/raid1/www/Hosts/bankrupt/TCR_Public/081024.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, October 24, 2008, Vol. 12, No. 254
Headlines
7303 HOLDINGS: Voluntary Chapter 11 Case Summary
AMERICAN INT'L: Paulo Reynolds as Chief Restructuring Officer
AMERICAN PORTABLE: Case Summary & 25 Largest Unsecured Creditors
AMERICHIP INTERNATIONAL: Has $198,581 Deficit for Q3 Ended Aug. 31
ARIAD PHARMACEUTICALS: Names Keane as Legal Chief Replacing Allen
AVISTAR COMMUNICATIONS: Posts $774,000 for Quarter Ended Sept. 30
CORTS TRUST: S&P Cuts $25MM Certificates to 'BB+' from 'BBB-'
DBO HOLDINGS: S&P Keeps 'B+' Corp. Credit Ratings Under Pos. Watch
DESIGN INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors
DIGITALFX INT'L: Revamps Management Team, Obtains Limited Waiver
DYNAMIC LEISURE: Files Chapter 7 Bankruptcy in Florida
ETHOS ENVIRONMENTAL: Inks Settlement Deal with GreenBridge Capital
FENWAY FUNDING: S&P Chips Rating to 'D' and Withdraws Afterwards
FITNESS HOLDINGS: Files for Chapter 11 Protection
GLOBAL VISION: Former Officer Settles Suit by Ch. 11 Trustee
HARRISON HOUSE: Case Summary & 20 Largest Unsecured Creditors
HC INNOVATIONS: Names Scott Walker as Chief Financial Officer
HEXION SPECIALTY: Reports Results of Notes Consent Solicitation
HYDROGEN LLC: Files for Chapter 11 Bankruptcy in New York
HYDROGEN LLC: Voluntary Chapter 11 Case Summary
INTEGRITY BANCSHARES: Files Chapter 7 Bankruptcy
JACOBS FINANCIAL: Aug. 31 Balance Sheet Upside-down by $11 Million
JC REED: Voluntary Chapter 11 Case Summary
JEFF DONOHUE: Case Summary & Eight Largest Unsecured Creditors
JOHNSON BROADCASTING: Blames Ch. 11 Filing to Ad Revenue Slowdown
JOHN VATH: Case Summary & 20 Largest Unsecured Creditors
LAKE AT LAS VEGAS: Wants Exclusive Periods Extended Until Jan. 13
LITHIUM TECHNOLOGY: Amir Albaz Quits as Chief Financial Officer
MATTRESS DISCOUNTERS: Court Approves Oct. 31 Auction
MERVYN'S LLC: Court Approves Closing Out Sale at 26 Stores
MASONITE INT'L: Has Until Mid-November to Pay Note Interest
MTJ WILLIAMS: Delays in Obtaining Credit Forces Ch. 11 Bankruptcy
MYTIQUE ENERGY: To Acquire All Petro Common Shares
NOVADEL PHARMA: Completes $4 Million Convertible Notes Sale
NPS PHARMACEUTICALS: BVF Entities Disclose 4.67% Equity Stake
OSKAR HUBER: Authorized to Deliver Pre-Bankruptcy Orders
PAMCO CLO: Moody's Chips $90MM Notes Rating to 'Caa2' from 'Baa2'
PAPER INT'L: U.S. Trustee Forms Three-Member Creditors' Committee
PATRIOT HOMES: Court Gives Final OK to Borrow $9MM
PEGRAIL INC: Case Summary & Eight Largest Unsecured Creditors
PETTERS AVIATION: Schedules Filing Deadline Extended to Nov. 10
PETTERS CO: Judge Puts Halt on Lawsuits Against Founder
PILGRIM'S PRIDE: M&G Investment Discloses 10.14% Equity Stake
PINE CCS: Moody's Trims Ratings on Two Note Classes to 'Caa3'
PINE VALLEY: B.C. Supreme Court Approves Definitive Plan
ROUGE INDUSTRIES: Court Extends Filing Period to Nov. 19
SAKS INC: S&P Holds 'BB-' Rating and Revises Outlook to Stable
SANDISK CORP: S&P Cuts Ratings to 'B' and Removes CreditWatch
S & A RESTAURANT: Court OKs Acquisition by Atalaya Capital Assets
SIMMONS CO: Weaker Earnings Cue S&P to Cut Rtngs to 'B-' from 'B'
SKINNER ENERGY: 3rd Cir. Rejects Insurers' Bid to Dismiss Case
SPRUCE CCS: Moody's Junks Ratings on Two Classes of Notes
QUIGLEY CO: No Examiner Probe on Pfizer Relationship for Now
RENAISSANCE CUSTOM: Files Schedules of Assets and Liabilities
RIVER BEND: Mediation with Secured Lender Set Nov. 17
RIVER RUN: Plan to Open Restaurant Pushes Through Amid Bankruptcy
RIVIERA HOLDINGS: Nov. 6 Conference Call on Third Quarter Results
RIVIERA HOLDING: Michael Meyer, Bryan Bloom Disclose 10% Stake
ROUGE INDUSTRIES: Court Extends Filing Period to Nov. 19
SEMGROUP LP: U.S. Trustee Appoints Louis J. Freeh as Examiner
SHUMATE INDUSTRIES: Transfers HVC Assets to Tejas Research
SIRIUS XM: Exchanges 67MM Shares for $30.5MM Convertible Notes
S & J PLAZA: Voluntary Chapter 11 Case Summary
SRX POST: Quebec Court Approves Amended Reorganization Plan
SUMMIT GLOBAL: U.S. Trustee Wants Ch. 11 Case Converted to Ch. 7
TOP TOMATO: Voluntary Chapter 11 Case Summary
TRANSNATIONAL AUTOMOTIVE: Has $1.38MM Equity Deficit as of Aug. 31
TRANSNATIONAL AUTO: Earns $1.8 Million for August 31, 2008
UNIGENE LABORATORIES: Victory Park, et al., Disclose 7.4% Stake
UNI-MARTS: Has Until Dec. 23 to File Chapter 11 Plan
US FARMS: To Offer 1,000,000 Shares, Files Registration Statement
VERANO CCS: Moody's Slashes $1.352MM Sr. Notes Rating to 'Caa3'
VERTICAL CDO: S&P Lowers Ratings on 75 Tranches from 22 US CLOs
VONAGE HOLDINGS: Inks $220 Million in Financing with Silver Point
VONAGE HOLDINGS: Amends Financing Terms to Notes Purchase Offer
WAVERLY GARDENS: Says Patient Care Ombudsman Not Necessary
WAVERLY GARDENS: Wants Farris Bobango as Bankruptcy Counsel
WORKFLOW MANAGEMENT: S&P Junks Corp. Credit; Outlook Developing
WORLDSPACE INC: Another Hearing on Borrowing Approval Set Oct. 28
W.R. GRACE: U.S. Trustee, et al., Object Disclosure Statement
* S&P Downgrades Ratings to 'D' on 32 Classes of Certificates
* S&P Puts Ratings on 30 Certificates Under Negative Watch
* Restructuring Lawyer Arthur Steinberg Joins King & Spalding-NY
* BOOK REVIEW: Distressed Investment Banking:
To the Abyss and Back
*********
7303 HOLDINGS: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: 7303 Holdings, Inc.
dba Studio 7303
7303 Ardmore Street
Houston, TX 77054
Bankruptcy Case No.: 08-36698
Chapter 11 Petition Date: October 22, 2008
Court: Southern District of Texas (Houston)
Judge: Marvin Isgur
Debtor's Counsel: James B Jameson, Esq.
jbjameson@jamesonlaw.net
Attorney at Law
3355 West Alabama, Suite 1160
Houston, TX 77098
Tel: (713) 807-1705
Fax: (713) 807-1710
Total Assets: $1,210,712
Total Debts: $483,093
The Debtor did not file a list of 20 largest unsecured creditors.
AMERICAN INT'L: Paulo Reynolds as Chief Restructuring Officer
-------------------------------------------------------------
American International Group, Inc., has named Paula Rosput
Reynolds -- the former Chairperson, President and Chief Executive
Officer of Safeco Corporation -- as Vice Chairperson and Chief
Restructuring Officer.
Ms. Reynolds will oversee AIG's divestiture of assets and will
serve as chief liaison with the Federal Reserve Bank of New York.
She reports to AIG Chairperson and Chief Executive Officer Edward
M. Liddy.
Ms. Reynolds was named Safeco President and CEO in January 2006
and Chairperson in May 2008. Prior to that, she was Chairperson,
President and CEO of AGL Resources, an Atlanta-based energy
holding company. Before joining AGL Resources, Ms. Reynolds spent
20 years in the energy business in various executive positions.
She has served on a number of public boards, including Andarko
Petroleum and Delta Airlines. She graduated with highest honors
in economics from Wellesley College.
Richard H. Booth, previously AIG Senior Vice President and Chief
Administrative Officer, has been named Vice Chairperson,
Transition Planning and Chief Administrative Officer. Mr. Booth
will be responsible for restructuring AIG's corporate center,
overseeing the separation of companies being sold by AIG and
executing AIG's operational transition to its new organizational
structure. Mr. Booth will continue with his current
responsibilities including AIG's global operations and systems,
corporate administration, corporate research and development, and
a variety of special projects. He will also continue to serve as
HSB Group, Inc., chairperson until it is sold. Mr. Booth also
reports to Mr. Liddy.
Mr. Booth was named AIG Senior Vice President and Chief
Administrative Officer in June 2008 in addition to his
responsibilities as Chairperson of HSB. Mr. Booth served as
President and CEO of HSB from 2000 through 2007. Prior to joining
HSB, he spent 30 years in various insurance industry positions,
including President, Chief Operating Officer and Director of The
Travelers Corporation, and Executive Vice President and a Director
of the Phoenix Companies. Mr. Booth is a CPA, Chartered Life
Underwriter and Chartered Financial Consultant. He received his
bachelor's and master's degrees from the University of Hartford's
Barney School of Business.
Mr. Liddy said that Ms. Reynolds and Mr. Booth are both well
prepared to play key roles in turning around AIG. "Both of these
executives will serve us well as we restore AIG as a competitive
enterprise that contributes to the economy and returns value to
taxpayers and shareholders," Mr. Liddy stated.
"Paula brings to AIG deep experience, not only as an insurance
industry leader, but also as someone who has successfully
realigned organizations to meet new challenges," Mr. Liddy said.
"She has earned a reputation for working collaboratively with
government and regulatory officials to achieve mutual goals," he
added.
Mr. Liddy also recognized Mr. Booth's successful career in the
insurance industry -- notably with HSB, the Travelers Corp. and
the Phoenix Companies -- and his particular strengths in managing
complex organizations. "In his brief tenure as AIG's Chief
Administrative Officer, Dick has made tremendous progress in
improving efficiency and reducing costs," Mr. Liddy said.
Shara Tibken at The Wall Street Journal relates that AIG has been
changing its executives since it accepted a $85 billion credit
facility from the federal government in September.
About American International
Based in New York City, American International Group Inc. --
http://www.aig.com/-- (NYSE: AIG) is an international insurance
and financial services organization, with operations in more than
130 countries and jurisdictions. The company is engaged through
subsidiaries in General Insurance, Life Insurance & Retirement
Services, Financial Services and Asset Management.
The company's British headquarters are located on Fenchurch Street
in London, continental Europe operations are based in La Defense,
Paris, and its Asian HQ is in Hong Kong. AIG owns Ocean Finance,
a United Kingdom based company providing home owner loans,
mortgages and remortgages. AIG operates in the UK with the brands
AIG UK, AIG Life and AIG Direct. It has about 3,000 employees,
and sponsors the Manchester United football club. In response to
redemption demands, AIG Life (UK) suspended redemptions of its AIG
Premier Bond money market fund on Sept. 19, 2008, in order to
provide an orderly withdrawal of assets.
The Federal Reserve Bank of New York has extended to AIG a
revolving credit facility up to $85 billion. AIG's borrowings
under the revolving credit facility will bear interest, for each
day, at a rate per annum equal to three-month Libor plus 8.50%.
The revolving credit facility will have a 24-month term and will
be secured by a pledge of assets of AIG and various subsidiaries.
The revolving credit facility will contain affirmative and
negative covenants, including a covenant to pay down the facility
with the proceeds of asset sales.
The summary of terms also provides for a 79.9% equity interest in
AIG. The corporate approvals and formalities necessary to create
this equity interest will depend upon its form.
In a statement, the company said "AIG is a solid company with over
$1 trillion in assets and substantial equity, but it has been
recently experiencing serious liquidity issues."
Standard & Poor's Ratings Services revised the CreditWatch
status of most of its ratings on the AIG group of companies --
including its 'A-' long-term counterparty credit ratings on
American International Group Inc. and the 'A+' counterparty credit
and financial strength ratings on most of AIG's insurance
operating subsidiaries -- to CreditWatch developing from
CreditWatch negative.
S&P raised its ratings on preferred stock of International Lease
Finance Corp. (ILFC; A-/Watch Dev/A-1) to 'BBB' from 'B', and
revised the CreditWatch implications to developing from negative.
All other ILFC ratings remain on CreditWatch with developing
implications.
Fitch Ratings revised its Rating Watch on American International
Group, Inc. to Evolving from Negative. Fitch viewed this
transaction as a favorable development that alleviates significant
near-term liquidity concerns.
* * *
In a U.S. Securities and Exchange Commission filing dated
Aug. 6, 2008, AIG reported a net loss for the second quarter of
2008 of $5.36 billion compared to 2007 second quarter net income
of $4.28 billion. Second quarter 2008 adjusted net loss was $1.32
billion, compared to adjusted net income of
$4.63 billion for the second quarter of 2007. The continuation of
the weak U.S. housing market and disruption in the credit markets,
as well as global equity market volatility, had a substantial
adverse effect on AIG's results in the second quarter.
Net loss for the first six months of 2008 was $13.16 billion,
compared to net income of $8.41 billion in the first six months
of 2007. Adjusted net loss for the first six months of 2008 was
$4.88 billion, compared to adjusted net income of
$9.02 billion in the first six months of 2007.
AMERICAN PORTABLE: Case Summary & 25 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: American Portable Medical Services, Inc.
2030 Ader Rd.
Jeannette, PA 15644
Tel: (412) 327-3557
Bankruptcy Case No.: 08-27063
Chapter 11 Petition Date: October 22, 2008
Court: Western District of Pennsylvania (Pittsburgh)
Debtor's Counsel: Michael E. Flaherty, Esq.
flahertylaw@msn.com
Karlowitz Cromer & Flaherty, P.C.
429 Forbes Avenue, Suite 1400
Pittsburgh, PA 15219
Tel: (412) 288-9160
Fax: (412) 288-2407
Estimated Assets: $100,000 to $500,000
Estimated Debts: $1,000,000 to $10,000,000
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/pawb08-27063.pdf
AMERICHIP INTERNATIONAL: Has $198,581 Deficit for Q3 Ended Aug. 31
------------------------------------------------------------------
AmeriChip International Inc.'s balance sheet as of Aug. 31, 2008,
showed $6,750,114 in total assets, $6,945,282 in total
liabilities, resulting to $198,581 in shareholders' deficit.
The company also had $34,935,799 in accumulated deficit.
At Aug. 31, 2008, the company's consolidated balance sheet also
showed strained liquidity with $842,781 in total current assets
available to pay $4,562,016 in total current liabilities.
AmeriChip International posted $1,188,032 in net losses on
$572,376 in net revenues for the three months ended Aug. 31, 2008,
compared with $102,598 in net losses on $863,826 in net revenues
for three months ended Aug. 31, 2007.
The company's material recurring losses from operations,
accumulated deficit, limited cash, negative working capital, among
others, indicate that it may be unable to continue as a going
concern for a reasonable period of time.
Full-text copy of Americhip International's financial results for
the three months ended Aug. 31, 2008, is available free of charge
at http://researcharchives.com/t/s?342a
About AmeriChip International
Based in Clinton Township, Mich., AmeriChip International Inc.
(OTC BB: ACHI.OB) -- http://www.americhiplacc.com/-- holds a
patented technology known as Laser Assisted Chip Control, which
can be used to re-engineer the manufacturing process for
industrial metal machining applications.
According to AmeriChip International, this technology, when
implemented by the customer, will eliminate dangerous ribbon-like
steel chips that tangle around moving tool parts, automation
devices and other components essential to the machine processing
of low to medium grade carbon steels and non-ferrous metal parts.
Going Concern Doubt
As reported in the Troubled Company Reporter on March 13, 2008,
Jewett, Schwartz, Wolfe & Associates, in Hollywood, Fla.,
expressed substantial doubt about Americhip International Inc.'s
ability to continue as a going concern after auditing the
company's consolidated financial statements for the year ended
Nov. 30, 2007. The auditing firm pointed to the company's
recurring losses from operations.
At May 31, 2008, the company had an accumulated deficit of
$33,747,767.
ARIAD PHARMACEUTICALS: Names Keane as Legal Chief Replacing Allen
-----------------------------------------------------------------
ARIAD Pharmaceuticals Inc. disclosed in a Securities and Exchange
Commission filing that Laurie A. Allen stepped down as the
company's Senior Vice President, Chief Legal Officer and
Secretary, effective Oct. 15, 2008.
Raymond T. Keane, General Counsel and Chief Compliance Officer
since May 2008, has assumed all of Ms. Allen's responsibilities.
Headquartered in Cambridge, Mass., ARIAD Pharmaceuticals Inc.
(Nasdaq: ARIA) -- http://www.ariad.com/-- is engaged in the
discovery and development of breakthrough medicines to treat
cancer by regulating cell signaling with small molecules. ARIAD
has a global partnership with Merck & Co. Inc. to develop and
commercialize deforolimus, ARIAD's lead cancer product candidate,
which is in Phase 3 clinical development.
At June 30, 2008, the company's consolidated balance sheet showed
$82.0 million in total assets and $121.1 million in total
liabilities, resulting in a $39.1 million total stockholders'
deficit.
AVISTAR COMMUNICATIONS: Posts $774,000 for Quarter Ended Sept. 30
-----------------------------------------------------------------
Avistar Communications Corporation disclosed in a Securities and
Exchange Commission filing its financial results for the three and
nine month periods ended Sept. 30, 2008.
Financial highlights for the quarter included:
-- Total revenue, prepared in accordance with GAAP, was
$2.7 million, as compared to $1.8 million for the quarter
ended June 30, 2008, an increase of 51%. The second quarter
of 2008 had previously marked a 56% improvement as compared
to the first quarter of 2008;
-- Operating expense (research & development, sales & marketing
and general and administrative) was $3.1 million for the
third quarter of 2008, as compared to $3.2 million for the
second quarter of 2008, representing the fourth quarter of
sequential improvement;
-- Income from settlement and licensing activity, which
management sees as a key component of the company's "top
line" performance, was $1.1 million in both the third and
second quarters of 2008;
-- Net income represented a loss of $774,000, or $(0.02) per
basic and diluted share, as compared to a loss of $1.6
million, or $(0.05) per basic and diluted share recorded in
the second quarter of 2008;
-- The cash and cash equivalent balance at Sept. 30, 2008
was $4.4 million, representing cash used in operations
during the third quarter, 2008 of $1.3 million. The
comparable cash used in operations result during the second
quarter of 2008 was $3.2 million.
"As anticipated from our last earnings conference call, results of
the third quarter of 2008 demonstrate our continued ability to
build revenue momentum off of a more efficient cost structure,"
said Simon Moss, Avistar's CEO. "The intended objective was
accomplished, and the third quarter posted an adjusted EBITDA
result of a $53,000 profit, a dramatic improvement over the second
quarter 2008 adjusted EBITDA loss of $1.2 million."
"After establishing a significantly-reduced cost structure during
the prior quarters of 2008 -- accomplished as part of our
turnaround strategy, our focus shifted to the top line and revenue
momentum in the third quarter," Mr. Moss continued. "This
sequencing was designed to translate our cost savings into direct
bottom-line improvement as revenues expanded. I'm pleased to
report that both goals were accomplished during the third quarter
of 2008, with revenue growing by an additional 51% over the
improvements of the second quarter, and our net loss improving by
52% from the second quarter."
Mr. Moss continued, "While the third quarter evidenced continuing
progress in our turnaround, this most recent quarter was perhaps
the most significant in the company's history from the vantage
point of building for the future. In August we announced a
technology agreement with LifeSize Communications Corporation, a
global leader in high definition (HD) video conferencing systems,
whereby we will integrate our technology with LifeSize's room
systems. Following the LifeSize agreement, we signed a product
and technology licensing agreement with IBM Corporation in
September, under which we will be working with IBM to provide
bandwidth management for its unified communications and
collaboration solutions. As part of this work, Avistar's C3's
dynamic bandwidth management technology is being licensed by IBM.
We expect these arrangements to provide improved revenue
visibility and momentum over the next several years. As part of
the LifeSize and IBM agreements, both corporations are now
licensees of our extensive patent portfolio as well.
About Avistar Communications
Headquartered in San Mateo, California, Avistar Communications
Corporation (Nasdaq: AVSR) -- http://www.avistar.com/-- holds a
portfolio of 80 patents for inventions in video and network
technology and licenses IP to videoconferencing, rich-media
services, public networking and related industries. Current
licensees include Sony Corporation, Sony Computer Entertainment
Inc. (SCEI), Polycom Inc., Tandberg ASA, Radvision Ltd. and
Emblaze-VCON.
The Troubled Company Reporter reported on July 28, 2008, that at
June 30, 2008, the company's consolidated balance sheet showed
$10.2 million in total assets and $25.0 million in total
liabilities, resulting in a $14.8 million stockholders' deficit.
The company's consolidated balance sheet at June 30, 2008, also
showed strained liquidity with $9.0 million in total current
assets available to pay $16.0 million in total current
liabilities. The company reported a net loss of $1.6 million for
the second quarter ended June 30, 2008, as compared to net income
of $388,000 in the same period last year.
CORTS TRUST: S&P Cuts $25MM Certificates to 'BB+' from 'BBB-'
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on the $25
million corporate-backed trust securities certificates from CorTS
Trust For PECO Energy Capital Trust III to 'BB+' from 'BBB-' and
placed it on CreditWatch with negative implications.
The rating action reflects the Oct. 21, 2008, lowering of the
rating on the underlying securities, the 7.38% capital trust pass-
through securities due April 6, 2028, issued by PECO Energy
Capital Trust III, and its placement on CreditWatch negative.
CorTS Trust For PECO Energy Capital Trust III is a pass-through
transaction, and the rating on the certificates is based solely on
the rating assigned to the underlying securities, the 7.38%
capital trust pass-through securities due April 6, 2028, issued by
PECO Energy Capital Trust III ('BB+/Watch Neg').
DBO HOLDINGS: S&P Keeps 'B+' Corp. Credit Ratings Under Pos. Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services said that its 'B+' corporate
credit rating and other ratings on DBO Holdings Inc. remain on
CreditWatch with positive implications, where they were initially
placed on Aug. 13, 2008. The CreditWatch placement followed the
company's announcement that it had entered into a definitive
agreement to be acquired by Russian steel producer OJSC
Novolipetsk Steel (BBB-/Stable/--) for $3.5 billion.
The CreditWatch update follows DBO's announcement that it has
filed a lawsuit against Novolipetsk Steel for failing to close the
transaction by Sept. 29, 2008, as agreed, and attempting to
renegotiate key terms in the agreement, including the acquisition
price.
"While we are uncertain about the timing and final terms of the
transaction because of this dispute, our CreditWatch recognizes
that the acquisition agreement is still in place," said Standard &
Poor's credit analyst Sherwin Brandford. At present, S&P does not
have enough information to conclude that the transaction will not
be consummated.
In resolving the CreditWatch listing, we will closely monitor the
ongoing dispute between the two companies to ascertain the timing
and final terms of the transaction. S&P expects DBO to use a
portion of the proceeds of the sale to repay all of its
outstanding debt. Upon completion of the sale, S&P will withdraw
its ratings on DBO.
DESIGN INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Design Industries, Inc.
51 S. Koweba Lane
Indianapolis, IN 46201
Bankruptcy Case No.: 08-13199
Type of Business: The Debtor describes itself as a direct
manufacturer of custom fixture programs that
enhance the quality image and presentationof
clients' products.
See: http://www.diinc.com/
Chapter 11 Petition Date: October 22, 2008
Court: Southern District of Indiana (Indianapolis)
Judge: Anthony J. Metz III
Debtor's Counsel: Edward R Cardoza, Esq.
ecardoza@rubin-levin.net
Rubin & Levin, P.C.
342 Massachusetts Ave., Suite 500
Indianapolis, IN 46204
Tel: (317) 860-2931
Fax: (317) 263-9411
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/insb08-13199.pdf
DIGITALFX INT'L: Revamps Management Team, Obtains Limited Waiver
----------------------------------------------------------------
DigitalFX International, Inc., entered into several agreements
that resulted in a reshuffle of senior management and in a
forbearance, limited in time, from any action by its note holders,
as a first step in a plan to strengthen its affiliate relations,
and regain financial stability and the confidence of its
shareholders.
On Oct. 15, 2008, the company entered into a Framework Agreement
with Richard Kall, Craig Ellins, VM Investor's co-manager,
chairman of the company's board of directors, and the company's
chief executive officer and president, and Amy Black, the
president of VMdirect, L.L.C., one of the company's subsidiaries.
Effective Oct. 15, 2008, Richard Kall was appointed as the
company's CEO and chairman of the board.
For the past 30 years, Mr. Kall has been one of the top leaders
and a star performer in the network marketing industry. Mr. Kall
has been associated with Nu Skin Enterprises, a skin care and
nutraceutical company since October 1985, and an affiliate of
Amway and a lead distributor of The Cambridge Diet. M r. Kall
is also the co-manager of VM Investors, LLC, the company's
majority shareholder. He is the author of "The First Million
is the Easiest" and "The Book on Network Marketing", along with
numerous training videos and DVDs.
Mr. Kall will be assisted by Mr. Abraham Sofer who was promoted
from general counsel to president of the company, effective
Oct. 17, 2008. An international lawyer, Mr. Sofer brings over
27 years of expertise in international and technology
transactions, workouts, corporate governance, taxation, the
financial markets, business development and the green tech
industry. He served as managing director at Aegis Capital
Corporation, the president of Arco Computer Products Inc., and
senior vice president for Greystone Financial Services, a US -
South Korean management consulting firm.
Effective Oct. 17, 2008, the board adopted these additional
resolutions:
-- Tracy Sperry was appointed as the company's chief financial
officer and secretary. Ms. Sperry has served as the
company's acting chief financial officer since February
2008.
-- Susan R. Hantman was appointed to the company's board of
directors audit committee and compensation committee.
Ms. Hantman has been a practicing Certified Public
Accountant for over 26 years. Prior to opening her own
accounting firm, Ms. Hantman was a senior tax manager with a
"Big 4" Accounting Firm and before that, worked for the
Internal Revenue Service.
Under the Framework Agreement, and certain note purchase
agreements, Mr. Kall agreed to purchase an aggregate of
$350,000 of the unpaid principal amount of the company's amended
and restated senior secured convertible notes, warrants to
purchase an aggregate of 90,517 shares of the company's common
stock, and an aggregate of 120,000 shares of common stock
previously issued to investors in the Notes. As a result those
investors and Mr. Kall agreed to forbear for a period of 30 days
from taking any action to enforce their rights as a result of the
event of default that occurred with respect to the company's
failure to satisfy one or more financial covenants under the Notes
for the fiscal quarter ended June 30, 2008. This forbearance
period will extend for up to 90 days if the company or other
parties makes periodic payments to the investors in the aggregate
amount of $500,000.
Subject to the Framework Agreement:
-- Kevin Keating and Jerry Haleva resigned from the board on
Oct. 13, 2008.
-- Craig Ellins resigned as the chairman of the board, the
company's chief executive officer and president, and from
all other officer positions held with the company and each
of its subsidiaries and from his position as co-manager of
VM Investors, LLC on Oct. 15, 2008.
-- Amy Black resigned as the president of VMdirect and from all
other officer positions held with the company and each of
its subsidiaries on Oct. 15, 2008.
On Oct. 15, 2008, the board also adopted resolutions reducing the
size of the board to three directors. As a result of these
transactions, Mr. Kall, as the sole manager of VM Investors and
the beneficial owner of 64.6% of the company's outstanding
shares of Common Stock, will exercise voting control over the
company. In addition, as the company's chairman and chief
executive officer, Mr. Kall will exercise, with the board and
other executive officers, operational control over the company.
"DigitalFX can now move forward to be positioned as top multi-tier
company without some of the barriers of the past," Mr. Kall said.
