/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/140604.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, June 4, 2014, Vol. 18, No. 153 Headlines 11850 DEL PUEBLO: Hearing on Case Dismissal Bid Moved to June 18 3333 MAIN: SA Challenger Wins Chapter 7 Conversion ACE AVIATION: Claims Bar Date Set for July 18 ADVANCED MICRO: Moody's Rates $400MM Senior Unsecured Notes 'B2' ADVANCED MICRO: S&P Assigns 'B' Rating to Sr. Notes Due 2024 AMERICAN INTERNATIONAL: Former Chief Must Face N.Y. Suit ALCOA INC: US Tax Court Says Trusts Not Liable for Company's Debts ARCTIC GLACIER: Unitholders' Meeting in Toronto on Aug. 11 ARCTIC GLACIER: Affected Creditors' Meeting in Toronto on Aug. 11 ARMORWORKS ENTERPRISES: Fourth Amended Plan Filed BABCOCK & WILCOX: Moody's Affirms 'Ba1' Corporate Family Rating BABCOCK & WILCOX: S&P Affirms 'BB+' CCR; Outlook Stable BAYONNE ENERGY: Moody's Rates $530MM Senior Secured Debt 'Ba3' BAYONNE ENERGY: S&P Assigns 'BB' Rating to $500MM Term Loan BERKS BEHAVIORAL: Court Rules on St. Joe's Sanctions Bid BIG M: Seibert Severance Claim Not Entitled to Admin Status BLUEJAY PROPERTIES: Reaches Settlement with BBOK & Kaw Valley BROOKFIELD GROUP: 401k Plan Members' Response Deadline Due July 1 BUCCANEER RESOURCES: Case Summary & 30 Top Unsecured Creditors BUNDY CANYON: Consolidated With Asset Resolution Case CASA CASUARINA: Confirms Amended Reorganization Plan CENTURY FABRICATORS: Case Summary & Top Unsecured Creditors CHARLES FRANCIS PATERNO: ArborOne Loses Bid to Convert Case CHEYENNE HOTEL: Court Dismisses Suit Against Colorado Casualty CHA CHA ENTERPRISES: Court Won't Stay Plan Order Pending Appeal CODERE SA: Spanish Casino Co. Extends Talks Over $1.3B Debt CONNECTEDU INC: Wins Approval to Sell CoursEval Without Auction CONSOLIDATED MERIDIAN: Suit v. Berg, Moss Adams Reinstated DETROIT, MI: Some Retirees Sent Wrong Bankruptcy Ballots DETROIT, MI: Early Returns Show Support for Bankruptcy Plan DFC GLOBAL: S&P Assigns 'B' Rating to Proposed 6-Yr. Sr. Notes DIGERATI TECHNOLOGIES: Plan Directors Need to Be 'Disinterested' DIKA-ROCKFORD: Case Summary & 16 Largest Unsecured Creditors DOLLAR FINANCIAL: Moody's Affirms 'B2' Corporate Family Rating E & C FASHION: Voluntary Chapter 11 Case Summary E H MITCHELL: Case Dismissal Hearing Moved to June 18 Afternoon EARL GAUDIO: Court Approves Martin Auction Services as Auctioneer ECOTALITY INC: Settlement Resolving Nissan Claims Approved EDGENET INC: Ex-Principals Want More Time to Bid in Ch. 11 Auction ENERGY FUTURE: Bid to Transfer Case to Texas Court Denied EVERGREEN INTERNATIONAL: Gets Nod on $5-Mil. Asset Sale FL 6801: Lehman Subsidiary Commences Ch. 11 for Miami Hotel FL 6801 SPIRITS: Case Summary & 13 Largest Unsecured Creditors GARY L REINERT: Court Denies Bankruptcy Discharge GENERAL MOTORS: Ignition-Switch Compensation Plan Weeks Away GENERAL MOTORS: Engineer Talks to Investigators GENERAL MOTORS: Has Made $22.6B While Taxpayers Lost $10.6B GRIDWAY ENERGY: Seeks OK for Ch. 11 Settlement with Creditors HILLMAN GROUP: S&P Affirms 'B' CCR & Removes From Watch Negative HUNTSMAN INTERNATIONAL: Moody's Keeps B1 Rating Over Add-on Notes IGPS COMPANY: Purchaser Is Being Legally Taxed, Says NY AG INSTITUTO MEDICO: Monge Robertin Approved as Restructuring Advisor JACK COOPER: Moody's Lowers Corporate Family Rating to 'B3' JAMES RIVER: Seeks to Pay $2.7-Mil. Bonuses to Executives JOHNSON CITY, TN: Moody's Hikes Revenue Bond Rating to 'Ba1' JORENE E MIZE: Frazee Law Group Allowed $45,000 in Fees LEVEL 3: Fitch Raises Issuer Default Rating to 'B+' LEWER LIFE: A.M. Best Affirms 'B' Financial Strength Rating LIGHTSQUARED INC: Garmin Moves to Dismiss Contract Claims LONGVIEW POWER: Revises Bankruptcy Exit Plan MALAYSIA AIRLINES: Union Calls for CEO to Resign MATERIAL MANAGEMENT: Judge Converts Case to Chapter 7 MBE CHARLESTON: Case Summary & 12 Largest Unsecured Creditors MF GLOBAL: PWC Raises Equal Fault Defense in Suit MI PUEBLO: Court Won't Stay Confirmation Order Pending Appeal MONTANA ELECTRIC: Plan Confirmation Hearing Moved to June 13 NEW STREAMWOOD: Voluntary Chapter 11 Case Summary NORTH STAR CHARTER: S&P Lowers Facility Revenue Bonds Rating to D P.F. CHANG'S: Moody's Lowers Corporate Family Rating to 'B3' PHILADELPHIA ENTERTAINMENT: Says Pennsylvania Owes $50-Mil. PILGRIM'S PRIDE: Said to Raise Bid for Hillshire PROSPECT SQUARE: Conundrum Group Approved as Special Counsel QIMONDA AG: Risk To Patent Portfolios May Diminish Ch. 15 Allure QUANTUM FOODS: Gets OK To Hire Liquidation Agent RED OAK: S&P Affirms 'B+' Rating on $384MM Sr. Secured Bonds REFCO PUBLIC: Hires American Legal as Administrative Advisor RESTAURANT INTERIORS: Case Summary & 20 Top Unsecured Creditors RIH ACQUISITIONS: Caesars Flips Atlantic Club To Florida Hotelier SALUTARIS DIALYSIS: Suit vs. Bankr. Counsel Goes to Trial SEASONS PROMENADE: Voluntary Chapter 11 Case Summary SEVEN COUNTIES: Entitled to Ch.11 Relief & Rejects KERS Contract SHEARER'S FOODS: Moody's Confirms 'B2' CFR; Outlook Negative SHEARER'S FOODS: S&P Affirms 'B' CCR & Removes From Watch Neg. SHENGDATECH INC: Trust May Amend Malpractice Suit v. Baker Tilly SLAVIE FEDERAL SAVINGS: Maryland Bank Failure is 9th in 2014 SOUTHERN STAR: S&P Assigns 'BB+' Rating to $450MM Notes Due 2022 SPECIALTY HOSPITAL: U.S. Trustee Seeks Dismissal of Bankruptcy ST CATHERINE HOSPITAL INDIANA: Dist. Court Rules in FSSA Appeal SUNSTONE CORPORATION: Voluntary Chapter 11 Case Summary TAM OF ALLEGHENY: Liquor License to Be Sold Off June 10 TELEXFREE LLC: Will Have Chapter 11 Trustee TELEXFREE LLC: Says Portions of TRO Violate Automatic Stay TELEXFREE LLC: Wants Until June 16 to File Schedules & Statements TELEXFREE LLC: Gordon Silver Approved as Bankruptcy Counsel TELEXFREE LLC: Greenberg Traurig Okayed as Bankruptcy Co-Counsel TELEXFREE LLC: Reaching Out to Investors, Creditors TRI POINTE: Moody's Assigns First Time B1 Corporate Family Rating TRI POINTE: S&P Assigns B+ CCR & Rates Proposed $800MM Notes BB- TUCKER & SONS: Case Summary & 6 Largest Unsecured Creditors UNITED CONTINENTAL: S&P Affirms 'B' CCR; Outlook Stable UNITED SECURITY: A.M. Best Affirms 'C-' Finc'l Strength Rating UNIVERSITY HEMATOLOGY: Case Summary & 19 Top Unsecured Creditors USEC INC: Disclosure Statement Hearing Adjourned to July 7 VALEANT PHARMACEUTICALS: Moody's Keeps Rating over Allergen Deal WALDMAN DIAMONDS: Files to Stop Seizure by Bank Leumi * Brokers Dodge Customer Complaints with Bankruptcy * Circuit Rules on Preservation of Voided Mortgage * Efforts to Curb College Costs Face Resistance * Wells Fargo Can't Shake L.A. Lawsuit Over Predatory Loans * LBOs Account for Nearly A Third of Defaults Since Crisis * Pa. Lawyer, Client Charged By Feds in Bankruptcy Fraud * Hangley Atty in Line to Nab Fed Bankruptcy Judgeship ********* 11850 DEL PUEBLO: Hearing on Case Dismissal Bid Moved to June 18 ---------------------------------------------------------------- A status conference on the management of 11850 Del Pueblo, LLC's Chapter 11 case and its motion for dismissal of its Chapter 11 case is continued to June 18, 2014 at 11:00 AM, before Judge Robert N. Kwan of the U.S. Bankruptcy Court Central District of California. The Debtor sought for the dismissal of its case following the resolution of the two-party dispute that brought it to bankruptcy. The Debtor commenced the case in September 2012, in response to precipitous action taken by its secured lender in the midst of what the Debtor believed to be good faith negotiations concerning the restructuring of the secured debt on the shopping mall, owned and operated by the Debtor, located at 11820-11850 Valley Boulevard, in El Monte, California. After the case was filed, negotiations between the Debtor and the secured lender resumed and in October 2013, they reached agreement on terms and conditions for a consensual sale of the Property and an allocation of the sale proceeds. The Property has now been sold and the lender has since been paid its share of the proceeds, and the disputes between the Debtor and the secured lender have otherwise been resolved. The U.S. Trustee has objected to the motion to dismiss, arguing that the Debtor must pay the quarterly U.S. Trustee fees prior to the dismissal of the Chapter 11 case. About 11850 Del Pueblo 11850 Del Pueblo, LLC, first filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 12-42819) in Los Angeles on Sept. 27, 2012. The Debtor, a Single Asset Real Estate under 11 Sec. 101(51B), owns property on 11850 Valley Boulevard, in El Monte, California. The property, according to the schedules filed together with the petition, is worth $9 million and secures a $17.5 million claim. The Court eventually dismissed the bankruptcy case on Oct. 12, 2012, due to the Debtor's failure to timely file certain necessary documents. The Debtor filed a second petition (Bankr. C.D. Cal. 12-44726) on Oct. 15, 2012. Bankruptcy Judge Robert N. Kwan presides over the case. Patrick Galentine is the duly appointed state court receiver and custodian for the Debtor. Craig A. Welin, Esq., and Reed S. Wadell, Esq., serve as bankruptcy counsel for the receiver. U.S. Bank National Association, as trustee, successor-in-interest to Bank of America, N.A., as Trustee, as successor by merger to LaSalle Bank National Association, as Trustee, for the Registered Holders of Deutsche Mortgage & Asset Receiving Corporation Mortgage Pass-Through Certificates, Series CD2006-CD3, is represented by Alan M. Feld, Esq., M. Reed Mercado, Esq., and Adam McNeile, Esq., at Sheppard, Mullin, Richter & Hampton LLP. 3333 MAIN: SA Challenger Wins Chapter 7 Conversion -------------------------------------------------- SA Challenger, Inc., won conversion of the Chapter 11 case of 3333 Main, LLC, to a case under Chapter 7 of the Bankruptcy Code. Challenger, an under-secured creditor of the Debtor, objects to certain unsecured claims and sought Chapter 7 conversion. The Debtor disputes Challenger's standing to object and opposed the conversion motion. Bankruptcy Judge Alan H.W. Shiff's May 29, 2014 Memorandum and Order, siding with Challenger, is available at http://is.gd/C1Lazd from Leagle.com. 3333 Main, LLC, filed a Chapter 11 bankruptcy petition (Bankr. D. Conn. Case No. 13-51533) on Sept. 30, 2013. The Debtor filed together with the petition the required schedules, including "Schedule F - Creditors Holding Unsecured Nonpriority Claims". The Debtor scheduled 15 unsecured creditors on Schedule F. Challenger was scheduled by the Debtor as a creditor holding a secured claim of $1,352,000 of which $492,000 was an unsecured portion. On Dec. 6, 2013, the Debtor filed amended schedules, including an Amended Schedule D, which continued to list Challenger's secured claim as $1,352,000, but amended the unsecured portion of that claim to $977,000 and included the following notation: "Value to be determined by appraisal". On Jan. 27, 2014, Challenger filed a proof of claim, with different numbers than those scheduled by the Debtor, by asserting a claim of $1,184,362.98, of which it designated $860,000.00 as secured and $324,362.98 as unsecured. On Feb. 14, 2014, with one exception, Challenger filed objections to the claims of each of the Schedule F Creditors. On March 7, 2014, the Debtor opposed the Claims Objections. None of the Schedule F Creditors responded to the Claims Objections. The unsecured creditors listed on Schedule F are: (1) 3333 Main Street, LLC Loan $1.00 (2) Bank of America Loan $1.00 (3) Branford Railside, LLC Loan $1.00 (4) Dahill Donofrio Subordination/ Indemnification for Mortgage debt $1,100,000.00 (5) Equity Release Hldg Corp. Loan $50,000.00 (6) Equity Release Hldg Corp. Loan $200,000.00 (7) GF Mortgage Corp. Loan $421,000.00 (8) Gus Curcio Loan $250,000.00 (9) Gus Curcio Loan $60,000.00 (10) Ironworks Dev'l Loan $1.00 (11) Leonard Paoletta Loan $100,000.00 (12) Lou Cirillo Loan $50,000.00 (13) Paul Van Stone Loan $50,000.00 (14) People's United Bank Loan $1.00 (15) Starter Homes, LLC Loan $1.00. Challenger did not object to the claim of People's United Bank. On Dec. 30, 2013, the Debtor filed a Disclosure Statement and a Plan of Reorganization. On Feb. 14, 2014, Challenger filed the Motion to Covert Case to Chapter 7 or Dismiss Case with In Rem Relief. The Debtor objected on March 7, 2014. On Feb. 19, 2014, the Debtor filed a First Amended Disclosure Statement and a First Amended Chapter 11 Plan to which Challenger objected. Hearings on the Claims Objections, Conversion Motion, and Disclosure Statement were scheduled and continued to various dates and ultimately were conducted on April 15. Challenger objected to the Disclosure Statement on the basis that the corresponding Plan is unconfirmable as a matter of law. In relevant part, Challenger's Claims Objections cited insufficient documentation and information. The Debtor has failed to provide any documentation to support the claim. Challenger argues that conversion would be in the best interest of the creditors since it would place a trustee in control of the estate who could pursue possible avoidable transfers the Debtor's principal is not likely to pursue. The Debtor's Plan delineates three impaired classes of creditors: the Town of Stratford's tax claim, Class 1; Challenger's secured claim as the holder of a first mortgage on the Debtor's property, Class 2; and holders of allowed general unsecured claims, i.e., "General Unsecured Creditors", Class 3. Challenger stated that pursuant to its loan documents with the Debtor, it is permitted to pay the Stratford tax claim, and that it will pay the entire amount of that claim. Under that scenario, Challenger asserted that the Town of Stratford would not be the holder of an impaired class of claims, and Class 1 would be eliminated. The Debtor did not challenge that conclusion. Challenger, as a holder of a secured claim, and the only member of Class 2, also stated that it would not accept the Plan. Confirmation of the Plan, therefore, depends of whether Class 3 accepts the Plan. That determination turns on who are the holders of allowed unsecured non-priority claims. According to the Court, the membership of a class of claims is not necessarily defined by a debtor plan proponent's schedules, but rather by those who are determined to be bone fide members of that class. To hold otherwise would permit a debtor plan proponent to manipulate the confirmation process by populating an impaired class through its schedules to ensure compliance with 11 U.S.C. Sec. 1129(a)(10). "It is noteworthy that although the Debtor did not list Challenger as a holder of an unsecured claim on Schedule F, by its Schedule D and Amended Schedule D, the Debtor recognized that a portion of Challenger's claim is unsecured. That is, by its own Schedules, the Debtor concedes that Challenger is a holder of both a secured and an unsecured claim. As such, Class 3 includes Challenger as the 16th member," the Court said. The Court's order disallowing the claims of the Schedule F Creditors leaves two unsecured creditors in Class 3: People's United Bank with a $1.00 claim, and Challenger with the under- secured portion of its claim, which is at least $977,000. According to the Court, since neither Challenger's actual proof of claim nor People's deemed proof of claim has been objected to, both are deemed allowed. As such, Challenger and People's may accept or reject the Debtor's Plan. However, since Challenger has stated that it will not vote in favor of the Debtor's Plan, even if People's were to accept the Plan, the Debtor could not satisfy the mandatory amount and number requirements of Sec. 1126(c). Consequently, it is impossible for the Debtor to secure an impaired class which will vote to accept its Plan, and as a matter of law, the Debtor's Plan is unconfirmable, the Court said. Counsel to the Debtor is: James M. Nugent, Esq. HARLOW, ADAMS & FRIEDMAN, P.C. One New Haven Avenue, Suite 100 Milford, CT 06460 Counsel for SA Challenger is: Scott D. Rosen, Esq. Cohn Birnbaum & Shea P.C. 100 Pearl Street, 12th Floor Hartford, CT 06103 Tel: 860-493-2220 E-mail: srosen@cbshealaw.com ACE AVIATION: Claims Bar Date Set for July 18 --------------------------------------------- Any claims against ACTS LP or its general partner, 4378555 Canada Inc., must be submitted to Ernst & Young Inc., the court-appointed liquidator for Ace Aviation Holdings Inc. ACE is in liquidation proceedings pursuant to the Canada Business Corporations Act before the Quebec Superior Court. Completed proofs of claim must be received by the Monitor by 5:00 p.m. (prevailing Eastern Time) on July 18, 2014. Additional information is available at http://www.ey.com/ca/aceaviationor by contacting the liquidator by telephone at 1-855-279-8388 or 416-493-444 or by fax at 1-416- 943-3300 ADVANCED MICRO: Moody's Rates $400MM Senior Unsecured Notes 'B2' ---------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Advanced Micro Devices, Inc.'s proposed $400 million, ten-year, senior unsecured note. Net proceeds received from the offering will be used to repurchase AMD's senior unsecured notes due 2017. The outlook is stable. The stable outlook reflects AMD's prospects for improving operating performance and a better liquidity profile over the next year as the company continues to reorient its business model to address markets beyond its core, legacy personal computer market that include the faster growing, embedded and semi-custom chips, dense server, professional graphics and ultra low power end markets. Ratings Rationale The B2 corporate family rating reflects AMD's prospects for improved profitability, free cash flow generation, good liquidity and lower leverage over the intermediate term. AMD is targeting to grow the faster growing segments mentioned above from roughly 30% of revenue in the second half of 2013 (10% in 2012) to 40%-50% of its revenue over the next two years. Driven by design wins and strong demand for Microsoft's Xbox and Sony's PS4 gaming consoles that have multi-year product cycles, Moody's expect revenue growth in semi-custom chips over the intermediate term. With profit margins in mid-teens, as compared to a slight loss for its legacy microprocessor business, Moody's expect continued execution of its product roadmap will lead to better overall profitability for AMD over the intermediate term. Partially offsetting AMD's improving product mix development is the ongoing weak demand conditions in the personal computer market, particularly in the lower end segments where tablet devices continue to take wallet-share. Combined with Moody's expectations that the market leader, Intel, will remain aggressive, AMD will be challenged to achieve profitability in this segment over the next year after losing $22 million in 2013. Recent design wins for AMD's dense server chips for mega data center applications (with Verizon) are promising, but Moody's expect revenue contribution from this part of the server market will be very modest for AMD over the next 12-18 months as design cycles and customer validation and acceptance for mission critical server components are long. The company achieved its goal of quarterly operating costs in the third quarter of last year and Moody's expect AMD will sustain quarterly operating costs between $420 million and $450 million in 2014 (excluding intangible amortization and any restructuring charges). With gross margins approximating 35%, the company should achieve modest profitability, positive free cash flow, and improving credit metrics, with adjusted debt to EBITDA below 5x over the next year, as compared to 5.7x at year end 2013. With $982 million of cash and marketable securities as of March 2014, and Moody's expectation that the company will be modestly free cash flow positive over the next year, AMD has good liquidity. AMD also has access to a $500 million committed, asset- backed, secured revolving credit facility that matures November 2018. After considering the $200 million payment AMD made to its foundry partner (GlobalFoundries) in the first quarter of fiscal 2014, and the traditionally stronger second half, Moody's expect AMD's 2014 year- end cash balances will approximate $1 billion. Management's minimum target cash balance is $600 million. Moody's do not anticipate any other cash payments by AMD to GlobalFoundries outside of normal course wafer supply purchases over the next year. After a $42 million note (unrated) matures May 2015 and after tendering for the $452 million note due 2017, AMD's next debt maturity is not until 2019, when a $600 million note matures. Considering AMD's improving prospects that lead to the stable outlook, expectations of minimal usage under the secured revolver and that all of AMD's obligations are unsecured other than the revolver, there was an over ride on the Loss Given Default output resulting in the affirmation of the senior unsecured rating at B2. Rating assigned: $400 million senior unsecured notes due 2024 at B2 (LGD4-57%) What Could Change the Rating -- DOWN The rating could be lowered if AMD's cash and liquid investments are likely to be sustained below $800 million, if the company is unlikely to achieve positive free cash flow over the next year, or if total debt increases other than for temporary working capital needs. What Could Change the Rating -- UP The rating is not likely to be raised over the near term. Longer term, the rating could be raised if AMD is able to sustain revenue growth with Moody's adjusted EBITDA margins above 10%, while maintaining cash and liquid investments in excess of $1 billion and achieving adjusted debt to EBITDA below 4 times. The principal methodology used in this rating was Global Semiconductor Industry Methodology published in December 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. ADVANCED MICRO: S&P Assigns 'B' Rating to Sr. Notes Due 2024 ------------------------------------------------------------ Standard & Poor's Ratings Services assigned Advanced Micro Devices Inc.'s (AMD) senior unsecured notes due 2024 a 'B' issue-level rating, with a recovery rating of '3', indicating S&P's expectation for meaningful (50%-70%) recovery in the event of a payment default. S&P expects the company to use proceeds from the new notes to refinance the 8.125% senior unsecured notes due 2017, which the company has launched a tender offer to repurchase. S&P plans to withdraw its rating on the 2017 notes pending successful completion of the tender. S&P's 'B' corporate credit rating and positive outlook on AMD remain unchanged. RATINGS LIST Advanced Micro Devices Inc. Corporate Credit Rating B/Positive/-- New Rating Advanced Micro Devices Inc. Senior Unsecured Notes due 2024 B Recovery Rating 3 AMERICAN INTERNATIONAL: Former Chief Must Face N.Y. Suit -------------------------------------------------------- Christie Smythe, writing for Bloomberg News, reported that Maurice "Hank" Greenberg, the former chairman of American International Group Inc., lost a bid to throw out the New York attorney general's 2005 lawsuit over alleged sham transactions intended to inflate the insurer's financial health. According to the report, Manhattan Supreme Court Justice Charles Ramos ruled on May 29 that the case can proceed to trial. The state claims Greenberg and former AIG Chief Financial Officer Howard Smith bear responsibility for sham transactions with General Reinsurance Corp. in 2000 and 2001 that inflated AIG's loss reserves by $500 million, the report related. About AIG With corporate headquarters in New York, American International Group, Inc., is an international insurance company, serving customers in more than 130 countries. AIG companies serve commercial, institutional and individual customers through property-casualty networks of any insurer. In addition, AIG companies are providers of life insurance and retirement services. At the height of the 2008 financial crisis, AIG experienced a liquidity crunch when its credit ratings were downgraded below "AA" levels by Standard & Poor's, Moody's Investors Service and Fitch Ratings. AIG almost collapsed under the weight of bad bets it made insuring mortgage-backed securities. The Company, however, was bailed out by the Federal Reserve, but even after an initial infusion of $85 billion, losses continued to grow. The later rescue packages brought the total to $182 billion, making it the biggest federal bailout in U.S. history. AIG sold off a number of its businesses and other assets to pay down loans received from the U.S. government. ALCOA INC: US Tax Court Says Trusts Not Liable for Company's Debts ------------------------------------------------------------------ Law360 reported that the U.S. Tax Court ruled that several trusts for heirs to the Reynolds Metal Co. fortune aren't responsible for paying unpaid income taxes for a Virginia-based personal holding company whose stock they sold because they aren't liable under state law. According to the report, the personal holding company held stock in Alcoa Inc. and the Internal Revenue Service alleged that the trusts sold the personal holding company's stock in order to avoid corporate tax on the Alcoa stock distributions. The agency said the court should apply a substance-over-form doctrine and treat the transactions as one, but the tax court declined, saying Virginia law doesn't apply that doctrine, the report related. The case is Julia R. Swords Trust et al. v. Commissioner of Internal Revenue, case number 142 TC No. 19 in the U.S. Tax Court. * * * The Troubled Company Reporter, on April 15, 2014, reported that Fitch Ratings has downgraded the ratings for Alcoa Inc. (NYSE: AA, Alcoa) including its Issuer Default Rating and senior unsecured debt to 'BB+' from 'BBB-'. The Rating Outlook is Stable. ARCTIC GLACIER: Unitholders' Meeting in Toronto on Aug. 11 ---------------------------------------------------------- Arctic Glacier Income Fund, Arctic Glacier Inc., Arctic Glacier International Inc., and its subsidiaries, and Glacier Valley Ice Company L.P. have filed with the Manitoba Court of Queen's Bench (Winnipeg Centre) a plan of compromise or arrangement dated May 21, 2014, as amended, pursuant to the Companies' Creditors Arrangement Act (Canada). A meeting of the Applicants' unitholders will be held at the offices of Osler, Hoskin & Harcourt LLP in Toronto on Aug. 11, 2014, beginning to 10:00 a.m. (Toronto time) for the purpose of considering and voting on a resolution to approve the Plan. The Meeting is being held pursuant to a May 21 order by the Hon. Madam Justice Spivak. To become effective in respect of the unitholders, the proposed resolution to approve the Plan must receive affirmative votes of more than 66-2/3% of the votes attached to the Trust Units represented by the Unitholders' Meeting and cast in accordance with the May 21 Meeting Order. The separate deemed vote by Affected Creditors in favor of the Plan, pursuant to the Aug. 11, 2014, meeting of Affected Creditors, does not affect the ability of any Affected Creditor to make submission at any motion to sanction the Plan, including in respect of the quantum of the Unresolved Claims Reserve or in respect of the proposed treatment of interest on Proven Claims that will be set out in the order being sought to sanction the Plan. The order sanctioning the Plan will be sought in a motion to be brought by the Applicants on Sept. 5, 2014, or at a later date as is set by the Court. Proxy materials for review by the Unitholders may be accessed through: http://is.gd/1t1bMy The Court-appointed Monitor for Arctic Glacier may be reached at: Alvarez & Marsal Canada Inc. Royal Bank Plaza, South Tower 200 Bay Street, Suite 2900, P.O Box 22 Toronto, ON Canada M5J 2J1 Attn: Melanie MacKenzie Tel: 416-847-5158 Fax: 416-847-5201 E-mail: mmackenzie@alvarezandmarsal.com ARCTIC GLACIER: Affected Creditors' Meeting in Toronto on Aug. 11 ----------------------------------------------------------------- Arctic Glacier Income Fund, Arctic Glacier Inc., Arctic Glacier International Inc., and its subsidiaries, and Glacier Valley Ice Company L.P. have filed with the Manitoba Court of Queen's Bench (Winnipeg Centre) a plan of compromise or arrangement dated May 21, 2014, as amended, pursuant to the Companies' Creditors Arrangement Act (Canada). A meeting of the Applicants' Affected Creditors will be held on Aug. 11, 2014, for the purpose of voting on a resolution to approve the Plan. The Meeting is being held pursuant to a May 21 order by the Hon. Madam Justice Spivak. The Deemed Vote does not affect the ability of any Affected Creditor to make submissions at any motion to sanction the Plan, including in respect of the quantum of the Unresolved Claims Reserve or in respect of the proposed treatment of interest afforded on Proven Claims that will be set out in the order being sought to sanction the Plan. The order sanctioning the Plan will be sought in a motion to be brought by the Applicants on Sept. 5, 2014, or at a later date as is set by the Court. Proxy materials for review by the Unitholders may be accessed through: http://is.gd/1t1bMy The Court-appointed Monitor for Arctic Glacier may be reached at: Alvarez & Marsal Canada Inc. Royal Bank Plaza, South Tower 200 Bay Street, Suite 2900, P.O Box 22 Toronto, ON Canada M5J 2J1 Attn: Melanie MacKenzie Tel: 416-847-5158 Fax: 416-847-5201 ARMORWORKS ENTERPRISES: Fourth Amended Plan Filed ------------------------------------------------- Debtors Armorworks Enterprises LLC, and TechFiber LLC on May 27, 2014, filed with the U.S. Bankruptcy Court for the District of Arizona a Fourth Amended Joint Plan of Reorganization and explanatory Fourth Amended Disclosure Statement. The Debtors are co-proposing the Plan with ArmorWorks Inc., and William J. Perciballi. AWI is the majority member of ArmorWorks with a 60% interest. C Squared Capital Partners, L.L.C. owns a 40% minority interest in ArmorWorks. Perciballi is a Manager and Founder of ArmorWorks. According to the Disclosure Statement, the Plan provides that on the Effective Date, in exchange for 100% of the equity interests in reorganized AWE, a plan investor will: (a) contribute $3,000,000 in cash to AWE for payment of claims and administrative expenses; (b) cause Perciballi and AWI to contribute to Reorganized AWE all intellectual property used in the businesses of the Debtors that is owned or controlled by Perciballi or AWI; and (c) fund the payment of certain obligations of AWI. Also on the Effective Date, (d) investor will contribute the equity interests in Reorganized AWE to AWI, along with certain cash, and will receive 67.5% of the common equity and 100% of the class A preferred equity in AWI; (e) Perciballi will receive 22.5% of the common equity in AWI; and (f) 10% of the common equity in AWI will be reserved for a management bonus pool. Concurrent with the closing of the corporate restructuring transactions, Perciballi will receive additional funds from investor to: (i) fund in full a settlement with C Squared; (ii) fund the purchase of the intellectual property owned by AWI or Perciballi being contributed to Reorganized AWE in the Corporate Restructuring Transactions; (iii) repay working capital loans made by Perciballi to ArmorWorks Canada; and (iv) fund other items. The Plan will be funded from ongoing business operations and from the proceeds of the sale of assets deemed to be no longer necessary to the ongoing operations of the business. The Debtors also may obtain a working capital line of credit to replace the DIP Facility. A copy of the Fourth Amended Disclosure Statement is available for free at http://bankrupt.com/misc/ARMORWORKSENTERPRISES_630_4ds.pdf The Debtors are represented by: John R. Clemency, Esq. Todd A. Burgess, Esq. GALLAGHER & KENNEDY, P.A. 2575 East Camelback Road Phoenix, AZ 85016-9225 Tel: (602) 530-8000 Fax: (602) 530-8500 E-mails: john.clemency@gknet.com todd.burgess@gknet.com ArmorWorks, Inc. and William J. Perciballi are represented by: Susan G. Boswell, Esq. Lori Winkelman, Esq. QUARLES & BRADY LLP One South Church Avenue, Suite 1700 Tucson, AZ 85701-1621 Tel: (520) 770-8713 Fax: (520) 770-2222 Mobile: (520) 349-6644 E-mail: Susan.Boswell@quarles.com Lori.Winkelman@quarles.com 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. BABCOCK & WILCOX: Moody's Affirms 'Ba1' Corporate Family Rating --------------------------------------------------------------- Moody's Investors Service affirmed the Ba1 corporate family rating and Ba2-PD probability of default rating of The Babcock & Wilcox Company (B&W). At the same time, Moody's downgraded the company's senior secured credit facility rating to Baa3 from Baa2 and assigns a Baa3 rating on $300 million term loan, to reflect the amendment of that facility. The amended facility will have an increased revolving borrowing capacity of $1 billion and a new $300 million term loan. The rating downgrade reflects the additional borrowing capacity along with a reduced underfunded pension liability as a loss absorbing buffer. The proceeds from the new term loan will be used to pay off borrowings on the current $700 million revolver, including funds used for the acquisition of MEGTEC, and to cover estimated transaction fees and expenses. Moody's has assigned a Speculative Grade Liquidity Rating of SGL-1 to reflect B&W's very good liquidity. The outlook remains stable. The following ratings were affected in this rating action: Assignments: Issuer: Babcock & Wilcox Company Speculative Grade Liquidity Rating, Assigned SGL-1 Senior Secured Revolving Credit Facility, Due 2019, Assigned Baa3 (LGD2, 22 %) Senior Secured Term Loan, Due 2019, Assigned Baa3 (LGD2, 22 %) Outlook Actions: Issuer: Babcock & Wilcox Company Outlook, Remains Stable Affirmations: Issuer: Babcock & Wilcox Company Probability of Default Rating, Affirmed Ba2-PD Corporate Family Rating, Affirmed Ba1 Issuer: Babcock & Wilcox Company Senior Secured Revolving Credit Facility, Due 2017 (withdrawn at release of new facility) Ratings Rationale The affirmation of B&W's corporate family rating reflects its enhanced focus on acquisitive growth, which was demonstrated by its definitive agreement to acquire MEGTEC for $155 million. MEGTEC designs, engineers, manufactures and services air pollution control systems and coating/drying equipment and generated 2013 revenues of $176 million with EBITDA margins north of 10%. This acquisition appears to be a good strategic fit for B&W since it extends its reach into the industrial area for pollution control equipment and enhances MEGTEC's ability to pursue additional sizeable project opportunities utilizing B&W's installation teams and financial backing. B&W indicated that this acquisition will not limit its pursuit of additional acquisitions. The company plans to fund its growth initiatives and shareholder returns and with existing cash balances, free cash flow and borrowings on its amended senior secured revolving credit facilities. The amended $1.3 billion revolving credit facilities will extend B&W's debt maturities and enhance the company's liquidity profile. The amendment will extend the maturity of the facility to 2019 from 2017. It will also increase the company's borrowing capacity by $600 million and result in about $450 million of additional liquidity. B&W's senior secured rating is one notch higher than its corporate family rating because the credit facility is secured by the assets of the Power Generation and Nuclear Energy segments, has guarantees provided by the Nuclear Operations and Technical Services segments, and is senior to roughly $390 million in underfunded pension liabilities. B&W's Ba1 corporate family rating also reflects the high barriers to entry for its US government nuclear operations, which typically accounts for about 55% to 65% of its segment income. The rating also considers its conservatively leveraged balance sheet, consistently positive free cash flow generation and very good liquidity profile. However, the rating reflects the shareholder friendly initiatives and growth aspirations that may cause its financial metrics to weaken. Meaningful cyclical and regulatory exposures in the Power Generation segment, the potential for cost overruns related to the company's fixed-price contracts, significant dependence on US Government spending and its relatively small scale also weigh on the rating. The company is expected to maintain good liquidity even if it only draws $150 million on the term loan since it will have no borrowings outstanding on the amended revolver. It is possible that B&W could draw only $150 million on the term loan at closing since it has a delayed draw option on $150 million that expires on December 31, 2014. The company had $746 million of liquidity on March 31, 2014 including $219 million of unrestricted cash and investments and $527 million of availability on its $700 million revolver, which had only $15 million of borrowings and $158 million of letters of credit outstanding. While the establishment of additional borrowing capacity enhances B&W's liquidity, it also indicates the company's willingness to take on additional debt to fund growth initiatives and shareholder friendly actions. B&W raised its quarterly dividend by 25% in November 2013, which will result in annual dividend payments of about $45 million. The company has also announced $750 million in share repurchase authorizations and has repurchased a total of about $269 million. The company has indicated a willingness to continue buying shares and to potentially accelerate the pace of repurchases in addition to pursuing growth initiatives. B&W is expected to generate positive free cash flow in 2014 even though its operating results will be under pressure due to weakness in its Power Generation segment, the timing of orders in the Nuclear Energy segment and the loss of contracts with the National Nuclear Security Administration (NNSA). B&W will benefit from reduced spending on its mPower small nuclear reactor program and the acquisition of MEGTEC, but that will not be enough to offset the weakness in other areas. Therefore, Moody's expect B&W's adjusted EBITDA to decline by about 10% in 2014. Babcock & Wilcox's credit metrics are expected to remain supportive of its current rating. The company had minimal funded debt of only $20 million on March 31, 2014 and its Moody's adjusted debt of $467 million consists mostly of pension, and to a lesser extent lease adjustments. The company's leverage ratio remains low at only 1.2x (Debt/EBITDA) and its interest coverage ratio remains high at 8.6x (EBITA/Interest Expense). However, the expected decline in operating results and the pursuit of growth initiatives and shareholder friendly actions will result in weaker credit metrics in 2014, with its leverage ratio rising to around 1.5x to 2.0x and its interest coverage ratio declining to about 6.0x to 6.5x. The stable outlook considers Moody's view that B&W is well positioned in its rating and its operating margins should improve in 2015 due to reduced mPower spending combined with the pursuit of margin improvement initiatives. It also assumes that operating results are likely to soften in the short-term and its credit protection measures may weaken as the company pursues shareholder friendly actions and growth initiatives. A ratings upgrade is not likely in the near term, but could occur should B&W maintain a conservative capital structure, preserve ample liquidity and not pursue aggressive shareholder friendly actions and growth initiatives. Key credit metrics associated with an upgrade would include a Debt/ EBITDA ratio sustained below 2x and cash and marketable securities above 75% of total Moody's adjusted debt. Downwards rating movement could occur if deteriorating operating results or cost overruns, or the pursuit of aggressive shareholder friendly actions and growth initiatives, lead to sustained Debt/EBITDA greater than 3x or EBITA/Interest Expense of less than 5x. The principal methodology used in these ratings was the Global Construction Methodology published in November 2010. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Charlotte, North Carolina, The Babcock & Wilcox Company (B&W) is an energy-focused engineering and construction company with a sizeable government business. The company reports its results through five segments: 1) Power Generation (51% of LTM revenue) provides coal-fired power generating systems, parts & services and environmental control systems for utilities and industrial customers, 2) Nuclear Operations (38%) produces naval nuclear components and reactors for the US Department of Energy (DOE)/ National Nuclear Security Administration (NNSA), principally for the Virginia-class submarine and Ford-Class carrier programs, 3) Nuclear Energy (8%) provides commercial nuclear services and manufactures components for utilities, 4) Technical Services (3%) together with its various joint venture partners, operates facilities for the DOE/ NNSA and other US government agencies and 5) mPower, which is developing a small scale modular nuclear reactor. Consolidated revenue for the fiscal year ended March 31, 2014 was $3.1 billion. About 80% of revenue was generated in the US, 10% in Canada and the rest outside of North America. BABCOCK & WILCOX: S&P Affirms 'BB+' CCR; Outlook Stable ------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its 'BB+' corporate credit rating on Charlotte, N.C.-based The Babcock & Wilcox Co. (B&W). The outlook is stable. At the same time, S&P assigned its 'BBB-' issue-level ratings and '2' recovery ratings to the company's proposed $1 billion senior secured revolving credit facility and $300 million senior secured term loan A, both due 2019. The '2' recovery ratings indicate S&P's expectation that the debtholders have substantial recovery prospects (70%-90%) in the event of a payment default. Over the long term, S&P expects that B&W will benefit from its strong competitive position in the North American coal-fired boiler segment. B&W is responsible for about 40% of the installed boilers in domestic coal-fired power plants in the region, and S&P believes this enables the company to generate significant aftermarket sales. In general, the same companies that install the original equipment also provide service and replacements. However, power generation demand depends mainly on the capital expenditures of electric power-generating companies and other steam-using industries. Demand can also depend on environmental legislation and regulation requirements, including potential requirements applicable to carbon dioxide emissions. The outlook is stable. "B&W's solid credit metrics and 'adequate' liquidity provide some headroom at the current rating for the company's external growth strategy," said Standard & Poor's credit analyst Robyn Shapiro. Although unlikely, S&P could lower the rating if the company's credit protection measures or liquidity were to decline unexpectedly and significantly. S&P could also lower the rating if FOCF to total debt decreases dramatically from current levels and remains below 15% for an extended period. This could occur if, for example, debt leverage increases as a result of the company's external growth strategies or due to returning cash to shareholders and, at the same time, an unanticipated project loss or working capital swings occur due to the timing of project work. The company's exposure to highly cyclical end markets and the possibility for working-capital swings constrain the potential for an upgrade. An upgrade would likely require improvement in B&W's business risk profile, such as a transition to a more predictable business model, which would result in more-consistent levels of free cash flow generation, or further diversification into less- cyclical business lines. An upgrade would also depend on a change in S&P's assessment of the company's financial policy to "neutral" from "negative," implying that the company would maintain its conservative credit metrics in lieu of debt-financed acquisitions or share repurchases. However, S&P do not believe this is likely to occur over the next 12 months. BAYONNE ENERGY: Moody's Rates $530MM Senior Secured Debt 'Ba3' -------------------------------------------------------------- Moody's Investors Service has assigned a Ba3 rating to Bayonne Energy Center LLC's (BEC or the Borrower) proposed $530 million senior secured first lien credit facilities. The facilities consist of a $500 million term loan due 2021 and a $30 million senior secured revolving credit facility due 2019. The rating outlook is stable. BEC is a 512 MW 8-unit dual-fuel simple-cycle power plant located in Bayonne, New Jersey (the project), that delivers power into the New York City electric grid through a 7-mile dedicated submarine cable. The project's capacity factor has averaged approximately 30% since BEC achieved commercial operation in June 2012. BEC is 50% owned by a subsidiary of ArcLight Energy Partners Fund III, L.P., a fund managed by ArcLight Capital Partners, LLC (ArcLight), and the remainder by affiliates of Hess Corporation (Hess). Concurrent with the closing of the proposed credit facilities, Hess will sell its ownership in BEC to an affiliate of ArcLight resulting in ArcLight becoming the sole owner. Proceeds from the proposed term loan will be used to repay existing debt, fund the acquisition of Hess' 50% ownership in the project, finance the contribution of ArcLight's tolling profits from BEC and pay for certain transaction-related expenses. Assignments: Issuer: Bayonne Energy Center Senior Secured Bank Credit Facility, Assigned Ba3 Senior Secured Bank Credit Facility, Assigned Ba3 Ratings Rationale "The Ba3 rating is supported by the predictable contracted cash flows that Moody's expect BEC to generate under existing tolling agreements with a financially sound counterpart" said Moody's Vice President Scott Solomon. "The rating also takes into consideration the attractive location of the project within NY-ISO Zone J, which provides premium energy, ancillary services and capacity pricing given constraints in generating and delivering electricity to New York City" added Solomon. These positive credit attributes, however, are balanced by the significant financial leverage being incurred by BEC, uncertainties relating to future electric and capacity prices and key financial metrics that are weak for the Ba-rating category. Apart from the above mentioned transaction with Hess, BEC and Hess will consummate a separate transaction that will result in its rights and obligations under two existing tolling contracts with BEC to be transferred to Direct Energy Business, LLC (Direct Energy: not rated), a subsidiary of British-based Centrica plc (Centrica: A3 senior unsecured, under review for possible downgrade) prior to the closing of the proposed financing. Direct Energy's payment obligations under the tolling contracts are guaranteed by Centrica. The two tolling agreements provide Direct Energy access to 62.5% of BEC's generating capacity in exchange for a fixed monthly payment. The first contract is for 50% of BEC's capacity, with initial tenors through June 1, 2017 (25%) and June 1, 2022 (25%), respectively. The second contract is for 12.5% of BEC's capacity, with a non-renewable tenor through June 1, 2019. Additionally, the first contract's two tranches totaling 50% of BEC's capacity may be extended at Direct Energy's option (the Buyer Option) for two consecutive five year periods or, at BEC's option (the Seller Option), for one five year period. The second contract due June 1, 2019 does not have a renewal option. In the aggregate, revenue from these contracts is expected to exceed $230 million during the tenor of the term loan, providing a strong underpinning for credit quality. Current and forecast market capacity prices are significantly higher than the fixed capacity payments under the tolling contracts. As such, Moody's current expectation is that Direct Energy will extend the terms of the first contract for two consecutive five year periods; through June 1, 2027 and June 1, 2032, respectively, for 50% of BEC's capacity. Should Direct Energy not invoke the Buyer Option, BEC would have the option to invoke a Seller Option, extending the tenor of the contracts for an additional five year period at a contracted price equal to 85% of pricing that would occur under a Buyer Option. The remaining 37.5% of BEC's generating capacity or 192 MWs is tolled by a separate subsidiary of ArcLight. However, pro forma with the transaction, ArcLight will contribute its profits under its tolling contracts to BEC, effectively rendering 37.5% of BEC's generating capacity uncontracted, with the majority of merchant cash flow coming from the sale of capacity into Zone J. NY-ISO Zone J spot capacity prices have trended upward over the last several seasonal auctions due to a combination of increases in the demand curve reference price, Locational Minimum Installed Capacity Requirement, and higher peak load forecasts. That said, capacity pricing has demonstrated volatility in the past, and new unmitigated supply, should it be built, as well as other considerations could quickly pressure capacity prices over the medium-term. BEC's refinancing risk appears manageable. Various stress testing suggested a range of $200-$275 million of term loan debt outstanding at or near the 2021 maturity. Moody's consider this amount re-financeable given that incremental contracted capacity revenues under a Buyer Option alone would be in the range of $240- 250 million beyond the tenor of the current financing. Should market capacity prices unexpectedly move significantly down such that Direct Energy does not invoke the Buyer Option, BEC would likely invoke a Seller Option, providing in that scenario, an estimated $90 million of incremental contracted capacity revenues. A key consideration for BEC's rating is the sizable amount of debt being incurred, which results in projected key financial metrics being somewhat weak for the rating category. Specifically, Moody's believe that BEC's debt service coverage ratio and the ratio funds from operations (FFO) to debt are expected to range from 1.7-2.0 times and 6-9%, respectively, through 2017, compared to the 2.5 times and 13%, that Moody's see more typically for low-Ba rated power projects. Lenders will be provided with project finance structural features that include a six-month debt service reserve requirement and a 100% excess cash flow sweep requirement. The credit facilities will be secured by a first lien on all tangible and intangible assets of BEC and its subsidiaries. BEC's rating is well-positioned within the Ba rating category. The stable rating outlook reflects the predictability of BEC's near- term cash flows primarily driven by tolling agreements with a investment grade counterparty, the locational value that BEC enjoys from premium merchant capacity, energy and ancillary services sales, and the expectation of continued strong operating performance. In light of the high leverage and the related low financial metrics, a rating upgrade is not likely in the near to intermediate term. The rating could be upgraded should merchant energy and capacity revenues materially exceed expectation resulting in more rapid debt reduction. The rating could be downgraded if BEC's operating performance is substantially weaker than expected resulting in materially higher operating costs or if merchant capacity and energy revenues are well-below Moody's expectations leading to key financial metrics falling to FFO-to-debt of 6% and a DSCR of 1.7x on a sustained basis. Additionally, a decline in capacity prices that results in Direct Energy not invoking a Buyer Option renewal in 2017 could put downward pressure on BEC's rating. The ratings are predicated upon final documentation in accordance with Moody's current understanding of the transaction and final debt sizing and model outputs consistent with initially projected credit metrics and cash flows. The principal methodology used in this rating was Power Generation Projects published in December 2012. Located in Bayonne, New Jersey, BEC is a 512 MW 8-unit dual-fuel simple-cycle power plant currently 50% owned by a subsidiary of ArcLight and the remainder by affiliates of Hess. While the primary fuel is natural gas, the project is capable of running on low sulfur diesel fuel. At financial close of the proposed credit facilities, Hess will sell its interest in BEC to an ArcLight affiliate such that ArcLight will own 100% of BEC. BAYONNE ENERGY: S&P Assigns 'BB' Rating to $500MM Term Loan ----------------------------------------------------------- Standard & Poor's Rating Services said it has assigned its preliminary 'BB' senior secured rating and preliminary '2' recovery rating to Bayonne Energy Center LLC's $500 million term loan B and $30 million revolving credit facility. The '2' recovery rating indicates a high (70% to 90%) likelihood of recovery of principal in a default scenario; the rating will be finalized upon the receipt and review of final documentation. The outlook is stable. Bayonne is a special-purpose, bankruptcy-remote entity that owns a 512-megawatt (MW) natural gas-fired power plant Bayonne, New Jersey. In May 2014, Hess Corp. agreed to sell its 50% interest in the project to a subsidiary of ArcLight Energy Partners Fund III L.P. ("ArcLight"), which already indirectly owned 50% of the project. "Bayonne is partially exposed to volatile energy and capacity market prices but has mitigated some of this risk through contracts and several operational characteristics that provide some important competitive advantages over its peers," said Standard & Poor's credit analyst Michael Ferguson. A limited track record of performance may offset these benefits, but Bayonne has worked to mitigate operational risk through a long-term service agreement with Rolls-Royce, the original equipment supplier. The composition of the cash flow fluctuates over time with the expiration of some tolling agreements and as a result in changes in power price assumptions, but the tolling agreement typically provides around 50% of EBITDA. Importantly, in S&P's view, tolling agreement renewal options for both Bayonne and Direct Energy partially protect the project in case of a sharp decline in market prices at the initial termination date. As a mid-merit facility with performance requirements under tolling contracts, availability is crucial to credit quality. Because of the relatively brief track record and capacity factors in line with a mid-merit facility, S&P considers operational risk to be "significant." S&P also considers the project's financial risk to be "significant." The stable outlook reflects S&P's expectation that Bayonne will likely generate generally stable cash flow during the next few years under the tolling agreement and cash flows with some variability from merchant energy and capacity sales in Zone J, which is constrained from additional supply and thus favorable to Bayonne. S&P believes the LTSA will ensure that the turbines achieve a high level of availability consistently such that maximum allowable capacity payments are earned. An improvement in the rating would require demonstrated operating performance in line with our expectations and greater visibility on Zone J capacity markets, and debt per kilowatt at maturity should be materially below S&P's current expectation of about $323. Developments that could lead to a downgrade could be lower-than- expected operational performance or downturns in market prices that result in materially higher debt at maturity or in debt- service-coverage ratios dropping below 1.5x consistently. BERKS BEHAVIORAL: Court Rules on St. Joe's Sanctions Bid -------------------------------------------------------- Bankruptcy Judge Stephen Raslavich granted, in part, the motion filed by St. Joseph Regional Health Network, d/b/a St. Joseph Medical Center (St. Joe), Catholic Health Initiatives, and Bornemann Health Corporation d/b/a Bornemann Psychiatry Associates, for sanctions against Berks Behavioral Health LLC for failure to comply with the Court's Oct. 21, 2013 Order Compelling Discovery. The parties are embroiled in a dispute, BERKS BEHAVIORAL HEALTH LLC Plaintiff, v. ST. JOSEPH REGIONAL HEALTH NETWORK D/B/A ST. JOSEPH MEDICAL CENTER, ET AL Defendants, Adv. Proc. No. 10-00163 (Bankr. E.D. Pa.). A copy of the Court's May 28, 2014 Opinion is available at http://is.gd/uBvpJqfrom Leagle.com. As reported by the Troubled Company Reporter on Dec. 9, 2013, prior to bankruptcy, the Debtor Plaintiff entered into a Management Services Agreement with Defendants St. Joseph Regional and Bornemann Health Corporation d/b/a Bornemann Psychiatry Associates. Under the MSA, the Plaintiff operated a mental health clinic and the Defendants provided administrative assistance and other necessary services to that business. As further inducement to run the clinic, the Defendants are alleged to have promised the Plaintiff that they would assist in the expansion of the practice. The Complaint alleges that because the Defendants failed to perform under the MSA, the business failed and the intended expansion never occurred. Berks Behavioral Health LLC, in Washington DC, a mental health care provider, filed for Chapter 11 bankruptcy (Bankr. E.D. Pa. Case No. 09-23317) on Dec. 24, 2009. Judge Richard E. Fehling presides over the case. Albert A. Ciardi, III, Esq., and Holly Elizabeth Smith, Esq., at Ciardi Ciardi & Astin, P.C., serve as the Debtor's counsel. In its petition, Berks Behavioral estimated $1 million to $10 million in assets and debts. The petition was signed by Garry Hoyes, the Company's president. BIG M: Seibert Severance Claim Not Entitled to Admin Status ----------------------------------------------------------- Bankruptcy Judge Donald H. Steckroth denied the request of Joel Seibert, a former employee of Big M Inc., for an order granting the Claimant's claim for an administrative expense on the grounds that his severance pay is entitled to administrative priority pursuant to 11 U.S.C. Sec. 503(b)(1)(A) of the Bankruptcy Code. The Claimant argues that severance pay of $294,000 is an administrative expense under section 503(b)(1)(A)(i), which should be afforded administrative priority pursuant to section 503(a). The Claimant contends that although the severance agreement between the Claimant and the Debtor was not dependent on his length of service, his claim is nevertheless entitled to administrative expense priority because he provided necessary post-petition services to the Debtor. The Debtor contends that the Claim should not be afforded administrative expense priority. The Debtor asserts that the severance agreement relates back to a prepetition agreement with the Claimant, which did not arise due to length of service or in lieu of notice for entitlement to severance; thus, the Claim must be governed under the general rules effecting administrative expense priority. On May 23, 2013, substantially all of the Debtor's assets were sold to YM, LLC, USA pursuant to an Asset Purchase Agreement dated April 5, 2013. The Debtor did not require the Purchaser to assume the Claimant's Severance Agreement and thus, the Severance Agreement was rejected. The Claimant did not receive prior notice of the Debtor's purported rejection of the Severance Agreement and was terminated, along with all other employees of the Debtor, upon a closing of the sale on or about May 28, 2013. At the time of the Claimant's termination, his salary was $235,000 per annum, and he retained 31 weeks of accrued vacation prior to the Petition Date. Judge Steckroth held that the Claim relates back to a prepetition severance agreement and was not an actual and necessary cost of preserving the estate. The Claim is not entitled to administrative priority status under Sec. 503(b)(1)(A). A copy of the Court's May 30, 2014 Opinion is available at http://is.gd/iClc0zfrom Leagle.com. Counsel for Joel Seibert is John P. Di Iorio, Esq., at Shapiro, Croland, Resier Apfel & Di Iorio, LLP in Hackensack, New Jersey. Counsel for the Debtor are Lowenstein Sandler LLP's Kenneth A. Rosen, Esq., Mary E. Seymour, Esq., and Eric H. Horn, Esq., in Roseland, New Jersey. About Big M, Mandee, Annie sez, and Afazxe Stores Totowa, New Jersey-based Big M, Inc., filed a Chapter 11 petition (Bankr. D.N.J. Case No. 13-10233) on Jan. 6, 2013, with Salus Capital Partners, LLC, funding the Chapter 11 effort. Judge Donald H. Steckroth presides over the case. At the time of the bankruptcy filing, Big M was the owner of Mandee, Annie sez, and Afazxe Stores. The Mandee brand is a juniors fashion retailer with 84 stores in Illinois and along the East Coast. Annie sez is a discount department-store retailer for women with 35 stores. Afaze is 10-store jewelry and accessory chain. Kenneth A. Rosen, Esq., at Lowenstein Sandler LLP, in Roseland, serves as counsel to the Debtor. PricewaterhouseCoopers LLP has been tapped to serve as financial advisor. GRL Capital Advisors LLC's Glenn R. Langberg has been hired to serve as chief restructuring officer. Attorneys at Becker Meisel LLC serve the Debtor as conflicts counsel. The Debtor disclosed $21,384,430 in assets and $21,374,057 in liabilities as of the Chapter 11 filing. The Official Committee of Unsecured Creditors has tapped Cooley Godward Kroish, LLP, as its counsel, and CBIZ Accounting, Tax and Advisory of New York, LLC and CBIZ Mergers & Acquisitions Group as its financial advisor. In mid-2013, the Bankruptcy Court authorized the Debtor to sell substantially all of its assets to YM LLC USA, formerly known as YM Inc USA. BLUEJAY PROPERTIES: Reaches Settlement with BBOK & Kaw Valley ------------------------------------------------------------- Bluejay Properties, LLC, asks the Bankruptcy Court to approve a compromise and settlement with Bankers' Bank of Kansas, Kaw Valley Bank and the individual members of the Debtor. The bankruptcy case has been subject to significant disputes in all aspects of the operations of the Debtor and the continued litigation between the various creditors and the Debtor. The members of Bluejay Properties, LLC -- Opportune, LLC, comprised of Brennan Fagan and Bill Skepnek, and Larkin Excavating, Inc., owned by John Larkin -- have been subject to a lawsuit in Sedgwick County demanding payment of the obligations of the Debtor under certain guarantee agreements with Bankers' Bank of Kansas. That case has been ongoing since 2012. In general, the agreement and settlement will: 1. establish an allowed claim of Bankers' Bank of Kansas as a secured claim, which in turn will provide an opportunity for Bankers' Bank of Kansas to credit bid at an agreed auction sale of the property. At the same time the agreement resolves the litigation between the Debtor, Bankers' Bank of Kansas, Kaw Valley Bank and the members of Bluejay Properties. 2. creditor Kaw Valley Bank would obtain compensation on part of its claim in the case, and would provide for a judgment against the Debtor for its claim. 3. provide for the release of the individual members from their guarantee agreements with Bankers' Bank of Kansas, and a release from the guarantee suit in state court. 4. leave the Debtor with only limited unsecured and contingent claims that, upon information and belief, will be withdrawn or satisfied by the settlement. At the same time, the agreement allows for the Debtor to satisfy administrative costs and to file appropriate tax returns. Under the settlement, University National Bank would be allowed to protect its position by bidding over Bankers' Bank of Kansas at the auction sale. While it should not be allowed to credit bid, as it is not owed money by the Debtor, it can preserve its position by purchasing the property and paying off the likely bid price by Bankers' Bank of Kansas. By this, University National Bank obtains all the rights that it negotiated for and obtained by filing the second mortgage in the case. University National Bank has not obtained the right legally to obtain money in satisfaction for its claim from the Debtor, only to look towards the real property for satisfaction of its claim. About Bluejay Properties Based in Junction City, Kansas, Bluejay Properties, LLC, doing business as Quinton Point, filed a bare-bones Chapter 11 petition (Bankr. D. Kan. Case No. 12-22680) in Kansas City on Sept. 28, 2012. Bankruptcy Judge Robert D. Berger presides over the case. Todd A. Luckman, Esq., and Kathryn E. Sheedy, Esq., at Stumbo Hanson LLP, in Topeka. The Debtor owns the Quinton Point Apartment Complex in Kansas City valued at $17 million. The Debtor scheduled liabilities of $13,112,325. The petition was signed by Michael L. Thomas of TICC Prop., managing member. Bankers' Bank of Kansas, owed approximately $13.08 million, is represented by Arthur S. Chalmers of Hite, Fanning & Honeyman, LLP. The University National Bank, owed approximately $1.2 million, is represented by Edward J. Nazar of Redmond & Nazar, L.L.P., and Todd Thompson of Thompson Ramsdell & Qualseth, P.A. There has been no official committee of unsecured creditors appointed in the case. BROOKFIELD GROUP: 401k Plan Members' Response Deadline Due July 1 ----------------------------------------------------------------- In the bankruptcy case entitled Brookfield Group, L.L.C., et al, Case No. 04-40413-HJB (Bankr. D. Mass.), the Chapter 7 Trustee, Anne J. White, was granted Court authority on May 20, 2014, to issue newspaper notice to all former participants of the SCITECH Plastics 401k Plan. In March, the Chapter 7 Trustee filed a motion with the Court seeking authority to pay certain retirement plan participants. The Chapter 7 Trustee said it has received funds totaling roughly $16,000 which are attributable to or relate to the terminated SCITECH Plastics 401k Plan. Former participants of the SCITECH Plastics 401k Plan who assert an interest in the MFS Qualified Settlement Fund must file a response with the United States Bankruptcy Court at 595 Main Street, Worcester, MA 01608-2076 on or by no later than July 1, 2014. Additional information is available at: http://www.scitechbrookfield.wordpress.com/ The Chapter 7 Trustee may be reached at: Anne J. White 200 State Street Boston, MA 02109 Tel: 617-263-2600 E-mail: awhite@demeollp.com BUCCANEER RESOURCES: Case Summary & 30 Top Unsecured Creditors -------------------------------------------------------------- Debtor affiliates filing separate Chapter 11 bankruptcy petitions: Debtor Case No. ------ -------- Buccaneer Resources, LLC 14-60041 11200 Westheimer, Suite 900 Houston, TX 77042 Buccaneer Energy Limited 14-60042 Level 9 25 Bligh Street Sydney, Australia Buccaneer Energy Holdings, Inc. 14-60043 11200 Westheimer, Suite 900 Houston, TX 77042 Buccaneer Alaska Operations, LLC 14-60044 11200 Westheimer, Suit 900 Houston, TX 77042 Buccaneer Alaska, LLC 14-60045 215 Fidalgo Avenue, Suite 100 Kenai, AK 99611 Kenai Land Ventures, LLC 14-60046 215 Fidalgo, Suite 100 Kenai, AK 99611 Buccaneer Alaska Drilling, LLC 14-60047 215 Fidalgo Avenue, Suite 100 Kenai, AK 99611 Buccaneer Royalties, LLC 14-60048 11200 Westheimer, Suite 900 Houston, TX 77042 Kenai Drilling LLC 14-60049 215 Fidalgo Avenue, Suite 100 Kenai, AK 99611 Type of Business: Oil and gas company Chapter 11 Petition Date: May 31, 2014 Court: United States Bankruptcy Court Southern District of Texas (Victoria) Judge: Hon. David R Jones Debtors' Counsel: Robert Andrew Black, Esq. FULBRIGHT JAWORSKI LLP 1301 McKinney, Suite 5100 Houton, TX 77010-3095 Tel: 409-835-5011 Fax: 409-835-5177 Email: rblack@fulbright.com - and - Jason Lee Boland, Esq. FULBRIGHT JAWORSKI LLP 1301 McKinney, Ste 4100 Houston, TX 77010 Tel: 713-651-3769 Email: jboland@fulbright.com - and - Robert Bernard Bruner, Esq. FULBRIGHT JAWORSKI LLP 1301 McKinney, Suite 5100 Houston, TX 77010 Tel: 713-651-5216 Email: rbruner@fulbright.com - and - William R Greendyke, Esq. FULBRIGHT & JAWORSKI LLP 2200 Ross Ave, Suite 2800 Dallas, TX 75201 Tel: 214-855-8204 Fax: 214-855-8200 Email: william.greendyke@nortonrosefulbright.com Debtors' CONWAY MACKENZIE Restructuring Advisor: Debtors' Claims EPIQ BANKRUPTCY SOLUTIONS, LLC Noticing and Solicitation Agent: Estimated Assets: $0 to $50,0000 Estimated Liabilities: $50 million to $100 million The petitions were signed by John T. Young, Jr., chief restructuring officer. Consolidated List of Debtors' 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Kenai Offshore Ventures Contract $18,513,184 15 Hoe Chiang Road, #12-05 Tower Fifteen Singapore 089316 Contact: Lorrine Wee Phone: +65 6309 0555 Fax: +65 6222 7848 Teras Oilfield Support Limited Contract $1,466,320 15 Hoe Chiang Road ROAD, #12-05 Tower Fifteen Singapore 089316 Contact: Lorrine Wee Phone: +65 6309 0555 Fax: +65 6222 7848 Frank's Casing Crew and Trade Payable $1,174,889 Rental Tools, Inc. P.O. Box 51729 Lafayette, LA 70505 Contact: Brian Baird Phone: (281) 966-7300 Fax: (281) 558-0948 Ocean Marine Services Trade Payable $608,414 12019 76th Place N.E. Kirkland, WA 98034 Contact: Daniel Roseta Phone: (425) 828-6434 Fax: (425) 827-2105 All American Oilfield Trade Payable $603,311 Associates, LLC 14896 Kenai Spur Highway, Suite 203 Kenai, AK 99611 Contact: Pete Dickson Phone: (907) 283-1048 Fax: (907) 283-1051 State of Alaska (Department Government $605,116 of Revenue) P.O. Box 110420 Juneau, AK 99811 Contact: Angela Rodell Phone: (907) 465-2300 Fax: (907) 465-2389 Crowell & Moring, LLP Professional $339,976 1001 Pennsylvania Avenue NW Services Washington, DC 20004 Contact: Kyle Parker Phone: (202) 624-2500 Fax: (202) 628-5116 AIMM Technologies, Inc. Trade Payable $276,736 801 Texas 146 Texas City, TX 77590 Contact: Brooks Bradford Phone: (409) 945-5414 Fax: (409) 945-6022 Pacific Pile & Marine, L.P. Trade Payable $195,000 Port Graham Corporation Trade Payable $187,243 Magtec Alaska, LLC Trade Payable $188,855 Weatherford US LLP Trade Payable $163,327 Petroleum Engineers, Inc. Trade Payable $138,773 Canrig Drilling Technology Trade Payable $106,264 Ltd. General Communication, Inc. Utilities $100,336 MAY Flower Remote Services, LLC Trade Payable $96,800 XTO Energy, Inc. Trade Payable $89,372 Air Liquide America LP Trade Payable $85,572 Petroleum Equipment & Services, Trade Payable $70,379 Inc. LCG Discovery Experts Professional $57,967 Services Owl Ridge Natural Resource Professional $56,271 Consultants Inc. Services North Star Terminal & Trade Payable $56,207 Stevedore Co LLC JMR Worldwide Trade Payable $52,500 Seismic Exchange, Inc. Trade Payable $51,317 Market Eye PTY Ltd. Professional $47,907 Services National Oilwell Varco Trade Payable $47,218 (NOV) Tuboscope Airport Equipment Rental Landlord $46,560 Dean Gallegos Contract $45,000 Brice Equipment, LLC Trade Payable $40,370 Conam Construction Trade Payable $40,005 BUNDY CANYON: Consolidated With Asset Resolution Case ----------------------------------------------------- Nevada District Judge Robert C. Jones granted the request of the creditors of Bundy Canyon Land Development, LLC (D. Nev. Case No. 13-CV-01786) to withdraw the involuntary Chapter 11 bankruptcy case. No party has objected. Because the case is related to In re Asset Resolution, LLC, No. 09-bk-32824, the Court granted the motion and consolidated the Bundy Canyon case as a member case with lead case In re Asset Resolution, LLC, No. 09-bk-32824. A copy of the Court's May 27, 2014 Order is available at http://is.gd/2MIVgQfrom Leagle.com. The creditors are Margaret Cangelosi, Todd Hansen, and Daniel Newman. They are represented by: Francis B Majorie, Esq. THE MAJORIE FIRM LTD. 3514 Cedar Springs Rd Dallas, TX 75219 Tel: (214) 522-7400 CASA CASUARINA: Confirms Amended Reorganization Plan ---------------------------------------------------- Bankruptcy Judge Laurel M. Isicoff entered an order confirming Casa Casuarina, LLC's Amended Plan of Reorganization. As reported in the Troubled Company Reporter on May 22, 2014, the Debtor filed with the Court a memorandum in support of confirmation of its Amended Plan. The Debtor and counsel for the U.S. Trustee have discussed the Plan, and the parties disagree as to whether the Plan, as filed, entitles the Debtor to a discharge. The memorandum provides that, among other things: a. the Plan does not liquidate substantially all of the Debtor's assets, and b. the Debtor will engage in business post-confirmation. As reported in the TCR on April 1, 2014, Judge Isicoff issued an order waiving the requirement for the Debtor to file a disclosure statement explaining its Plan, after finding the plan outline unnecessary. The Court found that the Plan, as amended consistent with the announcements made by the Plan Proponent at the Feb. 13 hearing, contains no unimpaired classes. In light of this, the Court found that the requirement of Section 1125(a) of the Bankruptcy Code, that a disclosure contains "adequate information" to make "an informed decision" regarding voting on the plan, is unnecessary, as no party-in-interest will have the right to vote on the Plan. For these reasons, the Court waived any disclosure requirements set forth in Section 1125. The Court also approved a settlement among the Debtor, Peter Loftin, Luxury Resorts, LLC, Loftin Family, LLC, Loftin Hospitality, LLC, Global Properties Group, LLC, 1116 Ocean Drive, LLC, BGW Design Limited, Inc., 1501 Event Enterprises, Inc., Collins Avenue Parking LLC, and Barton G. Weiss. The Plan proposes to pay creditors in full with the proceeds from the sale of the Debtor's property at 1116 Ocean Drive, in Miami, Florida, which property was formerly known as the Versace Mansion. The property was sold for $41.5 million. The Debtor says it has $5.5 million in trust for the estates, enough to pay all claims. 1116 Ocean Drive, which operated the Versace Mansion before the Petition Date, filed a disputed claim in the amount of $10 million. The Debtor disputed the entitlement of 1116 Ocean Drive to pay claim against the estate. The approved settlement provides that 1116 Ocean Drive will withdraw its claim and will voluntarily dismiss with prejudice Case No. 13-15720 pending before Florida's 11th Circuit Court, in and for Miami-Dade County, as to all defendants. Bill Rochelle, the bankruptcy columnist for Bloomberg News, pointed out that had the former operators of the property not withdrawn their claim, the recovery by unsecured creditors would have been 40%. The buyer of the mansion, VM South Beach LLC, had acquired a $34.5 million secured claim and paid most of the purchase price by waiving mortgage debt, Mr. Rochelle further pointed out. A full-text copy of the Plan, revised on March 14, is available for free at http://bankrupt.com/misc/CASACASUARINAplan0314.pdf About Casa Casuarina Casa Casuarina, LLC, owner of Gianni Versace's former South Beach mansion on Ocean Drive in Miami Beach, Florida, filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 13-25645) in Miami on July 1, 2013. Peter Loftin signed the petition as manager. Judge Laurel M. Isicoff presides over the case. The Debtor estimated assets of at least $50 million and debts of at least $10 million. Joe M. Grant, Esq., at Marwill Socarras Grant, P.L., serves as the Debtor's counsel. Until his Ponzi scheme fell apart in 2009, Scott Rothstein had controlled the company that owned the property. Herbert Stettin is the Chapter 11 trustee for Rothstein's law firm Rothstein Rosenfeldt Adler PA, which has been in Chapter 11 liquidation since November 2009. Before Casa Casuarina filed for bankruptcy, Mr. Stettin had reached agreement to settle his claim to partial ownership. In its schedules, the Debtor disclosed $79,005,976.66 in total assets and $32,506,799.29 in total liabilities as of the Petition Date. CENTURY FABRICATORS: Case Summary & Top Unsecured Creditors ----------------------------------------------------------- Debtor: New Century Fabricators, Inc. P.O. Box 9488 2904 Old Spanish Trail New Iberia, LA 70562 Case No.: 14-50652 Chapter 11 Petition Date: May 30, 2014 Court: United States Bankruptcy Court Western District of Louisiana (Lafayette) Judge: Hon. Robert Summerhays Debtor's Counsel: David Patrick Keating, Esq. THE KEATING FIRM, APLC PO Box 3426 Lafayette, LA 70502 Tel: (337) 354-2464 Fax: (337) 354-2467 Email: rick@thekeatingfirm.com Estimated Assets: $10 million to $50 million Estimated Liabilities: $10 million to $50 million The petition was signed by James C. Castille, president. List of Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Agility Project Logistics $38,850 Bayou Testers $231,862 Bill Poole Valves & Controls $15,923 Blue Fin Services $29,978 Capital Lease Group $24,285 Custom Automated Controls $11,421 Delta Rigging & Tools $10,379 Jo-De Equipment $24,140 Knox Insurance Group $34,483 Lafayette Paint & Supply $106,519 New Iberia Welding $119,902 Practical Engineering Solution $20,800 Processing Piping $322,555 P.O. Box 3307 Lafayette, LA 70502 Production Rental $46,060 Redfish Rentals $195,816 Star Service $13,531 Superior Supply & Steel $11,654 Thermon Heat Tracing $118,875 Total Production $30,226 Whitco Supply $667,654 200 North Morgan Street Broussard, LA 70518 CHARLES FRANCIS PATERNO: ArborOne Loses Bid to Convert Case ----------------------------------------------------------- Bankruptcy Judge Lena Mansori James denied, without prejudice, the request of ArborOne FLCA to convert the Chapter 11 case of Charles Francis Paterno, Jr. and Jacquelyn Nye Paterno to one under Chapter 7 of the Bankruptcy Code. Beginning in the early 2000s, Mr. Paterno became actively involved in the promotion of autoclaved aerated concrete, a thermally insulating lightweight concrete-based product used for internal and external construction. As a substantial shareholder in Carolina AAC, LLC and Carolina AAC Development, LLC, Mr. Paterno initiated construction on an AAC plant in South Carolina in 2010. Funding for this construction was provided primarily by ArborOne through the purchase of bonds. Specifically, on November 30, 2010, Carolina AAC made, executed, and delivered a series of Senior Secured Private Placement Taxable Bonds, Series 2010A, in the aggregate principal amount of $6,361,200.00, and a series of Senior Secured Taxable Private Placement Bonds, Series 2010B, in the aggregate principal amount of $706,800 pursuant to a Trust Indenture dated November 1, 2010, wherein Carolina AAC agreed to issue and ArborOne agreed to purchase the bonds. On that same date, Carolina AAC Development similarly made, executed, and delivered a series of Senior Secured Private Placement Taxable Bonds, Series 2010A, in the aggregate principal amount of $3,033,000, and a series of Senior Secured Taxable Private Placement Bonds, Series 2010B, in the aggregate principal amount of $337,000 pursuant to a Trust Indenture dated November 1, 2010, wherein Carolina AAC Development agreed to issue and ArborOne agreed to purchase the bonds. The bonds purchased by ArborOne for both companies totaled $10,438,000. To secure payment on these bonds, Carolina AAC Development provided ArborOne with a mortgage and security agreement against real property located in Marlboro County, South Carolina and Marion County, South Carolina. ArborOne further received and recorded a lien against all assets of Carolina AAC Development, Carolina AAC, and Lide Smith Farms, and an Assignment of Leases and Rents on December 1, 2010. For further security, the Debtors each absolutely and unconditionally guaranteed to ArborOne the due and punctual payment of all liabilities and obligations of Carolina AAC and Carolina AAC Development. Unfortunately, after almost two years of construction, the general contractor for the South Carolina plant committed suicide and construction ceased. Construction on the plant has not resumed to date. Following the general contractor's death, ArborOne declared the entire balance under the bonds to be immediately due and payable, and announced that the bonds were in default. It is disputed as to what amount, if any, the surety paid on the bonds following their default and whether any amount remains due from the surety. On July 12, 2013, ArborOne commenced two legal proceedings against the Debtors in the Superior Court of Orange County, North Carolina. The first case asserted a claim for the outstanding balance owed under the Carolina AAC Bonds and Guaranties. The second case asserted a claim for the outstanding balance owed under the Carolina AAC Development Bonds and Guaranties. On January 23, 2014, the Superior Court entered an Amended Order Granting Plaintiff's Motion for Summary Judgment Against Defendants Nunc Pro Tunc in favor of ArborOne in both cases. The amount granted to ArborOne