Case No. 13-11359 and 13-11360) on May 28, 2013. Founded in 1964 as a clay-based absorbents supplier, MFM is supplier of cat litter in the U.S. The Company produces 100,000 tons of cat litter a year, representing 1 percent of the total market. Its private label market share is 20 percent. The company's cat litter products are comprised of a blend of fuller's earth clay, sodium bentonite and scenting properties. Clay is supplied from a leased clay mine in Ocala, Florida, and is transported five miles away to the company's manufacturing plant in Reddick, Florida. Direct Capital Partners, LLC, acquired a majority stake in the Company in 1997. Frederick B. Rosner, Esq., at Rossner Law Group LLC, serves as the Debtors' bankruptcy counsel, and Pharus Securities, LLC, serves as investment banker. The Official Committee of Unsecured Creditors is represented by Michael J. Barrie, Esq. at Benesch, Friedlander, Coiplan & Aronoff LLP as its counsel; and Gavin/Solmonese LLC as its financial advisor. MIDLAND UNIVERSITY: Fitch Affirms B Rating on $16MM Revenue Bonds ----------------------------------------------------------------- Fitch Ratings affirms approximately $16.9 million of education facility revenue bonds issued by the Nebraska Educational Finance Authority on behalf of Midland University (MU or the university), formerly known as Midland Lutheran College, at 'B'. The Rating Outlook is Stable Security The bonds are a general obligation of the college, additionally secured by a cash-funded reserve funded at maximum annual debt service. Key Rating Drivers INCREASING OPERATIONAL STABILITY: The 'B' rating reflects Midland's second consecutive positive operating margin as a result of ongoing expense controls, fund raising and debt reduction, all of which serve to stabilize the outlook for the university. ENROLLMENT GROWTH: Headcount increased to 1,307 students, up from 977 in fall 2011; Midland seeks to grow its head count through graduate programs as well as a high school scholar program which is intended to create a pipeline of future local demand. LIQUIDITY LIMITS FLEXIBILITY: MU's financial cushion while improved from the previous year is very weak. MU has already borrowed against its endowment and could require additional operational support if enrollment trends stumble. MU has started paying down its internal borrowings in FY2014 however the university will require multiple years of positive operating results to achieve a measurable level of unrestricted financial resources. HIGH DEBT BURDEN: Maximum annual debt service (MADS) accounts for a high 11% of unrestricted operating revenue. FY 2013 net income available provided 1.2x MADS coverage, which though weaker than FY2012 was improved from the years prior. Rating Sensitivities SUSTAINED FINANCIAL IMPROVEMENT: The persistence of improved financial metrics evinced by increasingly consistent positive margins, enrollment growth, student retention and reduced reliance on non-recurring gifts and contributions could improve the rating over time. ADDITIONAL DEBT: The incurrence of additional debt for any operational or expansionary purpose without commensurate growth in resources to service that debt will negatively pressure the rating. Credit Profile Midland University, re-branded in 2010 from Midland Lutheran College, is a private, co-educational liberal arts college located in Fremont, Nebraska, approximately 35 miles northwest of Omaha. The college primarily serves undergraduate students, and expanded its masters programs in education and professional accounting to include business administration, in fall of 2012. MU is affiliated with the Evangelical Lutheran Church in America. Operating Margins Settling MU's fiscal 2013 margin of 3% showcases a second year of positive operations. A combination of higher tuition and fee revenue along with non-recurring gifts resulted in a net excess for fiscal 2013. University operations improved in fiscal 2013 while gifts and contributions continued to support margins and obviate operating deficits. Based on rebalancing efforts MU has moved closer to achieving break-even operations excluding onetime non-recurring gifts. Including unrestricted contributions, and support from a robust year over year enrollment trend, MU's financial performance has improved markedly. A relatively high tuition subsidy/discount of 54.6% continues to offset tuition revenue growth but overall discounting is expected to diminish once the current student classes graduate. The university's practice of regularly increasing tuition (5% for fiscal 2014) partially offsets the aforementioned discounting levels. Enrollment Growth Demand trends are positive. MU had a headcount of 1,192 undergraduates this past fall enrolling 19 high school juniors and seniors in the high school scholar program that allows juniors and seniors to take up to twelve college level course credits while still in high school. The university passed its target enrollment of 1,300 students this past fall and expects to improve retention and graduation rates by utilizing predictive software and staff and affecting student persistence through frequent staff interaction. Enhanced offerings and aggressive marketing are driving demand, including a new MBA program in spring of 2013, a successful RN to BSN program for nursing and successful undergraduate recruitment efforts. MU's ability to realize enrollment growth and maintain stable enrollment levels is critical to improving its credit profile. Weak Financial Cushion MU's rating remains hinged to its diluted liquidity profile. Available funds, defined as unrestricted cash and investments, totaled $960 thousand at May 31, 2013, improving from approximately negative $1.2 million at May 31, 2012. While Fitch acknowledges MU's success in raising unrestricted funds in fiscal 2012 and to a lesser degree in fiscal 2013, the severely depleted endowment balance reduces operational flexibility which is imperative for a school with essentially one concentrated revenue source. MU's internal borrowing from its permanently restricted endowment pool increased to $7.9 million in fiscal 2013. Investment gains and contributions increased the modest relative balance of the endowment to $8.3 million from $6.8 million. The repayment of these internally designated loans commenced in fiscal 2014 from all available sources of revenue. Fitch views this low level of operating flexibility as a key vulnerability. High Debt Burden MU's long-term debt was reduced as a result of loan forgiveness and subsequent note payoff in June of 2012. Outstanding debt includes approximately $16.9 million of fixed-rate bonds and $0.4 million of notes and capitalized leases. MADS ($2.3 million , 2029) burden remains high at 11% of unrestricted operating revenue. For fiscal 2013, annual debt service, including notes paid off in June of 2012 increased to $3.3 million, 15.6% of unrestricted operating revenue with coverage of 0.8x. MADS coverage from net income for fiscal 2013 was just sum sufficient at 1.2x, but expected as fiscal 2012 operations which covered MADS 2.3x benefitted from the receipt of non-recurring gifts and contributions. Expansion Plans MU entered into a lease agreement with an option to purchase the Dana College property in Blair, NE, in July of 2013. The lease extends to July of 2018. The intention of MU is to potentially expand into the second campus with approximately 600-700 students. In the meantime, the university pays rent and undertakes all operating costs of the facility under this lease while seeking to raise funds to purchase and renovate the facility in the future. While there are no concrete plans thus far, Fitch expects that no additional debt will be incurred to acquire the property. The likelihood of additional debt for the acquisition of the property could negatively pressure the rating. MONTANA ELECTRIC: Court Clarifies Employment Orders --------------------------------------------------- The Hon. Ralph B. Kirscher of the U.S. Bankruptcy Court for the District of Montana confirmed that the order authorizing Lee A. Freeman, Chapter 11 trustee for Southern Montana Electric Generation and Transmission Cooperative, Inc., to employ: 1. Hein and Associates as accountants for the estate; 2. Eide Bailey LLP as accountants and auditor for the estate; and 3. Harper Lutz Zuber Hofer and Associates as valuation experts are equally applicable to the Debtor. SME sought confirmation from the Court after it has been notified by many of the professionals working on the bankruptcy case, whether by the filing of "final" fee applications or verbally, that they seek or will require additional Court authorization to continue forward with the provision of services to the Debtor in light of the removal of the trustee by Court order dated Nov. 26, 2013. About Southern Montana Electric Based in Billings, Montana, Southern Montana Electric Generation and Transmission Cooperative, Inc., was formed to serve five other electric cooperatives. The city of Great Falls later joined as the sixth member. Including the city, the co-op serves a population of 122,000. In addition to Great Falls, the service area includes suburbs of Billings, Montana. Southern Montana filed for Chapter 11 bankruptcy (Bankr. D. Mont. Case No. 11-62031) on Oct. 21, 2011. Southern Montana estimated assets of $100 million to $500 million and estimated debts of $100 million to $500 million. Timothy Gregori signed the petition as general manager. Malcolm H. Goodrich, Esq., at Goodrich Law Firm, P.C., in Billings, Montana, serves as the Debtor's counsel. After filing for reorganization in October, the co-op agreed to a request for appointment of a Chapter 11 trustee. Lee A. Freeman was appointed as the Chapter 11 trustee in December 2011. He is represented by Joseph V. Womack, Esq., at Waller & Womack, and John Cardinal Parks, Esq., Bart B. Burnett, Esq., Robert M. Horowitz, Esq., and Kevin S. Neiman, Esq., at Horowitz & Burnett, P.C. Harold V. Dye, Esq., at Dye & Moe, P.L.L.P., in Missoula, Montana, represents the Unsecured Creditors' Committee as counsel. MONTANA ELECTRIC: ACES Terminated Consulting Contract ----------------------------------------------------- H. Annette Stamatkin, senior vice president and CIO, at ACES, in December notified Lee Freeman, trustee for Southern Montana Electric Generation and Transmission Cooperative, Inc., of the termination of a consulting agreement dated Jan. 12, 2012. Ms. Stamatkin stated that the termination date is effective Nov. 26, 2013, to coincide with the Court's order removing the Chapter 11 trustee. ACES has been assisting the Debtor with the procurement of electric power. Ms. Stamatkin added that if the Debtor needs ACES' assistance in purchasing electric power for the month of January 2014 and thereafter, the firm will remain available to provide such support under a new agreement. About Southern Montana Electric Based in Billings, Montana, Southern Montana Electric Generation and Transmission Cooperative, Inc., was formed to serve five other electric cooperatives. The city of Great Falls later joined as the sixth member. Including the city, the co-op serves a population of 122,000. In addition to Great Falls, the service area includes suburbs of Billings, Montana. Southern Montana filed for Chapter 11 bankruptcy (Bankr. D. Mont. Case No. 11-62031) on Oct. 21, 2011. Southern Montana estimated assets of $100 million to $500 million and estimated debts of $100 million to $500 million. Timothy Gregori signed the petition as general manager. Malcolm H. Goodrich, Esq., at Goodrich Law Firm, P.C., in Billings, Montana, serves as the Debtor's counsel. After filing for reorganization in October, the co-op agreed to a request for appointment of a Chapter 11 trustee. Lee A. Freeman was appointed as the Chapter 11 trustee in December 2011. He is represented by Joseph V. Womack, Esq., at Waller & Womack, and John Cardinal Parks, Esq., Bart B. Burnett, Esq., Robert M. Horowitz, Esq., and Kevin S. Neiman, Esq., at Horowitz & Burnett, P.C. Harold V. Dye, Esq., at Dye & Moe, P.L.L.P., in Missoula, Montana, represents the Unsecured Creditors' Committee as counsel. On Nov. 26, 2013, the Bankruptcy Court removed Mr. Freeman as Chapter 11 trustee for SME, at the behest of Fergus Electric Cooperative Inc. Judge Ralph Kirscher said changed circumstances, such as agreement among the co-op's members on a liquidation plan, eliminate the need for a trustee. Fergus and Beartooth Electric Cooperative, Inc., have asked the Court to convert SME's Chapter 11 case to one under Chapter 7 of the U.S. Bankruptcy Code. MONTREAL MAINE: Ch. 11 Trustee Rejects Victims' Plan ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Montreal Maine & Atlantic Railway Ltd. reorganization proposal filed by families of the 47 people who died when the railroad's cars derailed and exploded is "not a serious plan," according to Robert J. Keach, the Chapter 11 trustee. According to the report, the plan, filed on Jan. 29 in U.S. Bankruptcy Court in Bangor, Maine, is "facially non-confirmable" and "will go nowhere," Keach said in an e-mail. The victims' explanatory disclosure statement is set to go before a judge for approval on March 12. "Mr. Keach has unfortunately embarked on a war against the wrongful-death claimants," the report cited Daniel C. Cohn, of Murtha Cullina LLP in Boston, who represents the claimants. Former U.S. Senator George J. Mitchell, a Maine Democrat, would be the plan administrator. Cohn said the plan "was vetted not only within our group but also with Senator Mitchell's office," the report related. The proposal is "just a publicity stunt," Luc Despins of Paul Hastings LLP in New York, a lawyer for the official victims' committee, said in an interview. Despins said the lawyers who wrote the plan have agreements giving them 40 percent of client recoveries. 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. On Jan. 29, 2014, an ad hoc group of wrongful-death claimants submitted a plan, which would give 75 percent of the $25 million in available insurance to the families of those who died after an unattended train derailed in Lac-Megantic, Quebec, in July. The other 25 percent would be earmarked for claimants seeking compensation for property that was damaged when much of the town burned. Former U.S. Senator George Mitchell, a Democrat who represented Maine in the U.S. Senate from 1980 to 1995 and who is now chairman emeritus of law firm DLA Piper LLP, would administer the plan and lead the effort to wrap up MM&A's Chapter 11 bankruptcy. MW GROUP: Faces Off With Bank of America on Exit Plans ------------------------------------------------------ The U.S. Bankruptcy Court in Charlotte, North Carolina, held a hearing Jan. 30, 2014, on the disclosure statements explaining the competing Chapter 11 plans filed in MW Group LLC's case. On one end is the Second Amended Plan of Reorganization and an accompanying disclosure statement filed by MW Group on Jan. 13, 2014. A copy of the Debtor's Disclosure Statement is available at no extra charge at: http://bankrupt.com/misc/MWGROUPds.pdf On the other is the liquidation plan filed by Bank of America N.A. for the Debtor. The bnak submitted a "First Amended Disclosure Statement To Accompany Chapter 11 Amended Plan" on Jan. 15. A copy of the bank's Disclosure Statement is available at no extra charge at: http://bankrupt.com/misc/MWGROUP1ds.pdf Each proponent would have to seek approval of its disclosure statement to begin soliciting votes on the respective plans and schedule a confirmation hearing. Summary of Debtor's Plan The Debtor intends to continue operating as a going concern. To facilitate distributions under the Plan, the Debtor's projections show that the continued operations of the business will allow the Debtor to pay all of its Creditors with Allowed Claims in full. Thus, the Debtor believes it will have ample funds on hand to pay all necessary court fees and administrative expenses upon confirmation of the Plan. During the course of the Chapter 11 Case, both the Debtor and Bank fo America have retained appraisers to perform appraisals of the Property. The Debtor retained Damon Bidencope of Bidencope & Associates to appraise the Property. Mr. Bidencope appraised the Property at a fair market value of $10,614,000 as of April 12, 2013. The Bidencope Appraisals valued the Apartments at $6,800,000, the Land at $2,454,000, and the Condominiums at $1,360,000. BofA retained John Bosworth of John Bosworth & Associates, LLC to appraise the Property. Mr. Bosworth appraised the Property at a fair market value of $7,842,000 as of March 2013. The Bosworth Appraisals valued the Apartments at $6,370,000, the Land at $732,000, and the Condominiums at $740,000. Tax Claims to Be Paid in 5 Years The Plan provides that all Allowed Priority Tax Claims, if any, will be paid in full on the Effective Date, upon any other terms agreed upon by the holder of such a Claim and the Debtor, or, alternatively, in four annual Cash payments in January of each year following the Effective Date, with interest as required by the applicable provisions of the Bankruptcy Code, such that the full amount of each Allowed Priority Tax Claim is paid in full within five years of the Petition Date. Allowed Priority Non-Tax Claims, if any, will be paid in full on the Effective Date, upon other terms as agreed upon between such holder of an Allowed Non-Tax Claim and the Debtor, or, alternatively, in three annual installments of principal with interest at the rate of 3.25% per annum and any fees due thereon, with each installment payment to be made in January of each year following the Effective Date until paid in full. The Debtor proposes to restructure any outstanding secured debts for unpaid taxes by paying them in full on the Effective Date, in installments within five years of the Petition Date, or upon such other terms as are agreed upon by the holder of such a Claim and the Debtor. The Plan contemplates that the holders of secured tax claims will retain their existing liens on the Debtor's Assets until the Claims are paid in full. Two Options for BofA With regard to its other secured debt(s), consisting of the secured claim of Bank of America, the Debtor has provided the bank with two options to restructure and/or satisfy the BOA Loan. Specifically, option 1 contemplates that the BOA Allowed Secured Claim will be treated as an obligation of the Reorganized Debtor with the principal amount to be determined by the Bankruptcy Court or upon the agreement of the parties. The Debtor estimates that the BOA Allowed Secured Claim will be approximately $5,700,000. Upon confirmation of the Plan, the restructured principal balance of the BOA Loan shall be amortized over a 25-year term at an interest rate of 4.25% per annum. The restructured loan will mature in seven years. Payments on account of this claim will be made from the revenues and operations of the Reorganized Debtor. The Debtor believes that a 4.25% interest rate will provide BOA with the present value of its secured claim and is consistent with section 1129(b)(2)(A) of the Bankruptcy Code Option 2 provides for a two-year restructuring of the BOA Loan, discounted payoffs of the BOA Loan depending on the date of the refinance of the BOA Loan, and the sale of the Property in the event the Debtor is unable to refinance the BOA Loan within two- years of the Plan's Effective Date. In the event the bank rejects both options, then the Debtor intends to proceed to cramdown on Option 1. Under either option, BOA will retain its lien(s) on the Debtor's assets until its Claims are paid on the terms set forth in the Plan. Each holder of an Allowed General Unsecured Claim will be paid in Cash, in full, on the Effective Date, as otherwise agreed upon by the Debtor and holder of a General Unsecured Claim, or in deferred cash payments with interest from the Petition Date at the rate of 3.25% per annum, in equal monthly installments of principal and interest sufficient to fully amortize the outstanding indebtedness over a period of 12 months after the Effective Date. The initial distribution on account of Allowed Class 4 claims shall be paid within 30 days of the Effective Date of the Plan. Unsecured Claims Paid in Full The Allowed Unsecured Claims of the Debtor's insiders will be paid in full under the Plan. Each holder of an Allowed Class 6 Claim will be paid in full, in Cash, with interest, upon the sale or refinance of the Property. Interest shall accrue on the principal balance of the Allowed Insider Unsecured Claims as of the Petition Date at the prime rate of interest plus 2% per annum. The Plan will provide for the payment in full of the Debtor's obligations to certain key employees of the Apartments. The Debtor will assume it obligations to pay "Stay Incentives" under the Weyland Apartments Stay Incentive Compensation Plan, effective December 20, 2007. The Debtor's members will retain their membership interests in the company because the Plan provides for the payment in full of all senior classes of creditors. The Debtor's members will not receive any distributions until all senior classes have actually been paid in full, provided however, that the Debtor's members may take such interim distributions as necessary to pay their respective income taxes attributable to their ownership of the Debtor. BofA Wants Straight Sale, To Waive $500,000 Bank of America filed its original plan of liquidation on Nov. 16, 2012. Under the bank's Amended Plan, both the Debtor and Bank of America will jointly conduct a sale of the Debtor's real property after an appropriate period of marketing. The Sale will close within six months of the Confirmation Date. The Debtor, at the direction of Bank of America, will appoint a broker to market the property. Prior to the Petition Date, Bank of America provided a loan in the original principal amount of $6.25 million to Debtor secured by the Real Property. As of Jan. 1, 2014, Bank of America holds a secured claim totaling at least $6,483,980. Under the Amended Bank Plan, Bank of America proposes to waive roughly $500,000 of its Allowed Bank Secured Claim, with the Allowed Bank Secured Claim, for distribution purposes, limited to $5,900,000. Allowed Insider Claims consist of Unsecured Claims that are held by, or were originally held by, Insiders (including employees) of Debtor. To the extent each such Claim is Allowed, Allowed Insider Claims include the Claims held by or originally held by, inter alia, Laurance Freed, DDL, LLC, CF Palwaukee, LLC, Donald James, Laurance Realty, and certain employees subject to that certain Weyland Apartments Stay Incentive Compensation Plan, effective Dec. 20, 2007. To the extent an Executory Contract between the Debtor and an Insider is rejected pursuant to the Bank Amended Plan, the rejection damages flowing from such rejection, if deemed Allowed, shall also constitute an Allowed Insider Claim. Allowed Insider Claims shall receive a pari passu distribution from the proceeds of the Sale after payment in full of the Allowed Bank Secured Claim (subject to the cap of $5,900,000). Bank of America has agreed to allow existing Cash Collateral to be used to pay, in full, the holders of these Allowed Claims as of the Effective Date of the Amended Bank Plan: * Allowed Administrative Claims, * Allowed Priority Tax Claims, * Allowed Priority Non-Tax Claims, * Allowed Secured Tax Claims, * Allowed General Unsecured, Non-Insider Claims (excluding the Allowed Claims of Insiders and employees of Debtor), and * Allowed Other Secured Claims (excluding the Allowed Bank Secured Claim). About MW Group LLC MW Group, LLC, owns 36.5 acres of vacant land, 48 condominium units in the Marlborough Woods Condominium Association for rent, and 200 apartments known as Weyland and Weyland II, located in Charlotte, Mecklenburg County, North Carolina. MW Group is owned by 6 entities and individuals, A. Bruce Parker, Inc. (27.5%), DDL LLC (33.229%), David LaFave (12.083%), the David L. Kirshenbaum Revocable Trust dated February 29, 1996, David L. Kirshenbaum, trustee (6.042%), Thomas H. Fraerman (3.021%), and Donald R. James (18.125%). Donald R. James is the Manager of MW Group. Laurance Realty Associates performs the day-to-day management. Laurance Realty is effectively owned by these MW Group affiliates: DDL LLC, David LaFave, and James. MW Group LLC filed for Chapter 11 bankruptcy (Bankr. W.D.N.C. Case No. 11-32674) on Oct. 21, 2011, to stave off foreclosure attempts by lender, Bank of America N.A. The Debtor scheduled assets of $10.32 million and liabilities of $8.42 million. Donald R. James signed the petition as manager. No official committee of unsecured creditors has been appointed in the case. The Honorable George R. Hodges, United States Bankruptcy Judge, initially presided over the case, but the case was subsequently transferred to the Honorable Laura T. Beyer, United States Bankruptcy Judge, who has presided over this chapter 11 case since her appointment. MW Group is represented by: MOON WRIGHT & HOUSTON, PLLC Travis W. Moon, Esq. Andrew T. Houston, Esq. 227 West Trade Street, Suite 1800 Charlotte, NC 28202 Attorneys for Bank of America, N.A., successor by merger to LaSalle Bank National Association, are: D. Kyle Deak, Esq. TROUTMAN SANDERS LLP 434 Fayetteville Street, Suite 1900 Raleigh, NC 27601 Telephone: (919) 835-4103 Facsimile: (919) 829-8700 E-mail: kyle.deak@troutmansanders.com - and - Gus A. Paloian, Esq. Jason J. DeJonker, Esq. SEYFARTH SHAW LLP 131 South Dearborn Street Chicago, IL 60603 Telephone: (312) 460-5000 Facsimile: (312) 460-7000 E-mail: jdejonker@seyfarth.com - and - Shuman Sohrn, Esq. SEYFARTH SHAW LLP 1075 Peachtree Street, Suite 2500 Atlanta, GA 30309 Telephone: (404) 885-1500 Facsimile: (404) 892-7056 MW GROUP: Proposed Payment Weyland Compensation Plan Questioned --------------------------------------------------------------- The Office of the Bankruptcy Administrator for the Western District of North Carolina has filed an objection to the Amended Disclosure Statement explaining MW Group LLC's Second Amended Plan of Reorganization. Specifically, the Bankruptcy Administration takes exception with the provision in the Amended Disclosure Statement and Plan, wherein the Debtor would provide for a 100% payment to Class 7: Employee Unsecured Claim that is anticipated to be approximately $590,000.00. The description of the proposed distribution under the Plan states that "[t]he Debtor will assume its obligations under the Weyland Apartments Stay Incentive Compensation Plan, effective December 20, 2007." According to the Bankruptcy Administrator, MW Group should be required to disclose information regarding this claim, as it was not listed in the Debtor's schedules, and Weyland Apartments Stay Incentive Compensation Plan has not filed a proof of claim. The Bankruptcy Administrator noted that the employees who are the beneficiaries of the Compensation Plan are not employees of the Debtor, but are employees of Laurance Realty, the company that manages the Debtor. Also, one of the beneficiaries of the Compensation Plan is an insider of the Debtor. The Bankruptcy Administrator asks the Court deny the Debtor's request to approve its Amended Disclosure Statement with respect to Class 7: Employee Unsecured Claim. The Bankruptcy Administrator is represented by: Alexandria P. Kenny, Esq. Staff Attorney Office of the Bankruptcy Administrator 402 W. Trade Street, Suite 200 Charlotte, NC 28202-1669 Telephone: (704) 350-7587 Telecopier: (704) 344-6666 E-mail: alexandria_p_kenny@ncwba.uscourts.gov About MW Group LLC MW Group, LLC, owns 36.5 acres of vacant land, 48 condominium units in the Marlborough Woods Condominium Association for rent, and 200 apartments known as Weyland and Weyland II, located in Charlotte, Mecklenburg County, North Carolina. MW Group is owned by 6 entities and individuals, A. Bruce Parker, Inc. (27.5%), DDL LLC (33.229%), David LaFave (12.083%), the David L. Kirshenbaum Revocable Trust dated February 29, 1996, David L. Kirshenbaum, trustee (6.042%), Thomas H. Fraerman (3.021%), and Donald R. James (18.125%). Donald R. James is the Manager of MW Group. Laurance Realty Associates performs the day-to-day management. Laurance Realty is effectively owned by these MW Group affiliates: DDL LLC, David LaFave, and James. MW Group LLC filed for Chapter 11 bankruptcy (Bankr. W.D.N.C. Case No. 11-32674) on Oct. 21, 2011, to stave off foreclosure attempts by lender, Bank of America N.A. The Debtor scheduled assets of $10.32 million and liabilities of $8.42 million. Donald R. James signed the petition as manager. No official committee of unsecured creditors has been appointed in the case. The Honorable George R. Hodges, United States Bankruptcy Judge, initially presided over the case, but the case was subsequently transferred to the Honorable Laura T. Beyer, United States Bankruptcy Judge, who has presided over this chapter 11 case since her appointment. MW Group is represented by Moon Wright & Houston, PLLC's Travis W. Moon, Esq., and Andrew T. Houston, Esq. Bank of America, N.A., successor by merger to LaSalle Bank National Association, is represented in the case by D. Kyle Deak, Esq., at Troutman Sanders LLP; and Gus A. Paloian, Esq., Jason J. DeJonker, Esq., and Shuman Sohrn, Esq., at Seyfarth Shaw LLP. NAVISTAR INTERNATIONAL: BNY Mellon Holds 45,000 Pref. Shares ------------------------------------------------------------ In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, The Bank of New York Mellon Corporation disclosed that as of Dec. 31, 2013, it beneficially owned 45,000 shares of preferred stock of Navistar International Corporation representing 35.6 percent of the shares outstanding. A copy of the regulatory filing is available for free at: http://is.gd/vQBA7F About Navistar International Navistar International Corporation (NYSE: NAV) -- http://www.Navistar.com/-- is a holding