/raid1/www/Hosts/bankrupt/TCR_Public/081204.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, December 4, 2008, Vol. 12, No. 289
Headlines
1.618 GROUP: Wants Court to Dismiss Involuntary RBC Petition
AFFINIA GROUP: Moody's Affirms Corporate Family Rating at 'B2'
AGRIPROCESSORS INC: Gets Court OK on $2.5MM Loan From First Bank
AIR CANADA: S&P Puts 'B' Corp. Credit Rating on Watch Negative
AMERICAN HOME: Sends Plan to Creditors; Confirm. Hearing Jan. 28
AMERICAN INTERNATIONAL: Will Sell Interest in TMV to Tenaska
AMERICAN NATURAL: TSX Reinstates Trading of Common Shares
AMERICAN NATURAL: Sept. 30 Balance Sheet Upside-Down by $18MM
AMERICAN FIBERS: Panel May Employ Lowenstein Sandler as Counsel
AMERICAN FIBERS: Panel May Retain Amper Politziner as Accountants
ARCADIA RESOURCES: Posts $6MM Net Loss in 6 Months ended Sept. 30
ARTES MEDICAL: Seeks Liquidation of Business in Chapter 7
ATA AIRLINES: Court Okays Asset Sale to Southwest Airlines
ATLANTA GOLD: To Complete $2.5-Mil. Private Placement
ATLANTIS PLASTICS: Marcus Watson Appointed as Chapter 11 Trustee
ATLANTIS PLASTICS: U.S. Trustee Appoints Chapter 11 Trustee
BALLY TOTAL: Files for Chapter 22 Due to Liquidity Crisis
BALLY TOTAL: Case Summary & 50 Largest Unsecured Creditors
BEAZER HOMES: Posts $951.2MM Operating Loss in FY Year Sept. 30
BELMONT COUNTY: Fitch Withdraws 'B+' Rating on Series 2008 Bonds
BENJAMIN CONSTRUCTION: Files for Chapter 11 Protection
B MOSS CLOTHING: Case Summary & 232 Largest Unsecured Creditors
CATALYST PAPER: Moody's Affirms 'B1' CFR; Outlook Remains Negative
CF HOSPITALITY: Court Terminates Exclusive Plan Filing Rights
CFM US: Seeks Dec. 20 Extension to File Chapter 11 Plan
CHARMING SHOPPES: S&P Junks Sr. Unsec. Debt Rating; Outlook Stable
CHEVY CHASE: S&P Junks Ratings on Classes B4 & B5 Certificates
CHRYSLER LLC: UAW OKs Healthcare Payment Delays & Jobs Bank Cuts
CITADEL: Changes in Credit Agreement Won't Affect Moody's 'B3' CFR
CITIGROUP INC: Sells $5.5BB of FDIC-Guaranteed Bonds
CONCORD RETAIL: Case Summary & 20 Largest Unsecured Creditors
CONCORD RETAIL: Meeting to Form Creditors Panel on December 11
CONSTAR INTERNATIONAL: Misses Dec. 1 Payment on Sub Notes
CONSTAR INTERNATIONAL: Moody's Cuts Corp. Family Rating to Caa2
CONSTELLATION ENERGY: Electricite de France Mulls Buying Firm
ECLIPSE AVIATION: Owes $7.8 Million to LaBarge Inc.