for the Carolina AAC bonds was $7,092,225.13 plus interest, and the amount granted to ArborOne for the Carolina AAC Development bonds was $3,381,550.76 plus interest. In light of these judgments, the Debtors liquidated approximately $433,000.00 of stocks pre-petition, and Mr. Paterno requested early disbursements from his two lifetime pensions with Sonoco Products Company. These pensions provide Mr. Paterno with approximately $6,600.00 per month in income. However, despite the Debtors' attempts to work with ArborOne to pay the debt, ArborOne commenced foreclosure proceedings against Carolina AAC, Carolina AAC Development, and Lide Smith Farms. The foreclosure sales are scheduled to be held June 10, 2014 and June 16, 2014. The Debtors filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D.N.C. Case No. 14-80278) on March 14, 2014. As of this date, the sum owed by the Debtors to ArborOne as guarantors was $11,124,072.98 exclusive of costs and attorney's fees. According to the Debtors' Schedule I, Mr. Paterno is currently self-employed and receives $6,383.64 from his pension and $3,000.00 as a consulting and management fee from Carolina AAC. Although Mr. Paterno has a consulting services contract with Carolina AAC for $15,000.00 per month, he last received a consulting fee in early March 2014. Mr. Paterno deferred his remaining fees due to Carolina AAC's lack of funding, and is owed approximately $1,500,000.00 from the company to date. Mr. Paterno's wife is currently unemployed, and their monthly net income is $1,092.81. On April 29, 2014, before any monthly operating reports had been submitted, ArborOne filed a Motion to Convert Chapter 11 Case to Chapter 7. ArborOne argues that the Debtors have no reasonable likelihood of rehabilitation, and that there is substantial or continuing loss to the estate. ArborOne premises this argument on the Debtors' Schedules of Assets, Statement of Financial Affairs, and other documents filed with the Court. ArborOne argues that the Debtors failed to obtain employment for the past two years, liquidated approximately $433,000.00 of stock, survived solely on credit card debt, and failed to pay their tax liability. On April 30, 2014, the Debtors filed their first monthly operating report for the period of March 14, 2014 through March 31, 2014. This operating report showed a total income of $0.00 and total expenses of $3,587.13. At the start of the month, the Debtors had $7,924.17 in cash on hand, and they had $4,337.04 at the end of the month. As a result, their first monthly report reflected a cash loss in the amount of $3,587.13. The Debtors' second monthly operating report was timely filed on May 21, 2014, the day before the hearing on the motion to convert. This document reported monthly income of $14,403.62 and expenses of $12,404.45. Cash on hand at the start of the month totaled $4,337.04 and increased to $6,336.21 by the end of the month. The Debtors' net income for the month was $1,999.17. At the May 22, 2014 hearing, Mr. Paterno testified to his background in AAC, his future job prospects, his wife's education and teaching history, his monthly expenses, and his aggressive efforts to find a "white knight" investor for Carolina AAC. Mr. Paterno informed the Court that as of May 22, there had been no cash infusions into Carolina AAC for approximately eight weeks, and the company was operating with only one employee who had deferred his last two paychecks. Mr. Paterno stated that even if he did not receive his projected monthly $3,000.00 consulting fee from Carolina AAC, he and his wife could easily secure that money to help fund a plan through teaching or consulting with other businesses. Nonetheless, Mr. Paterno did acknowledge that neither he nor his wife had secured any employment outside Carolina AAC in the past two years. According to Judge James, the events cited by ArborOne all occurred pre-petition and are therefore irrelevant to the current inquiry. The record reflects that the Debtors have not sold any assets or incurred any credit card debt since the petition date. ArborOne's argument is premised solely on the Debtors' Schedules of Assets, monthly operating reports, and Statement of Financial Affairs. ArborOne does not dispute the accuracy of these documents and did not present any additional evidence at the hearing. Therefore, the court finds that ArborOne has failed to show any substantial or continuing post-petition loss to the estate. The Court also noted that while ArborOne's motion to convert relies heavily upon the argument that the rehabilitation of Carolina AAC and Carolina AAC Development appears unlikely, Mr. and Mrs. Paterno are the debtors in this case, not Carolina AAC and Carolina AAC Development. A copy of the Court's May 30, 2014 Memorandum Opinion and Order is available at http://is.gd/AVYdYOfrom Leagle.com. CHEYENNE HOTEL: Court Dismisses Suit Against Colorado Casualty -------------------------------------------------------------- Senior District Judge Richard P. Matsch in Colorado granted the request of Colorado Casualty Insurance Company for summary judgment, dismissing, with prejudice, a civil action filed against it by Cheyenne Hotel Investments, LLC. The civil action claims insurance coverage for damage to a Homewood Suites Hotel in Colorado Springs, Colorado. The complaint alleges that the Plaintiff was insured under a general hazard insurance policy issued by Westfield Insurance Company for the period from November 30, 2010 to November 30, 2011, and that the Plaintiff was insured under a general hazard insurance policy issued by Colorado Casualty for the earlier period of November 30, 2009 to November 30, 2010. The complaint states that in 2011, the Plaintiff incurred damages from a loss covered under the Westfield policy, and in the course of remediating and investigating that loss, the Plaintiff discovered damages that occurred before the coverage period of the Westfield policy. The Plaintiff states it made demand for payment from Colorado Casualty and received no response. The complaint states one claim against Colorado Casualty and one claim against Westfield, alleging the damage occurred during the coverage period of each policy and was the result of an insured peril. The Plaintiff seeks to recover approximately $140,000 for the cost of repairs to the hotel property, attorney's fees, costs and interest. The Plaintiff has voluntarily dismissed its claim against Westfield. Colorado Casualty moved for summary judgment of dismissal, arguing that the Plaintiff's claim against it is barred by the time limits for filing claims under its Policy. The case is, CHEYENNE HOTEL INVESTMENTS, LLC, Plaintiff, v. COLORADO CASUALTY INSURANCE COMPANY, Defendant, CIVIL ACTION NO. 13-CV-02027-RPM (D. Colo.). A copy of the Court's May 28, 2014 Order is available at http://is.gd/xQqxICfrom Leagle.com. Cheyenne Hotel Investments, LLC, is represented by: Saira Parvez Malik, Esq. MALIK LAW, LLC 1892 Big Bear Drive Sedalia, CO 80135 Tel: 303-814-8810 Colorado Casualty Insurance Company is represented by: Lyndsay K. Arundel, Esq. Troy R. Olsen, Esq. LEWIS ROCA ROTHGERBER LLP 1200 Seventeenth Street, Suite 3000 Denver, CO 80202 Tel: 303-628-9576 Fax: 303-623-9222 E-mail: LArundel@LRRLaw.com TOlsen@LRRLaw.com About Cheyenne Hotels Cheyenne Hotels LLC, which owns and operates the Hampton Inn & Suites in Colorado Springs, Colorado, filed for Chapter 11 bankruptcy (Bankr. D. Colo. Case No. 11-37518) on Nov. 25, 2011. Judge A. Bruce Campbell presides over the case, taking over from Judge Michael E. Romero. Thomas F. Quinn, Esq., at Thomas F. Quinn PC, serves as the Debtor's counsel. Cheyenne Hotels estimated $10 million to $50 million in both assets and debts. The petition was signed by Tanveer Khan, manager. Affiliate Cheyenne Hotel Investments LLC filed for Chapter 11 bankruptcy protection (Bankr. D. Colo. Case No. 11-25379) on June 28, 2011, disclosing assets of $12,912,702 and liabilities of $8,074,325 as of the Petition Date. Thomas F. Quinn, Esq., also represents Hotel Investments. Hotel Investments won confirmation of its own Chapter 11 plan on Aug. 16, 2013. A copy of the Third Amended Plan of Reorganization dated Aug. 5, 2013, is available at no charge at: http://bankrupt.com/misc/CHEYENNEHOTEL_3rdAmdPlan.PDF No committee of creditors or equity security holders has been appointed in the Debtors' cases. As reported by the Troubled Company Reporter on Jan. 6, 2014, the U.S. Trustee for Region 19 is seeking dismissal of the Hotel LLC case. Daniel J. Morse, as Assistant U.S. Trustee, said Cheyenne Hotels has been afforded the protections of the Bankruptcy Code for over two years but has failed to confirm a Chapter 11 Plan. Meanwhile, the bankruptcy estate continues to accrue administrative expenses, including professional fees, which are diminishing the bankruptcy estate. CHA CHA ENTERPRISES: Court Won't Stay Plan Order Pending Appeal --------------------------------------------------------------- Bankruptcy Judge Arthur S. Weissbrodt denied the motions of NUCP Turlock, Inc. for a stay of the orders confirming the Chapter 11 plans for MI Pueblo San Jose, Inc., and Cha Cha Enterprises, LLC, pending NUCP's appeal. NUCP, which is an unsecured creditor with filed claims in each case in excess of $11 million, has appealed the Bankruptcy Court's orders confirming each of Debtors' plans of reorganization. NUCP seeks a stay of the provisions of the confirmation orders that approve and implement releases of claims by either Debtor against Juvenal Chavez, members of the Chavez family, and the Chavez family trust, to the extent necessary to enable unsecured creditors to realize the benefit of any such claims that might be pursued following a reversal of the confirmation order(s). NUCP is represented by attorneys Peter J. Benvenutti and Tobias S. Keller. The motions are opposed by Debtor Mi Pueblo, Inc., which is represented by attorney Robert Harris; Debtor Cha Cha Enterprises, LLC, which is represented by attorney Paul Pascuzzi; Victory Park Capital Advisors, LLC and Victory Park Management, LLC, which are represented by attorney Todd Schwartz; Juvenal Chavez, who is represented by attorney Henry B. Niles, III; and The Official Committee of Unsecured Creditors of Mi Pueblo San Jose, Inc., which is represented by attorney Eric Goldberg. NUCP argues that there are serious questions going to the merits of its appeal. NUCP challenges the Bankruptcy Court's findings that the Plans were proposed in good faith and the Court's overruling of NUCP's evidentiary objections. NUCP also contends that the expedited nature of the confirmation hearing deprived NUCP of a reasonable opportunity to develop and present its objections. NUCP also questioned whether the Chavez family had engaged in self-dealing in the management of the Debtors, but offered no proof to that effect. However, the Creditors' Committee provided evidence that it had engaged in its own substantial investigation into these matters and discovered nothing that warranted the Committee's withdrawal of support for the plans. At the confirmation hearing, the Court permitted NUCP to cross- examine Mr. Chavez, albeit on a limited basis, but that cross- examination revealed nothing that raised questions as to whether the Plans were proposed in good faith. NUCP has been litigating with Mi Pueblo for some time dating back to well before the bankruptcy cases were filed. NUCP could have, but did not, raise issues and/or take discovery relating to alleged conflicts and/or lack of good faith at any time during these bankruptcies -- and certainly as of the time of Debtor's motion for approval of DIP and exit financing in early March 2014. According to Judge Weissbrodt, a stay pending appeal of the confirmation orders would cause irreparable harm to the Reorganized Debtors. Debtor Mi Pueblo is required to post a $3.5 million workers' compensation bond by June 1, 2014. According to the declaration of John Zott, Chief Financial Officer of Mi Pueblo, Mi Pueblo will not have sufficient cash to post the bond without the exit financing provided for in the plan, and without workers' compensation insurance, Mi Pueblo will be forced to cease operations. Collectively, the Debtors employ approximately 2,700 people across California. Absent the exit financing, Mi Pueblo's 21 grocery stores, which cater to the area's underserved Hispanic population, would be forced to close, and those 2,700 employees would be put out of work. The liquidation of Mi Pueblo would likely be devastating to Cha Cha as well, given that Mi Pueblo is Cha Cha's primary source of income. NUCP does not seek a stay of the entire confirmation orders. NUCP concedes that a stay of the entirety of the confirmation orders is neither feasible nor realistic given "the dynamics and financial needs of an operating business, and of the reliance that numerous parties . . . are going to place on the reorganized entity." Nevertheless, NUCP argues that if a "limited stay" is not granted, NUCP's appeal rights may be rendered moot by the substantial consummation of the plan. Judge Weissbrodt, however, held that NUCP has not met its burden to show that any stay is appropriate. A copy of the Court's May 29, 2014 Memorandum Decision is available at http://is.gd/8kcgs0from Leagle.com. About Cha Cha Enterprises Cha Cha Enterprises, LLC, is a California limited liability company formed in 1998 to purchase a fee interest in property located at 1775 Story Road, San Jose, California and a leasehold interest in property located at 1745 Story Road in San Jose. Cha Cha's primary business is the rental of real property. Cha Cha filed a Chapter 11 petition (Bankr. N.D. Cal. Case No. 13-53894) on July 22, 2013. The Debtor estimated at least $10 million in assets and liabilities. An affiliate, Mi Pueblo San Jose, Inc., sought Chapter 11 protection (Case No. 13-53893) on the same day. The cases are not jointly administered. Steven H. Felderstein, Esq., at Felderstein Fitzgerald Willoughby & Pascuzzi LLP serves as counsel. Nicolas De Lancie, Esq., at Jeffer Mangels Butler & Mitchell LLP Robert B. Kaplan, P.C. represents secured creditor Wells Fargo Bank, N.A. About Mi Pueblo San Jose Mi Pueblo San Jose, Inc., a chain of 21 Hispanic grocery stores, filed a Chapter 11 petition (Bankr. N.D. Calif. Case No. 13-53893) in San Jose, on July 22, 2013. An affiliate, Cha Cha Enterprises, LLC, the real estate and check-cashing arm, sought Chapter 11 protection (Case No. 13-53894) on the same day. The cases are not jointly administered. Mi Pueblo began in 1991 and was founded by Juvenal Chavez. In its amended schedules, Mi Pueblo disclosed $61,577,296 in assets and $68,735,285 in liabilities as of the Petition Date. Heinz Binder, Esq., at Binder & Malter, LLP, is the Debtor's general reorganization counsel. The Law Offices of Wm. Thomas Lewis, sometimes doing business as Robertson & Lewis, is the Debtor's special counsel. Avant Advisory Partners, LLC serves as its financial advisors. Bustamante & Gagliasso, P.C. serves as its special counsel. Cha Cha is represented by Sacramento-based Felderstein Fitzgerald Willoughby & Pascuzzi LLP. The U.S. Trustee appointed seven members to the Official Committee of Unsecured Creditors. Protiviti Inc. serves as financial advisor. Stutman, Treister & Glatt P.C. served as counsel to the Committee. Gordon Silver was tapped by the Committee as counsel effective May 1, 2014. NUCP Turlock is represented by Peter J. Benvenutti, Esq., and Tobias S. Keller, Esq., at Keller & Benvenutti LLP; and Steven N. Holland, Esq., and Justin J. Schnitzler, Esq., at Ring Hunter Holland & Schenone, LLP; and George Kalikman, Esq., and Valerie Bantner Peo, Esq., at Schnader Harrison Segal & Lewis LLP. CODERE SA: Spanish Casino Co. Extends Talks Over $1.3B Debt ----------------------------------------------------------- Law360 reported that Spanish casino and racetrack operator Codere SA said it has negotiated another extension of talks with creditors, who hold approximately $1.3 billion worth of debt, that it entered into in order to stave off insolvency proceedings. According to the report, Codere's board of directors said it has reached a sixth so-called "standstill agreement" with creditors, pushing the deadline for a deal back to June 4 while negotiations continue. About Codere S.A. Codere SA is a Madrid-based gaming company. It operates betting shops and race tracks from Italy to Argentina. The firm sought preliminary creditor protection on Jan. 2 after reporting seven consecutive quarters of losses. CONNECTEDU INC: Wins Approval to Sell CoursEval Without Auction --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that ConnectEdu Inc., a developer of Internet-based systems connecting students with educators and prospective employers, got the green light May 27 to sell its Academic Management Systems business without an auction to lender North Atlantic SBIC IV LP under a contract valued at $4 million. According to the report, the company owed $6 million to North Atlantic, which has a lien on substantially all the company's assets. North Atlantic will pay for the AMS assets by reducing debt by $4 million, the report said. ConnectEdu Inc., a maker of education-related technology, filed for Chapter 11 bankruptcy protection in Manhattan, on April 28, 2014. The case is In re ConnectEdu, Inc., Case No. 14-11238 (Bankr. S.D.N.Y.). The Debtor's counsel is Wojciech F Jun, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler LLP. The filing lists ConnectEdu's assets at between $1 million and $10 million against liabilities of between $10 million and $50 million. CONSOLIDATED MERIDIAN: Suit v. Berg, Moss Adams Reinstated ---------------------------------------------------------- In the case, MARK CALVERT, as Liquidating Trustee, et al., Plaintiffs, v. FREDERICK DARREN BERG and MOSS ADAMS LLP, Defendants, CASE NO. C13-1842RSL (W.D. Wash.), plaintiffs appeal of an order by the Bankruptcy Court for the Western District of Washington granting defendants' motion to dismiss for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1). However, District Judge Robert S. Lasnik reverses the bankruptcy court's order granting defendants' motion to dismiss and refers the matter to the bankruptcy court for further proceedings. The bankruptcy proceedings underlying the adversary proceeding began in 2010 and 2011 when a group of investment funds controlled by defendant Frederick Darren Berg, known collectively as the "Meridian Funds," collapsed and entered into bankruptcy. The bankruptcy court consolidated the various bankruptcy proceedings connected with Berg and entered an order confirming a consensual Chapter 11 plan. The Plan provides for the creation of a liquidating trust for the Meridian Funds and named Mark Calvert, one of the named plaintiffs in this adversarial proceeding, as the liquidating trustee. The trust holds all claims of the consolidated bankruptcy estate, including any claims the participating investors have against the auditors and accountants for Berg and his funds. The Plan further provides that "the Bankruptcy Court shall retain and have exclusive jurisdiction after the Effective Date over any matter arising under the Bankruptcy Code, arising in or related to the Chapter 11 Cases or the Plan. The trustee and 700+ individual investors filed this action seeking to recover damages from Berg and Moss Adams LLP, an auditor of the Meridian Funds. The trustee sued as the assignee of the investors who were allegedly injured by defendants' malfeasance. Plaintiffs allege three causes of action against defendants: (1) professional negligence; (2) negligent misrepresentation; and (3) fraud. Defendants moved to dismiss plaintiffs' First Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(1) and (6). Applying the "close nexus" test, the Honorable Karen A. Overstreet, United States Bankruptcy Judge, found that this action was not sufficiently "related to" the Meridian Funds bankruptcy proceeding for the court to exercise subject matter jurisdiction under 28 U.S.C. Sec. 1334(b) and dismissed the action. Plaintiffs filed the appeal. In reversing the lower court's ruling, Judge Lasnik held that the express reservation of claims against Moss Adams as a potential asset of the estate to be pursued by the trustee for the benefit of the creditors and the need to interpret certain Plan provisions relevant to the statute of limitations and the validity of the assignment establishes a "close nexus" between this action and the bankruptcy proceeding. Thus, the Court finds that there is "related to" jurisdiction under Sec. 1334(b). A copy of the Court's May 28, 2014 Order is available at http://is.gd/0wg78Efrom Leagle.com. About Meridian Mortgage and Frederick Darren Berg In November 2010, a federal grand jury in Seattle indicted Frederick Darren Berg on 12 counts of wire fraud, money laundering and bankruptcy fraud in connection with the demise of his Meridian Group of investment funds. Prosecutors believe Mr. Berg took in more than $280 million, with the losses attributed to the ponzi scheme estimated to be roughly $100 million. Hundreds of victims have lost money in the scheme between 2001 and 2010. Mr. Berg commenced a personal Chapter 11 case on July 27, 2010 (Bankr. W.D. Wash. Case No. 10-18668), estimating assets of more than $10 million and liabilities between $1 million and $10 million. The filing came after lawyers for one group of investors, armed with a court order and accompanied by sheriff's deputies, began seizing personal possessions at Mr. Berg's Mercer Island home and downtown Seattle condo. Diana K. Carey, trustee for Mr. Berg's estate, filed on Jan. 27, 2011, voluntary Chapter 11 petitions for Mortgage Investors Fund I LLC (Bankr. W.D. Wash. Case No. 11-10830) estimating assets of up to $50,000 and debts of up to $50 million and Meridian Mortgage Investors Fund III LLC (Case No. 11-10833), estimating up to $50,000 in assets and up to $100 million in liabilities. Michael J. Gearin, Esq., at K&L Gates LLP, in Seattle, served as counsel to the Debtors. Creditors filed an involuntary Chapter 11 petition for Meridian Mortgage Investors Fund II LLC (Bankr. W.D. Wash. Case No. 10-17976) on July 9, 2010. The petitioners were represented by Jane E. Pearson, Esq., at Foster Pepper PLLC, in Seattle. Creditors filed involuntary Chapter 11 petitions for Meridian Mortgage Investors Fund VIII, LLC (Bankr. W.D. Was. Case No. 10-17958) and Meridian Mortgage Investors Fund V, LLC (Bankr. W.D. Wash. Case No. 10-17952) on July 9, 2010. The petitioners were represented by John T. Mellen, Esq., at Keller Rohrback LLP, in Seattle, and Cynthia A. Kuno, Esq., at Hanson Baker Ludlow Drumheller PS, in Bellevue, represent the petitioners. On June 22, 2011, the Bankruptcy Court entered an order confirming a consensual Chapter 11 plan in the Meridian bankruptcy. The Plan provides for the creation of the Liquidating Trust for the Substantively Consolidated Meridian Funds, a/k/a/ The Meridian Investors Trust. Mr. Calvert was named Liquidating Trustee. On Feb. 9, 2012, Mr. Berg was sentenced to 18 years of imprisonment, three years of supervised release, and restitution. DETROIT, MI: Some Retirees Sent Wrong Bankruptcy Ballots -------------------------------------------------------- Reuters reported that some Detroit retirees were sent erroneous ballots for voting on the city's plan to deal with $18 billion of debt, including public pensions and exiting bankruptcy, attorneys disclosed in federal court. According to the report, the news appeared to rattle Judge Steven Rhodes, who has set a brisk schedule for Detroit's municipal bankruptcy. The judge demanded to know who was responsible for the ballot mess, the report related. Thousands of Detroit creditors must vote and return their ballots by July 11, the report said. About City of Detroit, Michigan The City of Detroit, Michigan, weighed down by more than $18 billion in accrued obligations, sought municipal bankruptcy protection on July 18, 2013, by filing a voluntary Chapter 9 petition (Bankr. E.D. Mich. Case No. 13-53846). Detroit listed more than $1 billion in both assets and debts. Kevyn Orr, who was appointed in March 2013 as Detroit's emergency manager, signed the petition. Detroit is represented by lawyers at Jones Day and Miller Canfield Paddock and Stone PLC. Michigan Governor Rick Snyder authorized the bankruptcy filing. The filing makes Detroit the largest American city to seek bankruptcy, in terms of population and the size of the debts and liabilities involved. The City's $18 billion in debt includes $5.85 billion in special revenue obligations, $6.4 billion in post-employment benefits, $3.5 billion for underfunded pensions, $1.13 billion on secured and unsecured general obligations, and $1.43 billion on pension- related debt, according to a court filing. Debt service consumes 42.5 percent of revenue. The city has 100,000 creditors and 20,000 retirees. The Hon. Steven Rhodes oversees the bankruptcy case. Detroit is represented by David G. Heiman, Esq., and Heather Lennox, Esq., at Jones Day, in Cleveland, Ohio; Bruce Bennett, Esq., at Jones Day, in Los Angeles, California; and Jonathan S. Green, Esq., and Stephen S. LaPlante, Esq., at Miller Canfield Paddock and Stone PLC, in Detroit, Michigan. Sharon Levine, Esq., at Lowenstein Sandler LLP, is representing the American Federation of State, County and Municipal Employees and the International Union. Babette Ceccotti, Esq., at Cohen, Weiss & Simon LLP, is representing the United Automobile, Aerospace and Agricultural Implement Workers of America. A nine-member official committee of retired workers was appointed in the case. The Retirees' Committee is represented by Dentons US LLP. Lazard Freres & Co. LLC serves as the Retiree Committee's financial advisor. DETROIT, MI: Early Returns Show Support for Bankruptcy Plan ----------------------------------------------------------- Matthew Dolan, writing for The Wall Street Journal, reported that early ballots from Detroit city employees and its retired workers are strongly supporting Detroit's debt-cutting plan, giving new hope to city leaders who aim to exit bankruptcy court by this fall. According to the report, the city sent ballots to roughly 32,000 pension recipients and the initial tally from votes of roughly 5,000 current and former city workers with pensions mailed in so far favored the city's plan at more than a two to one margin, city officials said. In other news, Robert Snell, writing for The Detroit News, reported that the city's bankruptcy team is trying to put a price tag on the entire Detroit Institute of Arts collection following demands from various creditors. According to Mr. Snell, city bankruptcy lawyer Bruce Bennett disclosed the ongoing valuation during a bankruptcy hearing but provided no details. The Detroit News noted that a group of creditors, led by Financial Guaranty Insurance Company, is trying to prove the DIA's collection is worth more than $816 million, the amount pledged in the "grand bargain" to swap the art for aid to 32,000 city pensioners. Christie's Appraisals last year valued about 1,741 city-purchased pieces of art at between $454 million and $867 million, the report recalled. 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. * * * The Troubled Company Reporter, on June 3, 2014, reported that Fitch Ratings maintains the Rating Watch Negative on the following city of Detroit, Michigan (the city) bonds issued on behalf of the Detroit Water and Sewerage Department (DWSD): -- $1.1 billion senior lien water revenue bonds 'BB+'; -- $565 million second lien water revenue bonds 'BB'. -- $1.6 billion senior lien sewer revenue bonds 'BB+'; -- $788 million second lien sewer revenue bonds 'BB'. DFC GLOBAL: S&P Assigns 'B' Rating to Proposed 6-Yr. Sr. Notes -------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned a 'B' issue- level rating on DFC Finance Corp.'s proposed six-year senior secured notes. At the same time, S&P kept its 'B' issuer credit and senior unsecured ratings on Berwyn, Pa.-based DFC Global Corp. on CreditWatch with negative implications. DFC Finance, an entity formed by Lone Star Funds, plans to issue $500 million and GBP150 million of six-year senior secured notes in conjunction with the pending acquisition of DFC Global by an affiliate of Lone Star Funds. DFC Finance will issue the proposed notes only if DFC Global's shareholders approve the sale of the company on June 6. The notes, alongside an equity contribution from Lone Star of $750 million, will finance the acquisition and the repayment of substantially all of DFC Global's currently outstanding debt, including the convertible bonds and the Canadian senior notes. Following the acquisition, Jersey-based Sterling Mid-Holdings Ltd., the holding company Lone Star has set up, will hold the stock of DFC Finance, DFC Global, and all other operating subsidiaries. Sterling, DFC Global, and certain other subsidiaries -- which will represent the majority of the consolidated company's cash flows and earnings -- will guarantee the notes. (The company also expects to enter into a $125 million senior secured, asset-based revolving credit facility that will allow borrowings in the U.S., the U.K., and Canada.) "Our 'B' rating on the proposed notes reflects those guarantees and our expectations regarding the creditworthiness of the consolidated entity following the close of the acquisition," said Standard & Poor's credit analyst Igor Koyfman. "The 'B' rating we plan to assign to Sterling if the acquisition closes will reflect the recent poor operating performance of DFC Global and the heightened regulatory risk of small-dollar lending. Positively, we expect Sterling to have lower leverage because it will repay more than $1 billion of DFC Global's outstanding debt." S&P plans to keep its ratings on DFC Global on CreditWatch until it becomes clearer whether the acquisition of the company will occur as planned. S&P believes Sterling will most likely acquire DFC Global as planned, but some shareholder representatives have voiced opposition to the deal. S&P will likely resolve the CreditWatch if shareholders approve the acquisition when they vote on June 6. If the acquisition unexpectedly fails, S&P will likely lower its rating on DFC Global -- given that its leverage has risen substantially recently because of a sharp decline in EBITDA. The Sterling acquisition would reduce that leverage through a debt paydown. DIGERATI TECHNOLOGIES: Plan Directors Need to Be 'Disinterested' ---------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that in a memorandum opinion published May 27 denying confirmation of Digerati Technologies Inc.'s amended plan "based solely upon a provision about which there is little case law," Chief Bankruptcy Judge Jeff Bohm reviewed "what scant case law exists" before determining that the plan in question could not be confirmed because the appointment of the bankrupt's chief executive and chief financial officer to serve as the sole members of the reorganized company's board was not "consistent with the interests of creditors and equity security holders and with public policy." According to the report, while Judge Bohm said he was making "an effort to develop guidelines for applying this particular provision of the Code," one element of his opinion may befuddle those who seek its meaning. After "distilling" five cases, Judge Bohm articulated nine factors to be considered in assessing whether the appointment of an individual to serve as a director or officer of a reorganized debtor is "consistent with public policy." The case is In re Digerati Technologies Inc., 13-bk-33264, U.S. Bankruptcy Court, Southern District of Texas (Houston). About Digerati Technologies, Inc. Digerati Technologies, Inc., filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 13-33264) in Houston, on May 30, 2013. Digerati -- http://www.digerati-inc.com-- is a diversified holding company which owns operating subsidiaries in the oil field services and the cloud communications industry. Digerati and its subsidiaries maintain Texas Offices in San Antonio and Houston. The Debtor has no independent operations apart from its subsidiaries. The Debtor's subsidiaries include Shift 8 Networks, a cloud communication service, Hurley Enterprises, Inc., and Dishon Disposal, Inc., both oil field services companies. The Debtor disclosed $60 million in assets and $62.5 million in liabilities as of May 29, 2013. Bankruptcy Judge Jeff Bohm oversees the case. Deirdre Carey Brown, Esq., Annie E. Catmull, Esq., Melissa Anne Haselden, Esq., Mazelle Sara Krasoff, Esq., and Edward L Rothberg, at Hoover Slovacek, LLP, in Houston, represent the Debtor as counsel. The Debtor tapped Gilbert A. Herrera and Herrera Partners as the investment banker. Earlier in the case, Rhode Holdings, LLC, sought the transfer of venue of Digerati's Chapter 11 case to the U.S. Bankruptcy Court for the Western District of Texas, San Antonio Division. The case, however, remained in Houston Bankruptcy Court. DIKA-ROCKFORD: Case Summary & 16 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Dika-Rockford, LLC 85 W. Algonquin Rd., Ste. 420 Arlington Heights, IL 60005 Case No.: 14-20376 Chapter 11 Petition Date: May 30, 2014 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Hon. Benjamin A. Goldgar Debtor's Counsel: Thomas W. Goedert, Esq. CRANE, HEYMAN, SIMON, WELCH & CLAR 135 S. LaSalle St., Suite 3705 Chicago, IL 60603 Tel: 312-641-6777 Fax: 312-641-7114 Email: tgoedert@craneheyman.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Marshall Dickler, manager/member. A list of the Debtor's 16 largest unsecured creditors is available for free at http://bankrupt.com/misc/ilnb14-20376.pdf DOLLAR FINANCIAL: Moody's Affirms 'B2' Corporate Family Rating -------------------------------------------------------------- Moody's Investors Service affirmed the B2 Corporate Family (CFR) and senior unsecured debt ratings of Dollar Financial Group and subsidiaries. Moody's also revised Dollar's rating outlook to negative from stable. Ratings Rationale The negative outlook reflects Moody's deepening concern regarding the regulatory environment related to Dollar's consumer lending activities. The company's financial results have been adversely affected in recent periods by increased regulatory restrictions on payday lending services in key markets, particularly in the UK. Moody's expect that the drag on Dollar's financial results will continue for the next twelve to eighteen months. Regulatory scrutiny is likely to intensify as the Consumer Financial Protection Bureau asserts its oversight of the payday lending sector in the US and as the FCA finalizes new rules for operators in the UK. Although the regulatory environment in Canada (Dollar's second largest market) appears stable, in Moody's view there exists the possibility of "regulatory convergence" leading to more restrictive standards in Canada as well. Partially offsetting these pressures is the expected improvement in financial flexibility which will result upon consummation of the proposed acquisition of Dollar by Lone Star Funds. On 2 April 2014, Dollar announced that it has entered into a definitive agreement to be acquired by an affiliate of Lone Star Funds ("Lone Star") in a transaction valued at approximately $1.3 billion, including the assumption of net debt. A shareholder vote is expected by 6 June and upon completion of the transaction, Dollar will become a privately held company. As part of the transaction, Dollar plans to issue $500 million and GBP150 million Senior Secured Notes through a newly created entity, DFC Finance Corp. (DFC Finance). Proceeds from the senior secured notes, along with Lone Star's equity contribution, will be used to pay off all existing rated debt. Once the transaction is complete, Moody's expects to assign a B2 CFR to Sterling Mid- Holdings Limited, the parent of DFC Finance, as well as a B2 rating to the newly issued senior secured notes of DFC Finance. Moody's also expects to withdraw Dollar's B2 CFR and senior unsecured debt ratings. Dollar's B2 senior unsecured rating reflects the company's improved capital position as a result of the expected capital injection by Lone Star. In addition, the debt issuance by DFC Finance further extends its debt maturities, thus reducing near- term refinancing risk. Dollar's ratings are unlikely to be upgraded given the negative outlook. The outlook could return to stable if the company successfully navigates current regulatory challenges, stabilizing its revenue and earnings. Ratings could be downgraded if the company experiences a significantly worse than anticipated operating environment with attendant adverse effects on profitability and financial condition, or if the deleveraging contemplated as a part of the Lone Star transaction fails to materialize. Dollar is a wholly-owned subsidiary of DFC Global Corp. (ticker symbol DLLR), an international financial services company serving under-banked consumers. Dollar, based in Berwyn, PA, reported total assets of $1,612 million as of March 31, 2014. The principal methodology used in this rating was Finance Company Global Rating Methodology published in March 2012. E & C FASHION: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: E & C Fashion Inc. 327 West 36th Street, 6 FL. New York, NY 10018 Case No.: 14-11699 Chapter 11 Petition Date: June 2, 2014 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Judge: Hon. Robert E. Gerber Debtor's Counsel: Xiangan Gong, Esq. XIANGAN GONG, ESQ 136-40 39th Avenue, Suite 202 Flushing, NY 11354 Tel: (718)569-2980 Fax: (718)888-1179 Email: xaglaw@gmail.com Estimated Assets: $0 to $50,000 Estimated Debts: $10 million to $50 million The petition was signed by David Loi, president. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. E H MITCHELL: Case Dismissal Hearing Moved to June 18 Afternoon --------------------------------------------------------------- The Bankruptcy Court rescheduled until June 18, 2014, at 2:00 p.m., the hearing to consider the motion to dismiss the Chapter 11 case of E. H. Mitchell & Company LLC. As reported in the Troubled Company Reporter on May 29, 2014, the matter was set or hearing on June 18, at 9:00 a.m. before Hon. Jerry A. Brown. Reginald J. Laurent, a creditor of the Debtor, filed a motion for determination that the Debtor is subject to Sec. 362(d)(3), the Debtor is a single asset real estate (SARE) entity, and that the Petition was filed in bad faith. Mr. Laurent requested for the dismissal of the bankruptcy case for cause because: a. the Debtor has only one asset, b. there are few unsecured creditors, and their claims are small in comparison to those of secured creditor, c. the Debtor has no employees, d. the asset (property) is the subject of pending litigation between debtor and secured creditor, and e. the debtor's bankruptcy filing was meant to frustrate the rights and remedies of the secured creditor. Mr. Laurent contended that the Debtor's bankruptcy filing was merely a litigation strategy, and that the case is a two-party dispute that should be resolved outside of bankruptcy. About E. H. Mitchell & Company LLC E. H. Mitchell & Company LLC sought protection under Chapter 11 of the Bankruptcy Code on Oct. 8, 2013, (Case No. 13-12786, Bankr. E.D. La.). The case is assigned to Judge Jerry A. Brown. The Debtor is represented by Robert L. Marrero, Esq., at Robert Marrero, LLC, in New Orleans, Louisiana. The Debtor disclosed $300,027,297 in assets and $1,281,148 in liabilities. The petition was signed by Michael Furr, secretary/member. Henry G. Hobbs, Jr., Acting United States Trustee for Region 5, has appointed three members to the official committee of unsecured creditors. EARL GAUDIO: Court Approves Martin Auction Services as Auctioneer ----------------------------------------------------------------- Earl Gaudio & Son, Inc. sought and obtained permission from the U.S. Bankruptcy Court for the Central District of Illinois to employ Martin Auction Services, LLC as auctioneer. The Debtor requires Martin Auction to conduct a public sale of certain personal property assets of the estates as well as all remaining vehicles of the Debtor. The Debtor intends to compensate Martin Auction on the terms set forth in the parties' Auction Agreement, including by paying a commission of 7% of the gross proceeds of the sale and for transportation and moving expenses up to a maximum of $5,000. Stanley B. Irvin of Martin Auction 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. Martin Auction can be reached at: Stanley B. Irvin MARTIN AUCTION SERVICES, LLC 9515 Texas Church Road Clinton, IL 61727 Tel: (217) 935-3245 Fax: (217) 935-3888 E-mail: stanirvin@yahoo.com About Earl Gaudio & Son, Inc. Earl Gaudio & Son, Inc., filed a Chapter 11 petition (Bankr. C.D. Ill. Case No. 13-90942) on July 19, 2013. The petition was signed by Angela E. Major Hart, as authorized signer of First Midwest Bank, custodian. Judge Gerald D. Fines presides over the case. The Debtor disclosed $11,849,187 in assets and $8,489,291 in liabilities as of the Chapter 11 filing. John David Burke, Esq., and Ben T. Caughey, Esq., at Ice Miller, LLP, serve as the Debtor's counsel. The U.S. Trustee appointed five creditors to serve in the Official Committee of Unsecured Creditors. The Committee retained Evans, Forehlich, Beth & Chamley as its local counsel, and Rubin & Levin, P.C., as its counsel. ECOTALITY INC: Settlement Resolving Nissan Claims Approved ---------------------------------------------------------- Bankruptcy Judge Madeleine C. Wanslee approved a settlement agreement resolving claims of Nissan North America, Inc. The agreement entered between Electric Transportation Engineering Corporation, doing business as Ecotality North America, et al., and NNA provides that NNA will pay $45,000 to the Debtors for the benefit of their estates and the parties will mutually release their claims arising from the DIP Financing and fee dispute in favor of the NNA or the Debtors' released parties. As reported in the Troubled Company Reporter on May 13, 2014, the Debtors, the Official Committee of Unsecured Creditors and Nissan began exchanging settlement proposals on Dec. 19, 2013, in an effort to settle a fee dispute on mutually agreeable terms without the expense of further litigation. Through their good faith and arm's-length negotiations, the parties have agreed on these key terms: i. Effective: The Settlement Agreement will be binding Date upon the parties, their respective successors and assigns, from the date of entry of an order of the Court approving the Settlement Agreement. ii. Settlement: Within 10 business days of entry of the Payment Approval Order, and conditioned upon Nissan's receipt of a completed W-9 form from the Debtors, Nissan or its affiliate will pay and deliver to the Debtors the sum of $45,000, in resolution of the Fee Dispute. iii. Release: In consideration of the Settlement Payment and of NNA other promises in the Settlement Agreement, the Debtors and the Creditors' Committee and all of their respective affiliates, past and present directors, officers, shareholders, members, agents, servants, employees, representatives, guarantors, predecessors in interest, trustees, administrators, adjusters, attorneys and insurers will release Nissan and all of its affiliates, past and present directors, officers, shareholders, members, agents, servants, employees, representatives, guarantors, predecessors in interest, trustees, administrators, adjusters, attorneys and insurers of any and all claims, liens, obligations, demands, claims for relief, causes of action, debts, damages, losses and liabilities of every type and nature whatsoever, which the Debtor releasors ever had, now have or might hereafter have against the Nissan Released Parties, as applicable, whether known or unknown, whether fixed or contingent, whether matured or un-matured, whether direct, indirect or consequential, and whether asserted or unasserted, arising from or related to the DIP financing or the fee dispute. iv. Release of: In consideration of the promises in the the Debtors Settlement Agreement, Nissan and all its affiliates, past and present directors, officers, shareholders, members, agents, servants, employees, representatives, guarantors, predecessors in interest, trustees, administrators, adjusters, attorneys and insurers will release the Debtors and each of their affiliates, past and present directors, officers, shareholders, members, agents, servants, employees, representatives, guarantors, predecessors in interest, trustees, administrators, adjusters, attorneys and insurers of any and all claims, liens, obligations, demands, claims for relief, causes of action, debts, damages, losses and liabilities of every type and nature whatsoever, which such Nissan releasors ever had, now has or might hereafter have against the Debtors' Released Parties, as applicable, whether known or unknown, whether fixed or contingent, whether matured or unmatured, whether direct, indirect or consequential, and whether asserted or unasserted, arising from or related to the DIP financing or the fee dispute. According to the Debtors, this settlement agreement is intended to compromise and fully resolve all issues, disputes, liabilities and claims existing between each other, arising from or related to the DIP financing and the fee dispute. The Debtors believe, in their business judgment, that it is prudent to settle the fee dispute to avoid the costs of further litigation. A full-text copy of the settlement agreement is available for free at http://is.gd/JMfe0Z About Ecotality Inc. Headquartered in San Francisco, California, Ecotality, Inc. (Nasdaq: ECTY) -- http://www.ecotality.com-- is a provider of electric transportation and storage technologies. Ecotality Inc. along with affiliates including lead debtor Electric Transportation Engineering Corp. sought Chapter 11 protection (Bankr. D. Ariz. Lead Case No. 13-16126) on Sept. 16, 2013, with plans to sell the business at an auction. The cases are assigned to Chief Judge Randolph J. Haines. The Debtors' lead counsel are Charles R. Gibbs, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Dallas, Texas; and David P. Simonds, Esq., and Arun Kurichety, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Los Angeles, California. The Debtors' local counsel is Jared G. Parker, Esq., at Parker Schwartz, PLLC, in Phoenix, Arizona. FTI Consulting, Inc. serves as the Debtors' crisis manager and financial advisor. The Debtors' claims and noticing agent is Kurtzman Carson Consultants LLC. Electric Transportation estimated assets of $10 million to $50 million and debt of $100 million to $500 million. Unlike most companies in bankruptcy, Ecotality has no secured debt. It simply ran out of money. There's $5 million owing on convertible notes, plus liability on leases. Part of pre-bankruptcy financing took the form of a $100 million cost-sharing grant from the U.S. Energy Department. In view of the San Francisco-based company's financial problems, the government cut off the grant when $84.8 million had been drawn. On Sept. 24, 2013, the Office of the United States Trustee for Region 14 appointed a committee of unsecured creditors. In October 2013, the bankruptcy judge cleared Ecotality to sell most of the business to Car Charging Group Inc. for $3.3 million. Two other buyers purchased other assets for $1 million in total. EDGENET INC: Ex-Principals Want More Time to Bid in Ch. 11 Auction ------------------------------------------------------------------ Law360 reported that bankrupt Edgenet Inc.'s noteholders committee joined a group of the company's former principals in a call to postpone the bid deadline for the debtor's auction, seeking more time for the ex-employees to best the $5.5 million stalking horse offer from a Parallax Capital Partners LLC unit. According to the report, in a motion before the Delaware bankruptcy court, the official committee of noteholders filed a joinder to a request to postpone the bid deadline and auction date from a company formed by three men. About Edgenet Inc. Edgenet, Inc., and Edgenet Holding Corp. are providers of cloud- based content and applications that enable companies to sell more products and services with greater ease across multiple channels and devices. Edgenet has three business locations: Waukesha, WI, Brentwood, TN, and its main office in Atlanta, GA. The Company has 80 employees. Edgenet Inc. and Edgenet Holding filed for Chapter 11 bankruptcy protection in Delaware (Lead Case No. 14-10066) on Jan. 14, 2014. Edgenet Inc. estimated assets of at least $10 million and liabilities of $100 million to $500 million. Raymond Howard Lemisch, Esq., at Klehr Harrison Harvey Branzburg LLP, in Wilmington, Delaware, serves as counsel to the Debtors; Glass Ratner Advisory & Capital Group LLC is the financial advisor; JMP Securities, LLC, is the investment banker, and Phase Eleven Consultants, LLC, is the claims and noticing agent. The U.S. Trustee has been unable to appoint an official unsecured creditors committee as no sufficient interest has been generated from creditors. Fred Marxer, Timothy Choate and Davis Carr, individuals and holders of a segment of the promissory notes issued in 2004 that have been referred to by Edgenet, Inc., et al., requested that the Court will issue an order appointing an official committee of Seller Noteholders, or in the alternative, an official committee of unsecured creditors, with members appointed from the Seller Noteholders who agree to waive any continued security interest arising from the Seller Notes. ENERGY FUTURE: Bid to Transfer Case to Texas Court Denied --------------------------------------------------------- Bankruptcy Judge Christopher S. Sontchi denied the motion of Wilmington Savings Fund Society, FSB to transfer the cases of Energy Future Holdings Corp., et al., to the U.S. District Court for the Northern District of Texas. WSFS, on May 21, responded to the Debtor's objection to the Venue Transfer Motion, stating that (i) the convenience of the Debtor's professionals and their creditors' professionals is not a factor that the Court must consider; (ii) the convenience of the Debtors' largest creditors is not afforded additional weight; and (iii) the convenience of the parties favors transfer of the cases to the Northern District Texas. On May 20, Neighbors for Neighbors, Inc., a non-profit Texas corporation comprised of individuals who live on and around the Three Oaks and Sandow lignite mines and the Sandow Steam Electric Power Generating Station located in Central Texas facilities which are owned and operated by Luminant mining Company LLC and Luminant Generation Company LLC, whole-owned subsidiaries of Texas Competitive Electric Holdings Company, LLC, joined the motion filed by WSFS to transfer the cases in the interest of justice and for convenience of the parties. Wilmington Savings is represented by: William P. Bowden, Esq. Gregory A. Taylor, Esq. ASHBY & GEDDES, P.A. 500 Delaware Avenue P.O. Box 1150 Wilmington, DE 19899 Tel: (302) 654-1888 Fax: (302) 654-2067 - and - Edward S. Weisfelner, Esq. Aaron B. Lauchheimer, Esq. BROWN RUDNICK LLP Seven Times Square New York, NY 10036 Tel: (212) 209-4800 Fax: (212) 209-4801 - and - Jeffrey L. Jonas, Esq. Jeremy B. Coffey, Esq. One Financial Center Boston, MS 02111 Tel: (617) 856-8200 Fax: (617) 856-8201 Neighbors for Neighbors is represented by: Michell A. McFaddin, Esq. 1900 Miles Avenue Austin, TX 78745 Tel: (512) 561-3039 E-mail: michelleamcfaddin@gmail.com About Energy Future Holdings, fka TXU Corp. Energy Future Holdings Corp., formerly known as TXU Corp., is a privately held diversified energy holding company with a portfolio of competitive and regulated energy businesses in Texas. Oncor, an 80 percent-owned entity within the EFH group, is the largest regulated transmission and distribution utility in Texas. The Company delivers electricity to roughly three million delivery points in and around Dallas-Fort Worth. EFH Corp. was created in October 2007 in a $45 billion leverage buyout of Texas power company TXU in a deal led by private-equity companies Kohlberg Kravis Roberts & Co. and TPG Inc. On April 29, 2014, Energy Future Holdings and 70 affiliated companies sought Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 14-10979) after reaching a deal with some key financial stakeholders to keep its businesses operating while reducing its roughly $40 billion in debt. The Debtors' cases have been assigned to Judge Christopher S. Sontchi (CSS). The Debtors are seeking to have their cases jointly administered for procedural purposes. As of Dec. 31, 2013, EFH Corp. reported total assets of $36.4 billion in book value and total liabilities of $49.7 billion. The Debtors have $42 billion of funded indebtedness. EFH's legal advisor for the Chapter 11 proceedings is Kirkland & Ellis LLP, its financial advisor is Evercore Partners and its restructuring advisor is Alvarez & Marsal. The TCEH first lien lenders supporting the restructuring agreement are represented by Paul, Weiss, Rifkind, Wharton & Garrison, LLP as legal advisor, and Millstein & Co., LLC, as financial advisor. The EFIH unsecured creditors supporting the restructuring agreement are represented by Akin Gump Strauss Hauer & Feld LLP, as legal advisor, and Centerview Partners, as financial advisor. The EFH equity holders supporting the restructuring agreement are represented by Wachtell, Lipton, Rosen & Katz, as legal advisor, and Blackstone Advisory Partners LP, as financial advisor. Epiq Systems is the claims agent. Wilmington Savings Fund Society, FSB, the successor trustee for the second-lien noteholders owed about $1.6 billion, is represented by Ashby & Geddes, P.A.'s William P. Bowden, Esq., and Gregory A. Taylor, Esq., and Brown Rudnick LLP's Edward S. Weisfelner, Esq., Jeffrey L. Jonas, Esq., Andrew P. Strehle, Esq., Jeremy B. Coffey, Esq., and Howard L. Siegel, Esq. An Official Committee of Unsecured Creditors has been appointed in the case. The Committee represents the interests of the unsecured creditors of ONLY of Energy Future Competitive Holdings Company LLC; EFCH's direct subsidiary, Texas Competitive Electric Holdings Company LLC; and EFH Corporate Services Company, and of no other debtors. The Committee has selected Morrison & Foerster LLP and Polsinelli PC for representation in this high-profile energy restructuring. The lawyers working on the case are James M. Peck, Esq., Brett H. Miller, Esq., and Lorenzo Marinuzzi, Esq., at Morrison & Foerster LLP; and Christopher A. Ward, Esq., Justin K. Edelson, Esq., Shanti M. Katona, Esq., and Edward Fox, Esq., at Polsinelli PC. EVERGREEN INTERNATIONAL: Gets Nod on $5-Mil. Asset Sale ------------------------------------------------------- Law360 reported that a Delaware bankruptcy judge gave the trustee for Evergreen International Aviation Inc. the nod on a sale of the bulk of the company's assets to Jet Midwest Group LLC and affiliates for nearly $5 million, a deal that comes in at $700,000 more than was originally expected. According to the report, at a hearing in Wilmington, attorneys for Evergreen trustee Alfred T. Giuliano, who oversees the bankruptcy estate, were able to present U.S. Bankruptcy Judge Mary F. Walrath with a revised proposed sale order after resolving several objections. About Evergreen International Evergreen International Aviation Inc., an air cargo carrier that halted operations in November 2013, filed a petition for liquidation in Chapter 7 on Dec. 31, 2013 (Bankr. D. Del. Case No. 13-13363). Three creditors owed a total of $468,000 filed an involuntary bankruptcy petition in Brooklyn, New York on Dec. 18, 2013 (Bankr. E.D.N.Y. Case No. 13-47494). By filing a voluntary petition, Evergreen indicated a preference for being liquidated in Delaware rather than in Brooklyn. The petition in Delaware listed assets worth less than $100 million and debt exceeding $100 million. FL 6801: Lehman Subsidiary Commences Ch. 11 for Miami Hotel ----------------------------------------------------------- FL 6801 Spirits LLC, a wholly owned subsidiary of Lehman Brothers Holdings Inc. ("Lehman"), and three of its wholly owned subsidiaries (collectively "FL Spirits") have elected to file voluntary Chapter 11 petitions today in the United States Bankruptcy Court for the Southern District of New York (the "Court") seeking bankruptcy protection for its condominium hotel property in Miami Beach that is operated and managed as a Canyon Ranch Living Hotel and Spa. FL Spirits has also filed a motion to pursue a sale process under Section 363 of the Bankruptcy Code. To this end, FL Spirits has entered into an acquisition agreement with a "stalking horse" bidder, 360 Miami Hotel & Spa LLC. Upon a successful closing of the transaction, the project will be managed by the Enchantment Group, a premier operator of award-winning resorts and destination spas, including Mii amo, a destination spa at Enchantment Resort. Under the proposed agreement, the purchaser will acquire the hotel lot (including the spa) and 13 condominium units for $12 million subject to higher and better offers. The sale agreement contemplates a Court-supervised auction process, which is designed to achieve the highest or best offer for FL Spirits' assets. The agreement with the purchaser sets the floor, or minimum acceptable bid, and is subject to Bankruptcy Court approval and certain other conditions. The current operator of the hotel, Canyon Ranch Living, is not a debtor, and operations at the property are expected to continue without interruption, during and after any court-approved sale and closing. Canyon Ranch Living is not affiliated with Lehman and is managing the hotel and condominium facilities pursuant to a management contract. * * * Bill Rochelle, the bankruptcy columnist for Bloomberg News, reported that the project, acquired by Lehman in November 2009 when the then-owner gave Lehman ownership to avoid foreclosure, listed assets of $12 million and debt totaling $17.3 million. The case is In re LF 6801 Spirits LLC, 14-bk-11691, U.S. Bankruptcy Court, Southern District of New York (Manhattan). FL 6801 SPIRITS: Case Summary & 13 Largest Unsecured Creditors -------------------------------------------------------------- Debtor affiliates filing separate Chapter 11 bankruptcy petitions: Debtor Case No. ------ -------- FL 6801 Spirits LLC 14-11691 c/o Lehman Brothers Holdings Inc. 1271 Avenue of the Americas New York, NY 10020 FL 6801 Collins North LLC 14-11692 FL 6801 Collins South LLC 14-11693 FL 6801 Collins Central LLC 14-11694 Type of Business: Hotel Property Chapter 11 Petition Date: June 1, 2014 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Judge: Hon. Shelley C. Chapman Debtor's Counsel: Frank A. Oswald, Esq. Albert Togut, Esq. Lara R. Sheikh, Esq. TOGUT, SEGAL & SEGAL LLP One Penn Plaza New York, NY 10119 Tel: (212) 594-5000 Fax: (212) 967-4258 Email: frankoswald@teamtogut.com alcourt@teamtogut.com lsheikh@teamtogut.com Debtors' Claims PRIME CLERK, LLC and Noticing Agent: Debtors' Special SHUTTS & BOWEN LLP Real Estate Counsel: Debtors' Real CBRE Estate Broker: Total Assets: $12 million as of April 30, 2014 Total Liabilities: $17.2 million as of April 30, 2014 As of the Petition Date, the Debtors' liabilities consist primarily of approximately $1.7 million in obligations under a secured loan extended to the Debtors by PAMI ALI, as evidenced by a Promissory Note, dated March 12, 2014. The Debtors also have outstanding potential unsecured obligations, which are asserted in the amount of approximately $15.5 million, comprised of: (a) approximately $5 million in obligations to the Canyon Ranch Entities under the Canyon Ranch Agreements, which are largely disputed; (b) approximately $370,000, as of April 30, 2014, in net rental income obligations to participating unit owners pursuant to the RMAs; (c) approximately $7,000 on account of association dues, utility payments and marketing costs relating to the Debtors' Units; and (d) approximately $10 million in disputed litigation claims. The petitions were signed by Anthony Barsanti, authorized signatory. Consolidated List of Debtors' 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Canyon Ranch Agreements Unliquidated North Carillon Beach Condominium Association, Inc. Litigation Unliquidated Central Carillon Beach Condominium Association, Inc. Litigation Unliquidated South Carillon Beach Condominium Association, Inc. Litigation Unliquidated CR Miami LLC Obligations Unliquidated KM/Plaza Contract $1,470,200 120 NE 27th Street, Suite 600 Miami, FL 33137 Tel.(305) 455-0784 EBL Partners, LLC, CGC Lic. Contract Unliquidated Cotton and Company Contract $2,300 Rennert Vogel Mandler & Contract Unliquidated Rodriguez, P.A. Florida Power and Light Utility $1,450 North Carillon Beach Association Dues $509 Condominium Association, Inc. South Carillon Beach Association Dues $105 Condominium Association, Inc. Central Carillon Beach Association Dues $3,115 Condominium Association, Inc. GARY L REINERT: Court Denies Bankruptcy Discharge ------------------------------------------------- Bankruptcy Judge Jeffery A. Deller denied the request filed by Gary L. Reinert, Sr., seeking reconsideration of the denial of his discharge. The discharge was denied, inter alia, for the Debtor's failure to cooperate with the trustes, his failure to fulfill the basic duties required of all debtors who seek the protection afforded by bankruptcy and his failure to file the requisite schedules of assets and liabilities and statement of financial affairs. The case has now been pending for approximately three years, but the Debtor has yet to file Schedules and Statement of Affairs that are complete and free of disclaimer. Gary L. Reinert, Sr., filed his voluntary Chapter 11 case (Bankr. W.D. Pa. Case No. 11-22840) on May 2, 2011. Mr. Reinert's personal case was filed along with several corporate cases with which he was affiliated. These cases are: Power Contracting, Inc., Case No. 11-22841JAD; MFPF, Inc., Case No. 11-22842JAD, Metal Foundations, LLC, Case No. 11-22843JAD; Flying Roadrunner, Inc., Case No. 411-22845JAD; Grille on 7th, Inc., Case No. 11-22846JAD. Shortly after the filing of Mr. Reinert's bankruptcy case, Carlota M. Bohm was appointed Chapter 11 Trustee on May 17, 2011. Upon the elevation of Attorney Bohm to the bench, Robert Shearer was appointed successor trustee. Subsequently, Eric Bononi was elected as trustee. During the tenure of the various trustees, there were no less than seven motions to extend the time for filing the Schedules and Statement of Affairs for this and the various corporate debtor cases. To assist with the preparation and filing of the Schedules and Statement of Affairs, counsel for the Debtor was also employed as special counsel to the Chapter 11 Trustee for that limited purpose. After the filing of the fifth motion to extend, this Court issued an Order to Show Cause why the Debtors should not be held in contempt for failing to file the Schedules and Statement of Affairs. Instead of filing the Schedules and Statement of Affairs, Mr. Reinert filed another motion to extend the time. That request was denied on March 1, 2012. On that same date, the Court converted Mr. Reinert's Chapter 11 proceeding to one under chapter 7. During the administration of the Chapter 11, the assets related to Mr. Reinert's metal foundations business were sold by the Trustee. Mr. Reinert contends that the computers containing the financial information of the Debtors were then in the possession of the purchaser of the assets. It is on this basis that Mr. Reinert alleged a lack of access in the disclaimer language of the Schedules and Statement of Affairs. A dispute then arose between the purchaser of the assets and Mr. Reinert resulting in a motion to enforce the sale order being filed by the purchaser. The Bankruptcy Court then took the unusual step in June 2012 of ordering that the desktop and laptop computers at issue formerly utilized by the related Debtor entities to be brought to the court at the rate of one computer a day over the course of eight business days to allow for review of each of the computers at issue. It is undisputed that Mr. Reinert had full access to these computers while they were at the offices of the Bankruptcy Clerk of Court. On October 15, 2012, the Court ordered that complete and accurate schedules and statement of financial affairs were to be filed by November 15, 2012. The Order also stated that failure to do so would result in a denial of discharge. The deadline for filing was extended to November 21, 2012 upon request of the Debtor. The order granting the extension also included the same language regarding denial of discharge in the event of failure to timely file the schedules. On November 21, 2012, Mr. Reinert filed Amended Statement of Financial Affairs and Schedules. Those documents no longer contained the lengthy disclaimer originally used; instead, as to certain debts listed on Schedule F as well as most answers to the Statement of Financial Affairs, they contained the following notation: "Verification still needed. Records received from 3rd party (MFA) were incomplete information prior to 11/08/2011 removed from computer records." On January 11, 2013 the Chapter 7 Trustee filed a motion to sell six Pittsburgh Steelers seat licenses that were the assets of Mr. Reinert. The seat licenses were not listed as an asset by Mr. Reinert in the Schedules and Statement of Affairs. Nor did Mr. Reinert disclose the existence of the seat licenses in several Meetings of Creditors conducted by the Chapter 7 Trustee. The seat licenses were material and sold for $101,000 by Order dated February 28, 2013. On April 26, 2013, an Order of Court was entered requiring Mr. Reinert to file in each of the affiliated corporate cases a verification under penalty of perjury that the schedules and statement of affairs (that had been completed by the Trustee) were complete and accurate or to file the necessary amendments. Further motions to extend time to comply with the order of April 26, 2013 were filed by Mr. Reinert. The Court granted Mr. Reinert a continuance until November 26, 2013. That day, the Court entered an Order denying further extensions and denying Mr. Reinert's discharge. To date, no further amendments to the schedules or statement of affairs have been filed. After the entry of the November 26th order, Mr. Reinert filed the Motion for Reconsideration. The Motion for Reconsideration was filed pro se despite the fact that he has had counsel throughout the approximate three year life of this case. Mr. Reinert was provided a hearing date of January 14, 2014 for his Motion for Reconsideration. On January 9, 2014 Mr. Reinert, again acting pro se, requested a continuance of the hearing. The day before the scheduled hearing on the Motion for Reconsideration, counsel for Mr. Reinert sought to withdraw his representation. The hearing on the Motion for Reconsideration went forward on the scheduled January 14, 2014 date; however, Mr. Reinert did not appear. Mr. Reinert asserted that medical reasons necessitated his absence from the hearing. The Court continued the matter to February 25, 2014, allowing Mr. Reinert an additional 30 days. On February 25, 2014, Mr. Reinert appeared and was provided the opportunity to present his argument, witnesses, testimony and evidence to support his reconsideration motion. A copy of the Court's May 30, 2014 Memorandum Opinion is available at http://is.gd/4aFjawfrom Leagle.com. GENERAL MOTORS: Ignition-Switch Compensation Plan Weeks Away ------------------------------------------------------------ Jeff Bennett, writing for The Wall Street Journal, reported that compensation expert Kenneth Feinberg said he hopes within the next few weeks to provide General Motors Co. with a set of options for offering financial restitution to victims of car crashes connected to the auto maker's ignition-switch recall. According to the report, Mr. Feinberg said he continues "working diligently" on the compensation recommendations and declined to provide additional details on the timing. The Journal noted that Mr. Feinberg faces a tangle of issues, starting with how to determine who would be eligible for compensation from any GM fund, if one is established. GM has said that it knows of 13 deaths connected to the ignition-switch defect, which is linked to stalling and air bag failures; however, attorneys for victims and families say the number of deaths is higher, the report related. About General Motors With its global headquarters in Detroit, Michigan, General Motors -- http://www.gm.com/-- is one of the world's largest automakers, traces its roots back to 1908. General Motors Co. was formed to acquire the operations of General Motors Corp. through a sale under 11 U.S.C. Sec. 363 following Old GM's bankruptcy filing. The U.S. government provided financing. The deal was closed July 10, 2009, and Old GM changed its name to Motors Liquidation Co. Old GM -- General Motors Corporation -- 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. The Debtors tapped Weil, Gotshal & Manges LLP Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel; and Morgan Stanley, Evercore Partners and the Blackstone Group LLP as financial advisor. 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 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. GENERAL MOTORS: Engineer Talks to Investigators ----------------------------------------------- Jeff Bennett and Siobhan Hughes, writing for The Wall Street Journal, reported that one of the General Motors Co. engineers at the center of the controversy over the company's handling of a deadly ignition switch defect has met with congressional investigators, indicating lawmakers are accelerating their probe, according to people familiar with the matter. According to the report, Raymond DeGiorgio, who was suspended in April with pay, traveled to Capitol Hill to talk about his role in a design change to ignition switches installed in 2.6 million GM compact cars that the company recalled earlier this year, two people who know of the meetings said. Law360 reported that GM lobbied the U.S. Judicial Panel on Multidistrict Litigation to centralized dozens of suits over its disastrous ignition-switch recall in New York, while plaintiffs backed myriad venues spanning the country from California to Florida. GM's counsel argued before all seven JPML judges in Chicago that the forthcoming decision on whether recall claims were extinguished in the auto maker's 2009 bankruptcy will have a profound impact on the MDL that it should proceed in the same venue -- the Southern District of New York, Law360 related. About General Motors With its global headquarters in Detroit, Michigan, General Motors -- http://www.gm.com/-- is one of the world's largest automakers, traces its roots back to 1908. General Motors Co. was formed to acquire the operations of General Motors Corp. through a sale under 11 U.S.C. Sec. 363 following Old GM's bankruptcy filing. The U.S. government provided financing. The deal was closed July 10, 2009, and Old GM changed its name to Motors Liquidation Co. Old GM -- General Motors Corporation -- 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. The Debtors tapped Weil, Gotshal & Manges LLP Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel; and Morgan Stanley, Evercore Partners and the Blackstone Group LLP as financial advisor. 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 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. GENERAL MOTORS: Has Made $22.6B While Taxpayers Lost $10.6B ----------------------------------------------------------- Chris Isidore, writing for CNN Money, reported that since 2009, General Motors has earned $22.6 billion, while taxpayers lost $10.6 billion by the time the U.S. Treasury department closed the books on the automaker's $49.5 billion bailout in December. According to the report, GM has repaid everything it was obligated to pay Treasury but taxpayers came up short because the U.S. decided to buy GM stock to keep the automaker alive instead of giving it a loan and saddling it with more debt. Although GM has been very profitable since 2009, its stock price never rose to a level that let Treasury to recoup that investment, the report said. About General Motors With its global headquarters in Detroit, Michigan, General Motors -- http://www.gm.com/-- is one of the world's largest automakers, traces its roots back to 1908. General Motors Co. was formed to acquire the operations of General Motors Corp. through a sale under 11 U.S.C. Sec. 363 following Old GM's bankruptcy filing. The U.S. government provided financing. The deal was closed July 10, 2009, and Old GM changed its name to Motors Liquidation Co. Old GM -- General Motors Corporation -- 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. The Debtors tapped Weil, Gotshal & Manges LLP Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel; and Morgan Stanley, Evercore Partners and the Blackstone Group LLP as financial advisor. 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 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. GRIDWAY ENERGY: Seeks OK for Ch. 11 Settlement with Creditors ------------------------------------------------------------- Gridway Energy Holdings, Inc., et al., ask the U.S. Bankruptcy Court for the District of Delaware to approve a settlement and compromise with (i) the Official Committee of Unsecured Creditors, (ii) Vantage Commodities Financial Services I, LLC, as the Debtors' prepetition secured lender, postpetition DIP lender and current stalking horse purchaser of substantially all of the assets of Gridway, and Negawatt Business Solutions, Inc., and (iv) EDF Trading North America LLC, as swap counterparty pursuant to an ISDA agreement. In connection with the Global Settlement, a fund of approximately $1.3 million to $1.5 million, or higher, depending on the proceeds of the sale of the Ziphany and NBS assets, will be established to fund (i) first, a carve-out for fees and expenses incurred by the Committee and its professionals; and (ii) second, settlement of non-ordinary course, colorable administrative expense claims asserted by creditors based on postpetition commissions, severance obligations, future compliance with non-compete provisions, and/or other colorable non-ordinary course administrative claims unpaid following the Petition Date. In addition, the Global Settlement contemplates, among other things, inter alia, (i) mutual releases by and between the Debtors, Secured Parties, the Committee and the Committee's members; and (ii) the release of all Avoidance Actions against unsecured creditors, provided that third party non-estate claims held by creditors against the Debtors' former chief executive officer, Gary Mole or other individual non-debtors related to pre- petition conduct are not being released. A hearing on the motion is scheduled for June 16, 2014, at 11:00 AM. The Debtors are represented by: Michael R. Nestor, Esq. Joseph M. Barry, Esq. Donald J. Bowman, Jr. (No. 4383) YOUNG CONAWAY STARGATT & TAYLOR, LLP Rodney Square 1000 North King Street Wilmington, Delaware 19801 Telephone: 302.571.6600 Facsimile: 302.571.1253 -- and -- Alan M. Noskow, Esq. Mark A. Salzberg, Esq. PATTON BOGGS LLP 2550 M St. NW Washington, DC 20037 Telephone: 202.457.6000 Facsimile: 202.457.6315 The Creditors' Committee is represented by: Sharon Levine, Esq. Philip J. Gross, Esq. LOWENSTEIN SANDLER LLP 65 Livingston Avenue Roseland, New Jersey 07068 Telephone: (973) 597-2500 Facsimile: (973) 597-6247 Email: slevine@lowenstein.com pgross@lowenstein.com -- and -- Frederick B. Rosner, Esq. Julia B. Klein, Esq. THE ROSNER LAW GROUP LLC 824 Market Street, Suite 810 Wilmington, DE 19801 Email: rosner@teamrosner.com klein@teamrosner.com About Gridway Energy Gridway Energy Holdings, Inc., and its affiliates, including Glacial Energy Holdings -- providers of electricity and natural gas in markets that have been restructured to permit retail competition -- sought Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 14-10833) on April 10, 2014. The Debtors have 200,000 electric residential customers and 55,000 gash residential customers across the U.S. A large portion of the customers' energy consumption and revenue is generated in the northeast U.S., Ohio, Illinois and Texas (collectively accounting for 80% of revenue), with the remaining portion coming from California and other states. The Debtors blamed bankruptcy due to lower revenue brought by increased market competition, which caused the Debtors to default on certain of their obligations. Gridway defaulted on $60 million of debt. Prepetition, the Debtors negotiated a stock purchase transaction with an interested buyer. But in March 2014, the purchaser withdrew from the transaction because of the large amount of debt that the purchaser would become liable through a stock transaction. The Debtors have tapped Patton Boggs LLP as counsel, Young, Conaway, Stargatt & Taylor, LLP, as local counsel, and Omni Management Group, LLC, as claims and notice agent. Gridway Energy estimated assets of $500 million to $1 billion and debt of more than $1 billion. VCFSI is represented by Ingrid Bagby, Esq., and David E. Kronenberg, Esq., at Cadwalader, Wickersham & Taft, LLP, in New York; and Jason Madron, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware. HILLMAN GROUP: S&P Affirms 'B' CCR & Removes From Watch Negative ---------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'B' corporate credit rating on Cincinnati, Ohio-based The Hillman Group Inc. S&P has also removed all ratings from CreditWatch negative, where it placed them on May 20, 2014. The outlook is stable. At the same time, S&P assigned a 'B' issue-level rating to Hillman's proposed $680 million senior secured credit facility, which includes a $70 million revolving credit facility due 2019 and a $610 million term loan due 2021. The recovery rating for the senior secured credit facility is '3', reflecting S&P's expectations for meaningful (50% to 70%) recovery in the event of payment default. S&P also assigned a 'CCC+' issue-level rating to the proposed $270 million senior unsecured notes due 2022. The recovery rating for the notes is '6', reflecting S&P's expectations for negligible (0% to 10%) recovery in the event of payment default. The proceeds from the new debt in addition to new equity from CCMP Capital Advisors and a small portion of the proposed revolving credit facility will be used to refinance the existing capital structure. S&P will withdraw the ratings on Hillman's existing balances on the 10.875% senior unsecured notes due 2018, the delayed draw term loan due 2016, the $30 million revolving credit facility due 2015, and the $350 million term loan due 2017, following the full repayment of these facilities upon the close of the transaction. Pro forma for the LBO and refinancing, approximately $1 billion of adjusted debt will be outstanding. The ratings are subject to review upon final documentation. "The ratings on Hillman reflect our view that the company's financial risk profile is 'highly leveraged' and that the business risk profile is 'fair,'" said Standard & Poor's credit analyst Stephanie Harter. For the 12 months ended March 31, 2014, S&P estimates the ratio of adjusted total debt to EBITDA of about 6.6x and funds from operations (FFO) to total debt of about 7.5%. Pro forma for the buyout related financing, S&P estimates leverage of about 8x. S&P expects the company to improve its credit metrics through a combination of additional debt reductions and sustained EBITDA margin over the next 12 months. Based on S&P's forecast, it estimates that by the end of fiscal 2014, adjusted leverage will be about 7x and FFO to total debt will be about 7.5%. The outlook is stable, reflecting S&P's expectation that Hillman will further improve credit measures and maintain adequate liquidity. S&P could lower its ratings if Hillman's leverage remains well above 7.0x, possibly as a result of acquisition activity, a decline in operating performance, the loss of a major customer or rising production costs. S&P estimates this scenario could occur with revenue growth in the low-single digits and relatively stable EBITDA margin. Although unlikely in the next year, S&P would consider an upgrade if the company lowers and commits to leverage below 5x. S&P estimates double-digit revenue growth coupled with