company whose subsidiaries and affiliates subsidiaries produce International(R) brand commercial and military trucks, MaxxForce(R) brand diesel engines, IC Bus(TM) brand school and commercial buses, Monaco RV brands of recreational vehicles, and Workhorse(R) brand chassis for motor homes and step vans. It also is a private-label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The Company also provides truck and diesel engine parts and service. Another affiliate offers financing services. Navistar International reported a net loss attributable to the Company of $898 million for the year ended Oct. 31, 2013, a net loss attributable to the Company of $3.01 billion for the year ended Oct. 31, 2012. The Company's balance sheet at Oct. 31, 2013, showed $8.31 billion in total assets, $11.91 billion in total liabilities and a $3.60 billion total stockholders' deficit. * * * In the Aug. 3, 2012, edition of the TCR, Moody's Investors Service lowered Navistar International Corporation's Corporate Family Rating (CFR), Probability of Default Rating (PDR), and senior note rating to B2 from B1. The downgrade of Navistar's ratings reflects the significant challenges the company will face during the next eighteen months in re-establishing the profitability and competitiveness of its US and Canadian truck operations in light of the failure to achieve EPA certification of its EGR emissions technology, the significant reductions in military revenues and substantially higher engine warranty reserves. As reported by the TCR on Oct. 9, 2013, Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Illinois-based truckmaker Navistar International Corp. (NAV) to 'CCC+' from 'B-'. "The rating downgrades reflect our increased skepticism regarding NAV's prospects for achieving the market shares it needs for a successful business turnaround," said credit analyst Sol Samson. As reported by the TCR on Jan. 24, 2013, Fitch Ratings has affirmed the Issuer Default Ratings (IDR) for Navistar International Corporation and Navistar Financial Corporation at 'CCC' and removed the Negative Outlook on the ratings. The removal reflects Fitch's view that immediate concerns about liquidity have lessened, although liquidity remains an important rating consideration as NAV implements its selective catalytic reduction (SCR) engine strategy. Other rating concerns are already incorporated in the 'CCC' rating. NEW YORK LIBERTY: Fitch Affirms 'BB+' Rating on $10MM Cl. A Notes ----------------------------------------------------------------- Fitch Ratings has affirmed all classes of New York Liberty Development Corporation liberty revenue refunding bonds, series 2012 (7 World Trade Center Project) and 7 WTC Depositor, LLC Trust 2012-WTC as follows: -- $18,475,000 class 1 maturing on Sept. 15, 2028 at 'AAAsf'; Outlook Stable; -- $19,410,000 class 1 maturing on Sept. 15, 2029 at 'AAAsf'; Outlook Stable; -- $20,390,000 class 1 maturing on Sept. 15, 2030 at 'AAAsf'; Outlook Stable; -- $21,425,000 class 1 maturing on Sept. 15, 2031 at 'AAAsf'; Outlook Stable; -- $22,510,000 class 1 maturing on Sept. 15, 2032 at 'AAAsf'; Outlook Stable; -- $73,670,000 class 1 maturing on Sept. 15, 2035 at 'AAAsf'; Outlook Stable; -- $137,220,000 class 1 maturing on Sept. 15, 2040 at 'AAAsf'; Outlook Stable; -- $108,000,000 class 2 at 'Asf'; Outlook Stable; -- $29,190,000 class 3 at 'BBBsf'; Outlook Stable; -- $97,123,889 class A at 'BBB-sf'; Outlook Stable; -- $10,515,000 class B at 'BB+sf'; Outlook Stable. Key Rating Drivers The affirmations and Stable Outlooks are the result of stable collateral performance. As of the nine months ending Sept. 30, 2013, the servicer-reported net cash flow DSCR was 1.28x compared to 1.23x underwritten at issuance. Rating Sensitivities All classes maintain Stable Outlooks. No rating actions are expected unless there are material changes in property occupancy or cash flow. The property performance is consistent with issuance. The transaction represents a securitization of the beneficial leasehold mortgage interest in 7 World Trade Center, a 52-story, class A office building, totaling approximately 1.7 million square feet and located on the north end of the World Trade Center site in the Downtown submarket of New York City. Proceeds of the loans were used to refinance the prior liberty bonds, pay closing costs, and return preferred equity investment to the sponsor. The bonds and the CMBS certificates follow a sequential pay structure. The total loan includes $575.3 million of liberty bonds and a CMBS loan secured by a mortgage backed by two cross- defaulted loans on 7 WTC. The senior loan is a $450.3 million tax-exempt liberty bond financing designated loan and the junior loan is a $125 million CMBS loan. The liberty bonds loan and the CMBS loan are administered pursuant to a traditional CMBS servicing agreement. The liberty bonds loan has a priority in payment over the CMBS certificates. Both loans are to be cross- defaulted. The liberty bonds and CMBS certificates are scheduled to amortize fully by their respective maturity dates following an initial interest-only period. The CMBS bonds are interest-only for the first year followed by a six-year full amortization. The liberty bonds are interest-only for 16 years followed by full amortization by 2044. NORD RESOURCES: Extends Maturity of Conv. Note to July 18 --------------------------------------------------------- Nord Resources Corporation has entered into an Amending Agreement with John A & Mary Acerra, JTWROS,, effective as of Jan. 17, 2014, and executed on Jan. 23, 2014. The Noteholder held a convertible promissory note dated July 18, 2013, to evidence the Company's promise to repay $28,626. The Note accrues interest at 20 percent per annum, and was to have matured on the earlier of: Jan. 18, 2014, and the closing of a financing transaction by the Company for gross proceeds in excess of US$20,000,000. Pursuant to the Amending Agreement, the Note has been extended to mature on the earlier of July 18, 2014, and the closing of a financing transaction by the Company for gross proceeds in excess of US$20,000,000. A copy of the Amended and Restated Convertible Promissory Note is available for free at http://is.gd/WVELwY About Nord Resources Based in Tuczon, Arizona, Nord Resources Corporation (TSX:NRD/OTCBB:NRDS.OB) -- http://www.nordresources.com/-- is a copper mining company whose primary asset is the Johnson Camp Mine, located approximately 65 miles east of Tucson, Arizona. Nord commenced mining new ore in February 2009. On June 2, 2010, Nord Resources appointed FTI Consulting to advise on refinancing structures and strategic alternatives. Nord Resources disclosed a net loss of $10.25 million on $8.14 million of net sales for the year ended Dec. 31, 2012, as compared with a net loss of $10.31 million on $14.48 million of net sales in 2011. The Company's balance sheet at Sept. 30, 2013, showed $49.02 million in total assets, $73.40 million in total liabilities and a $24.38 million total stockholders' deficit. "The results for 2012 continued to reflect the effects of the measures that Nord implemented beginning in July 2010 to reduce our costs, maximize cash flow, and improve operating efficiencies," said Wayne Morrison, chief executive and chief financial officer. Mayer Hoffman McCann P.C., in Denver, Colorado, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company reported net losses of ($10,254,344) and ($10,316,294) during the years ended Dec. 31, 2012, and 2011, respectively. In addition, as of Dec. 31, 2012 and 2011, the Company reported a deficit in net working capital of ($57,999,677) and ($51,783,180), respectively. The Company's significant historical operating losses, lack of liquidity, and inability to make the requisite principal and interest payments due under the terms of the Amended and Restated Credit Agreement with its senior lender raise substantial doubt about its ability to continue as a going concern. Bankruptcy Warning "The Company's continuation as a going concern is dependent upon its ability to refinance the obligations under the Credit Agreement with Nedbank, the Copper Hedge Agreement with Nedbank Capital, and the note payable with Fisher, thereby curing the current state of default under the respective agreements. Any actions by Nedbank, Nedbank Capital or Fisher Industries to enforce their respective rights could force us into bankruptcy or liquidation," according to the Company's annual report for the year ended Dec. 31, 2012. NORTHERN BEEF: Enters Stipulation for $254K of Financing -------------------------------------------------------- Northern Beef Packers Limited Partnership asks the Hon. Charles L. Nail, Jr. of the U.S. Bankruptcy Court for the District of South Dakota to approve its second stipulation amending and extending postpetition financing to incur debt in an amount not to exceed $254,314. The Court previously approved on Jan. 17, 2014, the first stipulation amending and extending postpetition financing, allowing the Debtor to obtain up to $537,026 from New Angus, LLC. As reported by the Troubled Company Reporter on Jan. 21, 2014, the Debtor asked the Court to approve the latest changes to the agreement with White Oak Global Advisors, LLC. The revised agreement authorized the Debtor to borrow $537,026 in additional financing to cover expenses pending the closing of the sale of its operating assets to White Oak Global. Under the deal, New Angus LLC, an affiliate of White Oak, would provide the loan "on an unsecured, superpriority basis." The financing commitment was set to terminate by the end of January. In return, the Debtor would assign to White Oak and New Angus any rights to refunds of amounts paid out of funds advanced under the original or the revised agreement. The Debtor stated in its Jan. 27, 2014 court filing that the terms of the Second Amended Stipulation are materially identical to those of the First Amended Stipulation, except that the Second Amended Stipulation provides funding for expenses for February, including $254,314 in budgeted expenses and up to $30,000 in fees and expenses of the Debtor's attorneys. According to the Debtor, the sale order has become a final order, and the Debtor does not believe that there is any material risk that the sale to White Oak will not close. "As the Second Amended Stipulation, like the First Amended Stipulation, provides for the waiver any right to repayment of any post-petition financing provided during this Chapter 11 case upon closing of the sale of the operating assets, approval of the Second Amended Stipulation will not impose any administrative burden on the estate, and will in fact relieve the estate of substantial administrative expenses," the Debtor said. About Northern Beef Packers Northern Beef Packers Limited Partnership, which operates a beef processing facility that opened in October 2012, filed for Chapter 11 relief (Bankr. D.S.D. Case No. 13-10118) on July 19, 2013. Karl Wagner signed the petition as chief financial officer. Judge Charles L. Nail, Jr., presides over the case. The Debtor estimated assets of at least $50 million and debts of at least $10 million. James M. Cremer, Esq., at Bantz, Gosch, & Cremer, L.L.C., serves at the Debtor's counsel. Steven H. Silton, Esq., at Cozen O'Connor serves as co-counsel. Lincoln Partners Advisors LLC serves as financial advisors. The U.S. Trustee has appointed five members to the Official Committee of Unsecured Creditors in the case. Robbins, Salomon & Patt, Ltd. serves as it lead counsel. Patrick T. Dougherty serves as its local counsel. OPENLINK INT'L: Moody's Affirms B3 CFR; Alters Outlook to Stable ---------------------------------------------------------------- Moody's Investors Service affirmed the debt ratings of OpenLink International Inc., including the B3 Corporate Family rating (CFR), B3-PD Probability of Default rating, and B1 senior secured instrument ratings. The ratings outlook was revised to stable from negative. Ratings Rationale Moody's anticipates solid revenue growth and free cash flow going forward, and steadily improving liquidity, consistent with the revised stable ratings outlook. The B3 CFR reflects expectations for debt to EBITDA to remain above 6 times in 2014. Moody's expects 2014 revenue and EBITDA (after Moody's standard adjustments) to approach $330 million and about $90 million, respectively, as the market for Open Link's products remains solid. Moody's expects free cash flow may be put towards acquisitions or other uses, rather than debt repayment. Liquidity is considered adequate. The stable ratings outlook reflects Moody's expectations for mid single digit growth in license sales and adequate liquidity. Moody's could lower the ratings if client retention or pricing declines, or if costs increase, driving zero or negative free cash flow and diminished liquidity. If Moody's comes to expect higher new customer additions and license sales growth, driving higher profits and at least $25 million of annual free cash flow, while debt is reduced such that debt to EBITDA is expected to remain below 6 times and Open Link maintains conservative financial policies, the ratings could be upgraded. Outlook Actions: Outlook, Changed To Stable From Negative Affirmations: Probability of Default Rating, Affirmed B3-PD Corporate Family Rating, Affirmed B3 Senior Secured Bank Credit Facility Oct 25, 2017, Affirmed B1 Senior Secured Bank Credit Facility Oct 25, 2016, Affirmed B1 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. OpenLink is a provider of energy and commodity trading and risk management (ETRM) software owned by affiliates of Hellman & Friedman LLC. OSHKOSH CORP: Moody's Affirms Ba3 CFR, Alters Outlook to Positive ----------------------------------------------------------------- Moody's Investors Service affirmed Oshkosh Corporation's Ba3 Corporate Family Rating (CFR) and Ba3-PD Probability of Default Rating (PDR). Moody's also changed Oshkosh's rating outlook to Positive from Stable. The Speculative Grade Liquidity rating was affirmed at SGL -- 2. Outlook Actions: Issuer: Oshkosh Corporation Outlook, Changed To Positive From Stable Affirmations: Issuer: Oshkosh Corporation Probability of Default Rating, Affirmed Ba3-PD Speculative Grade Liquidity Rating, Affirmed SGL-2 Corporate Family Rating, Affirmed Ba3 Senior Secured Bank Credit Facility Oct 1, 2015, Affirmed Ba2 Senior Unsecured Regular Bond/Debenture Mar 1, 2020, Affirmed B1 Senior Unsecured Regular Bond/Debenture Mar 1, 2017, Affirmed B1 Adjustments/changes: Issuer: Oshkosh Corporation Senior Secured Bank Credit Facility Oct 1, 2015, changed to a LGD3- 35 % from LGD3- 32 % Senior Unsecured Regular Bond/Debenture Mar 1, 2020, changed to a range of LGD5- 80 % from LGD5- 79 % Senior Unsecured Regular Bond/Debenture Mar 1, 2017, changed to a range of LGD5- 80 % from LGD5- 79 % Ratings Rationale The change in rating outlook to Positive from Stable reflects the company's strong credit metrics despite recent revenue decline as the strong cyclical rebound in access equipment has mitigated the major drop in defense sales, which (absent significant new contract wins) is expected to decline to less than $1 billion by FY 2015 from over $3 billion in FY 2013 due primarily to reduced funding for legacy programs and lower parts and service sales. Leverage is low and interest coverage high for the rating category with LTM 12/31/13 debt to EBITDA around 2x and LTM EBITA to interest over 7.0x. The company has a history of conservative balance sheet management since the 2009 economic downturn with a reduction in its debt balances by approximately $1 billion. The company's strong balance sheet provides the flexibility to adjust to further declines in the defense portfolio and for the weaker fire and emergency and commercial businesses to further stabilize and improve. Moody's expects the company's revenue decline to stabilize in calendar 2014 and for operating income and free cash flow to grow. The positive rating outlook considers the company's strategy and initiatives to improve earnings through organic revenue growth and expense reduction. Oshkosh's Ba3 CFR and Ba3-PD Probability of Default Rating considers the company's strong and long established market position in multiple specialty vehicle segments and reflects its strong balance sheet. Although Oshkosh had been facing a number of challenges, ranging from declining sales and margin compression in its defense segment to persistent weakness in its historically stable fire & emergency segment and commercial segment, the company continues to focus on cost rationalization efforts to improve the profitability of these businesses. Over the long term, as municipal budget constraints lift and the installed fire truck and emergency vehicle fleets continues to age, Oshkosh's commercial and fire & emergency segments could benefit from improved demand. The Speculative Grade Liquidity Rating of SGL-2 rating reflects Moody's view that Oshkosh will maintain a good liquidity profile over the next twelve months. Operating cash flow generation over the next twelve month period combined with availability under its revolving credit facility should be sufficient to fund the company's normal working capital requirements, capital spending needs and potential share repurchases or dividends. Oshkosh maintains a $525 million revolver with about $440 million of unused available capacity as of December 31, 2013, net of about $82 million of letters of credit. The rating may be upgraded if the company efficiently manages through the contraction of its defense business and meets its stated targets as they relate to operating income growth and margins. Moreover, a conservative, low-leverage balance sheet is necessary given the high cyclicality of demand for its products, with leverage remaining at under 3 times through the cycle. Additionally, the company's business profile is concentrated with the access equipment segment at over 50% of its operating income. As a result, the company could benefit from improved diversification of its business profile such that it experiences reduced cyclicality, depending on business performance and relevant credit metrics. The rating or rating outlook could be pressured by Debt to EBITDA of over 3.5 times if the challenges mentioned above were expected to persist over the rating horizon. A large debt financed acquisition or aggressive shareholder friendly policies could also pressure the rating or outlook depending on the resulting credit metrics. Oshkosh is a leading designer, manufacturer and marketer of a broad range of specialty vehicles and vehicle bodies. The company operates in four segments: access equipment, defense, fire & emergency, and commercial (rear and front-discharge concrete mixers and refuse collection vehicles as well as other products for mining and construction companies). Revenues for the company's fiscal year ending September 30, 2013 totaled approximately $7.7 billion. The company has about 12,000 employees worldwide and is headquartered in Oshkosh, Wisconsin. The principal methodology used in this rating was the Global Heavy Manufacturing Rating Methodology published in November 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. OVERLAND STORAGE: Cyrus Funds Stake at 66.8% as of Jan. 16 ---------------------------------------------------------- In an amended Schedule 13D filed with the U.S. Securities and Exchange Commission, Cyrus Capital Partners, L.P., FBC Holdings S.a r.l. and its affiliates disclosed that as of Jan. 16, 2014, they beneficially owned 64,042,538 shares of common stock of Overland Storage, Inc., representing 66.8 percent of the shares outstanding. Cyrus Capital previously reported beneficial ownership of 7,945,500 common shares or 19.99 percent equity stake as of Dec. 19, 2013. The Cyrus Funds acquired, as of Jan. 16, 2014, new notes totaling $2,000,000 pursuant to the Amended and Restated Note Purchase Agreement dated Nov. 1, 2013, with the Cyrus Funds and certain other note purchasers, which amended and restated the Note Purchase Agreement dated Feb. 12, 2013, between the Issuer, the Cyrus Funds and the other note purchasers. The purchase of those New Notes was funded on Jan. 21, 2014. The Cyrus Funds acquired those New Notes in the following original principal amounts in consideration for an equivalent purchase price: Cyrus Opportunities -- $1,152,000 of New Notes; CRS Master Fund, L.P -- $332,000 of New Notes; Crescent 1, L.P., -- $366,000 of New Notes; and Cyrus Select Opportunities Master Fund, Ltd., -- $150,000 of New Notes. The New Notes are convertible by the holder into a number of shares of Common Stock equal to the principal amount of the New Notes being converted divided by $1.00. The Cyrus Funds used their respective fund reserves to purchase New Notes. On Jan. 21, 2014, the Acquisition was consummated and FBC Holdings was issued 47,152,630 shares of the Issuer's Common Stock in exchange for all of the outstanding capital stock of Tandberg and Tandberg became a wholly owned subsidiary of the Issuer. Prior to the closing of the Acquisition, Tandberg Data Management S.a r.l. transferred to FBC Holdings S.a r.l., all of the capital stock of Tandberg which was held by TDM. A copy of the regulatory filing is available for free at: http://is.gd/j0puRx About Overland Storage San Diego, Cal.-based Overland Storage, Inc. (Nasdaq: OVRL) -- http://www.overlandstorage.com/-- is a global provider of unified data management and data protection solutions designed to enable small and medium enterprises (SMEs), corporate departments and small and medium businesses (SMBs) to anticipate and respond to change. Overland Storage incurred a net loss of $19.64 million on $48.02 million of net revenue for the fiscal year ended June 30, 2013, as compared with a net loss of $16.16 million on $59.63 million of net revenue during the prior fiscal year. The Company's balance sheet at Sept. 30, 2013, showed $27.87 million in total assets, $40.17 million in total liabilities and a $12.29 million total shareholders' deficit. Moss Adams LLP, in San Diego, California, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2013, citing recurring losses and negative operating cash flows which raise substantial doubt about the Company's ability to continue as a going concern. OVERLAND STORAGE: Pinnacle Stake at 8.5% as of Dec. 31 ------------------------------------------------------ In an amended Schedule 13D filed with the U.S. Securities and Exchange Commission, Pinnacle Family Office Investments, L.P., and Barry M. Kitt disclosed that as of Dec. 31, 2013, they beneficially owned 2,718,930 shares of common stock or 8.5 percent equity stake of Overland Storage, Inc. The reporting persons previously disclosed beneficial ownership of 2,575,280 common shares or 9 percent equity stake as of Dec. 31, 2012. A copy of the regulatory filing is available at http://is.gd/9r7xRy About Overland Storage San Diego, Cal.-based Overland Storage, Inc. (Nasdaq: OVRL) -- http://www.overlandstorage.com/-- is a global provider of unified data management and data protection solutions designed to enable small and medium enterprises (SMEs), corporate departments and small and medium businesses (SMBs) to anticipate and respond to change. Overland Storage incurred a net loss of $19.64 million on $48.02 million of net revenue for the fiscal year ended June 30, 2013, as compared with a net loss of $16.16 million on $59.63 million of net revenue during the prior fiscal year. The Company's balance sheet at Sept. 30, 2013, showed $27.87 million in total assets, $40.17 million in total liabilities and a $12.29 million total shareholders' deficit. Moss Adams LLP, in San Diego, California, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2013, citing recurring losses and negative operating cash flows which raise substantial doubt about the Company's ability to continue as a going concern. OVERSEAS SHIPHOLDING: Selling 5 Ships to GSO, Euronav for $255MM ---------------------------------------------------------------- Overseas Shipholding Group, Inc., disclosed in a regulatory filing with the Securities and Exchange Commission that on Feb. 3, 2014, debtors Front President Inc., Delta Aframax Corporation, Epsilon Aframax Corporation, Maple Tanker Corporation and Oak Tanker Corporation each entered into one of five "stalking horse" asset sale agreements with Shipco 1, L.L.C., Shipco 2, L.L.C., Shipco 3, L.L.C., Shipco 4, L.L.C. and Shipco 5, L.L.C, respectively, for the sale of certain of the Debtor Sellers' assets, including five vessels that are collateral for secured financing provided by the Export-Import Bank of China for a total cash purchase price of $255 million. The five vessels include three very large crude carriers (VLCCs) and two aframax tankers. The Purchasers are subsidiaries of Ship Acquisition Co., LLC, a joint venture between affiliates of GSO Capital Partners LP and Euronav N.V. The Purchase Agreements are subject to the approval of the Bankruptcy Court and to the outcome of an auction whereby higher and better offers for the purchase of the Assets may be made, pursuant to the bidding procedures proposed by the Debtors. The Purchasers' obligations in the Purchase Agreements are guaranteed by six GSO-affiliated investment funds. Pursuant to the Purchase Agreements, the Debtor Sellers will pay the Purchasers a break-up fee of 2.75% of the Purchase Price, or $7,012,500, and up to $1,000,000 in reasonable and documented fees, out-of-pocket costs and expenses incurred in connection with preparing, negotiating, and executing the Purchase Agreements in the event the Purchase Agreements are cancelled under certain circumstances, after the bidding procedures are approved by the Bankruptcy Court, where the Purchasers are not in breach of the Purchase Agreements. The Debtors filed with the Bankruptcy Court a motion seeking, inter alia, the Bankruptcy Court's (i) authorization of the entry by the Debtor Sellers into the Purchase Agreements; (ii) authorization and approval of certain bidding procedures for the sale of the Assets, including granting administrative expense status to the Bid Protections; and (iii) subject to the results of the auction, authorization and approval of the sale of the Assets to the successful bidders, free and clear of all encumbrances, pursuant to section 363(f) of the Bankruptcy Code. About Overseas Shipholding Overseas Shipholding Group, Inc. (OTC: OSGIQ), headquartered in New York, is one of the largest publicly traded tanker companies in the world, engaged primarily in the ocean transportation of crude oil and petroleum products. OSG owns or operates 111 vessels that transport oil and petroleum products throughout the world. Overseas Shipholding Group and 180 affiliates filed voluntary Chapter 11 petitions (Bankr. D. Del. Lead Case No. 12-20000) on Nov. 14, 2012, disclosing $4.15 billion in assets and $2.67 billion in liabilities. Greylock Partners LLC Chief Executive John Ray serves as chief reorganization officer. James L. Bromley, Esq., and Luke A. Barefoot, Esq., at Cleary Gottlieb Steen & Hamilton LLP serve as OSG's Chapter 11 counsel. Derek C. Abbott, Esq., Daniel B. Butz, Esq., and William M. Alleman, Jr., at Morris, Nichols, Arsht & Tunnell LLP, serve as local counsel. Chilmark Partners LLC serves as financial adviser. Kurtzman Carson Consultants LLC is the claims and notice agent. The Export-Import Bank of China, owed $312 million used for the construction of five tankers, is represented by Louis R. Strubeck, Jr., Esq., and Kristian W. Gluck, Esq., at Fulbright & Jaworski LLP in Dallas; David L. Barrack, Esq., and Beret Flom, Esq., at Fulbright & Jaworski in New York; and John Knight, Esq., and Christopher Samis, Esq., at Richards Layton & Finger PA. Chilmark Partners, LLC serves as financial and restructuring advisor. Akin Gump Strauss Hauer & Feld LLP, and Pepper Hamilton LLP, serve as co-counsel to the official committee of unsecured creditors. FTI Consulting, Inc., is the financial advisor and Houlihan Lokey Capital, Inc., is the investment banker. PAYMENT SYSTEMS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Payment Systems Group, Inc. dba Make My Payments aka PSG fdba Biweekly Management fdba Manage Your Mortgage P.O. Box 774000 PMB 337 Steamboat Springs, CO 80477 Case No.: 14-40776 Chapter 11 Petition Date: February 7, 2014 Court: United States Bankruptcy Court Eastern District of Missouri (St. Louis) Judge: Hon. Kathy A. Surratt-States Debtor's Counsel: Robert E. Eggmann, Esq. DESAI EGGMANN MASON LLC 7733 Forsyth Boulevard, Suite 2075 Clayton, MO 63105 Tel: 314-881-0800 Fax: 314-881-0820 E-mail: reggmann@demlawllc.com Total Assets: $48,099 Total Liabilities: $2.38 million The petition was signed by James McKee, III, vice president and CFO. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/moeb14-40776.pdf PENNSYLVANIA ECONOMIC: Fitch Affirms BB+ Rating on $169MM Bonds --------------------------------------------------------------- Fitch Ratings has affirmed Pennsylvania Economic Development Financing Authority's (the Colver Power Project, or Colver) approximately $169 million in 2005 series F resource recovery revenue refunding bonds (senior bonds due Dec 2018) at 'BB+'. The Outlook remains Stable. Key Rating Drivers Contractual Revenues Reliant on Strong Operations: The project relies on the ability of the operator to maintain high availability and capacity factors in order to maximize payments under the power purchase agreement (PPA), capture the benefit of excess energy sold at the locational marginal price (LMP) and provide revenue stability. LMP sales, despite their variability in price and small percentage relative to total revenues, help to add cushion to the cash flow profile. (Revenue Risk: Midrange) Operating Margin Subject to Cost Control: The project remains exposed to price fluctuations in commodities, uncertain costs for emissions standards compliance and major maintenance. The Company's prudent purchasing of ammonia, propane and diesel and conservative major maintenance budgeting help control expense levels and margin compression. Further, in order to meet the impending Mercury Air Toxic Standards (MATS) rule in 2015, the project will need to utilize additional limestone which is expected to result in a $3-$4 million increase in plant operating costs. (Operation Risk: Midrange) Adequate Coal Supply: Despite 75% of coal under contract through debt maturity, the project is susceptible to potential price swings in the remaining 25% of needed supply. However, an adequate supply through multiple sources at competitive prices offsets some price risk. (Supply Risk: Midrange) Debt Structure Supports Cash Flow: The short tenor remaining on the debt combined with an 18-month debt service reserve helps to bolster cash flows against periods of low dispatch or increased operating costs over the next five years. Further, the additional two years of unlevered cash flow under the PPA following debt maturity helps to offset relatively high leverage. (Debt Structure: Midrange) Sufficient Debt Service: Under a combined financial stress scenario of increased costs and reduced availability, Fitch projects near term debt service coverage ratios (DSCR) averaging 1.25x with a minimum of 1.00x coverage. While the coverage levels may be suggestive of a lower rating under the thermal criteria, the stable operating history, limited horizon for debt maturity and ample liquidity support the rating at the current level. Rating Sensitivities Inability to capture lower emissions control costs to meet MATS and increased fuel, ash or plant operating expenses above the current level could result in a downgrade. Any extended outage resulting in decreased availability and reduced cash flow could result in a downgrade. Security The Senior Bonds are secured by a first-priority interest in all project revenues, a lien on all of the project assets, and security interest in the contract rights of the PPA. Credit Update Fitch views positively the continued operating stability of the project through 2013. Overall production was higher than originally budgeted despite an unplanned, eight day outage that occurred in December 2013 as a result of tube leaks. Positively, the average annual capacity factor remained strong at 98.5%, consistent with the project's operating history. The project also benefitted from low sulfur coal opportunity purchases which resulted in a fuel cost savings of 8.7% compared to 2012. The Fitch calculated DSCR for 2013 increased to 1.54x from 1.24x in 2012, though it is lower than the historical average of 1.87x. Over the near term, major maintenance scheduled in 2014 and 2015 should help to improve plant operations as a key component of the work will focus on preventing future tube leaks. The roughly $4 million overhaul cost has been included in the 2014 budget and will result in increased operating costs for the year. Despite the outage, the sponsor forecasts a 2014 annual capacity factor of 96.88%, which should help to maintain revenue stability. Further, Fitch notes that 2013 cost savings related to low sulfur coal purchases are not likely to continue over the long term, and has maintained a cost profile at a level consistent with historic performance. Under base case conditions, which include reduction of capacity factor to 95.86% and limestone purchases for MATS, Fitch forecasts DSCRs averaging 1.36x with a minimum of 1.10x. Fitch's rating case analysis includes base case assumptions and operating cost increasing annually by 5%. This scenario yields an average DSCR of 1.25x and a minimum of 1.0x. While the analysis shows the project remains exposed to potential emissions compliance cost increases and lower dispatch due to major maintenance and unplanned outages, the limited horizon for the debt maturity and ample debt service reserves mitigate this risk. The Colver Project consists of a nominal 111.15 megawatt waste coal-fired qualifying facility located on a 62-acre site in Cambria, Pennsylvania. The project also includes a 9.6-mile, 115- kilovolt transmission line interconnecting with the Pennsylvania Electric Company (Penelec; 'BBB-'; Stable Outlook by Fitch) Glory Substation. The Colver facility began commercial operations on May 16, 1995. The senior bonds were issued on behalf of an owner- participant as part of a leveraged-lease transaction. Colver's sponsor is a limited partnership, Inter-Power/AhlCon Partners, which is held by subsidiaries of Constellation Energy Group (Exelon; 'BBB+') and Northern Star Generation. Under the terms of the PPA, Penelec pays flat rates on annual energy up to 278 gigawatt-hours (GWh) of on-peak production and 501 GWh/year off-peak production. Penelec purchases excess energy, produced in excess of caps above, at the posted hourly LMP or day-ahead of PJM Interconnectedness, LLC. PERPETUAL ENERGY: Moody's Retains Caa1 CFR & Unsec. Notes Rating ---------------------------------------------------------------- Moody's Investors Service downgraded Perpetual Energy Inc's Speculative Grade Liquidity rating to SGL-4 from SGL-3. The Corporate Family Rating (CFR) of Caa1, Probability of Default Rating (PDR) of Caa1-PD and senior unsecured notes rating of Caa1 were unchanged. The rating outlook remains negative. Perpetual's liquidity is considered weak because existing revolver availability will barely cover expected negative free cash flow to Q1 2015, and Moody's expects Perpetual to sell its remaining residual assets in order to pay off a maturing C$100 million convertible debenture rather than dilute equity, leaving no alternative source of cash in the future. Issuer: Perpetual Energy Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3 Rating Rationale Perpetual's Caa1 CFR is driven by weak liquidity, declining reserves, a low cash margin driven by a high percentage of gas, and a weak retained cash flow to debt metric. The rating also recognizes that Perpetual will sell assets to fund negative free cash flow and repay a $100 million convertible debenture maturity in January 2015 rather than convert to equity, leaving the company with only core assets. The C$150 million senior unsecured notes are rated at the Caa1 CFR due to the substantial amount of lower ranking subordinated debt (C$160 million, unrated) in the capital structure, which offsets the prior ranking C$110 million borrowing base revolver. This notching is in accordance with Moody's Loss Given Default Methodology. The SGL-4 Speculative Grade Liquidity rating reflects weak liquidity. As of September 30, 2013 Perpetual had no cash and roughly C$40 million available, after C$5 million in letters of credit, under its C$110 million borrowing base revolver that term outs in October 2014, and matures one year later. Moody's expect the negative free cash flow of about C$35 million from Q4 2013 to Q1 2015, and the upcoming debt maturity due January 31, 2015 to be funded from asset sales. Perpetual will be in compliance with the two financial covenants through this period. Perpetual's proved reserves are pledged to the revolver lenders, but other resources and assets represent a source of alternate liquidity given the company's portfolio of non-core properties. There is a C$60 million convertible debenture due December 31, 2015. The negative outlook reflects Moody's expectation that Perpetual will sell assets to repay the upcoming debt maturity and fund negative free cash flow, further eroding its asset base, and that the reserve base will continue to decline. A change in outlook to stable would be considered if the company can maintain its production and reserves, and fund its capital program with internal sources. The rating could be downgraded if core producing assets are sold to fund negative free cash flow, to repay debt or used for any other expenditure. The rating could be upgraded if retained cash flow to debt can be maintained above 20% and the company grows production and reserves. The principal methodology used in this rating/analysis 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. Perpetual Energy Inc is a Calgary, Alberta-based independent exploration and production company with total proved reserves of about 34 million barrels of oil equivalent (gross) and average daily production of about 17,000 barrels of oil equivalent per day of which approximately 75% is natural gas. PHYSICIANS TOTAL CARE: RSF Suit Against Silvermine Dismissed ------------------------------------------------------------ Oklahoma District Judge Gregory K. Frizzell granted the Motion to Dismiss filed by Silvermine Opportunity Funding, LLC, for failure to state a claim upon which relief can be granted in the lawsuit, RSF PARTNERS, LLC, Plaintiff, v. SILVERMINE OPPORTUNITY FUNDING, LLC, Defendant, Case No. 13-CV-361-GKF-FHM (N.D. Okla.), but will allow RSF Partners to file an amended complaint. RSF Partners alleges Silvermine tortiously interfered with two contracts between RSF and Physicians Total Care, Inc., and that Silvermine intentionally interfered with RSF's prospective economic advantage in its expectancy of a business relationship with PTC. RSF alleges that, in December 2011, PTC "was actively seeking investors to fund PTC's operations and development of PTC's proprietary logistics management software that allows physicians to dispense medications directly from a doctor's office rather than through a retail pharmacy." On Feb. 17, 2012, RSF and PTC entered into a "preliminary, non-binding letter agreement regarding the possible acquisition of, or controlling investment in, PTC." RSF and PTC agreed to an "Exclusivity Period" until 5:00 PM Central Time on March 1, 2012 during which the parties were to continue to discuss on an exclusive basis the possible acquisition of, or controlling investment in, PTC. On Feb. 23, 2012, PTC executed a Secured Promissory Note whereby PTC promised to pay to RSF $25,000, plus interest at 10% per annum on or by March 1, 2012. On March 1, 2012, RSF and PTC agreed to extend both the Exclusivity Period and the maturity date and amount of the Secured Promissory Note from March 1 to March 13, 2012. PTC executed an Amended and Restated Secured Promissory Note whereby PTC promised to pay RSF $100,000, plus interest at 10% per annum, on or before March 13, 2012. On March 29, 2012, RSF and PTC agreed to extend both the Exclusivity Period and the maturity date of the Amended and Restated Secured Promissory Note from March 13 to May 31, 2012. PTC executed an Amendment to the Amended and Restated Secured Promissory Note whereby PTC promised to pay RSF $205,000, plus interest at 10% per annum on or before May 31, 2012. On March 31, 2012, RSF and PTC entered into a Common Stock Purchase Agreement. The purchase and sale of PTC's stock was to close on May 31, 2012. RSF was to purchase 45,000,000 shares of PTC common for $45,000. In late April 2012, Barry Posner contacted PTC about purchasing an interest in PTC. PTC never notified RSF about Posner's inquiry. Without notifying RSF and in breach of the Letter Agreement, PTC and Posner entered into a nondisclosure agreement in April 2012. As a result of Posner's undisclosed interest in PTC, Posner brought in Silvermine as an equity partner in late May 2012. PTC executed another secured promissory note, this time in favor of Silvermine, as consideration for purchasing an interest in PTC. Prior to May 31, 2012, PTC, in violation of its Letter Agreement, provided Silvermine a copy of the Common Stock Purchase Agreement, and its "financials, documents, performance data, pro formas, and other documents in order for Silvermine to perform its own due diligence of PTC." With knowledge of the Common Stock Purchase Agreement and Letter Agreement, Silvermine interfered with the contract between PTC and RSF. On May 31, 2012, as a direct result of Silvermine's actions, PTC advised RSF that it would not proceed with the closing on the Common Stock Purchase Agreement, advising RSF that the shareholders of PTC would not authorize the transaction. Silvermine purchased PTC's assets. Judge Frizzell added that the Court and the parties shall discuss plaintiff's deadline for filing an Amended Complaint at the upcoming status/scheduling conference. Judge Frizzell said the Court is unpersuaded at this juncture by Silvermine's argument that the Bankruptcy Court's Order approving the sale of PTC's assets to Silvermine would preclude a properly pled claim that a Silvermine maliciously interfered with a contract with PTC before PTC went into bankruptcy. A copy of the Court's Feb. 3, 2014 Opinion and Order is available at http://is.gd/HeKunwfrom Leagle.com. Physicians Total Care, Inc., based in Tulsa, Oklahoma, filed for Chapter 11 bankruptcy (Bankr. N.D. Okla. Case No. 12-12502) on Sept. 11, 2012. PTC estimated $100,001 to $500,000 in assets, and $1 million to $10 million in liabilities. The petition was signed by Warren Moseley, chief executive officer. PTC is represented by: Lysbeth L. George, Esq. CROWE & DUNLEVY PC 20 North Broadway, Suite 1800 Oklahoma City, OK 73102 Tel: (405) 234-3245 Fax: (405) 272-5203 E-mail: lysbeth.george@crowedunlevy.com PICCADILLY RESTAURANTS: Lakes Medical's Claim Reclassified ---------------------------------------------------------- The Official Committee of Unsecured Creditors of Piccadilly Restaurants, LLC, et al., and Lakes Medical Center, LLC, entered into a stipulation resolving classification of Lakes Medical's claim. The Parties stipulate and agree that the Claim should be classified as a PR Class 5 General Unsecured Claim solely for purposes of voting on the First Amended Joint Chapter 11 Plan of Reorganization; provided, however, that nothing in the Plan will constitute or be deemed a final determination as to the classification and treatment of the Claim as either a PR Class 5 Claim (General Unsecured Claim) or PR Class 7 Claim (Unliquidated Tort Claim). On Feb. 25, 2013, Lakes Medical filed a proof of claim, Claim No. 315. On Nov. 14, 2013, the First Amended Joint Chapter 11 Plan proposed by Atalaya Administrative, LLC, Atalaya Funding II, LP, Atalaya Special Opportunities Fund IV, LP (Tranche B), Atalaya Special Opportunities Fund (Cayman) IV LP (Trance B), and the Official Committee of Unsecured Creditors was filed with the Court. In connection with the Plan solicitation, Lakes Medical's Claim was classified as a PR Class 7 Unliquidated Tort Claim within Exhibit E-2 to the Disclosure Statement and a PR Class 7 voting ballot was sent to Lakes Medical. Lakes Medical asserted and believes that its Claim should have been classified and treated as a PR Class 5 General Unsecured Claims for plan voting, treatment and distribution purposes under the Plan and, therefore, that it should have received a PR Class 5 ballot for voting on the Plan. The Committee agreed. A PR Class 5 ballot was sent to Lakes Medical, and Lakes Medical voted to accept the Plan as a general unsecured claimant. About Piccadilly Restaurants Piccadilly Restaurants, LLC, and two affiliated entities sought Chapter 11 bankruptcy protection (Bankr. W.D. La. Case Nos. 12-51127 to 12-51129) on Sept. 11, 2012. The affiliates are Piccadilly Food Service, LLC, and Piccadilly Investments LLC. Piccadilly Restaurants, LLC, headquartered in Baton Rouge, Louisiana, is the largest cafeteria-style restaurant in the United States, with operations in 10 states in the Southeast and Mid- Atlantic regions. It is wholly owned by Piccadilly Investments, LLC. Piccadilly operates an institutional foodservice division through a wholly owned subsidiary, Piccadilly Food Service, LLC, servicing schools and other organizations. With a history dating back to 1944, the Company operates 81 restaurants at three owned and 78 leased locations. Then known as Piccadilly Cafeterias, Inc., the Company filed for Chapter 11 relief (Bankr. S.D. Fla. Case No. 03-27976) on Oct. 29, 2003. Paul Steven Singerman, Esq., and Jordi Guso, Esq., at Berger Singerman, P.A., represented the Debtor in the case. After Piccadilly declared bankruptcy under Chapter 11, but before its plan was submitted to the Bankruptcy Court for the Southern District of Florida, the Bankruptcy Court authorized Piccadilly to sell its assets to Yucaipa Cos., for about $80 million. In October 2004, the Bankruptcy Court confirmed the plan. Judge Robert Summerhays oversees the 2012 cases. Attorneys at Jones, Walker. Waechter, Poitevent, Carrere & Denegre, LLP, represent the Debtors in their restructuring efforts. BMC Group, Inc., serves as claims agent, noticing agent and balloting agent. In its schedules, the Debtor disclosed $34,952,780 in assets and $32,000,929 in liabilities. Jeffrey L. Cornish serves as the Debtors' consultant. Postlethwaite & Netterville, PAC, serve as their independent auditors, accountants and tax consultants. GA Keen Realty Advisors, LLC, serve as the Debtors' special real estate advisors while FTI Consulting, Inc., as their financial consultants. New York-based vulture fund Atalaya Administrative LLC, in its capacity as administrative agent for Atalaya Funding II, LP, Atalaya Special Opportunities Fund IV LP (Tranche B), and Atalaya Special Opportunities Fund (Cayman) IV LP (Tranche B), the Debtors' prepetition secured lender, is represented in the case by lawyers at Carver, Darden, Koretzky, Tessier, Finn, Blossman & Areaux, L.L.C.; and Patton Boggs, LLP. Henry G. Hobbs, Jr., Acting United States Trustee for Region 5, has appointed seven members to the official committee of unsecured creditors in the Debtors' Chapter 11 cases. The Committee sought and obtained Court approval to employ Frederick L. Bunol, Esq., and Albert J. Derbes, IV, Esq., of Derbes Law Firm, LLC., as attorneys. Greenberg Traurig LLP also serves as counsel for the Committee while Protiviti Inc. serves as financial advisor. PICCADILLY RESTAURANTS: Panel Counters Yucaipa's Plan Objection --------------------------------------------------------------- The Official Committee of Unsecured Creditors of Piccadilly Restaurants, LLC, et al., filed on Jan. 31, 2014, its brief in support of confirmation of the First Amended Joint Chapter 11 Plan of Reorganization, stating that other than the objection lodged by Yucaipa Corporate Initiatives Fund I, L.P., all objections to the Plan have been consensually resolved. As reported by the Troubled Company Reporter on Jan. 16, 2014, Yucaipa filed documents opposing confirmation of the Plan, alleging that its equity interests in the Debtors are "in the money" and cannot be extinguished pursuant to the Plan. The Plan is being proposed by Atalaya Administrative LLC and related entities -- the Debtors' pre-bankruptcy secured lenders -- and the Official Committee of Unsecured Creditors. Atalaya and the Committee's Chapter 11 plan proposes to convert $9 million of secured debt to Atalaya for 100% of the equity of the reorganized Debtor, with the remaining $19 million secured claim to be paid off with a term note. Unsecured creditors with claims of $4.5 million to $7 million are impaired although they are estimated to recover approximately 100%, with payment from $1 million allocated by the Plan Proponents plus proceeds from a $4,750,000 note. Yucaipa, the 100% owner, will be wiped out. The Committee said that Yucaipa's equity interests are limited to PR Class 8, the only class of equity interests in Piccadilly Restaurants, LLC. "As such, no class of interests with similar legal rights to those of PR Class 8 exists because there are no other classes of interests in Piccadilly Restaurants, LLC. Accordingly, the Plan cannot and does not unfairly discriminate against Yucaipa's PR Class 8 equity interests," the Committee stated. Cancellation of Yucaipa's equity interests, according to the Committee, is fair and equitable because the value of the Debtors' estates does not extend beyond unsecured creditors. Cancellation of equity interests where equity is found to have no value is appropriate. The Plan was filed after a year of protracted negotiations among the Committee, Atalaya and Yucaipa, all of which are informed, sophisticated parties. "During the process, Yucaipa was never itself willing to inject sufficient funds to preserve its equity interests. Yucaipa cannot now claim that preservation of such equity has value," the Committee said. Atalaya said in a court filing dated Jan. 31, 2014, that the only objection raised by Yucaipa to confirmation of the Plan is that the Plan does not meet the "fair and equitable" requirements of Section 1129(b). According to Atalaya, Yucaipa's argument is based entirely upon valuation. Atalaya denied Yucaipa's assertion that because the value of the Debtors' business exceeds the amount of claims against the Debtors that would have to be satisfied, Atalaya's conversion of debt to 100% of the equity the Debtors somehow allows Atalaya a recovery of more than the value of its claim against the Debtors. Atalaya stated, "The most credible evidence adduced at the confirmation hearing established that the value of the Debtors' business is far less than the amount of creditor claims. Uncontroverted evidence established that the amount of claims against the Debtors that would have to be satisfied exceeds $56 million. As a result, in light of the valuation evidence . . . the value of Yucaipa's equity interest in the Debtors is $0, and therefore, by definition, Yucaipa is receiving 'the value of [it's] interest' in accordance with Section 1129(B)(2)(C)(i). Likewise, because the evidence conclusively demonstrated that Yucaipa's equity interest has no value, Atalaya's conversion of $9 million of debt to 100% of the equity in the reorganized debtors could never result in Atalaya receiving more than the amount of its claims against the Debtors. To the contrary, as of the effective date of the Plan, Atalaya's secured debt will be reduced from $35.8 million to $26.8 million, with the conversion of $9 million of debt to equity in the reorganized debtors. The evidence adduced at the confirmation hearing demonstrates that Atalaya is converting debt to equity of a company that has no equity value at the time of the conversion." On Feb. 3, 2014, Yucaipa filed its memorandum in support of its objection to the Plan, saying that Piccadilly's enterprise value range has a midpoint of $54 million, meaning that there is substantial equity value in Piccadilly. Yucaipa insisted that because the Plan provides no recovery to equity holders and instead awards Atalaya this equity value, it is not fair and equitable and violates Bankruptcy Code sections 1129(b)(1) and 1129(b)(2)(C)(i). About Piccadilly Restaurants Piccadilly Restaurants, LLC, and two affiliated entities sought Chapter 11 bankruptcy protection (Bankr. W.D. La. Case Nos. 12-51127 to 12-51129) on Sept. 11, 2012. The affiliates are Piccadilly Food Service, LLC, and Piccadilly Investments LLC. Piccadilly Restaurants, LLC, headquartered in Baton Rouge, Louisiana, is the largest cafeteria-style restaurant in the United States, with operations in 10 states in the Southeast and Mid- Atlantic regions. It is wholly owned by Piccadilly Investments, LLC. Piccadilly operates an institutional foodservice division through a wholly owned subsidiary, Piccadilly Food Service, LLC, servicing schools and other organizations. With a history dating back to 1944, the Company operates 81 restaurants at three owned and 78 leased locations. Then known as Piccadilly Cafeterias, Inc., the Company filed for Chapter 11 relief (Bankr. S.D. Fla. Case No. 03-27976) on Oct. 29, 2003. Paul Steven Singerman, Esq., and Jordi Guso, Esq., at Berger Singerman, P.A., represented the Debtor in the case. After Piccadilly declared bankruptcy under Chapter 11, but before its plan was submitted to the Bankruptcy Court for the Southern District of Florida, the Bankruptcy Court authorized Piccadilly to sell its assets to Yucaipa Cos., for about $80 million. In October 2004, the Bankruptcy Court confirmed the plan. Judge Robert Summerhays oversees the 2012 cases. Attorneys at Jones, Walker. Waechter, Poitevent, Carrere & Denegre, LLP, represent the Debtors in their restructuring efforts. BMC Group, Inc., serves as claims agent, noticing agent and balloting agent. In its schedules, the Debtor disclosed $34,952,780 in assets and $32,000,929 in liabilities. Jeffrey L. Cornish serves as the Debtors' consultant. Postlethwaite & Netterville, PAC, serve as their independent auditors, accountants and tax consultants. GA Keen Realty Advisors, LLC, serve as the Debtors' special real estate advisors while FTI Consulting, Inc., as their financial consultants. New York-based vulture fund Atalaya Administrative LLC, in its capacity as administrative agent for Atalaya Funding II, LP, Atalaya Special Opportunities Fund IV LP (Tranche B), and Atalaya Special Opportunities Fund (Cayman) IV LP (Tranche B), the Debtors' prepetition secured lender, is represented in the case by lawyers at Carver, Darden, Koretzky, Tessier, Finn, Blossman & Areaux, L.L.C.; and Patton Boggs, LLP. Henry G. Hobbs, Jr., Acting United States Trustee for Region 5, has appointed seven members to the official committee of unsecured creditors in the Debtors' Chapter 11 cases. The Committee sought and obtained Court approval to employ Frederick L. Bunol, Esq., and Albert J. Derbes, IV, Esq., of Derbes Law Firm, LLC., as attorneys. Greenberg Traurig LLP also serves as counsel for the Committee while Protiviti Inc. serves as financial advisor. PICCADILLY RESTAURANTS: GlassRatner Designated as Administrator --------------------------------------------------------------- The Official Committee of Unsecured Creditors of Piccadilly Restaurants, LLC, et al., pursuant to the First Amended Joint Chapter 11 Plan proposed by Atalaya Administrative, LLC, and the Committee, designated GlassRatner Advisory & Capital Group, LLC, by and through its principal, Ronald L. Glass, as administrator. The Committee also designated these individuals to serve as members of the oversight board: 1. Jay Geiger, Director of Finance, Peter A. Mayer Advertising, Inc.; 2. Ray "Jim" Blanchard, Jr., President of Calcasieu Mechanical Contractors; and 3. Corey Files, Operations Manager of Chandlers Parts & Service. About Piccadilly Restaurants Piccadilly Restaurants, LLC, and two affiliated entities sought Chapter 11 bankruptcy protection (Bankr. W.D. La. Case Nos. 12-51127 to 12-51129) on Sept. 11, 2012. The affiliates are Piccadilly Food Service, LLC, and Piccadilly Investments LLC. Piccadilly Restaurants, LLC, headquartered in Baton Rouge, Louisiana, is the largest cafeteria-style restaurant in the United States, with operations in 10 states in the Southeast and Mid- Atlantic regions. It is wholly owned by Piccadilly Investments, LLC. Piccadilly operates an institutional foodservice division through a wholly owned subsidiary, Piccadilly Food Service, LLC, servicing schools and other organizations. With a history dating back to 1944, the Company operates 81 restaurants at three owned and 78 leased locations. Then known as Piccadilly Cafeterias, Inc., the Company filed for Chapter 11 relief (Bankr. S.D. Fla. Case No. 03-27976) on Oct. 29, 2003. Paul Steven Singerman, Esq., and Jordi Guso, Esq., at Berger Singerman, P.A., represented the Debtor in the case. After Piccadilly declared bankruptcy under Chapter 11, but before its plan was submitted to the Bankruptcy Court for the Southern District of Florida, the Bankruptcy Court authorized Piccadilly to sell its assets to Yucaipa Cos., for about $80 million. In October 2004, the Bankruptcy Court confirmed the plan. Judge Robert Summerhays oversees the 2012 cases. Attorneys at Jones, Walker. Waechter, Poitevent, Carrere & Denegre, LLP, represent the Debtors in their restructuring efforts. BMC Group, Inc., serves as claims agent, noticing agent and balloting agent. In its schedules, the Debtor disclosed $34,952,780 in assets and $32,000,929 in liabilities. Jeffrey L. Cornish serves as the Debtors' consultant. Postlethwaite & Netterville, PAC, serve as their independent auditors, accountants and tax consultants. GA Keen Realty Advisors, LLC, serve as the Debtors' special real estate advisors while FTI Consulting, Inc., as their financial consultants. New York-based vulture fund Atalaya Administrative LLC, in its capacity as administrative agent for Atalaya Funding II, LP, Atalaya Special Opportunities Fund IV LP (Tranche B), and Atalaya Special Opportunities Fund (Cayman) IV LP (Tranche B), the Debtors' prepetition secured lender, is represented in the case by lawyers at Carver, Darden, Koretzky, Tessier, Finn, Blossman & Areaux, L.L.C.; and Patton Boggs, LLP. Henry G. Hobbs, Jr., Acting United States Trustee for Region 5, has appointed seven members to the official committee of unsecured creditors in the Debtors' Chapter 11 cases. The Committee sought and obtained Court approval to employ Frederick L. Bunol, Esq., and Albert J. Derbes, IV, Esq., of Derbes Law Firm, LLC., as attorneys. Greenberg Traurig LLP also serves as counsel for the Committee while Protiviti Inc. serves as financial advisor. PLATINUM PROPERTIES: Has Green Light to Sell Wynne Farms Assets --------------------------------------------------------------- The Hon. Basil H. Lorch III of the U.S. Bankruptcy Court for the Southern District of Indiana on Feb. 3 approved a private sale by Platinum Properties, LLC, et al., of real estate within a project and transfer assets to Wynne Farms Developer, LLC, pursuant to the real estate purchase agreement between Wynne Farms, LLC and Wynne Farms Developer, LLC. The Debtor has an ownership interest in several special purposes entities, including Wynne Farms, LLC. The Debtor owns 80% of the membership interests in Wynne Farms, and Wynne Farms in turn owns, operates and manages 553 of the 727 acres within a mixed-use development located in Avon and Brownsburg, Indiana known as Wynne Farms. Wynne