/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/150805.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Wednesday, August 5, 2015, Vol. 16, No. 153 Headlines A R G E N T I N A BUENOS AIRES: Moody's Gives Caa1 GS LC Rating to ARS812MM Bonds B R A Z I L BRAZIL: Analysts Expect Economy to Contract 1.8% HSBC BANK BRAZIL: S&P Affirms 'BB+/B' Global Scale Ratings C A Y M A N I S L A N D S AFRICA HORIZONS: Creditors' Proofs of Debt Due Aug. 19 DB GLOBAL: Commences Liquidation Proceedings DIA MALLORCA: Creditors' Proofs of Debt Due Aug. 18 DRAYTON CAPITAL: Creditors' Proofs of Debt Due Aug. 14 DRIFFIELD LTD: Creditors' Proofs of Debt Due Oct. 2 ENZIAN WACHSTUM: Commences Liquidation Proceedings GIRANDOLA INVESTMENT: Creditors' Proofs of Debt Due Aug. 17 HAPPYMAR CO: Commences Liquidation Proceedings MALL A321: Commences Liquidation Proceedings SAAD INVESTMENTS: Cayman Proceedings Wins US Court Recognition TN SHIPS 1: Creditors' Proofs of Debt Due Aug. 12 D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Customs 1H Revenue Jumps 15.5% to US$113.3MM M E X I C O GRUPO KUO: S&P Revises Outlook to Negative & Affirms 'BB' CCR P A N A M A AES PANAMA: S&P Affirms 'BB-' CCR; Outlook Remains Stable P A R A G U A Y VISION BANCO: S&P Affirms 'BB-' Counterparty Credit Rating P E R U TERMINALES PORTUARIOS: S&P Affirms 'BB' Rating on Sr. Sec. Notes P U E R T O R I C O PUERTO RICO: Defaults on Most of $58 Million Debt Payment PUERTO RICO: Just Defaulted for First Time PUERTO RICO: S&P Lowers Ratings on 3 PFC Series Bonds to 'D' DORAL FINANCIAL: Investors' Suit vs. Wakeman, Wahlman Continues STANDARD REGISTER: Amends Statement of Financial Affairs - - - - - ================= A R G E N T I N A ================= BUENOS AIRES: Moody's Gives Caa1 GS LC Rating to ARS812MM Bonds --------------------------------------------------------------- Moody's Latin America Agente de Calificacion de Riesgo has assigned a Caa1 -- Global Scale local currency -- and Baa3.ar --on Argentina's National Scale-- ratings to the Province of Buenos Aires's Series III Local Market Bonds for ARS812 million. The ratings are in line with the province's long term local currency issuer ratings, which carry negative outlook. RATINGS RATIONALE The 2015 Local Market Bonds Program has been authorized by the Governor's Decrees 46 and 546/2015 and by Law 14.652 of the Province of Buenos Aires (2015 Budget Law). The notes to be issued under the program constitute direct, general, unconditional, secured and unsubordinated obligations of the province and the maximum amount to be issued under the new Series III represents 0.3% of total revenues budgeted for this fiscal year. The new Series III will be payable in Argentine pesos and sold entirely in the local capital market. This third Series will bear 28.5% fixed interest rate for the first three coupons, but variable for the remaining ones, will mature in 18 months and show bullet amortization. The assigned ratings are based on preliminary documentation received by Moody's as of the rating assignment date. Moody's does not expect changes to the documentation reviewed over this period or anticipates changes in the main conditions that the notes will carry. Should issuance conditions and/or final documentation of any of the series under this program deviate from the original ones submitted and reviewed by the rating agency, Moody's will assess the impact that these differences may have on the ratings and act accordingly. WHAT COULD CHANGE THE RATING UP/DOWN Given the negative outlook on the issuer ratings, Moody's does not expect upward pressures in the Province of Buenos Aires's ratings in the near to medium term. However, a change in Argentina's sovereign outlook back to stable could lead to a change in the outlook back to stable of the Province of Buenos Aires. Conversely, a sharp deterioration of the Province of Buenos Aires's financial results, coupled with higher debt levels could add downward pressure to the assigned ratings. The province of Buenos Aires could also be downgraded if the negative outlook on the sovereign rating materializes into a rating downgrade. =========== B R A Z I L =========== BRAZIL: Analysts Expect Economy to Contract 1.8% ------------------------------------------------ EFE News reports that Analysts expect Brazil's economy to contract by 1.8 percent this year, with the inflation rate hitting 9.25 percent, the Central Bank said. The gross domestic product (GDP) and inflation estimates come from the Boletin Focus, a weekly Central Bank survey of analysts from about 100 private financial institutions on the state of the national economy, according to EFE News. The report notes that the latest forecast is more pessimistic than the one released last week, when analysts expected the GDP to contract by 1.76 percent and inflation to hit 9.23 percent. Analysts' lack of confidence in Brazil's economy is based on the continuing drop in the value of the real against the dollar and the recent increase in the cost of public services, such as water, electricity and transportation, the report relates. The Central Bank will likely keep the benchmark interest rate at 14.25 percent to fight inflation, analysts said, the report notes. The report discloses that the government said in July that it would not meet the 1.1 percent primary fiscal surplus target it set for this year and the goal was now to cut public spending by the equivalent of 0.15 percent of GDP. The government plans to slash the budget by BRL8.6 billion ($2.66 billion), a move that will further slow economic activity and deepen the contraction, the report says. Brazil's economy grew by just 0.10 percent in 2014, notes the report. HSBC BANK BRAZIL: S&P Affirms 'BB+/B' Global Scale Ratings ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+/B' global scale ratings on HSBC Bank Brasil S.A. The ratings remain on Credit Watch developing. Following the announcement on Aug. 3, 2015 that HSBC Holdings Plc reached an agreement to sell its Brazilian subsidiary HSBC Bank Brasil S.A. to Banco Bradesco S.A., S&P is changing the group status on HSBC Brazil to "nonstrategic" from "moderately strategic"" to HSBC Holdings Plc. The group status change does not impact the issuer credit rating on HSBC Brasil because the bank now incorporates one notch of uplift from its SACP due to its "moderate" likelihood of support from the government given its "moderate" systemic importance to the Brazilian financial system. The CreditWatch Developing on HSBC Bank Brasil S.A. reflects the potential uplift to the ratings should authorities approve the transaction. If this occurs, S&P would then decide which level of support from Bradesco S&P would incorporate into HSBC Brasil's SACP. Alternatively, S&P could lower HSBC Bank Brasil ratings if the acquisition is not approved by the regulators and the bank's credit fundamentals deteriorate, particularly its business position and funding, in turn hurting it SACP. In this scenario, it would not be able to count on parent support and S&P would review its systemic importance. ========================== C A Y M A N I S L A N D S ========================== AFRICA HORIZONS: Creditors' Proofs of Debt Due Aug. 19 ------------------------------------------------------ On July 7, 2015, the shareholders of Africa Horizons L.P. resolved to voluntarily liquidate the company's business. Creditors are required to file their proofs of debt by Aug. 19, 2015, to be included in the company's dividend distribution. The company's liquidator is: DMS Corporate Services Ltd. c/o Nicola Cowan Telephone: (345) 946 7665 Facsimile: (345) 949 2877 dms House, 2nd Floor P.O. Box 1344, Grand Cayman KY1-1108 Cayman Islands DB GLOBAL: Commences Liquidation Proceedings -------------------------------------------- On June 25, 2015, the shareholders of DB Global Master (Noetic Equity Long/Short) Fund Ltd resolved to voluntarily liquidate the company's business. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Delta FS Limited c/o Andrew Edgington Telephone: (345) 743 6630 Harbour Place, 5th Floor 103 South Church Street P.O. Box 11820 Grand Cayman KY1-1009 Cayman Islands DIA MALLORCA: Creditors' Proofs of Debt Due Aug. 18 --------------------------------------------------- The creditors of Dia Mallorca Leasing Ltd. are required to file their proofs of debt by Aug. 18, 2015, to be included in the company's dividend distribution. The company commenced liquidation proceedings on July 9, 2015. The company's liquidators are: Benjamin Booker Marguerite Britton P.O. Box 1043 Grand Cayman KY1-1102 Cayman Islands Telephone: (345) 640-6600 DRAYTON CAPITAL: Creditors' Proofs of Debt Due Aug. 14 ------------------------------------------------------ The creditors of Drayton Capital Limited are required to file their proofs of debt by Aug. 14, 2015, to be included in the company's dividend distribution. The company's liquidator is: Alric Lindsay Telephone: (345) 926-1688 Artillery Court Shedden Road P.O. Box 11371 George Town Grand Cayman KY1-1008 Cayman Islands DRIFFIELD LTD: Creditors' Proofs of Debt Due Oct. 2 --------------------------------------------------- The creditors of Driffield Ltd. are required to file their proofs of debt by Oct. 2, 2015, to be included in the company's dividend distribution. The company commenced liquidation proceedings on July 9, 2015. The company's liquidator is: Westport Services Ltd. c/o Dominique Massias Telephone: (345) 949 5122 Facsimile: (345) 949 7920 P.O. Box 1111 Grand Cayman KY1-1102 Cayman Islands ENZIAN WACHSTUM: Commences Liquidation Proceedings -------------------------------------------------- On July 3, 2015, the shareholder of Enzian Wachstum Aktiv resolved to voluntarily liquidate the company's business. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Doran + Minehane Telephone: 00353 61 413200 Facsimile: 00353 61 408613 Crescent House, 4th Floor Hartstonge Street Limerick Ireland GIRANDOLA INVESTMENT: Creditors' Proofs of Debt Due Aug. 17 ----------------------------------------------------------- The creditors of Girandola Investment Ltd. are required to file their proofs of debt by Aug. 17, 2015, to be included in the company's dividend distribution. The company commenced wind-up proceedings on July 8, 2015. The company's liquidator is: Morval Bank & Trust Cayman Ltd. Telephone: +1 (345) 949-9808 P.O. Box 30622 Grand Cayman KY1-1203 Cayman Islands HAPPYMAR CO: Commences Liquidation Proceedings ---------------------------------------------- On July 8, 2015, the shareholders of Happymar Co. Ltd. resolved to voluntarily liquidate the company's business. Only creditors who were able to file their proofs of debt by July 31, 2015, will be included in the company's dividend distribution. The company's liquidators are: Nicholas Quin Sarah Turnbull CDL Company Ltd. P.O. Box 31106 Grand Cayman KY1-1205 Cayman Islands MALL A321: Commences Liquidation Proceedings -------------------------------------------- On June 30, 2015, the shareholders of Mall A321 Partners, LDC resolved to voluntarily liquidate the company's business. Creditors are required to file their proofs of debt to be included in the company's dividend distribution. The company's liquidator is: Macquarie Aircraft Leasing Services (US), Inc. Suite 200, Two Embarcadero Center San Francisco, CA 94111, USA Telephone: +1 (345) 914 6365 SAAD INVESTMENTS: Cayman Proceedings Wins US Court Recognition -------------------------------------------------------------- The Hon. James L. Garrity, Jr., of