about 200- basis-point gross margin improvement for this to occur, likely driven by acquisitions. HUNTSMAN INTERNATIONAL: Moody's Keeps B1 Rating Over Add-on Notes ----------------------------------------------------------------- Moody's Investors Service reiterated the B1 rating on Huntsman International LLC's (HI) 5 1/8% notes due 2021 after the company issued an add-on of EUR145 million. The original ?300 million of notes were rated B1 in December 2013. The proceeds are expected to be used for general corporate purposes and will not affect Huntsman's ratings or outlook. HI and its parent, Huntsman Corporation (Huntsman), have Ba3 Corporate Family Ratings (CFRs) and their outlook is stable. HI is a wholly owned subsidiary of Huntsman Corporation and is the primary issuer of Huntsman's corporate debt. Huntsman Corporation is a global manufacturer of differentiated and commodity chemical products. Huntsman's products are used in a wide variety of end markets, including aerospace, automotive, construction, consumer products, electronics, medical, packaging, coatings, refining and synthetic fibers. Huntsman has revenues of over $11 billion. IGPS COMPANY: Purchaser Is Being Legally Taxed, Says NY AG ---------------------------------------------------------- Law360 reported that New York Attorney General Eric T. Schneiderman and the state's taxation agency slammed an objection by the private equity-backed purchaser of bankrupt iGPS Co. LLC to an estimated tax claim, saying the company's foot-dragging during an audit necessitated the assessment. According to the report, Schneiderman and the state's Department of Taxation and Finance said iGPS Logistics LLC, the shell company established to purchase plastic pallet leaser iGPS' assets, delayed an audit to determine its actual tax liability and forced the agency to calculate an estimate in order to file the claim in time to meet bankruptcy court deadlines. About iGPS Co. iGPS Company LLC filed a Chapter 11 bankruptcy petition (Bankr. D. Del. Case No. 13-11459) on June 4, 2013, to sell its assets to a group led by Balmoral Funds LLC, absent higher and better offers. iGPS Company -- http://www.igps.net-- is the first and only plastic pallet pooling rental and leasing company in the U.S. It offers plastic pallets with embedded radio frequency identification (RFID) tags. Founded in 2006, the company is headquartered in Orlando, Florida, and has a sales and innovation center in Bentonville, Arkansas. The Debtor estimated $100 million to $500 million in assets and liabilities in its Chapter 11 petition. According to the board resolution authorizing the bankruptcy, Pegasus IGPS LLC owns 12.55% of the company; iGPS Co-Investment LLC owns 18.75%; Kia VIII (iGPS Sub), LLC owns 30.74%; and KIA VIII iGPS Blocker, LLC, owns 12.27%. John H. Strock, Esq., and L. John Bird, Esq., at Fox Rothschild LLP, in Wilmington, Delaware; and John K. Cunningham, Esq., Richard S. Kebrdle, Esq., Kevin M. McGill, Esq., Fan B. He, Esq., at White & Case LLP, in Miami, Florida, also represent the Debtor. The Plan filed in the Debtor's case proposes to transfer to a liquidation trust all of the remaining assets of the Debtor. Under the Plan, Priority Claims (Class 1) and Non-Lender Secured Claims (Class 2) are unimpaired and will recover 100% of the allowed claim amount. Unsecured Claims (Class 3) are impaired and will receive its pro rata share of the available proceeds. Equity Interests (Class 4) are also impaired and will be canceled on the effective date. The Official Committee of Unsecured Creditors is represented by the law firm of McKenna Long & Aldridge LLP, as its counsel, and Cole, Schotz, Meisel, Forman & Leonard, P.A., as its Delaware counsel. The Committee tapped to retain Emerald Capital Advisors as its financial advisors. iGPS received court approval in July to sell the business largely in exchange for secured debt and filed the liquidating plan based on a settlement negotiated between the lenders and the unsecured creditors' committee. iGPS Logistics LLC, an entity established by the lenders, bought the business for $2.5 million cash and a commitment to pay all priority tax claims and claims by workers fired without required notice. The lenders agreed to waive their claims. The buyers are Balmoral Funds LLC, One Equity Partners LLC, and Jeff and Robert Liebesman. They purchased the $148.8 million working-capital loan shortly before bankruptcy. In September 2013, the Court authorized the Debtor to change its name to "Pallet Company LLC." The Debtor's Second Amended Chapter 11 Plan, which was co-proposed by the Official Committee of Unsecured Creditors, was confirmed on Nov. 14, 2013, and declared effective Nov. 27, 2013. Creditors were projected to recoup 28% to 35% on $13.8 million in unsecured claims. INSTITUTO MEDICO: Monge Robertin Approved as Restructuring Advisor ------------------------------------------------------------------ Instituto Medico Del Norte, Inc. sought and obtained authorization from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Jose M. Monge Robertin and Monge Robertin & Asociados, Inc. as insolvency and restructuring advisors. The Debtor requires Monge Robertin to: (a) assist Debtor and counsel to review tax and other claims and negotiate where necessary with taxing authorities and creditors; (b) review cash flow projections of the Debtor under the proposed plan of reorganization and prepare for testimony, if necessary, regarding feasibility; (c) prepare the Summary of Claims and Plan Payments as exhibits to the Disclosure Statement; (d) reconcile claims with Claims Registrar and classify claims in accordance with the Code; (e) assist the Debtor to develop the Plan of Reorganization including changes in the capital and financial restructuring; (f) assist counsel to develop drafts on the Disclosure Statement and plan; (g) prepare a Liquidation Analysis as an exhibit of the Disclosure Statement; (h) review operating reports to ascertain compliance with U.S. Trustee Guidelines; (i) assist the Debtor to determine U.S. Trustee fees for payment in accordance with current fee tables; (j) valuation of equipment and vehicles and real property as required for the Disclosure Statement and Liquidation Analysis; (k) review tax compliance and tax attributes to assist the Debtor in obtaining the full benefits permitted by law in relation to tax losses and non-taxable adjustments of claims; (l) assist external auditors, if necessary, in the drafting of financial statements in accordance with GAAP for entities under reorganization; (m) prepare a Feasibility Report for confirmation of the Plan; (n) provide testimony, if necessary, on feasibility or any other matters of expertise; (o) assist counsel in the compilation of 1129 statement data; (p) assist the Debtor in preparation of Quarterly Operating Reports from confirmation date to final decree; (q) coordinate with external accountant and CPA for ordinary course services; (r) assist legal counsel in any adversary proceedings that may arise in the course of the reorganization that may require financial and accounting support or testimony; (s) assist legal counsel and the Debtor in any negotiations with creditors or post-petition equity funding or financing; (t) review insurance coverage and expenses; (u) assist counsel and the Debtor to organize dockets, proof of claims and other documents to reduce electronic filing costs and provide efficient access to documents; (v) prepare Substantial Consummation Report for counsel to request Final Decree; and (w) any other support requested by counsel or the Debtor that is necessary for the benefit of the estate. Monge Robertin will be paid at these hourly rates: Jose M. Monge Robertin $200 David Ruiz $200 Maria Pena $125 Juan Llorens $75 Support Staff $65-$75 Accounting Assistants $35 Monge Robertin will also be reimbursed for reasonable out-of- pocket expenses incurred. A deposit of $5,000 is required to be provided by Debtor with the Approval of the Court. Jose M. Monge Robertin, principal of Monge Robertin, 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. Monge Robertin can be reached at: Jose M. Monge Robertin CPA, CIRA, CGMA MONGE ROBERTIN & ASOCIADOS, INC. #97 Acosta Street Caguas, PR 00725 Tel: (787) 410-1107 Fax: (787) 746-3895 About Instituto Medico Instituto Medico del Norte, Inc., aka Centro Medico Wilma N. Vazquez, aka Hospital Wilma N. Vazquez Skill Nursing Facility of Centro Medico Wilma N. Vazquez, sought protection under Chapter 11 of the Bankruptcy Code on Oct. 30, 2013 (Bankr. D.P.R. Case No. 13-08961). The case is assigned to Judge Mildred Caban Flores. The Debtor scheduled $20,843,692 in total assets and $20,107,642 in total liabilities. The Debtor, however, said its real property has a book value of $16,000,000 and personal property is worth $6,105,979. The Debtor is represented by Fausto David Godreau Zayas, Esq., and Rafael A. Gonzalez Valiente, Esq., at Latimer Biaggi Rachid & Godreau, in San Juan, Puerto Rico. Luis B. Gonzalez & Co. CPA's P.S.C. serves as accountant. The U.S. Trustee for the District of Puerto Rico in December appointed Dr. Carlos Mellado (b/t Lcda Dinorah Collazo Ortiz) as patient care ombudsman. JACK COOPER: Moody's Lowers Corporate Family Rating to 'B3' ----------------------------------------------------------- Moody's Investors Service has assigned a B3 Corporate Family Rating ("CFR") to JCH Parent, Inc. ("Jack Cooper"), a newly formed corporation that will become the direct parent of Jack Cooper Holdings Corp. ("JCHC") and has withdrawn the B2 CFR of JCHC, in essence lowering the CFR of the company to B3 from B2. The rating action follows the company's announcement to issue $150 million of senior PIK toggle notes and to use approximately $125 million of the net proceeds to fund a dividend to its shareholders. Moody's has assigned a Caa2 rating to the new senior PIK toggle notes and affirmed the B2 rating of the existing senior secured notes. The ratings outlook is stable. Ratings Rationale The announced transaction increases Jack Cooper's total debt to approximately $1.1 billion, calculated on a Moody's adjusted basis, including more than $400 million of imputed debt associated with the company's share in unfunded multi-employer pension plans. As a result, Moody's estimates that leverage, as measured by Debt to EBITDA, could increase to approximately 8.0 times in 2014, whereas EBIT to Interest for 2014 is estimated at only 1.0 times. The proposed transaction is considered particularly aggressive as it occurs at a time when debt levels are elevated due to the Allied acquisition in December 2013 and shortly after weak results for the first quarter due to the adverse impact of severe winter weather. At the same time, the B3 CFR for Jack Cooper takes into account the leading position of the company as a trucking-based logistics services provider specializing in the transportation of automobiles and light trucks. Moody's believes that the Allied acquisition has further strengthened the company's market position as it increases Jack Cooper's scale, diversifies its customer base and offers the potential to increase margins resulting from re- pricing of contracts and operational synergies. Notwithstanding the company's long-standing relationships with major car manufacturers and its multi-year contracts, the business remains exposed, however, to the cyclical North American automobile industry. Moody's considers Jack Cooper's liquidity adequate. While the company typically maintains a minimal cash balance and availability under the $100 million revolving credit facility was $25.4 million as of March 31, 2014, free cash flow could become positive in 2014, excluding the announced special dividend, provided the company successfully increases operating margins. The stable ratings outlook is predicated on continuing demand from Jack Cooper's customer base, supported by moderately growing new car sales. The outlook also anticipates the realization of benefits the company expects from the Allied acquisition. The B2 rating for the existing senior secured notes is one notch higher than the B3 CFR, which reflects the senior position of these securities in Moody's Loss Given Default ("LGD") analysis as well as the substantial amount of unsecured debt, comprised predominantly of the unfunded multi-employer pension plan obligations and the new $150 million senior PIK toggle notes. The new senior PIK toggle notes are structurally subordinated to all other obligations in the LGD analysis, substantially reducing their recovery rate as reflected in the Caa2 rating. The ratings could be lowered if the company is not able to demonstrate sufficient margin enhancement from the anticipated benefits of the Allied acquisition, which is critical to generate meaningful free cash flow to de-lever the balance sheet from currently heightened levels. The ratings could also be lowered if free cash flow is adversely affected by an unexpected weakening in the demand for new automobiles and light trucks. The ratings anticipate Debt to EBITDA to decrease to 7.0 times or less and could be pressured if leverage remains at or above current levels of approximately 8.0 times for a sustained period of time. An upgrade of the ratings could be considered if Jack Cooper demonstrates the ability to generate consistently free cash flow that is deployed to reduce leverage. As the company has limited flexibility to reduce the balance of the outstanding notes, Moody's foresees little upward rating pressure over the medium term, however. Debt to EBITDA of less than 6.0 times and EBIT to Interest of at least 1.5 times could support a positive rating action. The principal methodology used in this rating was the Global Surface Transportation and Logistics Companies published in April 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. Assignments: Issuer: JCH Parent, Inc. Corporate Family Rating, Assigned B3 Probability of Default Rating, Assigned B3-PD Senior Secured Regular Bond/Debenture, Assigned Caa2 Senior Secured Regular Bond/Debenture, Assigned a range of LGD6, 93 % Outlook Actions: Issuer: Jack Cooper Holdings Corp. Outlook, Remains Stable Issuer: JCH Parent, Inc. Outlook, to Stable from No Available Outlook Affirmations: Issuer: Jack Cooper Holdings Corp. Senior Secured Regular Bond/Debenture Jun 1, 2020, Affirmed B2 Upgrades: Issuer: Jack Cooper Holdings Corp. Senior Secured Regular Bond/Debenture Jun 1, 2020, Upgraded to a range of LGD3, 33 % from a range of LGD4, 57 % Withdrawals: Issuer: Jack Cooper Holdings Corp. Corporate Family Rating, Withdrawn , previously rated B2 Probability of Default Rating, Withdrawn , previously rated B2-PD JCH Parent, Inc. is a newly formed corporation that will become the direct parent of Jack Cooper Holdings Corp., headquartered in Kansas City, MO, a leading provider of over-the-road transportation of automobiles, SUVs and light trucks in the U.S. and Canada. JAMES RIVER: Seeks to Pay $2.7-Mil. Bonuses to Executives --------------------------------------------------------- James River Coal Company asked permission from the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division, to implement (a) a Chapter 11 key employee incentive plan, (b) a non- insider key employee retention plan, and (c) modifications to the Debtors' prepetition severance plan. If the Debtors achieve the minimum threshold of Total Value, the KEIP Participants will receive aggregate KEIP Payments of $892,715. At the target threshold of Total Value, aggregate KEIP Payments will be $1,444,040. At the maximum threshold of Total Value, the KEIP Participants will receive aggregate KEIP Payments of $2,711,148. The KEIP Participants include nine individuals, consisting of (i) the President and Chief Executive Officer, (ii) the Chief Operating Officer, (iii) the Chief Accounting Officer, (iv) five presidents of the Debtors' mine operations and (v) one assistant general manager of a mine operation, who, since the departure of the mine's former president, has been performing functions similar to those of the presidents of the Debtors' other mine operations. The maximum cost of the KERP is $1,401,783, with 100% of the KERP Payments vesting only upon a KERP Participant's continued employment through the earlier of the (1) sale of all or substantially all of the assets of the Debtors in one or more sales or (2) consummation of a chapter 11 plan. The employees eligible to participate in the KERP include 39 of the Debtors' non-insider employees who are vital to the Debtors' businesses and restructuring. The Debtors filed a separate motion seeking authority to file under seal Exhibits D and E to their motion to implement the KEIP and KERP plans. About James River James River Coal Company is a producer and marketer of coal in the Central Appalachia ("CAPP") and the Midwest coal regions of the United States. James River's principal business is the mining, preparation and sale of metallurgical coal, thermal coal (which is also known as steam coal) and specialty coal. James River and 33 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. E.D. Va. Case Nos. 14-31848 to 14-31886) in Richmond, Virginia, on April 7, 2014. The petitions were signed by Peter T. Socha as president and chief executive officer. Judge Kevin R. Huennekens oversees the Chapter 11 cases. On the petition date, James River Coal disclosed total assets of $1.06 billion and total liabilities of $818.6 million. Davis Polk & Wardwell LLP serves as the Debtors' counsel. Hunton & Williams, LLP, acts as the Debtors' local counsel. Kilpatrick Townsend & Stockton LLP serves as the Debtors' special counsel. Perella Weinberg Partners L.P. is the Debtors' financial advisor. Deutsche Bank Securities Inc. serves as the Debtors' investment banker and M&G advisor. Epiq Bankruptcy Solutions, LLC, acts as the debtors' notice, claims and administrative agent. The U.S. Trustee for Region 4 has appointed five creditors to the Official Committee of Unsecured Creditors. Michael S. Stamer, Esq., Alexis Freeman, Esq., and Jack M. Tracy II, Esq., at Akin Gump Strauss Hauer & Feld LLP; and Jonathan L. Gold, Esq., Christopher L. Perkins, Esq., and Christian K. Vogel, Esq., at LeClairRyan. The Debtors intend to hold an auction in July 8, 2014 for substantially all of the assets. The Debtors proposed a May 22 deadline for preliminary indications of interest. JOHNSON CITY, TN: Moody's Hikes Revenue Bond Rating to 'Ba1' ------------------------------------------------------------ Moody's Investors Service has upgraded to Ba1 from Ba3 the refunded Health and Educational Facilities Board of the City of Johnson City's (TN) Hospital Revenue Refunding and Improvement Bonds (Johnson City Medical Center Hospital), Series 1991 and 1998C. Rating Rationale This rating upgrade is based on the improved quality of investments held in the escrow account. The escrow funds are invested in the following: 1. Investment agreement with MBIA Inc. (MBIA Inc was upgraded to Ba1 from Ba3 on May 21, 2014) 2. Health and Educational Facilities Board of the City of Johnson City's (TN), Hospital First Mortgage Revenue Bonds, Series 2000C (underlying rating of Baa1) 3. Mountain States Health Alliance's First Mortgage Bonds, Series 2000D (underlying rating of Baa1) The Ba1 rating on the refunded bonds reflects the credit quality of the investment agreement provider. Strengths -- Secure escrow structure Challenges -- Potential downgrade of counterparties or investment providers What Could Make The Rating Go UP -- Upgrade of counterparties or investment providers What Could Make The Rating Go DOWN -- Downgrade of counterparties or investment providers The following is a list of outstanding bonds affected: The Health and Educational Facilities Board of the City of Johnson City, Tennessee, Hospital Revenue Refunding and Improvement Bonds, Series 1991 (Johnson City Medical Center Hospital), dated August 1, 1991, term bonds due July 1, 2016, escrowed to maturity. CUSIP#: 478271 FE4. Amount outstanding: $4,545,000. The Health and Educational Facilities Board of the City of Johnson City, Tennessee, Hospital Revenue Refunding and Improvement Bonds, Series 1998C (Johnson City Medical Center Hospital), dated December 1, 1998, term bonds due July 1, 2025, escrowed to maturity. CUSIP#: 478271 FG9. Amount refunded: $59,565,000. The Health and Educational Facilities Board of the City of Johnson City, Tennessee, Hospital Revenue Refunding and Improvement Bonds, Series 1998C (Johnson City Medical Center Hospital), dated December 1, 1998, term bonds due July 1, 2028, escrowed to maturity. CUSIP#: 478271DC0. Amount refunded: $75,105,000. The principal methodology used in this rating was Rating Methodology: Refunded Bonds published in June 2007. JORENE E MIZE: Frazee Law Group Allowed $45,000 in Fees ------------------------------------------------------- Frazee Law Group, counsel for Jorene E. Mize, filed its first interim application for compensation seeking fees of $54,295.00 and costs of $6,036.50. In a May 28 Memorandum Decision available at http://is.gd/a6dGACfrom Leagle.com, Bankruptcy Judge Fredrick E. Clement approved fees of $39,813.50 and costs of $5,286.50, on an interim basis. The Court noted that Mr. Mize's Chapter 11 case is distinguished only by skirmishes with the major secured creditor over cash collateral, valuation of collateral, stay relief and cause for conversion or dismissal. Jorene E. Mize filed for Chapter 11 bankruptcy (Bankr. E.D. Calif. Case No. 13-14894). In the 10 months the case has been pending, major events include employment of counsel and an appraiser; approval of the use of cash collateral (achieved on the second effort); valuation of commercial property located at 40807 Highway 41, Oakhurst (settled shortly before a scheduled evidentiary hearing); resolution by settlement of a motion for stay relief or, in the alternative, for dismissal or conversion; extension of exclusivity; an unsuccessful motion for sanctions; and approval of appraiser's fees (achieved on the second effort). A plan and disclosure statement have been filed, but despite two efforts the disclosure statement has not been approved. LEVEL 3: Fitch Raises Issuer Default Rating to 'B+' --------------------------------------------------- Fitch Ratings has upgraded the Issuer Default Rating (IDR) assigned to Level 3 Communications, Inc. (LVLT) and its wholly owned subsidiary Level 3 Financing, Inc. (Level 3 Financing) to 'B+' from 'B'. In addition Fitch has upgraded specific issue ratings assigned to LVLT and Level 3 Financing as outlined at the end of this release. The Rating Outlook has been revised to Stable. Approximately $8.4 billion of LVLT's consolidated debt as of March 31, 2014 is affected by Fitch's actions. Key Rating Drivers -- LVLT is clearly operating within its 3x to 5x net leverage target. Fitch expects further strengthening of LVLT's credit metrics during the remainder of 2014 as the company benefits from anticipated EBITDA growth, free cash flow (FCF) generation and debt reduction. Fitch foresees LVLT leverage will approach 4.7x by the end of 2014 and under 4x by the end of next year. -- The company is poised to generate sustainable levels of FCF (defined as cash flow from operations less capital expenditures and dividends). Fitch anticipates LVLT FCF generation during 2014 will approximate 4% of consolidated revenues, growing to 7.5% of revenues by year-end 2016. -- LVLT's revenue mix transformation is proceeding. The company's operating strategies are aimed at shifting its revenue and customer focus to become a predominantly enterprise-focused entity. -- The operating leverage inherent within LVLT's business model positions the company to expand both gross and EBITDA margins. The upgrade of LVLT's ratings is supported by the continued strengthening of the company's credit profile since the close of the Global Crossing Limited (GLBC) acquisition, positive operating momentum evidenced by expanding gross and EBITDA margins, and ongoing revenue growth within the company's Core Network Services (CNS) segment and its position to generate meaning FCF. Consolidated leverage as of the LTM period ended March 31, 2014 declined to 4.95x marking an improvement from 5.17x, 5.85x, and 8.1x as of years-ended 2013, 2012, and 2011, respectively. Fitch foresees LVLT leverage will further improve to 4.7x by the end of 2014 and to under 4x by year-end 2015. Fitch believes the company's ability to grow high-margin CNS revenues coupled with the strong operating leverage inherent in its operating profile positions the company to generate consistent levels of FCF. LVLT generated approximately $93 million of FCF during the LTM period ended March 31, 2014. In addition to LVLT's positive operating momentum driving EBITDA growth, additional factors such as interest expense savings derived from capital market activities completed during 2013 ($60 million of annual cash interest savings) and on-going operating cost optimization efforts (including 2013 head-count reductions) position the company to grow FCF during the ratings horizon. Fitch anticipates LVLT FCF generation during 2014 will approximate 4% of consolidated revenues growing to 7.5% of revenues by year-end 2016. Based largely on LVLT's strategy to invest in metropolitan facilities (which extend its on-network footprint and overall network depth) to carry more communications traffic on its network, the company derives strong operating leverage from its cost structure and network, enabling it to enhance margins. Additionally, the company's improving revenue mix can further strengthen its operating leverage and contribute to higher gross and EBITDA margins. LVLT's gross margin increased 170 basis points (bps) on a year-over-year basis during the first quarter of 2014. In addition, EBITDA margin increased 400bps, demonstrating the strong operating leverage inherent in LVLT's operating profile. LVLT's enterprise segment continues to drive overall revenue growth within CNS. LVLT's operating strategies are aimed at shifting its revenue and customer focus to become a predominantly enterprise-focused entity. The process started with the GLBC acquisition. LVLT's network capabilities, in particular its strong metropolitan network, along with a broad product and service portfolio emphasizing IP-based infrastructure and managed services, provide a solid base on which to grow its enterprise segment revenues. Fitch believes that revenue growth prospects within LVLT's CNS segment stand to benefit from the transition among enterprise customers from legacy time division multiplexing (TDM) communications infrastructure to Ethernet or IP VPN infrastructure based in internet protocol. Fitch anticipates that enterprise revenues will account for approximately 69% of CNS revenues by the end of 2015. Enterprise-segment revenues expanded by 10.4% on a year-over-year basis during the first quarter (11.2% on a constant currency basis). Importantly, revenue churn improved 10bps year-over-year during the first quarter to 1.5%. Overall, Fitch's ratings incorporate LVLT's weaker competitive position and lack of scale relative to larger and better capitalized market participants. The ratings for LVLT reflect the company's strong metropolitan network facilities position relative to alternative carriers, as well as the diversity of its customer base and service offering, and a relatively stable pricing environment for a significant portion of LVLT's service portfolio. Fitch believes that LVLT's liquidity position is adequate given the rating, and that overall financial flexibility is enhanced with positive FCF generation. The company's liquidity position is primarily supported by cash carried on its balance sheet, which as of March 31, 2014 totaled approximately $607 million, and expected FCF generation. LVLT does not maintain a revolver, which limits its financial flexibility in Fitch's opinion. LVLT does not have any significant maturities scheduled during the remainder of 2014. LVLT's next scheduled maturity is not until 2015 when approximately $475 million of debt is scheduled to mature or convert into equity. Rating Sensitivities What Could Trigger a Positive Rating Action: -- Consolidated leverage maintained at 4x or lower; -- Consistent generation of positive FCF, with FCF-to-adjusted debt of 5% or greater; -- Positive operating momentum characterized by consistent core network services revenue growth and gross margin expansion. What Could Trigger a Negative Rating Action: -- Weakening of LVLT's operating profile, as signaled by deteriorating margins and revenue erosion brought on by difficult economic conditions or competitive pressure; -- Discretionary management decisions including but not limited to execution of merger and acquisition activity that increases leverage beyond 5.5x in the absence of a credible de- leveraging plan. Fitch upgrades the following with a Stable Outlook: LVLT: -- IDR to 'B+' from 'B'; -- Senior unsecured notes to 'B/RR5' from 'B-/RR5'. Level 3 Financing, Inc.: -- IDR to 'B+' from 'B'; -- Senior secured term loan to 'BB+/RR1' from 'BB/RR1'; -- Senior unsecured notes to 'BB/RR2' from 'BB-/RR2'. LEWER LIFE: A.M. Best Affirms 'B' Financial Strength Rating ----------------------------------------------------------- A.M. Best Co. has revised the outlook to stable from positive and affirmed the financial strength rating of B (Fair) and issuer credit rating of "bb+" of Lewer Life Insurance Company (Kansas City, MO). The stable outlook reflects Lewer Life's lower operating earnings reported in 2013 and a net operating loss reported in the first quarter 2014 due to adherence with minimum loss ratio and rebate requirements of The Patient Protection and Affordable Care Act. A.M. Best believes the company's operating results could be adversely impacted further by these requirements in the short-to- medium term. Additionally, Lewer Life is primarily a reinsurer of international student health insurance business underwritten mainly by one carrier and marketed and administered chiefly by its affiliate, The Lewer Agency, Inc. Positive rating actions may occur if Lewer Life generates and sustains substantially higher earnings trends, generates meaningful non-student insurance premium revenue and materially grows its absolute level of capital. Alternatively, negative rating actions may occur if the company's earnings decline further or net premium revenue and/or capitalization levels materially deteriorate. LIGHTSQUARED INC: Garmin Moves to Dismiss Contract Claims --------------------------------------------------------- Law360 reported that Garmin International Inc., Deere & Co. and other GPS companies fired back against LightSquared Inc. in New York bankruptcy court, countering the wireless startup's allegations that they breached contract and withheld crucial spectrum-usage information. According to the report, Garmin, Deere, Trimble Navigation Ltd., the U.S. GPS Industry Council and the Coalition to Save Our GPS said they were not contractually obligated to design their devices to be compatible with the spectrum for which the Federal Communications Commission approved LightSquared. The adversary cases are LightSquared Inc. et al. v. Deere & Company et al., case number 1:13-cv-08157, and Harbinger Capital Partners LLC v. Deere & Company et al., case number 1:13-cv-05543, in the same court. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. LONGVIEW POWER: Revises Bankruptcy Exit Plan -------------------------------------------- Longview Power, LLC, et al., filed with the U.S. Bankruptcy Court for the District of Delaware a revised version of their first amended joint plan of reorganization to provide updates in the Debtors' ongoing dispute with Kvaerner North American Construction, Inc., and Siemens Energy, Inc. The Amended Plan requires the Debtors to obtain an order of the Bankruptcy Court determining that proceeds from the Policy of Title Insurance, number A40008468 issued by First American Title Insurance Company, issued to the Longview Credit Agreement Collateral Agent on March 9, 2007, are available for assignment and distribution in accordance with the Amended Plan in the event that the Liens, if any, securing Allowed Siemens Mechanics' Lien Claims or Allowed Kvaerner Mechanics' Lien Claims, if any, are senior in priority to any Liens securing Longview Credit Facility Claims. The contractors claim to have $335 million in mechanics' liens on Longview's plant, Bill Rochelle, the bankruptcy columnist for Bloomberg News, said. The lenders made a concession to enable the revised plan by agreeing to allow their $825 million title insurance policy to be used to pay the contractors' claims in full if their mechanics' lien are determined to come ahead of theirs, Mr. Rochelle related. If a court decides the mechanics' liens are junior to the lenders, the contractors will be given notes for 22 percent of their claims if they vote for the plan, and if they vote against the plan, they will have notes for 5.5 percent of their claims, Mr. Rochelle further related. The Debtors recently amended the DIP Credit Agreement, which amendment requires: (1) the hearing to confirm the Debtors' Chapter 11 plan of reorganization to commence on or before September 2, 2014; (2) the Confirmation Order to be entered on or before September 9, 2014; and (3) the Effective Date of the Debtors' chapter 11 plan of reorganization to occur on or before September 23, 2014. Longview's exclusive plan filing deadline is extended until June 4, while its exclusive solicitation period is until Aug. 5. Law360 reported that the bankruptcy judge in Delaware approved a supplement to Longview's disclosure statement, allowing the coal plant operator to continue soliciting votes for its Chapter 11 plan. Longview also submitted an amended plan on May 2 designed to advance the case by creating an alternative method of resolving $335.7 million in contested mechanic's liens claims asserted by contractors Siemens and Kvaerner. A full-text copy of the Revised Plan dated May 27 is available at for free at http://bankrupt.com/misc/LONGVIEWplan0527.pdf About Longview Power LLC Longview Power LLC is a special purpose entity created to construct, own, and operate a 695 MW supercritical pulverized coal-fired power plant located in Maidsville, West Virginia, just south of the Pennsylvania border and approximately 70 miles south of Pittsburgh. The project is owned 92% by First Reserve Corporation (First Reserve or sponsor), a private equity firm specializing in energy industry investments, through its affiliate GenPower Holdings (Delaware), L.P., and 8% by minority interests. Longview Power, LLC, filed a Chapter 11 (Bank. D. Del. Lead Case. 13-12211) on Aug. 30, 2013. The petitions were signed by Jeffery L. Keffer, the Company's chief executive officer, president, treasurer and secretary. The Debtor estimated assets and debts of more than $1 billion. Judge Brendan Linehan Shannon presides over the case. Kirkland & Ellis LLP and Richards, Layton & Finger, P.A., serve as the Debtors' counsel. Lazard Freres & Company LLC acts as the Debtors' investment bankers. Alvarez & Marsal North America, LLC, is the Debtors' restructuring advisors. Ernst & Young serves as the Debtors' accountants. The Debtors' claims agent is Donlin, Recano & Co. Inc. The Debtor disclosed assets of $1,717,906,595 plus undisclosed amounts and liabilities of $1,075,748,155 plus undisclosed amounts. Roberta A. DeAngelis, U.S. Trustee for Region 3, disclosed that as of September 11, 2013, a committee of unsecured creditors has not been appointed in the case due to insufficient response to the U.S. Trustee's communication/contact for service on the committee. MALAYSIA AIRLINES: Union Calls for CEO to Resign ------------------------------------------------ The Associated Press reported that the union representing Malaysia Airlines employees is calling for the resignation of the airline's chief executive, saying new management is needed to revive the beleaguered flag carrier. According to the report, citing the union's secretary Mohamad Jabbarullah Abdul Kadir, the airline has been mired in losses for four straight years and is now grappling with the aftermath of the Flight 370 tragedy. He says bankruptcy isn't an option but a new management team with experience in aviation can help improve the airline's performance, the AP related. MATERIAL MANAGEMENT: Judge Converts Case to Chapter 7 ----------------------------------------------------- Bankruptcy Judge Enrique S. Lamoutte converted the Chapter 11 case of Material Management, Inc., to one under Chapter 7 of the Bankruptcy Code, at the behest of creditors L.A. Scrap Export, Inc. and L.A. Scrap Puerto Rico. A copy of the Court's May 28, 2014 Opinion and Order is available at http://is.gd/yKYM8Mfrom Leagle.com. Material Management Inc., based in Dorado, Puerto Rico, filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 14-00478) on Jan. 28, 2014. Judge Enrique S. Lamoutte Inclan serves as the Debtor's counsel. Jorge R Davila Law Office serves as the Debtor's bankruptcy counsel. In its petition, MMI estimated $1 million to $10 million in both assets and liabilities. The petition was signed by Roy J. Barrie, president. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/prb-14-00478.pdf The Debtor has not yet filed its Disclosure Statement and Plan. MBE CHARLESTON: Case Summary & 12 Largest Unsecured Creditors ------------------------------------------------------------- Debtor affiliates filing separate Chapter 11 bankruptcy petitions: Debtor Case No. ------ -------- MBE Charleston Square, LLC 14-60886 2310 Woodland Lake Walk Snellville, GA 30078 MBE Southgate, LLC 14-60889 2310 Woodland Lake Walk Snellville, GA 30078 Chapter 11 Petition Date: June 2, 2014 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Debtor's Counsel: John A. Christy,, Esq. SCHREEDER, WHEELER & FLINT, LLP 1100 Peachtree Street, Suite 800 Atlanta, GA 30309-4516 Tel: 404-681-3450 Fax: 404 681 1046 Email: jchristy@swfllp.com Estimated Estimated Assets Liabilities ---------- ----------- MBE Charleston Square, LLC $1MM-$10MM $1MM-$10MM MBE Southgate, LLC $1MM-$10MM $1MM-$10MM The petitions were signed by Mark B. Epstein, general partner, MBE Investment, LP, sole member. A list of MBE Charleston Square, LLC's 12 largest unsecured creditors is available for free at: http://bankrupt.com/misc/ganb14-60886.pdf A list of MBE Southgate, LLC's 12 largest unsecured creditors is available for free at: http://bankrupt.com/misc/ganb14-60889.pdf MF GLOBAL: PWC Raises Equal Fault Defense in Suit ------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that PricewaterhouseCoopers LLP is again resorting to an old English legal principle to fight a $1 billion lawsuit stemming from MF Global Holdings Ltd.'s collapse. According to the report, the accounting firm asked U.S. District Judge Victor Marrero to dismiss the suit under the doctrine of "in pari delicto," Latin for "in equal fault." PwC, the report noted, successfully applied the principle in February, when Judge Marrero dismissed claims brought by MF Global's brokerage unit and its customers. The lawsuit is MF Global Holdings Ltd. v. PricewaterhouseCoopers LLP, 14-cv-02197, U.S. District Court, Southern District of New York (Manhattan). About MF Global New York-based MF Global -- http://www.mfglobal.com/-- was one of the world's leading brokers of commodities and listed derivatives. MF Global provides access to more than 70 exchanges around the world. The firm also was one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. On Oct. 31, 2011, MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058), after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. On Nov. 7, 2011, the United States Trustee appointed the statutory creditors' committee in the Debtors' cases. At the behest of the Statutory Creditor's Committee, the Court directed the U.S. Trustee to appoint a chapter 11 trustee. On Nov. 28, 2011, the Bankruptcy Court entered an order approving the appointment of Louis J. Freeh, Esq., of Freeh Group International Solutions, LLC, as Chapter 11 trustee. On Dec. 19, 2011, MF Global Capital LLC, MF Global Market Services LLC and MF Global FX Clear LLC filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15808, 11-15809 and 11-15810). On Dec. 27, the Court entered an order installing Mr. Freeh as Chapter 11 Trustee of the New Debtors. On March 2, 2012, MF Global Holdings USA Inc. filed a voluntary Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-10863), and Mr. Freeh also was installed as its Chapter 11 Trustee. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. The Chapter 11 Trustee has tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. The Official Committee of Unsecured Creditors has retained Capstone Advisory Group LLC as financial advisor, while lawyers at Proskauer Rose LLP serve as counsel. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. In April 2013, the Bankruptcy Court approved MF Global Holdings' plan to liquidate its assets. Bloomberg News reported that the court-approved disclosure statement initially told creditors with $1.134 billion in unsecured claims against the parent holding company why they could expect a recovery of 13.4% to 39.1% from the plan. As a consequence of a settlement with JPMorgan, supplemental materials informed unsecured creditors their recovery was reduced to the range of 11.4% to 34.4%. Bank lenders will have the same recovery on their $1.174 billion claim against the holding company. As a consequence of the settlement, the predicted recovery became 18% to 41.5% for holders of $1.19 billion in unsecured claims against the finance subsidiary, one of the companies under the umbrella of the holding company trustee. Previously, the predicted recovery was 14.7% to 34% on bank lenders' claims against the finance subsidiary. MI PUEBLO: Court Won't Stay Confirmation Order Pending Appeal ------------------------------------------------------------- Bankruptcy Judge Arthur S. Weissbrodt denied the motions of NUCP Turlock, Inc. for a stay of the orders confirming the Chapter 11 plans for MI Pueblo San Jose, Inc., and Cha Cha Enterprises, LLC, pending NUCP's appeal. NUCP, which is an unsecured creditor with filed claims in each case in excess of $11 million, has appealed the Bankruptcy Court's orders confirming each of Debtors' plans of reorganization. NUCP seeks a stay of the provisions of the confirmation orders that approve and implement releases of claims by either Debtor against Juvenal Chavez, members of the Chavez family, and the Chavez family trust, to the extent necessary to enable unsecured creditors to realize the benefit of any such claims that might be pursued following a reversal of the confirmation order(s). NUCP is represented by attorneys Peter J. Benvenutti and Tobias S. Keller. The motions are opposed by Debtor Mi Pueblo, Inc., which is represented by attorney Robert Harris; Debtor Cha Cha Enterprises, LLC, which is represented by attorney Paul Pascuzzi; Victory Park Capital Advisors, LLC and Victory Park Management, LLC, which are represented by attorney Todd Schwartz; Juvenal Chavez, who is represented by attorney Henry B. Niles, III; and The Official Committee of Unsecured Creditors of Mi Pueblo San Jose, Inc., which is represented by attorney Eric Goldberg. NUCP argues that there are serious questions going to the merits of its appeal. NUCP challenges the Bankruptcy Court's findings that the Plans were proposed in good faith and the Court's overruling of NUCP's evidentiary objections. NUCP also contends that the expedited nature of the confirmation hearing deprived NUCP of a reasonable opportunity to develop and present its objections. NUCP also questioned whether the Chavez family had engaged in self-dealing in the management of the Debtors, but offered no proof to that effect. However, the Creditors' Committee provided evidence that it had engaged in its own substantial investigation into these matters and discovered nothing that warranted the Committee's withdrawal of support for the plans. At the confirmation hearing, the Court permitted NUCP to cross- examine Mr. Chavez, albeit on a limited basis, but that cross- examination revealed nothing that raised questions as to whether the Plans were proposed in good faith. NUCP has been litigating with Mi Pueblo for some time dating back to well before the bankruptcy cases were filed. NUCP could have, but did not, raise issues and/or take discovery relating to alleged conflicts and/or lack of good faith at any time during these bankruptcies -- and certainly as of the time of Debtor's motion for approval of DIP and exit financing in early March 2014. According to Judge Weissbrodt, a stay pending appeal of the confirmation orders would cause irreparable harm to the Reorganized Debtors. Debtor Mi Pueblo is required to post a $3.5 million workers' compensation bond by June 1, 2014. According to the declaration of John Zott, Chief Financial Officer of Mi Pueblo, Mi Pueblo will not have sufficient cash to post the bond without the exit financing provided for in the plan, and without workers' compensation insurance, Mi Pueblo will be forced to cease operations. Collectively, the Debtors employ approximately 2,700 people across California. Absent the exit financing, Mi Pueblo's 21 grocery stores, which cater to the area's underserved Hispanic population, would be forced to close, and those 2,700 employees would be put out of work. The liquidation of Mi Pueblo would likely be devastating to Cha Cha as well, given that Mi Pueblo is Cha Cha's primary source of income. NUCP does not seek a stay of the entire confirmation orders. NUCP concedes that a stay of the entirety of the confirmation orders is neither feasible nor realistic given "the dynamics and financial needs of an operating business, and of the reliance that numerous parties . . . are going to place on the reorganized entity." Nevertheless, NUCP argues that if a "limited stay" is not granted, NUCP's appeal rights may be rendered moot by the substantial consummation of the plan. Judge Weissbrodt, however, held that NUCP has not met its burden to show that any stay is appropriate. A copy of the Court's May 29, 2014 Memorandum Decision is available at http://is.gd/8kcgs0from Leagle.com. About Cha Cha Enterprises Cha Cha Enterprises, LLC, is a California limited liability company formed in 1998 to purchase a fee interest in property located at 1775 Story Road, San Jose, California and a leasehold interest in property located at 1745 Story Road in San Jose. Cha Cha's primary business is the rental of real property. Cha Cha filed a Chapter 11 petition (Bankr. N.D. Cal. Case No. 13-53894) on July 22, 2013. The Debtor estimated at least $10 million in assets and liabilities. An affiliate, Mi Pueblo San Jose, Inc., sought Chapter 11 protection (Case No. 13-53893) on the same day. The cases are not jointly administered. Steven H. Felderstein, Esq., at Felderstein Fitzgerald Willoughby & Pascuzzi LLP serves as counsel. Nicolas De Lancie, Esq., at Jeffer Mangels Butler & Mitchell LLP Robert B. Kaplan, P.C. represents secured creditor Wells Fargo Bank, N.A. About Mi Pueblo San Jose Mi Pueblo San Jose, Inc., a chain of 21 Hispanic grocery stores, filed a Chapter 11 petition (Bankr. N.D. Calif. Case No. 13-53893) in San Jose, on July 22, 2013. An affiliate, Cha Cha Enterprises, LLC, the real estate and check-cashing arm, sought Chapter 11 protection (Case No. 13-53894) on the same day. The cases are not jointly administered. Mi Pueblo began in 1991 and was founded by Juvenal Chavez. In its amended schedules, Mi Pueblo disclosed $61,577,296 in assets and $68,735,285 in liabilities as of the Petition Date. Heinz Binder, Esq., at Binder & Malter, LLP, is the Debtor's general reorganization counsel. The Law Offices of Wm. Thomas Lewis, sometimes doing business as Robertson & Lewis, is the Debtor's special counsel. Avant Advisory Partners, LLC serves as its financial advisors. Bustamante & Gagliasso, P.C. serves as its special counsel. Cha Cha is represented by Sacramento-based Felderstein Fitzgerald Willoughby & Pascuzzi LLP. The U.S. Trustee appointed seven members to the Official Committee of Unsecured Creditors. Protiviti Inc. serves as financial advisor. Stutman, Treister & Glatt P.C. served as counsel to the Committee. Gordon Silver was tapped by the Committee as counsel effective May 1, 2014. NUCP Turlock is represented by Peter J. Benvenutti, Esq., and Tobias S. Keller, Esq., at Keller & Benvenutti LLP; and Steven N. Holland, Esq., and Justin J. Schnitzler, Esq., at Ring Hunter Holland & Schenone, LLP; and George Kalikman, Esq., and Valerie Bantner Peo, Esq., at Schnader Harrison Segal & Lewis LLP. MONTANA ELECTRIC: Plan Confirmation Hearing Moved to June 13 ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Montana moved the hearing to consider confirmation of Southern Montana Electric General and Transmission Cooperative, Inc.'s Chapter 11 Plan of Reorganization to June 13, 2014, to allow the Debtor and interested parties to resolve disputes relating to the plan, including disputes on the administrative claims of Energy West Resources Inc. and Energy West Montana and the Official Committee of Unsecured Creditors' objection to the Plan. The Committee complains that the Plan violates the absolute priority rule by treating the Debtor's members as unimpaired while treating its unsecured creditors as impaired. Moreover, the Committee asserts that it is presently unknown what the Debtor will pay for power and under what terms as there has been inadequate disclosure and inadequate information concerning the Debtor's power supplier and anticipated power costs over the life of the Plan and thus it is impossible to analyze the merits of whether the Debtor will be able to reorganize. PPL Energy Plus, LLC, an unsecured creditor holding a $372 million claim, complains that the Plan unfairly discriminates against it in violation of the Bankruptcy Code by placing it in a separate class from other unsecured creditors similarly situated. PPL echoes the Creditors' Committee's complaint that by treating members as unimpaired, while treating unsecured creditors as impaired, the Plan violates the absolute priority rule. The Debtor is represented by Malcolm H. Goodrich, Esq., and Maggie W. Stein, Esq., at Goodrich Law Firm, P.C., in Billings, Montana; and Mark E. Freedlander, Esq., at Mcguire Woods LLP, in Pittsburgh, Pennsylvania. The Committee is represented by Harold V. Dye, Esq., at Dye & Moe, P.L.L.P., in Missoula, Montana. PPL Energy is represented by: Martin S. King, Esq. WORDEN THANE P.C. 111 N. Higgins Ave., Suite 600 P.O. 4747 Missoula, Montana 59806 Tel: 406-721-3400 Fax: 406-721-6985 Email: mking@wthlaw.net -- and -- William A. (Trey) Wood III, Esq. BRACEWELL & GIULIANI LLP 711 Louisiana, Suite 2300 Houston, Texas 77002 Tel: 713-223-2300 Fax: 713-221-1212 Email: Trey.Wood@bgllp.com 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., and Maggie W. Stein, Esq., at Goodrich Law Firm, P.C., in Billings, Montana, serve 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. NEW STREAMWOOD: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: New Streamwood Lanes, INC. dba Streamwood Bowl 1232 E Irving Park Rd Streamwood, IL 60107 Case No.: 14-20808 Chapter 11 Petition Date: June 2, 2014 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Hon. Benjamin Goldgar Debtor's Counsel: Ryan Kim, Esq. INSEED LAW PC 2454 E Dempster St Suite 301 Des Plaines, Il 60016 Tel: (847) 905-6262 Fax: (847) 770-4774 Email: inseedlaw@gmail.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Terence Vaughn, president. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. NORTH STAR CHARTER: S&P Lowers Facility Revenue Bonds Rating to D ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating to 'D' from 'C' on the series 2009A and 2009B (taxable) facility revenue bonds issued for North Star Charter School, Idaho by the Idaho Housing & Finance Assn. "The rating action reflects our view of the execution of an offer to exchange the series 2009A and 2009B bonds with a private placement financing," said Standard & Poor's credit analyst Robert Dobbins. "According to our criteria and ratings definitions, an issue rating is lowered to 'D' on completion of a distressed exchange offer whereby some or all of an issue is exchanged for an amount of cash having a total value that is less than par," added Mr. Dobbins. The charter school's operations and cash balances significantly deteriorated during the past several years. A constrained funding environment and management's inability to accurately forecast enrollment resulted in budget variances that required the use of cash reserves. As a result, the charter school ended fiscal 2012 in violation of its financial covenants. Two separate financial consultants were hired to assess operations, with both finding that there was limited ability for the charter school to reduce expenses to right-size operations. Furthermore, the consultants noted that there was an ongoing risk that the charter school would not remain financially solvent during the next year. Management engaged bondholders in negotiations to reduce debt service, with the ultimate goal to establish a sustainable operating expense base. The bondholders agreed to a one-year forbearance, which preceded the exchange offer. P.F. CHANG'S: Moody's Lowers Corporate Family Rating to 'B3' ------------------------------------------------------------ Moody's Investors Service downgraded P.F. Chang's China Bistro Inc.'s Corporate Family Rating to B3 from B2 and Probability of Default rating to B3-PD from B2-PD. In addition, Moody's affirmed the company's Ba3 senior secured bank ratings and Caa1 senior unsecured note rating. The outlook is negative. Ratings Rationale The ratings downgrade reflects P.F. Chang's weaker than anticipated operating performance since Moody's initial rating in June 2012 that has resulted in credit metrics significantly below Moody's expectations. The downgrade also incorporates Moody's view that the company's ability to material improve credit metrics over the intermediate term through operating performance alone will be challenging as soft consumer spending and intense competitive pressure persists. Affirmation of the Ba3 (LGD2, 23%) senior secured credit facility rating reflects its senior position in the capital structure, specifically to the unsecured notes. The Caa1 rating (LGD5, 78%) on the senior unsecured notes, one notch below the CFR, reflects their effective subordination to the $75 million revolver and $305 million term loan, both of which are secured. The ratings downgraded are: Corporate Family Rating to B3 from B2 Probability of Default Rating to B3-PD from B2-PD The ratings affirmed are: $75 million senior secured revolver due June 22, 2017, rated Ba3, (LGD2, 23%) $305 million senior secured term loan due July 2, 2019, rated Ba3 (LGD2, 23%) $300 million senior unsecured notes due June 30, 2020, rated Caa1 (LGD5, 78%) The B3 Corporate Family Rating (CFR) reflects PF Chang's high leverage and modest interest coverage with leverage on a debt to EBITDA basis of over 7.0 times and EBITA coverage of interest of under 1.0 time. The ratings also reflects the company's weak same restaurant sales performance and Moody's expectations that same restaurant sales?particularly traffic?will remain under pressure over the intermediate term. The ratings are supported by the company's high level of brand awareness, reasonable scale, cost saving initiatives, and adequate liquidity. The negative outlook reflects P.F. Chang's weaker than expected operating performance that has resulted in debt protection metrics well below Moody's previous expectations. The outlook also reflects Moody's view that soft consumer spending and high level of discounts and promotions from competitors will make it difficult to materially improve debt protection metrics through stronger earnings growth alone over the intermediate term. Given the expectation that weak traffic trends will continue, a higher rating over the intermediate term is unlikely. However, factors that could result in an upgrade include a sustained improvement in earnings driven by positive operating trends, particularly a stabilization of traffic, and lower costs. Specifically, an upgrade would require EBITA coverage of interest expense above 1.75 times and debt to EBITDA of under 5.5 times on a sustained basis. A higher rating would also require good liquidity. Factors that could result in a downgrade include an inability to stabilize same store sales?particularly, weak traffic trends?or a failure to improve financial performance such that credit metrics remain weak. Specifically, a downgrade could occur if debt to EBITDA remains above 7.0 times or EBITA to interest remained below 1.0 times on a sustained basis. P.F. Chang's China Bistro, Inc. operates restaurants under the brand names P.F. Chang's China Bistro and Pei Wei Asian Diner in the casual and fast casual dining segment of the restaurant industry. Annual revenue is approximately $1.3 billion. 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. PHILADELPHIA ENTERTAINMENT: Says Pennsylvania Owes $50-Mil. ----------------------------------------------------------- Law360 reported that Philadelphia Entertainment & Development Partners LP filed suit in Pennsylvania federal court against the state, claiming the Pennsylvania Gaming Control Board has refused to return its $50 million fee after revoking the gaming license for its defunct Foxwoods casino. According to the report, PEDP claims the state revoked the license in 2010 before it had a chance to develop the casino and has refused to return the $50 million license fee, despite a written agreement to obtain repayment of the fee in the event of future delays or difficulties. Philadelphia Entertainment and Development Partners, L.P., filed a Chapter 11 bankruptcy petition (Bankr. E.D. Pa. Case No. 14-12482) on March 31, 2014. Brian R. Ford signed the petition as authorized signatory. The Debtor estimated assets of at least $10 million and liabilities of at least $50 million. DLA Piper LLP (US) serves as the Debtor's counsel. Judge Magdeline D. Coleman oversees the case. PILGRIM'S PRIDE: Said to Raise Bid for Hillshire ------------------------------------------------ Michael J. De La Merced, writing for The New York Times' DealBook, reported that Pilgrim's Pride has raised its takeover bid for Hillshire Brands, people briefed on the matter said, turning up the heat in a battle over the maker of Jimmy Dean sausages and Ball Park hot dogs. According to the report, the new offer, worth about $55 a share, tops a $50-a-share offer from Tyson Foods that was unveiled last week. Pilgrim's Pride's new bid values Hillshire at about $6.7 billion, while Tyson's previous offer was worth about about $6.1 billion, the report related. About Pilgrim's Pride Pilgrim's Pride Corporation -- http://www.pilgrimspride.com/-- is one of the largest chicken companies in the United States, Mexico and Puerto Rico. The Company's fresh chicken retail line is sold throughout the US, throughout Puerto Rico, and in the northern and central regions of Mexico. The Company exports commodity chicken products to 90 countries. The Company operates feed mills, hatcheries, processing plants and distribution centers in 15 U.S. states, Puerto Rico and Mexico. Pilgrim's Pride and six of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Lead Case No. 08-45664) on Dec. 1, 2008. The Company's subsidiaries in Mexico and certain subsidiaries in the United States were not included in the filing and operated outside of the Chapter 11 process. Attorneys at Weil, Gotshal & Manges LLP served as bankruptcy counsel. Lazard Freres & Co., LLC, was the Company's investment bankers. Kurtzman Carson Consulting LLC served as claims and notice agent. Kelly Hart and Brown Rudnick represented the official equity committee. Attorneys at Andrews Kurth LLP represented the official committee of unsecured creditors. On Dec. 10, 2009, the Bankruptcy Court confirmed the Joint Plan of Reorganization filed by the Debtors. The Plan was premised on the sale of the business to JBS SA. Under the Plan, creditors are paid in full. Existing owners retained 34% of the equity. The Company emerged from Chapter 11 on Dec. 28, 2009. * * * The Troubled Company Reporter, on May 1, 2014, reported that Standard & Poor's Ratings Services raised its ratings on Pilgrim's Pride Corp. (PPC), including the corporate credit rating to 'BB' from 'BB-'. The outlook is stable. At the same time, S&P raised the issue ratings on the company's senior secured $700 million revolving credit facility due 2018 to 'BBB-' from 'BB+' (two notches above the corporate credit rating), with an unchanged recovery rating of '1', indicating S&P's expectation for very high recovery (more than 90%) in the event of payment default. The Troubled Company Reporter, on May 29, 2014, reported that Moody's Investors Service placed the ratings of Pilgrim's Pride under review for downgrade following the company's disclosure of an unsolicited bid to acquire Hillshire Brands ("Hillshire", Baa2 ratings under review for downgrade) for approximately $6.4 billion. Pilgrim's ratings placed under review include the B1 Corporate Family Rating ("CFR"), B1-PD Probability of Default Rating, and B3 Senior Unsecured debt rating. At the same time, Moody's Affirmed the company's Speculative Grade Liquidity Rating at SGL-1. PROSPECT SQUARE: Conundrum Group Approved as Special Counsel ------------------------------------------------------------ Prospect Square 07A, LLC and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the District of Colorado to employ The Conundrum Group, LLP as special counsel. The Debtors desire to employ the services of Conundrum Group to continue its non-bankruptcy legal services, including general corporate and business matters. Conundrum Group will be paid at these hourly rates: Attorney $225-$295 Paralegal $135 Conundrum Group will also be reimbursed for reasonable out-of- pocket expenses incurred. Conundrum Group holds a pre-petition claim in the amount of $27,277.83 for prior legal services. Benjamin Kahn, founding partner of Conundrum Group, 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. Conundrum Group can be reached at: Benjamin Kahn, Esq. THE CONUNDRUM GROUP, LLP P.O. Box 848 Salida, CO 81201 Tel: (303) 377-7890 About Prospect Square 07 A, LLC Prospect Square 07 A, LLC, and related entities sought Chapter 11 bankruptcy protection from creditors (Bankr. D. Colo. Lead Case No. 14-10896) in Denver on Jan. 29, 2014. Prospect Square 07 A is a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B) with principal assets located at 9690 Colerain Avenue, Cincinnati, Ohio. The Debtor listed $16 million in assets and more than $12 million in liabilities. Lee M. Kutner, Esq., at Kutner Brinen Garber, P.C., in Denver, serves as the Debtors' counsel. Lender MSCI 2007-IQ16 Retail 9654, LLC, is represented by James T. Markus, Esq., and Jeffery O. McAnallen, Esq., at Markus Williams Young & Zimmermann LLC. QIMONDA AG: Risk To Patent Portfolios May Diminish Ch. 15 Allure ---------------------------------------------------------------- Law360 reported that insolvent foreign companies could be less inclined to seek U.S. bankruptcy relief if a ruling diminishing their control over their U.S. patent licenses is allowed to stand, forcing bankruptcy professionals to take a closer look at certain fundamental discrepancies among international insolvency laws. According to the report, the issue is explicitly addressed anywhere in an April 30 petition to the Supreme Court looking to overturn a Fourth Circuit ruling that effectively allowed licensees of German semiconductor manufacturer Qimonda AG's U.S. patents to retain their rights under the licensing agreements. The decision clashed with a German court order allowing the contracts to be terminated and the patents reissued under terms more financially favorable to Qimonda, the report related. If the Supreme Court decides not to take on the case or if it upholds the Fourth Circuit's decision, the question at hand is whether foreign companies going through bankruptcy in their home countries will be discouraged from using Chapter 15 in the U.S. to enforce their home court's decisions out of fear that the U.S. will put the interests of patent licensees ahead of the debtors' business interests, the report further related. About Qimonda AG Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- was a global memory supplier with a diversified DRAM product portfolio. The Company generated net sales of EUR1.79 billion in financial year 2008 and had -- prior to its announcement of a repositioning of its business -- roughly 12,200 employees worldwide, of which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond, Va. Qimonda AG commenced insolvency proceedings in a local court in Munich, Germany, on Jan. 23, 2009. On June 15, 2009, QAG filed a petition (Bankr. E.D. Va. Case No. 09-14766) for relief under Chapter 15 of the U.S. Bankruptcy Code. Qimonda North America Corp., an indirect and wholly owned subsidiary of QAG, is the North American sales and marketing subsidiary of QAG. QNA is also the parent company of Qimonda Richmond LLC. QNA and QR sought Chapter 11 protection (Bankr. D. Del. Case No. 09-10589) on Feb. 20, 2009. Mark D. Collins, Esq., Michael J. Merchant, Esq., and Lee E. Kaufman, Esq., at Richards Layton & Finger PA, in Wilmington Delaware; and Mark Thompson, Esq., Morris J. Massel, Esq., and Terry Sanders, Esq., at Simpson Thacher & Bartlett LLP, in New York City, represented the Debtors as counsel. Roberta A. DeAngelis, the United States Trustee for Region 3, appointed seven creditors to serve on an official committee of unsecured creditors. Jones Day and Ashby & Geddes represented the Committee. In its bankruptcy petition, Qimonda Richmond, LLC, estimated more than US$1 billion in assets and debts. The information, the Chapter 11 Debtors said, was based on QR's financial records which are maintained on a consolidated basis with QNA. In September 2011, the Chapter 11 Debtors won confirmation of their Chapter 11 liquidation plan which projects that unsecured creditors with claims between US$33 million and US$35 million would have a recovery between 6.1% and 11.1%. No secured claims of significance remained. QUANTUM FOODS: Gets OK To Hire Liquidation Agent ------------------------------------------------ Law360 reported that a Delaware bankruptcy judge gave Quantum Foods LLC the thumbs up to hire Tiger Remarketing Services LLC to liquidate whatever assets the debtor can't unload in turnkey sales, after it resolved several objections to the arrangement by creditors who argued their rights connected to collateral were being ignored. According to the report, at a hearing in Wilmington, Quantum attorney M. Blake Cleary of Young Conaway Stargatt & Taylor LLP said the defunct meatpacker had come to an agreement with several creditors, including GE Capital Corp. and PNC Equipment Finance, that settled their respective objections to the agency agreement with Tiger. About Quantum Foods Founded in 1990 and headquartered in Bolingbrook, Illinois, Quantum Foods, LLC -- http://www.quantumfoods.com-- provides protein products made from beef, poultry and pork. Quantum Foods and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 14-10318) on Feb. 18, 2014, to facilitate the sale of substantially all their business to CTI Foods Holding Co., LLC. The Debtors' primary secured indebtedness totals $50.2 million, owing to lenders led by Crystal Financial, LLC, as administrative and collateral agent. Quantum Foods is being advised in its restructuring by Daniel J. McGuire, Esq., Gregory M. Gartland, Esq., and Caitlin S. Barr, Esq., at Winston & Strawn as counsel; M. Blake Cleary, Esq., Kenneth J. Enos, Esq., and Andrew Magaziner, Esq., at Young, Conaway, Stargatt & Taylor, LLP, serve as local counsel. City Capital Advisors is the investment banker. FTI Consulting, Inc. also serves as advisor. BMC Group is the claims and notice agent. The U.S. Trustee for Region 3 appointed five members to the official committee of unsecured creditors in the case. The Committee is seeking to retain Triton Capital Partners, Ltd. as financial advisor; and Mark D. Collins, Esq., Russell C. Silberglied, Esq., Michael J. Merchant, Esq., Christopher M. Samis, Esq., and Robert C. Maddox, Esq., at Richards, Layton & Finger, P.A. as counsel. Raging Bull is represented in the case by Van C. Durrer II, Esq., at Skadden Arps Slate Meagher & Flom LLP. Crystal Finance LLC is represented by David S. Berman, Esq., at Riemer & Braunstein LLP. RED OAK: S&P Affirms 'B+' Rating on $384MM Sr. Secured Bonds ------------------------------------------------------------ Standard & Poor's Ratings Services said it affirmed its 'B+' rating on Red Oak Power LLC's $384 million senior secured bonds ($224 million 8.54% bonds due 2019 and $160 million 9.2% bonds due 2029). S&P revised the outlook on the rating to stable from negative. The recovery rating is unchanged at '2'. Total debt outstanding as of Dec. 31, 2013 (including a debt service reserve term loan), was $283.6 million (i.e., about $342 per kilowatt). "The outlook change reflects our view that Red Oak has returned to stable operating conditions and is on track to replenish its DSRA following outages in 2012 and 2013 caused by Hurricane Sandy and an unscheduled turbine outage, respectively," said Standard & Poor's credit analyst Terry Pratt. Operating performance from June 2013 through the first quarter of 2014 has been sound, reflected by a 99.8% unforced capacity rating (UCR). The project also deposited $0.9 million into the DSRA in late 2013, leaving it $0.8 million short of reaching the required six-month balance. S&P expects the project to replenish the DSRA to the required level by year end 2014. Red Oak is an 830-megawatt (MW) combined cycle, natural-gas fired generation station in Sayreville, N.J., located in the PJM power market. S&P expects the project will maintain stable operational performance and will fully replenish its debt service reserve account this year. S&P expects the annual DSCR including subordinated payments to be around 1x until the PPA expires in 2022. Factors that could lead to a downgrade include a decline in operational performance from our expectations due to either unscheduled material outages or further degradation of heat rate performance such that the DSRA is drawn upon. Factors that would lead to an improvement in the rating would be a record of continued stable operational performance and DSCRs including subordinated expenses improving to a consistent level of about 1.2x. REFCO PUBLIC: Hires American Legal as Administrative Advisor ------------------------------------------------------------ Refco Public Commodity Pool, L.P., f/k/a S&P Managed Futures Index Fund, LP, seeks authorization from the U.S. Bankruptcy Court for the District of Delaware to employ American Legal Claims Services LLC as administrative advisor, nunc pro tunc to May 13, 2014 petition date. The Fund requires American Legal to: (a) provide balloting and solicitation services to the Fund in furtherance of confirmation of a plan or plans of reorganization including assisting in the creation of a solicitation database, tabulating ballots on a daily basis, preparing voting results reports, drafting certification of voting results, and providing court testimony with respect to balloting, solicitation, and tabulation matters; (b) manage any distributions pursuant to a confirmed plan of reorganization; and (c) provide such other balloting and administrative services as may be requested from time to time by the Fund in accordance with the Services Agreement and that are not otherwise allowed under the order approving the Section 156(c) Application. American Legal will be paid at these hourly rates: Clerical $28-$38 Analyst $55-$95 Consultant $100-$150 SR Consultant $155-$185 American Legal will also be reimbursed for reasonable out-of- pocket expenses incurred. Under the Services Agreement, the Fund paid American Legal a retainer of $10,000. Jeffrey Pirrung, managing director of American Legal, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. The Court for the District of Delaware will hold a hearing on the application on Jun. 25, 2014, at 9:30 a.m. Objections, if any, are due Jun. 11, 2014, at 4:00 p.m. American Legal can be reached at: Jeffrey Pirrung AMERICAN LEGAL CLAIM SERVICES, LLC P.O. BOX 23560 Jacksonville, FL 32241 Tel: (904) 329-0508 E-mail: jeff.pirrung@americanlegalclaims.com About Refco Public Commodity Refco Public Commodity Pool, L.P., also known as S&P Managed Futures Index Fund, L.P., is a fund that was formed in May 2003 to make investments that substantially track the performance of the Standard & Poor's Managed Futures Index. It did this by investing substantially all of its assets in SPhinX Managed Futures Fund, SPC, a Cayman Islands domiciled segregated portfolio company. RefcoFund Holdings, LLC was the general partner of the Fund. Refco Public filed a Chapter 11 bankruptcy petition (Bankr. D. Del. Case No. 14-11216) in Wilmington, Delaware, on May 13, 2014. Daniel F. Dooley signed the petition as managing member of MAA, LLC. The Debtor estimated assets of $17 million and debt of $0. The case is assigned to Judge Brendan Linehan Shannon. Alston & Bird LLP in Atlanta, Georgia, serves as the Debtor's counsel. Richards, Layton & Finger, in Delaware, acts as local counsel. Morris Anderson & Associates, Ltd., is the Debtor's financial advisor, and Maples & Calder serves as the Debtor's Cayman Islands counsel. RESTAURANT INTERIORS: Case Summary & 20 Top Unsecured Creditors --------------------------------------------------------------- Debtor: Restaurant Interiors, Inc. 158 Holly Street Jasper, GA 30143 Case No.: 14-21300 Chapter 11 Petition Date: May 30, 2014 Court: United States Bankruptcy Court Northern District of Georgia (Gainesville) Judge: Hon. Robert Brizendine Debtor's Counsel: Frank Nason, IV, Esq. LAMBERTH, CIFELLI, STOKES ELLIS & NASON, P.A. Ste 550, 3343 Peachtree Rd., NE Atlanta, GA 30326 Tel: (404) 262-7373 Email: gfn@lcsenlaw.com Debtor's GGG PARTNERS, LLC Financial Advisor: Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Renate S. Wegenstein, president. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/ganb14-21300.pdf RIH ACQUISITIONS: Caesars Flips Atlantic Club To Florida Hotelier ----------------------------------------------------------------- Law360 reported that Caesars Entertainment Corp. has unloaded a closed Atlantic City, New Jersey, casino it recently bought out of a bankruptcy auction to Florida-based hotel operator TJM Properties Inc., a spokesman for the gaming giant said. The deal hands over the Atlantic Club Casino Hotel about six months after a Caesars unit picked it out of a Chapter 11 auction, the report related. About RIH Acquisitions RIH Acquisitions NJ LLC, doing business as the Atlantic Club Casino Hotel in Atlantic City, New Jersey, filed a Chapter 11 petition (Bankr. D.N.J. Case No. 13-34483) on Nov. 6, 2013, in Camden, New Jersey, to sell the property in the near term. The Debtors are represented by Michael D. Sirota, Esq., and Warren A. Usatine, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A. Paul V. Shalhoub, Esq., at Willkie Farr & Gallagher LLP, in New York also represents the Debtor. Duane Morris, LLP, serves as the Debtors' special gaming regulatory counsel. Imperial Capital, LLC, serves as financial advisor and investment banker to the Debtors, while Mercer (US) Inc. serves as compensation consultant. Kurtzman Carson Consultants LLC is the Debtors' claims and noticing agent. Northlight Financial LLC, as DIP Lender, is represented by Harlan W. Robins, Esq., at Dickinson Wright PLLC, in Columbus, Ohio; Kristi A. Katsma, Esq., at Dickinson Wright PLLC, in Detroit, Michigan; and Bruce Buechler, Esq., and Kenneth A. Rosen, Esq., at Lowenstein Sandler LLP, in Roseland, New Jersey. Financing for the Chapter 11 reorganization is being provided by Northlight Financial LLC. RIH Acquisitions NJ LLC scheduled $17,776,359 in total assets and $16,813,022 in total liabilities. Under the Debtors' joint plan of liquidation dated Feb. 28, 2014, unclassified claims including Allowed Administrative Expense Claims, Professional Compensation and Reimbursement Claims, Priority Tax Claims and DIP Credit Agreement Claims will be paid in full in Cash. An official committee of unsecured creditors appointed in the case is represented by Morton R. Branzburg, Esq., Carol Ann Slocum, Esq., and Richard M. Beck, Esq., at Klehr Harrison Harvey Branzburg LLP. The Committee hired PricewaterhouseCoopers, LLC, as financial advisor. Chief Judge Gloria M. Burns on April 14, 2014, entered an order (i) approving, on a final basis, the Disclosure Statement; and (ii) confirming the Joint Plan of Liquidation of RIH Acquisitions NJ, LLC and RIH Propco NJ, LLC dated Feb. 28, 2014. About Caesars Entertainment Caesars Entertainment Corp., formerly Harrah's Entertainment Inc. -- http://www.caesars.com/-- is one of the world's largest casino companies, with annual revenue of $4.2 billion, 20 properties on three continents, more than 25,000 hotel rooms, two million square feet of casino space and 50,000 employees. Caesars casino resorts operate under the Caesars, Bally's, Flamingo, Grand Casinos, Hilton and Paris brand names. The Company has its corporate headquarters in Las Vegas. Harrah's announced its re-branding to Caesar's on mid-November 2010. Caesars Entertainment reported a net loss of $2.93 billion on $8.55 billion in 2013, as compared with a net loss of $1.50 billion in 2012. The Company's balance sheet at March 31, 2014, showed $24.37 billion in total assets, $26.65 billion in total liabilities and a $2.27 billion total deficit. * * * Caesars Entertainment carries a 'CCC' long-term issuer default rating, with negative outlook, from Fitch and a 'Caa1' corporate family rating with negative outlook from Moody's Investors Service. As reported in the TCR on Feb. 5, 2013, Moody's Investors Service lowered the Speculative Grade Liquidity rating of Caesars Entertainment Corporation to SGL-3 from SGL-2, reflecting declining revolver availability and Moody's concerns that Caesars' earnings and cash flow will remain under pressure causing the company's negative cash flow to worsen. In the April 10, 2014, edition of the TCR, Standard & Poor's Ratings Services lowered its corporate credit ratings on Las Vegas-based Caesars Entertainment Corp. (CEC) and wholly owned subsidiaries, Caesars Entertainment Operating Co. (CEOC) and Caesars Entertainment Resort Properties (CERP), as well as the indirectly majority-owned Chester Downs and Marina, to 'CCC-' from 'CCC+'. The downgrade reflects S&P's expectation that Caesars' capital structure is unsustainable, and the amount of cash the company will burn in 2014 and 2015 creates conditions under which S&P believes a restructuring of some form is increasingly likely over the near term absent an unanticipated significantly favorable change in operating performance. The TCR reported in its June 2, 2014, edition that Moody's Investors Service lowered the rating on Caesars Entertainment Operating Company Inc.'s first lien debt to Caa2 from Caa1 and assigned a Speculative Grade Liquidity rating of SGL-3. Moody's also assigned a Caa2 rating to CEOC's proposed $1.75 million first lien term loan B-7 due 2017. The company's Caa3 Corporate Family rating and Caa3-PD Probability of Default ratings are affirmed. SALUTARIS DIALYSIS: Suit vs. Bankr. Counsel Goes to Trial --------------------------------------------------------- Bankruptcy Judge Brian K. Tester denied the motion to dismiss and the cross motion for summary judgment filed in adversary proceeding commenced by Noemi Landrau, the Chapter 7 trustee for Salutaris Dialysis & Nephrology Center, against Reorganization And Bankruptcy Legal Services, P.S.C., et al. RBLS served as counsel to the Debtor during its Chapter 11 case. On June 5, 2013, the Chapter 7 Trustee filed a complaint for recovery and the turning over of the retainer as part of the Debtor's estate, violation of the automatic stay and damages against RBLS, Carlos Rodriguez Quedasa and Nelson Robles Diaz as RBLS' members, their respective wives and conjugal partnerships. The Trustee asserts that the defendants failed to maintain the $25,000 retainer in a separate account, as required by the rules of professional conduct. The Trustee also asserts that, because the application to employ and the application for compensation were never approved by the court in the chapter 11 case, the Debtor is entitled to the retainer as a result of the case dismissal. Judge Tester said there are genuine issues of material facts that preclude judgment as a matter of law. An evidentiary hearing is thus required to determine the true nature of the retainer, and the resulting controversies. Salutaris Dialysis & Nephrology Center filed a chapter 11 petition (Bankr. D. P.R. Case No. 12-04675) on June 15, 2012. The Debtor filed an application to employ RBLS as its legal counsel, effective as of the petition date, and including the services provided prepetition in preparation of the filing of the chapter 11 case. On Aug. 1, 2012, the chapter 11 case was dismissed. The Debtor requested reconsideration of the dismissal, which was denied on Oct. 17, 2012. The case docket reveals that the application for employment of RBLS was not approved by the court. However, on Oct. 12, 2012, RBLS filed an application for compensation and a motion to withdraw the application. RBLS filed a new application for compensation on Oct. 15, 2012. The court did not approve RBLS' application for compensation and closed the chapter 11 case on Nov. 20, 2012. On Oct. 31, 2012, the Debtor filed a voluntary chapter 7 case. The case is, NOEMI LANDRAU, Chapter 7 Trustee, Plaintiff, v. REORGANIZATION AND BANKRUPTCY LEGAL SERVICES, P.S.C., ET ALS. Defendant, Adv. Proc. No. 13-00114 (Bankr. D.P.R.). A copy of Judge Tester's May 29, 2014 Opinion and Order is available at http://is.gd/BJD1uPfrom Leagle.com. SEASONS PROMENADE: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Seasons Promenade, LLC 5409 Saint Lyonn Place NE Marietta, GA 30068 Case No.: 14-60637 Chapter 11 Petition Date: May 31, 2014 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Judge: Hon. Mary Grace Diehl Debtor's Counsel: John L.G. Herbert, Jr., Esq. HERBERT & WOLF, LLC Ste. 116, 1700 Enterprise Way Marietta, GA 30067 Tel: 404-850-0180 Fax: 678-302-4413 Email: john@herbertwolf.com Estimated Assets: Not indicated Estimated Liabilities: Not indicated The petition was signed by Jesse Shannon, manager of managing member, Easlan Gainesville LLC. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. SEVEN COUNTIES: Entitled to Ch.11 Relief & Rejects KERS Contract ---------------------------------------------------------------- Bankruptcy Judge Joan A. Lloyd dismissed the Complaint of Kentucky Employees Retirement System against Seven Counties Services, Inc., for Declaratory Judgment, Dismissal of Chapter 11 Bankruptcy Case and Injunctive Relief, and held that Seven Counties is entitled to: -- seek Chapter 11 relief; and -- reject its executory contract with KERS in its sound business judgment. "The issue of Debtor's eligibility was initially raised through KERS's Motion to Dismiss the Chapter 11 case, but the parties proceeded with this adversary proceeding at the Court's direction. The ruling herein on Debtor's eligibility is a preliminary matter in this bankruptcy case. Debtor's ultimate objective is confirmation of a plan. The Court assumes the Debtor will proceed toward that objective," Judge Lloyd said. The judge held that the Amended Motion for Approval of Debtor's Rejection of a Potentially Executory Contract with Kentucky Employees Retirement System, is granted. The case is, KENTUCKY EMPLOYEES RETIREMENT SYSTEM Plaintiff, v. SEVEN COUNTIES SERVICES, INC. Defendants, AP NO. 13-03019 (Bankr. W.D. Ky.). A copy of the Court's May 30, 2014 Memorandum Opinion is available at http://is.gd/maCX8Mfrom Leagle.com. About Seven Counties Seven Counties Services Inc., a not-for-profit behavioral services provider from Louisville, Kentucky, filed for Chapter 11 protection (Bankr. W.D. Ky. Case No. 13-31442) on April 4, 2013. The agency generates more than $100 million a year in revenue and employs a staff of 1,400 providing services at 21 locations and 120 schools and community centers. The petition was signed by Anthony M. Zipple as president/CEO. The Debtor scheduled assets of $45,603,716 and scheduled liabilities of $232,598,880. Seiller Waterman LLC serves as the Debtor's counsel. Judge Joan A. Lloyd presides over the case. Bingham Greenebaum Doll LLP and Wyatt, Tarrant & Combs LLP have been retained by the Debtor as special counsel. Hall, Render, Killian, Heath & Lyman, PLLC, is special counsel to represent and advise it in the implementation of its new software system. Peritus Public Relations, LLC, has been tapped to provide public relations and public affairs support in Kentucky. SHEARER'S FOODS: Moody's Confirms 'B2' CFR; Outlook Negative ------------------------------------------------------------ Moody's Investors Service confirmed Shearer's Foods, LLC's B2 Corporate Family Rating ("CFR") and B2-PD Probability of Default Rating. In addition, Moody's upgraded the $235 million First Lien Secured Bond due 2019 to B1 from B3 and assigned first time ratings of B1 to its proposed First Lien Term Loan and Caa1 to its proposed Second Lien Term Loan. The outlook is negative. The action concludes Moody's review for downgrade of Shearer's, which was initiated on May 7, 2014 following the announcement that the company would buy Lance Private Brands for $430 million, just one month after having acquired Medallion Foods for $32.3 million. Ratings Rationale "The addition of Lance Private Brands is likely to be a long-term positive for Shearer's due to the benefits of better product diversification and higher margins" said Linda Montag, Moody's Senior Vice President. "But the new business is large relative to Shearer's existing scale, follows just a month after another smaller acquisition and it will meaningfully increase leverage in the short term" she added. The B2 CFR reflects the company's leading position as a producer of private label kettle chips, potato chips, and tortilla chips, as well as crackers and cookies following the acquisition of Lance Private Brands. The acquisition of Lance Private Brands significantly improves product diversification by adding a sizable private label portfolio of cookies and crackers so that revenue generated from kettle, potato and tortilla chips will now account for less than 60% of pro-forma revenue. The rating also reflects the company's good liquidity and solid sales growth. These positive factors are offset by low EBITA margins, high customer concentration, and exposure to commodity price fluctuations for the private label businesses. In addition, financial leverage ( debt to EBITDA adjusted for Moody's standard accounting adjustments) will be high -- in the low to mid six times range-- following the acquisition and there are certain integration risks given the large scale of Lance and the need to turnaround performance at recently acquired Medallion. Following the transaction, capital spending requirements will increased over the next year but Moody's expects that Shearer's will maintain good liquidity with positive free cash flow, additional revolver capacity and the absence of financial maintenance covenants. The following ratings were confirmed: B2 Corporate Family Rating B2-PD Probability of Default Rating The following rating was upgraded $235 million 9% Secured Notes due 2019 to B1 (LGD3- 42%) from B3 (LGD4 - 60%) The following ratings were assigned $290 million First Lien Term Loan at B1 (LGD3- 42%) $225 million Second Lien Term Loan at Caa1 (LGD5- 89%) The outlook is negative The upgrade of the $235 million 9% secured bonds due 2019 to B1 from B3 reflects the addition of $225 million junior debt (the second lien term loan) to the capital structure. The negative outlook reflects Shearer's high post transaction financial leverage and the risks that accompany integrating two acquisitions with total sales that are more than 60% of Shearer's historical sales. The ratings could be downgraded if Shearer's debt to EBITDA leverage (using Moody's adjustments) is sustained at or above 6.5 times, if EBITA margins fail to improve, if integration of the two new businesses is more difficult than originally expected or if liquidity weakens. Other debt financed acquisitions or shareholder returns while leverage remains above 6 times would also likely result in a downgrade. To stabilize the rating, Moody's would need to see evidence of smooth integration of both new businesses, as well as leverage reduction and sustained EBITA margin improvements. An upgrade could occur in time, if Shearer's generates sustained sales and profit growth, EBITA margins approach 10%, leverage is expected to remain below 5.0 times and the company demonstrates a commitment to maintaining a conservative financial policy. The principal methodology used in this rating was the Global Packaged Goods published in June 2013. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Massillon, Ohio, Shearer's Foods, LLC. is a leading producer of private label and branded snack food such as kettle chips, tortilla chips, potato chips, rice crisps and extruded cheese snacks. Shearer's is majority owned by Wind Point Partners and Ontario Teachers' Pension Plan Board, which acquired the company from Mistral Equity Partners in 2012. On May 7, 2014, Shearer's announced the acquisition of Lance Private Brands, a leading private label manufacturer of cookies and crackers, for $430 million. On April 14, 2014, Shearer's completed the acquisition of Medallion Foods, a private label tortilla chip manufacturer, for $32.3 million. SHEARER'S FOODS: S&P Affirms 'B' CCR & Removes From Watch Neg. -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Massillon, Ohio-based Shearer's Foods LLC. In addition, S&P assigned its 'B' issue-level ratings to the company's proposed $290 million first-lien term loan due 2019. The recovery rating on the first-lien term loan is '3' indicating S&P's expectations for meaningful (50% to 70%) recovery in the event of a payment default, although at the low end of the range. S&P assigned its 'CCC+' issue-level ratings to the company's proposed $225 million second-lien term loan due 2022. The recovery rating on these notes is '6' indicating S&P's expectations for negligible (0% to 10%) recovery in the event of a payment default. At the same, S&P affirmed its 'B' issue-level ratings on the company's existing $235 million senior secured notes due 2019. S&P revised the recovery rating to '3' from '4', reflecting its revised recovery valuation for the company's new capital structure. The ratings were removed from CreditWatch with negative implications where they were placed on May 7, 2014. All ratings are subject to review upon receipt and review of final documentation. The outlook is stable. "The rating actions reflect our anticipation that the Lance's private label business will increase Shearer's operating scale, diversify its product and customer mix, and improve its operating margins and cash flow generation," said Standard & Poor's credit analyst Bea Chiem. Proceeds from the proposed new debt will fund the purchase of the Lance private label business for roughly $430 million, repay a $40 million bridge facility, buy out $27 million in leases, and pay fees and expenses. S&P estimates that pro forma for the transaction, Shearer's will have $971 million in lease-adjusted debt outstanding (including $150 million of preferred stock). SHENGDATECH INC: Trust May Amend Malpractice Suit v. Baker Tilly ---------------------------------------------------------------- Shengdatech Liquidating Trust brought an adversary proceeding in the Bankruptcy Court against Hansen, Barnett, & Maxwell, P.C.; KPMG LLP; Baker Tilly International Limited; and KPMG International Cooperative for: (1)-(3) professional negligence and malpractice; (4) breach of contract; and (5) fraudulent transfer. The KMPG Defendants asked the Court to withdraw the reference under 28 U.S.C. Sec. 157(d). The Court granted the motion over Plaintiff's objection. The Court has approved a settlement between Plaintiff and KMPG Defendants. Currently pending before the Court are a joint motion to amend the Complaint and a joint motion to join a Defendant. No party has objected to either motion, and one of the two remaining Defendants has filed a notice of non-opposition. In a May 28, 2014 Order available at http://is.gd/4mIbg6from Leagle.com, Nevada District Judge Robert C. Jones ruled that: -- the Motion to Amend and the Motion to Join are granted; and -- the motion hearing set for June 2, 2014 is vacated. The case is, SHENGDATECH LIQUIDATING TRUST, Plaintiff, v. HANSEN, BARNETT, & MAXWELL, P.C. et al., Defendants, NO. 3:13-CV-00563-RCJ (D. Nev.). Shengdatech Liquidating Trust is represented by: Brenda F. Szydlo, Esq. Christine Mackintosh, Esq. Megan D. McIntyre, Esq. Stuart M. Grant, Esq. GRANT & EISENHOFER P.A. 123 Justison Street, 7th Floor Wilmington, DE 19801 Tel: (646) 722-8533 E-mail: bszydlo@gelaw.com cmackintosh@gelaw.com mmcintyre@gelaw.com sgrant@gelaw.com - and - John F. Murtha, Esq. WOODBURN & WEDGE Sierra Plaza 6100 Neil Road, Suite 500 Reno, NV 89511-1149 Tel: (775) 688-3000 Fax: (775) 688-3088 E-mail: jmurtha@woodburnandwedge.com Hansen, Barnett & Maxwell, P.C., is represented by: Jennifer W. Arledge, Esq. Kathleen M. Maynard, Esq. WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER LLP 300 South 4th Street - 11th Floor Las Vegas, NV 89101-6014 Tel: 702-727-1258 E-mail: kathleen.maynard@wilsonelser.com Baker Tilly International Limited appeared Pro Se. About ShengdaTech Headquartered in Shanghai, China, ShengdaTech, Inc., makes nano precipitated calcium carbonate for the tire industry. ShengdaTech converts limestone into nano-precipitated calcium carbonate (NPCC) using its proprietary and patent-protected technology. NPCC products are increasingly used in tires, paper, paints, building materials, and other chemical products. In addition to its broad customer base in China, the Company currently exports to Singapore, Thailand, South Korea, Malaysia, India, Latvia and Italy. ShengdaTech sought Chapter 11 bankruptcy protection from creditors (Bankr. D. Nev. Case No. 11-52649) on Aug. 19, 2011, in Reno, Nevada, in the United States. The Shanghai-China based company said in its bankruptcy filing it would fire all of its officers and restructure to try to recover from an accounting scandal. The Company disclosed US$295.4 million in assets and US$180.9 million in debt as of Sept. 30, 2011. The Company's legal representative in its Chapter 11 case is Greenberg Traurig, LLP. On Aug. 23, 2011, the Court entered an interim order confirming the Board of Directors Special Committee's appointment of Michael Kang as the Debtor's chief restructuring officer. Alvarez & Marsal North America, LLC, is the Company's chief restructuring officer. As reported in by the Troubled Company Reporter on Sept. 7, 2011, the United States Trustee appointed AG Ofcon, LLC, The Bank of New York, Mellon (in its role as indenture trustee for bondholders), and Zazove Associates, LLC, to serve on the Official Committee of Unsecured Creditors of ShengdaTech, Inc. Hogan Lovells US serves as counsel for ShengdaTech's official committee of unsecured creditors. The Plan provides for the wind-down of the Debtor's affairs and the Distribution of the Debtor's remaining assets to Creditors. SLAVIE FEDERAL SAVINGS: Maryland Bank Failure is 9th in 2014 ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Slavie Federal Savings Bank from Bel Air, Maryland, became the ninth U.S. bank to fail this year when it was taken over on May 30 by regulators. The two branches became part of Bay Bank FSB from Lutherville, Maryland, the report related. The failed Maryland bank had $111.1 million in deposits, and the failure is estimated to cost the Federal Deposit Insurance Corp. $6.6 million, the report further related. SOUTHERN STAR: S&P Assigns 'BB+' Rating to $450MM Notes Due 2022 ---------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'BBB-' corporate credit ratings and all its issue ratings on Southern Star Central Corp. and wholly owned subsidiary Southern Star Central Gas Pipeline Inc. The outlook is stable. S&P also assigned its 'BB+' issue rating to Southern Star Central Corp.'s $450 million of senior notes due in 2022. Standard & Poor's ratings reflect Southern Star's "strong" business risk profile and "aggressive" financial risk profile (as S&P's criteria define the terms). Southern Star's revenues come entirely from wholly owned subsidiary Southern Star Central Gas Pipeline Inc., which owns a Federal Energy Regulatory Commission- regulated interstate natural gas pipeline system that has a mainline capacity of 2.4 billion cubic feet (bcf) of natural gas per day. The pipeline supplies gas from Kansas, Oklahoma, Wyoming, and Texas to its primary markets in the major metropolitan areas of Kansas and Missouri. The company also operates eight underground storage facilities, with a total capacity of 47 bcf and delivery capacity of 1.26 bcf of natural gas per day. "The stable rating outlook reflects Southern Star Central Corp.'s highly visible cash flow, a function of firm transportation agreements, and our expectation that FFO to debt will remain between 11% and 12%," said Standard & Poor's credit analyst Richard Cortright. S&P could lower the rating if there were an unfavorable shift in treatment by regulators or if the company confronted recontracting challenges with its major customers such that FFO to debt fell to less than about 10% and debt to EBITDA rose above 6x for a sustained period. S&P could raise the rating if the company maintains FFO to debt greater than about 13% and total debt to EBITDA less than 5x on a sustained basis. SPECIALTY HOSPITAL: U.S. Trustee Seeks Dismissal of Bankruptcy -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Trustee assigned in the Chapter 11 case of Specialty Hospital of Washington LLC has asked the bankruptcy court in Washington, D.C., to dismiss the case if the DIP financing is not approved. According to the report, the hospitals filed a revised financing proposal on May 26 seeking a $15 million loan from Silver Point Capital LLC to come behind $4.7 million owed on the mortgage. The hospitals are proposing a sale to Silver Point, absent a higher bid at auction, the report related. About Specialty Hospital Six alleged creditors of Specialty Hospital of Washington, LLC, are seeking to send the hospital to Chapter 11 bankruptcy. The involuntary bankruptcy case (Bankr. D. Del. Case No. 14-10935) was filed in Wilmington, Delaware on April 23, 2014. Led by Capitol Hill Group, the creditors are represented by Stephen W. Spence, Esq., at Phillips, Goldman & Spence, in Wilmington, Delaware. Capitol Hill Group claims to be owed $1.66 million on a lease for non-residential real property while another creditor, Metropolitan Medical Group, LLC, claims $837,000 for physician services. The petitioners assert $2.69 million in total claims. According to Web site http://www.specialtyhospitalofwashington.com/capitol-hill/the SHW Capitol Hill Campus provides 60 beds in private rooms for extended stay critical care patients, plus 120 nursing center beds. The hospital has 24-hour in-house physician, nursing and respiratory therapy coverage. ST CATHERINE HOSPITAL INDIANA: Dist. Court Rules in FSSA Appeal --------------------------------------------------------------- District Judge Sarah Evans Barker affirmed in part, and reversed, in part, a September 2013 ruling by the Bankruptcy Court for the Southern District of Indiana, which entered summary judgment for Saint Catherine Hospital of Indiana, LLC, in its lawsuit against the Indiana Family and Social Services Administration. Saint Catherine Hospital of Indiana is a regional health care facility in Charlestown, Indiana. The hospital is classified as a general acute care facility that treats some Medicaid patients; according to the testimony of its President and CEO Merlyn Knapp, however, Saint Catherine specializes in senior care, and the majority of its patients are insured through Medicare. Like other hospitals in the state, Saint Catherine receives reimbursement from the state and federal governments for its treatment of Medicaid patients; the United States Department of Health and Human Services Center for Medicare and Medicaid Services (CMS) provides two dollars of funding for every one dollar provided by the state government. Indiana Family and Social Services Administration -- FSSA -- administers Indiana's Medicaid Program. On April 29, 2011, the Indiana General Assembly adopted Public Law 229, 2011, Section 281, a measure designed to facilitate increased reimbursement for hospital care to Medicaid patients, to be paid for by an assessment known as the Hospital Assessment Fee -- HAF -- levied on Indiana hospitals. A committee appointed by the legislature determined that the total HAF fund must reach $559,100,000 for inpatient services and $87,676,084 for outpatient services. Each individual hospital's share of the fee was determined by an Indianapolis auditing firm on a pro rata basis, employing a hospital's patient data from the period May 1, 2010 through April 30, 2011. The "fee period" for the assessment on hospitals spanned from July 1, 2011 to June 30, 2013 (fiscal years 2012 and 2013), but collection of the HAF for fiscal year 2012 was delayed until the program received the required approval from the U.S. Department of Health and Human Services. The federal government issued its approval on May 21, 2012; thereafter FSSA began assessing the HAF on hospitals, retroactively dated to July 1, 2011. On May 22, 2012, FSSA issued Provider Bulletin BT201217, which informed Indiana hospitals of the HAF collection process and announced the timeline that would govern the assessments and FSSA's collection methods. As an acute care hospital serving Medicaid patients pursuant to Indiana Code Sec. 16-21-2, Saint Catherine was eligible for HAF assessments. The committee determined that Saint Catherine owed $1,107,038.51 for fiscal year 2012, and roughly the same amount for fiscal year 2013. FSSA sent Saint Catherine the bill for its fiscal year 2012 HAF on May 29, 2012. Shortly thereafter, FSSA commenced withholdings from its Medicaid reimbursements to Saint Catherine in order to recover the approximately $1.1 Million that Saint Catherine owed retroactive to July 1, 2011. On June 5 and June 12, 2012, FSSA withheld from Saint Catherine a total of $781,041.30. FSSA subsequently remitted a portion of this amount, leaving the total net withholdings on June 5 and June 12 at $615,912.64. Saint Catherine filed for Chapter 11 bankruptcy protection on June 19, 2012. FSSA continued its withholdings in service of the fiscal year 2012 HAF debt for two more weeks: it withheld $53,470.57 on June 19 and $105,582.67 on June 26. The withholdings for the 2012 HAF that occurred after Saint Catherine petitioned for bankruptcy thus totaled $159,053.24. On July 28, 2012, FSSA issued Saint Catherine its $1,127,296.44 HAF for fiscal year 2013 -- a period spanning July 1, 2012 to June 30, 2013. Saint Catherine did not pay the fee during fiscal year 2012, and after July 1, 2013, FSSA began withholding sums from its regular Medicaid reimbursements in satisfaction of this debt. All told, FSSA withheld $989,738.78 in satisfaction of the fiscal year 2013 HAF; all of these withholdings were made after Saint Catherine had filed its bankruptcy petition. Saint Catherine filed the Adversary Complaint against FSSA on March 14, 2013, seeking an injunction against further collection of the HAF and recovery of sums withheld by FSSA both before and after the Chapter 11 bankruptcy position. After oral argument, Bankruptcy Judge Basil H. Lorch III granted Saint Catherine's motion for a preliminary injunction and issued an order enforcing the automatic post-petition stay. Saint Catherine then moved for summary judgment on July 5, 2013, seeking recovery of the $615,912.64 withheld by FSSA before its bankruptcy petition in service of the fiscal year 2012 HAF, the $159,053.24 withheld in service of the fiscal year 2012 HAF after the bankruptcy petition, and the $989,738.78 withheld post-petition in service of the fiscal year 2013 HAF. On September 19, 2013, the Bankruptcy Court granted Saint Catherine summary judgment on all of its claims. The Court ruled that the pre-petition withholdings constituted preference payments under 11 U.S.C. Sec. 547 and were not subject to the exemption for payments made in the "ordinary course of business." As to the post-petition withholdings, the Court concluded that all of them -- for the 2012 and 2013 HAFs alike -- constituted "act[s] to collect, assess, or recover a claim against the debtor that arose before the commencement of the case" pursuant to 11 U.S.C. Sec. 362(a)(6). The Court rejected FSSA's argument that the post- petition withholdings were "recoupment" exempt from the operation of Section 362's automatic stay, and it ordered FSSA to repay Saint Catherine the full amount it had withheld. FSSA appealed. "We agree with the Bankruptcy Court that the withholdings FSSA made from Medicaid reimbursements to satisfy Saint Catherine's pre-petition debt should not be exempt from either the rule regarding preference payments pursuant to 11 U.S.C. Sec. 547 or the automatic stay pursuant to 11 U.S.C. ? 362(a)(6). Our only disagreement with the Bankruptcy Court stems from our conclusion that the 2013 HAF is a post-petition debt and therefore not subject to the automatic stay" Judge Barker said. "We therefore REVERSE the Bankruptcy Court's grant of injunctive relief against FSSA, to the extent that the court's order enjoined efforts to collect the 2013 HAF. We also REVERSE the Bankruptcy Court's entry of judgment against FSSA in the amount of $989,738.78 for amounts withheld by FSSA to satisfy the 2013 HAF obligation. We AFFIRM the order of the Bankruptcy Court in all other respects. The matter is REMANDED to the Bankruptcy Court for entry of a judgment consistent with this holding." The case is, INDIANA FAMILY AND SOCIAL SERVICES ADMINISTRATION, Appellant, v. SAINT CATHERINE HOSPITAL OF INDIANA, LLC, Appellee, NO. 4:13-CV-00183-SEB-WGH (S.D. Ind.). A copy of the Court's May 30, 2014 Order is available at http://is.gd/2aANfofrom Leagle.com. Saint Catherine Hospital of Indiana, LLC, is represented by: David Marcus Cantor, Esq. James Edwin McGhee, III, Esq. SEILLER WATERMAN LLC 462 South 4th Street, 22nd Floor Louisville, KY 40202 Tel: 502-584-7400 Indiana Family And Social Services Administration is represented by Heather M. Crockett, Esq., and Maricel E.V. Skiles, Esq., of the Indiana Attorney General's Office. The Unsecured Creditor's Committee in the hospital's case is represented by: Peter M. Gannott, Esq. GANNOTT LAW GROUP 12910 Shelbyville Road, Suite 115 Louisville, KY 40243 Tel: 502-749-8800 SUNSTONE CORPORATION: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: The Sunstone Corporation dba Sunstone Press PO Box 2321 Santa Fe, NM 87504-2321 Case No.: 14-11697 Chapter 11 Petition Date: May 30, 2014 Court: United States Bankruptcy Court New Mexico (Albuquerque) Judge: Hon. David T. Thuma Debtor's Counsel: Daniel J Behles, Esq. MOORE, BERKSON & GANDARILLA, P.C. 3800 Osuna Rd NE, STE #2 Albuquerque, NM 87109 Tel: 505-242-1218 Fax: 505-242-2836 Email: dan@behles.com - and - Arin Elizabeth Berkson, Esq. MOORE, BERKSON & GANDARILLA, P.C. 3800 Osuna Rd NE, STE #2 Albuquerque, NM 87109 Tel: 505-242-1218 Fax: 505-242-2836 Email: mbglaw@swcp.com - and - Bonnie Bassan Gandarilla, Esq. MOORE, BERKSON & GANDARILLA, P.C. 3800 Osuna Rd NE, STE #2 Albuquerque, NM 87109 Tel: 505-242-1218 Fax: 505-242-2836 Email: mbglaw@swcp.com - and - George M Moore, Esq. MOORE, BERKSON & GANDARILLA, P.C. 3800 Osuna Rd NE, STE #2 Albuquerque, NM 87109 Tel: 505-242-1218 Fax: 505-242-2836 Email: mbglaw@swcp.com - and - Koo Im Sakayo Tong, Esq. MOORE, BERKSON, & GANDARILLA, P.C. 3800 Osuna Rd NE, STE #2 Albuquerque, NM 87109 Tel: 505-242-1218 Fax: 505-242-2836 Email: kooimt@swcp.com Total Assets: $1.04 million at Dec. 31, 2013 Total Liabilities: $1.22 million at Dec. 31, 2013 The petition was signed by James Clois Smith, Jr., authorized individual. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. TAM OF ALLEGHENY: Liquor License to Be Sold Off June 10 ------------------------------------------------------- In the Chapter 11 case of TAM of Allegheny LLC, Liquor License No. R-13169, LID-53125 currently assigned to a premises situated at 2827 California Avenue, Pittsburgh, PA 15212-2502, will be sold in a bankruptcy auction on June 10, 2014, at 1:30 p.m., in Courtroom B, 54th Floor, U.S. Steel Tower, 600 Grant Street, Pittsburgh, PA 15219. Objections to the sale were due May 28. The initial offer is $40,000. Higher and better offers will be considered at the hearing. Bidders must bring cash of $4,000 during the auction. Additional information may be obtained through: Rosemary C. Crawford Trustee P.O. Box 355 Allison Park, PA 15101 Tel: 724-443-4757 TAM of Allegheny LLC, dba Stonefront Witch Way Inn, filed for Chapter 11 bankruptcy (Bankr. W.D. Pa. Case No. 13-23143) on July 26, 2013, listing under $1 million in both assets and debts. A copy of the bankruptcy petition is available at http://bankrupt.com/misc/pawb13-23143.pdf J. Michael Baggett, Esq., at McCann Garland Ridall & Burke, serves as the Debtor's counsel. TELEXFREE LLC: Will Have Chapter 11 Trustee ------------------------------------------- TelexFREE, LLC, et al., failed to block a bid for appointment of a Chapter 11 trustee to oversee its estate. U.S. Bankruptcy Judge Melvin S. Hoffman on Friday ruled that, "For the reasons set forth on the record at the hearing on the Motion of the United States Trustee for Order Directing Appointment of a Chapter 11 Trustee Pursuant to [Sec.] 1104(a), the Motion is GRANTED. The United States Trustee is directed to appoint a Chapter 11 trustee." TelexFREE, LLC, objected to the request, which was sought by Tracy Hope Davis, U.S. Trustee for Region 17. The Debtors said the U.S. Trustee sought to dispossess the Debtors' postpetition management from the operation, control, and opportunity to reorganize and rehabilitate the Debtors' telecommunications businesses, but the U.S. Trustee failed to offer any credible or admissible evidence to compel the appointment of a Chapter 11 trustee. The U.S. Securities and Exchange Commission also objected to the motion on the grounds that it is premature. On April 22, the U.S. Trustee said that there is compelling evidence of fraud, dishonesty and gross mismanagement of the affairs of the TelexFREE debtor entities, TelexFREE, LLC, TelexFREE, Inc. and TelexFREE Financial, Inc. There are reasonable grounds to suspect that the members of the governing board who selected the Debtors' new executives participated in actual fraud, dishonesty and criminal conduct in the management of TelexFREE. About TelexFREE TelexFREE -- http://www.TelexFREE.com-- is a telecommunications business that uses multi-level marketing to assist in the distribution of voice over internet protocol telephone services. TelexFREE's retail VoIP product, 99TelexFREE, allows for unlimited international calling to seventy countries for a flat monthly rate of $49.90. TelexFREE has over 700,000 associates or promoters worldwide. The company believes the sales of the 99TelexFREE product, the TelexFREE "app," and other new products will ultimately prove successful and profitable. The company is struggling, however, with several factors that required it to seek chapter 11 protection. First, the Company experienced exponential growth in revenue between 2012 and 2013 (from de minimus amounts to over $1 billion), which put tremendous pressure on the Company's financial, operational and management systems. Second, although the company revised its original compensation plan to promoters in order to address certain questions that were raised regarding such plan, the company believes that the plans need to be further revised. Finally, the trailing liabilities arising from the original compensation plan are difficult to quantify and have resulted in substantial asserted liabilities against the company, a number of which may not be valid. TelexFREE LLC and two affiliates sought bankruptcy protection (Bankr. D. Nev. Lead Case No. 14-12525) on April 13, 2014. Alvarez & Marsal North America, LLC is serving as restructuring advisor and Greenberg Traurig, LLP and Gordon Silver are serving as legal advisors to TelexFREE. Kurtzman Carson Consultants LLC serves as claims and noticing agent. TelexFREE, LLC, estimated $50 million to $100 million in assets and $100 million to $500 million in liabilities. TelexFREE is facing accusations of operating a $1 billion-plus pyramid scheme. In May, the Court approved the motion by the U.S. Securities & Exchange Commission to transfer the venue of the Debtors' cases to the U.S. Bankruptcy Court, District of Massachusetts (Bankr. D. Mass. Case Nos. 14-40987, 14-40988 and 14-40989). The Court entered an order in relation to the venue transfer stating that the cases remain jointly administered, and KCC will continue to serve as claims processing agent. The Debtors had opposed to the motion, stating that while the SEC contends that the Massachusetts Bankruptcy Court is more convenient for the SEC, the SEC has failed entirely to meet its burden to show that the Massachusetts Bankruptcy Court is better than the Nevada Bankruptcy Court for administration of the Chapter 11 Cases. The Debtors chose the Nevada Bankruptcy Court because, inter alia, TelexFREE Nevada, a Nevada entity, is a counter-party to more than 700,000 contracts governed by Nevada law. TELEXFREE LLC: Says Portions of TRO Violate Automatic Stay ---------------------------------------------------------- TelexFREE, LLC, et al., responded to the U.S. Securities and Exchange Commission's objection to their motion for an order determining that: (i) portions of the temporary restraining order entered at the request of the SEC violate the automatic stay of Section 362 of the Bankruptcy Code; (ii) portions of the TRO are void; and (iii) the Debtors are entitled to use their assets in the ordinary course of business. According to the Debtor, among other things: a. the 1998 Bankruptcy Code amendments do not except portions of the TRO from Section 362(a); b. a governmental unit may not enforce a money order; c. the TRO creates a "lien" upon the Debtors' assets and, therefore, portions of the TRO are not excepted under Section 362(b)(4); and d. even if the TRO is excepted from the automatic stay under Section 362(b)(4), the Court may impose a stay. On April 29, the SEC called the Debtors' motion "frivolous" as it misapprehends the facts and fails to analyze the current version of the controlling statute. The SEC also stated that the automatic stay did not apply to the Commission's actions as in case of Burton Douglas Morris, 2012 U.S. District LEXIS 81809. On May 3, 2014, the SEC brought to the Bankruptcy Court's attention the case SEC V. Burton Douglas Morris which directly contradicts the statement made by the Debtors' counsel during the argument at the May 2, 2014 hearing in the case. On April 23, the SEC commenced an action in District Court and obtained, on an ex parte basis, the TRO which has enjoined the Debtors from operating their business in the ordinary course of business and honoring administrative claims, the effect of which (which as appears to have been the clear intent of the SEC) will be the certain and immediate failure of the Chapter 11 cases. The Debtors said the SEC's actions in seeking and obtaining the TRO as they relate to the Debtors is in part violative of Section 362(a) and does not fall within the exception of Section 362(b)(4) for the exercise of police and regulatory powers. The Debtors are represented by: Nancy A. Mitchell, Esq. Joseph P. Davis, Esq. Maria J. Diconza, Esq. GREENBERG TRAURIG, LLP The MetLife Building 200 Park Avenue New York, NY 10166 Tel: (212) 801-9200 Fax: (212) 801-6400 E-mail: mitchelln@gtlaw.com diconzam@gtlaw.com - and - Gregory E. Garman, Esq. Thomas H. Fell, Esq. Teresa M. Pilatowicz, Esq. Mark Weisenmiller, Esq. GORDON SILVER 3960 Howard Hughes Parkway, 9th Flr. Las Vegas, NV 89169 Tel: (702) 796-5555 Fax: 702-369-2666 E-mail: ggarman@gordonsilver.com tfell@gordonsilver.com tpilatowicz@gordonsilver.com mweisenmiller@gordonsilver.com The U.S. Trustee is represented by: Scott Andrew Farrow Acting Assistant United States Trustee J. Michal Bloom, trial attorney UNITED STATES DEPARTMENT OF JUSTICE Office of the United States Trustee 300 Las Vegas Boulevard, So., Suite 4300 Las Vegas, Nevada 89101 Tel: (702) 388-6600 Fax: (702) 388-6658 E-mails: scott.a.farrow@usdoj.gov j.michal.bloom@usdoj.gov About TelexFREE TelexFREE -- http://www.TelexFREE.com-- is a telecommunications business that uses multi-level marketing to assist in the distribution of voice over internet protocol telephone services. TelexFREE's retail VoIP product, 99TelexFREE, allows for unlimited international calling to seventy countries for a flat monthly rate of $49.90. TelexFREE has over 700,000 associates or promoters worldwide. The company believes the sales of the 99TelexFREE product, the TelexFREE "app," and other new products will ultimately prove successful and profitable. The company is struggling, however, with several factors that required it to seek chapter 11 protection. First, the Company experienced exponential growth in revenue between 2012 and 2013 (from de minimus amounts to over $1 billion), which put tremendous pressure on the Company's financial, operational and management systems. Second, although the company revised its original compensation plan to promoters in order to address certain questions that were raised regarding such plan, the company believes that the plans need to be further revised. Finally, the trailing liabilities arising from the original compensation plan are difficult to quantify and have resulted in substantial asserted liabilities against the company, a number of which may not be valid. TelexFREE LLC and two affiliates sought bankruptcy protection (Bankr. D. Nev. Lead Case No. 14-12525) on April 13, 2014. Alvarez & Marsal North America, LLC is serving as restructuring advisor and Greenberg Traurig, LLP and Gordon Silver are serving as legal advisors to TelexFREE. Kurtzman Carson Consultants LLC serves as claims and noticing agent. TelexFREE, LLC, estimated $50 million to $100 million in assets and $100 million to $500 million in liabilities. TelexFREE is facing accusations of operating a $1 billion-plus pyramid scheme. In May, the Court approved a motion by the U.S. Securities & Exchange Commission to transfer the venue of the Debtors' cases to the U.S. Bankruptcy Court, District of Massachusetts (Bankr. D. Mass. Case Nos. 14-40987, 14-40988 and 14-40989). The Court entered an order in relation to the venue transfer stating that the cases remain jointly administered, and KCC will continue to serve as claims processing agent. TELEXFREE LLC: Wants Until June 16 to File Schedules & Statements ----------------------------------------------------------------- TelexFREE LLC, et al., ask the Bankruptcy Court to extend their time to file their schedules of assets and liabilities, and statements of financial affairs until June 16, 2014. The Debtors explained that they spend most of their time addressing (i) administrative complain filed by the Office of the Secretary of the Commonwealth Securities Division and pending in Boston Massachusetts; and (ii) the civil complaint filed by the Securities and Exchange Commission pending before the U.S. District Court for the District of Massachusetts. Tracy Hope Davis, U.S. Trustee for Region 17, objects to an extension, telling the Court that an extension in filing schedules until May 16 would be preferable, however, if the Debtors can demonstrate to the Court by May 16, that they had made every effort to recover their records and have been unsuccessful, then an additional enlargement of time might be appropriate. Meanwhile, a meeting of creditors pursuant to section 341 of the Bankruptcy Code previously set for May 22 has been cancelled. The date and location for the re-scheduled meeting of creditors has not been set. About TelexFREE TelexFREE -- http://www.TelexFREE.com-- is a telecommunications business that uses multi-level marketing to assist in the distribution of voice over internet protocol telephone services. TelexFREE's retail VoIP product, 99TelexFREE, allows for unlimited international calling to seventy countries for a flat monthly rate of $49.90. TelexFREE has over 700,000 associates or promoters worldwide. The company believes the sales of the 99TelexFREE product, the TelexFREE "app," and other new products will ultimately prove successful and profitable. The company is struggling, however, with several factors that required it to seek chapter 11 protection. First, the Company experienced exponential growth in revenue between 2012 and 2013 (from de minimus amounts to over $1 billion), which put tremendous pressure on the Company's financial, operational and management systems. Second, although the company revised its original compensation plan to promoters in order to address certain questions that were raised regarding such plan, the company believes that the plans need to be further revised. Finally, the trailing liabilities arising from the original compensation plan are difficult to quantify and have resulted in substantial asserted liabilities against the company, a number of which may not be valid. TelexFREE LLC and two affiliates sought bankruptcy protection (Bankr. D. Nev. Lead Case No. 14-12525) on April 13, 2014. Alvarez & Marsal North America, LLC is serving as restructuring advisor and Greenberg Traurig, LLP and Gordon Silver are serving as legal advisors to TelexFREE. Kurtzman Carson Consultants LLC serves as claims and noticing agent. TelexFREE, LLC, estimated $50 million to $100 million in assets and $100 million to $500 million in liabilities. TelexFREE is facing accusations of operating a $1 billion-plus pyramid scheme. In May, the Court approved a motion by the U.S. Securities & Exchange Commission to transfer the venue of the Debtors' cases to the U.S. Bankruptcy Court, District of Massachusetts (Bankr. D. Mass. Case Nos. 14-40987, 14-40988 and 14-40989). The Court entered an order in relation to the venue transfer stating that the cases remain jointly administered, and KCC will continue to serve as claims processing agent. TELEXFREE LLC: Gordon Silver Approved as Bankruptcy Counsel ----------------------------------------------------------- Bankruptcy Judge Melvin S. Hoffman authorized TelexFREE, LLC, et al., to employ Gordon Silver as counsel. The Debtors, in a separate order, were authorized to employ Greenberg Traurig as co-bankruptcy counsel. GS will monitor and coordinate carefully the efforts of all estate professionals, and delineate clearly their respective duties so as to prevent duplication of effort wherever possible. The Debtors, GS, and GT believe that the division of services will result in significant cost savings to the estates. GS maintains offices at 3960 Howard Hughes Parkway, Nith Floor, Las Vegas, Nevada, well as Phoenix, Arizona, Reno, Nevada, Los Angeles, California, and affiliated government affairs firm in Washington D.C. Gregory E. Garman, Esq., managing shareholder with GS, tells the Court that the hourly rates of GS personnel assigned in the cases are: Greg Garman $595 Thomas Fell $600 Teresa Pilatowicz $350 Marck Weisenmiller $225 Other attorneys and paralegals will render services to the Debtors as needed. Generally, GS' hourly rates are in these ranges: Professional GS Hourly Rate ------------ -------------- Shareholders $395 - $750 Of Counsel/Senior Counsel $365 - $625 Associates $200 - $350 Legal Assistants/Paralegals $145 - $190 To the best of the Debtors' knowledge, GS is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Pursuant to the "Appendix B-Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed under 11 U.S.C. Sec. 330 for Attorneys in Larger Chapter 11 Cases," GS, through Mr. Garman, provided these responses: Questions Require by Part D1 of 2013 UST Guidelines Answer ------------------------------- ------------------- 1. Did you agree to any variations from, No. or alternatives to, your standard or customary billing arrangements for this engagement? 