ENTELLIUM CORP: Files for Chapter 11 Protection in Washington
FIBERTECH POLYMERS: Assets Sold to Owner Yucaipa
FORD MOTOR: UAW OKs Healthcare Payment Delays & Halt of Jobs Bank
G-I HOLDINGS: DOJ Wants Plan Filing Period Extended to March 30
GENERAL GROWTH: Gets Extension; $1-Bil. Debt Matures Mid-December
GENERAL MOTORS: UAW OKs Trust Payment Delay & Jobs Bank Cessation
GLOBAL CROSSING: S&P Assigns 'CCC+' Issue-Level Rating
GREATWIDE LOGISTICS: Lists $600 Million in Debts
GROUPE AEROPLAN: Payment Acceleration Won't Affect Aeroplan Rating
HAWAIIAN TELECOM: Gets Interim Okay to Use $75MM Cash Collateral
HAWAIIAN TELCOM: Got Investment Offer from Carlyle Pre-Bankruptcy
HERNANDO OAKS: Bankruptcy Doesn't Affect Hernando Oaks II Project
HINES HORTICULTURE: Wants Until March 18, 2009, to File Ch.11 Plan
INTROGEN THERAPEUTIC: Files for Chapter 11 Bankruptcy in Texas
JEVIC TRANSPORTATION: Wants March 17 Deadline to File Plan
JPMORGAN CHASE: Fitch Puts Ratings on 9 Classes on Negative Watch
JPMORGAN CHASE: Investors Want to Flee From Highbridge Capital
KAUPTHING BANK: Files for Chapter 15 Bankruptcy in New York
KGEN LLC: Moody's Downgrades Rating on $400 Mil. Facility to 'B1'
KOBRA PROPERTIES: Judge McManus Approves First Day Motions
LANDAMERICA FINANCIAL: Fails Due to Real-Estate Insurance Decline
LEHMAN BROTHERS: SIPC Says All Claims Must be Filed With Giddens
MEG ENERGY: Moody's Reviews 'Ba3' Ratings for Possible Downgrade
NEW CENTURY: Files Disclosure Statement Explaining Joint Plan
NEW JERSEY HEALTH: Fitch Cuts Rating on $900 Mil. Bonds to 'BB+'
NEW YORK TIMES: Cuts Quarterly Dividend by 74% to Conserve Cash
OAKRIDGE HOMES: Court Denies Appointment of Chapter 11 Trustee
OAKRIDGE HOMES: Plan Filing Period Extended to February 10, 2009
ORAGENICS INC: Appeals Securities Delisting Action of NYSE-A
PILGRIM'S PRIDE: Gets Interim Approval for $450MM DIP Financing
PILGRIM'S PRIDE: Gets Interim OK to Access $300MM Cash Collateral
PLATINA ENERGY: Files for Chapter 11 Bankruptcy in Texas
POTLACH CORP: S&P Keeps Developing Watch on BB Corp. Credit Rating
PURE DIAMONDS: Has 210 Days to Comply With Listing Requirements
QUANTUM CORP: S&P Cuts Sub. Debt Rating to 'CCC'; Outlook Negative
RADNOR HOLDINGS: U.S. Trustee Protests Changes in Chapter 11 Plan
SHEARIN FAMILY: Gets Final OK for DIP Loan from RBC
SUNWEST MANAGEMENT: 2 Assisted Living Homes File for Chapter 11
TALECRIS BIOTHERAPEUTICS: Moody's Lifts Corp. Family Rating to B3
THORNBURG MORTGAGE: Suspended From NYSE Trading Starting Dec. 5
TUCSON ELECTRIC: S&P Upgrades Corporate Credit Rating to 'BB+'
VALLEY CLUB: Asks Court to Dismiss Case; Cal National Objects
VALUE FAMLY: Voluntary Chapter 11 Case Summary
VERSO TECHNOLOGIES: Plan Filing Period Extended to Jan. 30, 2009
WAVE SYSTEMS: Sept. 30 Balance Sheet Upside-Down by $5 Million
WAVE SYSTEMS: Suspends Unit's TVTonic Services to Save on Costs
WELLMAN INC: Sept. 30 Balance Sheet Upside-Down by $268 Million
* Fitch Changes Not-For-Profit Hospital Sector Outlook to Negative
* Gruppo Levey Forms New Practice Group on Restructuring
* Moody's Says Federal Initiatives Help Short-term Market Recovery
* Richardson Taps Robert Shenfeld to Join Bankruptcy Group
* S&P Downgrades Ratings on 25 Tranches From 7 Hybrid CDO Deals
* U.S. in Recession Since Dec. 2007, Says NBER
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
*********
1.618 GROUP: Wants Court to Dismiss Involuntary RBC Petition
------------------------------------------------------------
Bloomberg News' Christopher Scinta reports that 1.618 Group LLC
asks the United States Bankruptcy Court for the Southern District
of New York to dismiss the involuntary Chapter 7 petition filed
against it by RBC Capital Markets.
Mr. Scinta relates that no other creditors joined in the request
and the company has claims against RBC Capital for fraud and
breach of contract.
"Given the lack of merit to its involuntary petition, it
appears RBC is attempting to use this court to cripple 1.618
Group or to prevent 1.618 Group from prosecuting significant
litigation claims against RBC," Bloomberg quoted the company as
stating.