"Now, everyone can focus on what is most important, creating
value, benefiting our affiliates, and introducing innovative
products."
"The company's culture of days past will be resurrected with the
new management and new talent being recruited and I can think of
nothing better for us than to continue to introduce great products
through our network," Mr. Kall added.
About DigitalFX International, Inc.
Headquartered in Las Vegas, Nevada, DigitalFX International Inc.
(AMEX:DXN) -- http://www.DigitalFX.com/-- markets web-based
products such as streaming live and on-demand video, video email
and digital storage. The company also markets proprietary
communication and collaboration services, and social networking
software applications, including its flagship product, called the
Studio.
Covenant Non-Compliance
For the quarter ended June 30, 2008, the company reported that it
had not satisfied the financial covenants included in the Amended
and Restated Senior Secured Convertible Notes issued as of
Nov. 30, 2007, and such failure constitutes a default under such
Notes.
DYNAMIC LEISURE: Files Chapter 7 Bankruptcy in Florida
------------------------------------------------------
BankruptcyData.com reports that Dynamic Leisure Corp. filed for
Chapter 7 protection with the U.S. Bankruptcy Court in the Middle
District of Florida. Ian R. Leavengood, Esq., of Leavengood &
Nash, P.A., represents the Debtor in its restructuring efforts.
Headquartered in Tampa, Fla., Dynamic Leisure Corporation (OTC BB:
DYLI) -- http://www.dylicorp.com/-- with offices in New York City
and London, England, is a wholesaler and online international
technology-based leisure travel packager. The company provides
worldwide vacation travel packages directly to the consumer,
travel agencies and other travel resellers.
ETHOS ENVIRONMENTAL: Inks Settlement Deal with GreenBridge Capital
------------------------------------------------------------------
Ethos Environmental, Inc., disclosed in a Securities and Exchange
Commission filing that on Oct. 16, 2008, it entered into a
Settlement Agreement and General Mutual Release with GreenBridge
Capital Partners, IV.
Per the terms of a Registration Rights Agreement dated Aug. 7,
2007, the company agreed to pay certain liquidated damages to GBCP
if 2,500,000 shares purchased by GBCP were not registered by
Feb. 15, 2008.
To date, the GBCP Stock has not been registered and GBCP has
received 2,265,428 shares of the company's common stock as
liquidated damages per the terms of the Registration Rights
Agreement. In exchange for cancellation of the Registration
Rights Agreement, GBCP has agreed to accept 10,200,000 additional
shares of Company common stock.
The Managing Member of GBCP is Corey P. Schlossmann, the company's
interim Chief Executive Officer, President, Secretary and
Chairman. Mr. Schlossmann abstained from the vote of the Board of
Directors pertaining to the Settlement Agreement.
About Ethos Environmental
Ethos Environmental Inc. manufactures and distributes a line of
fuel reformulators that contain a blend of low and high molecular
weight esters. The product adds cleaning and lubrication
qualities to any type of fuel or motor oil.
Going Concern Doubt
Moore & Associates Chartered, in Las Vegas, expressed substantial
doubt about Ethos Environmental Inc.'s ability to continue as a
going concern after editing the company's consolidated financial
statements for the year ended Dec. 31, 2007. The auditing firm
pointed to the company's net loss due to non-cash transactions.
For the three months ended June 30, 2008, Ethos posted a
$1,304,363 net loss on revenues of $1,286,884. As of June 30,
2008, the company's balance sheet showed $9,337,574 in total
assets, $1,946,945 in total current liabilities, and $7,390,629 in
total stockholders' equity.
FENWAY FUNDING: S&P Chips Rating to 'D' and Withdraws Afterwards
----------------------------------------------------------------
Standard & Poor's Ratings Services reinstated its rating on the
asset-backed commercial paper issued by Fenway Funding LLC, set it
to 'D', and then withdrew it. Standard & Poor's previously
withdrew the Fenway ABCP rating on Sept. 16, 2008, at the request
of Hudson Castle Group Inc., the program manager, acting on behalf
of Fenway.
After reconsidering the relevant information, S&P now believes
that the rating should have been lowered to 'D' prior to the
Sept. 16 withdrawal due to a ratings link to a counterparty that
provided liquidity and credit support to the ABCP.
FITNESS HOLDINGS: Files for Chapter 11 Protection
-------------------------------------------------
Bloomberg News reports that Fitness Holdings International, Inc.,
filed for Chapter 11 protection, citing economic weakness and a
lender who called in a loan.
Bloomberg quoted Fitness Holdings' CEO Kenton Van Harten as
saying, "The impact of weakness in the economy and declines in the
performance of the retail sector, in general, has negatively
impacted sales at the debtor's stores."
Fitness Holdings said it owes $18.7 million in secured debt under
a term loan from Pacific Western Bank, according to Bloomberg.
Fitness Holdings also has a $27.5 million subordinated, unsecured
loan, the report says.
About Fitness Holdings
Long Beach, California-based Fitness Holdings International, Inc.,
sells treadmills, cross-trainers, and exercise bikes for home use.
The company does business as Busy Body Home Fitness, OMNI Fitness
Equipment and LA Gym Equipment.
The company filed for Chapter 11 protection on Oct. 20, 2008
(Bankr. C. D. Calif. Case No. 08-27527). David S. Kupetz, Esq.,
at SulmeyerKupetz, A Professional Corporation, represents the
company in its restructuring effort. The company listed assets of
$10 million to $50 million and debts of $10 million to
$50 million.
GLOBAL VISION: Former Officer Settles Suit by Ch. 11 Trustee
------------------------------------------------------------
Bill Rochelle says that the Chapter 11 trustee for Global Vision
Products, Inc., reached a settlement with former officer and
director, Melissa Madden, one of the defendants in a lawsuit he
filed in July against former officers and directors. The suit was
aimed at recovering $6.9 million in profits the executives
allegedly made by taking away what would have been a strategic
acquisition for the company.
Ms. Madden agreed to pay $75,000 and turn over the net proceeds
from the sale of her home in Arizona. According to the report,
the trustee agreed that Global Vision will not sell its Avacor
topical hair regrowth product beyond the end of the year although
a buyer of the assets would be free to continue marketing the
product.
The trustee also reached a settlement with class action
plaintiffs, according to the report.
Headquartered in New York City, Global Vision Products Inc.
markets Avacor topical hair regrowth product. The company filed
for chapter 11 protection on Aug. 17, 2007 (Bankr. S.D.N.Y. Case
No. 07-12628). Gilbert A. Lazarus, Esq., at Lazarus & Lazarus
P.C. serves as the Debtor's counsel. Papers filed in court on the
Petition Date disclosed $3.9 million in assets and $3.2 million in
debts.
HARRISON HOUSE: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Harrison House, Inc.
dba Harrison House Publishers
P.O. Box 35035
Tulsa, OK 74153
Bankruptcy Case No.: 08-12507
Type of Business: The Debtor is a publishing company.
See: http://www.harrisonhouse.com/
Chapter 11 Petition Date: October 22, 2008
Court: Northern District of Oklahoma (Tulsa)
Judge: Terrence L. Michael
Debtor's Counsel: Mark A. Craige, Esq.
mark@law-office.com
Morrel, Saffa, Craige, Hicks, et al.
3501 S. Yale
Tulsa, OK 74135
Tel: (918) 664-0800
Fax: (918) 663-1383
Estimated Assets: $1 million to $10 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
County Mayo, L.P. all assets $3,998,000
2933 South FLA, Avenue #4
Lakeland, FL 33803
Worzalla contingent $2,208,092
3535 Jefferson Street potential
P.O. Box 307 liability
Lake Books MFG contingent $1,382,762
2085 N. Cornell Avenue potential
Houston, TX 77082 liability
RR Donnelly contingent $1,235,349
potential
liability
CalEast Industrial trade creditor $1,075,241
of Eagle
Communications
CalEast Industrial trade creditor $1,075,241
Oral Roberts University trade creditor $988,727
Oral Roberts University trade creditor $988,727
Anderson Merchandisers trade creditor $963,000
Phoenix Color Corporation contingent $736,387
potential
liability
Cecil Ivy contingent $668,556
potential
liability
County Mayo Limited Partners trade creditor $538,457
GL Services - $403,752
Norman Graphics contingent $365,551
potential
liability
Dickinson Press, Inc. - $311,307
Dickinson Press, Inc. trade creditor $307,857
Splichal Apostoliekensraat contingent $270,371
103 potential
liability
White Stone Marketing - $255,286
White Stone Books, LLC trade creditor $211,562
Versa Press trade creditor $162,187
HC INNOVATIONS: Names Scott Walker as Chief Financial Officer
-------------------------------------------------------------
HC Innovations, Inc., disclosed in a Securities and Exchange
Commission filing that it entered into an employment agreement
with Scott Walker pursuant to which Mr. Walker will serve as the
its Chief Financial Officer, commencing on Oct. 20, 2008.
The term of the Employment Agreement is initially for three years,
and is automatically renewable for one year terms thereafter.
The Employment Agreement provides that Mr. Walker will receive a
base salary at an initial annual rate of $225,000. Mr. Walker
will also be entitled to:
-- an annual incentive compensation award based on performance
targets, with earnings being a key performance target, which
shall afford Mr. Walker the opportunity to earn an award of
25% of his Base Salary;
-- an option to purchase 1,000,000 shares of the company's
Common Stock at an exercise price of $0.635 per share, which
equaled the fair market value per share on the date the
option was approved;
-- participation in the company's 2008 Incentive Compensation
Plan; and
-- participation in all benefits to which other similarly
situated executives and employees of the company are
entitled to receive.
The Employment Agreement may be terminated in the event of:
-- the death or disability of Mr. Walker, in which event he or
his estate shall be entitled to, among other things, his
base salary through the date of termination and a prorated
Annual Bonus, if so payable;
-- without cause, in which event, and as consideration for
Mr. Walker's entering into a severance agreement with the
company, he shall be entitled to, among other things, his
Base Salary for one year from the date of termination and a
prorated Annual Bonus;
-- with cause, in which event Mr. Walker shall be entitled to
his Base Salary and accrued vacation pay as of the date of
termination; or
-- following a change of control, in which event, and as
consideration for Mr. Walker's entering into a severance
agreement with the company, he shall be entitled to, among
other things, an amount equal to one times the Base Salary
and a prorated Annual Bonus, if so payable.
About HC Innovations
Headquartered in Shelton, Conn., HC Innovations Inc. (OTC BB:
HCNV) -- http://www.hcinnovationsinc.com/-- is the holding
company for Enhanced Care Initiatives (ECI), which provides
complex care management services for medically unstable, complex
patients. These services are performed through a program of 24/7
clinical support and intensive interventions based on care plans
guided by a proprietary electronic health record (EHR) system.
The company targets its offering to HMOs, other risk-bearing
managed care organizations, state Medicaid departments, and as an
on-site subcontractor for disease management companies.
Going Concern Doubt
As reported in the Troubled company Reporter on April 29, 2008,
Carlin, Charron & Rosen, LLP, in Glastonbury, Conn., expressed
substantial doubt about HC Innovations Inc.'s ability to continue
as a going concern after auditing the company's consolidated
financial statements for the years ended Dec. 31, 2007, and 2006.
The auditing firm pointed to the company's negative working
capital, net losses for the two years then ended, and accumulated
deficit.
The Troubled company Reporter reported on Sept. 8, 2008, that HC
Innovations Inc.'s consolidated balance sheet at June 30, 2008,
showed $7,827,038 in total assets and $12,543,255 in total
liabilities, resulting in a $4,716,217 stockholders' deficit. At
June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $4,008,617 in total current assets
available to pay $12,126,389 in total current liabilities.
The company reported a net loss of $3,533,075 on net revenues of
$6,833,433 for the second quarter ended June 30, 2008, compared
with a net loss of $1,879,434 on net revenues of $2,752,470 in the
corresponding period in 2007.
HEXION SPECIALTY: Reports Results of Notes Consent Solicitation
---------------------------------------------------------------
Hexion Specialty Chemicals, Inc. disclosed that Nimbus Merger Sub
Inc., a subsidiary of Hexion, had received, as of 5:00 p.m. New
York City time on Oct. 22, 2008, tenders and consents from holders
of:
(A) i) 86.06% of the outstanding principal amount of Second-
Priority Senior Secured Floating Rate Notes due 2014
(CUSIP No. 428303AG6) and
ii) 96.13% of the outstanding principal amount of 9-3/4%
Second-Priority Senior Secured Notes due 2014 (CUSIP No.
428303AH6) issued by Hexion U.S. Finance Corp. and Hexion
Nova Scotia Finance, ULC; and
(B) i) 96.42% of the outstanding principal amount of 11a...%
Senior Secured Notes due 2010 (CUSIP No. 44701RAE0);
ii) 99.53% of the outstanding principal amount of 11-1/2%
Senior Notes due 2012 (CUSIP No. 44701RAG5);
iii) 98.65% of the outstanding principal amount of 7a...oe%
Senior Subordinated Notes due 2015 (CUSIP No. 44701QAK8);
iv) 98.94% of the outstanding principal amount of 7-1/2%
Senior Subordinated Notes due 2015 (CUSIP No. 44701QAL6);
v) 97.49% of the outstanding principal amount of 7a...%
Subordinated Notes due 2014 (CUSIP No. 44701QAP7) and
vi) 92.63% of the outstanding principal amount of 6a...%
Subordinated Notes due 2013 (Reg. S ISIN No. XS0274281186,
Rule 144A ISIN No. XS0274281855); in each case issued by
Huntsman International Inc. fka Huntsman International
LLC, in connection with the cash tender offers and
consent solicitations by Nimbus for the Hexion Notes and
the Huntsman Notes.
As a result of the receipt of the requisite consents, Hexion
intends to and Huntsman is expected to enter into supplemental
indentures effecting the proposed amendments. The proposed
amendments, which will eliminate most of the restrictive
covenants and certain events of default, will become effective
when Nimbus accepts for purchase the Notes validly tendered
pursuant to the terms of the Offer Documents. In addition,
the proposed amendments will terminate the security interests
securing obligations under the Hexion Notes.
In accordance with the terms of the Offer Documents, tendered
Notes may no longer be withdrawn and delivered consents may no
longer be revoked, unless the tender offers and the consent
solicitations are terminated without any Notes being purchased or
the company is required by law to permit withdrawal or revocation.
The pricing terms for the Hexion Notes, the Huntsman 7a...oe%
Notes, the Huntsman 7 1/2% Notes, the Huntsman 7a...% Notes and
the Huntsman 6a...% Notes will be determined as described in the
respective Offer Documents and will be reported on Oct. 23, 2008,
unless Nimbus, in its sole discretion, establishes a new price
determination date.
The tender offers are subject to the conditions set forth in the
Offer Documents, including obtaining the financing necessary to
pay for the Notes and consents in accordance with the terms of
the tender offers and consent solicitations.
Nimbus has retained Oppenheimer & Co. Inc. to act as Dealer
Manager in connection with the tender offers and consent
solicitations. Questions about the tender offers and consent
solicitations may be directed to Oppenheimer & Co. Inc., at
(800)274-2746 (toll free) or (212)885-4646 (collect). Copies
of the Offer Documents and other related documents may be
obtained from D.F. King& Co., Inc., the information agent for
the tender offers and consent solicitations, at (800)290-6426
(toll free) or (212)269-5550 (collect).
About Hexion Specialty
Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. --
http://www.hexionchem.com/-- is a producer of thermosetting
resins, or thermosets. Thermosets are a critical ingredient in
virtually all paints, coatings, glues and other adhesives produced
for consumer or industrial uses. Hexion Specialty Chemicals is
controlled by an affiliate of Apollo Management L.P.
Hexion Specialty Chemicals Inc.'s balance sheet at June 30, 2008,
showed total assets of $3.9 billion and total liabilities of
$5.4 billion, resulting in a shareholders' deficit of
$1.5 billion.
HYDROGEN LLC: Files for Chapter 11 Bankruptcy in New York
---------------------------------------------------------
HydroGen LLC, a subsidiary of HydroGen Corporation, filed a
voluntary petition under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of New
York.
Reuters, citing papers filed with the Court, says the filing
came when the company was unable to find a purchaser or raise
additional funding. The company said the U.S. credit market has
dried up, the report relates.
The Chapter 11 filing constituted an event of default under
the loan and security agreement with certain lenders including
Samsung C&T Corporation and Federated Kaufmann Fund. As a result,
repayment of the $1,450,000 loan plus accrued and unpaid interest
as well as other obligations under the deal may be accelerated and
become due and payable, according to Scott M. Schecter, the
company appointed chief executive officer.
As part of the filing, the company asks the Court to (i) use its
existing bank accounts and cash management system; (ii) the
employment and retention of professionals used in the ordinary
course of business; and (iii) limit notice and establish notice
procedures.
Before its bankruptcy filing, the company has terminated several
officers including John Freeh, chief executive officer; Joshua
Tosteson, president; and Gregory Morris, senior vice president.
Audit committee member Brian McGee resigned from the company's
board of director.
The company listed assets and debts of between $1 million and
$10 million in its filings.
David C. McGrail, Esq., at The Law Offices of David C. McGrail,
represents the company as its counsel.
The company selected Donlin, Recano & Company Inc., as its notice
agent.
About HydroGen
Headquartered in New York, HydroGen LLC --
http://www.hydrogenllc.net-- manufactures fuel
cell systems and air-cooled phosphoric acid fuel cell technology.
HydroGen Corporation owns 100% of the membership interest of the
Debtor.
HYDROGEN LLC: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: HydroGen, L.L.C.
10 East 40th Street, Suite 3405
New York, NY 10016
Bankruptcy Case No.: 08-14139
Type of Business: The Debtor manufactures fuel cell systems
and air-cooled phosphoric acid fuel cell
technology. HydroGen Corporation owns 100% of
the membership interest of the Debtor.
See: http://www.hydrogenllc.net/
Chapter 11 Petition Date: October 22, 2008
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtor's Counsel: David C. McGrail, Esq.
dmcgrail@davidmcgraillaw.com
Law Offices of David C. McGrail
676A Ninth Avenue, #211
New York, NY 10036
Tel: (646) 290-6496
Fax: (646) 224-8377
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
The Debtor did not file a list of 20 largest unsecured creditors.
INTEGRITY BANCSHARES: Files Chapter 7 Bankruptcy
------------------------------------------------
BankruptcyData.com reports that Integrity Bancshares, Inc., filed
a voluntary Chapter 7 bankruptcy with the United States Bankruptcy
Court for the Northern District of Georgia (Case No. 08-80512).
On August 29, 2008, the Georgia Department of Banking and Finance
closed Integrity Bank, Inc., the wholly owned commercial banking
subsidiary of the Debtor, and the Federal Deposit Insurance Corp.
was named as the receiver of the bank, according to the report.
The Debtor's principal asset is the common stock that it owns in
Integrity Bank, and, as a result of the closure of the bank, it
has very limited remaining tangible assets, according to the
report. The assets acquired by the Federal Deposit totaled
$1.1 billion with $974.0 million in total deposits as of June 30,
2008, according to the report. The Debtor listed less than
$50,000 in assets, according to the report.
Atlanta, Georgia-based Integrity Bancshares, Inc. --
http://www.myintegritybank.com/default.cfm-- is a bank holding
company. Integrity Bank, its wholly owned subsidiary, is a full
service independent community bank. The Debtor has specialized in
real estate lending and serving the local communities with its
faith-based culture. The Debtor currently operates five full
service financial centers and a loan production office.
JACOBS FINANCIAL: Aug. 31 Balance Sheet Upside-down by $11 Million
------------------------------------------------------------------
Jacobs Financial Group, Inc.'s consolidated condensed balance
sheet at Aug. 31, 2008, showed $6,404,995 in total assets,
$5,255,431 in total liabilities, $2,454,434 series A preferred
stock, and $10,298,664 series B preferred stock, resulting in a
$11,603,534 stockholders' deficit.
The company reported $496,729 net loss on total revenues of
$285,715 for the three months ended Aug. 31, 2008, compared to
$574,175 net loss for the same period a year ago.
Going Concern Doubt
According to the Troubled Company Reporter on Sept 22, 2008,
Malin, Bergquist & Company raised substantial doubt about the
ability of Jacobs Financial Group, Inc., to continue as a going
concern after it audited the company's financial statements for
the year ended May 31, 2008. The auditor pointed to the company's
significant net working capital deficit and operating losses.
The company incurred losses (after accretion of mandatorily
redeemable convertible preferred stock, including accrued
dividends) of around $3,333,000 and $2,661,000 for the years ended
May 31, 2008, and 2007. Losses are expected to continue until
First Surety Corporation, a wholly owned subsidiary of the
company, develops substantial business. While improvement is
anticipated as the company's business plan is implemented,
restrictions on the use of First Surety 's assets, the company's
significant deficiency in working capital and stockholders' equity
raise substantial doubt about the company's ability to continue as
a going concern.
A full-text copy of the company's regulatory filing is available
for free at http://ResearchArchives.com/t/s?342d
About Jacobs Financial
Headquartered in Charleston, West Va., Jacobs Financial Group,
Inc. (OTC BB: JFGI) -- www.jacobs-financial.com/ -- through its
subsidiaries, provides investment advising, investment management,
surety business, security brokerage, and related services.
Subsidiaries include Jacobs & Co., which provides investment
advisory services; FS Investments, a holding company organized to
develop surety business through the formation and acquisition of
companies engaged in the issuance of surety bonds and FSI's
wholly-owned subsidiary Triangle Surety Agency, which places
surety bonds with insurance companies. Subsidiary Crystal Mountain
Water holds mineral property in Arkansas.
JC REED: Voluntary Chapter 11 Case Summary
------------------------------------------
Debtor: JC Reed & Co., Inc.
2555 Meridian Blvd., Suite 100
Franklin, TN 37067
Bankruptcy Case No.: 08-09771
Type of Business: The Debtor is a mortgage banker.
Chapter 11 Petition Date: October 22, 2008
Court: Middle District of Tennessee (Nashville)
Judge: Marian F. Harrison
Debtor's Counsel: William L. Norton, III, Esq.
BNorton@BoultCummings.com
Boult Cummings Conners Berry, PLC
P.O. Box 340025
Nashville, TN 37203
Tel: (615) 252-2397
Fax: (615) 252-6397
Estimated Assets: $1,000,000 to $10,000,000
Estimated Debts: $100,000 to $500,000
The Debtor did not file a list of 20 largest unsecured creditors.
JEFF DONOHUE: Case Summary & Eight Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Jeff Donohue
15 Misty Acres Road
Rolling Hills Estate
CA 90274-5749
Bankruptcy Case No.: 08-27664
Chapter 11 Petition Date: October 21, 2008
Court: Central District Of California (Los Angeles)
Judge: Ernest M. Robles
Debtor's Counsel: Claudia L. Phillips, Esq.
celpmgp@aol.com
Claudia Phillips, Attorney At Law
5699 Kanan Road #425
Agoura Hills, CA 91301
Tel: (310) 597-3534
Fax: (818) 735-0139
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/cacb08-27664.pdf
JOHNSON BROADCASTING: Blames Ch. 11 Filing to Ad Revenue Slowdown
-----------------------------------------------------------------
Johnson Broadcasting, Inc., said that it sought protection under
Chapter 11 in the United States Bankruptcy Court for the Southern
District of Texas on Oct. 13, 2008, due to its inability to cover
operating costs amid slowdown in advertising revenue, The Deal's
Mike Schoeck reports.
According to Mr. Schoeck, prepetition lender IFC Credit Corp. sued
the company seeking repayment involving equipment leases issued to
the company in 2006. The suit was filed in the United States
District Court for the Northern District of Illinois on July 3,
2008. The company defaulted on its obligation on payments of
$1.2 million to the prepetition lender, he says.
The company listed assets and debts of between $10 million and
$50 million each in its filing. The company owes $3,033,080 to
its unsecured creditor, including USFR Media Group, Inc., which is
owed $1,082,618; Merrill Lynch Business Financial Services Inc.,
which is owed $711,604; and Warner Brothers, which is owed
$235,630.
The company's affiliate, Johnson Broadcasting Inc., and owner Doug
Johnson also filed for bankruptcy.
John James Sparacino, Esq., and Timothy Alvin Davidson, II, Esq.,
at Andrews and Kurth LLP, represent the company.
Headquartered Houston, Texas, Johnson Broadcasting of Dallas,
Inc., operates a telecommunication business.
JOHN VATH: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: John Lawrence Vath, Jr.
aka John L. Vath, Jr.
16420 Lake Church Road
Odessa, FL 33556
Bankruptcy Case No.: 08-16547
Chapter 11 Petition Date: October 22, 2008
Court: Middle District of Florida (Tampa)
Debtor's Counsel: Stanley J. Galewski, Esq.
stan@galewski.com
Galewski Law Group PA
201 E. Kennedy Blvd, #760
Tampa, FL 33602
Tel: (813) 222-8210
Fax: (813) 222-8211
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/flmb08-16547.pdf
LAKE AT LAS VEGAS: Wants Exclusive Periods Extended Until Jan. 13
-----------------------------------------------------------------
Bill Rochelle of Bloomberg News reports that Lake at Las Vegas
Joint Venture, LLC, and its debtor-affiliates asked the U.S.
Bankruptcy Court for the District of Nevada for an extension of
their exclusive right to propose a Chapter 11 plan until Jan. 13,
2009. The Court, according to the report, scheduled a hearing on
Nov. 13, 2008, to consider the request.
The Official Committee of Unsecured Creditors and the Debtors'
lenders support the request.
About Lake at Las Vegas
Headquartered in Henderson, Nevada, Lake at Las Vegas Joint
Venture, LLC and 14 of its debtor-affiliates --
http://www.lakelasvegas.com/-- are owners and developers of
3,592-acre residential and resort destination Lake Las Vegas
Resort in Las Vegas, Nevada. Centered around a 320-acre man-made
lake, Lake Las Vegas contains more than 9,000 residential units,
and also includes two luxury resort hotels (a Loews and a Ritz-
Carlton), a casino, a specialty retail village shopping area,
marinas, three signature golf courses and related clubhouses, and
other real property.
The Debtors filed separate petitions for Chapter 11 relief on
July 17, 2008 (Bankr. D. Nev. Lead Case No. 08-17814). When Lake
at Las Vegas Joint Venture, LLC filed for protection from its
creditors, it listed assets of $100 million to $500 million, and
debts of $500 million to $1.0 billion. Schwartzer & McPherson Law
Firm is the Debtors' proposed local counsel.
Santoro, Driggs, Walch, Kearney, Holley & Thompson is the Debtors'
proposed special litigation counsel. Munger, Tolles & Olson LLP
is the Official Committee of Unsecured Creditors' proposed lead
counsel. McDonald Carano Wilson LLP is the Creditors Committee's
proposed local counsel.
LITHIUM TECHNOLOGY: Amir Albaz Quits as Chief Financial Officer
---------------------------------------------------------------
Lithium Technology Corporation disclosed in a Securities and
Exchange Commission filing that on Oct. 15, 2008, Amir Elbaz
resigned as the Chief Financial Officer.
Mr. Elbaz will continue working with the company during a
transition period up to Nov. 30, 2008. The company expects to
appoint a new CFO around Dec. 1, 2008.
About Lithium Technology
Based in Plymouth Meeting, Pennsylvania, Lithium Technology
Corporation (OTC: LTHU) -- http://www.lithiumtech.com/-- produces
unique large-format rechargeable batteries under the GAIA brand
name and trademark. The company supplies a variety of military,
transportation and back-up power customers in the U.S. and Europe
from its two operating locations in Plymouth Meeting and
Nordhausen, Germany.
Going Concern Doubt
In a letter dated May 13, 2008, Amper, Politziner & Mattia, P.C.,
raised substantial doubt on the ability of Lithium Technology
Corporation to continue as a going concern after it audited the
company's financial statements for the year ended Dec. 31, 2007.
The auditor pointed to the company's recurring losses from
operations since inception and working capital deficiency.
The company's operating plan seeks to minimize its capital
requirements, but the expansion of its production capacity to meet
increasing sales and refinement of its manufacturing process and
equipment will require additional capital. The company expects
that operating and production expenses will increase
significantly. The company has recently entered into a number of
financing transactions and is continuing to seek other financing
initiatives. The company needs to raise additional capital to
meet its working capital needs, for the repayment of debt and for
capital expenditures. Such capital is expected to come from the
sale of securities. The company believes that if it raises
approximately US$14,000,000 to US$20,000,000 in debt and equity
financings it would have sufficient funds to meet its needs for
working capital, repayment of debt and for capital expenditures
over the next 12 months to meet expansion plans.