2. Do any professionals included in the No. in the engagement vary their rate base on the geographic location of the bankruptcy case? 3. If you represented the client in the GS represented the 12 month prepetition, disclose your client since April billing rates and material financial 2014. The material financial terms for the prepetition financial terms for the engagement, including any adjustments prepetition engagement during the 12 month prepetition. If remained the same as your billing rates and material engagement was hourly financial terms have changed based. postpetition, explain the difference and reasons for the difference. 3. Has your client approved your Due to the expediency respective budget and staffing plan, required for filing the and if so, for what budget period? cases, GS and the Debtors are still developing a budget that will cover services rendered for the from the Petition Date until the week ending July 11, 2014. GS will thereafter a supplemental declaration. Preceding the Petition Date, the Debtors paid GS $55,235 for legal services rendered in connection with its restructuring. GS is holding $694,764, in which sum GS claims both a security interest and an attorneys' lien as provided for under the Nevada law to assure payment during the Chapter 11 cases. Stuart A. MacMillan, a consultant with Impact This Day, Inc., as interim chief executive officer of the Debtors, also made the declaration on behalf of Gordon Silver. About TelexFREE TelexFREE -- http://www.TelexFREE.com-- is a telecommunications business that uses multi-level marketing to assist in the distribution of voice over internet protocol telephone services. TelexFREE's retail VoIP product, 99TelexFREE, allows for unlimited international calling to seventy countries for a flat monthly rate of $49.90. TelexFREE has over 700,000 associates or promoters worldwide. The company believes the sales of the 99TelexFREE product, the TelexFREE "app," and other new products will ultimately prove successful and profitable. The company is struggling, however, with several factors that required it to seek chapter 11 protection. First, the Company experienced exponential growth in revenue between 2012 and 2013 (from de minimus amounts to over $1 billion), which put tremendous pressure on the Company's financial, operational and management systems. Second, although the company revised its original compensation plan to promoters in order to address certain questions that were raised regarding such plan, the company believes that the plans need to be further revised. Finally, the trailing liabilities arising from the original compensation plan are difficult to quantify and have resulted in substantial asserted liabilities against the company, a number of which may not be valid. TelexFREE LLC and two affiliates sought bankruptcy protection (Bankr. D. Nev. Lead Case No. 14-12525) on April 13, 2014. Alvarez & Marsal North America, LLC is serving as restructuring advisor and Greenberg Traurig, LLP and Gordon Silver are serving as legal advisors to TelexFREE. Kurtzman Carson Consultants LLC serves as claims and noticing agent. TelexFREE, LLC, estimated $50 million to $100 million in assets and $100 million to $500 million in liabilities. TelexFREE is facing accusations of operating a $1 billion-plus pyramid scheme. In May, the Court approved a motion by the U.S. Securities & Exchange Commission to transfer the venue of the Debtors' cases to the U.S. Bankruptcy Court, District of Massachusetts (Bankr. D. Mass. Case Nos. 14-40987, 14-40988 and 14-40989). The Court entered an order in relation to the venue transfer stating that the cases remain jointly administered, and KCC will continue to serve as claims processing agent. TELEXFREE LLC: Greenberg Traurig Okayed as Bankruptcy Co-Counsel ---------------------------------------------------------------- Bankruptcy Judge Melvin S. Hoffman authorized TelexFREE, LLC, et al., to employ Greenberg Traurig, LLP as co-counsel to represent the Debtors in connection with the investigation. Greenberg Traurig assisted the Debtors in responding to subpoenas and appeared on behalf of the Debtors at the on-the-record interviews of its then officers and directors, James Merrill and Carlos Wanzeler. The Debtors related that GT and Gordon Silver, as counsel, will coordinate and delineate which tasks each firm will handle, subject to their right to adjust their respective roles and responsibilities. Joseph P. Davis, Esq., shareholder at GT, told the Court that the hourly rates of GT personnel are: Professional Hourly Rate ------------ ----------- Nancy A. Mitchell $995 Joseph P. Davis $925 Maria J. DiConza $875 Mark A. DiConza $875 Erin E. Hayes $560 Matthew L. Hinker $560 Avi Fox $515 Zack A. Polidoro $325 The hourly rates of other personnel assigned to the case are: Professional Hourly Rate ------------ ----------- Shareholders $270 - $1,000 Of Counsel/Senior Counsel $350 - $1,115 Associates $150 - $735 Legal Assistants/Paralegals $95 - $360 GT applied $557,725 to services rendered and expenses incurred prior to the Petition Date, leaving a balance of $3,726,604 remaining as of the Petition Date. Pursuant to the "Appendix B-Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed under 11 U.S.C. Sec. 330 for Attorneys in Larger Chapter 11 Cases," GT provided these responses: Questions Require by Part D1 of 2013 UST Guidelines Answer ------------------------------- ------------------ 1. Did you agree to any variations from, No. or alternatives to, your standard or customary billing arrangements for this engagement? 2. Do any professionals included in the No. in the engagement vary their rate base on the geographic location of the bankruptcy case? 3. If you represented the client in the GT represented the 12 month prepetition, disclose your client since February billing rates and material financial 2014. The material financial terms for the prepetition financial terms for the engagement, including any adjustments prepetition engagement during the 12 month prepetition. If remained the same as your billing rates and material engagement was hourly financial terms have changed based. postpetition, explain the difference and reasons for the difference. 3. Has your client approved your Due to the expediency respective budget and staffing plan, required for filing the and if so, for what budget period? cases, GT and the Debtors are still developing a budget that will cover services rendered for the from the Petition Date until the week ending July 11, 2014. GT will thereafter a supplemental declaration. Stuart A. MacMillan, a consultant with Impact This Day, Inc., as interim chief executive officer of the Debtors, also made the declaration on behalf of Greenberg Traurig. About TelexFREE TelexFREE -- http://www.TelexFREE.com-- is a telecommunications business that uses multi-level marketing to assist in the distribution of voice over internet protocol telephone services. TelexFREE's retail VoIP product, 99TelexFREE, allows for unlimited international calling to seventy countries for a flat monthly rate of $49.90. TelexFREE has over 700,000 associates or promoters worldwide. The company believes the sales of the 99TelexFREE product, the TelexFREE "app," and other new products will ultimately prove successful and profitable. The company is struggling, however, with several factors that required it to seek chapter 11 protection. First, the Company experienced exponential growth in revenue between 2012 and 2013 (from de minimus amounts to over $1 billion), which put tremendous pressure on the Company's financial, operational and management systems. Second, although the company revised its original compensation plan to promoters in order to address certain questions that were raised regarding such plan, the company believes that the plans need to be further revised. Finally, the trailing liabilities arising from the original compensation plan are difficult to quantify and have resulted in substantial asserted liabilities against the company, a number of which may not be valid. TelexFREE LLC and two affiliates sought bankruptcy protection (Bankr. D. Nev. Lead Case No. 14-12525) on April 13, 2014. Alvarez & Marsal North America, LLC is serving as restructuring advisor and Greenberg Traurig, LLP and Gordon Silver are serving as legal advisors to TelexFREE. Kurtzman Carson Consultants LLC serves as claims and noticing agent. TelexFREE, LLC, estimated $50 million to $100 million in assets and $100 million to $500 million in liabilities. TelexFREE is facing accusations of operating a $1 billion-plus pyramid scheme. In May, the Court approved a motion by the U.S. Securities & Exchange Commission to transfer the venue of the Debtors' cases to the U.S. Bankruptcy Court, District of Massachusetts (Bankr. D. Mass. Case Nos. 14-40987, 14-40988 and 14-40989). The Court entered an order in relation to the venue transfer stating that the cases remain jointly administered, and KCC will continue to serve as claims processing agent. TELEXFREE LLC: Reaching Out to Investors, Creditors --------------------------------------------------- Tom Corrigan, writing for The Wall Street Journal, reported that TelexFree LLC, who used multilevel marketing to assist in the distribution of voice over Internet protocol telephone service plans, is faced with the daunting challenge of tracking all of its 700,000 investors, approximately 75% of whom are located outside the U.S. According to the report, the U.S. Bankruptcy Court in Worcester, Mass., where TelexFree's bankruptcy is pending, has a dedicated page on its website to assist creditors in filing claims, while the Federal Bureau of Investigation created a webpage and survey seeking "customer assistance" for investors and promoters who believes they have been defrauded. About TelexFREE TelexFREE -- http://www.TelexFREE.com-- is a telecommunications business that uses multi-level marketing to assist in the distribution of voice over internet protocol telephone services. TelexFree's retail VoIP product, 99TelexFree, allows for unlimited international calling to seventy countries for a flat monthly rate of $49.90. TelexFREE has over 700,000 associates or promoters worldwide. The company believes the sales of the 99TelexFree product, the TelexFree "app," and other new products will ultimately prove successful and profitable. The company is struggling, however, with several factors that required it to seek chapter 11 protection. First, the Company experienced exponential growth in revenue between 2012 and 2013 (from de minimus amounts to over $1 billion), which put tremendous pressure on the Company's financial, operational and management systems. Second, although the company revised its original compensation plan to promoters in order to address certain questions that were raised regarding such plan, the company believes that the plans need to be further revised. Finally, the trailing liabilities arising from the original compensation plan are difficult to quantify and have resulted in substantial asserted liabilities against the company, a number of which may not be valid. TelexFREE LLC and two affiliates sought bankruptcy protection (Bankr. D. Nev. Lead Case No. 14-12525) on April 13, 2014. Alvarez & Marsal North America, LLC is serving as restructuring advisor and Greenberg Traurig, LLP and Gordon Silver are serving as legal advisors to TelexFREE. TelexFree, LLC, estimated $50 million to $100 million in assets and $100 million to $500 million in liabilities. TRI POINTE: Moody's Assigns First Time B1 Corporate Family Rating ----------------------------------------------------------------- Moody's Investors Service assigned a first-time B1 corporate family rating and B1-PD probability of default rating to TRI Pointe Homes, Inc. ("TRI Pointe"). In a related action, Moody's also assigned a B1 rating to the company's proposed $800 million senior unsecured notes that will be offered in five-year and 10- year tranches. Proceeds of the new notes will be used to finance the combination with Weyerhaeuser Real Estate Company ("WRECO"), a subsidiary of Weyerhaeuser Company ("Weyerhaeuser"). The notes will initially be issued by WRECO, but TRI Pointe will become the issuing entity upon consummation of the merger. The TRI Pointe stockholders will have approximately a 20% stake in the combined entity, with Weyerhaeuser shareholders holding the remaining portion of the combined entity. In addition, Moody's assigned a speculative grade liquidity rating of SGL-3. The rating outlook is stable. The following ratings were assigned: B1 Corporate Family Rating; B1-PD Probability of Default rating; B1 (LGD 4, 54%) rating on the proposed senior unsecured notes due 2019 and 2024; SGL-3 Speculative Grade Liquidity Rating. Ratings Rationale TRI Pointe's B1 rating reflects the integration challenges that may arise from a relatively small and new company combining with a much larger and longer-established entity. Although WRECO will now be managed by a pure homebuilder (TRI Pointe) rather than by a timber REIT (Weyerhaeuser), which WRECO managers may look forward to, it is also possible that managers at each of the five homebuilding companies comprising WRECO may have to give up some of their prior autonomy. In addition, Moody's regard TRI Pointe's liquidity profile as being only adequate, hampered by a thin cash position and Moody's expectation of negative free cash flow generation for the next 12 to 18 months. Counterbalancing these risk factors, Moody's rating incorporates the large increase in size, scale, market presence, and geographical footprint that TRI Pointe will experience as a result of this acquisition, the combined company's strong pro forma adjusted debt leverage out of the box (approximately 43%), and its healthy gross margin performance (in excess of 20%). The B1 rating assigned to both tranches of TRI Pointe's proposed $800 million senior unsecured notes is in line with the company's corporate family rating as the notes will comprise the preponderance of debt in the capital structure. TRI Pointe's SGL-3 speculative grade liquidity rating reflects the combined company's adequate liquidity profile. The company has pro forma cash on hand of $39 million as of March 31, 2014, and expects to maintain minimal cash going forward. Moody's also project free cash flow remaining negative for at least the next 12 to 18 months, which will lead to continued heavy reliance on external sources of liquidity. TRI Pointe expects to draw $177 million under its proposed $425 million unsecured revolving credit facility to refinance existing secured debt, and Moody's expect further takedowns under the revolver to help finance ongoing operations. The proposed revolver is expected to have financial covenants, including a 55% maximum net debt-to-capitalization ratio, a 1.5x minimum interest coverage ratio, a minimum liquidity test based on debt service requirements, and a minimum tangible net worth test that increases with operating performance. Moody's expect that the company will maintain sufficient headroom under its leverage, interest coverage and net worth covenants. Projected headroom for the liquidity test is weak. However, satisfying the interest coverage test will waive this requirement. The stable rating outlook is based on Moody's expectations of the company's continued strong financial performance, moderate debt leverage, and adequate liquidity. Positive rating actions are unlikely over the near term, as TRI Pointe faces integration risks after combining with a company of WRECO's size and scale and because the combined company's adequate liquidity profile could limit its ability to invest in future growth opportunities. However, an upgrade might be considered in the future if Tri Pointe seamlessly merges the two businesses and continues to grow while maintaining prudent debt leverage and improving liquidity. A downgrade could occur if the combined company's liquidity profile deteriorates or if adjusted debt leverage rises above 55%, EBIT interest coverage falls below 2.5x, and/or gross margins below decline to below 18%. The principal methodology used in this rating was the Global Homebuilding Industry published in March 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. TRI Pointe, founded in 2009 and headquartered in Irvine, California, designs, builds, and sells single-family homes throughout Northern and Southern California as well as Colorado. TRI Pointe completed its IPO in January 2013 and now plans to combine with WRECO in the third quarter of 2014. The combination with WRECO, which was founded in 1970, will expand TRI Pointe's geographic footprint considerably and provide greater size and scale. For the 12 months ended March 31, 2014, TRI Pointe's consolidated revenue and net income were approximately $303 million and $19.4 million, respectively. WRECO's consolidated revenue and net income for the same period, excluding impairments on assets to be retained by Weyerhaeuser after the divestiture, were approximately $1.3 billion and $200 million, respectively. TRI POINTE: S&P Assigns B+ CCR & Rates Proposed $800MM Notes BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'B+' corporate credit rating to TRI Pointe Homes Inc. At the same time, S&P assigned its 'BB-' issue-level rating and '2' recovery rating to the proposed offering of an aggregate $800 million of senior unsecured notes to be issued in two tranches with five- and 10-year tenors. The '2' recovery rating indicates prospects for a substantial recovery (70% to 90%) of principal in the event of payment default. The outlook is stable. On Nov. 4, 2013, TRI Pointe agreed to combine with WRECO, Weyerhaeuser's homebuilding business, in a transaction structured as a Reverse Morris Trust and valued at $2.7 billion, consisting of about $2 billion of TRI Pointe stock and an estimated $739 million of cash, subject to adjustments, to be funded by the proceeds of the proposed debt offering. Under the terms of the transaction Weyerhaeuser will distribute ownership of WRECO, to its shareholders through a split-off. A wholly owned subsidiary of TRI Pointe will merge with and into WRECO with WRECO surviving the merger and becoming a wholly owned subsidiary of TRI Pointe. In the merger, each WRECO share will be converted into 1.297 shares of TRI Pointe. Following the merger, Weyerhaeuser shareholders will own roughly 80% of the common stock of TRI Pointe. As part of the transaction structure and requirements, WRECO is proposing to issue the $800 million of senior notes, which will ultimately become a debt obligation of TRI Pointe upon the merger becoming effective; the bonds will be guaranteed by TRI Pointe's wholly owned subsidiaries, including WRECO and its subsidiaries. The merger transaction is expected close in the third quarter of 2014. "The stable outlook reflects our expectation that the larger combined platform, with land under control to meet its needs over the next one to two years, will support our base case revenue and EBITDA growth expectations," said Standard & Poor's credit analyst George Skoufis. "We expect debt to EBITDA to be in the 3x-4x range and interest coverage to be 5x-6x by the end of 2015. We also expect TRI Pointe Homes to prudently pursue land investments and maintain adequate liquidity." S&P would lower the rating if operating performance is weaker than expected or if the company finances acquisitions (including land) with debt resulting in debt to EBITDA in excess of 5x. S&P considers an upgrade unlikely at this time, but in the longer term it would consider raising the rating after the company successfully manages the integration of WRECO and becomes more seasoned operating a larger platform while raising and allocating capital effectively and enhances its scale and diversity while maintaining adequate liquidity. This could result in the removal of the comparable rating analysis modifier. TUCKER & SONS: Case Summary & 6 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Tucker & Sons, Inc. 1622 Barrington View Stone Mountain, GA 30087 Case No.: 14-60507 Chapter 11 Petition Date: May 30, 2014 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Judge: Hon. James R. Sacca Debtor's Counsel: Kenneth Mitchell, Esq. GIDDENS, MITCHELL & ASSOCIATES, P.C. Suite 555, 3951 Snapfinger Parkway Decatur, GA 30035 Tel: 770-987-7007 Email: gmapclaw1@gmail.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Satwinder Tucker, president. A list of the Debtor's six largest unsecured creditors is available for free at http://bankrupt.com/misc/ganb14-60507.pdf Pending bankruptcy case filed by an affiliate: Debtor: Prince Tucker Inc. Case No.: 14-60402 Date Filed: 5/29/2014 Court: United States Bankruptcy Court Northern District of Georgia UNITED CONTINENTAL: S&P Affirms 'B' CCR; Outlook Stable ------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its 'B' corporate credit rating on Chicago-based United Continental Holdings Inc. The outlook remains stable. At the same time, S&P took numerous rating actions (upgrades, downgrades, and affirmations) on certain enhanced equipment trust certificates (EETCs) that were originally issued by Continental Airlines Inc. (which has since merged into United Airlines Inc., United Continental's principal operating subsidiary), based on S&P's assessment of United Continental's current and expected loan to value (LTV) ratios. "Our corporate credit rating on United Continental is based on our assessment of the company's "weak" business risk profile and "aggressive" financial risk profile. Our upgrades of certain EETCs that Continental Airlines originally issued in the 1990s reflect the debt amortization that has resulted in substantially improved collateral coverage, exceeding our previous expectations. Our downgrades of certain EETCs that Continental Airlines had originally issued more recently primarily reflect the increased LTVs (thus providing less collateral coverage), which are significantly higher than our expectations. We affirmed our ratings on other EETCs. Our review of the EETCs consider, among other things, the importance of the aircraft collateral to United Continental's operations, the quality (in terms of technology and resale liquidity) of the aircraft, the current and prospective LTV ratios, and the structural features of the EETCs (including, for example, the cross collateralization and cross default of the debt on each aircraft in the recent EETCs)," S&P said. The outlook is stable. "United Continental continues to experience problems from merger integration and has recently reported worse operating results than other large U.S. airlines," said Standard & Poor's credit analyst Betsy Snyder. "Although we believe that the company has the potential to be rated higher, we do not expect an upgrade over the next year." S&P could raise the rating if stronger-than-expected operating performance (the adjusted operating margin reaches the high- single-digit percent area, compared with 7.1% for the 12 months ended March 31, 2014) and the company generates adjusted FFO to debt consistently in the mid-teens percent area. While not considered likely, S&P could lower the rating if the company's operating performance deteriorates, resulting in FFO to debt falling into the mid-single-digit percent area. UNITED SECURITY: A.M. Best Affirms 'C-' Finc'l Strength Rating -------------------------------------------------------------- A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength rating of C- (Weak) and the issuer credit rating of "cc" of United Security Life and Health Insurance Company (USL&H) (Bedford Park, IL). The revised outlook reflects USL&H's decision to exit the major medical line of business and the termination in March 2014 of the majority of its group major medical policies, combined with the sale of its unprofitable life insurance block and the liquidation of its entire equity portfolio in late 2013. The business profile of the organization is now less volatile. These changes will have a positive impact on the future profitability of the organization, especially as the major medical business was causing significant financial strain to USL&H. The decrease in liability reserves from the canceled major medical business and sold life block, in addition to the sale of the equity portfolio, are anticipated to bolster the company's risk-adjusted capital levels in 2014. A.M. Best will need to monitor the future strategic direction of the company going forward. Factors that could result in positive rating actions for USL&H include profitable premium revenue growth, the generation of sustained earnings and an improved absolute capital level. Conversely, negative rating actions could occur if the company reports net losses and/or a material deterioration in either absolute or risk-adjusted capital levels. UNIVERSITY HEMATOLOGY: Case Summary & 19 Top Unsecured Creditors ---------------------------------------------------------------- Debtor: University Hematology Oncology, Inc. FDBA University Hematology Oncology Group, Inc. 2325 Dougherty Ferry Road, Suite 204 Saint Louis, MO 63122 Case No.: 14-44407 Chapter 11 Petition Date: May 30, 2014 Court: United States Bankruptcy Court Eastern District of Missouri (St. Louis) Judge: Hon. Charles E. Rendlen III Debtor's Counsel: Tracy A. Brown, Esq. LAW OFFICE OF TRACY A. BROWN, PC 1034 S. Brentwood Blvd., Suite 1830 St. Louis, MO 63117 Tel: 314-644-0303 Fax: 314-644-0333 Email: tbrownfirm@bktab.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Dr. Shabbir H. Safdar, president. A list of the Debtor's 19 largest unsecured creditors is available for free at http://bankrupt.com/misc/moeb14-44407.pdf USEC INC: Disclosure Statement Hearing Adjourned to July 7 ---------------------------------------------------------- The hearing to consider approval of the disclosure statement explaining USEC Inc.'s plan of reorganization is adjourned to July 7, 2014, at 11:00 a.m. (Eastern Time) before Judge Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware. The deadline to object or respond to the adequacy or approval of the Disclosure Statement is now June 30. As reported by the Troubled Company Reporter on March 21, 2014, the Plan proposes, and its terms embody, a prearranged restructuring of the Debtor's obligations under (a) its 3.0% convertible senior unsecured notes due 2014, and (b) its preferred stock. Specifically, the Plan provides that, among other things, each holder of an allowed noteholder claim will receive its pro rata share of (i) 79.04% of the new common stock issued under the Plan, (ii) cash equal to the amount of the interest accrued on the old notes from the date of the last interest payment made by the Debtor before the Petition Date to the Effective Date, and (iii) new notes to be issued under the Plan in the aggregate principal amount of $200 million. USEC has obtained authority from the Bankruptcy Court to enter into an amended DIP Credit Agreement with its subsidiary United States Enrichment Corp. The primary modifications to the Original DIP Credit Agreement include the extension of the Maturity Date until the earlier of (x) the Plan Effective Date and (y) September 30, 2014 (which date may be extended by Enrichment Corp in its sole discretion). The Original DIP Credit Agreement would previously have matured on July 4, 2014. About USEC Inc. USEC Inc. filed a Chapter 11 bankruptcy petition (Bank. D. Del. Case No. 14-10475) on March 5, 2014. John R. Castellano signed the petition as chief restructuring officer. The Hon. Christopher S. Sontchi presides over the case. D. J. Baker, Esq., Rosalie Walker Gray, Esq., Adam S. Ravin, Esq., and Annemarie V. Reilly, Esq., at Latham & Watkins LLP, serve as the Debtor's general counsel. Amanda R. Steele, Esq., Mark D. Collins, Esq., and Michael J. Merchant, Esq., at Richards, Layton & Finger, P.A., serve as the Debtor's Delaware counsel. Vinson & Elkins is the Debtor's special counsel. Lazard Freres & Co. LLC acts as the Debtor's investment banker. AP Services, LLC, provides management services to the Debtor. Logan & Company Inc. serves as the Debtor's claims and noticing agent. Deloitte Tax LLP are the Debtor's tax professionals. The Debtor's independent auditor is PricewaterhouseCoopers LLP. KPMG LLP provides fresh start accounting services to the Debtors. VALEANT PHARMACEUTICALS: Moody's Keeps Rating over Allergen Deal ---------------------------------------------------------------- Moody's Investors Service commented that the most recently revised offer by Valeant Pharmaceuticals International, Inc. to acquire Allergan, Inc. would raise Valeant's financial leverage relative to the earlier offers, but that the proposed acquisition would still be credit positive for Valeant. Valeant is rated Ba3 with a developing outlook, and there is currently no impact on the ratings from the revised bid. Moody's notes, however, that the increasing amount of financial leverage in Valeant's bid reduces the degree of any upward pressure in Valeant's ratings if a deal is finalized. The principal methodology used in this rating was Global Pharmaceutical Industry published in December 2012. Headquartered in Laval, Quebec, Valeant Pharmaceuticals International, Inc. ("Valeant") is a global specialty pharmaceutical company with expertise in branded dermatology, eye health, neuroscience products, branded generics and OTC products. Valeant reported $5.8 billion in net revenues in 2013, which includes Bausch & Lomb only from the acquisition date of August 5, 2013. WALDMAN DIAMONDS: Files to Stop Seizure by Bank Leumi ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Alexander M. Waldman Diamond Co., a dealer in loose diamonds, filed a petition for Chapter 11 protection on May 30 in Manhattan to stop secured lender Bank Leumi USA from seizing the assets. According to the report, the company?s problems were caused by the loss-making operations of affiliate Waldman Diamonds Complete LLC, which closed last year. The affiliate, which made finished jewelry, also filed for bankruptcy protection, the report said. A Dec. 31 balance sheet shows assets of $13.5 million and $6.6 million owing to the bank, the report said. * Brokers Dodge Customer Complaints with Bankruptcy --------------------------------------------------- Mason Braswell, writing for Investment News, reported that bankruptcy protections afforded by federal law have frozen five customer complaints in which Scott Levine, a former John Thomas Financial broker, was named and which carry damage claims that could total nearly $5 million. According to the report, attorneys who represent investors said that the situation is indicative of an unintended consequence of Section 362 of the Bankruptcy Code, which freezes litigation and administrative actions and is designed to help those who face financial emergencies maintain their livelihood and get back on their feet. Instead, it could be allowing some brokers to remain in the business too long with customer complaints discharged in bankruptcy court or left open indefinitely, the report said. * Circuit Rules on Preservation of Voided Mortgage -------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Circuit Court of Appeals in Boston saved a bankrupt from losing her home as the result of the bank's failure to record a mortgage. According to the report, writing for the three-judge panel on the First Circuit, Circuit Judge Jeffrey R. Howard set aside the lower courts' conclusions in a May 23 opinion. He said that reversal comported with "any sense of fairness on these facts" and with the "most coherent reading we can make of a trustee's powers under the Bankruptcy Code." The case is DeGiacomo v. Traverse (In re Traverse), 13-9002, U.S. Court of Appeals for the First Circuit (Boston). * Efforts to Curb College Costs Face Resistance ----------------------------------------------- Josh Mitchell, writing for The Wall Street Journal, reported that Obama administration initiatives intended to help restrain soaring college costs are facing resistance from schools and from a bipartisan bloc of lawmakers looking to protect institutions in their districts. According to the report, groups representing colleges and universities formally opposed the administration's plan to more tightly oversee programs that officials say leave students in steep debt but with weak job prospects. The new rules cover for- profit schools along with career-training programs -- those that lead to certificates, but not degrees, in a given field, such as mechanics or cosmetology -- at public schools and nonprofits, the report related. A bipartisan group in Congress is seeking ways to kill the plan, which the administration wants to have in place by November, the report further related. * Wells Fargo Can't Shake L.A. Lawsuit Over Predatory Loans ----------------------------------------------------------- Edvard Pettersson, writing for Bloomberg News, reported that Wells Fargo & Co. lost a bid to throw out a lawsuit by Los Angeles in the city's renewed effort to hold mortgage lenders liable for record foreclosures during the collapse of the U.S. housing market. According to the report, U.S. District Judge Otis Wright II in Los Angeles, without ruling on the merits of the claims, on May 28 said the city's allegations that the bank targeted minority lenders with "predatory loans" were legally sufficient at this stage to proceed with the case. The second-largest U.S. city separately sued Wells Fargo, Citigroup Inc., and Bank of America Corp. last year, saying the three mortgage lenders engaged in discriminatory practices since at least 2004, placing minority borrowers in loans they couldn't afford and driving up the number of foreclosures in their neighborhoods, the report related. The case is City of Los Angeles v. Wells Fargo & Co., 13-cv-9007, U.S. District Court, Central District of California (Los Angeles). * LBOs Account for Nearly A Third of Defaults Since Crisis ---------------------------------------------------------- Law360 reported that cheap and easily available leverage before the financial crisis allowed private equity firms to undertake some of the biggest deals on record, but in recent years, some of the most highly levered deals are the source of much investor pain, according to a report from Fitch Ratings Inc. About 29 percent of all high-yield defaults since 2007 have been by companies that were the target of leveraged buyouts, or LBOs, Law360 said, citing Fitch. That has affected $55.3 billion in bonds and $64.5 billion in leveraged loans, Fitch says, but investors remain undeterred, report related. * Pa. Lawyer, Client Charged By Feds in Bankruptcy Fraud -------------------------------------------------------- Law360 reported that federal prosecutors charged a Pennsylvania attorney and his client in a bankruptcy scheme, alleging in an indictment that they worked together to conceal property before initiating the bankruptcy filing. According to the report, Pietro A. Barbieri, who practiced law as Barbieri and Associates, and Deborah Messner, both of Chester County, are accused of concealing the transfer of a car, divorce settlement proceeds and money spent to cover his legal fees before she filed for Chapter 7 in 2009. * Hangley Atty in Line to Nab Fed Bankruptcy Judgeship ------------------------------------------------------ Law360 reported that Hangley Aronchick Segal Pudlin & Schiller announced that shareholder Ashely M. Chan is in line to become a U.S. bankruptcy judge after winning the recommendation of a merit selection committee for the U.S. Bankruptcy Court for the Eastern District of Pennsylvania. According to the report, the merit selection committee, appointed by the Judicial Council of the Third Circuit to recommend candidates for a future vacancy, named Chan the most qualified for the position after widely publicizing the vacancy and interviewing numerous applicants. ********* 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 ***