RBC Capital reviewed the portfolio of the company after it
suffered significant losses in respect of certain commodities
contracts in late September 2008 due to data entry error, Mr.
Scinta says. RBC Capital found that there was imbalance and
directed the company to stop trading, he relates.
The company president J. Robert Collins, Jr., said in a statement
that RBC Capital took control of the company's portfolio and
liquidated it at a loss of about $31 million, which it claims the
company is responsible for covering. Mr. Collins asserted that
the portfolio had a positive net value when RBC took it over. RBC
refused to provide detail how the portfolio was liquidated,
he notes.
Mr. Scinta notes that RBC Capital had asked the Court to appoint
an interim trustee to oversee liquidation of the company. RBC
Capital said the company improperly collected money, which should
go to the $33.2 million owed to it, he adds.
The company, Mr. Scinta relates, had deposited margin funds with
RBC to secure its trading.
A hearing, Mr. Scinta says, is scheduled for Dec. 15, 2008, to
consider the request.
Headquartered in New York, 1.618 Group LLC trades energy futures
and over-the-counter contracts on the Nymex and Intercontinental
Exchange Inc. electronic systems.
AFFINIA GROUP: Moody's Affirms Corporate Family Rating at 'B2'
--------------------------------------------------------------
Moody's Investors Service has affirmed Affinia Group Inc.'s
Corporate Family Rating and Probability of Default at B2. In a
related action, Moody's affirmed the ratings on the company's
existing senior secured first lien bank debt at Ba2 and
subordinated debt at B3. The Speculative Grade Rating is affirmed
at SGL-3. The outlook is negative.
The negative outlook reflects the softer demand environment for
aftermarket auto parts, which has contributed to weakening
covenant cushions at Affinia. Demand for the company's products
is generally more correlated with normal maintenance and wear
requirements than overall economic conditions, yet lower miles
driven and deferral of vehicle maintenance still influences the
company's prospects. The company's recent performance has
benefited from successful restructuring actions, and lower cost
sourcing. However, the outlook anticipates that the near term
demand softness for aftermarket parts will further pressure the
company's top line resulting in a lower covenant cushion.
The B2 Corporate Family Rating continues to consider the
qualitative strengths of Affinia's business under Moody's Auto
Supplier Methodology such as scale of operations, geographic and
customer diversification and focus on the replacement parts
market. The company benefits from leading market shares in
filters, brakes and chassis components and offers a full line of
products in those categories, which helps to competitively
position its products across distribution channels. The rating
also considers Affinia's high leverage, weak interest coverage and
negative free cash flow as a result of restructuring expenditures.
The Speculative Grade Liquidity Rating of SGL-3 reflects the
company's current adequate level of liquidity. At Sept. 30, 2008,
the company maintained US$40 million of cash and cash equivalents.
The US$125 million revolver was undrawn at Sept. 30, 2008, but
about US$21 million was utilized for LC issuance. The company had
no outstandings under its US$100 million receivable securitization
facility that matures in November 2009. The next debt maturity is
the company's US$297 million term loan in November 2011.
Alternate forms of liquidity are limited as the bank credit
facilities are secured by substantially all of the company's
assets. Affinia's ability to generate free cash flow over the
next 12 months will be pressured by softer business conditions
which may further delay consumer aftermarket purchases.
Ratings affirmed:
-- B2, Corporate Family Rating
-- B2, Probability of Default
-- First lien bank debt, Ba2 (LGD 2, 18%)
-- B3 (LGD5, 70%) on the Subordinated Notes
-- Speculative Grade Liquidity Rating, SGL-3
-- Senior Unsecured Issuer Rating, B3
The last rating action was the affirmation of Affinia's Corporate
Family Rating of B2 on Sept. 29, 2008.
The principal methodology used in rating Affinia was Moody's
rating methodology for the Global Auto Supplier Industry (June
2005), which can be found at www.moodys.com in the Credit Policy &
Methodologies directory, in the Ratings Methodologies
subdirectory. Other methodologies and factors that may have been
considered in the process of rating this issuer can also be found
in the Credit Policy & Methodologies directory.