Bankruptcy Warning
Management warned that if the company is unsuccessful in
completing these financings, it will not be able to meet its
working capital, debt repayment or capital equipment needs or
execute its business plan. In such case, the company will assess
all available alternatives including a sale of its assets or
merger, the suspension of operations and possibly liquidation,
auction, bankruptcy, or other measures.
MATTRESS DISCOUNTERS: Court Approves Oct. 31 Auction
----------------------------------------------------
Bill Rochelle of Bloomberg News reports that the U.S. Bankruptcy
Court for the District of Maryland approved the request of
Mattress Discounters Corp. and debtor-affiliate Mattress
Discounters Corp. East to hold an auction of their assets on
Oct. 31, 2008.
According to Troubled Company Reporter on Oct. 21, 2008, a buyer
has offered $152,000 to purchase leases on five stores in New
England that are closing. The net price is $30,000 after
subtracting the cost of curing lease-payment arrears, according to
the report.
Based in Upper Marlboro, Maryland, Mattress Discounters Corp. is a
specialty mattress retailer. The company and Mattress Discounters
Corporation East filed separate petitions for Chapter 11 relief on
Sept. 10, 2008 (Bankr. D. Md. Case Nos. 08-21642 and 08-21644).
Kevin Kobbe, Esq., at DLA Piper LLP (US) represents the Debtor.
When Mattress Discounters Corp. filed for protection from its
creditors, it listed assets of between $10 million and $50
million, and debts of between $10 million and $50 million.
This is the second bankruptcy filing for Mattress Discounters
Corp. The Debtor first filed for Chapter 11 protection on
Oct. 23, 2002 (Bankr. D. Md. Case No. 02-22330). The Debtor
emerged from its first bankruptcy filing on March 14, 2003.
MERVYN'S LLC: Court Approves Closing Out Sale at 26 Stores
----------------------------------------------------------
Mervyn's LLC and its debtor-affiliates seek authority from the
U.S. Bankruptcy Court for the District of Delaware to sell or
assign their interest in the Leases for the 26 stores in
accordance with their proposed procedures. The Debtors have
determined that the procedures will enable them to realize the
maximum value for their leases.
The Debtors previously obtained Court authority to conduct store
closing sales at 26 of their store locations. The Debtors also
obtained approval (i) to retain Hilco Real Estate, LLC to, among
other things, market and negotiate the sale or assignment of the
Debtors' leases for the 26 stores, and (ii) for expedited
procedures for the rejection or assumption and assignment of
unexpired leases and executory contracts.
The Debtors ask the Court to enter:
(i) at a hearing to be held October 27, 2008, at 11:00
a.m., an order (a) establishing the terms and conditions
for conducting an auction and bidding procedures to sell
any or all of the 26 leases, (b) approving certain bid
protections to a Stalking Horse Bidder, if applicable (c)
fixing the manner and extent of notice, and (d) scheduling
a hearing to consider the entry of the Lease Sale Order;
and
(ii) at the hearing to be held November 10, 2008, at 1:00 p.m.,
an order (a) approving and authorizing the sale of any or
all of the 26 Leases pursuant to the proposed terms and
conditions, and (ii) waiving the 10-day stay required
under Rules 6004(g) and 6006(d) of the Federal Rules of
Bankruptcy Procedure.
Sale of the Leases Pursuant to Auction
Under Rule 6004(f)(1), the sale of property outside the ordinary
course of business may be by private sale or by public auction.
The Debtors have determined that the sale of the Leases through a
public auction process will enable them to obtain the highest and
best offers for the Leases, and maximize the value of their
estates.
The Debtors propose to establish these Auctions and Bid
procedures:
(a) The Debtors will serve a copy of the notice of auction not
later than two business days after the entry of the
Procedures Order on the U.S. Trustee, counsel to the
Debtor-in possession agent, counsel to the Official
Committee of Unsecured Creditors, all known potential
purchasers, counsel to all landlords, counsel to the
Prepetition Second Lien Lenders, counsel to Cerberus
Capital Management, LP, counsel to Lubert-Adler and Klaff
Partners, LP, counsel to MDS entities, and all parties
entitled to receive notices in the Chapter 11 cases
pursuant Bankruptcy Rule 2002.
(b) The Auction will be conducted on November 5, 2008, at
11:00 a.m. (Eastern) at the offices of Morgan, Lewis &
Bockius LLP, or other locations as may be selected by the
Debtors. Bidding at the Auction will continue until the
time the highest or best bid is determined.
(c) In the event the Debtors receive only a single Qualified
Bid for a particular Lease or group of Leases, the Leases
will not be subject to bidding at the Auction, and the
Debtors may seek to assume and assign the Leases at the
Lease Sale Hearing if the Qualified Bid is otherwise
acceptable to the Debtors.
(d) A minimum Qualified Bid amount for each Lease or group of
Leases may be announced or posted prior to the Auction.
All bidding will be in increments or posted prior to the
Auction.
(e) At the conclusion of the Auction, the Debtors will
announce which bid is the highest and best bid for each
Lease and which bid is the second highest bid for each
Lease. The winning bidders will be required to enter into
a definitive assignment agreement, before the Auction is
deemed closed.
(f) The Lease Sale Hearing will be held on November 10, 2008,
at 1:00 p.m. (Eastern). Objections must be filed and
served on the Notice Parties no later than November 7,
2008, at 4:00 p.m.
(g) The closing of a sale of a Lease or group of Leases and
the assignment agreement will take place within one
business day following the entry of the Lease Sale Order
approving the assumption and assignment of the Leases to
the Winning Bidder. Upon failure to consummate a sale of
some or all of the Leases due to a breach by the Winning
Bidder, the Debtors will retain the deposit as liquidated
damages, and the next highest or otherwise Bid as
disclosed at the Lease Sale Hearing with respect to some
or all the Leases, will be deemed the Winning Bidder and
will consummate the sale of the Leases without further
Court order. The second highest or best Bidder for any
Leases will keep its bid open for fourteen days after the
Auction.
(h) The Debtors reserve the right to reject any and all bids
for a particular Lease or to remove any of the Leases from
the Auction if the Debtors determine that the action will
maximize the value for the Debtors' estates.
(i) The Debtors may adopt rules for the bidding process or
revise the procedures that will better promote the goals
of the sale process without further Court order.
The Debtors also ask the Court to approve these Bid Procedures:
(a) On or before October 31, 2008, at 4:00 p.m., a bidder must
submit a Qualified Bid to the Debtors, Richards, Layton &
Finger, P.A., FTI Consulting, Miller Buckfire & Co., LLC,
Morgan, Lewis & Bockius LLP, counsel to the DIP agent,
counsel to the Committee, Hilco Real Estate, LLC, and
counsel to the Prepetition Second Lien Lenders.
(b) Each bidder will be deemed to acknowledge:
(i) that it had an opportunity to inspect and examine
the premises and to review the lease agreements and
all other pertinent documents with respect to the
Leases before making its offer;
(ii) that Bidder is not relying upon any written or oral
statements, representations, or warranties of the
Debtors, their agents or representatives; and
(iii) that the occupancy of the premises in the Leases
may not be available until the completion of the
store closing at the premises.
(c) Only Bidders that have submitted qualified bids will be
eligible to participate in the Auction. To be a Qualified
Bid, a bid should:
(i) include each of the Required Bid Documents;
(ii) be an offer to purchase one or more of the Leases
for cash, except that a landlord can "credit bid"
on a Lease to which it is a party, up to that
portion, if any, which represents the total
outstanding documented and verifiable pre- or
postpetition rent arrears, together with the
balance for cash only and a waiver of rejection
damages for the Lease;
(iii) not be contingent on obtaining financing; and
(iv) be received by the Bid Deadline.
(d) All bids must include:
(i) a written offer on the Bidder's corporate
letterhead or Bidder's legal counsel's letterhead;
(ii) in the case of a real estate broker bidding on a
Lease as agent for a Bidder, the broker must submit
the Required Bid Documents together with a letter
of authorization on the Bidder's corporate
letterhead, executed by an authorized officer of
the Bidder;
(iii) in the case of a landlord bidding on a Lease to
which the landlord is a party, a written offer on
the landlord's corporate letterhead or the
landlord's legal counsel's letterhead, for the
purchase of one or more of the Leases that must
include the gross amount offered for each
individual Lease;
(iv) a certified check for the deposit;
(v) an executed and fully completed copy of an
assignment agreement;
(vi) with the exception of a Landlord Bid, written
evidence of the Bidder's ability to consummate the
transaction and evidence of adequate assurance of
future performance; and
(vii) "package" bids for multiple Leases for the 26
Leases will be considered but will be subject to
competitive bids from (a) other package bids, and
(b) individual bids for the Leases which may
aggregate more than the package bid.
(e) Each Bidder will tender a deposit that is:
(i) equal to 10% of the bid amount, or for each Lease on
which the Bidder submits a bid;
(ii) in the case of a Landlord Bid, equal to 10% of the
cash portion of any bid over and above any Cure
Amounts and claims waiver;
(iii) in the case of a package bid, 15% of the bid amount,
for each Lease on which the Bidder submits a bid.
The deposit will be by cashier's check payable to
the Debtors;
(iv) the Debtors will hold in escrow the deposit of the
first highest or best Bidder and the deposit of the
second highest or best Bidder until the earlier of
(a) the Closing, and (b) 14 days after the Auction.
The Debtors will return the deposits of all other
Bidders within 10 business days after the Auction.
In the case of a Landlord Bid, the Cure Amount, if
any, will be deemed part of the deposit.
Christopher M. Samis, Esq., at Richards, Layton & Finger, PA, in
Wilmington, Delaware, relates that in the event of a failure to
consummate a sale of a Lease because of a breach or failure on
the part of a successful bidder with respect to the Lease, the
Debtors are requesting authority to retain the Winning Bidder's
deposit as liquidated damages, and the next highest or otherwise
best Qualified Bidder, as disclosed at the hearings with respect
to the Lease, will be deemed the Winning Bidder and will
consummate the sale of the Lease without further Court order.
Moreover, Mr. Samis notes, in the event of a failure to
consummate a sale of a Lease because of a breach or failure on
the part of the Debtors, the Debtors sole obligation and
liability will be to refund to the Winning Bidder with respect to
the Leases.
The Debtors reserve the right at any time, in their sole
discretion, prior to the Auction to select and negotiate one or
more "stalking horse" bids and enter into an agreement with the
Stalking Horse Bidder for one or more of the Leases.
The Debtors propose to pay each prospective Stalking Horse Bidder
a break-up fee for up to three percent of its aggregate bid, plus
reimbursement of the Stalking Horse Bidder's actual, necessary,
reasonable and documented out-of-pocket expenses, up to a maximum
cap to be established by the Debtors in consultation with the DIP
Agent, the Committee, and the Prepetition Second Lien Lenders.
According to Mr. Samis, in the event that a landlord is the
successful bidder for the Lease under which it is the landlord,
the Debtors request the Court's authority to enter into a lease
termination agreement with any landlord and to seek approval from
the Court for the lease termination agreement at the Lease Sale
Hearing.
The Debtors add that any sale, assignment or other disposition of
each of the Lease will be without representations or warranties
of any kind, nature or description by the Debtors, their agents
or representatives. Each of the Lease will be transferred "as
is" and "where is".
The Debtors relate that the sale of the Leases will not include
personal property, inventory, fixtures, trade fixtures, or other
furnishings or equipment located in the premises whether or not
owned by the Debtors. The Debtors reserve their rights to sell
the property to the Winning Bidder or to any other party, to
abandon any or all of the personal property located at each of
the leased premises, or to make other arrangements as may be
appropriate.
To attract the highest and best offers, the Debtors request that
the Leases be assigned and sold, pursuant to Section 365(f) of
the Bankruptcy Code, free and clear of all liens, claims,
encumbrances, and security interests, which will attach to the
net proceeds received by the Debtor as a result of the sale with
the same force and effect that they would now have, subject to
further Court order. The Debtors also request that the Winning
Bidder be afforded all the protections under Section 363(m) of
the Bankruptcy Code as good faith purchaser in the event that the
sale of the Leases is later reversed or modified on appeal.
The Debtors further ask the Court to waive the 10-day stay with
respect to the sales of and assignment of the Leases. "Requiring
the Debtors to pay additional unnecessary administrative
obligations on the Leases sold would place a substantial burden
on the estates," Mr. Samis contends.
At the Debtors' behest, the Court will convene a hearing on the
Motion on Oct. 27, 2008, at 11:00 a.m. Objection deadline is
on Oct. 23, at 4:00 p.m.
About Mervyn's LLC
Headquartered in the San Francisco Bay Area, Mervyn's LLC --
http://www.mervyns.com/-- provides a mix of top national brands
and exclusive private labels. Mervyn's has 176 locations in seven
states. Mervyn's stores have an average of 80,000 retail square
feet, smaller than most other mid-tier retailers and easier to
shop, and are located primarily in regional malls, community
shopping centers, and freestanding sites.
The company and its affiliates filed for Chapter 11 protection on
July 29, 2008, (Bankr. D. Del. Lead Case No.: 08-11586). Howard
S. Beltzer, Esq., and Wendy S. Walker, Esq., at Morgan Lewis &
Bockius LLP, and Mark D. Collins, Esq., Daniel J. DeFranceschi,
Esq., Christopher M. Samis, Esq. and L. Katherine Good, Esq., at
Richards Layton & Finger P.A., represent the Debtors in their
restructuring efforts. Kurtzman Carson Consultants LLC is the
Debtors' claims agent. The Debtors' financial advisor is Miller
Buckfire & Co. LLC. Mervyn's LLC's balance sheet at Aug. 30,
2008, showed $665,493,000 in total assets and $717,160,000 in
total liabilities resulting in a $51,667,000 total stockholders'
deficit.
(Mervyn's Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
MASONITE INT'L: Has Until Mid-November to Pay Note Interest
-----------------------------------------------------------
Masonite International Inc. disclosed in a Securities and Exchange
Commission filing that on Sept. 16, 2008, the agent, on behalf of
the lenders, under its credit facility provided notice under the
company's senior subordinated note indentures of the imposition of
a payment blockage period with respect to its $769.9 million
senior subordinated notes due 2015.
The notice was permitted by the terms of the indentures as a
result of the company's non-compliance with certain financial
covenants under its credit facility.
As a result, the company is not permitted for a period of up to
179 days from Sept. 16, 2008, to make interest or principal
payments under the senior subordinated notes.
In accordance with this restriction, the company did not make a
scheduled payment of interest on the senior subordinated notes
when due on Oct. 15, 2008, although it had sufficient cash on hand
to make such payment. Failure to make such interest payment
within 30 days of Oct. 15, 2008, would constitute an event of
default under the note indentures, permitting holders of at least
30% in principal amount of outstanding notes to declare the full
amount of the notes immediately due and payable.
Masonite U.S. and Masonite Canada entered into senior secured
credit facilities, consisting of a $1.175 billion term loan
facility and a $350.0 million revolving credit facility, in
connection with a 2005 merger with Stile Canada. Masonite U.S.
and Masonite Canada also entered into a $770.0 million senior
subordinated loan facility.
In a regulatory filing with the SEC in April 2008, Masonite said
its senior secured credit facilities contain cross-default and
cross-acceleration provisions, and the indentures governing its
notes also provide for cross-acceleration. The provisions could
result in substantially all of the company's debt obligations
coming due at the same time if an event of default under any of
its indebtedness were to occur. Masonite said that, in such
event, it may not have available liquidity to satisfy all of those
obligations.
On September 16, 2008, Masonite entered into a forbearance
agreement with the lenders that are party to the company's credit
facility. Under terms of the forbearance agreement, neither the
administrative agent nor the lenders will (i) take action to
accelerate the maturity of or terminate the company's revolving
credit facility or to otherwise enforce payment of the company's
obligations under the credit agreement, or (ii) exercise any other
rights and remedies available to them under the credit agreement
or applicable law. The forbearance agreement applies to the non-
compliance by the company of certain financial covenants as of
June 30, 2008 and, provisionally, any non-compliance as of
September 30, 2008. The forbearance agreement expires November 13,
2008, unless further extended by mutual agreement of the company,
the administrative agent and the lenders.
About Masonite International
Based in Ontario, Canada, Masonite International Corporation --
http://www.masonite.com/-- (TSE:MHM) is a vertically integrated
producer, manufacturing key components of doors, including
composite molded and veneer door facings, glass door lites and cut
stock. The company provides these products to its customers in
more than 70 countries around the world. The company is a wholly
owned subsidiary of Masonite International Inc. It offers a range
of interior and exterior doors. Masonite Canada operates Masonite
International's Canadian subsidiaries, well as certain other non-
United States subsidiaries.
On December 22, 2004, Masonite International Corporation entered
into a combination agreement with Stile Canada, an entity
controlled by affiliates of Kohlberg Kravis Roberts & Co. L.P. On
April 6, 2005, Stile Canada acquired all of the common shares of
Masonite International Corporation at a purchase price of C$42.25
per share in cash. Following the Transaction, Masonite
International Corporation was amalgamated with Stile Canada to
form Masonite Canada Corporation, which then transferred all of
the common shares of Masonite Holdings, Inc., which is the parent
company of Masonite International Corporation's U.S. subsidiaries,
to Stile U.S. Following the transfer, Masonite Holdings, Inc. was
merged with and into Stile U.S., and the surviving corporation was
renamed Masonite Corporation. Masonite Canada Corporation was
subsequently renamed Masonite International Corporation.
The aggregate value of the Transaction, including the assumption
of indebtedness, premiums, fees and expenses, was approximately
$2.7 billion, including approximately $551.5 million of new equity
provided by KKR and $24.3 million of equity invested by certain
members of management at the closing. On June 30, 2005, members
of Masonite's management and certain other employees invested an
additional $22.6 million in the capital stock of Masonite Holding
Corporation, with the proceeds used to repurchase shares held by
KKR.
* * *
As reported in the Troubled Company Reporter on Sept. 1, 2008,
Standard & Poor's Ratings Services lowered its long-term corporate
credit ratings on Masonite International Inc. (Masonite) and its
subsidiaries, Masonite International Corp. and Masonite US Corp.,
to 'CCC+' from 'B-'. S&P also lowered the senior secured debt
rating on Masonite to 'B' from 'B+'. The ratings remain on
CreditWatch with negative implications, where they were placed
April 18, 2008.
MTJ WILLIAMS: Delays in Obtaining Credit Forces Ch. 11 Bankruptcy
-----------------------------------------------------------------
Delays in obtaining financing forced MTJ Williams LLC, whose chief
member is Michael T. Williams, to file for Chapter 11 bankruptcy,
Andy Meek of The Memphis Daily News reported Wednesday.
Mr. Williams, a Memphis grocery store owner who owns the Apple
Market at 3237 Winchester Road, in Memphis, filed for bankruptcy
Oct. 14, listings assets of $758,000 and liabilities of
$1.2 million.
Plans to open the Williams Soulsville Apple market will push
through despite the bankruptcy filing. "The intent is to keep the
store open and reorganize it under Chapter 11," said Mr. Williams'
attorney, John Ryder.
"You've got a lot of adverse conditions in the economy," Mr. Ryder
said. "Times are tough. It was that combined with the tightening
of the credit market. There were delays in obtaining a line of
credit, it couldn't happen in time, so we had to go the bankruptcy
route."
Based in Memphis, Tennessee, MTJ Williams, LLC, is a grocery store
priorietorship. The company filed for Chapter 11 relief on Oct.
14, 2008 (Bankr. W.D. Tenn. Case No. 08-30768). John L. Ryder,
Esq., at Harris Shelton Hanover Walsh, PLLC, represents the Debtor
as counsel. When the Debtor filed for protection from its
creditors, listed assets of $500,000 to $1,000,000, and debts of
$1,000,000 to $10,000,000.
MYTIQUE ENERGY: To Acquire All Petro Common Shares
--------------------------------------------------
Mystique Energy, Inc., said that it will acquire all of the issued
common shares of Petro Energy Corp. under an arrangement agreement
dated Sept. 8, 2008.
The agreement forms the basis of a proposed arm's length business
combination the details with respect to which Mystique has filed
pursuant to the Companies' Creditors Arrangement Act. The terms
of the combination have been approved by the Alberta Court of
Queen's Bench and by the unsecured creditors of Mystique.
By order of the Court, the current deadline to complete the
combination is Dec. 31, 2008. Trading in shares of Mystique
currently listed on the TSV Venture Exchange is currently halted
and is anticipated to remain halted until the receipt by the TSXV
of satisfactory documentation relating to the Combination,
including a Mystique Filing Statement/Petro Information Circular
in relation thereto which shall include prospectus level
disclosure with respect to Mystique, Petro and the listed issuer
resulting from the Combination.
Petro anticipates that it will submit an application for an
exemption from the sponsorship requirements articulated by Policy
2.2 of the TSXV, however there is no assurance that such exemption
will be granted.
In connection with the combination:
a) all unexercised options to purchase common shares of
Mystique shall be cancelled for no consideration and shall
cease to represent the right to acquire any Mystique Shares;
b) the issued and outstanding Mystique Shares shall be
consolidated on the basis of one Mystique Share for each
thirty Mystique Shares issued and outstanding immediately
prior to such consolidation;
c) those creditors of Mystique who have elected, none of which
are non-arm's length parties to either Mystique or Petro,
shall receive that number of post-consolidation Mystique
Shares calculated by dividing each such Mystique Creditor's
aggregate proven claims by $0.25;
d) the directors of Mystique shall be replaced with a board of
directors comprised of three nominees of Petro and one
nominee of Mystique, or such other directors as shall be
determined by Petro and Mystique
e) the articles of Mystique shall be amended such that the name
of Mystique shall be changed to "Petro Energy Corp.";
f) all unexercised options to acquire Petro Shares shall be
cancelled for no consideration and shall cease to represent
the right to acquire any Petro Shares; and
g) with respect to each Petro Share, each holder of Petro Shares
shall be deemed to have received an offer from Mystique to
acquire all of such holder's Petro Shares, and an agreement
of purchase and sale will exist between Mystique and such
holder, and such Petro Shares will be and will be deemed to
be transferred by the holder thereof, to Mystique in exchange
for one Mystique Share for each Petro Share so transferred.
Petro is a private company operating in the oil and gas sector.
Petro was incorporated under the Business Corporations Act on July
28, 2006.
Headquartered in Alberta, Canada, Mystique Energy Inc. (MYS:TSX
Venture) -- http://www.mystiqueenergy.ca/-- is a junior oil and
gas company that had focused on exploration and development of
petroleum and natural gas reserves, with production in western
Alberta.
NOVADEL PHARMA: Completes $4 Million Convertible Notes Sale
-----------------------------------------------------------
NovaDel Pharma, Inc., disclosed in a Securities and Exchange
Commission filing that on Oct. 17, 2008, it closed on the
remaining portion of the ProQuest financing, in the amount of
$2,525,000 of convertible notes and accompanying warrants,
yielding net proceeds to the Company of approximately $2.5
million, after deducting fees and estimated expenses.
The financing relates to a Securities Purchase Agreement on May 6,
2008, to sell up to $4,000,000 of secured convertible notes, and
accompanying warrants to ProQuest Investments II, L.P., ProQuest
Investments II Advisors Fund, L.P. and ProQuest Investments III,
L.P.
The Company has closed on the initial portion the ProQuest
financing on May 30, 2008, in the amount of $1,475,000 of
convertible notes and warrants.
The securities sold in this private placement have not been
registered under the Securities Act of 1933, as amended, referred
to herein as the Securities Act, and may not be offered or sold in
the United States in the absence of an effective registration
statement or exemption from the registration requirements under
the Securities Act.
About NovaDel Pharma
Based in Flemington, N.J., NovaDel Pharma Inc. (AMEX: NVD)
-- http://www.novadel.com/-- is a specialty pharmaceutical
company developing oral spray formulations for a broad range of
marketed drugs. The company's proprietary technology offers, in
comparison to conventional oral dosage forms, the potential for
faster absorption of drugs into the bloodstream leading to quicker
onset of therapeutic effects and possibly reduced first pass liver
metabolism, which may result in lower doses.
Going Concern Doubt
J.H. Cohn LLP, in Roseland, N.J., expressed substantial doubt
about NovaDel Pharma Inc.'s ability to continue as a going concern
after auditing the company's financial statements for the years
ended Dec. 31, 2007, and 2006. The auditing firm pointed to the
company's recurring losses from operations and negative cash flows
from operating activities.
The company posted $3,202,000 in net losses on $51,000 in revenues
for the second quarter ended June 30, 2008. As of the same date,
the company had $70,417,000 in accumulated deficit.
NPS PHARMACEUTICALS: BVF Entities Disclose 4.67% Equity Stake
-------------------------------------------------------------
BVF Partners L.P. and BVF, Inc., disclosed in a Securities and
Exchange Commission filing that as of Oct. 14, 2008, they may each
be deemed to beneficially own 2,207,215 shares of NPS
Pharmaceuticals' common stock, representing 4.67% of the
47,227,375 shares issued and outstanding.
Biotechnology Value Fund, L.P. disclosed that as of Oct. 14, 2008,
it may be deemed to beneficially own 498,215 shares of NPS
Pharmaceuticals, Inc.'s common stock, representing 1.05% of the
47,227,375 shares issued and outstanding.
Biotechnology Value Fund II, L.P. disclosed that as of Oct. 14,
2008, it may be deemed to beneficially own 341,000 shares of NPS
Pharmaceuticals' common stock, representing 0.72% of the
47,227,375 shares issued and outstanding.
BVF Investments, L.L.C. disclosed that as of Oct. 14, 2008, it may
be deemed to beneficially own 1,218,000 shares of NPS
Pharmaceuticals' common stock, representing 2.58% of the
47,227,375 shares issued and outstanding.
Investment 10, L.L.C. disclosed that as of Oct. 14, 2008, it may
be deemed to beneficially own 150,000 shares of NPS
Pharmaceuticals' common stock, representing 0.32% of the
47,227,375 shares issued and outstanding.
Based in Bedminster, New Jersey, NPS Pharmaceuticals Inc. (Nasdaq:
NPSP) -- http://www.npsp.com/-- is developing specialty
therapeutics company for gastrointestinal and endocrine disorders
with high unmet medical need. The company is currently advancing
two late-stage programs. Teduglutide, a proprietary analog of
GLP-2, is in Phase 3 clinical development for intestinal failure
associated with short bowel syndrome as GATTEX(TM) and in
preclinical development for gastrointestinal mucositis and
necrotizing enterocolitis.
NPS Pharmaceuticals, Inc. reported its financial results for the
second quarter of 2008. At June 30, 2008, the company's balance
sheet showed total assets of $187.7 million and total liabilities
of $384.9 million, resulting in a $197.1 million stockholders
deficit.
Revenues were $27.0 million for the second quarter of 2008, as
compared to $13.1 million for the second quarter of 2007.
* * *
As reported Troubled Company Reporter on May 14, 2008, the Audit
Committee of the Board of Directors of NPS Pharmaceuticals, Inc.,
concluded, after consultation with management of the company and a
review of the pertinent facts, that the previously reported
financial statements contained in the company's Annual Report on
Form 10-K for the fiscal year ended Dec. 31, 2007, should not be
relied upon due to an error in the computation of the cash sweep
premium interest expense associated with the Secured 8.0% Notes
due on March 30, 2017. The company detected this error during the
course of the preparation and review of the company's Quarterly
Report on Form 10-Q for the period ended March 31, 2008.
As a result of this error, the company understated accrued
interest expense and retained deficit and overstated income taxes
payable on the Consolidated Balance Sheet as of Dec. 31, 2007.
Also, as a result of the error, the company understated interest
expense and overstated income tax expense on the Consolidated
Statement of Operations for the year ended Dec. 31, 2007. The
company is currently working on restating the financial statements
that were included in its Form 10-K for the year ended Dec. 31,
2007, and will file an amendment on Form 10-K/A to include the
restated financial statements and related disclosures once they
are completed.
OSKAR HUBER: Authorized to Deliver Pre-Bankruptcy Orders
--------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey has
authorized Oskar Huber, Inc., to complete furniture orders for
which it received deposits prior to filing for Chapter 11
bankruptcy on Sept. 22, 2008, Michelle Brunetti of the Press of
Atlantic City (N.J.) reported Sunday.
"The company was granted the right to honor deposits and fulfill
orders to the best of its ability, and will try to do that," said
Hal Baume, a partner in Fox, Rothschild LLP in Princeton and
counsel to Oskar Huber.
"In the next two to three weeks, every customer who gave a deposit
will be contacted by phone, or by letter if they can't be reached
by phone, to verify orders and talk about options," Mr. Baume
said. Mr. Baume said that all Oskar Huber stores will reopen by
the end of the week for the liquidation sale being run by Planned
Furniture Promotions.