Farms' property or the project is composed of (a) six single family residential subdivisions totaling 624 lots; (b) one quads subdivision composed of 48 units; (c) three multi-family projects with up to approximately one thousand apartment/townhome units, and (d) 75 acres for commercial use. The project was originally financed by an $18,850,000 revolving senior loan provided by BMO Harris Bank. Each of the Debtor, Steven R. Edwards, Paul F. Rioux, Jr., and Kenneth R. Brasseur guaranteed the indebtedness, obligations, and liabilities owed by Wynne Farms to BMO. On Feb. 27, 2013, Olive Portfolio Alpha, LLC purchased the loan from BMO, and BMO assigned and transferred all of its rights and obligations related to the loan to Olive Portfolio. As of December 31, 2013, the total balance due to Olive Portfolio was $19,967,000. According to the Debtor, the sale transaction will materially benefit the bankruptcy estate. The sale will allow a settlement with Olive Portfolio to close, which eliminates any deficiency claim by Olive Portfolio, thereby releasing the Debtor from $19,967,000 in liability. The Debtor will also be relieved of any of its obligations under the Assigned Contracts as manager of Wynne Farms, including the Builder Deposit Liability, well as its obligations to fund the maintenance costs of Wynne Farms. Finally, the Debtor will be relieved of some payroll and other overhead expense. The Debtor, as the manager of Wynne Farms, is authorized to consummate the transactions contemplated in the purchase agreement and the sale motion. About Platinum Properties and PPV LLC Indianapolis, Indiana-based Platinum Properties, LLC, is a residential real estate developer. Platinum acquires land, designs the projects, obtains zoning and other approvals, and constructs roads, drainage, utilities, and other infrastructure of residential subdivisions. Platinum then sells the finished, platted lots. Platinum also has an ownership interest in several special purpose entities that in turn own, operate and manage individual projects. PPV LLC is a joint venture between Platinum and a non-debtor entity, Pittman Partners, Inc., each of whom hold an equity interest in PPV. PPV owned four projects directly and owns 100% of the membership interest of Sweet Charity Estates, LLC. Platinum Properties and PPV LLC filed for Chapter 11 protection (Bankr. S.D. Ind. Case Nos. 11-05140 and 11-05141) on April 25, 2011. Lawyers at Baker & Daniels LLP, in Indianapolis, Indiana, serve as the Debtors' bankruptcy counsel. Platinum Properties disclosed $14,624,722 in assets and $181,990,960 in liabilities as of the Chapter 11 filing. The U.S. Trustee has not yet appointed a creditors committee in the Debtor's case. The U.S. Trustee reserves the right to appoint such a committee should interest developed among the creditors. PLATINUM PROPERTIES: Settlement With Olive Portfolio Approved ------------------------------------------------------------- The Hon. Basil H. Lorch III of the U.S. Bankruptcy Court for the Southern District of Indiana entered an order: i) approving a settlement between Platinum Properties, LLC, et al., and Olive Portfolio Alpha, LLC; ii) authorizing the transfer and conveyance by Wynne Farms LLC of certain real estate to Olive Portfolio Alpha, pursuant to the terms and conditions of a Deed-in-Lieu Agreement; iii) authorizing the execution and delivery to Olive Portfolio by the Debtor, on its own behalf and as the manager of Wynne Farms, of the settlement agreement and any other documents contemplated by the settlement agreement or as may be necessary to effect the provisions thereof; iv) authorizing the execution and delivery to Olive Portfolio by the Debtor, as the manager of Wynne Farms, of the Deed-in-Lieu Agreement and any other documents contemplated by the Deed-in-Lieu Agreement or as may be necessary to effect the provisions thereof; v) authorizing the performance by the Debtor of all of its other obligations under the settlement agreement and the Deed-in-Lieu Agreement; and vi) authorizing the assumption and assignment by the Debtor to Olive Portfolio of the H&K Contract, an executory contract related to the real estate to be transferred to Olive Portfolio. Wynne Farms and Herman & Kittle Properties, Inc. (H&K) are parties to a contract for purchase of real estate, whereby Wynne Farms granted to H&K an option and first right of offer to purchase the remaining 14.75 acres within Parcel D of the Multi-Family Real Estate. About Platinum Properties and PPV LLC Indianapolis, Indiana-based Platinum Properties, LLC, is a residential real estate developer. Platinum acquires land, designs the projects, obtains zoning and other approvals, and constructs roads, drainage, utilities, and other infrastructure of residential subdivisions. Platinum then sells the finished, platted lots. Platinum also has an ownership interest in several special purpose entities that in turn own, operate and manage individual projects. PPV LLC is a joint venture between Platinum and a non-debtor entity, Pittman Partners, Inc., each of whom hold an equity interest in PPV. PPV owned four projects directly and owns 100% of the membership interest of Sweet Charity Estates, LLC. Platinum Properties and PPV LLC filed for Chapter 11 protection (Bankr. S.D. Ind. Case Nos. 11-05140 and 11-05141) on April 25, 2011. Lawyers at Baker & Daniels LLP, in Indianapolis, Indiana, serve as the Debtors' bankruptcy counsel. Platinum Properties disclosed $14,624,722 in assets and $181,990,960 in liabilities as of the Chapter 11 filing. The U.S. Trustee has not appointed a creditors committee in the Debtors' case. The U.S. Trustee reserves the right to appoint such a committee should interest developed among the creditors. PREMIER GOLF: Hearing on Case Dismissal Continued Until March 3 --------------------------------------------------------------- The Bankruptcy Court, according to a minute order for hearing held on Jan. 24, 2014, continued until March 3, 2014, at 3:30 p.m., the hearing to consider Premier Golf Properties LP's motion to dismiss the Chapter 11 case and approve a compromise. In seeking case dismissal, Premier Golf said the core dispute in the proceeding is that between Far East National Bank and the Debtor. That dispute was the trigger event for the commencement of the Chapter 11 case and is the subject of two California Superior Court actions and complex motions for valuation and relief from stay which remain unresolved. The Debtor added that if the dispute would prevail, it would be very expensive without a guaranty of favorable outcome. The outcome of the dispute is existential in the sense that if FENB prevail, Premier would lose the Cottonwood real property; i.e., the golf courses, and all creditors except FENB would receive nothing. In this relation FENB and the Debtor in November 2013 agreed to resolve all of the issues outstanding between them and entered into a settlement and release agreement, which provides for: 1. Premier will, on or before March 1, 2015, pay to FENB a lump sum of $8,500,000; 2. Pay, within 90 days of the execution of the agreement all delinquent real estate taxes. Although Premier has paid its current installments of real estate tax during the course of this proceeding, per-petition delinquencies together with interest thereon have accrued to approximately $1,700,000; 3. From and after payment of delinquent real estate tax, to keep all real estate tax obligations current until FENB is paid in full; 4. Premier will make interest only payments at a rate of 6 percent per annum payable monthly on the 15th day of each month commencing Jan. 10 2014; 5. Premier will execute and adeliver to FENB a new security agreement, in essence, a blanket lien on all of Premier's personal property, including greens fees. 6. Henry Gamboa, who guaranteed the original FENB loan, is required to execute and deliver to FENB a current financial statement in a format acceptable to FENB. As reported in the Troubled Company Reporter on Jan. 20, 2014, Byron B. Mauss, Esq., at Assayag Mauss, on behalf of FENB, asked the Bankruptcy Court to approve the Debtor's motion. About Premier Golf Properties, LP Premier Golf Properties, L.P. owns and operates the Cottonwood Golf Club in El Cajon, California. The Club has two 18-hole golf courses, a driving range, pro shop, and club house restaurant. The Club maintains the golf courses and operates a golf course business on the real property. Its income comes from green fees, range fees, annual membership sales, golf lessons, golf cart rentals, pro shop clothing and equipment sales, and food and beverage services. Premier Golf filed for Chapter 11 protection (Bankr. S.D. Calif. Case No. 11-07388) on May 2, 2011. Judge Peter W. Bowie presides over the case. Jack F. Fitzmaurice, Esq., at Fitzmaurice & Demergian, in Chula Vista, California, represented the Debtor. The Debtor estimated assets and liabilities at $10 million to $50 million. PRM FAMILY: DCT, El Paso & Cigna Object to Private Asset Sale ------------------------------------------------------------- DCT DESOTO LLC, The City of El Paso, and Connecticut General Life Insurance Company and related Cigna entities filed objections to PRM Family Holding Company, L.L.C., et al.'s motion for order authorizing (i) a private sale of substantially all of the Debtors' assets, and (ii) assumption and assignment of executor contracts and unexpired leases. As reported by the Troubled Company Reporter on Jan. 20, 2014, the Debtors intend to sell all of their assets to Cardenas Northgate (CNG). In papers filed in the Bankruptcy Court on Dec. 2, CNG seeks the right to credit bid the full amount of claims acquired from Bank of America, the Debtors' largest secured creditor. CNG is expected to pay approximately $53,600,000 (approximately $39,600,000 based on the prepetition Bank of America claim and $14,000,000 cash in new capital for the Debtors' estates) to close the transaction. Landlord and creditor DCT stated in its Jan. 21 court filing that any sale order should make clear that the security deposit held by DCT is not being transferred and will be unaffected by the sale motion. The City of El Paso, a unit of local government in the State of Texas which possesses the authority under the laws of the State to assess and collect ad valorem taxes on real and personal property, has filed its pre-petition secured proof of claim for ad valorem property taxes assessed against the Debtor's property for tax year 2013 in the amount of $140,224.32. The City's claim is for personal property taxes incurred by the Debtor in the ordinary course of business. These taxes are secured by first priority liens. The City asserts in its Jan. 21 court filing that its ad valorem tax lien for tax year 2013 pertaining to the personal property located at 703 N Zaragoza Rd and the personal property located at 10501 W Gateway Blvd will attach to the sales proceeds and that the Debtor should pay all ad valorem tax debt owed incident to the Subject Properties immediately upon closing and prior to any disbursement of proceeds to any other person or entity. A lien to secure the payment of the year 2014 post-petition tax debt was created on Jan. 1, 2014. Pursuant to the sale motion, the City's tax lien is to attach to the sale proceeds. The City asserts that a sale free and clear of the year 2014 post-petition ad valorem tax lien is inappropriate. The purchaser will presumably acquire and possess the Subject Properties prior to the close of year 2014. To secure the payment of the year 2014 tax, the City must retain its year 2014 tax lien against the Subject Properties so as to provide the City with the requisite adequate protection. The estate will incur a significant cost savings in providing this relief. The City asserts that the ad valorem tax lien for year 2014 should be retained against the Subject Properties until the 2014 ad valorem taxes are paid in full. In its Jan. 21 court filing, Cigna claimed that the Debtor failed to pay approximately $540,000 due to Cigna under the Cigna agreements for services provided within the 180-day period prior to the Petition Date. The Debtor failed to remit to Cigna the employee payroll withholdings corresponding to the unpaid premiums. Although the Debtors continue to retain the Withholdings, they are not property of the estate. The Debtor's motion states that the sale will generate funds to pay certain administrative priority claims "and priority tax claims." According to Cigna, the motion does not propose a distribution to creditors like Cigna whose claims have a higher priority than priority tax claims. The sale motion, says Cigna, seeks approval of the sale of all of Debtors' assets, including "all cash," which may include the Withholdings. Thus, the relief sought in the motion may evaporate any ability to properly apply the Withholdings. The sale motion seeks the Bankruptcy Court's authority to assume and assign "certain executor contracts and unexpired leases designated by CNG," which Cigna objects because, inter alia, (i) the Debtors have not identified any of the Cigna agreements as contracts to be assumed and assigned; (ii) the Debtors have proposed no cure amounts for the Cigna agreements; (iii) the Debtors have provided no adequate assurance of future performance; and (iv) any assumption and assignment of any of the Cigna agreements must be consistent with their respective and collective terms and functions. Cigna states in its court filing that no assumption of any Cigna Agreement should be considered until the Debtors (a) fully and accurately identify the specific Cigna agreement(s) that they propose to assume and assign; (b) fully and accurately identify all parties to any Cigna agreement to be assumed and assigned; and (c) confirm that the assumption and assignment of any Cigna agreement will include any and all amendments, riders, schedules, certificates, renewal caveats, addendums, letters of intent and banking agreements related thereto. The City is represented by: Sacks Tierney P.A. Aaron G. York, Esq. 4250 North Drinkwater Boulevard, Fourth Floor Scottsdale, AZ 85251 Tel: (480) 425-2625 DID Fax: (480) 425-4925 DID DCT is represented by: Peter J. Rathwell, Esq. Snell & Wilmer L.L.P. One Arizona Center 400 E. Van Buren Street Phoenix, AZ 85004-2202 Tel: (602) 382-6203 Fax: (602) 382-6070 E-mail: prathwell@swlaw.com and Carl N. Kunz, III, Esq. Morris James LLP 500 Delaware Avenue, Suite 1500 Wilmington, DE 19801-1494 Tel: (302) 888-6811 Fax: (302) 571-1750 E-mail: ckunz@morrisjames.com Cigna is represented by: Steven D. Jerome, Esq. Andrew V. Hardenbrook, Esq. Snell & Wilmer L.L.P. One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Tel: (602) 382-6000 E-mail: sjerome@swlaw.com ahardenbrook@swlaw.com and Jeffrey C. Wisler, Esq. Connolly Gallagher LLP 1000 N. West Street, Suite 1400 Wilmington, DE 19801 Tel: (302) 757-7300 Fax: (302) 658-0380 E-mail: jwisler@connollygallagher.com About PRM Family PRM Family Holding Company, L.L.C., operator of 11 Pro's Ranch Markets grocery stores in Arizona and Texas and New Mexico, sought Chapter 11 protection (Bankr. D. Ariz. Case No. 13-09026) on May 28, 2013. As of the bankruptcy filing, PRM Family Holding operates seven grocery stores in Phoenix, two in El Paso, Texas, and two in New Mexico. Its corporate office is in California and it has warehouses and distribution facilities in California and Phoenix. Its Pro's Ranch Markets feature produce, baked goods, and other general grocery items with a Hispanic flair and theme. The company has more than 2,200 employees. PRM Family blamed its woes on, among other things, the adverse effect of the perception in Arizona towards immigrants including the passage of SB 1070 and an immigration audit to which no other competitor was subjected. It also blamed a decline in the U.S. economy and an increase competition from other grocery store chains. Bank of America, the secured lender, declared a default in February 2013. PRM Family estimated liabilities in excess of $10 million. Judge Sarah Sharer Curley oversees the case. Michael McGrath, Esq., Scott H. Gan, Esq., Frederick J. Petersen, Esq., Kasey C. Nye, Esq., David J. Hindman, Esq., and Isaac D. Rothschild, Esq., at Mesch, Clark & Rothschild, P.C., serve as the Debtor's counsel. HG Capital Partners' Jim Ameduri serves as financial advisor. PRM Family submitted to the Bankruptcy Court on Sept. 23, 2013, a Joint Disclosure Statement in support of Plan of Reorganization. The Disclosure Statement says the Debtor will continue the operation of a long-standing business, which currently employs approximately 2,300 people. Continuing the business will allow the Debtors to repay creditors and maintain trading relationships with long-term trade vendors. Attorneys at Freeborn & Peters LLP, in Chicago, Ill., represent the Official Committee of Unsecured Creditors as lead counsel. Attorneys at Schian Walker, P.L.C., in Phoenix, Arizona, represent the Committee as local counsel. O'Keefe & Associates Consulting, LLC, serves as financial advisor to the Committee. Robert J. Miller, Esq., Bryce A. Suzuki, Esq., and Justin A. Sabin, Esq., at Bryan Cave LLP, in Phoenix, serve as counsel for Bank of America, N.A., as administrative agent and a lender under an amended and restated credit agreement dated July 1, 2011. Q MERGER: Moody's Assigns 'B2' CFR & Rates New $875MM Loan 'B1' --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Q Merger Sub Inc.'s (acquirer of CEC Entertainment) proposed $150 million guaranteed senior secured revolving credit facility and $725 million guaranteed senior secured term loan B. In addition, Moody's also assigned Q Merger Sub a B2 Corporate Family Rating (CFR) and B2-PD Probability of Default Rating (PDR). The outlook is stable. Ratings Rationale Proceeds from the proposed bank facilities along with approximately $350 million in common equity contributed by an affiliate of Apollo Investments and $305 million from a senior unsecured bridge loan (unrated) will be used to fund the acquisition of CEC Entertainment Inc. (CEC). Upon consummation of the acquisition, Q Merger Sub Inc. will be merged with and into CEC, with CEC being the surviving entity and assuming the obligations of Q Merger Sub Inc. Upon the successful consummation of the transaction, Moody's will change the name of the rated entity to CEC Entertainment Inc. from Q Merger Sub Inc. Moody's ratings are subject to review of final documentation. The B2 Corporate Family Rating reflects CEC's high leverage and modest coverage, driven in part by weak same store sales performance and our concern that soft consumer spending and competition will continue to pressure earnings and debt protection metrics. The ratings also incorporate the high seasonality of CEC's earnings in the first quarter and store concentration in California and Texas. The ratings are supported by our expectation that CEC's marketing initiatives with greater media focus towards children, birthdays and overall value should help stabilize and grow same store sales, leverage its store base and drive higher earnings. The ratings also factor in CEC's meaningful scale, reasonable level of brand awareness, and good liquidity. Ratings assigned are: Corporate Family Rating of B2 Probability of Default Ratings of B2-PD $150 million guaranteed senior secured revolver due 2019, rated B1 (32%, LGD3) $725 million guaranteed senior secured term loan B due 2021, rated B1 (32%, LGD3) The stable outlook reflects Moody's view that CEC's revised marketing initiatives will drive improvement in same store sales, earnings and cash flows that will more than support significantly higher interest expense. Moody's expects the company to maintain good liquidity while reducing debt well above required amortization as it focuses on a less capital intensive franchise growth model beginning in 2015. Given CEC's high leverage and modest coverage, a higher rating over the near term is unlikely. However, factors that could result in an upgrade over the intermediate term include a sustained improvement in earnings and debt protection metrics driven by positive operating trends and lower debt levels. Specifically, an upgrade would require debt to EBITDA of under 5.0 times, EBITA coverage of interest of over 2.0 times, and retained cash flow to debt of well over 10% on a sustained basis. A higher rating would also require maintaining good liquidity. Ratings could be downgraded in the event operating trends (same store sales) remained negative causing earnings and cash flows to fall short of our current expectations. Specifically, a downgrade could occur in the event debt to EBITDA failed to migrate towards 6.0 times or EBITA to interest didn't strengthen to around 1.5 times on a sustained basis within the next 12 months. A material deterioration in liquidity for any reason could also result in negative ratings pressure. CEC Entertainment, Inc., headquartered in Irving, Texas, owns, operates, and franchises a total of 577 Chuck E. Cheese stores that provide family-oriented entertainment. Annual revenues are approximately $822 million. The principal methodology used in this rating was the Global Restaurant Methodology published in June 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. QUALITY DISTRIBUTION: Eagle Asset Stake at 5% as of Dec. 31 ----------------------------------------------------------- Eagle Asset Management, Inc., disclosed in a Schedule 13G filed with the U.S. Securities and Exchange Commission that as of Dec. 31, 2013, it beneficially owned 1,359,452 shares of common stock of Quality Distribution, Inc., representing 5.05 percent of the shares outstanding. A copy of the regulatory filing is available for free at http://is.gd/FnkYal About Quality Distribution Quality Distribution, LLC, and its parent holding company, Quality Distribution, Inc., are headquartered in Tampa, Florida. The company is a transporter of bulk liquid and dry bulk chemicals. The company's 2010 revenues are approximately $686 million. Apollo Management, L.P., owns roughly 30 percent of the common stock of Quality Distribution, Inc. Quality Distribution reported net income of $50.07 million for the year ended Dec. 31, 2012, as compared with net income of $23.43 million in 2011. The Company's balance sheet at Sept. 30, 2013, showed $465.05 million in total assets, $503.19 million in total liabilities and a $38.13 million total shareholders' deficit. Bankruptcy Warning According to the Company's annual report for the period ended Dec. 31, 2012, the Company had consolidated indebtedness and capital lease obligations, including current maturities, of $418.8 million as of Dec. 31, 2012. The Company must make regular payments under the ABL Facility and its capital leases and semi- annual interest payments under its 2018 Notes. The Company's 2018 Notes issued in the quarter ended Dec. 31, 2010, carry high fixed rates of interest. In addition, interest on amounts borrowed under the Company's ABL Facility is variable and will increase as market rates of interest increase. The Company does not presently hedge against the risk of rising interest rates. The Company's higher interest expense may reduce its future profitability. The Company's future higher interest expense and future redemption obligations could have other important consequences with respect to the Company's ability to manage its business successfully, including the following: * it may make it more difficult for the Company to satisfy its obligations for its indebtedness, and any failure to comply with these obligations could result in an event of default; * it will reduce the availability of the Company's cash flow to fund working capital, capital expenditures and other business activities; * it increases the Company's vulnerability to adverse economic and industry conditions; * it limits the Company's flexibility in planning for, or reacting to, changes in the Company's business and the industry in which the Company operates; * it may make the Company more vulnerable to further downturns in its business or the economy; and * it limits the Company's ability to exploit business opportunities. The ABL Facility matures August 2016. However, the maturity date of the ABL Facility may be accelerated if the Company defaults on its obligations. "If the maturity of the ABL Facility and/or such other debt is accelerated, we may not have sufficient cash on hand to repay the ABL Facility and/or such other debt or be able to refinance the ABL Facility and/or such other debt on acceptable terms, or at all. The failure to repay or refinance the ABL Facility and/or such other debt at maturity would have a material adverse effect on our business and financial condition, would cause substantial liquidity problems and may result in the bankruptcy of us and/or our subsidiaries. Any actual or potential bankruptcy or liquidity crisis may materially harm our relationships with our customers, suppliers and independent affiliates." * * * As reported in the TCR on June 28, 2013, Moody's Investors Service upgraded Quality Distribution, LLC's Corporate Family Rating to B2 from B3 and Probability of Default Rating to B2-PD from B3-PD. The upgrade of Quality's CFR to B2 was largely driven by the expectation that credit metrics will improve over the next twelve to eighteen months, through a combination of EBITDA growth and debt paydowns, to levels consistent with the B2 rating level. The company is in the process of integrating the bolt-on acquisitions made in its Energy Logistics business sector since 2011. R.E. LOANS: Bankr. Court, 5th Cir. Hand Loss to Wells Fargo ----------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas and the U.S. Court of Appeals for the Fifth Circuit handed out separate decisions on Feb. 5 in a dispute involving Wells Fargo Capital Finance LLC and certain former investors in R.E. Loans, LLC R.E. Loans is a hard-money lender that raised funds to make real estate secured loans to real estate developers. Suffering from a liquidity shortage, REL entered into a senior secured credit facility with Wells Fargo in July 2007. Later, in November 2007, REL and its member-investors entered into a transaction wherein the member-investors exchanged their equity interest in REL for junior secured notes issued by REL. As the real estate market worsened, so did REL's financial condition. Ultimately, REL filed for bankruptcy in the U.S. Bankruptcy Court for the Northern District of Texas. Under its Chapter 11 Plan of Reorganization, the REL estate released all claims against Wells Fargo that were property of the REL estate on the effective date of the plan. Gordon Noble, Arlene Dea Deeley, Fredric C. Mendes, Nancy Rapp, Phillip Cantor, John Emanuele, Irene Lee, and David Nolan filed a consolidated putative class action complaint in California state court against Wells Fargo, alleging they were induced into participating in an exchange offering through misrepresentations the managers of REL made to them, and that Wells Fargo provided assistance in the managers' misrepresentations. Wells Fargo, in turn, commenced an adversary proceeding in the bankruptcy court, and moved to enjoin prosecution of the Consolidated Complaint on the ground that the asserted causes of action were property of the REL estate and that the REL estate had released all claims against Wells Fargo. Wells Fargo argued that the Consolidated Complaint sought recovery for harm to REL and that the Class Plaintiffs' injuries were derivative of, and secondary to, the harm REL allegedly suffered. The District Court issued a written opinion in which it concluded that the claims asserted by the REL Class Plaintiffs in the Amended and Consolidated Complaint were property of the REL bankruptcy estate in part, and were not property of the REL bankruptcy estate in part. Wells Fargo appealed. The REL Class Plaintiffs filed a motion to dismiss the appeal due to the agreed filing of a new complaint in the California Class Action -- the Third Amended Complaint -- which, according the REL Class Plaintiffs, moots the appeal, since the Amended and Consolidated Complaint is no longer the live pleading in the California Class Action. The Fifth Circuit agreed with the Class Plaintiffs' and dismissed the appeal, as moot. A copy of the Fifth Circuit's decision is available at http://is.gd/OyOa8zfrom Leagle.com. Also on Wednesday, the Bankruptcy Court held that the Third Amended Complaint does not state a claim against Wells Fargo that is property of the REL bankruptcy estate. The three claims pled in the Third Amended Complaint state claims that belong to the REL Class Plaintiffs. However, because it is theoretically possible that some component of the damages proven at trial may be derivative of damage to REL based upon its managers' post-Exchange Offer mismanagement, the Bankruptcy Court will issue an injunction preventing the REL Class Plaintiffs from collecting that portion of the damages proven at trial, and leave it to the court presiding over the California Class Action to correctly apportion those damages to the extent that becomes necessary at trial. A copy of the Bankruptcy Court's Memorandum Opinion, penned by Dallas Bankruptcy Judge Barbara J. Houser, is available at http://is.gd/zdhaWMfrom Leagle.com. About R.E. Loans R.E. Loans, LLC, was, for many years, in the business of providing financing to home builders and developers of real property. R.E. Future LLC and Capital Salvage own the real property obtained following foreclosure proceedings initiated by R.E. Loans against its borrowers. R.E. Loans is the sole shareholder of Capital Salvage and the sole member of R.E. Future. B-4 Partners LLC is the sole member of R.E. Loans. As a result of the multiple defaults by R.E. Loans' borrowers, R.E. Loans has transitioned from being a lender to becoming a property management company. Lafayette, California-based R.E. Loans, R.E. Future