the U.S. Bankruptcy Court for the Southern District of New York approved the request of recognition of Saad Investments Company Limited's liquidation proceedings pending before the Grand Court of the Cayman Islands, Financial Services Division filed by the joint official liquidators of SICL. As reported in the Troubled Company Reporter on July 2, 2015, the Joint Official Liquidators -- Hugh Dickson of Grant Thornton Specialist Services (Cayman) Limited and Stephen Akers and Mark Byers of Grant Thornton U.K. L.L.P -- are in the midst of a lengthy and complex liquidation process based in the Cayman Islands for which they are the sole persons authorized to act on SICL's behalf. SICL's multibillion-dollar liquidation is international in scale and has been in progress for almost six years. The Cayman Island Proceeding involves over $9.7 billion in assets and about $3.754 billion in liabilities, stemming from holdings and obligations located in multiple jurisdictions in the Caribbean, Europe, Australia, and Middle East. Accordingly, in carrying out their duties, the JOLs have already sought and received recognition of the Cayman Islands Proceeding as a foreign main proceeding in multiple jurisdictions, including in England and Australia, and brought various legal proceedings to recover SICL's assets on behalf of creditors. To date, they have recovered over $450 million in assets. The JOLs seek recognition of the Cayman Islands Proceeding to efficiently administer SICL's assets and investigate SICL's affairs in the United States. There are multiple foreign proceedings related to the Cayman Islands Proceeding that have already received recognition as foreign main proceedings in U.S. court. First is Saad Investments Finance Company (No. 5) Limited, which is a wholly owned subsidiary of SICL and also in official liquidation in the Cayman Islands. Due to a conflict, Petitioners were not appointed as Joint Official Liquidators of Saad Investments Finance Company (No. 5) Limited; instead Mark Longbottom and Nicholas Paul Matthews of Kinetic Partners were appointed as the entity's Joint Official Liquidators. Saad Investments Finance Company (No. 5) Limited's Cayman Islands insolvency proceeding was recognized as a foreign main proceeding by order of the Bankruptcy Court for the District of Delaware, Case No. 09-13985-KG, Docket No. 39, Dec. 4, 2009. The second related proceeding is Awal Bank, BSC, which is a foreign banking corporation incorporated in the Kingdom of Bahrain. SICL is a 48% shareholder of Awal Bank. On July 30, 2009, the Central Bank of Bahrain placed Awal Bank into administration and appointed Charles Russell, a British law firm with a Bahrain office, as External Administrator. Awal Bank's Bahrain insolvency proceeding was recognized as a foreign main proceeding by order of the Bankruptcy Court for the Southern District of New York, Case No. 09-15923 (ALG), Docket No. 18, October 28, 2009. Subsequently, Awal Bank filed a voluntary petition under chapter 11 of the Bankruptcy Code also in the Bankruptcy Court for the Southern District of New York, Case No. 10-15518 (ALG). Finally, there is a third set of proceedings for seven of Awal Bank's subsidiaries -- Awal Master Fund, Awal Finance Company Limited, Awal Feeder 1 Fund Limited, Awal Finance Company (No. 2) Limited, Awal Finance Company (No. 3) Limited, Awal Finance Company (No. 4) Limited, and Awal Finance Company (No. 5) Limited (collectively, the "Awal Subsidiaries"). Each of the Awal Subsidiaries has liquidation proceedings in the Cayman Islands. Chris Johnson, Russell Homer, Bruce Alexander MacKay, and Geoffrey Lambert Carton-Kelly were appointed as the Joint Official Liquidators of the Awal Subsidiaries. The Awal Subsidiaries' Cayman Islands proceedings were recognized by order of the Bankruptcy Court for the Southern District of New York, Case No. 15-10652 (MEW), on May 5, 2015. About Saad Investments Saad Investments Company Limited is the main holding company of a group of Saad entities. The Saad Group's Chairman and SICL's beneficial owner is Maan Al-Sanea of Saudi Arabia. According to Forbes magazine, Al-Sanea's net worth was once $7 billion, ranking him as the world's 62nd richest person. SICL's stated purpose was to hold and manage Al-Sanea's non-Saudi Arabian assets, including a portfolio consisting of equities, funds, interest bearing securities, and real estate. The joint official liquidators of SICL filed a Chapter 15 petition (Bankr. S.D.N.Y. Case No. 15-11440) in Manhattan in the United States on May 29, 2015, to seek recognition of SICL's winding up proceedings in the Cayman Islands. The U.S. case is assigned to Judge James L. Garrity Jr. Randall Adam Swick, Esq., at Reid Collins & Tsai LLP, serves as counsel in the U.S. case. TN SHIPS 1: Creditors' Proofs of Debt Due Aug. 12 ------------------------------------------------- The creditors of TN Ships 1 Limited are required to file their proofs of debt by Aug. 12, 2015, to be included in the company's dividend distribution. The company commenced liquidation proceedings on July 9, 2015. The company's liquidator is: Appleby Trust (Cayman) Ltd. c/o Richard Gordon Telephone: +1 (345) 949 4900 75 Fort Street P.O. Box 1350 Grand Cayman KY1-1108 Cayman Islands =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Customs 1H Revenue Jumps 15.5% to US$113.3MM ---------------------------------------------------------------- Dominican Today reports that Dominican Republic Customs Agency revenue from January to July jumped 15.5% to RD$51.0 billion (US$113.3 million), or RD$6.8 billion more than the same period a year ago. Revenue was RD$8.4 billion just in July, a 18.4% increase, or RD$1.3 billion more than the same month in 2014, according to Dominican Today. In