Mr. Baume said that the company has already fulfilled 43 percent
of pre-bankruptcy orders.
According to the report, the Court has not permitted the refunds
of deposits.
Mr. Baume said the company will send notices and claim forms to
any customer who paid a deposit but doesn't get their merchandise,
in plenty of time to meet any deadline. The deadline for filing
claims is February 11.
Based in Cherry Hill, N.J., Oskar Huber Fine Furniture, Inc., and
five of its debtor-affiliates, including Oskar Huber, Inc., filed
separate petitions for Chapter 11 on Sept. 22, 2008 (Bankr. D.
N.J. Lead Case No. 08-28138). Hal L. Baume, Esq., at Fox
Rothschile LLP represents the Debtor as counsel. When the Debtor
filed for protection from its creditors, it listed assets of less
than $50,000, and debts of less than $50,000.
PAMCO CLO: Moody's Chips $90MM Notes Rating to 'Caa2' from 'Baa2'
-----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings on the notes
issued by PAMCO CLO Series 1997-1:
Class Description: $90,000,000 Class B Second Senior Secured Notes
due 8/6/09
-- Prior Rating: Baa2
-- Prior Rating Date: 12/19/2006
-- Current Rating: Caa2
According to Moody's, this rating action is a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool, consisting primarily of loans and
bonds. Moody's noted that there is much uncertainty in cash flows
expected from the remaining collateral which is not publicly rated
by Moody's, and that the collateral has substantial concentration
in certain industries and issuers.
PAPER INT'L: U.S. Trustee Forms Three-Member Creditors' Committee
-----------------------------------------------------------------
Diana G. Adams, the U.S. Trustee for Region 2, appointed three
creditors to serve on an Official Committee of Unsecured Creditor
for Chapter 11 cases of Paper International Inc. and Fiber
Management of Texas Inc.
1. Gramercy Advisors, LLC
Attn: Robert L. Rauch
20 Dayton Avenue
Greenwich, CT 06830
Tel: (203) 552-1905
2. Credit Renaissance Partners
Attn: Julian Schroeder
295 Madison Avenue
New York, New York 10017
Tel: (212) 935-0204
3. Law Debenture Trust Company of New York
Attn: James D. Heaney
400 Madison Avenue, Suite 4D
New York, New York 10017
Tel: (212) 750-6474
Official creditors' committees have the right to employ legal
and accounting professionals and financial advisors, at the
Debtors' expense. They may investigate the Debtors' business and
financial affairs. Importantly, official committees serve as
fiduciaries to the general population of creditors they represent.
Those committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
About Paper International
Headquartered in Prewitt, New Mexico, Paper International, Inc.
-- http://www.internationalpaper.com-- manufactures paper and
packaging products with operations in North America, Europe, Latin
America, Russia and North Africa. The Debtors have more than
50,000 employees in in 20 countries. The company and Fiber
Management of Texas, Inc. filed for Chapter 11 protection on
Oct. 6, 2008 (Bankr. S.D. N.Y. Lead Case No.08-13917). Larren M.
Nashelsky, Esq., at Morrison & Foerster LLP, at represents the
Debtors. The Debtor selected Meade Monger as their chief
restructuring officer. The Debtors also selected AP Services, LLC
as their restructuring advisor.
Corporacion Durango, S.A.B. de C.V. of Durango, Mexico, owns
100% of the Debtors' interests as of October 6, 2008. Corporacion
Durango filed a voluntary Chapter 15 petition in the United
States Bankruptcy Court for the District of New York, Case
No. 08-13911.
Paper International listed assets of between $100 million and
$500 million, and debts of between $500 million and $1 billion,
while Fiber Management listed assets of between $1 million and
$10 million, and debts of between $500 million and $1 billion.
PATRIOT HOMES: Court Gives Final OK to Borrow $9MM
--------------------------------------------------
Bill Rochelle of Bloomberg News reports that the U.S. Bankruptcy
Court for the Northern District of Indiana gave final authority to
Patriot Homes, Inc., and its debtor-affiliates to borrow as much
as $9 million from the secured lender Wells Fargo Bank NA.
Headquartered in Middlebury, Indiana, Patriot Homes, Inc.
-- http://www.patriothomes.com/-- makes modular houses. The
Debtor and 7 of its debtor-affiliates filed separate motions for
Chapter 11 relief on Sept. 28, 2008 (Lead Case No. 08-33347).
Bell Boyd & Lloyd, LLP, is the Debtors proposed counsel. In its
filing, Patriot Homes listed between $10 million and $50 million
in assets and between $10 million and $50 million in debts.
PEGRAIL INC: Case Summary & Eight Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Pegrail, Inc.
51 S. Koweba Lane
Indianapolis, IN 46201
Bankruptcy Case No.: 08-13201
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Design Industries, Inc. 08-13199
Chapter 11 Petition Date: October 22, 2008
Court: Southern District of Indiana (Indianapolis)
Judge: James K. Coachys
Debtor's Counsel: Edward R. Cardoza, Esq.
ecardoza@rubin-levin.net
Rubin & Levin, P.C.
342 Massachusetts Ave., Suite 500
Indianapolis, IN 46204
Tel: (317) 860-2931
Fax: (317)-263-9411
Estimated Assets: $100,000 to $500,000
Estimated Debts: $1,000,000 to $10,000,000
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/insb08-13201.pdf
PETTERS AVIATION: Schedules Filing Deadline Extended to Nov. 10
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Minnesota extended
the deadline for the filing of Petters Aviation, LLC's schedules
of assets and liabilities and statement of financial affairs to
Nov. 10, 2008.
The Debtor asked the Court to extend the deadline for the filing
of its schedules and statements to Nov. 20, 2008. The schedules
and statements were initially due on Oct. 21, 2008.
The Debtor told the Court that it has been unable to complete the
preparation and signing of the schedules and statements because:
-- the financial affairs and the books and records of the
Debtor are complex, and the information needed to
properly complete the lists, schedules and statements
required by Rule 1007 of the Federal Rules of
Bankruptcy Procedure is voluminous; and
-- upon the commencement of the Debtor's case, in order to
continue operations and avoid irreparable harm to
Debtor's estate, the Debtor was required, among other
things, to:
(1) obtain authority to authorize payment of pre-
petition claims of essential creditors and to
maintain existing bank accounts, and
(2) authorize Debtor in Possession to pay wages,
salaries, medical benefits, deductions, insurance
benefits and reimburse employee expenses and to
maintain existing payroll accounts.
The Debtor's accounting personnel are working diligently to
compile and analyze the information necessary to prepare the
schedules, statements, and lists. The Debtor said that due to the
volume of information, the process will take many of the Debtor's
employees several weeks to complete.
About Petters Aviation
Petters Aviation LLC, and its debtor-affiliates MN Airlines LLC,
dba. Sun Country Airlines Inc. and MN Airline Holdings Inc. filed
separate petitions for Chapter 11 relief on Oct. 6, 2008 (Bankr.
D. Minn. Lead Case No. 08-45136). Brian F. Leonard, Esq., Matthew
R. Burton, Esq., at Leonard O'Brien et al., represented the
Debtors as counsel. When Petters Aviation LLC filed for
protection from its creditors, it listed assets of $50 million and
$100 million, and the same range of debts.
PETTERS CO: Judge Puts Halt on Lawsuits Against Founder
-------------------------------------------------------
Jennifer Bjorhus and David Phelps at StarTribune.com report that
the U.S. District Court Judge Ann Montgomery called a halt on
lawsuits being failed against Petter's founder, Tom Petters and
some of his associates.
StarTribune.com relates that so many people are suing Mr. Petters
for allegedly running a Ponzi scheme. According to the report,
court-appointed receiver Doug Kelley and law partner Steven Wolter
complained that the lawsuits are overwhelming their ability to
preserve what they can of Petters' many business entities. The
report quoted Mr. Wolter as saying, "We're seeking some amount of
breathing room to fulfill the receiver's responsibilities."
According to StarTribune.com, Mr. Wolter said that more than 30
civil lawsuits are now pending in multiple states. Finding
lawyers to defend the Petters companies is costly and time-
consuming, the report says, citing Mr. Wolter.
Judge Montgomery, says StarTribune.com, granted the requested stay
on civil actions, freezing existing lawsuits and halting the
processing of new ones.
About Petters Group Worldwide
Based in Minnetonka, Minn., Petters Group Worldwide LLC is named
for founder and chairman Tom Petters. The group is a collection
of some 20 companies, most of which make and market consumer
products. It also works with existing brands through licensing
agreements to further extend those brands into new product lines
and markets. Holdings include Fingerhut (consumer products via
its catalog and Web site), SoniqCast (maker of portable, WiFi MP3
devices), leading instant film and camera company Polaroid
(purchased for $426 million in 2005), Sun Country Airlines
(acquired in 2006), and Enable Holdings (online marketplace and
auction for consumers and manufacturers' overstock inventory).
Petters formed the company in 1988.
Petters Company, Inc. is the financing and capital-raising unit of
Petters Group Worldwide, LLC. Petters Company, Inc. and Petters
Group Worldwide, LLC, filed separate petitions for Chapter 11
relief on Oct. 11, 2008 (Bankr. D. Minn. Case No. 08-45257 and
08-45258, respectively). James A. Lodoen, Esq., at Lindquist &
Vennum P.L.L.P., represents the Debtors as counsel. In its
petition, Petters Company, Inc. listed debts of between
$500 million and $1 billion, while its parent, Petters Group
Worldwide, LLC listed debts of not more than $50,000.
As reported in the Troubled Company Reporter on Oct. 7, 2008,
Petters Aviation, LLC,, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline Holdings,
Inc., filed for Chapter 11 bankruptcy protection with the U.S.
Bankruptcy Court for the District of Minnesota on
Oct. 6, 2008 (Lead Case No. 08-45136). Petters Aviation, LLC is a
wholly owned unit of Thomas Petters Inc. and owner of MN Airline
Holdings, Inc., Sun Country's parent company.
PILGRIM'S PRIDE: M&G Investment Discloses 10.14% Equity Stake
-------------------------------------------------------------
M&G Investment Funds 1 disclosed in a Securities and Exchange
Commission filing that it may be deemed to beneficially own
7,513,690 shares of Pilgrim's Pride Corporation's common stock,
representing 10.14% of the shares issued and outstanding.
Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation
(NYSE: PPC) -- http://www.pilgrimspride.com/-- produces,
distributes and markets poultry processed products through
retailers, foodservice distributors and restaurants in the U.S.,
Mexico and in Puerto Rico. Pilgrim's Pride employs about 40,000
people and has major operations in Texas, Alabama, Arkansas,
Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania,
Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with
other facilities in Arizona, Florida, Iowa, Mississippi and Utah.
* * *
As reported in the Troubled Company Reporter on Sept. 29, 2008,
Standard & Poor's Ratings Services lowered its ratings on
Pilgrim's Pride Corp., including its corporate credit rating to
'CCC+' from 'BB-'. In addition, S&P revised the CreditWatch
implications to developing from negative.
Moody's Investors Service lowered the ratings of Pilgrim's Pride
Corporation, including: (i) corporate family rating to B2 from
B1; (ii) probability of default rating to B2 from B1; (iii)
$400 million 7.625% senior notes due 2015 to Caa1 from B3 and
(iv) $250 million senior subordinated notes due in 2017 and
$5.1 million (original $100 million) senior subordinated notes
due 2013 to Caa1 from B3.
PINE CCS: Moody's Trims Ratings on Two Note Classes to 'Caa3'
-------------------------------------------------------------
Moody's Investors Service has downgraded its ratings of the three
classes of notes issued by Pine CCS, Ltd.:
(1) $1,025,000,000 Class A-1 Notes due 2014
-- Prior Rating: A3, on review for downgrade
-- Prior Rating Date: June 26, 2008
-- Current Rating: Caa3
(2) $488,600,000 Class A-2 Notes due 2014
-- Prior Rating: A3, on review for downgrade
-- Prior Rating Date: June 26, 2008
-- Current Rating: Caa3
(3) $132,400,000 Class B Notes due 2014
-- Prior Rating: B2, on review for downgrade
-- Prior Rating Date: June 26, 2008
-- Current Rating: C
Pine is a collateralized loan obligation transaction for which the
underlying assets consist entirely of participation interests in
loans granted by Lehman Commercial Paper Inc. Because Pine does
not hold any of these loans directly, it is dependant on the
Lehman Grantor to pass on all interest and principal payments
received from obligors on the underlying loans. The Lehman
Grantor's obligations under the participation arrangements are
guaranteed by Lehman Brothers Holdings Inc., which filed for
protection under Chapter 11 of the U.S. Bankruptcy Code on
September 15, 2008.
The ongoing bankruptcy proceeding of LBHI as well as the
additional insolvency proceedings of various LBHI subsidiaries and
affiliates has left uncertain the ongoing performance of the
Lehman Grantor under the participation interests. The rating
actions reflect this uncertainty, as well as the occurrence of an
event of default on October 20, 2008 and Moody's understanding of
a current interruption in the Lehman Grantor passing through to
Pine payment amounts received from underlying loan obligors. As a
result, Moody's expects that Pine will not be able to make
upcoming payments owed on the Class A-1, Class A-2 and Class B
Notes.
PINE VALLEY: B.C. Supreme Court Approves Definitive Plan
--------------------------------------------------------
The Supreme Court of British Columbia approved Pine Valley
Mining's definitive plan of compromise and arrangement under the
Companies' Creditors Arrangement Act.
Prior to receiving Court approval, the Definitive Plan was
approved at a meeting of the affected creditors of Pine Valley,
its wholly-owned subsidiary, Globaltex Gold Mining Corporation,
and former creditors of Pine Valley's former subsidiary, Falls
Mountain Coal Inc. On Oct. 20, 2006, Pine Valley and its
subsidiaries were granted protection under the CCAA by an initial
order of the Court, which stayed the Creditors from enforcing
their rights until Nov. 15, 2006. Such protection was extended by
subsequent orders of the Court. Pursuant to the Initial Order,
Ernst & Young Inc. was appointed as monitor in the CCAA
proceedings.
Since filing for CCAA protection in 2006, the company has worked
with certain of the Creditors to develop a workable plan of
arrangement and compromise that is fair and reasonable to all of
the Creditors. This process has culminated in the Definitive
Plan, which will facilitate a compromise and arrangement of all
indebtedness of the Company and Globaltex as well as dealing with
the claims of the former creditors of FMC. Most Creditors will
receive a payment in respect of their proven claims and thereby
derive a benefit through the Definitive Plan that might not
otherwise have been available.
On June 29, 2007, pursuant to an agreement amongst the company,
FMC and Cambrian Mining PLC dated April 26, 2007, the company
completed the sale of its shares in FMC, which held all of the
company's interests in the Willow Creek coal mine in north-eastern
British Columbia to Cambrian. The sale was contemplated under a
plan of arrangement approved by the Creditors on June 19, 2007.
In an order dated June 25, 2007, the Court approved, and
authorized and directed the Company and FMC to implement, the
Initial Plan. As a result of the Initial Plan and the June 2007
Order, FMC and its subsidiary, Pine Valley Coal Ltd., were
released from the CCAA proceedings and only Pine Valley and
Globaltex, remained as petitioners.
The Sale Agreement provided for:
-- $15.65 million in cash paid on closing;
-- previously issued Western Canadian Coal Corp. debentures in
the principal amount of $11.0 million delivered on closing;
-- quarterly royalty payments to Pine Valley payable by Cambrian
of $1.00 per tonne, subject to annual escalation at a rate of
2.0% per year to a maximum of $1.50, for each tonne of coal
from FMC's coal properties or from WCC's Brule mine that is
loaded from FMC's train loading facilities in the aggregate
amount of up to $26.0 million; and
-- Royalty Payments are due within 30 days after the end of each
quarter beginning with the fiscal year ending June 30, 2009
and are subject to a minimum quarterly payment of $50,000.
The Company has received the first minimum Royalty Payment of
$50,000.
Pine Valley has subsequently sold in the market the WCC debentures
and realized approximately $10.43 million from such sale.
Under the Sale Agreement Cambrian had the right to assign the Sale
Agreement to WCC and have WCC assume the obligation to make the
Royalty Payments. Cambrian has now completed this assignment.
Upon such assignment WCC became liable for the Royalty Payments
and Cambrian was released from such obligation.
The Initial Plan provided for certain payments of secured debt,
transaction costs and other matters but did not provide for the
final distribution of sale proceeds to the Creditors. This
further distribution will be governed by the Definitive Plan. On
July 5, 2007, $12.06 million was paid by virtue of the order of
the Court to Pine Valley's secured creditor, The Rockside
Foundation.
For the Definitive Plan to be approved by the Creditors in
accordance with the CCAA, it had to be accepted by an affirmative
vote of not less than a majority in number of Creditors
representing two-thirds (66 2/3%) in value of the claims in each
Creditor class voting at the Meeting.
"The CCAA process, started in October 2006, is drawing to an end.
Approval of the Definitive Plan by the Creditors and Final
Approval by the Court marks another important step in the process
of implementing a compromise that is fair and reasonable to all
Creditors," said Mark Smith, President and Chief Executive Officer
of the Company.
The essential terms of the Definitive Plan provide for the
distribution of total assets of $37.11 million, which includes
rights to the aforementioned Royalty Payments ($26.0 million) and
the remaining cash held on behalf of FMC mentioned above ($11.11
million). Former creditors of FMC will have their claims settled:
-- for former creditors of FMC with claims of $10,000 or less,
an immediate cash payment of 40% of the proven claim in full
satisfaction of that claim.
-- for former creditors of FMC with claims in excess of $10,000,
an immediate cash payment of 23.8% of the claim, plus a
proportionate interest in the Royalty Payments of 55.8% of
the claim, to be paid to Pine Valley over an extended time,
as described in the Definitive Plan.
-- an offer to the former creditors of FMC with claims in excess
of $10,000 to exchange 61.4% of their entitlement to Royalty
Payments in the future for a cash payment of 18.85% of that
amount now. The Definitive Plan details the position of each
creditor to whom this offer is being extended.
-- the Company will continue to have and maintain all of its
rights provided in the Sales Agreement and, in particular, in
relation to the Royalty Payments. In the event the Company
wishes to settle the future Royalty Payments for an amount to
the Company that is less than 35% of the remaining balance
outstanding at the time of settlement, the Company will be
required to obtain approval of the majority in dollar value
of the creditors, other than the Company, having a share in
the Royalty Payments.
The Definitive Plan also provides for the settlement of Pine
Valley's claim against its former subsidiary FMC. This claim
arose by virtue of the fact that in order to finance the ongoing
operations to bring the mine into production, Pine Valley advanced
funds to FMC. As a result, in the CCAA proceedings Pine Valley
initially made a claim against FMC in the amount of approximately
$42 million. The Monitor was prepared to accept $27.1 million of
this amount. However, certain creditors took issue with the
Inter-company Claim and sought to have it disallowed on a variety
of theories. In order the avoid the uncertainty of litigation,
while still preserving significant value for the shareholders, the
Company agreed, in the Definitive Plan to compromise the Inter-
company Claim to $18 million. Accordingly, the Company will
participate in the distribution based on the Inter-company Claim
being reduced from $27.1 million to $18 million. Total claims
against FMC, including the claim of Pine Valley, amount to
approximately $46.6 million.
The Definitive Plan provides that direct creditors of the Company
will be paid in full, except for Marubeni Corporation as is more
fully described in the Definitive Plan. Payments to be made to
Tercon Mining P.V. Ltd. are also specifically addressed in the
Definitive Plan and include a payment towards Tercon's legal
expenses relating to its challenge of the Inter-company Claim
against FMC.
The Definitive Plan provides that those former FMC creditors with
claims in excess of $10,000 may accept an additional cash payment
in exchange for a portion of their future Royalty Payments. 34 of
such Creditors, representing $10,274,938 in claims, have so
elected such that $663,300 in additional cash will be paid from
the funds on hand of Pine Valley in exchange for a portion of
their share of the Royalty Payments. As a result, the Company
will be entitled to 69.1% of the Royalty Payments. Subject to the
performance of the Definitive Plan, the treatment of claims under
the Definitive Plan will be final and binding on the Company and
all Creditors, and the Definitive Plan shall constitute a full,
final and absolute settlement of all rights of the Creditors in
consideration of the distributions to such Creditors in accordance
with the terms of the Definitive Plan.
After the Definitive Plan is implemented, the Monitor will issue
and file with the Court a certificate of completion, which states
that the sum of $11.11 million, being the remaining funds arising
from the Sale Agreement, and $50,000, being the Royalty Payments
already received by the Company, has been distributed in
accordance with the Definitive Plan. Upon the filing of such
certificate by the Monitor, the Company and Globaltex shall be
released from CCAA protection.
The Company will now implement the Definitive Plan and the
distributions to the Creditors in accordance with the terms of the
Definitive Plan will commence. Based upon the cash the Company
currently has on hand and the receipts and disbursements
contemplated under the Definitive Plan, the Company will have
approximately $430,000 remaining. These funds and cash received
by the Company for its share of the Royalty Payments may be
available, subject to the discretion of the Company's board of
directors, for distribution to the Company's shareholders, subject
to appropriate reserves for future administration and other
anticipated expenses to be incurred in operating the Company for
the purpose of managing the distribution over the period of time
that the Royalty Payments are made, which could exceed ten years.
There is also $0.5 million being held in escrow under the Sales
Agreement with Cambrian in respect of possible claims. Assuming
there are no claims this money would also be available for
distribution to the Company's shareholders. The Company's board
of directors will monitor the distribution and may revise the
manner in which the distribution is made to shareholders based on
prudent planning and advice received. The Company currently has
75,732,878 common shares outstanding.
On Aug. 20, 2006, the Toronto Stock Exchange suspended trading in
the company's shares and advised the Company that it intended to
delist its shares unless it remedies all of the conditions which
resulted in the suspension and demonstrates to the Exchange's
satisfaction that the Company meets all of the Exchange's
requirements for an original listing. The Company expects that
once it is released from CCAA protection, the Exchange will
proceed with delisting the Company's shares. The Company's shares
may continue to trade in the United States on the OTC Bulletin
Board.
On Aug. 10, 2007, the company was unable to release its financial
statements, management's discussion and analysis or its Form 20-F
for the year ended March 31, 2007 as a result of a decision by its
auditors to decline to issue an audit opinion. Since that time
the Company has failed to file additional continuous disclosure
documents required by applicable securities laws and is noted as
being in default by the securities commissions in each of British
Columbia, Alberta and Ontario. The Company expects that once it
is released from CCAA protection, the Commissions will proceed
with issuing a cease trade order prohibiting trading in the
Company's shares.
The Company's board of directors continues to oversee the
operations of the Company, including the administration of the
distribution of Royalty Payments to the Creditors in accordance
with the terms of the Definitive Plan. If, as expected, the
Commissions issue cease trade orders prohibiting trading in the
company's shares as a result the Company being in default of its
reporting obligations under applicable securities laws, trading in
the company's shares, including in the United States on the OTC
Bulletin Board, may be further limited. Although the Company will
continue to be a reporting issuer under applicable securities
laws, the Company does not expect that it will be in a position to
bring itself into compliance with its reporting obligations.
Accordingly, on an ongoing basis, the Company's shareholders will
have only the right to receive the distributions.
About Pine Valley
Pine Valley Mining Corporation -- http://www.pinevalleycoal.com/
-- (TSX: PVM)(OTCBB: PVMCF) operates the Willow Creek Mine which
has a large supply of good quality PCI and metallurgical coal
reserves in British Columbia.
On October 20, 2006, the Supreme Court of British Columbia granted
an order providing the company creditor protection under the
Companies' Creditors Arrangement Act. Ernst & Young Inc. was
appointed by the Court as the Monitor in the CCAA proceedings.
On April 27, 2007, the company reported that it has reached
agreement with Cambrian Mining PLC for the sale of Pine Valley's
wholly-owned subsidiary, Falls Mountain Coal Inc., which includes
all of its interests in the Willow Creek mine and related coal
properties.
ROUGE INDUSTRIES: Court Extends Filing Period to Nov. 19
--------------------------------------------------------
Bill Rochelle of Bloomberg News reports that the U.S. Bankruptcy
Court for the District of Delaware extended the exclusive period
of Rouge Industries, Inc., and its debtor-affiliates to file a
plan to Nov. 19, 2008. The Debtors, according to the report, say
their still attempting to negotiate a global settlement between
the union and the Pension Benefit Guaranty Corp.
About Rouge Industries
Based in Dearborn, Michigan, Rouge Industries, Inc., is an
integrated producer of flat-rolled steel. Rouge Industries,
together with Rouge Steel Company, QS Steel Inc., and Eveleth
Taconite Company, filed for chapter 11 protection on Oct. 23, 2003
(Bankr. D. Del. Case No. 03-13272 through 03-13275).
Adam G. Landis, Esq., Kerri K. Mumford, Esq., Rebecca L. Butcher,
Esq., at Landis, Rath & Cobb, LLP, Alicia Beth Davis, Esq., Daniel
B. Butz, Esq., Donna L. Culver, Esq., Donna L. Harris, Esq., Eric
D. Schwartz, Esq., Gregory Thomas Donilon, Esq., Gregory W.
Werkheiser, Esq., Robert J. Dehney, Esq., Thomas F. Driscoll,
Esq., William H. Sudell, Jr., at Morris, Nichols, Arsht & Tunnell
LLP, and Joanna Flynn, Esq., at Akin Gump Strauss Hauer & Feld
LLP, represent the Debtors. The U.S. Trustee for Region 3
appointed creditors to serve on an Official Committee of Unsecured
Creditors. Gaston Plantiff Loomis, II, Esq., Kurt F. Gwynne,
Esq., Richard Allen Keuler, Jr., Esq., at Reed Smith LLP, and
Thomas Joseph Francella, Jr., Esq., at Whiteford Taylor Preston
LLC, serve as counsel to the Official Committee of Unsecured
Creditors. When the Debtors filed for protection from their
creditors, they listed $558,131,000 in total assets and
$558,131,000 in total debts.
SAKS INC: S&P Holds 'BB-' Rating and Revises Outlook to Stable
--------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on New York
City-based luxury retailer Saks Inc. to stable from positive.
Concurrently, Standard & Poor's affirmed the ratings on the
company, including its 'BB-' corporate credit rating.
"The outlook revision reflects our belief that the company will be
more challenged than previously expected by the current weak
economic environment in the U.S. and that credit metrics will not
strengthen sufficiently for an upgrade over the next year or so,"
said Standard & Poor's credit analyst Diane Shand. Saks'
comparable store sales decreased 10.9% in September and are down
0.3% for the first eight months of 2008. "We expect same store
sales will decrease 4%-5% for this year and that margins will be
erode by 50 basis points.
"The ratings on Saks Inc. are a reflection of its subpar business
profile as its luxury Saks Fifth Avenue department stores have
historically underperformed such important competitors as Neiman
Marcus, Nordstrom, and Bloomingdale's," Ms. Shand added. "The
company's improving business and financial profile over the past
two years partially mitigates this risk."
Under new leadership, Saks has made substantial progress improving
merchandising and marketing at Saks Fifth Avenue. This, along
with heavy investments in its existing store base and
infrastructure, is helping the company strengthen its brand image
for upscale customers. Standard & Poor's expects that the company
will continue to improve its merchandising by refining individual
store assortments according to its so-called "Nine-box grid" and
by expanding distinctive businesses. Saks is currently putting
much more emphasis on boosting gross margins, controlling costs,
and increasing local marketing efforts. These efforts have been
paying off, with strong increases in same-store sales in 2006 and
2007 and its gross margins have been widening. Sales trends began
weakening in December 2007 due to the overall economy.
In recent months, same store sale declines have worsened due to
the turmoil in the financial markets. Sales trends for luxury
retailers have recently underperformed the mid-priced department
stores. S&P does not expect Saks' sales trends to improve until
the financial markets stabilize. Although S&P forecast that the
operating margin will narrow to 8.7% in 2008 from 9.2% in 2007,
S&P expects them to improve over the intermediate term as a result
of Saks' merchandising initiatives and investments in its store
base.
The stable outlook recognizes that the weak U.S. economy will
impede management's ability to improve the business over the next
12-months. Credit metrics are expected to decline slightly but
should remain appropriate for the rating category. Although
unlikely, S&P would consider an outlook revision to negative if
the consumer pulls back sharply, resulting in Saks' EBITDA falling
18% from current levels and leverage rising to 4.0x. An outlook
revision to positive over the next 12 months is unlikely given the
current weak U.S. economy and the company's high leverage.