Affinia Group Inc., headquartered in Ann Arbor, Michigan, is a
designer, manufacturer and distributor of aftermarket components
for passenger cars, sport utility vehicles, light, medium and
heavy trucks and off-highway vehicles. The company's product
range addresses filtration, brake and chassis markets in North and
South America, Europe and Asia. In 2007, the company reported
revenues of approximately US$2.1 billion.
AGRIPROCESSORS INC: Gets Court OK on $2.5MM Loan From First Bank
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The U.S. Bankruptcy Court for the Eastern District of New York has
approved a $2.5 million advance funding from First Bank Business
Capital to Agriprocessors Inc., The Associated Press reports,
citing Bankruptcy Trustee Joseph Sarachek.
As reported in the Troubled Company Reporter on Dec. 2, 2008,
Agriprocessors has no revenue coming in to buy feeds for its
hundreds of thousands of chickens, which will soon be too old to
slaughter. Mr. Sarachek said that a lender has agreed to finance
Agriprocessors' three-week operations. First Bank, a creditor
owed $35 million by Agriprocessors, was in favor of reopening the
plant.
According to The AP, the loan will allow Agriprocessors to reopen
its Iowa kosher meatpacking plant. The AP says that using the
loan, Agriprocessors could already resume the processing of its
inventory of about 750,000 chickens through Jan. 9, 2009, and ease
a nationwide shortage of kosher meat. Citing Mr. Sarachek, the
report states that production could start this week.
The AP relates that the funding will help Agriprocessors pay a
deposit to its utility provider and pay for its insurance. The
funding, says The AP, includes paying for 140 production employees
to work 50 hours a week through Jan. 9, 10 administrative staff
and four managers, 10 workers at the Agriprocessors' distribution
center in New York, and rabbis to supervise the slaughter to
ensure it meets kosher standards.
About Agriprocessors
Headquartered in Postville, Iowa, Agriprocessors Inc. --
http://www.agriprocessor.com/-- operates a kosher meat and
poultry packing processors located at 220 North West Street. The
company maintains an executive office with 50 employees at 5600
First Avenue in Brooklyn, New York. The company filed for Chapter
11 protection on Nov. 4, 2008 (Bankr. E. D. N.Y. Case No. 08-
47472). Kevin J. Nash, Esq., at Finkel Goldstein Rosenbloom &
Nash represents the company in its restructuring effort. The
company listed assets of $100 million to $500 million and debts
of $50 million to $100 million.
AIR CANADA: S&P Puts 'B' Corp. Credit Rating on Watch Negative
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B' long-term
corporate credit rating on Air Canada on CreditWatch with negative
implications.
"The CreditWatch placement reflects the increased short-term
pressure on Air Canada's liquidity," said S&P's credit analyst
Greg Pau.
This pressure is a result of the company's need to post
significant collateral to counterparties of fuel-hedging contracts
because of the recent rapid decline in fuel prices and Air
Canada's capital expenditure in the past year on its aircraft
renewal and refurbishment program. "Although S&P believes the
drop in fuel prices and a more modern and fuel-efficient fleet
should help Air Canada's cost position and improve its operating
cash flow in 2009, these factors have a more near-term effect on
the company's liquidity," Mr. Pau added.
As of Oct. 31, Air Canada's cash balance fell to CUS$1.03 billion
from CUS$1.50 billion on June 30, 2008. The amount was about 10%
of company revenue for the 12-month period ended Sept. 30, 2008,
which is low when compared with the 15%-20% reported by other
similarly rated North American airlines. That Air Canada
currently has no access to any available revolving credit facility
further reduces its financial flexibility.
S&P understands that Air Canada is pursuing a number of possible
ways to improve its liquidity. These include arranging a
replacement revolving credit facility, arranging to use
unencumbered assets (aircraft and spare parts) to support
additional financing or sales-and-leaseback transactions, and
improving working-capital management. However, under the current
credit market conditions, the timing and amount Air Canada can
derive from these sources are difficult to predict.
On the other hand, Air Canada's cash resources could possibly
decrease if fuel prices fall further to necessitate higher
collateral requirement, although S&P believes this could be partly
offset by lower fuel costs and the expiration of existing hedging
contracts in 2009. A higher required contribution to Air Canada's
postretirement plan to cover the decline in plan assets due to
weak equity prices could also reduce the company's balance.