a statement released Aug 2, Customs said revenue was 8.6% higher (RD$660.9 million) than the National Budget estimate of RD$7.7 billion, the report adds. =========== M E X I C O =========== GRUPO KUO: S&P Revises Outlook to Negative & Affirms 'BB' CCR ------------------------------------------------------------- Standard & Poor's Ratings Services said that it revised its outlook to negative from stable on Mexico-based consumer goods, chemicals and auto parts producer Grupo KUO, S.A.B. de C.V. (KUO). At the same time, S&P affirmed the 'BB' global scale and 'mxA' national scale corporate credit ratings. S&P also affirmed the 'BB' global scale and 'mxA' national scale issue-level rating on the company's senior unsecured notes. The '3' recovery rating on the senior unsecured debt remains unchanged, indicating S&P's expectation for meaningful (upper half of the 50% to 70% range) recovery in the event of payment default. S&P subsequently withdrew the ratings on the MXN 700 million (about $50 million) "KUO10" senior unsecured notes (Certificados Bursatiles) originally due on November 2015, following the complete repayment of balance outstanding. The company repaid the balance using part of the proceeds from a new credit facility for MXN 1,000 million (about $65 million) due 2020 granted by Bank of America, N.A. on July, 20, 2015, which will not rate. The outlook revision reflects S&P's view that the company's credit quality has deteriorated as a result of softer macroeconomic conditions, depressed oil prices and the corresponding impact of petrochemical products prices, and foreign exchange rate volatility. Consequently, the key credit metrics' performance has been below S&P's previous expectations. Although S&P anticipates an improvement in the next two years, it believes that improvement might be slower or curtailed by heightened foreign exchange volatility and sluggish oil price recovery. S&P's negative outlook reflects the risk that the company might not improve performance to levels where credit measures will be appropriate for current ratings and that these could even further deteriorate if business conditions worsen, leading potentially to lower its financial risk profile. The negative outlook reflects S&P's view that if business conditions continue to weaken, particularly raw materials prices and foreign exchange volatility, the company's credit metrics could further deteriorate in 2015 and 2016. S&P could lower the ratings if KUO's operating performance declines, weakening its financial performance. This could stem from softer economic conditions, or further volatility in raw materials prices and foreign exchange, driving the company's total consolidated debt to EBITDA to exceed 4.0x without considering the recognition of JV results. S&P could revise the outlook to stable if the company's key credit metrics perform in line with S&P's projected base case scenario, evidenced by a total consolidated debt to EBITDA between 3.0x and 3.5x without considering the recognition of JV results on a consistent basis. =========== P A N A M A =========== AES PANAMA: S&P Affirms 'BB-' CCR; Outlook Remains Stable --------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'BB-' corporate credit and issue-level ratings on AES Panama S.R.L. The outlook remains stable. "Our ratings on AES Panama reflect our assessment of its 'b+' stand-alone credit profile SACP. The SACP is based on the company's "fair" business risk profile and "aggressive" financial risk profile, as our criteria define these terms. It also reflects the company's "less than adequate" liquidity," S&P said. The stable outlook reflects S&P's expectation that AES Panama's adjusted FFO to debt and adjusted debt to EBITDA will strengthen through 2015 and 2016 due to increased generation, resulting in lower purchases in the spot market. S&P expects FFO to debt to be 7% in 2015 and 16% in 2016 and adjusted debt to EBITDA to be 6.7x and 3.6x, respectively. Because AES Panama is a government-related entity, a downgrade is possible if S&P was to revise its SACP downward by more than one notch. This could result from sustained FFO to debt of less than 12%. An upgrade would require the company's adjusted debt to EBITDA to remain below 5.0x. An improvement in the company's liquidity to S&P's "adequate" assessment could also lead to an upgrade. =============== P A R A G U A Y =============== VISION BANCO: S&P Affirms 'BB-' Counterparty Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'BB-' long-term counterparty credit rating on Vision Banco S.A.E.C.A. (Vision). At the same time, S&P revised the outlook to stable. The ratings on Vision reflect S&P's view of the bank's "adequate" business position among banks in Paraguay, its "moderate" capital and earnings (based on S&P's forecasted RAC ratio), and its "adequate" risk position, given its asset quality metrics. S&P also incorporates its assessment of its "above average" funding due to its well-diversified and stable deposit base, and its "adequate" liquidity, with liquidity metrics in line with other rated banks in the country. The rating on the bank is the same as the SACP, 'bb-', because S&P do not incorporate notching from external support (neither from the government nor from the group). The stable outlook reflects S&P's expectation that the bank will consolidate its RAC ratios at moderate levels for the next 12-18 months, gradually improve its asset quality metrics, and maintain its adequate business and funding and liquidity profiles. S&P could take a negative action on the ratings if improvements in capital ratios do not materialize as expected, with RAC ratio before diversification above 5%, and/or if asset quality metrics significantly deteriorate. A ratings upside is limited, at this point, by S&P's BICRA on Paraguay. S&P would need to see improvements in its assessment on Paraguay's banking industry, while the bank's credit factors remain constant, in order to upgrade the ratings. ======= P E R U ======= TERMINALES PORTUARIOS: S&P Affirms 'BB' Rating on Sr. Sec. Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' rating on Terminales Portuarios Euroandinos Paita's senior secured notes due 2037. The outlook remains stable. The rating affirmation reflects the port's higher traffic volume following its expansion. Therefore, financial performance continues to be in line with S&P's expectations. The rating on the bonds continues to reflect the project's strengths: -- A favorable concession agreement with a clear mechanism of tariff adjustment, service quality, and mandatory investments, with a detailed time schedule and triggers properly defined in terms of capacity reached. -- No exposure to construction risk because the new berth works were completed on time and within budget in the last quarter of 2014. -- Relatively low operating risk and sound minimum and average debt service coverage ratio (DSCR) of 1.3x and 2.3x, respectively. Several weaknesses mitigate these strengths: -- The project's exposure to the volatile commodity and container trade volumes because potential decreases in traffic levels and/or regional production could hinder TPE's revenues. -- Small scale of operations compared with other ports in the region. -- Relatively concentrated customer base. As of December 2014, TPE's top 10 clients generated more than 70% of its consolidated revenues. -- Exposure to climatic factors, such as the El Nino phenomenon, which are beyond TPE's control. ====================== P U E R T O R I C O ====================== PUERTO RICO: Defaults on Most of $58 Million Debt Payment --------------------------------------------------------- Aaron Kuriloff at The Wall Street Journal reports Puerto Rico missed most of a $58 million bond payment, marking the first default by the U.S. commonwealth and escalating its attempt to restructure about $72 billion in debt. The payment to bondholders is the first skipped since Gov. Alejandro Garcia Padilla in June said the island's debts were unsustainable and urged negotiations with creditors, which range from individuals to hedge funds, according to The WSJ. The WSJ notes analysts said the missed payment isn't likely to provoke an acute marketwide reaction from investors, many of which have been inching away for the commonwealth for years amid dire economic news. But the episode is the latest confirmation that Puerto Rico doesn't have the money to meet all of its coming obligations, said Emily Raimes, vice president at Moody's Investors Service. "This is a first in what we believe will be broad defaults on commonwealth debt," The WSJ quoted Ms. Raimes as saying. The WSJ notes that the Government Development Bank for Puerto Rico said the island's legislature didn't set aside money for the appropriation bonds, a decision that reflects "serious concerns about the Commonwealth's liquidity" and its need to balance paying bondholders with maintaining essential services, according to a news release from the bank. The bank did pay about $628,000 remaining from prior funds, The WSJ relays. The nonpayment is another setback for investors in debt from Puerto Rico, which is struggling with a decade of economic stagnation and high unemployment, underscoring the commonwealth's effort to prioritize payments as it attempts to preserve its cash and avoid a government shutdown, The WSJ relays. About half of municipal-bond mutual funds in the U.S. have exposure to Puerto Rico, according to research firm Morningstar Inc. The WSJ discloses that those investors have already suffered losses as the commonwealth's credit ratings fell to junk in recent years and bond prices plummeted. Some Puerto Rico bonds sold in 2014 traded Aug. 3 at about 69.25 cents on the dollar, down from about 73 cents in mid-July, according to Thomson Reuters Municipal Market Data, the report notes. The corporation's missed payment suggests how Puerto Rico may treat different forms of debt going forward, said John Miller, co- head of fixed income at Nuveen Asset Management LLC in Chicago, which manages about $100 billion in tax-exempt bonds, says WSJ. Investors in the appropriation bonds have little recourse because the bonds are backed only by the legislature's willingness to find the money for them. Other bonds have greater legal protections. "It is somewhat meaningful that this is their first monetary default," Mr. Miller said, WSJ relays. "However, if people have been paying attention to the plans, this was anticipated, and it doesn't really change the orchestrated direction that the government's taking." The WSJ notes that direction has even some former boosters backing away. Monarch Alternative Capital LP, which at one point had about 5% of its now $5 billion under management invested in the commonwealth's general-obligation bonds, told investors late last week that it sold off part of the position in recent weeks. "We believe that the probability of a default scenario has significantly increased and could risk extending the timeline for a resolution to the island's situation," co-founder Michael Weinstock and other firm executives wrote to investors in a letter reviewed by WSJ. In particular, he flagged the firm's discussions with the island's political leadership. "We ultimately came to the view that the sentiment of Puerto Rico's leadership had shifted and that they would be unwilling to implement the fiscal reform measures needed to regain the market's confidence and avoid a potential default," the letter said, WSJ notes. A group of Puerto Rico policy