SANDISK CORP: S&P Cuts Ratings to 'B' and Removes CreditWatch
-------------------------------------------------------------
Standard & Poor's Ratings Services removed its ratings on
Milpitas, California-based SanDisk Corp. from CreditWatch, and
lowered its corporate credit and senior secured ratings to 'B'
from 'B+'. The outlook is stable.
"The action follows a series of announcements, including its
restructured joint venture with Toshiba, third-quarter results and
near-term outlook, and the withdrawal of Samsung Electronics Co.
Ltd.'s offer to acquire the company," said Standard & Poor's
credit analyst Lucy Patricola. "The rating actions reflect
SanDisk's credit profile as an independent company and our
expectation of continued sharp operating losses in the next two to
three quarters. We remain concerned that the potential positive
impact of the restructured joint ventures may not be sufficient to
reverse SanDisk's operating trends and negative cash flows, given
persistent industry over-capacity and weakening macro-economic
conditions."
SanDisk and Toshiba have agreed to sell 30% of their joint venture
interests in Fabs 3 and 4 to Toshiba, effectively reducing
SanDisk's ownership to 35% from 50%. The transaction is valued at
about $1 billion and includes an approximate $500 million cash
payment, reduces capital spending requirements and lowers
SanDisk's wafer supply. The transaction is a positive development
and could partially alleviate SanDisk's negative cash flow trends
through 2009. Still, SanDisk faces considerable near-term
pressure on earnings and cash flow.
Marketplace conditions remain challenging, with price erosion of
60% annually. SanDisk has accumulated excess inventories despite
taking inventory reserves and related charges of $109 million for
the September quarter and now has more than 90 days of supply.
S&P expects EBITDA will remain negative for the next few quarters
and, despite reduced capital spending, cash flow will likely be
negative as well. Liquidity remains a key pillar of credit
support at $2.6 billion as of Sept. 30, 2008.
The ratings on SanDisk Corp. reflect significant business risk
stemming from a narrow business profile, price volatility in the
NAND flash memory industry, and the substantial investment
required to maintain technology and cost leadership. Substantial
liquidity, stable royalty income streams, and the risk and cost-
sharing benefits of the company's manufacturing joint ventures
with Toshiba Corp. partly offset company business risks.
SanDisk is a leading manufacturer of various formats of flash
memory cards for use in consumer electronics products, including
digital cameras, mobile phones, and game systems. In addition,
the company produces devices such as universal serial bus drives
and MP3 music players. For analytical purposes, Standard & Poor's
consolidates obligations of the company's joint ventures with
Toshiba. Including its portion of guaranteed leases that reside
at the flash joint ventures, lease-adjusted debt was $2.3 billion
as of June 30, 2008. SanDisk's equity investments in and notes
receivable from the joint ventures are treated as capital
spending.
The outlook on SanDisk is stable. The company's adequate
liquidity provides a cushion for operating losses and negative
cash flow expected for the next two to three quarters. S&P could
revise the outlook to negative if the company cannot equalize
product demand with inventory supplies by mid-2009, and continues
to operate at a loss with negative discretionary cash flows. An
outlook revision to positive would be predicated on sustained
profitable operations and fully adjusted leverage measures in the
4x area.
S & A RESTAURANT: Court OKs Acquisition by Atalaya Capital Assets
-----------------------------------------------------------------
Atalaya Capital Management and Bennigan's Franchising Company,
L.P. disclosed that the U.S. Bankruptcy Court for the Eastern
District of Texas, Sherman Division, has approved the
acquisition of Bennigan's Franchising Company by affiliates of
Atalaya Capital, including the company's equity, trademarks and
other assets, including the Tavern and Steak & Ale brands.
Atalaya Capital expects to close on the acquisition on or before
Oct. 31, 2008.
"We're thrilled to have reached an agreement with the Bankruptcy
court for the acquisition of Bennigan's Franchising Company and
our goal is to continue to partner with existing franchisees,
well as new ones, to grow the Bennigan's Grill & Tavern brand,"
Joel Holsinger, a Partner at Atalaya Capital Management, said.
"We are excited about working with everyone involved in the
company to reinvigorate the Bennigan's brand."
Bennigan's is working with both existing and new franchisees to
re-open up to 60 closed company-owned restaurants well as open
new franchisee-owned locations both domestically and
internationally. Despite the market turmoil and circumstances
facing BFC's former parent, four company-owned locations have
been re-opened in the last several months. In addition, four
new locations have opened domestically and three have opened
internationally.
Bennigan's is also evaluating, and will soon report, a new
culinary program to place added emphasis on the brand's
distinctive food as well as the appointment of a marketing
consultant to help reposition the brand going forward, including
the introduction of a new fast-pub prototype and concept.
"Throughout these past few months, we've greatly appreciated the
support and hard work of our franchisees and vendors," said Vince
Runco, interim President and CEO of Bennigan's Franchising
Company. "We continue to build the franchisor's infrastructure
to support our franchisees and grow the system. A rejuvenated
Bennigan's will continue to offer the same great food and fun
atmosphere that our patrons love while improving upon their
overall dining experience."
About Atalaya Capital Management
Atalaya Capital Management is an alternative investment firm
with offices in New York and Atlanta that focuses on private debt,
mezzanine and equity investments in middle-market companies.
About S & A Restaurant
Headquartered in Plano, Texas, S & A Restaurant Corp. --
http://www.metrogroup.com,http://www.steakandale.com,
http://www.steakandalerestaurants.com,http://www.bennigans.com/
-- and other affiliated entities operate the Bennigan's Grill &
Tavern, and the Steak & Ale restaurant chains under the Metromedia
Restaurant Group. Bennigan's Grill & Tavern is a chain of more
than 310 pub-themed restaurants offering sandwiches and burgers,
as well as ribs, steaks, and seafood. The Steak & Ale chain
offers a broader menu set in the atmosphere of an 18th century
English country inn. The Metromedia Restaurant Group, a unit of
closely held conglomerate Metromedia Company, is one of the
world's leading multi-concept table-service restaurant groups,
with more than 800 Bennigan's(R), Bennigan's SPORT(TM), Steak and
Ale(R), Ponderosa Steakhouse(R) and Bonanza(TM) Steakhouse
restaurants in the United States and abroad. MRG's annual U.S.
sales are estimated at $1,000,000,000.
S & A Restaurant and 38 of its affiliates filed Chapter 7 petition
under the U.S. Bankruptcy Code on July 29, 2008 (Bankr. E.D. Tex.
Case No. 08-41898). J. Michael Sutherland, Esq. at Carrington
Coleman Sloman & Blumenthal, is the Debtors' counsel. The Debtors
disclosed total scheduled assets of $2,302,057 and total scheduled
liabilities of $159,432,691.
Michelle H. Chow is the Debtors' Chapter 7 bankruptcy trustee.
The lead counsel for the trustee is Kane Russell Coleman & Logan
PC. Mark Ian Agee, Esq., of the law firm Mark Ian Agee, Attorney
at Law, is co-counsel.
(Bennigan's and Steak & Ale Bankruptcy News; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
SIMMONS CO: Weaker Earnings Cue S&P to Cut Rtngs to 'B-' from 'B'
-----------------------------------------------------------------
Standard & Poor's Ratings Services has lowered its ratings on
Atlanta, Georgia-based Simmons Co., including its corporate credit
rating, which was lowered to 'B-' from 'B'. The ratings remain on
CreditWatch with negative implications, where they were placed on
Aug. 12, 2008, following the company's drawdown of its revolving
credit facility after the end of the second quarter. At Sept. 27,
2008, Simmons had close to $1.3 billion in total debt outstanding,
including debt at its holding company, Simmons Super Holding Co.
The downgrade follows Simmons's announcement of weaker earnings
guidance and that it does not expect to be in compliance with the
maximum-leverage ratio covenant in its credit facility for the
quarter ended Sept. 27, 2008. The company's results have been
negatively affected by sharply higher raw material and fuel costs
and reduced consumer demand for its products.
"Although the company has initiated cost reductions and pricing
actions, we believe near-term operating performance is unlikely to
improve meaningfully, given the current weak economy and our
expectation for continued weakness in the North American bedding
industry," said Standard & Poor's credit analyst Rick Joy.
According to the International Sleep Products Assn., unit
shipments and sales dollars in 2008 are expected to decline 7.5%
and 9.5%, respectively, for its sample of 18 leading U.S. mattress
producers. Simmons is seeking a bank waiver and amendment to
provide more financial flexibility.
S&P believes leverage will increase to more than 9.2x at the end
of the third quarter, from about 7.9x at June 28, 2008. Given
weak industry conditions, it does not believe Simmons will be able
to reduce leverage as it previously expected.
Although Simmons currently has adequate cash on its balance sheet,
S&P are concerned about the difficult operating environment facing
the company and its liquidity and ability to obtain a waiver and
bank amendment in a timely manner, given current credit market
conditions. If Simmons is unable to secure a covenant amendment
and waiver within the next few weeks, S&P would consider lowering
the ratings further. If the company successfully negotiates a
waiver and amendment, S&P will remove the ratings from CreditWatch
and affirm the 'B-' corporate credit rating.
SKINNER ENERGY: 3rd Cir. Rejects Insurers' Bid to Dismiss Case
--------------------------------------------------------------
The United States Court of Appeals for the Third Circuit affirmed
a lower court ruling denying a request to dismiss Skinner Engine
Company's and American Capital Equipmentÿs Chapter 11 case for
lack of good faith.
The appellants are Hartford Accident and Indemnity Company,
Hartford Fire Insurance Company, First State Insurance Company,
Allianz Global Risk US Insurance Co., Firemanÿs Fund Insurance Co.
of Ohio, Century Indemnity Company, Pacific Employers Insurance
Co., National Union Fire Insurance Company of Pittsburgh, Pa.,
Continental Insurance Company, Continental Casualty Company, and
The Fairchild Corporation.
Skinner allegedly manufactured asbestos-containing engines and
engine parts for ships until some time in the 1970s. During the
1980s, Skinner began to be named as a defendant in a number of
lawsuits alleging exposure to asbestos by merchant marines. None
of these claims has ever resulted in a judgment against Skinner.
Because these claims fell under admiralty jurisdiction, they were
originally brought in the Northern District of Ohio in a special
docket entitled MARDOC. In 1991, these MARDOC claims were
transferred to the Eastern District of Pennsylvania. In 1996, the
Court administratively dismissed all MARDOC claims, providing that
these cases could be reinstated if claimants could show an
asbestos-related compensable injury and probative evidence of
exposure to the defendantÿs products.
In 2003, the Court clarified that the administrative dismissals
were "not intended to provide a basis for excluding the MARDOC
claimants from participating in settlement programs or prepackaged
bankruptcy programs of a like nature or purpose." In re Asbestos
Products Liability Litigation (No. VI), Order Granting Relief to
MARDOC Claimants with Regard to Combustion Engineering, Inc.,
Civil Action No. 2 MDL 875 (E.D. Pa. Feb. 19, 2003).
After being bought and sold a number of times, Skinner was
eventually purchased by American Capital Equipment in 1998. On
April 16, 2001, Skinner and ACE filed voluntary Chapter 11
bankruptcy petitions, citing the financial underperformance of
Skinner and a slowdown in the automotive industry. The Debtorsÿ
disclosure made no mention of the outstanding asbestos claims
against Skinner. At the time of filing, Skinner had approximately
29,000 asbestos claims pending against it. It had also purchased
approximately $146,000,000 worth of insurance coverage for these
claims. Most of these policies, which are the Debtorsÿ only
significant assets, were issued by the Appellants.
The Debtors have proposed a series of different plans for
reorganization, none of which have yet been confirmed. The most
recent plan proposes, among other things, the creation of a trust
designed to pay the asbestos claimants in accordance with
particular matrices and mechanisms similar to those approved in
other asbestos-related bankruptcies. Under this system, each
asbestos claim would be audited under the oversight of the
Bankruptcy Court, resulting in payments based on the severity of
the claimantÿs illness. As part of the plan, claimants who chose
to "opt-in" would also be charged a 20% "surcharge" on any
recovery which would be earmarked to pay non-asbestos creditors.
Claimants could also choose to "opt-out" and simply maintain
their existing action in the District Court. The trust would be
funded primarily by the proceeds from Skinner's insurance
policies.
The Debtors alleged that the plan would allow them to satisfy the
claims of the greatest number of creditors. Skinnerÿs unsecured
creditors and asbestos claimants voted in support of the plan.
Skinnerÿs insurers then initiated an adversary proceeding alleging
that the arrangement violated their contractual rights under the
insurance policies.
In June 2005, the Appellants filed a motion to dismiss the Chapter
11 petitions, arguing that the case no longer served a legitimate
purpose under Chapter 11 and was no longer proceeding in good
faith under 28 U.S.C. Section 1112(b). The Appellants alleged that
the plan was not designed to maximize the value of the assets to
the creditors, but instead was designed to gain an improper
litigation advantage over the insurers by allowing the asbestos
claimants to use truncated, court-monitored procedures to access
the insurance policies in exchange for claimantsÿ agreement to
hand over a portion of their insurance recoveries to other non-
asbestos creditors. Following a series of hearings, the Bankruptcy
Court ultimately issued an order denying the motion and staying
the proceedings pending appeal. The Appellants brought the matter
before the United States District Court for the Western District
of Pennsylvania. In a May 11, 2007 order, the District Court
affirmed, finding that the plan maximized value to creditors and
was not filed solely to gain a litigation advantage over
creditors, and concluding that the Bankruptcy Court did not abuse
its discretion in declining to dismiss the Debtorsÿ Chapter 11
case for a lack of good faith.
In affirming the District Court's decision, the Third Circuit held
that:
1. The Debtors have satisfied their burden to show that their
Chapter 11 case seeks to maximize the value of the
bankruptcy estate for the benefit of the creditors,
pointing out that both the asbestos claimants and the
unsecured creditors will be able to share in the assets
of the estate -- the asbestos claimants through the Court-
administered claim assessment process, funded by the
insurance policies, and the unsecured creditors through
the surcharge. Outside of bankruptcy the asbestos
creditors would have to pursue their claims through the
court system and the unsecured creditors would not recover
anything.
2. The Debtors have not violated the good faith requirement
of 28 U.S.C. Section 1112(b), pointing that the Debtors
have clearly stated that the plan was not intended to
have any effect on the insurance contracts or on the
pending adversary proceeding regarding insurance coverage.
Moreover, the Appellants have not directed the Circuit
Court to any clear evidence that the plan was intended to
confer, or would result in, a particular litigation
advantage to the Debtors, over and above the advantages
that a typical debtor may properly obtain by availing
himself of the bankruptcy system. The Court notes that
the case was brought by legitimately distressed entities,
long before the Appellants initiated any litigation.
Moreover, the Debtorsÿ creditors agreed with the proposed
plan.
SPRUCE CCS: Moody's Junks Ratings on Two Classes of Notes
---------------------------------------------------------
Moody's Investors Service has downgraded its ratings of two
classes of notes issued by Spruce CCS, Ltd.:
(1) $1,462,050,000 Senior Notes due 2017
-- Prior Rating: A2, on review for downgrade
-- Prior Rating Date: September 18, 2008
-- Current Rating: Caa3
(2) $243,670,000 Mezzanine Notes due 2017
-- Prior Rating: B1, on review for downgrade
-- Prior Rating Date: September 18, 2008
-- Current Rating: C
Spruce is a collateralized loan obligation transaction for which
the underlying assets consist entirely of participation interests
in loans granted by Lehman Brothers Bankhaus AG and Lehman
Commercial Paper Inc. Because Spruce does not hold any of these
loans directly, it is dependant on the Lehman Grantors to pass on
all interest and principal payments received from obligors on the
underlying loans. The Lehman Grantors' obligations under the
participation arrangements are guaranteed by Lehman Brothers
Holdings Inc., which filed for protection under Chapter 11 of the
U.S. Bankruptcy Code on September 15, 2008.
The ongoing bankruptcy proceeding of LBHI as well as the
additional insolvency proceedings of various LBHI subsidiaries and
affiliates has left uncertain the ongoing performance of the
Lehman Grantors under the participation interests. The rating
actions reflect this uncertainty, as well as the occurrence of an
event of default on October 20, 2008 and Spruce's failure to make
interest and principal payments due on the Senior and Mezzanine
Notes on the October 15, 2008 distribution date. Moody's
understands that such payment failure was due in part to a current
interruption in Lehman Grantors passing through to Spruce payment
amounts received from underlying loan obligors.
QUIGLEY CO: No Examiner Probe on Pfizer Relationship for Now
------------------------------------------------------------
Bill Rochelle of Bloomberg News says that Quigley Company, Inc.,
for now at least won't have an examiner to investigate the
relationship with the parent Pfizer Inc., as a result of a ruling
on Oct. 21 in bankruptcy court in New York.
As reported by the Troubled Company Reporter on Oct. 22, Pfizer,
Inc., asked the U.S. Bankruptcy Court for the Southern District of
New York on Oct. 17, 2008, to deny the request of the U.S. Trustee
for the appointment of an examiner to investigate Pfizer's
relationship with Quigley Co. because the Trustee is trying to
obstruct the Debtor's reorganization.
"Nor do the U.S. Trustee's allegations even assert any fraud,
dishonesty, incompetence, or gross mismanagement to establish
requisite cause for the appointment of an examiner," the had
Committee.
The Committee reportedly said that the Debtor may not have
liquidated, non-insider unsecured debt of more $5 million, as
required for the appointment of an examiner. The $33.3 million of
unsecured debt owed to Pfizer doesn't count, because the drugmaker
is an insider, and asbestos personal-injury claims of about $4.43
billion are potential, unliquidated claims, the committee,
according to the report, said.
According to Mr. Rochelle's report, the judge said the U.S.
Trustee has not yet shown the required $5 million in undisputed
debt. He invited the U.S. Trustee to make another request.
About Quigley Company
Quigley Company, Inc., a division of Pfizer Inc., sold asbestos-
containing insulation products until the early 1970s. Quigley
filed for protection under chapter 11 on Sept. 3, 2004 (Bankr.
S.D.N.Y. Case No. 04-15739) in order to implement a proposed
global resolution of all pending and future asbestos-related
personal injury liabilities.
Asbestos victims and Pfizer have been negotiating a settlement
deal which calls for Pfizer to pay $430 million to 80% of existing
plaintiffs. It will also place an additional $535 million into an
asbestos settlement trust that will compensate future plaintiffs
as well as the remaining 20% of current plaintiffs with claims
against Pfizer and Quigley. The compensation deal is worth
$965 million all up. Of that $535 million, $405 million is in a
40-year note from Pfizer, while $100 million will come from
insurance policies.
Lawrence V. Gelber, Esq., and Michael L. Cook, Esq., at Schulte
Roth & Zabel LLP, represent the Debtor in its restructuring
efforts. Elihu Inselbuchm Esq., at Caplin & Drysdale, Chartered,
represents the Official Committee of Unsecured Creditors. When
the Debtor filed for protection from its creditors, it listed
$155,187,000 in total assets and $141,933,000 in total debts.
RENAISSANCE CUSTOM: Files Schedules of Assets and Liabilities
-------------------------------------------------------------
Bill Rochelle of Bloomberg News reports that Renaissance Custom
Homes LLC, filed a formal list of assets and debt showing
real estate of $68.4 million against liabilities totaling
$66.3 million. An initial disclosure by Renaissance Custom showed
assets of $128.5 million and debt of $116 million as of June 30.
The Debtor reportedly owes $56.8 million to secured creditors
and $9.5 million to unsecured creditors.
Renaissance Custom had sales of $35.4 million through June,
according to the report.
As reported by The Troubled Company Reporter on Oct. 21, 2008, the
U.S. Bankruptcy Court for the District of Oregon gave interim
authority to Renaissance Custom Homes, LLC, and its debtor-
affiliates to borrow $310,000 for construction costs and
operational expenses. The Court has set another hearing on Nov.
3, 2008, to consider the Debtors' request for final authority to
borrow $600,000.
Headquartered in Lake Oswego and West Linn, Oregon, Renaissance
Customs Homes LLC -- http://www.renaissance-homes.com/-- engages
in residential real estate and home-building business. The
company and two of its debtor-affiliates filed separate petitions
for Chapter 11 relief on on Sept. 25, 2008 (Bankr. D. Ore. Lead
Case No. 08-35023). Albert N. Kennedy, Esq., Ava L. Schoen, Esq.,
and Timothy J. Conway, Esq., at Tonkon Torp LLP, represent the
Debtors as counsel. An Official Committee of Unsecured Creditors
has been appointed in the case.
RIVER BEND: Mediation with Secured Lender Set Nov. 17
-----------------------------------------------------
Bill Rochelle of Bloomberg News reports that River Bend Community
LLP, is set for mediation with its secured lender on Nov. 17.
As reported by The Troubled Company Reporter on Aug. 22, River
Bend Community said that, together with its secured lender, it
obtained appraisals and is set for mediation over a bankruptcy
plan.
The report adds that the Debtor is asking for an extension of its
exclusive right to file a reorganization plan until Dec. 26, 2008.
About River Bend
Headquartered in Lake Worth, Florida, River Bend Community, LLP
owns a golf course and surrounding housing development near San
Antonio. It filed for chapter 11 protection on May 30, 2008
(Bankr. S.D. Fla Case No. 08-17264). Alan J. Perlman, Esq., at
Adorno & Yoss, LLP, represents the Debtor in its restructuring
efforts. The Debtor's schedules showed total assets of
$36,810,640 and total liabilities of $27,871,325.
RIVER RUN: Plan to Open Restaurant Pushes Through Amid Bankruptcy
-----------------------------------------------------------------
River Run Cove Land Development Co. will push through with plans
to open a restaurant in Anderson, California, David Benda of
Record-Searchlight (California) reported Sunday. River Run Cove's
owner, Bill Johnson, said that "We are still moving forward."
According to the report, Mr. Johnson unveiled plans in early 2004
for a $10 million development project in Anderson, which would
include retail space, apartments and a restaurant. Mr. Johnson
would not give details on his company's bankruptcy filing.
Based in Anderson, California, River Run Cove Land Development
Company Inc. is a land developer. On July 29, 2008, the company
filed for Chapter 11 relief (Bankr. E.D. Calif. Case No. 08-
30357). The case was filed PRO SE. Judge Michael S. McManus
presides over the case. According to court filings, the company
has $2.6 million in assets and $3.4 million in liabilities,
Record-Searchlight (California) reported.
RIVIERA HOLDINGS: Nov. 6 Conference Call on Third Quarter Results
-----------------------------------------------------------------
Riviera Holdings Corporation disclosed in a Securities and
Exchange Commission filing that in conjunction with the release of
its third quarter financial results, it will hold a conference
call on Thursday, Nov. 6, 2008 at 2 p.m. EDT.
Headquartered in Las Vegas, Riviera Holdings Corporation (Amex:
RIV) -- http://www.rivierahotel.com/-- owns and operates the
Riviera Hotel and Casino on the Las Vegas Strip and the Riviera
Black Hawk Casino in Black Hawk, Colorado.
At June 30, 2008, the company's balance sheet showed total assets
of $217.2 million and total liabilities of $260.2 million,
resulting in a $43 million stockholders' deficiency.
Net revenues for the second quarter of 2008 were $45.6 million, a
decrease of $8.1 million, or 15%, from $53.7 million for the
comparable period in the prior year.
* * *
As reported in the Troubled Company Reporter on July 22, 2008,
Moody's Investor's Service revised Riviera Holding Corporation's
rating outlook to negative from stable. The company's B2
corporate family, B2 probability of default, and B2 senior secured
ratings were affirmed.
As disclosed in the TCR on June 24, 2008, Standard & Poor's
Ratings Services revised its outlook on Riviera Holdings Corp. to
negative from developing. Ratings on Riviera, including the 'B'
corporate credit rating, were affirmed. Total debt outstanding at
March 31, 2008 was $225 million.
RIVIERA HOLDING: Michael Meyer, Bryan Bloom Disclose 10% Stake
--------------------------------------------------------------
Michael J. Meyer and Bryan E. Bloom disclosed in a Securities and
Exchange Commission filing that they may be deemed to indirectly
beneficially own 1,248,605 shares of Riviera Holdings
Corporation's common stock, representing 10% of the 12,498,555
shares issued and outstanding.
Messrs. Meyer and Bloom serve as directors of FX Real Estate and
Entertainment, Inc., which indirectly beneficially owns 1,248,605
shares of issued and outstanding Common Stock of Riviera Holdings.
About Riviera Holding
Headquartered in Las Vegas, Riviera Holdings Corporation (Amex:
RIV) -- http://www.rivierahotel.com/-- owns and operates the
Riviera Hotel and Casino on the Las Vegas Strip and the Riviera
Black Hawk Casino in Black Hawk, Colorado.
At June 30, 2008, the company's balance sheet showed total assets
of $217.2 million and total liabilities of $260.2 million,
resulting in a $43 million stockholders' deficiency.
Net revenues for the second quarter of 2008 were $45.6 million, a
decrease of $8.1 million, or 15%, from $53.7 million for the
comparable period in the prior year.
* * *
As reported in the Troubled Company Reporter on July 22, 2008,
Moody's Investor's Service revised Riviera Holding Corporation's
rating outlook to negative from stable. The company's B2
corporate family, B2 probability of default, and B2 senior secured
ratings were affirmed.
As disclosed in the TCR on June 24, 2008, Standard & Poor's
Ratings Services revised its outlook on Riviera Holdings Corp. to
negative from developing. Ratings on Riviera, including the 'B'
corporate credit rating, were affirmed. Total debt outstanding at
March 31, 2008 was $225 million.
ROUGE INDUSTRIES: Court Extends Filing Period to Nov. 19
--------------------------------------------------------
Bill Rochelle of Bloomberg News reports that the U.S. Bankruptcy
Court for the District of Delaware extended the exclusive period
of Rouge Industries, Inc., and its debtor-affiliates to file a
plan to Nov. 19, 2008. The Debtors, according to the report, say
their still attempting to negotiate a global settlement between
the union and the Pension Benefit Guaranty Corp.
About Rouge Industries
Based in Dearborn, Michigan, Rouge Industries, Inc., is an
integrated producer of flat-rolled steel. Rouge Industries,
together with Rouge Steel Company, QS Steel Inc., and Eveleth
Taconite Company, filed for chapter 11 protection on Oct. 23, 2003
(Bankr. D. Del. Case No. 03-13272 through 03-13275).
Adam G. Landis, Esq., Kerri K. Mumford, Esq., Rebecca L. Butcher,
Esq., at Landis, Rath & Cobb, LLP, Alicia Beth Davis, Esq., Daniel
B. Butz, Esq., Donna L. Culver, Esq., Donna L. Harris, Esq., Eric
D. Schwartz, Esq., Gregory Thomas Donilon, Esq., Gregory W.
Werkheiser, Esq., Robert J. Dehney, Esq., Thomas F. Driscoll,
Esq., William H. Sudell, Jr., at Morris, Nichols, Arsht & Tunnell
LLP, and Joanna Flynn, Esq., at Akin Gump Strauss Hauer & Feld
LLP, represent the Debtors. The U.S. Trustee for Region 3
appointed creditors to serve on an Official Committee of Unsecured
Creditors. Gaston Plantiff Loomis, II, Esq., Kurt F. Gwynne,
Esq., Richard Allen Keuler, Jr., Esq., at Reed Smith LLP, and
Thomas Joseph Francella, Jr., Esq., at Whiteford Taylor Preston
LLC, serve as counsel to the Official Committee of Unsecured
Creditors. When the Debtors filed for protection from their
creditors, they listed $558,131,000 in total assets and
$558,131,000 in total debts.
SEMGROUP LP: U.S. Trustee Appoints Louis J. Freeh as Examiner
-------------------------------------------------------------
Roberta A. DeAngelis, Acting U.S. Trustee for Region 3, appointed
Louis J. Freeh, Esq., to serve as Chapter 11 examiner to
investigate the trading practices and prepetition transaction of
SemGroup, LP and its debtor affiliates.
The U.S. Trustee obtained directive from the U.S. Bankruptcy
Court for the District of Delaware to appoint a Chapter 11
examiner for the Debtors' bankruptcy cases.
The Examiner will investigate the circumstances surrounding (i)
the Debtors' Trading Strategy and the transfer of their New York
Mercantile Exchange account; (ii) the Insider Transactions and
the formation of SemGroup Energy Partners; and (iii) the
potential improper use of borrowed funds and funds generated
from the Debtors' operations and the liquidation of their assets
to satisfy margin calls related to the Trading Strategy for the
Debtors and certain entities owned or controlled by the Debtors'
officers and directors.