and Capital Salvage filed for Chapter 11 bankruptcy (Bankr. N.D. Tex. Case Nos. 11-35865, 11-35868 and 11-35869) on Sept. 13, 2011. Judge Barbara J. Houser presides over the case. Stutman, Treister & Glatt Professional Corporation, in Los Angeles, and Gardere, Wynne Sewell LLP, in Dallas, represent the Debtors as counsel. James A. Weissenborn at Mackinac serves as R.E. Loans' chief restructuring officer. The Debtors tapped Hines Smith Carder as their litigation and outside general counsel. The Debtors tapped Alixpartners, LLP as noticing agent, and Latham & Watkins LLP as special counsel in real estate matters. R.E. Loans disclosed $713.6 million in assets and $886.0 million in liabilities as of the Chapter 11 filing. Akin Gump Strauss Hauer & Feld LLP, in Dallas, represents the Official Committee of Note Holders as counsel. The Bankruptcy Court confirmed R.E. Loans, LLC, et al.'s Modified Fourth Amended Plan of Reorganization dated June 1, 2012, as supplemented on June 8, 2012. R.E. Loans, LLC, et al., notified the Court that the Effective Date of the Modified Fourth Amended Plan occurred June 29, 2012. A full-text copy of the Modified Fourth Amended Joint Plan is available for free at: http://bankrupt.com/misc/RE_LOANS_plan_modifie4amended.pdf RAPID AMERICAN: W.Va. Court Remands "Davis" Suit to State Court --------------------------------------------------------------- Judge John T. Copenhaver, Jr., of the U.S. District Court for the Southern District of West Virginia, in Charleston, on Jan. 28, 2014, granted a motion to remand filed by a plaintiff in an asbestos-related personal injury action after the plaintiff dismissed its suit against the defendant who removed the case to the federal court. Accordingly, Judge Copenhaver remanded the case to the Circuit Court of Kanawha County. The case is JOHN EDWARD DAVIS and GLORIA A. DAVIS, Plaintiffs, v. 3M COMPANY and A. W. CHESTERTON COMPANY and AJAX MAGNETHERMIC CORPORATION and AURORA PUMP COMPANY and BUFFALO PUMPS, INC. and CAMERON INTERNATIONAL CORPORATION, formerly known as Cooper Cameron Corporation, and CERTAINTEED CORPORATION and CLEAVER- BROOKS COMPANY, INC. and COLUMBUS McKINNON CORPORATION and CRANE COMPANY and DRAVO CORPORATION and FAIRMONT SUPPLY COMPANY and F.B. WRIGHT COMPANY and FLOWSERVE CORPORATION, formerly known as Durametallic Corporation, and BW IP, INC., other, Burns International Services, formerly known as Byron Jackson Pumps, and FLOWSERVE US, INC., formerly known as Durco International, Inc., and FMC CORPORATION and FOSTER WHEELER ENERGY CORPORATION and GARLOCK, INC. and GENERAL ELECTRIC COMPANY and GEO. V. HAMILTON, INC. and GOULDS PUMPS, INC. and HONEYWELL INTERNATIONAL, formerly known as Allied Signal, formerly known as Allied Corporation, other Bendix Corporation, and HOWDEN-BUFFALO, INC. and I. U. NORTH AMERICA, INC., other, Garp Company, formerly known as The Gage Company, and IMO INDUSTRIES, INC., formerly known as IMO DeLaval, Inc., formerly known as DeLaval Turbine, Inc., DeValco Corporation, and INDUSTRIAL HOLDINGS CORPORATION, formerly known as Carborundum Company, and INGERSOLL-RAND COMPANY and ITT CORPORATION, doing business as Bell & Gossett Pumps, doing business as Kennedy Valves, and J.H. FRANCE REFRACTORIES and LOCKHEED MARTIN CORPORATION, formerly known as Martin Marietta Corporation, and McJUNKIN CORPORATION, now known as McJunkin Redman Corporation, and METROPOLITAN LIFE INSURANCE COMPANY and NAGLE PUMPS, INC. and NITRO INDUSTRIAL COVERINGS, INC. and OHIO VALLEY INSULATING COMPANY, INC. and OWENS-ILLINOIS, INC. and its predecessor in interest, other, Owens-Illinois Glass Co., and PNEUMO ABEX CORPORATION, other, Abex Corporation, and PREMIER REFRACTORIES, INC., formerly known as Adience, Inc., other, Adience Company, LP, other, BMI, Inc., and RAPID AMERICAN CORPORATION, in its own right and as successor in interest to and liable for, other, Philip Carey Corporation, and RILEY POWER INC., formerly known as Riley Stoker Corporation, and ROCKWELL AUTOMATION, INC. and SQUARE D COMPANY and STERLING FLUID SYSTEMS LLC and SUNBEAM PRODUCTS, INC., other, Sunbeam Corporation, and SURFACE COMBUSTION, INC. and SWINDELL DRESSLER INTERNATIONAL COMPANY and TACO, INC. and TASCO INSULATIONS, INC. and UB WEST VIRGINIA, INC., formerly known as Union Boiler Company, and VIACOM, INC., AS SUCCESSOR BY MERGER TO CBS CORPORATION, formerly known as Westinghouse Electric Corporation, and VIKING PUMP, INC. and VIMASCO CORPORATION, Defendants, CIVIL ACTION NO. 2:13-32308 (S.D.W.Va.). A full-text copy of Judge Copenhaver's memorandum opinion and order is available at http://is.gd/KLpcnZfrom Leagle.com. About Rapid-American Corp. Rapid-American Corp. filed for Chapter 11 bankruptcy protection in Manhattan (Bankr. S.D.N.Y. Case No. 13-10687) on March 8, 2013, to deal with debt related to asbestos personal-injury claims. New York-based Rapid-American was formerly a holding company with subsidiaries primarily engaged in retail sales and consumer products and was never engaged in an asbestos business of any kind. Through a series of merger transactions going back more than 45 years, Rapid has nevertheless incurred successor liability for personal injury claims arising from plaintiffs' exposure to asbestos-containing products sold by The Philip Carey Manufacturing Company -- Old Carey -- as that entity existed prior to June 1, 1967. Attorneys at Reed Smith LLP serve as counsel to the Debtor. The Debtor disclosed assets in excess of $4,446,261 and unknown liabilities. The Official Committee of Unsecured Creditors retained Caplin & Drysdale, Chartered, as counsel. Young Conaway Stargatt & Taylor, LLP represents Lawrence Fitzpatrick, the Future Claimants' Representative, as counsel. REEVES DEVELOPMENT: Iberiabank Objects to Disclosure Statement -------------------------------------------------------------- Secured creditor Iberiabank filed with the U.S. Bankruptcy Court for the Western District of Louisiana an objection to Reeves Development Company, LLC's amended version of the Disclosure Statement for its proposed Plan of Reorganization as of Dec. 31, 2013. As reported by the Troubled Company Reporter on Jan. 10, 2014, the Amended Disclosure Statement reveals that as to the Class 15 Unsecured Claim of Branch Banking and Trust, to the extent that BB&T is not fully compensated from the assets of Houma Dollar Parnter, LLC, the excess amount will be included in the unsecured claims of the Debtor. The assets of Houma Dollar Partners are expected to generate net sales proceeds sufficient to satisfy the claims of BB&T. This claim is currently estimated to total $6,000,000. The Claimant has agreed to a settlement of claims against the Debtor in exchange for certain concessions from Debtors affiliated Company Houma Dollar Partners, LLC. In exchange for these concessions, the Debtor has agreed to forgo any payments due from Houma Dollar Partners, LLC. A full-text copy of the Dec. 31 version of the Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/REEVESDEV_AmdDSDec31.PDF Iberiabank said in its Jan. 21, 2014 court filing that the major change concerns the Debtor proposing to enter into a Letter of Intent to execute a lease, rather than a sale, and as in the past the transaction involves an insider (an LLC that was not in existence at the time of the entering into the Letter of Intent) and is based upon self serving disclosures as to expenses, with no disclosure as to income projections. According to Iberiabank, all expense and income projections are by the manager of the Debtor. No projections by accountants, or third party experts. The Amended Plan resolves the issue as to the absolute priority rule, wherein a junior creditor was to be paid prior to the senior creditor. Iberiabank objects and does not consent to its collateral or cash collateral being used to pay any other creditor. Under Classification of Claims (Class 1), is listed "Iberia Bank Secured Claim."; however the treatment of the bank's claim is treated jointly by the Debtor and RCP and is based upon collateral owned by not only the Debtor, but also collateral owned by RCP. Iberia also claims that, among other things: a. there is no disclosure as to how RCP proposes to pay the secured and unsecured claims of Iberiabank from assets of RCP; b. the Debtor's schedules reflect Iberiabank as being undersecured; and Iberiabank asserts that the Debtors have over-valued its collateral as to the RDC case; c. the Disclosure Statement does not address the unsecured claim of Iberiabank; d. the Debtor's Plan is based on the development of an industrial park; that is a new endeavor of the Debtor, and the Debtor's background does not reflect any expertise in that development; and e. the effective date is confusing at best. Assuming that a disclosure statement is approved, the effective date of the plan should be specific. Iberiabank is represented by: Ronald J. Bertrand, Esq. Attorney at Law 714 Kirby Street Lake Charles, Louisiana 70601 Tel: (337) 436-2541 About Reeves Development Reeves Development Company, LLC, a commercial and residential real estate developer, filed a Chapter 11 petition (Bankr. W.D. La. Case No. 12-21008) in Lake Charles, Louisiana, on Oct. 30, 2012. The closely held developer was founded in 1998 by Charles Reeves Jr., its sole owner. Reeves Development has about 80 employees and generates about $40 million in annual revenue, according to its Web site. Bankruptcy Judge Robert Summerhays oversees the case. Arthur A. Vingiello, Esq., at Steffes, Vingiello & McKenzie, LLC, in Baton Rogue, Louisiana, represents the Debtor as counsel. Reeves Development scheduled assets of $15,454,626 and liabilities of $20,156,597 as of the Petition Date. Affiliate Reeves Commercial Properties, LLC (Bankr. W.D. La. Case No. 12-21009) also sought court protection. The Debtor's Plan dated Feb. 27, 2013, provides that on the effective date, all allowed accrued interest calculated at the non-default contractual rate of 4% per annum plus any amounts allowed by the Court will be capitalized and added to the outstanding principal balance due under the note issued by Iberia Bank. The maturity of the Iberia Note will be extended to 60 months from the Effective Date. The Debtor will then repay the New Principal Balance with interest accruing at the non-default contractual rate of 4% per annum from the Effective Date. RESIDENTIAL CAPITAL: Abed-Stephens' $1.75-Mil. Claim Expunged ------------------------------------------------------------- Bankruptcy Judge Martin Glenn sustained the objection of Residential Capital, LLC, to Claim No. 5420 of Vachagan Abed- Stephen and Susie Abed-Stephen. The Debtors seek to expunge Claim Number 5420 because the Claim allegedly fails to state a basis for liability against the Debtors and lacks sufficient documentation. The Claimants filed their proof of claim on Nov. 16, 2012. The proof of claim is unclear as to precisely what liability the Claimants are asserting. The amount of the Claim appears to be $1.75 million, and the Claimants appear to assert that $1,223,221.89 of the Claim is secured, although the secured claim figure is written as "$1,2223,221.89" and there is no listing of the unsecured portion of the Claim. Further, the proof of claim does not provide a basis for the Claim, nor does it provide a basis for the security. To date, more than 7,300 proofs of claim have been filed in the Debtors' cases, as reflected on the Debtors' claims registers. On August 29, 2012, the Court entered an order establishing procedures and a deadline of Nov. 9, 2012, for filing proofs of claim. The Court later extended the bar date to November 16, 2012. A copy of the Court's Feb. 5, 2014 Memorandum Opinion and Order is available at http://is.gd/9r2fpBfrom 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. SARKIS INVESTMENTS: Plan Filing Deadline Extended to Feb. 27 ------------------------------------------------------------ The Hon. Robert Kwan of the U.S. Bankruptcy Court for the Central District of California has extended, at the behest of Sarkis Investments Company, LLC, the Debtor's exclusive period to file its plan of reorganization up to and including Feb. 27, 2014. As reported by the Troubled Company Reporter on Nov. 21, 2013, the Debtor stated that the counsel for the Debtor and the Lender have begun the first of many settlement meetings regarding a consensual exit strategy for the Debtor, and is very optimistic that the parties will continue to work together towards this goal. "As both the Debtor and the Lender believe it is more appropriate to work together towards an exit strategy that is currently more sale-oriented, the Debtor submits that it is appropriate to extend the exclusivity period to foster continued settlement discussions in this regard." Sarkis Investments Company, LLC, filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 13-29180) on July 29, 2013. Judge Robert Kwan presides over the case. Pamela Muir signed the petition as manager. The Debtor estimated assets and debts of at least $10 million. Ashley M. McDow, Esq., at Baker & Hostetler, LLP, serves as the Debtor's counsel. Patrick Galentine was appointed by a state court as receiver for the Debtor's assets. The receiver may be reached at: The receiver is represented by Reed Waddell, Esq., at Frandzel Robins Bloom & Csato, LC. MSCI 2007-IQ13 ONTARIO RETAIL LIMITED PARTNERSHIP, which initiated the receivership proceedings against Sarkis in state court, is represented by Ron Oliner, Esq., at Duane Morris LLP. SENATE INSURANCE AGENCY: Voluntary Chapter 11 Case Summary ---------------------------------------------------------- Debtor: Senate Insurance Agency, Inc. 352 Main Street Laurel, MD 20707 Case No.: 14-11743 Chapter 11 Petition Date: February 5, 2014 Court: United States Bankruptcy Court District of Maryland (Greenbelt) Judge: Hon. Paul Mannes Debtor's Counsel: Lawrence P Block, Esq. STINSON LEONARD STREET LLP 1775 Pennsylvania Ave., N.W., Suite 800 Washington, DC 20006 Tel: (202) 785-9100 Email: lawrence.block@stinsonleonard.com Estimated Assets: $50,000 to $100,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Janet M. Nesse, responsible officer. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. SHREE MAHALAXMI: Trust Not Entitled to Pre-Bankr. Default Interest ------------------------------------------------------------------ Bankruptcy Judge Craig A. Gargotta in San Antonio, Texas, granted, in part, Shree Mahalaxmi, Inc.'s Amended Objection to Claim No. 4 of U.S. Bank National Association, as Trustee, Successor to State Street Bank and Trust Company, as Trustee for the Registered Holders of Merrill Lynch Mortgage Investors, Inc., Mortgage Pass- Through Certificates, Series 1996-C3, by and through CW Capital Asset Management LLC, Solely In Its Capacity as Special Servicer. The Court is of the opinion that: (1) allowance of pre-petition interest under Sec. 502 of the Bankruptcy Code relies on the underlying state law of Texas governing the Loan Documents; (2) the Debtor committed an Event of Default under the Loan Documents; (3) the Loan Documents allow imposition of default interest only if the Trust exercises its option to accelerate the debt upon an Event of Default; and (4) the Trust did not exercise its option to accelerate the debt before the Petition Date. As such, the Court finds that the Trust's claim for default interest did not accrue pre-petition and it is therefore not entitled to include pre- petition default interest in its Proof of Claim. On August 23, 1996, the Debtor received a loan from Merrill Lynch Credit Corporation in the amount of $1,650,000. In originating the loan, the Debtor executed these documents evidencing the debt to Merrill Lynch in repayment of the loan: (1) a Promissory Note dated August 23, 1996, in the amount of $1,650,000 made for the benefit of Merrill Lynch; (2) a Deed of Trust, Security Agreement, Assignment of Rents and Fixture Filing dated August 23, 1996, for the benefit of Merrill Lynch and securing the Debtor's obligations under the Note by the Collateral; and (3) an Absolute Assignment of Leases and Rents and Security Deposits dated August 23, 1996, in favor of Merrill Lynch. After the origination of the loan with Merrill Lynch, the Debtor further encumbered the Collateral by placing two junior liens on the Collateral both in favor of National Republic Bank of Chicago. On July 23, 2003, the Debtor placed the first junior lien on the Collateral in favor of NRBC in order to secure a $1,850,000 loan made to ADR Management which was recorded in the Bexar County records on July 24, 2003. ADR Management is a separate corporation that owns and operates a Red Roof Inn in New Braunfels, Texas but shares some common ownership with the Debtor. Through this common ownership, the Debtor signed the $1,850,000 note in favor NRBC and placed the First Junior Lien on the Collateral for the benefit of ADR Management. On Oct. 15, 2003, the Debtor placed the second junior lien on the Collateral in favor of NRBC to secure a $325,000 loan made to ADR Management which was recorded in the Bexar County records on June 24, 2004. The central disagreement between the Parties is whether the terms of the Loan Documents allow the Trust to impose retroactive pre- petition default interest for the first time after the Petition Date. The Debtor argues that inclusion of pre-petition default interest in the Trust's Proof of Claim is improper because: (1) the Loan Documents require the Trust to provide notice regarding any Event of Default to the Debtor before imposing default interest; (2) the Note itself does not provide for automatic accrual of default interest upon occurrence of an Event of Default; (3) the Loan Documents provide grace periods and an opportunity to cure this type of default event; and (4) to the extent the Trust may automatically impose default interest, the Trust's claim for default interest is barred by the applicable statute of limitations. The Trust argues that the Loan Documents, read as a whole, entitle it to impose default interest from the date of the Event of Default and do not require the Trust to provide any notice to the Debtor. Further, the Trust argues that only discovery of the Event of Default can trigger the statute of limitations or, in the alternative, the Debtor's subsequent payments on the debt tolled any statute of limitations. Additionally, the Trust asserts that the Loan Documents do not provide any grace periods for the type of default committed by the Debtor. A copy of the Court's Feb. 5, 2014 Order is available at http://is.gd/iQv55jfrom Leagle.com. Shree Mahalaxmi, Inc. d/b/a Super 8, is a Texas corporation that owns and operates hotel property located at 3617 N. Pan Am Expressway, San Antonio, Bexar County, Texas 78219. Shree Mahalaxmi filed for Chapter 11 bankruptcy (Bankr. W.D. Tex. Case No. 13-50040) on Jan. 7, 2013, listing under $1 million in both assets and debts. A copy of the petition is available at no extra charge at http://bankrupt.com/misc/txwb13-50040p.pdfand a copy of the lsit of creditors is available at no extra charge at http://bankrupt.com/misc/txwb13-50040c.pdf Rakhee V. Patel, Esq., -- rpatel@pronskepatel.com -- at Pronske & Patel, P.C., serves as the Debtor's counsel. SONY CORP: Slashes Forecast to $1.1 Billion Annual Loss ------------------------------------------------------- Kana Inagaki, writing for The Wall Street Journal, reported that Sony Corp. moved to deal with its two most troubled electronics units, saying it will eliminate 5,000 jobs in the company's television and personal-computer businesses while splitting off its TV division into a separate subsidiary. Laura Board, writing for The Deal, related that the company has been struggling to improve returns at its electronics business for more than two years. Last year, it became the target of an activist campaign by Dan Loeb's ThirdPoint LLC, which wanted Sony to sell off part of its media business. Sony, according to The Deal, said it will sell its Vaio-branded PC business to investment firm Japan Industrial Partners Inc. The companies plan to sign a firm deal by the end of March and complete the sale by July 1. The standalone company will initially concentrate on selling consumer and corporate PCs in Japan in a bid to stabilize profit, The Deal said, citing Sony. Sony will have an initial 5% stake in the business. According to the Journal, in its second downward revision in just three months, the Japanese technology company said on Feb. 6 that it now expects to incur a loss of JPY110 billion ($1.1 billion) for the full year through March -- a reversal from a previously forecast profit of JPY30 billion. It also said it will sell its PC business, confirming earlier reports. With the television and personal-computer steps, Chief Executive Kazuo Hirai said the bulk of Sony's restructuring is now complete, leaving the company free to concentrate on expanding promising businesses, the Journal related. Yet investors and analysts warned it is by no means clear Sony will succeed in its turnaround, while Mr. Hirai himself said more products could end up on the block. "I hope this puts a period to structural reforms of this scale," said Mr. Hirai, during a rare appearance at an earnings news conference on Feb. 6, the Journal cited. "But with competition increasing, we need to constantly review and reshuffle our business portfolios." Sony blamed its projected full-year loss on $690 million in charges for restructuring its PC and TV businesses, steps that include 1,500 job cuts in Japan and 3,500 overseas by March 2015, the Journal pointed out. Sony employed roughly 146,000 people world-wide in March 2013, at the end of its previous fiscal year. About Sony Corp. Based in Japan, Sony Corporation engages in the operation of imaging products and solution (IP&S), game, mobile products and communication (MP&C), home entertainment and sound (HE&S), device, movie, music, financial and other business. The IP&S segment provides digital imaging products and professional solutions. As reported in the Troubled Company Reporter-Asia Pacific on Jan. 29, 2014, Moody's Japan K.K. has downgraded the Issuer Rating and the long-term senior unsecured bond rating of Sony Corporation to Ba1 from Baa3. The ratings outlook is stable. At the same time, Moody's has downgraded the short-term rating of its supported subsidiary, Sony Global Treasury Services Plc, to Not Prime from Prime-3. SOUTH EDGE: Case Summary & 15 Largest Unsecured Creditors --------------------------------------------------------- Debtor: The South Edge, Inc. 2115 Old Adobe Road Petaluma, CA 94954 Case No.: 14-10176 Chapter 11 Petition Date: February 5, 2014 Court: United States Bankruptcy Court Northern District of California (Santa Rosa) Judge: Hon. Alan Jaroslovsky Debtor's Counsel: Gina R. Klump, Esq. LAW OFFICE OF GINA R. KLUMP 17 Keller St. Petaluma, CA 94952 Tel: (707) 778-0111 Email: klumplaw@gmail.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by JoAnn Claeyssens, vice president. A list of the Debtor's 15 largest unsecured creditors is available for free at http://bankrupt.com/misc/canb14-10176.pdf SOUTH FLORIDA SOD: Feb. 10 Plan Confirmation Hearing Canceled ------------------------------------------------------------- The Bankruptcy Court, according to South Florida Sod Inc.'s case docket, has canceled the hearing scheduled for Feb. 10, 2014, to consider confirmation of South Florida Sod, Inc.'s Amended Plan of Reorganization, as further amended. As reported in the Troubled Company Reporter on Jan. 17, 2014, the Court approved an amended motion for authority to sell property of the estate through a public auction. The Court directed the Debtor to conduct an auction of the property at 5771 acres located in North Port, Florida, Sarasota County, on Feb. 13, 2014. The Debtor said the sale of the property would (i) satisfy secured claims held by Orange Hammock Ranch, LLC, and Wauchula State Bank against the property; and (ii) generate cash with which to fund a plan of reorganization. The auction will be conducted live from the property. South Florida Sod has sought and obtained authorization from the Bankruptcy Court to employ National Auction Group, Inc., as auctioneer and real estate broker to sell the property. Gator Plan Objection & Estimation Motion Gator State Sod Co. filed an objection to the Plan, in an abundance of caution. Gator said its objection to the prior version of the Plan has not changed with the filing of the Second Amendment. Gator also filed papers with the Court pursuant to Rule 3018(a) of the Federal Rules of Bankruptcy Procedure, seeking estimation and temporary allowance of its claim for voting on the Amended Plan. According to GSS, it seeks temporary allowance of its claim, in an amount which the Court deems proper for the purpose of voting on the Plan, to prevent possible abuse by plan proponents who might ensure acceptance of a plan by filing last minute objections to the claims of dissenting creditors," which is precisely "[t]he policy behind temporary allowing claims." GSS says its motion will expedite the process and ensure that its vote and objections to confirmation receive consideration. Based upon critical time frames imposed by the Court and the continued administration of the case, it is imperative that the matter be heard prior to or in conjunction with the confirmation hearing scheduled for Feb. 10, 2014, at 10:30 a.m. On Dec. 4, 2013, the Debtor filed the Second Amendment, which revised four items in the prior Amended Plan. On Dec. 5, GSS filed its objection to Debtor's Amended Plan, which was linked to the Amended Plan but not the Second Amendment. U.S. Trustee Objection As reported in the Troubled Company Reporter on Jan. 16, 2014, the U.S. Trustee objected to the approval of the Disclosure Statement explaining the Debtor's Amended Plan. The U.S. Trustee asserted that the Amended Disclosure Statement failed to provide a liquidation analysis, which is critical in order to provide creditors with adequate information regarding the value of assets available for liquidation in the event the proceeds from the McCall Ranch auction scheduled for Feb. 13, 2014, fail to satisfy the claims of all creditors. According to the U.S. Trustee, the Amended Disclosure Statement also failed to indicate an estimated amount necessary to pay administrative costs and all classes contemplated in the Plan from the proceeds of the McCall Ranch auction. Summary of Plan On Nov. 14, 2013, the Court entered its order conditionally approving disclosure statement. According to the Amended Disclosure Statement, the Debtor intends to sell at auction, free and clear of claims and interests, the McCall Ranch Property. The Debtor intends that the auction will take place after the confirmation of the Plan. By doing so, the Debtor believes that sufficient funds will be received to pay most, if not all, of its creditors. If the proceeds of the sale do not pay all of the claims in full, the Debtor will select another property to be sold. This will be repeated until either all of the property is sold or the debts are paid in full. The Debtor also intends to sell its interest in the Little Ockmulgee Property at auction prior to confirmation. George D. Warthen Bank has agreed that to the extent there are not sufficient funds to pay its claim in full, any remaining balance will be discharged, and any claims against the guarantors released. A copy of the Amended Disclosure Statement and Amendment to Plan are available for free at: http://bankrupt.com/misc/SOUTHFLORIDASODamendedds.pdf http://bankrupt.com/misc/SOUTHFLORIDASODamendmenttoplan.pdf The TCR on Oct. 17, 2013, reported on the Disclosure Statement dated Oct. 7, 2013. The Plan designates 3 Unimpaired Claims -- Class 1 Allowed Other Secured Claims, Class II Allowed Non-Tax Priority Claims, and Class III Allowed Secured Claim of Ford Motor Credit Company, LLC. It also designates 15 Impaired Claims: * Class IV Allowed Secured Claim of Ascot Capital LLC-3. * Class V Allowed Secured Claim of ATCFII Florida-A LLC * Class VI Allowed Secured Claim of TLGFY, LLC * Class VII Allowed Secured Claim of Chippewa Co. Tax Collector * Class VIII Allowed Sec. Claim of Highlands County Tax Collector * Class IX Allowed Secured Claim of Garfield County Treasurer * Class X Allowed Secured Claim of George D. Warthern Bank * Class XI Allowed Secured Claim of Great Oak Pool 1, LLC * Class XII Allowed Secured Claim of Orange Hammock Ranch, LLC * Class XIII Allowed Sec. Claim of Wauchula State Bank for Lake Rosalie and Farm 2 * Class XIV Allowed Sec. Claim of Wauchula State Bank for Farm 1 * Class XV Sec. Postpetition Admin. Claim of Wauchula State Bank * Class XVI Allowed Unsecured Claims of Affiliates * Class XVII Allowed Unsecured Claims * Class XVIII Allowed Interest Most of the Allowed Claims for Classes IV to XV will be paid from the proceeds of the sale of the McCall Ranch or from proceeds of the sale of assets they have a lien on. Class XVI Claims will receive nothing, while Class XVII Claims will also be paid from proceeds of the sale of the McCall Ranch. Class XVIII Interests of Wiley T. McCall will be retained under the Plan. About South Florida Sod South Florida Sod Inc., a sod farmer, owns multiple parcels of rural real estate in Florida, Georgia, Michigan and Montana. The Debtor uses these parcels in its sod, hay, cattle, timber, stumping and hunting operations. The Company filed for Chapter 11 protection (Bankr. M.D. Fla. Case No. 13-08466) on July 9, 2013, in Orlando, Florida. The Debtor estimated at least $10 million in assets and liabilities. The company owns 13 properties in Florida and three other states. The company intends on selling a 5,777-acre property in Sarasota County, Florida, with a claimed value of $20 million or more. Secured debt totals $23.5 million, not including a $1.6 million judgment. Latham Shuker Eden & Beaudine, LLP, originally represented