makers are working on a restructuring plan and scheduled to present their findings at the end of August, says the report. Creditors, including mutual funds, hedge funds and other distressed-debt investors, have been splitting into committees based on which bonds they own. The WSJ discloses that Puerto Rico has said its debt includes about $18.6 billion of general-obligation bonds and government- guaranteed debt, $15.2 billion of sales-tax-backed bonds and $24.1 billion of bonds issued by government agencies, like the Puerto Rico Electric Power Authority, which is already negotiating a restructuring with creditors. Many investors hold bonds across the different sectors, which could recover different amounts in a restructuring. The restructuring process is uncertain in part because Puerto Rico is neither a U.S. state nor a sovereign nation, The WSJ says. The report relays that all states are barred from filing for bankruptcy, but cities, such as Detroit, can seek protection under chapter 9 of the U.S. bankruptcy code. Puerto Rico is lobbying the U.S. Congress for a law allowing some of its entities to access chapter 9 protections. Until such a law passes, the island's leaders must negotiate with creditors without that process. Matt Fabian, partner at research firm Municipal Market Analytics, Concord, Mass., said that while worries about Puerto Rico have had little impact on the broader market for municipal bonds, a missed payment could spur new selling in other commonwealth debt, WSJ adds. "The Puerto Rico market is huge and diverse," the report quoted Mr. Fabian as saying. "You have to presume there will be some knock-on selling," Mr. Fabian added. As reported in the Troubled Company Reporter-Latin America on July 3, 2015, Moody's Investors Service has downgraded the Commonwealth of Puerto Rico's general obligation (GO) and guaranteed bonds as well as its senior lien Sales Tax Financing Corporation (Sr COFINA) bonds to Caa3 from Caa2. Moody's also lowered ratings assigned to other securities, including bonds of the Puerto Rico Aqueduct and Sewer Authority, which also were downgraded to Caa3 from Caa2. Bonds already in the Ca category were affirmed at that level. In all, about $55.5 billion was affected by these actions. With the GO rating action, the seventh downgrade in the past five years, the commonwealth's rating has declined 12 notches since 2011. The outlook for all affected securities remains negative. PUERTO RICO: Just Defaulted for First Time ------------------------------------------ CNN Money reports that Puerto Rico just went into default for the first time in its history. The commonwealth paid a mere $628,000 toward a $58 million debt bill due Aug. 3 to creditors of its Public Finance Corporation, according to CNN Money. This will hurt the island's residents, not Wall Street. The debt is mostly owned by ordinary Puerto Ricans through credit unions, notes the report. "This was a decision that reflects the serious concerns about the Commonwealth's liquidity in combination with the balance of obligations to our creditors and the equally important obligations to the people of Puerto Rico," Puerto Rico's Government Development Bank president Melba Acosta Febo said in a statement obtained by the news agency. The report relays that the default is a historic moment in Puerto Rico's economic "death spiral," a term the island's governor, Alejandro Garcia Padilla, has used. The island is struggling with about $70 billion in total outstanding debt, and its economy is in recession. The report relays that Mr. Padilla has put together a team to come up with a plan to restructure Puerto Rico's debt crisis by the end of the summer. According to CNN Money, Puerto Ricans are leaving the island in droves in search of jobs and stability. Unemployment is high, the economy is shrinking and the future looks shaky. The report notes that Puerto Rico had to make a monthly debt payment of $483 million. Puerto Rico paid all its debt due except the $58 million due to creditors of its Public Finance Corporation, the report relays. The government is strategically choosing not to pay the PFC debt because the entities that own the debt, credit unions and ordinary Puerto Ricans, have little legal power to fight back in court. "This is a first in what we believe will be broad defaults on commonwealth debt," said Emily Raimes of Moody's Investors Service. The other debt -- some of which is owned by Wall Street hedge funds and hence has more legal clout -- was paid on Aug. 3, the report discloses. Puerto Rico has the same amount of outstanding debt as New York. Yet its economy -- worth $69 billion -- is just a fraction of the Empire State's $1.2 trillion, the report relays. The economy is also in a big mess. Unemployment is more than double the rate in the mainland United States, the report relays. And with Puerto Ricans leaving the island in droves to look for jobs on the mainland, it only shrinks the tax base further, making it harder for the island to pay its debts, the report says. Meanwhile, the report relays that just when you think it can't get worse, Puerto Rico is going through a bad drought. The government is rationing water, adds the report. As reported in the Troubled Company Reporter-Latin America on July 3, 2015, Moody's Investors Service has downgraded the Commonwealth of Puerto Rico's general obligation (GO) and guaranteed bonds as well as its senior lien Sales Tax Financing Corporation (Sr COFINA) bonds to Caa3 from Caa2. Moody's also lowered ratings assigned to other securities, including bonds of the Puerto Rico Aqueduct and Sewer Authority, which also were downgraded to Caa3 from Caa2. Bonds already in the Ca category were affirmed at that level. In all, about $55.5 billion was