The Examiner will also perform the duties of an examiner set
forth in Sections 1106(a)(3) and 1106(a)(4) of the Bankruptcy
Code. The Examiner is directed to propose a work plan and
provide his estimated costs for the Investigation before
Oct. 24, 2008. The Examiner will file a report within 120 days
after approval of his work plan.
Mr. Freeh is the founder of and senior managing partner at Freeh
Group International, in Wilmington, Delaware. In a declaration
filed with the Court, Mr. Freeh stated that he has reviewed the
Debtors' master retention checklist, and assures the Court that
he has no connections with the Debtors and their non-debtor
affiliates in United States or Canada; their current and former
directors and officers; significant investors; secured creditors;
DIP lenders; and other parties-in-interest.
Mr. Freeh served as the director Federal Bureau of Investigation
from September 1, 1993, to June 25, 2001. He says one or more
parties-in-interest in the Debtors' bankruptcy cases may have
been parties to litigation in his capacity as Director. During
his time as FBI Director, he was the lead prosecutor in the
"Pizza Connection" case, which involved an extensive drug-
trafficking operation in the United States by Sicilian organized
crime members who use pizza parlor as fronts.
Mr. Freeh was, from Sept. 10, 2001, through Jan. 1, 2006, vice-
chairman and general counsel of MBNA Corporation, which was
acquired by BofA in Jan. 1, 2006.
The U.S. Trustee tells Judge Shannon that it has consulted the
counsel to the Debtors, the Official Committee of Unsecured
Creditors, and Bank of America, N.A., agent for the Debtors'
lenders, and other parties in interest regarding the appointment
of the Examiner.
SemGroup spokesman Lance Ignon, according to The Tulsa World, did
not comment specifically on Mr. Freeh's appointment except to
note that in the past that the company has not objected to the
request for an examiner. "We intend to cooperate with the
examination," Mr. Ignon told the newspaper agency.
About SemGroup
SemGroup L.P. -- http://www.semgrouplp.com/-- is a
midstream service company providing the energy industry means to
move products from the wellhead to the wholesale marketplace.
SemGroup provides diversified services for end users and consumers
of crude oil, natural gas, natural gas liquids, refined products
and asphalt. Services include purchasing, selling, processing,
transporting, terminaling and storing energy. SemGroup serves
customers in the United States, Canada, Mexico, Wales, Switzerland
and Vietnam.
SemGroup L.P. and its debtor-affiliates filed for Chapter 11
protection on July 22, 2008 (Bankr. D. Del. Lead Case No.
08-11525). These represent the Debtors' restructuring efforts:
John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins,
Esq. at Richards Layton & Finger; Harvey R. Miller, Esq., Michael
P. Kessler, Esq. and Sherri L. Toub, Esq. at Weil, Gotshal &
Manges LLP; and Martin A. Sosland, Esq. and Sylvia A. Mayer, Esq.
at Weil Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C.
is the Debtors' claims agent. The Debtors' financial advisors are
The Blackstone Group L.P. and A.P. Services LLC.
Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye
Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter
Anderson & Corroon LLP, represent the Debtors' prepetition
lenders.
SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude
Company, sought protection under the Companies' Creditors
Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc.,
is the appointed monitor of SemCanada Crude Company and its
affiliates' reorganization proceedings before the Canadian
Companies' Creditors Arrangement Act. The CCAA stay expires on
Nov. 21, 2008.
SemGroup L.P.'s consolidated, unaudited financial conditions as of
June 30, 2007, showed $5,429,038,000 in total assets and
$5,033,214,000 in total debts. In their petition, they showed
more than $1,000,000,000 in estimated total assets and more than
$1,000,000,000 in total debts.
(SemGoup Bankruptcy News, Issue No. 14; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SHUMATE INDUSTRIES: Transfers HVC Assets to Tejas Research
----------------------------------------------------------
Shumate Industries Inc. disclosed in a Securities and Exchange
Commission filing on October 15, 2008, the company and its wholly
owned subsidiary Hemiwedge Valve Corporation, entered into a
Transfer Agreement with Tejas Research & Engineering, L.P.
Pursuant to the agreement, the company and HVC transferred certain
assets and granted certain license rights related to its Hemiwedge
Valve Technology to Tejas in exchange for $3.5 million in cash at
closing and a five-year common stock purchase warrant to purchase
2,443,269 shares of its common stock at a purchase price of $0.25
per share.
On the closing date, the shares underlying the warrant around
9.99% of the company's issued and outstanding shares of common
stock. Concurrent with the closing, Tejas transferred the warrant
to Intervale Capital, LLC. Tejas is a portfolio company of
Intervale.
The transfer of assets was consummated pursuant to the Hemiwedge
Intellectual Property Agreement between HVC and Tejas, under which
Tejas received:
-- a worldwide, perpetual, fully paid up, irrevocable and
sublicensable license for the intellectual property related
to HVC's hemispherical wedge valves for the markets, or
Fields of Use, of Sub-Sea and Offshore, Drilling and
Workover, above 5,000 PSI, Surface Safety valves and all
Downhole applications, all together known as the "Combined
Fields of Use;"
-- assignment of two pending U.S. patent applications related
to specialty valves; and
-- the use of the Hemiwedge registered trademark in their
Combined Fields of Use, in exchange for the $3.5 million
cash payment referred to above.
The company agreed to register the shares of common stock
underlying the warrant upon the request of the warrant holder. In
addition, if, at any time after April 14, 2008, the shares of
common stock underlying the warrant cannot be sold without
restriction pursuant to an effective registration statement under
the Securities Act of 1933, as amended with a current prospectus,
then the warrantholder may elect to exercise the warrant pursuant
to the "cashless" exercise provisions.
About Shumate Industries
Based in Conroe, Texas, Shumate Industries Inc. (OTC BB: SHMT)
-- http://www.shumateinc.com/-- is an energy field services
company. The company operates through two wholly owned
subsidiaries, Shumate Machine Works, a contract machining and
manufacturing division, and Hemiwedge Valve Corporation, a
proprietary new valve technology that targets mid-stream process
and flow control markets with its Hemiwedge(R) Cartridge valve
product line, sub-sea via a pending licensing deal for
Hemiwedge(R) sub-sea high pressure valve product line, and
Hemiwedge(R) down-hole valves under development for drilling
applications.
Going Concern Doubt
As reported in the Troubled Company Reporter on June 13, 2008,
Houston-based Malone & Bailey, PC, expressed substantial doubt on
Shumate Industries Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the years ended Dec. 31, 2007, and 2006. The auditing firm stated
that Shumate requires significant amount of cash in its operations
and does not have sufficient cash to fund its operations for the
next 12 months.
As of June 30, 2008, Shumate Industries Inc.'s consolidated
balance sheet showed $4.9 million in total assets and $12.4
million in total liabilities, resulting in a $7.4 million in
stockholders' deficit.
Shumate incurred recurring losses from operations of $3,107,251
for the six months ended June 30, 2008, and has an accumulated
deficit of $30,550,139. These conditions, the Company said in an
August 2008 regulatory filing, raise substantial doubt as to its
ability to continue as a going concern.
Shumate has sought recapitalization with debt and equity during
2008, however there can be no assurance that it will successfully
recapitalize. In addition, management is trying to continue to
increase Shumate's revenues and improve its results of operations
to a level of profitability including revenues and cash flow from
its Hemiwedge Valve Corporation subsidiary. New sales
representative agreements have been executed during 2008 to assist
in the sales and marketing efforts to improve our results of
operations.
Shumate believes that it will not be able to fund its operations,
working capital requirements, and debt service requirements
through fiscal year 2008 through cash flows generated by
operations alone. The Company said management will seek to raise
additional capital in fiscal year 2008, and possibly beyond 2008
if Shumate's results of operations do not continue to improve or
if the need otherwise arises.
SIRIUS XM: Exchanges 67MM Shares for $30.5MM Convertible Notes
--------------------------------------------------------------
Sirius XM Radio, Inc., disclosed in a Securities and Exchange
Commission filing that it issued an aggregate of 67,038,070 shares
of its common stock, par value $0.001 per share, in exchange for
$30,500,000 principal amount of its 2-1/2% Convertible Notes due
2009 beneficially owned by institutional holders.
Sirius XM did not receive any cash proceeds as a result of the
exchange of it common stock for the 2-1/2% Notes, which notes have
been retired and canceled. The company executed these
transactions to reduce debt and interest cost, increase equity,
and improve balance sheet. The company may engage in additional
exchanges in respect of its outstanding indebtedness if and as
favorable opportunities arise.
The issuance of the shares of the company's common stock was made
pursuant to the exemption from the registration requirements of
the Securities Act of 1933.
Headquartered in New York, Sirius XM Radio Inc. --
http://www.sirius.com/-- formerly Sirius Satellite Radio Inc., is
a satellite radio provider. The company offers over 130 channels
to its subscribers, 69 channels of 100% commercial-free music and
65 channels of sports, news, talk, entertainment, traffic, weather
and data content. Its primary source of revenue is subscription
fees, with most of its customers subscribing to SIRIUS on either
an annual, semi-annual, quarterly or monthly basis. The company
derives revenue from activation fees, the sale of advertising on
its non-music channels, and the direct sale of SIRIUS radios and
accessories. Various brands of SIRIUS radios are Best Buy,
Circuit City, Costco, Crutchfield, Sam's Club, Target and Wal-
Mart.
* * *
Standard & Poor's Ratings Services affirmed its corporate ratings
on Sirius XM Radio Inc. (CCC+) and XM Satellite Radio Holdings
Inc., which S&P analyzes on a consolidated basis for purposes of
the corporate credit rating, and removed them from CreditWatch
with developing implications, where S&P placed them on March 4,
2008. The issue-level ratings on debt at New York City-based
Sirius XM Radio Inc. and at Sirius' unrestricted subsidiaries, XM
Satellite Radio Holdings Inc. and XM Satellite Radio Inc., remain
on CreditWatch with developing implications until additional
information becomes available regarding the ultimate
capitalization and the effect of cost-saving plans and growth
initiatives on secured and unsecured recovery at Sirius and XM.
Upon S&P's examination of additional information, S&P could raise,
affirm, or lower the issue-level ratings. The outlook is
developing.
S & J PLAZA: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: S & J Plaza, LLC
13107 South Morrow Circle
Dearborn, MI 48126
Bankruptcy Case No.: 08-35678
Chapter 11 Petition Date: October 22, 2008
Court: Northern District of Ohio (Toledo)
Judge: Mary Ann Whipple
Debtor's Counsel: Richard J. Szczepaniak, Esq.
rjs1@buckeye-express.com
P.O. Box 501
Toledo, OH 43697-0501
Tel: (567) 455-6651
Fax: (419) 242-5959
Estimated Assets: below $50,000
Estimated Debts: $1 million to $10 million
The Debtor did not file a list of 20 largest unsecured creditors.
SRX POST: Quebec Court Approves Amended Reorganization Plan
-----------------------------------------------------------
The Superior Court of Quebec approved SRX Post Holdings Inc.'s
amended plan of compromise and reorganization under the Companies'
Creditors Arrangement Act and the Canada Business Corporations Act
was sanctioned by
The Plan will be implemented by Nov. 14, 2008.
The company said that the Plan is in furtherance of the previously
announced arrangement agreement on Aug. 15, 2008, with Bonterra
Energy Income Trust, Bonterra Energy Corp., and Novitas Energy
Ltd. providing for the reorganization and recapitalization of the
parties thereto.
The Plan and the concurrent reorganization of Bonterra will result
in:
-- all liabilities of the Company being extinguished or settled;
-- Bonterra Trust making an investment of approximately
$11,250,000 in the Company;
-- the share capital of the Company being reorganized to enable
the redemption of all outstanding common shares for no
consideration; and
-- the corporate name of the Company being changed to Bonterra
Oil & Gas Ltd. or such other name acceptable to Bonterra.
A copy of the Plan and related documents are available on RSM
Richter's website at http://www.rsmrichter.com.
On March 24, 2008, the company entered into a definitive agreement
with Lagasse Communications & Industries Inc. to sell all of its
property and assets related to the WiMAX business and symmetry
line of products.
The transaction closed on April 4, 2008 and the Company received
cash proceeds of $6.05 million before transaction costs of
$1.49 million. Following the sale of substantially all of its
assets to Groupe Lagasse, the Company ceased operations and
continues to pursue the monetization of its remaining assets.
About SR Telecom
Headquartered in Quebec, Canada, SRX Post Holdings Inc. fka SR
Telecom (TSX: SRX) -- http://www.srtelecom.com/-- delivers
broadband wireless access (BWA) solutions that enable service
providers to deploy voice, Internet and next-generation services
in urban, suburban and remote areas. The company has offices in
Mexico, France and Thailand.
SR Telecom Inc.'s consolidated balance sheet at June 30, 2007,
showed C$83.9 million in total assets and C$97.9 million in total
liabilities, resulting in a C$14.0 million total stockholders'
deficit.
SR Telecom is currently operating under the protection of the
Companies' Creditors Arrangement Act (CCAA). The company
filed for creditor protection under the CCAA on Nov. 19, 2007. On
August 14, 2008, the protection was extended to December 19, 2008.
SUMMIT GLOBAL: U.S. Trustee Wants Ch. 11 Case Converted to Ch. 7
----------------------------------------------------------------
BankruptcyData.com reports that Donald F. MacMaster, the Acting
United States Trustee, has asked the U.S. Bankruptcy Court for the
District of New Jersey to convert the Chapter 11 bankruptcy cases
of Summit Global Logistics, Inc., and its debtor-affiliates to
Chapter 7.
Based in East Rutherford, New Jersey, Summit Global Logistics Inc.
fdba Aeorbic Creations Inc. -- http://www.summitgl.com/-- offers
a network of strategic logistics services, such as non-vessel
operating common carrier ocean services, overseas consolidation,
air freight forwarding, warehousing & distribution, cross-dock,
transload, customs brokerage and trucking. The Company and its 17
affiliates filed for Chapter 11 protection on January 30, 2008
(Bankr. N.J. Case No. 08-11566). Kenneth Rosen, Esq., at
Lowenstein Sandler, P.C., represents the Debtors in its
restructuring efforts. No Official Committee of Unsecured
Creditors has been appointed in this cases. When the Debtor filed
for protection against their creditors, it list assets between
$50 million and $100 million and debts between $100 million and
$500 million.
TOP TOMATO: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: Top Tomato Pizza Cafe Kitchen, Inc.
1107 Walnut Street
Philadelphia, PA 19107
Tel: (215)735-0078
Bankruptcy Case No.: 08-16929
Type of Business: The Debtor operates a restaurant.
Chapter 11 Petition Date: October 22, 2008
Court: Eastern District of Pennsylvania (Philadelphia)
Debtor's Counsel: Mark W. Richardson, Esq.
markwrichardsonesquire@msn.com
Mark Richardson Esquire
1518 Walnut Street, Suite 1410
Philadelphia, PA 19102
Tel: (215) 735-0078
Estimated Assets: $100,000 to $500,000
Estimated Debts: unstated
The Debtor did not file a list of 20 largest unsecured creditors.
TRANSNATIONAL AUTOMOTIVE: Has $1.38MM Equity Deficit as of Aug. 31
------------------------------------------------------------------
Transnational Automotive Group Inc.'s balance sheet as of
Aug. 31, 2008, showed $7.75 million in total assets, $9.13 million
in total liabilities, resulting to $1.38 million in shareholders'
deficit.
The company also had $17.87 million in accumulated deficit.
At Aug. 31, 2008, the company's consolidated balance sheet also
showed strained liquidity with $2.71 million in total current
assets available to pay $9.13 million in total current
liabilities.
The company posted $1.89 million in net profit on $3.57 million in
net revenues for the three months ended Aug. 31, 2008, compared
with $1.78 million in net losses on $2.13 million in net revenues
for the three months ended Aug. 31, 2007.
Full-text copy of the company's financial results for quarter
ended Aug. 31, 2008, is available free of charge at:
http://researcharchives.com/t/s?3425
Going Concern
Kabani & Company Inc., in Los Angeles, expressed substantial doubt
about Transnational Automotive Group Inc.'s ability to continue as
a going concern after auditing the company's consolidated
financial statements for the years ended Feb. 29, 2008, and 2007.
The auditing firm pointed to the company's significant loss for
the year ended Feb. 29, 2008, and working capital deficit.
As of May 31, 2008, the company has an accumulated deficit of
$19,761,959 as well as a working capital deficiency of $9,011,829.
About Transnational Automotive
Based in Los Angeles, Calif., Transnational Automotive Group Inc.
(OTC BB: TAMG) -- http://www.transauto-group.com/-- and its
wholly-owned and majority-owned subsidiaries are engaged in the
development and operations of mass public transportation systems
in Cameroon, Africa. The company's current operations are
comprised of an intra-city bus transit system in the capital city
of Yaounde under the brand name, LeBus, and an inter-city bus
transit system between Yaounde and Douala, known as LeCar.
TRANSNATIONAL AUTO: Earns $1.8 Million for August 31, 2008
----------------------------------------------------------
Transnational Automotive Group, Inc. reported $1,895,390 net
income on total revenue of $3,570,356 for the three months ended
Aug. 31, 2008, compared to $1,784,343 net loss on total revenue of
$2,133,766 for the same period a year earlier.
The company's consolidated balance sheet at Aug. 31, 2008, showed
$7,749,077 in total assets and $9,134,066 in total liabilities
resulting in a $1,384,989 stockholders' equity.
Going Concern
Kabani & Company Inc., in Los Angeles, expressed substantial doubt
about Transnational Automotive Group Inc.'s ability to continue as
a going concern after auditing the company's consolidated
financial statements for the years ended Feb. 29, 2008, and 2007.
The auditing firm pointed to the company's significant loss for
the year ended Feb. 29, 2008, and working capital deficit.
As of May 31, 2008, the company has an accumulated deficit of
$19,761,959 as well as a working capital deficiency of $9,011,829.
A full-text copy of the company's regulatory filing is available
for free at http://ResearchArchives.com/t/s?342e
About Transnational Automotive
Based in Los Angeles, Calif., Transnational Automotive Group Inc.
(OTC BB: TAMG) -- http://www.transauto-group.com/-- and its
wholly-owned and majority-owned subsidiaries are engaged in the
development and operations of mass public transportation systems
in Cameroon, Africa. The company's current operations are
comprised of an intra-city bus transit system in the capital city
of Yaounde under the brand name, LeBus, and an inter-city bus
transit system between Yaounde and Douala, known as LeCar.
UNIGENE LABORATORIES: Victory Park, et al., Disclose 7.4% Stake
---------------------------------------------------------------
Victory Park Capital Advisors, LLC, Victory Park Special
Situations Master Fund, Ltd., Jacob Capital, L.L.C. and Richard
Levy, disclosed in a Securities and Exchange Commission filing
that they may be deemed to beneficially own 6,632,314 shares of
Unigene Laboratories, Inc.'s common stock, representing 7.4% of
the shares issued and outstanding.
Each of parties may be deemed to be the beneficial owner of a
warrant to acquire 1,000,000 shares of the company\u2019s Common
Stock. The warrant contains a contractual provision blocking
exercise of the warrant if after exercise the holder would be the
beneficial owner of more than 4.99% of the issued and outstanding
shares of Common Stock.
About Unigene Laboratories
Based in Fairfield, N.J., Unigene Laboratories Inc. (OTC BB: UGNE)
-- http://www.unigene.com/-- is a biopharmaceutical company
focusing on the oral and nasal delivery of large-market peptide
drugs. Due to the size of the worldwide osteoporosis market,
Unigene is targeting its initial efforts on developing calcitonin
and PTH-based therapies.
Fortical(R), Unigene's nasal calcitonin product for the treatment
of postmenopausal osteoporosis, received FDA approval and was
launched in August 2005. Unigene has licensed the U.S. rights for
Fortical to Upsher-Smith Laboratories, worldwide rights for its
oral PTH technology to GlaxoSmithKline and worldwide rights for
its calcitonin manufacturing technology to Novartis.
As reported in the Troubled company Reporter on March 28, 2008,
Grant Thornton, in Edison, N.J., expressed substantial doubt about
Unigene Laboratories Inc.'s ability to continue as a going
concern after auditing the company's financial statements for
the years ended Dec. 31, 2007, and 2006. The auditing firm
pointed to the company's recurring losses from operations and
accumulated deficit.
Unigene's balance sheet as of June 30, 2008, showed $17.06 in
shareholders' deficit $126.3 million in accumulated deficit. The
company posted $1.2 million in net losses on $5 million in
revenues.
UNI-MARTS: Has Until Dec. 23 to File Chapter 11 Plan
----------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware granted a
request by Uni-Marts, LLC, and its debtor-affiliates to extend
their exclusive period to file a Chapter 11 reorganization plan to
Dec. 23, Bill Rochelle of Bloomberg News reports .
As reported by the Troubled Company Reporter on Sept. 23, 2008,
the Court approved the request of Uni-Marts, LLC, and its debtor-
affiliates to be bought by Atlantis Petroleum LLC for at least
$17.7 million.
The Debtors, according to the report, named Atlantis the lead, or
stalking-horse, bidder at an August auction. Atlantis won the bid
when no competing offers were submitted, and the auction was
canceled, court papers show according to the report.
About Uni-Marts
Headquartered in State College, Pennsylvania, Uni-Marts LLC sells
consumer goods. The company and six of its affiliates filed for
Chapter 11 protection on May 29, 2008 (Bankr. D. Del. Lead Case
No.08-11037). Michael Gregory Wilson, Esq., at Hunton & Williams
LLP represents the Debtors in their restructuring efforts. The
Debtor selected Epiq Bankruptcy Solutions LLC as its claims,
notice and balloting agent. The U.S. Trustee for Region 3
appointed seven creditors to serve on an Official Committee of
Unsecured Creditors. The Committee selected Blank Rome LLP as its
counsel in these cases.
US FARMS: To Offer 1,000,000 Shares, Files Registration Statement
-----------------------------------------------------------------
US Farms Inc. has filed with the Securities and Exchange
Commission that a registration statement (File No. 333-154469)
relating to the offer and sale of 1,000,000 shares of its $0.001
par value per share common stock to directors and attorneys
associated with the company pursuant to the 2008 Amended Non-
Qualified Attorneys Stock Compensation Plan and the 2008 Non-
Qualified Stock Compensation Plan.
Pursuant to the Attorneys Plan, US Farms is registering, based
upon received services and shares of common stock, an additional
200,000 shares of common stock issued concurrent.
Pursuant to the Stock Plan, US Farms is registering, based upon
received services and shares of common stock, at total of 153,000
shares of common stock issued current.
Additionally, there are a total of 647,000 shares of common stock
being registered to be reserved for future issuance under either
the Attorneys or Stock Plan.
Full-text copy of the registration statement is available free of
charge at http://researcharchives.com/t/s?3426
About US Farms Inc.
US Farms Inc. (OTC BB: USFI.OB) -- http://www.usfarmsinc.com/--
is a diversified commercial Farming, Nursery and Brokerage company
based in Southern California. The company's principal operations
are located in Southern California in the Imperial Valley, North
County San Diego and Los Angeles. US Farms Inc. grows, markets
and distributes horticultural products through a number of wholly
owned subsidiaries which include: American Nursery Exchange Inc.
(ANE); California Management Solutions Inc. (CMS); California
Produce Exchange Inc. (CPE); American Aloe Vera Growers Inc.
(AAVG); Imperial Ethanol Inc. (IE); Sammy's Produce Inc. (SPI); US
Ag Transportation Inc (USAT); US Produce Inc. (USPI); Texas Garlic
& Spice Inc. (TGS); US Trading Group, Inc. (USTG); and World
Garlic & Spice Inc. (WGS).
Going Concern Doubt
The company has working capital and accumulated deficits of
$3,245,645 and $25,197,785, respectively, at June 30, 2008. For
the six months ended June 30, 2008, the company had a net loss
totaling $1,800,864. In addition, the company is in default on
certain of its promissory notes, is in litigation with a
Convertible Debenture holder and a secured note holder, and is in
default and in the litigation process with multiple vendors with
respect to the Perishable Agricultural Commodities Act (PACA). In
addition, on June 10, 2008, the company announced that it was
divesting itself of non-performing segments of its CPE Produce
Brokerage Segment which includes tomatoes, asparagus and garlic
operations.
US Farms Inc.'s consolidated balance sheet at June 30, 2008,
showed $2,494,244 in total assets and $4,794,871 in total
liabilities, resulting in a $2,300,627 stockholders' deficit.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $1,549,226 in total current assets
available to pay $4,794,871 in total current liabilities.
The company reported a net loss of $104,372 on net sales of
$218,126 for the second quarter ended June 30, 2008, compared with
a net loss of $2,146,394 on net sales of $235,094 in the
corresponding period a year ago.
VERANO CCS: Moody's Slashes $1.352MM Sr. Notes Rating to 'Caa3'
---------------------------------------------------------------
Moody's Investors Service has downgraded its ratings of the two
classes of notes issued by Verano CCS, Ltd.:
(1) $1,352,600,000 Senior Notes due 2016
-- Prior Rating: A3, on review for downgrade
-- Prior Rating Date: July 31, 2008
-- Current Rating: Caa3
(2) $180,400,000 Mezzanine Notes due 2016
-- Prior Rating: B2, on review for downgrade
-- Prior Rating Date: July 31, 2008
-- Current Rating: C
Verano is a collateralized loan obligation transaction for which
the underlying assets consist entirely of participation interests
in loans granted by Lehman Commercial Paper Inc., Lehman
Commercial Paper Inc., UK Branch and Lehman Brothers Special
Financing Inc. Because Verano does not hold any of these loans
directly, it is dependant on the Lehman Grantors to pass on all
interest and principal payments received from obligors on the
underlying loans. The Lehman Grantors' obligations under the
participation arrangements are guaranteed by Lehman Brothers
Holdings Inc., which filed for protection under Chapter 11 of the
U.S. Bankruptcy Code on September 15, 2008.
The ongoing bankruptcy proceeding of LBHI as well as the
additional insolvency proceedings of various LBHI subsidiaries and
affiliates has left uncertain the ongoing performance of the
Lehman Grantors under the participation interests. The rating
actions reflect this uncertainty, as well as the occurrence of an
event of default on October 20, 2008 and Moody's understanding of
a current interruption in the Lehman Grantors passing through to
Verano payment amounts received from underlying loan obligors. As
a result, Moody's expects that Verano will not be able to make
upcoming payments owed on the Senior and Mezzanine Notes.
VERTICAL CDO: S&P Lowers Ratings on 75 Tranches from 22 US CLOs
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 75
tranches from 22 U.S. cash flow and hybrid collateralized debt
obligation transactions. S&P removed 33 of the lowered ratings
from CreditWatch with negative implications. At the same time,
S&P placed two ratings from Vertical CDO 2003-1 Ltd. on
CreditWatch with negative implications. The ratings on 42 of the
downgraded tranches are on CreditWatch with negative implications,
indicating a significant likelihood of further downgrades.
The CreditWatch placements primarily affect transactions for which
a significant portion of the collateral assets currently have
ratings on CreditWatch with negative implications or have
significant exposure to assets rated in the 'CCC' category.
The 75 downgraded U.S. cash flow and hybrid tranches have a total
issuance amount of $16.788 billion. Eight of the 22 affected
transactions are mezzanine structured finance CDOs of asset-backed
securities, which are collateralized in large part by mezzanine
tranches of residential mortgage-backed securities and other SF
securities. Ten of the 22 affected transactions are high-grade SF
CDOs of ABS, which were collateralized at origination primarily by
'AAA' through 'A' rated tranches of RMBS and other SF securities.
The other four transactions are CDOs of CDOs that were
collateralized at origination primarily by notes from other CDOs,
as well as by tranches from RMBS and other SF transactions. The
CDO downgrades reflect a number of factors, including credit
deterioration and recent negative rating actions on U.S. subprime
RMBS.
In addition, Standard & Poor's reviewed the ratings assigned to
Parkridge Lane Structured Finance Special Opportunities CDO I Ltd.
and West Coast Funding I Ltd., and based on the current credit
support available to the tranches, has left the ratings at their
current levels.
To date, including the CDO tranches listed below and including
actions on both publicly and confidentially rated tranches, S&P
have lowered its ratings on 3,950 tranches from 885 U.S. cash
flow, hybrid, and synthetic CDO transactions as a result of stress
in the U.S. residential mortgage market and credit deterioration
of U.S. RMBS. In addition, 1,182 ratings from 447 transactions
are currently on CreditWatch with negative implications for the
same reasons. In all, S&P have downgraded $469.331 billion of CDO
issuance.