the Debtor as counsel. Latham Shuker was later replaced by Frank M. Wolff, Esq., at Wolff, Hill, McFarlin & Herron, P.A. Jonathan Stidham, Esq., at Stidham & Stidham, P.A., serves as special counsel to the Debtor. South Florida Sod also tapped Daniel Dempsey as its financial advisor. Wallace T. Long, Jr., CPA and Lynch, Johnson & Long, CPA, serve as accountants. Orange Hammock Ranch, LLC, the principal secured creditor, is represented by Brian A. McDowell, Esq., at Holland & Knight LLP. SOUTH FLORIDA SOD: Hammock Credit Bid Pegged at $13.9MM ------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida entered an order dated Jan. 28 granting, in part, the motion of Orange Hammock Ranch LLC to determine (a) the maximum allowed amount of its secured claim in the Chapter 11 case of South Florida Sod Inc., (b) its resulting credit bid at the auction of real property in Sarasota County, Florida, (c) the payoff amount at the closing of any sale, and (d) if applicable, the amount of its post-auction secured and unsecured claims. The Court ruled that Orange Hammock's maximum credit bid at the auction of real property in Sarasota County, Florida is $13,907,151 -- subject to reconsideration of Orange Hammock's attorneys' fees at the continued evidentiary hearing scheduled for Feb. 20, 2014, at 2:15 p.m. Objections from the Debtor, Wauchula State Bank, Texas 1845, LLC, and the Acting U.S. Trustee are overruled in part. All matters raised in the objections that were not withdrawn or not related to the reasonableness of Orange Hammock's attorneys' fees are overruled. All matters raised in the objections related to the reasonableness of Orange Hammock's attorneys' fees will be addressed at the continued hearing. As reported in the Troubled Company Reporter on Jan. 17, 2014, the Court approved an amended motion for authority to sell property of the estate through a public auction. The Court directed the Debtor to conduct an auction of the property at 5771 acres located in North Port, Florida, Sarasota County, on Feb. 13, 2014. The Debtor said the sale of the property would (i) satisfy secured claims held by Orange Hammock Ranch, LLC, and Wauchula State Bank against the property; and (ii) generate cash with which to fund a plan of reorganization. The auction will be conducted live from the property. South Florida Sod has sought and obtained authorization from the Bankruptcy Court to employ National Auction Group, Inc., as auctioneer and real estate broker to sell the property. About South Florida Sod South Florida Sod Inc., a sod farmer, owns multiple parcels of rural real estate in Florida, Georgia, Michigan and Montana. The Debtor uses these parcels in its sod, hay, cattle, timber, stumping and hunting operations. The Company filed for Chapter 11 protection (Bankr. M.D. Fla. Case No. 13-08466) on July 9, 2013, in Orlando, Florida. The Debtor estimated at least $10 million in assets and liabilities. The company owns 13 properties in Florida and three other states. The company intends on selling a 5,777-acre property in Sarasota County, Florida, with a claimed value of $20 million or more. Secured debt totals $23.5 million, not including a $1.6 million judgment. Latham Shuker Eden & Beaudine, LLP, originally represented the Debtor as counsel. Latham Shuker was later replaced by Frank M. Wolff, Esq., at Wolff, Hill, McFarlin & Herron, P.A. Jonathan Stidham, Esq., at Stidham & Stidham, P.A., serves as special counsel to the Debtor. South Florida Sod also tapped Daniel Dempsey as its financial advisor. Wallace T. Long, Jr., CPA and Lynch, Johnson & Long, CPA, serve as accountants. Orange Hammock Ranch, LLC, the principal secured creditor, is represented by Brian A. McDowell, Esq., at Holland & Knight LLP. SPIRIT AEROSYSTEMS: Moody's Puts Ratings on Review for Downgrade ---------------------------------------------------------------- Moody's Investors Service has placed the ratings of Spirit Aerosystems, Inc., including its Ba1 senior secured and Ba3 senior unsecured debt ratings, under review for possible downgrade. The review follows the company's reporting of significantly weaker operating and financial performance than expected, as partially reflected in new forward loss charges totaling $546 million and which bring cumulative charges to almost $2 billion spread across multiple programs over the past two-plus years. The review will consider the company's ability to realize and sustain a less volatile and stronger forward earnings and cash flow profile than has been evidenced over the recent past, and the degree to which a lower cost operating position can be achieved and maintained as production rates increase across the multitude of new aircraft model programs for which Spirit remains a key supplier. Although it appears to be reasonably well assured over the near term, the review will also consider the extent to which Spirit can sustain adequate liquidity as it effects targeted operating performance improvements over the interim period. The following summarizes Moody's ratings and the rating actions for Spirit Aerosystems, Inc.: Corporate Family Rating, under review for downgrade from Ba2 Probability of Default Rating, under review for downgrade from Ba2-PD $650 million senior secured revolver due 2017, under review for downgrade from Ba1, LGD3, 33% $550 million senior secured term loan due 2019, under review for downgrade from Ba1, LGD3, 33% $300 million senior notes due 2017, under review for downgrade from Ba3, LGD5, 81% $300 million senior notes due 2020, under review for downgrade from Ba3, LGD5, 81% Speculative Grade Liquidity Rating, SGL-3 The principal methodology used in this rating was the Global Aerospace and Defense published in June 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. Spirit AeroSystems, Inc., headquartered in Wichita, Kansas, is an independent non-OEM designer and Tier-1 manufacturer of commercial aircraft aerostructures. Components include fuselages, pylons, struts, nacelles, thrust reversers, and wing assemblies, primarily for Boeing but also for Airbus, Gulfstream and others. Revenues were about $6 billion for 2013. STEF LLC: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------ Debtor: STEF, LLC 3108 Eton Road Raleigh, NC 27608 Case No.: 14-00703 Chapter 11 Petition Date: February 5, 2014 Court: United States Bankruptcy Court Eastern District of North Carolina (Raleigh Division) Judge: Hon. Stephani W. Humrickhouse Debtor's Counsel: William P Janvier, Esq. JANVIER LAW FIRM, PLLC 1101 Haynes Street, Suite 102 Raleigh, NC 27604 Tel: 919 582-2323 Fax: 866 809-2379 Email: bill@janvierlaw.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $500,000 to $1 million The petition was signed by Robert Abee, member/manager. A list of the Debtor's six largest unsecured creditors is available for free at http://bankrupt.com/misc/nceb14-703.pdf STOCKTON, CA: Agrees to Be Sued Over Treatment of Animals --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Stockton, California, agreed to defend a lawsuit in state court designed to compel compliance with a California law intended to forestall unnecessary euthanasia of abandoned animals. According to the report, the Animal Legal Defense Fund persuaded the city to consent to modification of the bar against suits outside bankruptcy court. Under authorization granted by the bankruptcy judge, the fund can initiate a suit in state court to enforce California's Hayden Act requiring better treatment of abandoned animals. The fund agreed it will seek no monetary recovery from Stockton, just enforcement of the Hayden Act, the report related. Stockton's creditors are voting on the city's plan in advance of a confirmation hearing to begin March 5 for approval of the debt restructuring, the report added. The plan would pay municipal pensions in full, while other creditors would have smaller recoveries. The plan is based partly on a sales tax increase. About Stockton, Calif. The City of Stockton, California, filed a Chapter 9 petition (Bankr. E.D. Cal. Case No. 12-32118) in Sacramento on June 28, 2012, becoming the largest city to seek creditor protection in U.S. history. The city was forced to file for bankruptcy after talks with bondholders and labor unions failed. Stockton estimated more than $1 billion in assets and in excess of $500 million in liabilities. The city, with a population of about 300,000, identified the California Public Employees Retirement System as the largest unsecured creditor with a claim of $147.5 million for unfunded pension costs. In second place is Wells Fargo Bank NA as trustee for $124.3 million in pension obligation bonds. The list of largest creditors includes $119.2 million owing on four other series of bonds. The city is being represented by Marc A. Levinson, Esq., and John W. Killeen, Esq., at Orrick, Herrington & Sutcliffe LLP. The petition was signed by Robert Deis, city manager. Mr. Levinson also represented the city of Vallejo, Cal. in its 2008 bankruptcy. Vallejo filed for protection under Chapter 9 (Bankr. E.D. Cal. Case No. 08-26813) on May 23, 2008, estimating $500 million to $1 billion in assets and $100 million to $500 million in debts in its petition. In August 2011, Vallejo was given green light to exit the municipal reorganization. The Vallejo Chapter 9 plan restructures $50 million of publicly held debt secured by leases on public buildings. Although the Plan doesn't affect pensions, it adjusts the claims and benefits of current and former city employees. Bankruptcy Judge Michael McManus released Vallejo from bankruptcy on Nov. 1, 2011. The bankruptcy judge on April 1, 2013, ruled that the city of Stockton is eligible for municipal bankruptcy in Chapter 9. SURTRONICS INC: Has Until April 7 to Decide on Lease ---------------------------------------------------- The Hon. Stephani W. Humrickhouse of the U.S. Bankruptcy Court for the Eastern District of North Carolina has extended, at the behest of Surtronics, Inc., the deadline for the Debtor to assume or reject an unexpired lease of nonresidential real property until April 7, 2014, or until the date of the entry of an order confirming a plan. As reported by the Troubled Company Reporter on Jan. 6, 2014, creditor Smith & Wade objected to the extension. Smith & Wade, a North Carolina general partnership which owns certain real property known as 4001 Beryl Drive, 4025 Beryl Drive, and 508 Method Road, Raleigh, Wake County, North Carolina, entered into a lease agreement with the Debtor on Oct. 1, 2003, pursuant to which Smith & Wade, as landlord, leased the Property to the Debtor as tenant. Smith & Wade and the Debtor executed a series of lease addenda, the latest of which was executed on Sept. 6, 2013. The Debtor currently is, and has been, leasing the Property as its primary production facility and corporate office. The Lease is therefore a lease of nonresidential real property governed by 11 U.S.C. Section 365(d)(4), Gregory B. Crampton, Esq., at Nicholls & Crampton, P.A., the attorney for Smith & Wade, said. Raleigh, North Carolina-based Surtronics, Inc., filed a Chapter 11 bankruptcy petition in Wilson, North Carolina (Bankr. E.D.N.C. Case No. 13-05672) on Sept. 9, 2013. Founded in 1965, Surtronics is in the business of providing electroplating and anodizing services to base-metal alloys for use across various industries, including but not limited to aerospace, defense, medical, telecommunications, and automotive. Surtronics' primary production facility and corporate office are located in a series of buildings at 4001 and 4025 Beryl Drive, and 508 Method Road, Raleigh, North Carolina. The Debtor is represented by David A. Matthews, Esq., at Shumaker, Loop & Kendrick, LLP, in Charlotte, North Carolina. Carr Riggs & Ingram PLLC, serves as its accountants. In its schedules, the Debtor disclosed $16,300,878 in total assets and $3,507,088 in total liabilities. The Bankruptcy Administrator has been unable to organize and recommend to the Bankruptcy Court the appointment of a committee of creditors holding unsecured claims against Surtronics Inc. SWA BASELINE: Section 341(a) Meeting Scheduled for March 13 ----------------------------------------------------------- A meeting of creditors in the bankruptcy case of SWA Baseline, LLC, will be held on March 13, 2014, at 3:30 p.m. at U.S. Trustee Meeting Room, James A. Walsh Court, 38 S Scott Ave, St 140, Tucson, AZ. 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. SWA Baseline, LLC, filed a Chapter 11 bankruptcy petition (D.Ariz. Case No. 14-01418) on Feb. 5, 2014. Andrew J. Briefer signed the petition as designated representative. On the petition date, the Debtor disclosed total assets of $17.95 million and total liabilities of $16.8 million. Patrick A Clisham, Esq., at ENGELMAN BERGER PC, in Phoenix, AZ, serves as the Debtor's counsel. The Hon. Brenda Moody Whinery oversees the case. SWA BASELINE: Case Summary & 10 Unsecured Creditors --------------------------------------------------- Debtor: SWA Baseline, LLC 5995 E. Grant Road, Suite 111 Tucson, AZ 85712 Case No.: 14-01418 Chapter 11 Petition Date: February 5, 2014 Court: United States Bankruptcy Court District of Arizona (Tucson) Judge: Hon. Brenda Moody Whinery Debtor's Counsel: Patrick A Clisham, Esq. ENGELMAN BERGER PC 3636 N Central Ave #700 Phoenix, AZ 85012 Tel: 602-271-9090 Fax: 602-222-4999 Email: pac@eblawyers.com Total Assets: $17.95 million Total Liabilities: $16.80 million A copy of the Schedules of Assets and Liabilities is available for free at http://bankrupt.com/misc/SWA_Schedules.pdf The petition was signed by Andrew J. Briefer, designated representative. List of Debtor's 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ EyeSite Surveillance Inc. Services and $9,101 equipment Arizona Turf Masters LLC Trade debt $7,339 Greg Carlson Engineering LLC Engineering fees $7,220 Salt River Project Utilities $6,396 David S. Cutler CPA PC Accounting fees $2,630 Arizona Commercial Signs, Inc. Trade Debt $2,428 Gallagher & Kennedy Legal fees $2,338 Peritus Commerical Finance LLC Consulting fees $2,106 Century Link Telephone services $500 Rusing Lopez & Lizardi, PLLC Legal fees Unknown T AND S RESTAURANTS: Case Summary & 5 Top Unsecured Creditors ------------------------------------------------------------- Debtor: T and S Restaurants dba Subways of Cody, Wyoming 13 Stone Sheep Circle Powell, WY 83435 Case No.: 14-20068 Chapter 11 Petition Date: February 5, 2014 Court: United States Bankruptcy Court District of Wyoming (Cheyenne) Judge: Hon. Peter J. McNiff Debtor's Counsel: Ken McCartney, Esq. THE LAW OFFICES OF KEN MCCARTNEY, P.C. P.O. Box 1364 Cheyenne, WY 82003 Tel: 307-635-0555 Fax: 307-635-0585 Email: bnkrpcyrep@aol.com Total Assets: $50,085 Total Liabilities: $1.41 million The petition was signed by Jay Torgerson, managing general partner. A list of the Debtor's five largest unsecured creditors is available for free at http://bankrupt.com/misc/wyb14-20068.pdf TASC INC: Moody's Cuts Corp. Family Rating to B3; Outlook Stable ---------------------------------------------------------------- Moody's Investors Service has lowered ratings of TASC, Inc., including the Corporate Family Rating to B3 from B2. The rating outlook is stable. Year-over-year revenue declines that quickened across 2013, against elevated credit metrics and a pressured U.S. fiscal setting drove the downgrade. Ratings: Corporate Family, to B3 from B2 Probability of Default, to B3-PD from B2-PD $80 million first lien revolver due 2015, to B2, LGD3, 42% from B1, LGD3, 37% $641 million first lien term loan due 2015, to B2, LGD3, 42% from B1, LGD3, 37% Rating Outlook, Stable Ratings Rationale The B3 Corporate Family Rating reflects credit metrics on par with the rating despite significant debt reduction since 2009 and considers year-over-year revenue declines that gained momentum across 2013. On a Moody's adjusted basis, debt to EBITDA was still over 6x (6.4x at Q3-2013), despite debt reduction of $184 million since Q4-2009. Based on the Q3-2013 revenue run rate, Moody's estimates that TASC's revenues likely declined by more than 20% year-over-year during the second half of 2013, a sharp drop when compared to other federal services contractors. Effective working capital management and cost actions undertaken nonetheless permitted the company to, once again, prepay a meaningful amount of (mezzanine) debt across the fiscal year. But if the revenue contraction does not stabilize, leverage could still quickly escalate. The company's funded backlog to revenue ratio is low - not uncommon for a services contractor but a characteristic that highlights potential for further performance volatility if the revenue trend does not stabilize. The CFR also recognizes that headroom under the bank facility's maximum leverage covenant test could as well diminish near-term without better revenue traction. The rating outlook is stable. Following the company's CEO change of November 2013, cost actions were undertaken that should reduce the indirect labor billing rates that TASC charges its government customers. Enhanced price competitiveness should follow and may help the company grow backlog. Budget levels remain pressured but President Obama's signing of an omnibus federal spending measure in January 2014 alleviated the sequestration budgetary caps near term and should provide a more fluid near-term procurement environment for services contractors than would have otherwise have been the case. The development could prove to be fortuitous if TASC in turn secures significant task orders. "We consider the company's liquidity profile to be adequate and, while credit metrics are not strong, they have not weakened to levels unsupportive of the rating. The company remains focused on reducing its debt with its free cash flow. In fact, the variable cost services business model and repayment of much high coupon mezzanine debt since 2009 helps interest coverage measures and raises the potential for EBITDA flow through to free cash flow. Market share was likely lost in 2013, but the company's long- standing reputation within the U.S. intelligence community and its highly qualified and cleared direct labor force should still help the renewed marketing effort," Moody's said. Upward rating momentum would depend on expectation of debt/EBITDA descending to and being sustained below 6x, with free cash flow to debt in the high single digit percentage range and an adequate liquidity profile. Downward rating pressure would follow continuation of material revenue declines, weakened liquidity, debt/EBITDA above 7x or low free cash flow generation. The principal methodology used in this rating was the Global Aerospace and Defense published in June 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. TASC, Inc. provides advanced systems engineering and integration services to U.S. Government intelligence agencies, Department of Defense and various civil agencies. The existing company is a former unit of Northrop Grumman Corporation's advisory services segment and was acquired for $1.65 billion in a leveraged transaction by affiliates of General Atlantic and Kohlberg Kravis Roberts in late 2009. Revenues over the twelve months ended September 30, 2013 were $1.4 billion. TARGUS GROUP: Moody's Cuts CFR & $185MM Sr. Loan Rating to Caa1 --------------------------------------------------------------- Moody's Investors Service downgraded Targus Group International, Inc.'s Corporate Family Rating ("CFR") to Caa1 from B2 and Probability of Default Rating to Caa1-PD from B2-PD. Concurrently, Moody's downgraded the rating on the $185 million senior secured term loan to Caa1 from B2. The rating outlook remains stable. The downgrade reflects the possibility of a debt restructuring in light of the company's high leverage and approaching 2016 maturities, unless Targus achieves very strong near term earnings growth by turning around its operating performance. Leverage increased to high-6 times (based on Moody's-adjusted metrics, including HoldCo PIK notes) as of FYE September 2013, as a result of a significant decline in EBITDA and higher debt levels. Moody's expects that the company's operations and liquidity will continue to be challenged by low-single-digit declines in its core laptop case and accessory market, driven by the secular replacement of laptops with tablets. Targus has a much smaller presence (approximately a quarter of FY 2013 revenue) and weaker position in the growing but more competitive and dynamic market for tablet and smart phone cases. Moreover, the company's limited financial flexibility will likely constrain its ability to compete effectively in a market driven by rapid technological change. Given the challenges of the business, Moody's believes that refinancing on economical terms would require the company to bring down leverage significantly from current levels over the next 12- 18 months. The company's expectations are for a leverage reduction of about 1.5 times over the next twelve months driven by EBITDA growth from product initiatives, higher product margins and operating cost reductions and higher free cash flow for debt repayment from supply chain initiatives. While Moody's expects earnings to improve in 2014, the PIK debt accretion will offset some of the earnings improvement. In Moody's view, the HoldCo lenders will bear the brunt of a potential impairment if a debt restructuring scenario were to materialize. Rating actions: Issuer: Targus Group International, Inc. Corporate Family Rating, downgraded to Caa1 from B2 Probability of Default Rating, downgraded to Caa1-PD from B2-PD $185 million senior secured term loan due 2016, downgraded to Caa1 (LGD4, 51%) from B2 (LGD3, 46%) TECHOS CARIBE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Techos Caribe Inc. PO Box 69001, Suite 380 Hatillo, PR 00659 Case No.: 14-00843 Chapter 11 Petition Date: February 6, 2014 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Judge: Hon. Enrique S. Lamoutte Inclan Debtor's Counsel: Alexi Fuentes Hernandez, Esq. FUENTES LAW OFFICES, LLC PO Box 9022726 San Juan, PR 00902-2726 Tel: (787) 722-5216 Fax: (787) 722-5206 Email: alex@fuentes-law.com Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Jose I. Rodriquez Colon, president. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/prb14-843.pdf THREE FORKS: Files Amendment to Q3 2013 Report ---------------------------------------------- Three Forks, Inc., filed with the U.S. Securities and Exchange Commission an amendment to Form 10-Q for the quarter ended Sept. 30, 2013. A copy of the document is available at http://is.gd/6JYd0I The Company reported a net loss of $215,592 on $629,762 of total revenues for the three months ended Sept. 30, 2013, compared with a net loss of $283,524 on $102,537 of total revenues for the same period in 2012. The Company's balance sheet at Sept. 30, 2013, showed $7.66 million in total assets, $4.85 million in total liabilities, and stockholders' equity of $2.81 million. For the period ended Sept. 30, 2013, the Company has reported an accumulated deficit of $2.1 million. At Sept. 30, 2013, the Company has current assets of $2.47 million, including cash and cash equivalents of $2.03 million and current liabilities of $4.56 million but has sold its major proved oil and gas property. To the extent the Company's operations are not sufficient to fund the Company's capital and current growth requirements the Company will attempt to raise capital through the sale of additional shares of stock. At the present time, the Company cannot provide assurance that it will be able to raise funds through the further issuance of equity in the Company. These conditions raise substantial doubt about the Company's ability to continue as a going concern, according to the Company's regulatory filing. Three Forks, Inc., based in Broomfield, Colorado, is engaged in the acquisition, exploration, development, and production of oil and gas properties. The Company currently has oil and gas projects in Texas, Oklahoma, and Louisiana. THUNDERVISION LLC: Ch.7 Trustee May Recoup $63,863 From RW Smith ---------------------------------------------------------------- Louisiana Bankruptcy Judge Elizabeth W. Magner ruled that RW Smith Publishing LLC and Roger Wayne Smith are liable severally and in solido to Thundervision LLC in the amount of $63,863, plus federal judicial interest from the date of demand, for breach of fiduciary duty and the Louisiana Unfair Trade Practices and Consumer Protection Law. Mr. Smith and RW Smith are also liable severally and in solido for attorneys' fees in the amount of $25,545. They are also liable for reasonable costs. The Court will set a deadline for Thundervision's Chapter 7 Trustee to file an itemized list of costs as well as a deadline for Mr. Smith and RW Smith to file any objections. The case is, DAVID V. ADLER, Trustee, Plaintiff, v. ROGER WAYNE SMITH, ET AL, Defendants, Section A, Adversary No. 12-1058 (Bankr. E.D. La.). A copy of the Court's Feb. 5, 2014 Memorandum Opinion is available at http://is.gd/DwrR0Ufrom Leagle.com. Thundervision LLC filed for Chapter 11 bankruptcy (Bankr. E.D. La. Case No. 09-11145) on April 21, 2009. Thundervision's primary business was the publication of Louisiana Homes and Gardens magazine. It maintained the website ourhouse.biz, which published content from and offered subscriptions to LH&G. Roger Wayne Smith and Dale C. Higgins are the managing members and equal owners of Thundervision. Thundervision employed Stewart Peck, Christopher Caplinger, and the firm of Lugenbuhl, Wheaton, Peck, Rankin & Hubbard as its bankruptcy attorneys. On April 5, 2010, the Court approved Thundervision's Amended Disclosure Statement. Under Thundervision's Amended Plan of Reorganization, Higgins and Smith continued to manage Thundervision for the same salaries, $36,000 and $78,000 respectively. Confirmation of the Plan was contested and tried on June 29, 2010. On June 30, 2010, the Court entered an Order confirming Thundervision's Plan. The Plan provided that administrative claims were payable on the later of the effective date of the Plan,10 when allowed, or due. Priority tax claims were payable in quarterly installments. The Plan also provided for monthly payments of $1,855 for five years to Hancock Bank on its secured claim. General unsecured claims were to receive quarterly distributions over seven years equal to 50% of net income for the first five years and increasing to 70% of net income for the last two years. After failing to obtain financing and defaulting under the Plan, the case was converted to Chapter 7 on Sept. 29, 2011. David Adler was appointed chapter 7 trustee. He hired Stewart Peck, Christopher Caplinger, and the firm of Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, Thundervision's counsel, as special counsel. TM REAL ESTATE: Failed to Pay Postpetition Interest, TD Bank Says ----------------------------------------------------------------- TD Bank, N.A., successor by merger to Commerce Bank/North, has notified the U.S. Bankruptcy Court for the Eastern District of New York that T.M. Real Estate Holding LLC has failed to comply with the order extending T.M. Real's time to file a plan of reorganization or approving the debtor-in-possession or replacement financing. According to TD Bank, a payment in the amount of $76,486 -- representing 30 days of Lot 80 postpetition interest on the Lot 80 Judgment for the period Jan. 23, 2014, until Feb. 21 -- was not received on or Jan. 22, 2014. In this relation, TD Bank the automatic stay under Section 362(a) of the Bankruptcy Code with respect to Debtor TM will terminate without further action by, or order of, the Bankruptcy Court. On July 22, 2013, T.D. Bank filed a motion to (i) dismiss the Debtor's Chapter 11 case, or in the alternative, to grant relief from the automatic stay, or in the alternative, (ii) condition the continuation of the automatic stay upon adequate protection of TD Bank's interest in the property of the estate and designate the Debtor as a single asset real estate entity in T.M. Real's case. Pursuant to a Dec. 19 order, the Court conditioned the continuation of the automatic stay with respect to Debtor TM upon payments to be made by the Debtors' principals or a third party on behalf of the Debtors: a) on Dec. 23, a payment to TD Bank in the amount of $76,486, representing 30 days of Lot 80 Post-Petition Interest on the Lot 80 Judgment at the per diem rate of $2,549, covering the period of Dec. 23, until Jan. 22, 2014. b) in the event that the parties have not otherwise resolved the TD Bank claim against Lot 80 prior to Jan. 21, on Jan. 22, the Debtors will be required to make a second payment to TD Bank in the same amount and in the same manner, for the period Jan. 23, until Feb. 21. About Richmond Valley Plaza LLC and TM Real Estate Holding LLC Richmond Valley Plaza LLC, owner of shopping centers, filed a Chapter 11 petition (Bankr. E.D.N.Y. Case No. 13-44040) on June 28, 2013, in Brooklyn, New York. Yann Geron, Esq. and Kathleen Aiello, Esq., at Fox Rothschild LLP, serve as counsel to the Debtor. Richmond Valley Plaza estimated up to $8,400,000 in assets and up to $6,517,934 in liabilities. Affiliates, A.E.T. Realty Holding Corp., (Case No. 13-44043) and E.B. Realty Holding Corp (Case No. 13-44047) sought Chapter 11 protections on the same day. TM Real Estate Holding LLC a/k/a T.M. Realty Holding Corp., filed a Chapter 11 petition (Bankr. E.D.N.Y. Case No. 13-44046) on June 28, 2013. The Debtor scheduled assets of $10,900,000 and liabilities of $10,497,264. The petition was signed by John Noce, manager. The Debtors' cases are being jointly administered pursuant to an order of the Court, dated Aug. 8, 2013. Michael J. Venditto, Esq., at Reed Smith LLP, represents TD Bank. TRANSGENOMIC INC: To Effect a 1-for-12 Reverse Stock Split ---------------------------------------------------------- At a special meeting of stockholders of