affected by these actions. With the GO rating action, the seventh downgrade in the past five years, the commonwealth's rating has declined 12 notches since 2011. The outlook for all affected securities remains negative. PUERTO RICO: S&P Lowers Ratings on 3 PFC Series Bonds to 'D' ------------------------------------------------------------ Standard & Poor's Ratings Services has lowered its rating on $1.0 billion of Puerto Rico Public Finance Corporation (PFC) series 2011A, 2011B, and 2012A bonds to 'D' from 'CC' following a payment default on the bonds as of the close of business Aug. 3, 2015, the first business day following the Aug. 1 stated due date, which fell on a Saturday. Although a partial payment of $628,000 in interest was made Aug. 3, the amount was far short of the $58 million of principal and interest due. S&P assigns a rating of 'D' to obligations in default of full and timely debt service on their due date, unless S&P believes that such payments will be made within five business days. This first default by Puerto Rico on tax-supported debt represents a significant departure from Puerto Rico's past practice of timely funding of debt service. S&P believes the default signals severe liquidity distress, whereby Puerto Rico must now choose among which financial obligations it can honor, and presages other possible defaults as liquidity becomes further constrained during the next few months. The default follows the legislature's decision not to appropriate debt service for these bonds in its fiscal 2016 budget. In S&P's view, Puerto Rico's decision to deliberately miss the PFC bonds' relatively small $58 million debt service payment, compared to annual revenues of about $9 billion, indicates that short-term liquidity distress has taken priority over preserving access to debt markets. S&P believes the small, short-term improvement in liquidity will come at the cost of investors' worsened perception of Puerto Rico's willingness to pay debt, at a time when Puerto Rico needs cash flow financing to avoid running out of cash in the next few months. Last year Puerto Rico sold $1.2 billion of fiscal 2015 cash flow notes; the $703 million general fund operating deficit recently disclosed for the fiscal year ended June 30, 2015, has likely placed additional liquidity pressure on the commonwealth. S&P believes the PFC default may further impede Puerto Rico's ability to obtain financing for cash flow needs. S&P believes these bonds may have been selected due to their limited recourse for PFC bondholders in the event of legislative non-appropriation; the 2016 budget does appropriate debt service for other series of bonds. In addition, the Aug. 1 PFC payment represented the start of principal repayment for the PFC bonds, for $36.3 million, and thus an increase in debt service from previous years' PFC interest-only payments. DORAL FINANCIAL: Investors' Suit vs. Wakeman, Wahlman Continues --------------------------------------------------------------- In the case captioned ROBERT BLUE, Individually and on Behalf of All Others Similarly Situated, Plaintiffs, v. DORAL FINANCIAL CORPORATION, GLEN R. WAKEMAN, ROBERT E. WAHLMAN, PENKO IVANOV, DAVID HOOSTON, ENRIQUE R. UBARRI-BARAGANO and CHRISTOPHER C. POULTON, Defendants, CIVIL NO. 14-1393 (GAG) (D.P.R.), Judge Gustavo A. Gelpi of the United States District Court for the District of Puerto Rico granted in part and denied in part a motion to dismiss, and, subsequently, dismissed the case against the individual defendants, except for Glen R. Wakeman and Robert E. Wahlman against whom the case continues. A putative class action lawsuit was filed on behalf of investors against the holding company of Doral Bank, Doral Financial Corporation, and several current and prior company executives. The complaint alleged that the plaintiffs purchased common stock of Doral between April 2, 2012, and May 1, 2014, at prices that were artificially inflated by the defendants' false and misleading statements. The defendants moved to dismiss the complaint pursuant to the Private Securities Litigation Reform Act of 1995 and Federal Rules of Civil Procedure 9(b) and 12(b)(6), arguing that the plaintiffs failed to state a single claim under the applicable federal securities laws upon which relief can be granted. Judge Gelpi analyzed the motion to dismiss only as to the individual defendants because the case against Doral was automatically stayed when it filed a voluntary petition under Chapter 11 of the Title 11 of the Bankruptcy Code. Judge Gelpi found that the allegations regarding Wakeman and Wahlman's participation in the fraudulent scheme by knowingly manipulating the ALLL and PLLL that was reported in the numerous SEC filings, conference calls, and press releases are sufficient to meet the heightened pleading standards for scienter. However, Judge Gelpi found that with the remaining defendants, the plaintiffs failed to plead their involvement in the purported fraudulent scheme with the particularity required under Rule 9(b) and the Private Securities Litigation Reform Act of 1995. A full-text copy of Judge Gelpi's July 22, 2015 opinion and order is available at http://is.gd/gyQmVNfrom Leagle.com. Robert Blue is represented by: Erin W. Boardman, Esq. Robert M. Rothman, Esq. ROBBINS GELLER RUDMAN & DOWD LLP 58 South Service Road, Suite 200 Melville, NY 11747 Tel: (631) 367-7100 Fax: (631) 367-1173 Email: eboardman@rgrdlaw.com rrothman@rgrdlaw.com -- and -- Frank J. Johnson, Esq. JOHNSON & WEAVER, LLP 600 West Broadway, Suite 1540 San Diego, CA 92101 Tel: (619) 230-0063 Fax: (619) 255-1856 Email: frankj@johnsonandweaver.com -- and -- Andres W. Lopez, Esq. THE LAW OFFICES OF ANDRES W. LOPEZ, P.S.C. John Dalessandro is represented by: Erin W. Boardman, Esq. ROBBINS