Additionally, S&P's ratings on $18.483 billion of securities have
not been lowered but are currently on CreditWatch with negative
implications, indicating a high likelihood of future downgrades.
Rating Actions
Rating
------
Transaction Class To From
----------- ----- -- ----
Blue Bell Funding Ltd ABCP AA/A-1+/WatchNeg AAA/A-1+/WatchNeg
Blue Bell Funding Ltd A-1 BBB/Watch Neg A/Watch Neg
Blue Bell Funding Ltd A-2 B-/Watch Neg BBB/Watch Neg
Blue Bell Funding Ltd B CC CCC/Watch Neg
Broderick CDO 2 Ltd A-1AD CCC-/Watch Neg AA
Broderick CDO 2 Ltd A-1AT CCC-/Watch Neg AA
Duke Funding High Grade VI X BBB-/Watch Neg AAA/Watch Neg
Duke Funding High Grade VI A-1LA CCC+/Watch Neg B+/Watch Neg
Duke Funding High Grade VI A-1LB CC CCC-/Watch Neg
Duke Funding VII, Ltd. I-A1 BB/Watch Neg AA/Watch Neg
Duke Funding VII, Ltd. I-A2 BB/Watch Neg AA/Watch Neg
Duke Funding VII, Ltd. I-A2v BB/Watch Neg AA/Watch Neg
Duke Funding VII, Ltd. II CC BB-/Watch Neg
ESP Funding I Ltd A-1R B/Watch Neg A/Watch Neg
ESP Funding I Ltd A-1T1 B/Watch Neg A/Watch Neg
ESP Funding I Ltd A-1T2 CCC-/Watch Neg BBB-/Watch Neg
ESP Funding I Ltd A-2 CC CCC+/Watch Neg
ESP Funding I Ltd A-3 CC CCC-/Watch Neg
Gemstone CDO IV Ltd. A-1 CCC-/Watch Neg A-/Watch Neg
Gemstone CDO IV Ltd. A-2 CC BB+/Watch Neg
Gemstone CDO IV Ltd. A-3 CC BB+/Watch Neg
Gemstone CDO IV Ltd. B CC B-/Watch Neg
Gemstone CDO IV Ltd. C CC CCC-/Watch Neg
GSC ABS CDO 2005-1 Ltd A1S B+/Watch Neg A-/Watch Neg
GSC ABS CDO 2005-1 Ltd A1J CC BB+/Watch Neg
GSC ABS CDO 2005-1 Ltd A2 CC BB-/Watch Neg
GSC ABS CDO 2005-1 Ltd A3 CC B/Watch Neg
GSC ABS CDO 2005-1 Ltd B CC B-/Watch Neg
Hudson Mezzanine Funding S BB/Watch Neg AA/Watch Neg
2006-2 Ltd
Hudson Mezzanine Funding A-1 CC CCC/Watch Neg
2006-2 Ltd
Kent Funding II Ltd A-1A CC CCC-/Watch Neg
Kent Funding II Ltd A-1B CC CCC-/Watch Neg
Klio III Funding Ltd A-1 B+/Watch Neg BB+/Watch Neg
Klio III Funding Ltd A-2 CCC-/Watch Neg B/Watch Neg
Klio III Funding Ltd ABCP BBB/A-2/Watch Neg AA/A-1+/Watch Neg
Klio III Funding Ltd B CC CCC-/Watch Neg
Lenox CDO Ltd A-1S BB+/Watch Neg A-/Watch Neg
Lenox CDO Ltd A-1J CC B/Watch Neg
Lenox CDO Ltd A-2 CC CCC-/Watch Neg
Midori CDO, Ltd. A-1Fnd CC B-/Watch Neg
Midori CDO, Ltd. A-1Unfnd CC B-/Watch Neg
Midori CDO, Ltd. A-X CCC+/Watch Neg A-
Monroe Harbor CDO 2005-1 A-1A B+/Watch Neg AAA/Watch Neg
Monroe Harbor CDO 2005-1 A-1B B+/Watch Neg AAA/Watch Neg
Monroe Harbor CDO 2005-1 A-2 CCC/Watch Neg AA-/Watch Neg
Monroe Harbor CDO 2005-1 B CC A+/Watch Neg
Nautilus RMBS CDO II A-1S A/Watch Neg AAA/Watch Neg
Nautilus RMBS CDO II A-1J BBB+/Watch Neg AA+/Watch Neg
Nautilus RMBS CDO II A-2 BBB-/Watch Neg AA-/Watch Neg
Nautilus RMBS CDO II A-3 BB/Watch Neg BBB/Watch Neg
Nautilus RMBS CDO II B CCC/Watch Neg BB/Watch Neg
Nautilus RMBS CDO II C CC CCC-/Watch Neg
Neptune CDO III Ltd S BBB-/Watch Neg AA/Watch Neg
Neptune CDO III Ltd A-1 CC BBB-/Watch Neg
Neptune CDO III Ltd A-2 CC B/Watch Neg
Neptune CDO III Ltd A-3 CC CCC-/Watch Neg
Newbury Street CDO Ltd A1 AA-/Watch Neg AAA/Watch Neg
Robeco High Grade CDO I A-1 B-/Watch Neg AA/Watch Neg
Solstice ABS CBO II, Ltd. A-1 AA/Watch Neg AAA/Watch Neg
Solstice ABS CBO II, Ltd. A-2 AA/Watch Neg AAA/Watch Neg
TABS 2004-1 Ltd A-1 AA/Watch Neg AAA/Watch Neg
TABS 2004-1 Ltd A-2 CCC-/Watch Neg A-/Watch Neg
TABS 2004-1 Ltd B CC CCC+/Watch Neg
Tazlina Funding CDO II Ltd A-1 CCC-/Watch Neg AA/Watch Neg
Vertical CDO 2003-1 Ltd. A AAA/Watch Neg AAA
Vertical CDO 2003-1 Ltd. B AA/Watch Neg AA
Zais Investment Grade VII A-1A AA-/Watch Neg AAA
Zais Investment Grade VII A-1B AA-/Watch Neg
AAA
Zais Investment Grade VII A-2 BBB/Watch Neg AA/Watch
Neg
Zais Investment Grade VII A-3 CC BB+/Watch
Neg
Zais Investment Grade VII B-1A CC CCC-/Watch
Neg
Limited VII
Zais Investment Grade VII B-1B CC CCC-/Watch
Neg
Zais Investment Grade A-1 BBB/Watch Neg AAA/Watch
Neg
Limited VIII
Zais Investment Grade A-2 CCC-/Watch Neg BBB/Watch
Neg
Limited VIII
Zais Investment Grade B CC BB+/Watch
Neg
Limited VIII
Zais Investment Grade C CC B/Watch
Neg
Limited VIII
Zais Investment Grade D CC CCC-/Watch
Neg
Limited VIII
Other Ratings Reviewed
Transaction Class Rating
----------- ----- ------
Broderick CDO 2 Ltd A-1B CC
Broderick CDO 2 Ltd A-2 CC
Broderick CDO 2 Ltd B CC
Broderick CDO 2 Ltd C CC
Broderick CDO 2 Ltd D CC
Broderick CDO 2 Ltd E CC
Diversified Asset Securitization A-1L AA
Holdings III L.P.
Diversified Asset Securitization A-2 AA
Holdings III L.P.
Diversified Asset Securitization A-3L BB+
Holdings III L.P.
Diversified Asset Securitization B-1L CC
Holdings III L.P.
Duke Funding High Grade VI A-2L CC
Duke Funding High Grade VI A-3L CC
Duke Funding High Grade VI B-1L CC
Duke Funding VII, Ltd. III-A CC
Duke Funding VII, Ltd. III-B CC
Duke Funding VII, Ltd. IV-A CC
Duke Funding VII, Ltd. IV-B CC
ESP Funding I Ltd A-4 CC
ESP Funding I Ltd B CC
ESP Funding I Ltd C CC
Gemstone CDO IV Ltd. D CC
Gemstone CDO IV Ltd. E CC
Hudson Mezzanine Funding 2006-2 Ltd A-2 CC
Hudson Mezzanine Funding 2006-2 Ltd B CC
Hudson Mezzanine Funding 2006-2 Ltd C CC
Hudson Mezzanine Funding 2006-2 Ltd D CC
Hudson Mezzanine Funding 2006-2 Ltd E CC
Kent Funding II Ltd X AA/Watch Neg
Kent Funding II Ltd A-2 CC
Kent Funding II Ltd B CC
Kent Funding II Ltd C CC
Kent Funding II Ltd D CC
Kent Funding II Ltd E CC
Klio III Funding Ltd C CC
Klio III Funding Ltd PrefShrs CC
Lenox CDO Ltd B-1 CC
Lenox CDO Ltd B-2 CC
Lenox CDO Ltd C CC
Lenox CDO Ltd D CC
Lenox CDO Ltd E-1 CC
Lenox CDO Ltd E-2 CC
Midori CDO, Ltd. A-2 CC
Midori CDO, Ltd. B CC
Midori CDO, Ltd. C CC
Midori CDO, Ltd. D CC
Midori CDO, Ltd. E CC
Neptune CDO III Ltd B CC
Neptune CDO III Ltd C CC
Newbury Street CDO Ltd A2 CC
Newbury Street CDO Ltd A3 CC
Newbury Street CDO Ltd A4 CC
Newbury Street CDO Ltd B CC
Newbury Street CDO Ltd C CC
Newbury Street CDO Ltd D CC
Parkridge Lane Structured Finance A-1 AAA
Special Opportunities CDO I Ltd
Parkridge Lane Structured Finance A-2 AAA
Special Opportunities CDO I Ltd
Parkridge Lane Structured Finance B AA
Special Opportunities CDO I Ltd
Parkridge Lane Structured Finance C A
Special Opportunities CDO I Ltd
Parkridge Lane Structured Finance D BBB
Special Opportunities CDO I Ltd
Parkridge Lane Structured Finance E BB/Watch Neg
Special Opportunities CDO I Ltd
Robeco High Grade CDO I A-2 CC
Robeco High Grade CDO I A-3 CC
Robeco High Grade CDO I A-4 CC
Robeco High Grade CDO I B CC
Robeco High Grade CDO I C CC
Robeco High Grade CDO I D CC
Solstice ABS CBO II, Ltd. B CC
Solstice ABS CBO II, Ltd. C CC
TABS 2004-1 Ltd C CC
TABS 2004-1 Ltd D CC
Tazlina Funding CDO II Ltd A-2 CC
Tazlina Funding CDO II Ltd A-3 CC
Tazlina Funding CDO II Ltd B CC
Tazlina Funding CDO II Ltd C CC
Tazlina Funding CDO II Ltd D CC
Tazlina Funding CDO II Ltd E CC
West Coast Funding I Ltd A-1a AA+/Watch
Neg
West Coast Funding I Ltd A-1b B-/Watch
Neg
West Coast Funding I Ltd A-1v B-/Watch
Neg
West Coast Funding I Ltd A-2 CCC-/Watch
Neg
West Coast Funding I Ltd A-3 CC
West Coast Funding I Ltd B CC
West Coast Funding I Ltd C CC
West Coast Funding I Ltd D CC
VONAGE HOLDINGS: Inks $220 Million in Financing with Silver Point
-----------------------------------------------------------------
Vonage Holdings Corp. disclosed in a Securities and Exchange
Commission filing that on Oct. 19, 2008, it entered into
definitive agreements for a financing consisting of:
(i) a $130.3 million senior secured first lien credit facility,
(ii) a $72.0 million senior secured second lien credit facility,
and
(iii) the sale of $18.0 million of the company's 20% senior
secured third lien notes due 2015.
Funding of the Financing is subject to the fulfillment of the
conditions precedent specified, and is currently scheduled for
November.
The co-borrowers under the Financing will be the company and
Vonage America Inc., its wholly owned subsidiary. Obligations
under the Financing will be guaranteed, fully and unconditionally,
by the company's other U.S. subsidiaries, and may in the future be
guaranteed by Vonage Limited, a United Kingdom subsidiary of the
company.
The lenders under the First Lien Senior Facility and the Second
Lien Senior Facility and the purchasers of the Convertible Notes
will be Silver Point Finance, LLC, certain of its affiliates,
other third parties and affiliates of the company. The company
and its financial advisor approached a limited number of qualified
institutional buyers and institutional accredited investors,
including holders of the company's existing convertible notes.
Parties were not permitted to participate in the purchase of
Convertible Notes unless they or one of their affiliates also
agreed to be a lender in the First Lien Senior Facility or the
Second Lien Senior Facility.
The company will use the net proceeds of the Financing, plus cash
on hand, to repurchase up to $253.5 million of its existing
convertible notes in a tender offer that the company commenced on
July 30, 2008, which is expected to expire on Nov. 3, 2008, the
date of the stockholder meeting. The company estimates that it
has incurred and will incur aggregate costs in connection with the
Financing, including all fees and expenses, of between $28 million
and $31 million.
About Vonage Holdings Corp.
Headquartered in Holmdel, New Jersey, Vonage Holdings Corp.
(NYSE:VG) -- http://www.vonage.com/-- provides broadband
telephone services with nearly 2.6 million subscriber lines. The
company's Residential Premium Unlimited and Small Business
Unlimited calling plans offer consumers unlimited local and long
distance calling, and features like call waiting, call forwarding
and voicemail for a flat monthly rate. Vonage's service is sold
on the web and through national retailers including Best Buy,
Circuit City, Wal-Mart Stores Inc. and Target and is available to
customers in the U.S., Canada and the United Kingdom.
Going Concern Doubt
BDO Seidman, LLP, in Woodbridge, New Jersey, raised substantial
doubt as to Vonage Holdings Corp.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the years Dec. 31, 2007, and 2006.
Vonage Holdings's balance sheet at June 30, 2008, showed
$466.1 million in total assets and $551.9 million in total
liabilities, resulting in an $85.8 million stockholders' deficit.
VONAGE HOLDINGS: Amends Financing Terms to Notes Purchase Offer
----------------------------------------------------------------
Vonage Holdings Corp. has amended the financing condition to its
offer to purchase for cash any and all of its outstanding 5%
Senior Unsecured Convertible Notes due 2010.
As disclosed on Oct. 20, 2008, Vonage signed definitive agreements
to refinance its convertible debt. The agreed upon financing
consists of a $130.3 million senior secured first lien credit
facility, a $72.0 million senior secured second lien credit
facility and the sale of $18.0 million of senior secured third
lien convertible notes. The financing condition has been amended
such that the offer is conditioned upon the receipt of such
financing.
Miller Buckfire & Co., LLC is acting as Dealer Manager and D.F.
King & Co., Inc. is acting as the Information Agent in connection
with the offer.
American Stock Transfer & Trust Company, LLC is the Depositary for
the offer.
For any questions concerning the offer or for copies of the
documents related to the offer contact D.F. King & Co., Inc. by
calling (212) 269-5550 (for banks and brokers) or 1-888-628-9011
(all others toll free).
Headquartered in Holmdel, New Jersey, Vonage Holdings Corp.
(NYSE:VG) -- http://www.vonage.com/-- provides broadband
telephone services with nearly 2.6 million subscriber lines. The
company's Residential Premium Unlimited and Small Business
Unlimited calling plans offer consumers unlimited local and long
distance calling, and features like call waiting, call forwarding
and voicemail for a flat monthly rate. Vonage's service is sold
on the web and through national retailers including Best Buy,
Circuit City, Wal-Mart Stores Inc. and Target and is available to
customers in the U.S., Canada and the United Kingdom.
Going Concern Doubt
BDO Seidman, LLP, in Woodbridge, New Jersey, raised substantial
doubt as to Vonage Holdings Corp.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the years Dec. 31, 2007, and 2006.
Vonage Holdings's balance sheet at June 30, 2008, showed
$466.1 million in total assets and $551.9 million in total
liabilities, resulting in an $85.8 million stockholders' deficit.
WAVERLY GARDENS: Says Patient Care Ombudsman Not Necessary
----------------------------------------------------------
Waverly Gardens of Memphis, LLC and Kirby Oaks Integra, LLC, dba
Waverly Glen, ask the U.S. Bankruptcy Court for the Western
District of Tennessee to find that the appointment of a patient
care ombudsman pursuant to 11 U.S.C. Section 333(a)(1) is
unnecessary under the facts of their bankruptcy cases.
Waverly Gardens operates an independent living facility and is not
directly regulated by the State of Tennessee or any other
regulatory agency. Waverly Glen operates an assisted living
facility, including an Alzheimer's unit, and is licensed by the
State of Tennessee Department of Health. As of the bankruptcy
filing date, Waverly Glen was in good standing with the State of
Tennessee, and, in particular, with the State of Tennessee Patient
Ombudsman. No patient complaints are pending against Waverly Glen
with any regulatory agency.
Section 333(a)(1) requires the Court to appoint a Patient Care
Ombudsman within 30 days after the bankruptcy filing unless the
Court finds that the appointment is not necessary for the
protection of the patients under the specific facts of the case.
Michael P. Coury, Esq., at Farris Bobango Branan, PLC, in Memphis,
says the economic events giving rise to the Debtors' Chapter 11
Petitions are unrelated to any care issues of the Debtors'
residents, or any issues relating to preservation of patient
records. The subject Chapter 11 Petitions were the result of
defaults on bank loans with the Debtors' principal lender, First
Tennessee Bank, which defaults have not negatively impacted the
Debtors' ability to provide care and services to their residents,
Mr. Coury explains.
About Waverly Gardens
Memphis, Tennessee-based Waverly Gardens of Memphis, LLC --
http://www.waverlygardens.com/-- operates a retirement home
facility. The company and its affiliate, Kirby Oaks Integra, LLC
dba Waverly Glen, filed for Chapter 11 protection on
Oct. 2, 2008 (Bankr. W.D. Tenn. Case No. 08-30218). Michael P.
Coury, Esq., at Farris Bobango Branan PLC assists the company in
its restructuring effort. The company listed assets of $10
million to $50 million and debts of $1 million to $10 million.
WAVERLY GARDENS: Wants Farris Bobango as Bankruptcy Counsel
-----------------------------------------------------------
Waverly Gardens of Memphis, LLC, and its affiliate, Kirby Oaks
Integra, LLC, seek the U.S. Bankruptcy Court for the Western
District of Tennessee's permission to appoint Farris Bobango
Branan PLC as bankruptcy counsel.
The Firm will, among other things, prepare schedules, statement of
affairs, reports required, motions and applications required in
the administration of this reorganization proceeding, and
formulate and submit to creditors a plan of reorganization.
The Firm will charge the Debtor these hourly rates:
Professional Rate
------------ ----
Michael P. Coury $275
James E. Bailey III $265
R. Campbell Hillyer $190
D. Ann Young $ 95
Michael P. Coury, Esq., a member at the Firm, assures the Court of
the Firm's disinterestedness and that it doesn't have or represent
any interest adverse to the Debtor or its estate. Mr. Coury tells
the Court that the Frim has represented Carruthers & Associates,
an unsecured creditor of the Debtor, in connection with matters
that are not related to the Debtors.
Objections on the request must be filed by Oct. 24, 2008. A
hearing will be set for Oct. 28, 2008, at 11:00 a.m.
About Waverly Garden
Memphis, Tennessee-based Waverly Gardens of Memphis, LLC --
http://www.waverlygardens.com/-- operates a retirement home
facility. The company and its affiliate, Kirby Oaks Integra, LLC
dba Waverly Glen, filed for Chapter 11 protection on
Oct. 2, 2008 (Bankr. W.D. Tenn. Case No. 08-30218). The company
listed assets of $10 million to $50 million and debts of $1
million to $10 million.
WORKFLOW MANAGEMENT: S&P Junks Corp. Credit; Outlook Developing
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its issuer and issue-
level ratings on Workflow Management Inc.; the corporate credit
was lowered to 'CCC' from 'B-'. The rating outlook is developing.
"The downgrade reflects our concern regarding Workflow's near-term
liquidity position, given the tight cushion against its financial
covenants as amended in March of this year and the company's
burdensome amortization payments on its first-lien term loan,"
said Standard & Poor's credit analyst Michael Listner. "We
believe that additional contributions from the company's equity
sponsor, Perseus Partners LLC, or the consummation of the
previously announced merger with Enterprise Acquisition Corp. will
be necessary to satisfy upcoming debt obligations and avoid a
near-term default."
In March, Perseus contributed $39 million to Workflow to fund an
acquisition and prepay amortization payments on the company's
first-lien term loan through the third quarter of 2008. While the
equity contribution and amendments to the company's credit
facilities have provided for some level of credit support in the
short term, the company now faces heightened liquidity pressure.
It is currently unclear in S&P's opinion whether the sponsor will
continue to support the company's operations and existing capital
structure given the absence of material progress in improving
operating performance.
In addition, it is uncertain at this time whether the announced
merger with Enterprise Acquisition Corp., given the requisite
approval of the merger by at least 70% of the shareholders of
Enterprise, will indeed come to fruition and result in a
recapitalization of Workflow's balance sheet.
The 'CCC' rating reflects Workflow Management's significant debt
service requirements, recent operating challenges, near-term
concerns about the company's liquidity position, and the
susceptibility of the printing industry to the current economic
slowdown. Given Workflow's burdensome debt obligations
(approximately $40 million in annual interest costs, $6.9 million
of principal amortization in the fourth quarter of 2008, and
$27.5 million of principal amortization payments in 2009), S&P
anticipates that the company's operations will not generate
sufficient cash flow to maintain payments on these obligations.
Despite the acquisition of the digital print and specialty
envelope businesses of Miami Systems Corporation during the first
quarter of this year, deterioration in Workflow's legacy
businesses and the current weakness in the economy have failed to
create the operating momentum necessary for generating sufficient
cash flow to accommodate the company's debt obligations.
WORLDSPACE INC: Another Hearing on Borrowing Approval Set Oct. 28
-----------------------------------------------------------------
Bill Rochelle of Bloomberg News says that the United States
Bankruptcy Court in Delaware -- after granting WorldSpace, Inc.,
emergency authority to borrow $2 million -- will hold another
hearing on Oct. 28 to decide on an interim borrowing approval.
The Troubled Company Reporter reported on Oct. 23 that
WorldSpace(R), received approval of the first part of an interim
Debtor-in-Possession financing in an amount up to $2 million,
which will enable the Company to meet payroll obligations to
critical employees and commence a process to sell the Company or
its assets.
In accordance with the terms of the DIP financing facility for
which the Company has received initial court approval and intends
to seek further approvals in the coming weeks, the Company has
commenced a process to market and sell the Company or its assets,
or complete an alternative restructuring transaction.
The holders of the Company's existing senior secured and
convertible notes have agreed to provide, subject to the
satisfaction of certain conditions, a DIP financing facility of up
to $13 million for a period of 90 days in order to facilitate a
sale transaction. The financing facility is expected to enable the
Company to continue to pay salaries of critical employees and
continue operations which are critical to preserving the value of
its core assets through the term of the facility.
WorldSpace, Inc. (WSI) -- http://www.1worldspace.com/-- was
organized on July 29, 1990, and incorporated in the State of
Maryland on November 5, 1990. WorldSpace, Inc. and subsidiaries is
engaged in the design, development, construction, deployment and
financing of a satellite-based radio and data broadcasting
service, which serve areas of the world where traditional
broadcast media or internet services are limited. The Company,
which operates in 10 countries, has one satellite in orbit over
Africa, another over Asia and a completed third satellite
currently in storage. This satellite, which can be used to replace
either of the company's two operational satellites may also be
modified and launched to provide DARS in Western Europe.
The Debtor and two of its affiliates filed for Chapter 11
bankruptcy protection on Oct. 17, 2008 (Bankr. D.Del., Case No.
08-12412 - 08-12414). Laura Davis Jones, Esq., at
Pachulski Stang Ziehl & Jones, LLP, and Shearman & Sterling LLP,
are the Debtors' counsel. When the Debtors filed for bankruptcy,
they listed total assets of $307,382,000 and total debts of
$2,122,904,000.
W.R. GRACE: U.S. Trustee, et al., Object Disclosure Statement
-------------------------------------------------------------
Roberta A. DeAngelis, the Acting U.S. Trustee for Region 3,
object to the Disclosure Statement explaining the Joint Plan of
Reorganization filed by W.R. Grace & Co., et al., the Official
Committee of Asbestos Personal Injury Claimants, the Asbestos PI
Future Claimants' Representative, and the Official Committee of
Equity Security Holders. Other Objectors are:
* Official Committee of Unsecured Creditors
* Bank Lenders led Anchorage Advisors
* Bank of America, N.A., et al.
* JP Morgan Chase Bank, N.A.
* Official Committee of Asbestos Property Damage Claimants
* Her majesty the Queen in her right of Canada
* Libby Claimants
* BNSF Railway Company
* The Scotts Company, LLC
* Insurance Companies
* ERISA Plaintiffs
* Longacre Master Fund
* Kaneb Pipe Line Operating Partnership, L.P., and Support
Terminal Services, Inc.
Judith K. Fitzgerald of the United States Bankruptcy Court for the
District of Delaware will convene a hearing on October 27, 2008,
to consider approval of the Disclosure Statement.
A. U.S. Trustee
The U.S. Trustee stresses that the solicitation of votes is
prohibited without the Court's determination of a disclosure
statement's adequacy under Section 1125 of the Bankruptcy Code.
The U.S. Trustee cites that the releases contemplated by the
Disclosure Statement go overboard and inappropriate under
relevant Third Circuit law and that the Ballots do not provide
holders of claims or interests with the ability to separately
withhold their consent to the release whether or nor they vote to
accept the Plan. Thus, the Disclosure Statement should be
amended to allow claimants the right to vote against these
releases, the U.S. Trustee asserts.
In essence, the Trustee avers that the Disclosure Statement does
not contain relevant information relating to the current dispute
between the Debtors and certain creditors over amount of interest
to be paid on these creditors' claims. A description of that
dispute would certainly constitute adequate information, but
would also provide a basis for the Debtors' determination that
the general unsecured claims, Class 9, are unimpaired and deemed
to have voted to accept the Plan, the Trustee explains.
In addition, the Trustee suggests that the Disclosure Statement
should note that the Debtors are obliged to (i) file operating
reports and (ii) pay all preconfirmation quarterly fees owed
under Section 1930(a)(6) on the Plan's Effective Date until the
closing of their Chapter 11 cases.
B. Creditors' Committee
"The Plan, at best, is an attempt by the Debtors and other Plan
proponents to disenfranchise general unsecured creditors by
refusing to solicit these unsecured creditors' votes on the Plan.
Accordingly, the Disclosure Statement should be disapproved," the
Creditors' Committee tells the Court.
Michael R. Lastowski, Esq., at Duane Morris LLP, in Wilmington,
Delaware, points out that the Plan will not pay unsecured
creditors postpetition interest at applicable defaults rates.
This impairment of Class 9, the Committee asserts, is
impermissible because it results solely from the treatment
provided to the Class in the Plan but not from applicable
provisions of the Bankruptcy Code.
"The Debtors are proposing a Plan that protects their equity
holders and guarantees them a significant recovery, while denying
general unsecured creditors the right to receive the benefits of
their contractual bargains," Mr. Lastowski points out. The
Debtors, he adds, can't trump the absolute priority rule and
pertinent case law that holds to the contrary. The Debtors are
not interested in ensuring a fair process for determining
disputes with creditors and only seek to impose procedural
hurdles in order to hush any dissent to their distribution
scheme, Mr. Lastowski points out.
The Disclosure Statement is woefully inadequate on where the
Committee stands in the Plan, the treatment of Class 9 Claims, or
on the Bank Claims Default Interest Litigation as a matter
pending before the Court, the Creditors Committee maintains.
C. Bank Lenders
The Plan seeks to pay Bank Lenders, as members of Class 9, a
lower rate of interest than the contract default rate, rendering
the Bank Claims impaired under Section 1124(1), James S. Green,
Jr., Esq., at Landis Rath & Cobb LLP, in Wilmington, Delaware,
complains. The Bank Lenders, he argues, have the right to vote
on the Plan now that the Debtors are seeking to deprive them of
voting rights.
The Bank Lenders include:
* Anchorage Advisors, LLC;
* Avenue Capital Group;
* Bass Companies;
* Caspian Capital Advisors, LLC;
* Catalyst Investment Management Co. , LLC;
* Intermarket Corp.;
* JD Capital Management, LLC;
* JP Morgan Chase, N.A. Credit Trading Group;
* Loeb Partners Corporation;
* MSD Capital, L.P.;
* Murray Capital Management, Inc.;
* Normandy Hill Capital, L.P.;
* Ore Hill Partners, LLC;
* P. Schoenfeld Asset Management, LLC; and
* Restoration Capital Management, LLC.