Transgenomic, Inc., held on Jan. 14, 2014, the stockholders of the Company approved the authorization of the Board of Directors of the Company to, in its discretion, amend the Company's Third Amended and Restated Certificate of Incorporation to effect a reverse split of the Company's common stock, par value $0.01, at a ratio of between one-for-four to one-for-twenty-five, with that ratio to be determined by the Board. On Jan. 15, 2014, the Board determined to set the reverse stock split ratio at one-for-twelve and approved the final form of Certificate of Amendment to the Certificate of Incorporation to effectuate the Reverse Stock Split. The Certificate of Amendment was filed with the Secretary of State of the State of Delaware on Jan. 24, 2014, and the Reverse Stock Split became effective in accordance with the terms of the Certificate of Amendment at 5:00 p.m. Central Time on Jan. 27, 2014. At the Effective Time, every twelve shares of Common Stock issued and outstanding were automatically combined into one share of issued and outstanding Common Stock, without any change in the par value per share. No fractional shares will be issued as a result of the Reverse Stock Split. Stockholders who otherwise would be entitled to receive a fractional share in connection with the Reverse Stock Split will receive a cash payment in lieu thereof. After giving effect to the Reverse Stock Split, the Common Stock and outstanding preferred stock, $0.01 par value per share, have the same proportional voting rights and rights to dividends and distributions and are identical in all other respects to the rights of the Common Stock and Preferred Stock as of immediately prior to the Effective Time , except for immaterial changes and adjustments resulting from the treatment of fractional shares. Wells Fargo Bank, N.A., is acting as exchange agent for the Reverse Stock Split and will send instructions to stockholders of record who hold stock certificates regarding the exchange of certificates for Common Stock. Stockholders who hold their shares in brokerage accounts or "street name" are not required to take any action to effect the exchange of their shares following the Reverse Stock Split. On Jan. 28, 2014, the Common Stock will commence quoting on the Over-the-Counter Bulletin Board on a reverse stock split-adjusted basis. The Common Stock will be reported for 20 business days under the temporary ticker symbol "TBIOD," with the "D" added to signify that the reverse stock split has occurred. After 20 business days, the symbol will revert to the original symbol of "TBIO." In connection with the Reverse Stock Split, the Company's CUSIP number was changed to 89365K 305. In addition, the Board has authorized adjustments to outstanding warrants and awards under the Company's 2006 Equity Incentive Plan to preserve the rights of the holders of such warrants and awards following the Reverse Stock Split. At the Special Meeting, the Company's stockholders approved amendments to the 2006 Plan to (a) increase the number of shares of Common Stock that may be issued under the 2006 Plan by 10,000,000 shares (prior to giving effect to the Reverse Stock Split), and (b) provide for a corresponding increase in the limits on the number of incentive stock options and awards other than options or stock appreciation rights that may be granted under the 2006 Plan. The amendments to the 2006 Plan had been previously approved by the Board, subject to stockholder approval of the amendments to the 2006 Plan and contingent upon stockholder approval of, and the Board effectuating, the Reverse Stock Split. The amendments to the 2006 Plan became effective immediately upon the effectiveness of the Reverse Stock Split and the number of shares of Common Stock that may be issued under the 2006 Plan was increased by 833,333 shares of Common Stock. About Transgenomic Transgenomic, Inc. -- http://www.transgenomic.com/-- is a global biotechnology company advancing personalized medicine in cardiology, oncology, and inherited diseases through its proprietary molecular technologies and world-class clinical and research services. The Company is a global leader in cardiac genetic testing with a family of innovative products, including its C-GAAP test, designed to detect gene mutations which indicate cardiac disorders, or which can lead to serious adverse events. Transgenomic has three complementary business divisions: Transgenomic Clinical Laboratories, which specializes in molecular diagnostics for cardiology, oncology, neurology, and mitochondrial disorders; Transgenomic Pharmacogenomic Services, a contract research laboratory that specializes in supporting all phases of pre-clinical and clinical trials for oncology drugs in development; and Transgenomic Diagnostic Tools, which produces equipment, reagents, and other consumables that empower clinical and research applications in molecular testing and cytogenetics. Transgenomic believes there is significant opportunity for continued growth across all three businesses by leveraging their synergistic capabilities, technologies, and expertise. The Company actively develops and acquires new technology and other intellectual property that strengthens its leadership in personalized medicine. Transgenomic incurred a net loss of $8.32 million in 2012, a net loss of $9.78 million in 2011 and a net loss of $3.13 million in 2010. The Company's balance sheet at Sept. 30, 2013, showed $33.18 million in total assets, $17.78 million in total liabilities and $15.39 million in total stockholders' equity. As reported by the TCR on Feb. 13, 2013, Transgenomic entered into a forbearance agreement with Dogwood Pharmaceuticals, Inc., a wholly owned subsidiary of Forest Laboratories, Inc., and successor-in-interest to PGxHealth, LLC, with an effective date of Dec. 31, 2012. TRI-STATE FINANCIAL: 8th Cir. Remands Fee Dispute to Bankr. Court ----------------------------------------------------------------- Thomas Stalnaker, trustee of Tri-State Financial, LLC, doing business as North Country Ethanol, and Centris Federal Credit Union appeal the May 21, 2013 judgment of the bankruptcy court to the extent it determined certain funds were not property of the bankruptcy estate. James G. Jandrain, Distefano Family Ltd. Partnership, George Allison, Jr., Frank and Phyllis Cernik, Chris and Amy Daniel, Timothy Jackes, George Kramer, and Bernie Marquardt appeal the same judgment to the extent it awarded Stalnaker certain fees and expenses and surcharged those fees and expenses against the funds the bankruptcy court determined were not property of the bankruptcy estate. Stalnaker and Centris identify 15 issues presented on appeal. Jandrain, et al., identify an additional 15 issues presented on appeal and identify three issues presented on cross-appeal. The issues may all be boiled down to two: (1) whether the bankruptcy court erred in concluding $1,190,000 in funds was not property of the bankruptcy estate; and (2) whether the bankruptcy court erred in surcharging Stalnaker's attorney fees, costs, and expenses against the $1,190,000. In their post-trial brief, Stalnaker and Centris argued, inter alia, "[Tri-State Financial] is judicially estopped from having any intent or position imputed upon it other than the [$1,190,000.00] belong[s] to [Tri-State Financial]." Stalnaker and Centris also argued a "sweeping release" executed in August 2006 by all but two members of the Omaha Group -- Jandrain and Radio Engineering Industries, Inc. -- " includes any claimed obligation of [Tri-State Financial] to turn over the [$1,190,000.00] to [those parties.]" Finally, Stalnaker and Centris argued the Omaha Group "should be estopped from asserting ownership to the [$1,190,000.00]." Both the bankruptcy court's Feb. 13, 2013 order and its May 21, 2013 order are silent with respect to these arguments. According to the U.S. Court of Appeals for the Eighth Circuit, "We could, perhaps, interpret the bankruptcy court's silence as an implicit rejection of Stalnaker and Centris's arguments and render an opinion on that basis. However, we believe the better course is to afford the bankruptcy court an opportunity to consider those arguments, if it did not in fact do so, and explain its reasoning for accepting or rejecting them." In a Feb. 5, 2014 decision available at http://is.gd/JI5W2Efrom Leagle.com, the Eighth Circuit reversed and remanded the matter for further proceedings consistent with its opinion. The cases before the Eighth Circuit are: Thomas D. Stalnaker, Trustee, Plaintiff-Appellant v. George Allison; Frank Cernik; Phyllis Cernik; Chris Daniel; Amy Daniel; Distefano Family LTD Partnership; Mark E. Ehrhart; Robert G. Griffin; John Hoich; Denise Hoich; James G. Jandrain; American Interstate Bank; George Kramer; Bernie Marquardt; Radio Engineering Industries, Inc.; Joseph Vacanti, Trustee of The Joseph and Cynthia Vacanti Trust;, Defendants-Appellees Centris Federal Credit Union, Defendant-Appellant Centris Federal Credit Union Counterclaim and Cross-Claim Plaintiff-Appellant v. Thomas D. Stalnaker Counterclaim Defendant-Appellant and George Allison; Frank Cernik; Phyllis Cernik; Chris Daniel; Amy Daniel; Distefano Family LTD Partnership; Mark E. Ehrhart; Robert G. Griffin; John Hoich; Denise Hoich; James G. Jandrain; American Interstate Bank; Timothy Jackes; George Kramer; Bernie Marquardt; Radio Engineering Industries, Inc.; Joseph Vacanti, Trustee of The Joseph and Cynthia Vacanti Trust Cross-Claim Defendants-Appellees In re: Tri-State Financial, LLC, doing business as North Country Ethanol Debtor Thomas D. Stalnaker, Trustee, Plaintiff-Appellee v. George Allison; Frank Cernik; Phyllis Cernik; Chris Daniel; Amy Daniel; Distefano Family LTD Partnership, Defendants-Appellants Mark E. Ehrhart; Robert G. Griffin; John Hoich; Denise Hoich, Defendants James G. Jandrain; George Kramer; Bernie Marquardt, Defendants- Appellants Radio Engineering Industries, Inc.; Joseph Vacanti, Trustee of The Joseph and Cynthia Vacanti Trust; American Interstate Bank, Defendants Centris Federal Credit Union, Defendant-Appellee Centris Federal Credit Union Counterclaim and Cross-Claim Plaintiff-Appellee v. Thomas D. Stalnaker Counterclaim Defendant-Appellee George Allison; Frank Cernik; Phyllis Cernik; Chris Daniel; Amy Daniel; Distefano Family LTD Partnership Cross-Claim Defendants- Appellants Mark E. Ehrhart; Robert G. Griffin; John Hoich; Denise Hoich Cross-Claim Defendants James G. Jandrain Cross-Claim Defendant-Appellant American Interstate Bank Cross-Claim Defendant Timothy Jackes; George Kramer; Bernie Marquardt Cross-Claim Defendants-Appellants Radio Engineering Industries, Inc.; Joseph Vacanti, Trustee of The Joseph and Cynthia Vacanti Trust Cross-Claim Defendants Nos. 13-6030, 13-6036. About Tri-State Financial Tri-State Financial LLC, owner of the North Country Ethanol plant near Rosholt, South Dakota, filed a Chapter 11 petition (Bankr. D. Neb. Case No. 08-83016) on Nov. 21, 2008, in Omaha, Nebraska. The company listed assets of $35 million and debt totaling $27 million. Centris Federal Credit Union holds a secured claim aggregating $19.6 million. The Chapter 11 case was filed four days after Centris launched a foreclosure action against Tri- State. The bankruptcy case was later converted to a Chapter 7 liquidation and Thomas D. Stalnaker as named Chapter 7 trustee. TSU YUE WANG: SDNY Court Won't Dismiss "Wu" FLSA Suit ----------------------------------------------------- SHU LUN WU and FOONG OI WONG, Plaintiffs, v. MAY KWAN SI, INC. d/b/a OLLIE'S NOODLE SHOP & GRILLE, TSU Y. WANG, RONG LIN ZHU, and HANG CHENG CHEN, Defendants, No. 10 Civ. 5380 (SAS) (S.D.N.Y., July 14, 2010), seeks damages for alleged violations of the Fair Labor Standards Act, New York Labor Law, and New York City labor regulations. At that time, defendant Tsu Yue Wang was a debtor in the U.S. Bankruptcy Court for the Southern District of New York. Wang seeks dismissal of the claims brought against him. He argues that plaintiffs' claims were discharged pursuant to his confirmed chapter 11 plan of reorganization. Plaintiffs argue that their claims were not discharged because they did not have notice of the bankruptcy and move for sanctions against Wang's counsel under Federal Rule of Civil Procedure 11 for violating professional obligations. In a Feb. 4 Opinion and Order available at http://is.gd/prnFRO from Leagle.com, District Judge Shira A. Scheindlin ruled that Wang's motion to dismiss is denied without prejudice, and plaintiffs' motion for sanctions is denied. A status conference is scheduled in this case on Feb. 20, 2014, at 4:30 p.m. Wang filed his bankruptcy petition (Bankr. S.D.N.Y. Case No. 10-11478) on March 22, 2010. His case was assigned to Bankruptcy Judge Martin Glenn. Wang's disclosure statement was approved in January 2012, and his chapter 11 plan of reorganization was confirmed on Feb. 29, 2012. Neither the disclosure statement nor the plan of reorganization were served on plaintiffs. Vincent S. Wong, Esq., in New York, New York, represents the Plaintiffs. Joseph M. Labuda, Esq., at Milman Labuda Law Group, PLLC, in Lake Success, New York, argues for Tsu Yue Wang. TUSCANY INTERNATIONAL: Meeting to Form Creditors' Panel on Feb. 19 ------------------------------------------------------------------ Roberta A. DeAngelis, United States Trustee for Region 3, will hold an organizational meeting on February 19, 2014, at 10:30 a.m. in the bankruptcy case of Tuscany International Holdings (U.S.A.) Ltd. The meeting will be held at: The DoubleTree Hotel 700 King St., Salon C Wilmington, DE 19801 The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' case. The organizational meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. A representative of the Debtor, however, may attend the Organizational Meeting, and provide background information regarding the bankruptcy cases. To increase participation in the Chapter 11 proceeding, Section 1102 of the Bankruptcy Code requires that the United States Trustee appoint a committee of unsecured creditors as soon as practicable. The Committee ordinarily consists of the persons, willing to serve, that hold the seven largest unsecured claims against the debtor of the kinds represented on the committee. Section 1103 of the Bankruptcy Code provides that the Committee may consult with the debtor, investigate the debtor and its business operations and participate in the formulation of a plan of reorganization. The Committee may also perform other services as are in the interests of the unsecured creditors whom it represents. About Tuscany International Tuscany International Holdings (U.S.A.) Ltd. and Tuscany International Drilling Inc. sought protection from creditors under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 14-10193) in Delaware on Feb. 2, 2014. Tuscany USA said it also intends to commence ancillary proceedings in the Court of Queen's Bench of Alberta under the Companies' Creditors Arrangement Act. Pursuant to a restructuring support agreement with prepetition lenders holding 95% of the prepetition loans, the Debtors have agreed to sell substantially all of the assets of TID to lenders in exchange for a credit bid of certain of their debt, effectuated through a plan of reorganization. Headquartered in Calgary, Alberta, Tuscany is engaged in the business of providing contract drilling and work-over services along with equipment rentals to the oil and gas industry. Tuscany is currently focused on providing services to oil and natural gas operators in South America. Tuscany has operating centers in Colombia, Brazil, and Ecuador. The Colombian and Brazilian businesses are operated by certain non-debtor affiliates, while the Ecuador business is operated by branch office of debtor TID. As of the Petition Date, Tuscany entities owned 26 rigs, of which 12 are located in Colombia, nine in Brazil and five in Ecuador. Of the 26 rigs, 15 were contracted and operational as of the Petition Date and five were directly owned by the Debtors. Attorneys at Latham Watkins LLP and Young Conaway Stargatt & Taylor LLP serve as the Debtors' co-counsel. FTI Consulting Canada, Inc.'s Deryck Helkaa is the chief restructuring officer. Prime Clerk LLC is the claims and notice agent. McCarthy Tetrautt LLP is the special Canadian counsel. Deloitte & Touche LLP is providing tax professionals. TXU CORP: 2014 Bank Debt Trades at 31% Off ------------------------------------------ Participations in a syndicated loan under which TXU Corp. is a borrower traded in the secondary market at 69.08 cents-on-the- dollar during the week ended Friday, February 7, 2014, according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. This represents a decrease of 1.09 percentage points from the previous week, The Journal relates. TXU Corp. pays 350 basis points above LIBOR to borrow under the facility. The bank loan matures on Oct. 10, 2014 and carries Moody's Caa3 rating and Standard & Poor's CCC- rating. The loan is one of the biggest gainers and losers among 205 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. TXU CORP: 2017 Bank Debt Trades at 32% Off ------------------------------------------ Participations in a syndicated loan under which TXU Corp is a borrower traded in the secondary market at 68.71 cents-on-the- dollar during the week ended Friday, February 7, 2014, according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. This represents a decrease of 0.68 percentage points from the previous week, The Journal relates. TXU Corp. pays 450 basis points above LIBOR to borrow under the facility. The bank loan matures on Oct. 10, 2017 and carries Moody's Caa3 rating and Standard & Poor's CCC- rating. The loan is one of the biggest gainers and losers among 205 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. VILLAGE AT NIPOMO: May Continue Cash Collateral Use Until Feb. 28 ----------------------------------------------------------------- The Hon. Alan M. Ahart of the U.S. Bankruptcy Court for the Central District of California has approved the stipulation between The Village at Nipomo, LLC, and Coastline RE Holdings Corp., extending the Debtor's cash collateral use until Feb. 28, 2014. The Debtor can use Coastline's cash collateral solely for the purpose of funding ordinary and necessary costs of operating and maintaining the Debtor's real property. The Debtor will make adequate protection payments to Coastline in the amount of $47,115.90 per month, each month's payment due and payable on the first business day of the month. Any adequate protection payment for the month of January 2014 and any subsequent month that begins before entry of the Jan. 10, 2014 court order will be due and payable no later than the third business day after entry of the order. As adequate protection of Coastline's interests in connection with the Debtor's use of the cash collateral, the Debtor will grant Coastline replacement liens in all categories of assets of the Debtor's estate in which Coastline holds valid and perfected prepetition liens of the same kind and type. About Village at Nipomo The Village at Nipomo, LLC, operator of a shopping center in Tefft and Mary Streets, in Nipomo, California, sought Chapter 11 protection (Bankr. C.D. Cal. Case No. 13-13593) on May 28, 2013. The company sought bankruptcy protection following efforts by Pacific Western Bank to appoint a receiver for the Debtor's commercial shopping center known as "The Village at Nipomo". VAN LLC was formed by Edwin F. Moore, who is currently a member of the Debtor, holding a 25 percent interest in the company. Edwin Moore and Carolyn W. Moore earlier filed a separate Chapter 11 petition (Case No. 12-15817). The Debtor disclosed $11,802,970 in assets and $9,645,558 in liabilities as of the Chapter 11 filing. The Debtor is represented by Illyssa I. Fogel, Esq., at Illyssa I. Fogel & Associates. VERIDIEN CORP: SEC Revokes Registration of Securities ----------------------------------------------------- The U.S. Securities and Exchange Commission revoked the registration of each class of securities of Veridien Corporation registered pursuant to Section 12 of the Exchange Act of 1934. The Company has failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder because it has not filed any periodic reports with the Commission since the period ended Sept. 30, 2008. About Veridien Corp. Headquartered in Largo, Fla., Veridien Corporation (OTC BB: VRDE) -- http://www.veridien.com/-- engages in the development, manufacture, distribution, and sale of disinfectants, antiseptics, and sterilants that are non-toxic and decompose into harmless naturally occurring organic molecules. It primarily offers a hard surface disinfectant/cleaner, which is a tuberculocide, bactericide, virucide, and fungicide; and antiseptic hand sanitizer to sanitize hands or for antiseptic cleansing of hands under the VIRAGUARD brand name. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $1,345,141 in total current assets available to pay $2,912,948 in total current liabilities. Malone & Bailey, PC, in Houston, expressed substantial doubt about Veridien Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring losses from operations, negative cash flow from operations and accumulated deficit. WALTER ENERGY: Bank Debt Trades at 4% Off ----------------------------------------- Participations in a syndicated loan under which Walter Energy Inc. is a borrower traded in the secondary market at 96.29 cents-on- the-dollar during the week ended Friday, February 7, 2014, according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. This represents a decrease of 0.71 percentage points from the previous week, The Journal relates. Walter Energy Inc. pays 575 basis points above LIBOR to borrow under the facility. The bank loan matures on March 14, 2018 and carries Moody's B3 rating and Standard & Poor's B rating. The loan is one of the biggest gainers and losers among 205 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. Walter Energy, Inc. is a metallurgical coal producer with additional operations in metallurgical coke, steam and industrial coal, and natural gas. Headquartered in Birmingham, Alabama, the company generated $2 billion in revenue for the twelve months ended June 30, 2013. WAYNE COUNTY, MI: Fitch Maintains BB- Rating on $195MM LTGO Bonds ----------------------------------------------------------------- Fitch Ratings maintains the Negative Rating Watch for the following Wayne County, Michigan bond ratings: -- $195.5 million limited tax general obligation (LTGO) bonds issued by Wayne County currently rated 'BB-'; -- $58.2 million building authority (stadium) refunding bonds, series 2012 (Wayne County limited tax general obligation) issued by Detroit/Wayne County Stadium Authority currently rated 'BB-'; -- $210.6 million building authority bonds issued by Wayne County Building Authority currently rated 'BB-'; -- Wayne County unlimited tax general obligation (ULTGO) (implied) currently rated 'BB'. The Negative Rating Watch is maintained. Security Limited tax general obligation bonds issued by the county carry the county's general obligation ad valorem tax pledge, subject to applicable charter, statutory and constitutional limitations. Stadium authority and building authority bonds are secured by lease payments from the county to the respective authority. The obligation to make the rental payments is not subject to appropriation, setoff or abatement for any cause, and carries the county's limited tax general obligation pledge. KEY RATING DRIVERS RAPID FINANCIAL DETERIORATION: The speculative grade ratings stem from the county's considerably narrowed liquidity position, the deepening of the general fund accumulated deficit and Fitch's concern regarding the limited options for elimination of the negative position. NEAR-TERM LIQUIDITY CHALLENGES; MARKET ACCESS UNCERTAINTY: The Negative Watch reflects the county's highly illiquid general fund, dependent upon both inter-fund and external short-term borrowing for cash flow. The county anticipates issuing $100 million in tax anticipation notes (TANs) in the spring to meet day-to-day cash flow requirements. Inability to access the market in an economically feasible manner, given the recent uncertainty in the market for Michigan issuers, could negatively affect liquidity and would likely result in a downgrade. STRESSED ECONOMY SLOW TO RECOVER: The weak local area economy is reflected in elevated unemployment rates, population loss, and below-average income levels. The tax base suffered significant declines during the last recession but the rate of decline has recently slowed. REVENUE INFLEXIBILITY LIMITS OPTIONS: Steep tax base declines over the course of the recession caused property tax receipts to plummet 25% between fiscals 2008 and 2013. Strict tax rate limits and statutorily imposed controls on growth in assessments will constrain revenue recovery even as housing values increase. LIMITED EXPENDITURE FLEXIBILITY: Deep across-the-board spending cuts have not been sufficient to restore structural balance. Carrying costs for debt, pension and other post-employment benefits (OPEB) are currently moderate but expected to rise sharply in the near term, further pressuring operations. LEASES CARRY GO PLEDGE: The parity ratings on stadium authority and Building Authority bonds reflect the fact that county lease rental payments are not subject to abatement or appropriation and carry the county's limited tax general obligation pledge. Rating Sensitivities INABILITY TO ACCESS MARKET FOR CASH FLOW: Inability to access the market in an economically feasible manner for cash flow borrowing would severely constrain the county's liquidity position and would trigger a downgrade. FURTHER DETERIORATION OF LIQUIDITY: Deterioration of the county's already precarious liquidity position would likely result in a downgrade. FAILURE TO REDUCE DEFICIT: Fitch believes the county remains severely challenged to stem the decline in its financial position and show material improvement in the near term. Lack of significant progress toward accumulated deficit reduction within the current fiscal year, as evidenced by improvement in its liquidity position and unrestricted general fund balance/deficit, would place negative pressure on the rating. CREDIT PROFILE Near-Term Liquidity Pressure Stressed financial operations have led to sharp declines in liquidity. The county relies upon a pooled cash model, supplemented by external cash flow borrowing to meet its day-to- day cash flow needs. Cash flow projections show these measures will not be sufficient to provide adequate liquidity going forward, leading to higher projected amounts of external borrowing. Careful management of pooled cash resources allowed a delay in the expected December TAN issuance. The county now expects to issue $100 million of TANs in March, prior to a low cash flow point projected for June. The expected transfer of the county's Mental Health Fund, which contained $81 million unrestricted cash and investments at the close of fiscal 2012, will decrease the amount of internal borrowable resources. The transfer of the fund from the county to an independent authority took place on Oct. 1, 2013, although management plans a phased withdrawal of the mental health cash over the course of several years to blunt the impact on the county's liquidity. Large Fund-Deficit Positions The August 2013 ratings downgrade reflected weaker than projected financial performance. The unrestricted accumulated deficit grew in fiscal 2012 and is expected to deepen yet again in fiscal 2013, despite significant expenditure cuts. Fitch is concerned that the even deeper cuts planned for fiscal 2014 may not be enough for meaningful deficit reduction given other budgetary pressures. The county's efforts to reduce its sizeable deficit fund balance positions are hindered by persistent economic pressure and a limited revenue environment. The large -$145.9 million unrestricted general fund balance (representing a very high -25.5% of general fund spending) in fiscal 2012 is primarily the result of steep revenue declines and overspending in funds outside of the general fund. The general fund recorded a $53.2 million net operating deficit (after transfers) in fiscal 2012. Approximately $30.4 million of this was due to absorption of the equipment leasing fund deficit, which was previously reserved for in the general fund. Accordingly, the decline in unrestricted general fund balance was more moderate at $20 million, although still a departure from Fitch's expectation of overall deficit improvement. The county's somewhat dated deficit elimination plan was filed with the state several years ago and has not yet been approved. The county is in the process of developing a new deficit elimination plan later this fiscal year which would rely on different revenue sources. Audited fiscal 2013 results are not yet available, delayed just one month to the end of February, which Fitch still considers timely following the Sept. 30 fiscal year end. County projections show a $30 million general fund operating deficit (after transfers), which could bring the cumulative deficit position to roughly 30% of spending but may be slightly offset by transfers from the delinquent tax revolving fund. Fitch will continue to monitor the county's efforts toward deficit elimination, as measured by the unrestricted general fund balance/deficit. The fiscal 2014 budget features a slight increase in spending and forecasts balanced operations, including a $16 million appropriation for deficit reduction. Fitch notes that final audited results have materially deviated from original budget expectations in recent years. Lack of significant progress toward accumulated deficit reduction within the current fiscal year, as evidenced by improvement in the county's liquidity position and unrestricted general fund balance/deficit, would place negative pressure on the