GELLER RUDMAN & DOWD LLP 58 South Service Road, Suite 200 Melville, NY 11747 Tel: (631) 367-7100 Fax: (631) 367-1173 -- and -- Francis McConville, Esq. Jeremy A. Lieberman, Esq. POMERANTZ, LLP 600 Third Avenue New York, NY 10016 Tel: (212) 661-1100 Fax: (212) 661-8665 Email: jalieberman@pomlaw.com -- and -- Frank J. Johnson, Esq. JOHNSON & WEAVER, LLP 600 West Broadway, Suite 1540 San Diego, CA 92101 Tel: (619) 230-0063 Fax: (619) 255-1856 -- and -- Jorge E. Perez-Casellas, Esq. Andres W. Lopez, Esq. THE LAW OFFICES OF ANDRES W. LOPEZ, P.S.C. Timothy Stump and are represented by: Francis McConville, Esq. POMERANTZ, LLP Mordechai Hakim represented by: Eric M. Quetglas-Jordan, Esq. QUETGLAS LAW OFFICE #1021 Ashford Ave., 2nd Floor Condado, PR 00908 Tel: (787) 722-0635 Fax: (787) 725-3970 -- and -- Kara M. Wolke, Esq. Leanne E. Heine-Solish, Esq. Lionel Z. Glancy, Esq. Peter A. Binkow, Esq. GLANCY PRONGAY & MURRAY LLP 1925 Century Park East Suite 2100 Los Angeles, CA 90067 Tel: (310) 201-9150 Fax: (310) 432-1495 Email: kwolke@glancylaw.com lheine@glancylaw.com lglancy@glancylaw.com pbinkow@glancylaw.com -- and -- Robert M. Rothman, Esq. ROBBINS GELLER RUDMAN & DOWD LLP 58 South Service Road, Suite 200 Melville, NY 11747 Tel: (631) 367-7100 Fax: (631) 367-1173 Email: rrothman@rgrdlaw.com Doral Financial Corporation, Glenn R. Wakeman, Robert E. Wahlman, Penko Ivanov, David Hooston, Enrique R. Ubarri-Baragano, and Christopher C. Poulton are represented by: Anthony Antonelli, Esq. Kevin P. Broughel, Esq. Kevin C. Logue, Esq. Shahzeb Lari, Esq. PAUL HASTINGS LLP 75 East 55th Street New York, NY 10022 Tel: (212) 318-6000 Fax: (212) 319-4090 Email: anthonyantonelli@paulhastings.com kevinbroughel@paulhastings.com shahzeblari@paulhastings.com Jose A. Acosta-Grubb, Esq. Jose L. Ramirez-Coll, Esq. FIDDLER GONZALEZ & RODRIGUEZ, P.S.C. 254 Munoz Rivera Ave. 6th floor Hato Rey, PR 00918 Tel: (787) 753-3113 Email: jacosta@fgrlaw.com jramirez@fgrlaw.com About Doral Financial Doral Financial Corporation is a holding company whose primary operating asset was equity in Doral Bank. DFC maintains offices in New York City, Coral Gables, Florida and San Juan, Puerto Rico. DFC has three wholly-owned subsidiaries: (i) Doral Properties, Inc., (ii) Doral Insurance Agency, LLC ("Doral Insurance"), and (iii) Doral Recovery, Inc. On Feb. 27, 2015, regulators placed Doral Bank into receivership and named the Federal Deposit Insurance Corp. as receiver. Doral Bank served customers through 26 branches located in New York, Florida, and Puerto Rico. DFC sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 15-10573) in Manhattan on March 11, 2015. The case is assigned to Judge Shelley C. Chapman. DFC estimated $50 million to $100 million in assets and $100 million to $500 million in debt as of the bankruptcy filing. The Debtor tapped Ropes & Gray LLP as counsel. The Debtor's Chapter 11 plan and Disclosure Statement are due July 9, 2015. The initial case conference is set for April 10, 2015. The U.S. trustee overseeing the Chapter 11 case of Doral Financial Corp. appointed five creditors of the company to serve on the official committee of unsecured creditors. STANDARD REGISTER: Amends Statement of Financial Affairs -------------------------------------------------------- Standard Register Co. filed with the U.S. Bankruptcy Court for the District of Delaware an amended statement of financial affairs. A full-text copy of the amended statement is available for free at http://is.gd/DBfVfq About Standard Register Standard Register provides market-specific insights and a compelling portfolio of workflow, content and analytics solutions to address the changing business landscape in healthcare, financial services, manufacturing and retail markets. The Company has operations in all U.S. states and Puerto Rico, and currently employs 3,500 full-time employees and 16 part-time employees. The Standard Register Company and 10 affiliated debtors sought Chapter 11 protection in Delaware on March 12, 2015, with plans to launch a sale process where its largest secured lender would serve as stalking horse bidder in an auction. The cases are pending before the Honorable Judge Brendan L. Shannon and are jointly administered under Case No. 15-10541. The Debtors have tapped Gibson, Dunn & Crutcher LLP and Young Conaway Stargatt & Taylor LLP as counsel; McKinsey Recovery & Transformation Services U.S., LLC, as restructuring advisors; and Prime Clerk LLC as claims agent. The Official Committee of Unsecured Creditors tapped Lowenstein Sandler LLP as its counsel and Jefferies LLC as its exclusive investment banker. *********** Monday's edition of the TCR-LA delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-LA 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-LA constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-LA editor holds some position in the issuers' public debt and equity securities about which we report. Tuesday's edition of the TCR-LA features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. 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. Submissions about insolvency-related conferences are encouraged. Send announcements to conferences@bankrupt.com *********** 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-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Valerie U. Pascual, Julie Anne L. Toledo, and Peter A. Chapman, Editors. Copyright 2015. All rights reserved. ISSN 1529-2746. 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 Latin America subscription rate is US$775 per half-year, 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 US$25 each. For subscription information, contact Peter A. Chapman at 215-945-7000 or Nina Novak at 202-362-8552. * * * End of Transmission * * *