Mr. Green cites that it was the Debtors who triggered the default
rate interest under the credit agreements by failing to fulfill
contractual obligations. The Debtors, he asserts, cannot
challenge the Bank Lenders' rights to default interest under
applicable state law, and there is no relevant legal authority
which upholds that the rights simply vanish in bankruptcy that a
creditor is unimpaired under Section 1124 if rights are taken
away.
The Bank Lenders assert that the Plan makes the Debtors appear
"generous" for paying as an "extra" to a creditor already
unimpaired by virtue of receipt of its allowed Section 502
prepetition claim under classification scheme that does not
comply with the Bankruptcy Code.
Pursuant to letters of credit it issued to the Debtors, Bank of
America, N.A., had an allowed unsecured nonpriority claim against
the Debtors for $9,799,720 and allowed contingent unsecured
nonpriority claim for $6,710,100. Subsequently, BofA transferred
to Morgan Stanley all its rights to the Unsecured Claims. In
turn, Morgan Stanley Senior Funding, Inc., transferred half of
the $6,710,110 Claim or $3,355,055, to Tempo Master Fund LP. In
all, Morgan Stanley and Tempo had Unsecured Claims for
$16,489,830.
The Bank Claimants question the Plan's classification of the
Unsecured Claims under Class 6, treated as impaired class instead
of Class 9 general unsecured claims as unimpaired class. The
Banks point out that they have never asserted an injury due to
asbestos exposure against the Debtors nor have filed any state
court actions seeking damages. By placing these allowed
unsecured claims in Class 6, the Plan provides unequal treatment
of claims to unsecured creditors who provide money under a letter
of credit, the Bank Claimants assert.
At best, the Plan is arbitrary and unreasonable in classifying
the Unsecured Claims, the Bank Claimants stress. Should the
Debtors prevail in classifying dissimilar unsecured claims in one
class, banks will have new reasons to withhold credit, the Bank
Claimants admonish.
JP Morgan Chase Bank, N.A., takes up the stance of the Bank
Lenders.
D. PD Claimants
The PD Committee points out that the Debtors fail to file
exhibits critical to its understanding of the Plan, including the
treatment of unresolved asbestos property damage claims and ZAI
claims. With the Disclosure Statement lacking in adequate
information, the PD Committee seeks the Court that any approval
of the Disclosure Statement should be subject to the PD
Committee's rights to review and consider the omitted Plan
exhibits.
Her majesty the Queen in her right of Canada, on behalf of
Canadian ZAI Claimants, complains that the Disclosure Statement
fails to disclose (i) treatment of the Crown's contribution and
indemnity claims and the Claims-related pending dispute between
the Crown and the Debtors. The Crown asserts claims against the
Debtors relating to costs incurred to seal attics and otherwise
remediate ZAI installed in Crown-owned properties in homes built
in the military bases and Native reserves.
The Canadian Government's counsel, Matthew P. Ward, Esq., at
Womble Carlyle Sandbridge & Rice, PLLC, notes that the Crown and
the Debtors have not reached a settlement regarding the Claims
and the Disclosure Statement should mention about the on-going
litigation on the Crown?s Claims dispute and whether the Claims
are (i) properly channeled to injunction under Section 524(g) or
(ii) subject to the automatic stay and discharge.
Mr. Ward contends that the Crown and not the CCAA Representative
Counsel should be the party solicited to vote on the Plan.
F. Libby Claimants
"The Disclosure Statement is so inadequate that it unreasonable
to even require parties-in-interest to respond," the Libby
Claimants tell the Court. The Disclosure Statement lacks the
very basic information to elicit a meaningful response, the Libby
Claimants explain.
The Libby Claimants complain that the Plan Proponents have
reserved the right to change material provisions of the Plan
without further disclosure. The Plan Proponents left blank the
amount referring to the percentage of the liquidated value of
each Asbestos PI Claim to be paid by the Asbestos PI Trust, and
given the inadequate notice, the Asbestos PI Claimants will be
denied of an opportunity to object to material element of the
Plan.
The Libby Claimants stress that only the Asbestos PI Claimants
are the not being paid in full under the Plan thus the Debtors
should have made a focus to draft a Disclosure Statement that
would assist these creditors in making an informed decision about
the Plan.
The Libby Claimants, in a separate filing, seek leave from the
Court to exceed the page limitation for its Disclosure Statement
objection.
G. State of Montana
The State of Montana, objects to the Disclosure Statement because
it fails to disclose that the Plan blatantly disregards the
absolute priority rule and prohibition against unfair
discrimination, as set forth in Section 1129(b). Specifically,
Montana points out that the Bankruptcy Code provides that a plan
normally may be confirmed if it meets certain requirements,
including that each and every class either accepts the plan or
does not suffer any impairment under the plan.
Montana adds that Disclosure Statement and the Exhibit Book omit
certain critical exhibits that a hypothetical investor would find
necessary to evaluate its options.
The Solicitation Motion, which provides that indemnification
claims will be estimated at $1 each for voting purposes, should
be explained.
H. Scotts Company
The Scotts Company, who purchased vermiculite ore mined by the
Debtors in Libby, Montana, says the Disclosure Statement does not
contain "full disclosure" on matters pertinent to its rights
under the Plan. Given the broad definition of indirect PI Trust
claims, the Disclosure Statement does not say if Scotts Company's
claims will be allowed as Indirect PI Trust Claims and if it
does, Scotts will have an allowed claim in Class 6 for damages
due to Libby vermiculite.
Furthermore, Scotts assert that the Disclosure Statement must
provide that Scotts Claims are not common law claims and should
be deemed as post-confirmation claims not subject to compromise
or discharge in a plan.
The Disclosure Statement does not say if the Debtors intend to
use certain injunction and release provisions on Scotts'
declaratory judgment arising from the Adversary Proceeding when
the Court and the Debtors have acknowledged that Scotts is
entitled to declaratory judgment. Moreover, the Debtors are also
silent as to the treatment of the Declaratory Judgment Action and
Scotts' rights under the WR Grace insurance policies.
Accordingly, the Disclosure Statement should be amended to
reflect that Scotts' existing rights to a coverage claim under
the insurance policies, by declaratory relief or otherwise, will
not be discharged, released or otherwise adversely affected by
any provision of the Plan.
I. BNSF Railway
Given the broad definition of an Asbestos PI Claim offered by the
Plan, BNSF cannot ascertain if the definition includes claims
against BNSF in the state court actions relating to Libby Mine,
Montana are included in the definition. For clarification, the
Disclosure Statement should say that BNSF and any person that
asserted or will assert a claim against BNSF will have an allowed
claim in Class 6, BNSF proposes.
To the extent that the Plan intends to treat BNSF?s claims as
Asbestos PI Claims or Indirect PI Trust Claims, the Debtors
should cite the basis in the Disclosure Statement.
J. Insurance Companies
Several insurance companies who have issued insurance policies to
the Debtors covering their asbestos-related personal injury
liabilities object to the Disclosure Statement because the
document does not contain adequate information on the insurance
policies and their treatment under the Plan:
* Maryland Casualty Company;
* Continental Casualty Company, Transportation Insurance
Company, and their American insurance affiliates;
* Seaton Insurance Company and OneBeacon America Insurance
Company;
* Fireman's Fund Insurance Company and Riunione Adriatica di
Sicurta;
* Century Indemnity Company, Pacific Employers Insurance
Company, Century Indemnity Company of Hartford, Connecticut
by and through Cravens, Dargan & Company Pacific Coast, and
Central National Insurance Company of Omaha;
* Zurich Insurance Company and Zurich International (Bermuda),
Ltd.; and Federal Insurance Company;
* Arrowood Indemnity Company;
* Federal Insurance Company.
The Insurance Companies complain that the Disclosure Statement
fails to include copies of the Asbestos Insurance Policy Schedule
and the Asbestos Insurance Transfer Agreement they entered into
with the Debtors, which, they contend, are critical components of
how the Plan intends to treat them. Without the schedule and the
agreement, the Insurance Companies assert that the Disclosure
Statement fails to fully and clearly provide information
necessary for creditors to make an informed judgment on the Plan.
The Insurance Companies argue that the manner and terms of any
transfer of insurance rights under the Insurance Policies from
the Debtors to the Asbestos PI Trust is a matter of great
importance to them. The Plan provides that the Asbestos PI Trust
will have the right to seek to recover from the Insurance
Companies some or all payments pursuant to the Insurance
Policies. Since the Plan purports to be "insurance neutral," for
the Insurance Companies to have a meaningful opportunity to
determine whether they should object to the Plan, the companies
need to be able to review all relevant documents relating to the
transfer of insurance rights to the Asbestos PI Trust.
The Plan, FFIC points out, contemplates that Asbestos PI Claims
will be paid, in part, with the proceeds of insurance policies
that the Debtors intend to seek to recover from FFIC. However,
the Disclosure Statement fails to provide adequate information
about the mechanics and risks in so doing. Significantly, FFIC
complains that the Disclosure Statement fails to disclose to
holders of Asbestos PI Claims that any insurance coverage that
otherwise might be available to pay those Asbestos PI Claims may
be vitiated, and those claimants? recoveries diminished, by the
Plan's violation of FFIC's contractual rights and releases of
Debtors' reciprocal contractual obligations with respect to the
Policies.
In particular, FFIC complains that the Disclosure Statement:
(a) fails to provide adequate information regarding the
Proposed procedures that will be employed by the Asbestos
PI Trust to liquidate and pay Asbestos PI Claims.
Specifically, FFIC says it is deprived of meaningful
information regarding (i) its involvement, if any in the
Asbestos Claims liquidation process; and (ii) the process
by which the Asbestos PI Trust will seek to recover
insurance proceeds from FFIC and other Asbestos Insurance
Entities that have not previously entered into Asbestos
Insurance Settlement Agreements;
(b) fails to adequately disclose that the Plan is not
"insurance neutral" with respect to FFIC; and
(c) fails to provide adequate information regarding material
risks that any otherwise available insurance coverage may
be vitiated by the Plan's violation of FFIC's Contractual
Rights and releases of Debtors' Contractual Obligations.
Seaton and Beacon complain that the Disclosure Statement does not
permit them to determine how their indemnity claims will be
treated under the Plan.
J. ERISA Plaintiffs
Keri Evans, Timothy Whips and Mark Siamis, participants in the W.
R. Grace & Co. Savings & Investment Plan, on behalf of
themselves, the S&I Plan, and a class of all others similarly
situated, complain that the Disclosure Statement's description of
the ERISA litigation is not accurate and that the Plan provides
improper releases and injunctions that may impact the ERISA
Plaintiffs' claims against the Non-Debtor Defendants.
The Release Provisions, the ERISA Plaintiffs point out, are so
broad and ambiguous that one may interpret them to release the
claims of the ERISA Plaintiffs against the Non-Debtor Defendants,
thereby enjoining and prohibiting the ERISA Plaintiffs from
asserting claims in the ERISA Litigation against the non-Debtors.
Indeed, to that extent, the releases and any related injunction
are improper and must not be allowed, Ira M. Levee, Esq., at
Lowenstein Sandler PC, in Roseland, New Jersey, argues for the
ERISA Plaintiffs.
K. Longacre Master Fund
As the Disclosure Statement relates to a plan that cannot be
confirmed, the Court should thus deny its approval, Longacre
Master Fund, Ltd. asserts. The Plan plainly violates the
absolute priority rule set forth by Section 1129.
Longacre complains that not only is the treatment of each holder
of general unsecured claim under the Plan ambiguous, the
solicitation procedures intend to deprive unsecured creditors the
right to vote to the Plan. Moreover the Plan cannot be confirmed
unless the Unsecured Creditors class is made unimpaired and the
Debtors honor the obligation to pay at default interest to
unsecured creditors as applicable contracts dictate even if the
rate is greater than the 4.19% set in the Plan.
J. Kaneb Pipe Line
Kaneb Pipe Line Operating Partnership, L.P., and Support Terminal
Services, Inc., contend that the neither the Plan nor Disclosure
Statement provides any disclosure on what will be the status of
certain causes of action commenced by Grace Energy Corporation
against Kaneb, which litigation Kaneb intends to pursue.
Kaneb has purchased from Grace Energy a jet fuel pipeline in Cape
Cod, Massachusetts, that is subject to remediation costs for $75
million imposed by the Massachusetts Department of Environmental
Protection and the U.S. Department of Justice. Though the 191st
District Court of Dallas County has entered a Final Judgment as
amended, Grace Energy and Kaneb have appealed the District Court
decision, pending resolution. Kaneb also wants the Disclosure
Statement?s explanation to a claim for $8 million asserted by
Samson Hydrocarbons relating to Cape Cod Pipeline.
Kaneb speculates that there might be insurance policies covering
the Cape Cod Pipeline that the Debtors have not disclosed, the
Debtors, however, must assume all obligations and any insurance
coverage with respect to the Cape Cod Pipeline.
About W.R. Grace
Headquartered in Columbia, Md., W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally.
The Company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee
of Equity Security Holders.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on January 14, 2008.
At Dec. 31, 2006, the W.R. Grace's balance sheet showed total
assets of $3,620,400,000 and total debts of $4,189,100,000.
As of November 30, 2007, W.R. Grace's balance sheet showed total
assets of $3,335,000,000, and total debts of $3,712,000,000.
(W.R. Grace Bankruptcy News, Issue No. 168; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
* S&P Downgrades Ratings to 'D' on 32 Classes of Certificates
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings to 'D' on
32 classes of mortgage pass-through certificates from 27 U.S.
subprime residential mortgage-backed securities transactions from
various issuers.
The downgrades reflect principal write-downs on the affected
classes. Of the 32 defaulted classes, S&P downgraded one from the
'B' rating category, five from the 'CCC' rating category, and 26
from the 'CC' rating category. The principal balances of these
certificates incurred realized losses during the September 2008
remittance period.
Rating Actions
2005-CB6 Trust
Series 2005-CB6
Rating
------
Class CUSIP To From
----- ----- -- ----
B-5 12489WPA6 D CC
Aegis Asset Backed Securities Trust
Series 2005-5
Rating
------
Class CUSIP To From
----- ----- -- ----
B3 00764MHN0 D CC
Aegis Asset Backed Securities Trust Mortgage Pass Through
Certificates Series
2005-4
Rating
------
Class CUSIP To From
----- ----- -- ----
B4 00764MGR2 D CCC
Fremont Home Loan Trust 2004-3
Series 2004-3
Rating
------
Class CUSIP To From
----- ----- -- ----
M9 35729PFU9 D CC
Fremont Home Loan Trust 2005-D
Series 2005-D
Rating
------
Class CUSIP To From
----- ----- -- ----
B4 35729PMT4 D CC
GSAMP Trust 2003-HE1
Series 2003-HE1
Rating
------
Class CUSIP To From
----- ----- -- ----
B-2 36228FSY3 D CCC
GSAMP Trust 2004-HE1
Series 2004-HE1
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 36228FR99 D CCC
GSAMP Trust 2005-AHL2
Series 2005-AHL2
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 362341J75 D CC
GSAMP Trust 2006-NC2
Series 2006-NC2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-8 362463AN1 D CCC
M-9 362463AP6 D CC
HSI Asset Securitization Corporation Trust 2006-HE1
Series 2006-HE1
Rating
------
Class CUSIP To From
----- ----- -- ----
M8 44328AAP5 D CC
IXIS Real Estate Capital Trust 2006-HE3
Series 2006-HE3
Rating
------
Class CUSIP To From
----- ----- -- ----
B-2 46602UAM0 D CC
B-3 46602UAN8 D CC
IXIS Real Estate Capital Trust 2007-HE1
Series 2007-HE1
Rating
------
Class CUSIP To From
----- ----- -- ----
B2 45073DAM0 D CC
B3 45073DAN8 D CC
Long Beach Mortgage Loan Trust 2003-3
Series 2003-3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-4 542514ED2 D CCC
MASTR Asset Backed Securities Trust 2006-AM2
Series 2006-AM2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-12 57645FAT4 D CC
MASTR Asset Backed Securities Trust 2007-WMC1
Series 2007-WMC1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-5 55275TAK4 D CC
M-6 55275TAL2 D CC
Morgan Stanley ABS Capital I Inc. Trust 2006-WMC1
Series 2006-WMC1
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 61744CXW1 D CC
Morgan Stanley ABS Capital I Inc. Trust 2006-WMC2
Series 2006-WMC2
Rating
------
Class CUSIP To From
----- ----- -- ----
B-1 61749KAN3 D CC
Morgan Stanley Capital I Inc. Trust 2006-HE1
Series 2006-HE1
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 617451EA3 D CC
Morgan Stanley IXIS Real Estate Capital Trust 2006-1
Series 2006-1
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 61749QAP5 D CC
Option One Mortgage Loan Trust 2005-3
Series 2005-3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-11 68389FJC9 D CC
Option One Mortgage Loan Trust 2006-2
Series 2006-2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-7 68402CAM6 D CC
Option One Mortgage Loan Trust 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-11 68400DAS3 D CC
People's Choice Home Loan Securities Trust Series 2004-1
Series 2004-1
Rating
------
Class CUSIP To From
----- ----- -- ----
M7 71085PAL7 D CC
SG Mortgage Securities Trust 2006-FRE1
Series 2006-FRE1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-8 81879MBE8 D CC
SG Mortgage Securities Trust 2006-FRE2
Series 2006-FRE2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-7 784208AM2 D CC
SG Mortgage Securities Trust 2006-OPT2
Series 2006-OPT2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-11 78420MAS8 D CC
Terwin Mortgage Trust 2006-1
Series 2006-1
Rating
------
Class CUSIP To From
----- ----- -- ----
I-B-4 881561N42 D B
II-M-1 881561J47 D CC
* S&P Puts Ratings on 30 Certificates Under Negative Watch
----------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on 30
classes of commercial mortgage pass-through certificates from six
commercial mortgage-backed securities transactions on CreditWatch
with negative implications.
The negative CreditWatch placements reflect Standard & Poor's
preliminary analysis of the transactions' tenant exposure to
Mervyn's (not rated), which filed for Chapter 11 bankruptcy
protection in July 2008 and announced last week that it would
liquidate the remaining 149 stores operating under the Mervyn's
name over the remainder of the year.
The transactions have 62 properties with Mervyn's exposure, and
all but one of the properties is 100% occupied by Mervyn's. The
CreditWatch placements reflect S&P's concerns with six loans
($377.2 million) across the six affected transactions, three of
which ($36.6 million) have already been transferred to the special
servicer. S&P considered several factors when evaluating the six
loans, including potential downtime for the properties,
retenanting costs, average market rents, and the properties'
current debt per square foot relative to comparable properties in
the local market.
S&P also factored in the properties' geographic locations and
considered the impact of any potential valuation decline in the
context of the transactions' capital structures. S&P will
continue to monitor the situation and will update or resolve the
CreditWatch placements as more information becomes available. Any
rating adjustments will follow a full analysis of all the loans in
each transaction.
Given the single-tenant nature of the properties, Standard &
Poor's views the loss of the Mervyn's tenant as a degradation in
credit of the underlying loans. S&P also have concerns about the
geographic concentration of many of the properties. Many are
located in Southern California, which is experiencing economic
weakness due to subprime mortgage-related issues.
Details of each transaction and its Mervyn's-related loans are:
Banc of America Commercial Mortgage Inc. 2005-5
This transaction has exposure to three loans totaling
$36.5 million (2%) that are secured by three single-tenant retail
properties in California totaling 236,635 sq. ft. Mervyn's
occupies 100% of the net rentable area at all three properties,
and the weighted average year-end 2007 DSC was 1.44x.
Morgan Stanley Capital I Trust 2006-TOP21
The Mervyn's Portfolio loan ($61.7 million, 4%) in this
transaction is secured by the fee interests in 25 single-tenant
retail spaces that have operated as Mervyn's stores. The
properties total 1.90 million sq. ft. and are all located in
California. The Mervyn's Portfolio loan appears on the servicer's
watchlist. S&P reviewed this transaction on Sept. 9, 2008, and at
that time, none of the stores were scheduled to be closed. For
the year ended Dec. 31, 2007, the DSC was 2.57x.
GMAC Commercial Mortgage Securities Inc. 2006-C1, GE Commercial
Mortgage Corp. 2005-C4, and COMM 2005-FL11
The Mervyn's Portfolio loan is a $258.5 million whole loan that is
participated into three pari passu notes. The first participation
($106.3 million; 6%) is the largest loan in the GMAC 20056-C1
transaction; the second participation ($106.3 million, 5%) is the
second-largest loan in the GE 2005-C4 transaction; and the third
participation is the fourth-largest loan ($45.9 million, 8%) in
the COMM 2005-FL11 transaction. The loan is secured by 35 single-
tenant retail properties totaling 2,662,853 sq. ft. The
properties have operated as Mervyn's stores, and 24 of the
properties are located in California, five are in Nevada and
Arizona, and one is in Texas. Eight of the stores were closed
prior to last week's announcement. For the year ended Dec. 31,
2007, DSC for this loan was 2.16x.
Greenwich Capital Commercial Funding Corp. 2006-FL4
The Westchester Shopping Center loan ($17.7 million, 3%) is the
12th-largest loan in the pool and has a whole-loan balance of
$36.9 million. The whole loan consists of a $17.7 million senior
participation, a $3.1 million subordinate nonpooled component that
is raked to the "WSC" certificates, and a $16.2 million junior
participation interest that is not securitized. The whole loan is
secured by a 157,349-sq.-ft. retail property in Los Angeles.
Mervyn's is the anchor tenant and occupies 62% of the NRA. Once
Mervyn's closes this location, the property will be only 38%
occupied. For the year ended Dec. 31, 2007, DSC for this loan was
1.09x. The loan matures in February 2009 and has two one-year
extension options remaining.
Standard & Poor's has identified 33 nondefeased loans
($1.81 billion) in 32 CMBS transactions that list Mervyn's as a
tenant at one of the properties that secure the loan. S&P are
continuing its effort to evaluate Mervyn's exposure in its rated
transactions. As S&P continue these efforts, and as the status of
individual properties becomes available, it will update S&P's
CreditWatch placements or initiate rating actions as warranted.
Ratings Placed on Creditwatch Negative
Banc of America Commercial Mortgage Inc.
Commercial mortgage pass-through certificates series 2005-5
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
N B/Watch Neg B 2.28%
O B-/Watch Neg B- 1.90%
Morgan Stanley Capital I Trust 2006-TOP 21
Commercial mortgage pass-through certificates series 2006-TOP21
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
H BBB-/Watch Neg BBB- 2.41%
J BB+/Watch Neg BB+ 1.78%
K BB/Watch Neg BB 1.52%
L BB-/Watch Neg BB- 1.14%
M B+/Watch Neg B+ 1.02%
N B/Watch Neg B 0.89%
O B-/Watch Neg B- 0.64%
GMAC Commercial Mortgage Securities Inc. Series 2006-C1 Trust
Commercial mortgage pass-through certificates series 2006-C1
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
G BBB+/Watch Neg BBB+ 5.95%
H BBB/Watch Neg BBB 4.81%
J BBB-/Watch Neg BBB- 3.42%
K BB+/Watch Neg BB+ 3.04%
L BB/Watch Neg BB 2.66%
M BB-/Watch Neg BB- 2.15%
N B+/Watch Neg B+ 2.03%
O B/Watch Neg B 1.77%
P B-/Watch Neg B- 1.39%
GE Commercial Mortgage Corp.
Commercial mortgage pass-through certificates series 2005-C4
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
J BBB-/Watch Neg BBB- 3.95%
K BB+/Watch Neg BB+ 3.44%
L BB/Watch Neg BB 2.93%
M BB-/Watch Neg BB- 2.55%
N B+/Watch Neg B+ 2.17%
O B/Watch Neg B 1.91%
P B-/Watch Neg B- 1.53%
COMM 2005-FL11
Commercial mortgage pass-through certificates series 2005-FL11
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
K BBB-/Watch Neg BBB- 3.96%
L BBB-/Watch Neg BBB- N/A
Greenwich Capital Commercial Funding Corp.
Commercial mortgage pass-through certificates series 2006-FL4
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
N-WSC A-/Watch Neg A- N/A
O-WSC BBB/Watch Neg BBB N/A
P-WSC BB+/Watch Neg BB+ N/A
N/A -- Not applicable.
* Restructuring Lawyer Arthur Steinberg Joins King & Spalding-NY
----------------------------------------------------------------
Arthur Steinberg, a high-profile financial restructuring lawyer
with 29 years' experience, has joined King & Spalding's New York
office. Mr. Steinberg is the seventh bankruptcy lawyer the firm
has hired in the past 16 months and continues the firm's
expansion of its restructuring practice, including the addition
of a bankruptcy practice in Houston.
"[Mr. Steinberg] augments King & Spalding's already comprehensive
financial restructuring and bankruptcy practice by broadening
our national capability in New York -- one of the most active
bankruptcy courts in the United States," Paul K. Ferdinands,
head of the King & Spalding's financial restructuring practice
group.
Mr. Steinberg joins King & Spalding from Kaye Scholer LLP, where
he was a partner and co-head of the business reorganization and
creditors' rights department. Mr. Steinberg has represented a
broad range of clients, including debtors, creditors' committees,
secured and unsecured creditors groups/individuals, distressed
investors and asset buyers, and parties to bankruptcy related
litigation. He also has acted as a receiver and Investment
Company Act trustee for failed hedge funds and investment
advisors.
Mr. Steinberg earned a B.A., cum laude, from Columbia University
and a J.D. from New York University School of Law, order of the
coif.
"[Mr. Steinberg] has a high profile within the restructuring
community in New York," Robert F. Perry, managing partner of King
& Spalding's New York office, said. "He has worked on a number
of major restructurings and his experience will add significantly
to the firm's restructuring practice in New York City,"
King & Spalding's 26-lawyer financial restructuring group is a
financial restructuring practices. The firm's lawyers are
regularly retained in large bankruptcy matters and workouts to
represent debtors, trustees, creditors' committees,
institutional lenders, other critical creditors and parties-in-
interest, and potential acquirers of businesses and large assets.
King & Spalding's New York office employs 100 attorneys practicing
in a variety of areas including banking, business litigation,
corporate finance, energy, financial restructuring, intellectual
property, Islamic finance, mergers and acquisitions, private
equity, tax and real estate, among others.
About King & Spalding
King & Spalding LLP -- http://www.kslaw.com/-- is an
international law firm with more than 800 lawyers in Atlanta,
Dubai, Houston, London, New York, Riyadh (affiliated office) and
Washington, D.C. The firm represents half of the Fortune 100.
King & Spalding is into financial restructuring practices. It
provides valuable knowledge and in-depth experience to virtually
all facets of corporate reorganizations, in-court and out-of-court
debt restructuring, bankruptcy and insolvency litigation, and
distressed asset mergers and acquisitions. This practice is
regularly retained in bankruptcy matters and workouts to represent
debtors, trustees, creditors' committees, institutional lenders,
other critical creditors and parties-in-interest, and potential
acquirers of businesses and large assets.
The Houston office of King & Spalding, with more than 100 lawyers,
provides a variety of services to clients the world over. Chief
among its practices are those focusing on litigation and
transactional law, especially energy, international arbitration
and Latin American matters.
* BOOK REVIEW: Distressed Investment Banking:
To the Abyss and Back
---------------------------------------------
Authors: Henry F. Owsley and Peter S. Kaufman
Publisher: Beard Books
Hardcover: 236 pages
List Price: US$59.96
Own your personal copy at
http://amazon.com/exec/obidos/ASIN/1587982676/internetbankrupt
This new book is the definitive work on distressed investment
banking by two widely acknowledged leaders in this field.
Dealing with the restructuring of troubled companies, an insider's
view is provided on the methods and complexities of this
fascinating area of investment banking.
It demystifies what investment bankers really do and conveys
difficult concepts in easily understandable terms.
Particular focus is directed to unconflicted advice to boards of
directors interested in recoveries of shareholders.
Attorneys, accountants, crisis mangers, business students, judges,
and investment bankers -- as well as management and directors of
distressed companies -- all will find this book of interest.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. Julybien D. Atadero, Sheryl Joy P. Olano, Ronald C. Sy, Joel
Anthony G. Lopez, Cecil R. Villacampa, Ludivino Q. Climaco, Jr.,
Loyda I. Nartatez, Tara Marie A. Martin, Joseph Medel C. Martirez,
Ma. Cristina I. Canson, Christopher G. Patalinghug, and Peter A.
Chapman, Editors.
Copyright 2008. 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 $775 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 Christopher Beard
at 240/629-3300.
*** End of Transmission ***