Although on Nov. 28, 2008, the government announced a plan to
extend the funding payment schedule of solvency deficiencies as of
Dec. 31, to 10 years from five years, the extension is conditional
upon either the agreement of employees and retirees or a letter of
credit supporting the payment difference. Therefore, unless Air
Canada obtains agreement from employees and retirees, it might
still have to use its cash resources or credit limit to support
the higher contribution. As for other airlines, receipt of cash
from advance ticket sales, which amounted to CUS$1.45 billion as
of Sept. 30, provides Air Canada with a source of short-term
funding. However, under current economic conditions, lower ticket
sales could reduce the amount of such funding, representing a
working-capital cash outflow.
To resolve this CreditWatch, S&P will evaluate Air Canada's
liquidity and its efforts to shore up its liquidity position in
the next one-to-two quarters. For the rating to be removed from
CreditWatch and to remain unchanged, S&P believes the company will
need to improve its cash level and revolving credit limit toward
15% of its trailing 12-month revenue. Conversely, S&P could lower
the rating on the company by one notch if it fails to improve its
liquidity, or by more than one notch if liquidity materially
deteriorates further in the next two quarters.
AMERICAN HOME: Sends Plan to Creditors; Confirm. Hearing Jan. 28
----------------------------------------------------------------
American Home Mortgage Investment Corp., and its debtor affiliates
won a ruling from the U.S. Bankruptcy Court for the District of
Delaware that the disclosure statement explaining the terms of
their Chapter 11 plan of liquidation, as twice amended, contains
adequate information necessary for creditors to make an informed
judgment on the Plan. Accordingly, the Debtors may now send the
Plan to creditors for balloting and subsequently seek confirmation
of the Plan.
The Bankruptcy Court, according to Bloomberg News, has approved a
solicitation schedule, which provides for a January 28 hearing to
consider confirmation of the Plan.
The Bankruptcy Court, Bloomberg reports, also extended American
Home's exclusive right to solicit acceptances until Jan. 27.
The Plan does not consolidate the claims filed against the
Debtors. While administrative claimants and secured creditors
would be paid in full or according to their settlement agreements,
unsecured creditors of AHM Holdings Inc. are expected to recover
just around 5.86%; while unsecured creditors of most other
affiliates would recover 1% or less.
About American Home
Based in Melville, New York, American Home Mortgage Investment
Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage
real estate investment trust engaged in the business of investing
in mortgage-backed securities and mortgage loans resulting from
the securitization of residential mortgage loans originated and
serviced by its subsidiaries.
American Home Mortgage and seven affiliates filed for chapter 11
protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047
through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite,
Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt &
Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC
acts as the Debtors' claims and noticing agent. The Official
Committee of Unsecured Creditors selected Hahn & Hessen LLP as
its counsel. As of March 31, 2007, American Home Mortgage's
balance sheet showed total assets of $20,553,935,000, total
liabilities of $19,330,191,000.
American Home filed a de-consolidated plan of liquidation on
August 15, 2008. (American Home Bankruptcy News; Bankruptcy
Creditors' Service,Inc., http://bankrupt.com/newsstand/or
215/945-7000 )
AMERICAN INTERNATIONAL: Will Sell Interest in TMV to Tenaska
------------------------------------------------------------
Tenaska, Inc., will repurchase the interest in Tenaska Marketing
Ventures, Tenaska Gas Storage and Tenaska Marketing Canada
(collectively TMV) from American International Group, Inc.'s
affiliates.
Since April 1, 2007, about 50% of TMV's holding companies have
been owned by affiliates of Tenaska and the other 50% by
affiliates of AIG Financial Products Corp. (AIG-FP). Tenaska
serves as manager of TMV and Tenaska personnel operate the
business. Tenaska proposed to AIG that Tenaska reacquire AIG's
interest in TMV after AIG announced that it was winding down the
AIG-FP division as part of AIG's restructuring of certain of its
assets.
Before AIG acquired its interest in TMV in April 2007, Tenaska was
sole owner of TMV for many years. After completion of this
repurchase, Tenaska's employee owners will again own 100 percent
of TMV, which was formed in 1991. AIG and Tenaska anticipate
closing on or about Jan. 2 2009, subject to the timing of certain
regulatory approvals. The terms of the transaction were not
disclosed.