rating. Constrained Revenue-Raising Ability The county's inflexible revenue structure exacerbates the budget effects of its considerable expenditure pressures. Assessed valuation declines caused the general fund annual property tax revenues to decline sharply from $383.5 million in fiscal 2008 to $286.2 million in fiscal 2012. Further declines are projected; the county anticipates general fund property taxes of $266 million in fiscal 2014, resulting in a cumulative 31% decline over the last six years. The county is levying at its maximum millage as limited by the Headlee Amendment, and taxable values continue to drop. Statutory restrictions on growth in the levy and in assessments will constrain future revenue growth, severely limiting the ability of the county to benefit should housing values recover. Other revenue-raising options are limited. As a practical matter, most significant revenue-raising efforts require voter or state support. Management is exploring the idea of requesting voter approval for an additional 1 or 2 mills. The county is subject to a requirement that a supermajority of the county commission approve any ballot proposal to increase taxes; additionally, such a proposal would require a 60% approval of the voters. Fitch is not optimistic given public statements by various county commissioners citing insufficient political support for a millage increase. Expenditure Controls Insufficient to Restore Balance County officials have taken substantive steps to curtail overall spending but measures have not been sufficient to restore balance. Major initiatives include negotiating, or imposing where able, 10% compensation decreases for most employees and implementing health care plan design changes for current employees and retirees, reducing overall health care expenditures. The county's expenditure framework, like revenues, suffers in part from a lack of independent control. The county is responsible for funding certain departments with separately elected leadership. Favorably, the county reached an agreement with one such department, the circuit court. The county now has greater control over court spending which totaled approximately 7% of fiscal 2012 governmental fund expenditures. The fiscal 2014 budget imposes an additional deep 20% across the board departmental spending cut. Fitch remains concerned that these steps, while significant, may not be sufficient to counteract the spending pressures and allow for elimination of the deficit. The county faces a variety of legal actions stemming from its cost cutting measures. Management is confident it will be allowed to maintain the changes; however, the litigation introduces vulnerability to the substantial cost savings generated thus far. Economy Shows Persistent Stress The Detroit area economy remains pressured after severe weakening during the recent recession. Socioeconomic indices for county residents are below average overall, as the effect of impoverished city residents outweighs that of the relatively wealthier suburban residents. Median household income was 84% of the state and 79% of the nation. The poverty rate of 22.7% is well above the state and national averages of 15.7% and 14.3%, respectively. Market value per capita is also well below average at $48,000, reflecting the weakened housing market. The economy remains heavily dependent on the auto industry, despite having lost thousands of manufacturing jobs over the past decade. Several auto manufacturers have announced plans to add jobs within the county, although auto-related employment is not expected to recover to pre-recession levels. The county takes an aggressive stance with economic development and reports success in drawing in new high-tech and engineering jobs, particularly in the 'Aerotropolis,' which surrounds the airport. The county unemployment rate remained above the state and U.S. levels throughout the recession, but is showing signs of improvement. The seasonally unadjusted November 2013 rate of 9.3% is lower than the 10.9% recorded in November 2012 and well below the peak of 17.9% recorded in July 2009. Total employment and the labor force have both contracted severely over the last decade. Recent trends are more favorable, showing employment expanded by 1.7%, outpacing slight contraction in the labor force growth of 0.1% over the past year. Above-Average Debt Burden The high debt burden of 7.0% is largely attributable to considerable borrowing by overlapping governments, but nevertheless presents a practical limitation on future debt issuance flexibility. The county's net direct debt is a modest 0.7% of market value. Payout is average, with 62% of long-term debt to be retired within 10 years. Future new money borrowing plans are uncertain, as plans for the jail construction are in flux. The county recently halted the jail project, for which it borrowed $200 million in 2010, when cost projections rose from $300 million to $390 million. Management is evaluating its options for the site, and recently signed a memorandum of understanding to sell it to Rock Ventures for $50 million. The county continues to study the alternative of moving jail operations to a vacant state facility which would require significant renovations. Fitch will continue to monitor developments and evaluate the potential impact on operating and capital costs. Rising Legacy Costs The county maintains two single-employer pension plans, the smaller of which is currently fully funded from state contributions. The larger plan reported a 45.9% funding ratio at the end of FY2012 using the county's 7.75% return assumption, or an estimated weak 42.4% funding ratio when adjusted by Fitch to reflect a 7% discount rate. The pension actuarial required contribution (ARC) has more than tripled in recent years, from $18.4 million in 2008 to $51.7 million in fiscal 2012. The county contributed less than the ARC in fiscals 2011 and 2012, relying upon transfers from the pension fund's inflation equity reserve to make up the difference. This strategy resulted in technical meeting of the ARC, but not an overall increase in pension assets. The county currently funds its other post-employment benefits (OPEB) on a pay-as-you-go basis. The unfunded actuarially accrued liability is large at $1.5 billion or 0.9% of market value. County management has at times discussed the idea of issuing $600 million of OPEB funding bonds, but no firm plans are in place. Carrying costs for debt service, pension ARC and OPEB pay-go are currently moderate at 16.4% of governmental spending (net of capital projects and mental health funds); however, Fitch expects carrying costs to rise significantly in the near term, given the trajectory of the pension ARC, and the county's recent history of underfunding it. WESTLAKE CENTER: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Westlake Center, LLC 560-566 W. Lake St. Chicago, IL 60661 Case No.: 14-03682 Chapter 11 Petition Date: February 5, 2014 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Hon. Janet S. Baer Debtor's Counsel: Linda Spak, Esq. SPAK & ASSOC 6938 N Kenton Lincolnwood, IL 60712 Tel: 312 372-8703 Fax: 773 338-4956 Email: attorneyspak@yahoo.com 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. WJO INC: Owner Balks at Aumiller Lomax Hiring as Special Counsel ---------------------------------------------------------------- William J. O'Brien, III, D.O., sole owner of WJO Inc., objected to the motion filed by Chapter 11 trustee Alfred T. Giuliano to employ Aumiller Lomax LLC as special counsel to prosecute claims related to the Office of Worker's Compensation Program. Mr. O'Brien said that: 1. there are already specialists hired to do the work; 2. Aumiller Lomax has no connection with the Debtor, creditors, or any party of interest". This only hurts settlement discussions; and 3. the Trustee's previous selections have been less than average. One was found by the court to be less then truthful, the other didn't know the law but was happy to pontificate total nonsense on the stand. As reported in the Troubled Company Reporter on Dec. 2, 2013, the Chapter 11 Trustee proposes to pay Aumiller Lomax on a contingency fee basis of 20% of any recovery. The trustee proposes this procedure for payment of the Contingency Fee to Aumiller Lomax: (a) upon receipt of each recovery, AL will immediately forward the monies to the trustee; (b) if Bankruptcy Court approval of the recovery/settlement is not required, the Trustee may pay AL the contingency fee upon clearance of the funds; and (c) if Bankruptcy Court approval of the recovery/settlement is required, the Trustee may pay AL the contingency fee only after a final Bankruptcy Court order approving the recovery/settlement. AL will also be reimbursed for reasonable out-of-pocket expenses incurred. Aaron B. Aumiller, principal of Aumiller Lomax, 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. About WJO Inc. Bristol, Pennsylvania-based WJO, Inc., operates six family practices located in Newtown, Bristol, Bensalem, Bustleton, South Philadelphia, and Bethlehem, Pennsylvania and consists of Board Certified Osteopathic Physicians specializing in Family Medicine. Prior to the petition date, and to allow the Company to restructure effectively, HyperOx Inc., HyperOx I, LP, HyperOx III, LP, and East Coast TMR, Inc., were merged into WJO. WJO filed for Chapter 11 bankruptcy protection (Bankr. E.D. Pa. Case No. 10-19894) on Nov. 15, 2010. The Debtor disclosed $19,923,802 in assets and $6,805,255 in liabilities as of the Chapter 11 filing. Holly Elizabeth Smith, Esq., and Thomas Daniel Bielli, Esq., at Ciardi Ciardi & Astin, P.C., serve as the Debtor's bankruptcy counsel. Pond Lehocky Stern Giordano serves as the Debtor's special counsel to represent it in worker's compensation proceedings pertaining to the Therapeutic Magnetic Resonance treatments. Patrick Yun serves as the Debtor's financial advisor. Attorneys at Keifer & Tsarouhis LLP serve as counsel to the official committee of unsecured creditors. ParenteBeard LLC serves as the Committee's accountant and financial advisor. The United States Trustee has appointed David Knowlton as patient care ombudsman in the case. The Ombudsman is represented in the case by Karen Lee Turner, Esq., at Eckert Seamans Cherin & Mellott, LLC, as counsel. Tristate Capital Bank, the cash collateral lender, is represented in the case by lawyers at Benesch Friedlander Coplan & Aronoff LLP. On July 3, 2012, Roberta A. DeAngelis, U.S. Trustee for Region 3, obtained permission from the Hon. Jean K. Fitzsimon of the U.S. Bankruptcy Court for the Eastern District of Pennsylvania to appoint Alfred T. Giuliano as Chapter 11 trustee of the bankruptcy estate of WJO, Inc. Maschmeyer Karalis P.C. serves as the Chapter 11 Trustee's general bankruptcy counsel. XTREME POWER: U.S. Trustee et al. Protest Asset Sale ---------------------------------------------------- Judy A. Robbins, United States Trustee for Region 7, and several entities object to the request filed by Xtreme Power Inc. and its debtor-affiliates with the U.S. Bankruptcy Court for the Western District of Texas for approval of bidding procedures for the sale of substantially all assets. The U.S. Trustee objects to the Debtors' request to waive compliance with Local Rule of Bankruptcy Procedure 1020.1, the guidelines for early disposition of assets in Chapter 11 cases, the sale of substantially all assets under Section 363, and overbid and topping fees. According to the U.S. Trustee, the Debtors have not filed schedules in this case. There are certain requirements of Local Rule 1020.1 that have not been met by the Debtors' motion, including debt structure of the Debtors and any discussion on the estimated gross proceeds and estimate of net proceeds, the U.S. Trustee notes. The U.S. Trustee points out that certain of the required information is included in the Debtors' motion and some of the requirements are geared toward a specific buyer and therefore not applicable to the sale requested by the Debtors. However, parties in interest are entitled to have at least a general knowledge of what the Debtors are proposing to sell and what they can expect from the sale. T.S Trustee said it also objects to what appears to be a limitation of notice of future events. The Debtors should be required to comply with the required notice unless cause is shown to limit notice. Specifically, the Motion limits notice of a request for break-up fee, attending the auction, objections to the approval of the sale of assets to the prevailing bidder, assignment notice and, in general, the contract procedures. Other entities who object to the Debtors' request include: -- First Wind Holdings LLC; -- City of Austin Police Retirement System; -- Notrees Windpower LP and Duke Energy Transmission Holding Company LP; -- Horizon Batteries LLC, Idling Solutions LLC and Horizon Batteries Real Estate LLCs; -- ME Projects LLC; and -- Toshiba International Corporation. Asset Sale As reported in the Troubled Company Reporter on Jan. 31, 2014, the Debtors' counsel, Shelby A. Jordan, Esq., at Jordan, Hyden, Womble, Culbreth & Holzer, P.C., in Austin, Texas, said 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 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 said 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 proposed 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 was set for Feb. 6, 2014, at 1:30 p.m. 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. YBA NINETEEN: District Court Affirms Chapter 7 Conversion --------------------------------------------------------- District Judge William Q. Hayes affirmed a bankruptcy court order dated Oct. 4, 2013, converting the Chapter 11 case of YBA Nineteen, LLC, to a liquidation under Chapter 7 of the Bankruptcy Code. The appellate case is, YBA NINETEEN, LLC, Appellant, v. INDYMAC VENTURE, LLC, Appellee, Civil No. 13cv2426-WQH-RBB (Bankr. S.D. Cal.). A copy of the Court's Feb. 4 Order is available at http://is.gd/lCqYdRfrom Leagle.com. Secured lender IndyMac Venture LLC had asked the Bankruptcy Court to deny approval of the Debtor's disclosure statement and convert the case to a case under chapter 7 of the Bankruptcy Code. YORK ENTERPRISES: Case Summary & 14 Unsecured Creditors ------------------------------------------------------- Debtor: York Enterprises, LLC 515 Williams Street South Haven, MI 49090 Case No.: 14-00628 Chapter 11 Petition Date: February 6, 2014 Court: United States Bankruptcy Court Western District of Michigan (Grand Rapids) Judge: Hon. Jeffrey R. Hughes Debtor's Counsel: James Shek, Esq. JAMES SHEK LAW OFFICE 225 Hubbard Street, Ste B P.O. Box A Allegan, MI 49010 Tel: 269-673-3547 Email: tshingle@yahoo.com Total Assets: $1.64 million Total Liabilities: $843,397 The petition was signed by Frank J. York, sole member/manager. A list of the Debtor's 14 largest unsecured creditors is available for free at http://bankrupt.com/misc/miwb14-628.pdf YRC WORLDWIDE: Teamsters Certifies Ratification of Vote Results --------------------------------------------------------------- The Teamsters National Freight Industry Negotiating Committee (TNFINC) certified the results of the Teamsters ratification vote and that, on a related note, the certified Amended Memorandum of Understanding (MOU) satisfied the relevant condition of the equity transaction announced on December 23rd. "The ratification of the revised MOU, our improved performance and the committed equity transaction clear the way for us to enter the senior debt markets to refinance our current term and asset-based loans," said Jamie Pierson, chief financial officer of YRC Worldwide. As previously announced on Dec. 23, 2013, the company has entered into agreements whereby the company would issue $250 million of common stock and preferred stock and use the proceeds to pay off its existing 6 percent Convertible Notes due February 2014 and defease or pay off its existing Series A Convertible Notes due March 2015. In addition, holders of approximately $50 million in principal amount of the company's existing Series B Convertible Notes due March 2015 have agreed to exchange or convert those notes to common stock, further reducing the company's debt. The investors have confirmed that the revised MOU is satisfactory under the terms of these existing agreements. The company held a bank meeting on Jan. 28, 2014, to launch the new senior credit facilities. To Refinance Existing Facilities YRC Worldwide Inc. launched a process to refinance its existing ABL and term loan facilities with a new $450 million ABL facility and a new $700 million term loan facility. As contemplated, the refinancing would extend the maturity of the Company credit facilities and reduce cash interest expense. The Company will be meeting with potential lenders in connection with the refinancing and will be giving those lenders certain financial information that gives effect to, among other things, the previously announced extension of the Company's collective bargaining agreement with the International Brotherhood of Teamsters, including (i) that it expects Adjusted EBITDA for the year ended Dec. 31, 2013, to be approximately $250-260 million, (ii) that it expects pro forma Adjusted EBITDA for the year ended Dec. 31, 2013, giving effect to the projected cost savings from the Amended IBT Agreement as if it had been implemented on Jan. 1, 2013, would have been approximately $320-330 million and (iii) that it forecasts Adjusted EBITDA for fiscal 2014 will be approximately $350-360 million if the Amended IBT Agreement is ratified and fully implemented. About YRC Worldwide Headquartered in Overland Park, Kan., YRC Worldwide Inc. (NASDAQ: YRCW) -- http://www.yrcw.com/-- is a holding company that offers its customers a wide range of transportation services. These services include global, national and regional transportation as well as logistics. For the year ended Dec. 31, 2012, the Company incurred a net loss of $136.5 million on $4.85 billion of operating revenue, as compared with a net loss of $354.4 million on $4.86 billion of operating revenue during the prior year. As of Sept. 30, 2013, the Company had $2.13 billion in total assets, $2.79 billion in total liabilities and a $665.8 million total shareholders' deficit. * * * As reported by the TCR on Aug. 2, 2013, Moody's Investors Service affirmed the rating of YRC Worldwide, Inc., corporate family rating at Caa3. The ratings outlook is has been changed to positive from stable. "The positive ratings outlook recognizes the important progress that YRCW has made in restoring positive operating margins through implementation of yield management initiatives, during a period of stabilizing demand in the less than truckload ('LTL') segment," the report stated. In August 2011, Standard & Poor's Ratings Services raised its corporate credit rating on YRC Worldwide Inc. to 'CCC' from 'SD' (selective default), after YRC completed a financial restructuring. Outlook is stable. YRC WORLDWIDE: Amends Agreements with Solus Alternative, et al. --------------------------------------------------------------- Solus Alternative Asset Management LP, Solus GP LLC, and Christopher Pucillo and certain affiliated funds and YRC Worldwide, Inc., entered into Amendment No. 1 to the Stock Purchase Agreement and Amendment No. 1 to the Exchange Agreement. The purpose of the amendments was to change the definition of the IBT Agreement to a new extension agreement for the Restructuring of the YRC Worldwide Inc. Operating Companies as approved for presentation to the "two-man committee" by the Teamsters National Freight Industry Negotiating Committee of the International Brotherhood of Teamsters on Jan.17, 2014, by and among YRC Inc., USF Holland, Inc., New Penn Motor Express, Inc. and USF Reddaway and the TNFINC. Solus Alternative, et al., disclosed that as of Jan. 27, 2014, they beneficially owned 800,715 shares of common stock of YRC Worldwide Inc. representing 6.82 percent of the shares outstanding. A copy of the regulatory filing is available for free at: http://is.gd/5MLqiC About YRC Worldwide Headquartered in Overland Park, Kan., YRC Worldwide Inc. (NASDAQ: YRCW) -- http://www.yrcw.com/-- is a holding company that offers its customers a wide range of transportation services. These services include global, national and regional transportation as well as logistics. For the year ended Dec. 31, 2012, the Company incurred a net loss of $136.5 million on $4.85 billion of operating revenue, as compared with a net loss of $354.4 million on $4.86 billion of operating revenue during the prior year. As of Sept. 30, 2013, the Company had $2.13 billion in total assets, $2.79 billion in total liabilities and a $665.8 million total shareholders' deficit. * * * As reported by the TCR on Aug. 2, 2013, Moody's Investors Service affirmed the rating of YRC Worldwide, Inc., corporate family rating at Caa3. The ratings outlook is has been changed to positive from stable. "The positive ratings outlook recognizes the important progress that YRCW has made in restoring positive operating margins through implementation of yield management initiatives, during a period of stabilizing demand in the less than truckload ('LTL') segment," the report stated. In August 2011, Standard & Poor's Ratings Services raised its corporate credit rating on YRC Worldwide Inc. to 'CCC' from 'SD' (selective default), after YRC completed a financial restructuring. Outlook is stable. * BAPCPA Likely Limited Personal Bankruptcies --------------------------------------------- Ben Leubsdorf, writing for Daily Bankruptcy Review, reported that more Americans probably would have gone bankrupt and wiped out their debts during the recession had not Congress, just a couple years earlier, made it more expensive to file for bankruptcy, according to new research from the Federal Reserve Bank of St. Louis. * Fitch: Expired Tax Relief Adds Pressure to Troubled Borrowers --------------------------------------------------------------- The recently expired tax relief provided by the Mortgage Forgiveness Debt Relief Act (MFDRA) of 2007 may lead to modestly negative pressure on liquidation timelines and recoveries for legacy U.S. mortgage investors if it is not renewed, according to Fitch Ratings. The tax relief expired Jan. 1, 2014, creating larger tax burdens for underwater borrowers who receive some form of mortgage debt forgiveness. If the tax breaks are not renewed, Fitch expects declines in short sale volume, fewer principal forgiveness modifications, and higher re-default rates on those that are granted. Mortgage debt that is cancelled or forgiven by the lender - through a foreclosure, short sale or loan modification - is typically considered income for tax purposes. The MFDRA provided tax relief by allowing certain borrowers to exclude such income on their tax returns. The act applied only to debt associated with a primary residence, and no more than $2 million of debt could be excluded per year. The MFDRA was originally signed into law in December 2007 and Congress is currently considering several bills that would extend the tax relief through 2015 or 2016. The extension has broad support from state attorneys general, and most housing and consumer advocacy groups. However, the passage of an extension bill by Congress is not a given, and at present the tax breaks remain expired. Fitch expects a decline in the volume of short sales and principal forgiveness modifications as a result of the MFDRA's expiration. Without the tax exemption on the forgiven debt amount, there is less incentive for distressed borrowers to agree to a voluntary property sale that will not pay the loan off in full. This in turn will likely increase the number of involuntary foreclosure sales. The MFDRA's expiration also provides servicers less incentive to offer principal forgiveness modifications since the tax burden on the borrower increases the likelihood of re-default. Servicers may increasingly opt instead for principal forbearance, which requires the borrower to repay the reduced principal amount at the end of the loan term. If Congress does not extend the MFDRA, the rating implications are likely to be modestly negative for legacy U.S. RMBS. In 2013, voluntary short sales accounted for roughly half of all distressed property sales within U.S. RMBS and short sales experienced faster resolutions and higher recoveries than involuntary sales. A reduction in short sale activity will likely increase negative pressure on both timelines and recoveries, offsetting some of the benefits of the recent gains in home prices. * Ex-SAC Trader Convicted of Securities Fraud --------------------------------------------- Alexandra Stevenson and Matthew Goldstein, writing for The New York Times' DealBook, reported that Mathew Martoma had been on his way to being another American success story. On Feb. 6, he is the eighth person who once worked for the hedge fund titan Steven A. Cohen to be convicted of insider trading. According to the report, a federal jury in Manhattan on Feb. 6 found Mr. Martoma guilty of seeking out confidential information related to a clinical trial for an experimental drug for Alzheimer's disease -- information that enabled Mr. Cohen's SAC Capital Advisors to earn $275 million. The son of immigrant parents from India, Mr. Martoma, 39, graduated from Duke, attended Harvard Law School and earned an M.B.A. from Stanford Business School before he landed a job as portfolio manager at SAC, one of the most successful hedge funds in the world, the report related. Now, Mr. Martoma is expected to receive a sentence of seven to 10 years in prison, legal experts said, the report further related. As a guilty verdict on two counts of securities fraud and one count of conspiracy was read in the courtroom in Lower Manhattan, Mr. Martoma's wife, Rosemary, a pediatrician, cried, while he sat stone-faced, the report said. * 4th Cir. Appoints Benjamin Kahn as M.D.N.C. Bankruptcy Judge -------------------------------------------------------------- The Fourth Circuit Court of Appeals appointed Bankruptcy Judge Benjamin A. Kahn to a fourteen-year term of office in the Middle District of North Carolina, effective February 3, 2014, (vice, Stocks, retired). Honorable Benjamin A. Kahn United States Bankruptcy Court 101 S. Edgeworth Street Greensboro, NC 27401 Julie Grimley Law Clerk Telephone: 336-358-4091 Linda McKnight Judicial Assistant Telephone: 336-358-4081 Fax: 336-358-4085 Term expiration: February 2, 2028 * BOND PRICING: For Week From Feb. 3 to 7, 2014 ----------------------------------------------- Company Ticker Coupon Bid Price Maturity Date ------- ------ ------ --------- ------------- AES Eastern Energy LP AES 9.670 4.125 1/2/2029 AES Eastern Energy LP AES 9.000 1.750 1/2/2017 Alion Science & Technology Corp ALISCI 10.250 71.750 2/1/2015 Buffalo Thunder Development Authority BUFLO 9.375 39.500 12/15/2014 Cengage Learning Acquisitions Inc TLACQ 10.500 28.000 1/15/2015 Cengage Learning Acquisitions Inc TLACQ 12.000 22.625 6/30/2019 Cengage Learning Acquisitions Inc TLACQ 13.250 1.375 7/15/2015 Cengage Learning Acquisitions Inc TLACQ 10.500 28.000 1/15/2015 Cengage Learning Acquisitions Inc TLACQ 13.250 1.375 7/15/2015 Cengage Learning Holdco Inc TLACQ 13.750 1.375 7/15/2015 Champion Enterprises Inc CHB 2.750 0.375 11/1/2037 Cott Beverages Inc BCBCN 8.375 104.250 11/15/2017 DAE Aviation Holdings Inc DAEAVI 11.250 97.750 8/1/2015 Energy Conversion Devices Inc ENER 3.000 7.875 6/15/2013 Energy Future Competitive Holdings Co LLC TXU 8.175 10.000 1/30/2037 Energy Future Holdings Corp TXU 5.550 39.390 11/15/2014 FairPoint Communications Inc/Old FRP 13.125 1.000 4/2/2018 FiberTower Corp FTWR 9.000 0.625 1/1/2016 James River Coal Co JRCC 7.875 18.665 4/1/2019 James River Coal Co JRCC 4.500 13.467 12/1/2015 James River Coal Co JRCC 10.000 18.500 6/1/2018 James River Coal Co JRCC 10.000 19.875 6/1/2018 James River Coal Co JRCC 3.125 24.000 3/15/2018 JPMorgan Chase Bank NA JPM 6.000 78.962 8/19/2014 LBI Media Inc LBIMED 8.500 30.000 8/1/2017 Lehman Brothers Holdings Inc LEH 1.000 19.750 8/17/2014 Lehman Brothers Holdings Inc LEH 1.000 19.750 8/17/2014 OnCure Holdings Inc RTSX 11.750 48.875 5/15/2017 Platinum Energy Solutions Inc PLATEN 14.250 74.750 3/1/2015 Platinum Energy Solutions Inc PLATEN 14.250 74.750 3/1/2015 Platinum Energy Solutions Inc PLATEN 14.250 74.750 3/1/2015 Platinum Energy Solutions Inc PLATEN 14.250 74.750 3/1/2015 Powerwave Technologies Inc PWAV 1.875 0.125 11/15/2024 Powerwave Technologies Inc PWAV 1.875 0.125 11/15/2024 Pulse Electronics Corp PULS 7.000 78.302 12/15/2014 Residential Capital LLC RESCAP 6.875 30.704 6/30/2015 Savient Pharmaceuticals Inc SVNT 4.750 0.248 2/1/2018 School Specialty Inc/Old SCHS 3.750 37.875 11/30/2026 Scotia Pacific Co LLC MXM 7.710 0.188 1/20/2014 Scotia Pacific Co LLC MXM 6.550 0.875 1/20/2007 Sealed Air Corp SEE 12.000 99.500 2/14/2014 Texas Competitive Electric Holdings Co LLC / TCEH Finance Inc TXU 10.250 5.625 11/1/2015 Texas Competitive Electric Holdings Co LLC / TCEH Finance Inc TXU 15.000 32.500 4/1/2021 Texas Competitive Electric Holdings Co LLC / TCEH Finance Inc TXU 10.250 4.900 11/1/2015 Texas Competitive Electric Holdings Co LLC / TCEH Finance Inc TXU 10.500 5.625 11/1/2016 Texas Competitive Electric Holdings Co LLC / TCEH Finance Inc TXU 15.000 35.800 4/1/2021 Texas Competitive Electric Holdings Co LLC / TCEH Finance Inc TXU 10.250 5.500 11/1/2015 Texas Competitive Electric Holdings Co LLC / TCEH Finance Inc TXU 10.500 5.125 11/1/2016 THQ Inc THQI 5.000 43.500 8/15/2014 TMST Inc THMR 8.000 20.000 5/15/2013 USEC Inc USU 3.000 36.500 10/1/2014 WCI Communities Inc/Old WCI 4.000 0.625 8/5/2023 Western Express Inc WSTEXP 12.500 61.375 4/15/2015 Western Express Inc WSTEXP 12.500 61.375 4/15/2015 Windermere Baptist Conference Center WINBAP 8.400 2.000 11/15/2033 ********* 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 ***