Paula Reynolds, AIG Vice Chairperson and Chief Restructuring
Officer, said AIG's decision to sell its interest in TMV is
consistent with its restructuring. "AIG has benefited from its
investment in TMV. That investment, however, does not fit with
our strategic insurance focus and the businesses in which we
intend to remain as we restructure," said Ms. Reynolds.
TMV President Fred Hunzeker said, "Tenaska is a strong and viable
company and TMV's business model is sound despite the current
conditions in U.S. financial markets. Thanks to Tenaska's
conservative approach to business, Tenaska is well positioned to
repurchase AIG's interest and assume full ownership of TMV. Our
cash and committed revolver facilities are more than adequate to
support our current business commitments. We will continue to
operate TMV with substantial liquidity, maintaining total maximum
exposure to counterparties at or below the amount of available TMV
and Tenaska resources."
Tenaska Chief Financial Officer Jerry Crouse said that in early
2009 Tenaska plans again to solicit interest in a new partnership
arrangement. "Our business plan remains the same, combining TMV's
marketing expertise with added financial strength to promote
growth and continue its expansion plans," Mr. Crouse stated.
Blackstone Advisory Services provided financial advice to AIG in
connection with AIG's global restructuring program.
AIG Launches Financing Entity
AIG reported that a financing entity recently created by the
Federal Reserve Bank of New York and designed to mitigate AIG's
liquidity issues in connection with its credit default swaps and
similar derivative instruments (CDS) written on multi-sector
collateralized debt obligations (CDOs) has been launched. The new
entity, which was announced on Nov. 10, is designed to purchase
CDOs on which AIG-FP has written CDS contracts. To date, the new
entity has entered into agreements with AIG-FP's CDS
counterparties to purchase approximately $53.5 billion principal
amount of CDOs. To date, $46.1 billion principal amount of such
CDOs have been purchased, and the associated notional amount of
CDS transactions have been terminated in connection with such
purchases.
AIG has provided $5 billion in equity funding, and the FRBNY will
provide up to approximately $30 billion in senior funding to the
financing entity, of which approximately $15.1 billion has been
funded to effect purchases of CDOs. The entity will collect cash
flows from the assets it owns and pay a distribution to AIG for
its equity interest once principal and interest owing to the FRBNY
on the senior loan have been paid down in full. Upon payment in
full of the FRBNY's senior loan and AIG's equity interest, all
remaining amounts received by the entity will be paid 67% to the
FRBNY and 33% to AIG.
AIG Lawsuit Against Former Executives Continues
Chad Bray at Dow Jones Newswires reports that the New York State
Supreme Court Justice Charles E. Ramos in Manhattan denied on
Wednesday the request by former AIG executives to dismiss a
breach-of-fiduciary-duty lawsuit filed by AIG earlier this year.
Dow Jones relates that the motions were filed by:
-- former CEO Maurice R. Greenberg,
-- former chief financial officer Howard Smith, and
-- other former AIG executives.
According to Dow Jones, AIG filed the lawsuit over control of
Starr International Co.'s ownership stake in the company. The
report says that Mr. Greenberg controls Starr International, AIG's
largest shareholder.
Dow Jones relates that AIG alleged that Messrs. Greenberg and
Smith and other Starr International officials misappropriated in
March 2005a large block of AIG shares, valued at $20 billion at
that time. According to the report, Messrs. Greenberg and Smith
left AIG in March 2005 as the company's accounting was being
investigated. Messrs. Greenberg and Smith remained as directors
until June 2005, the report states, citing AIG. Messrs. Greenberg
and Smith dispute that statement, says the report.
Dow Jones reports that AIG claims that Mr. Greenberg seized
control of Starr International in March 2005. AIG, says Dow
Jones, alleged that Mr. Greenberg reneged on an arrangement where
a block of AIG shares controlled by Starr International were used
to finance a deferred compensation plan for some AIG executives.
Those shares were also were reportedly used to protect AIG from
hostile takeover, according to Dow Jones. The report states that
AIG claimed that Mr. Greenberg planned a "coup d'etat" to gain
control of Starr International's board after leaving AIG.
Dow Jones quoted Judge Ramos as saying, "Ultimately, whether
Greenberg and Smith properly discharged their duties of loyalty
while simultaneously serving as SICO [Starr International]
directors will require a fact-intensive assessment of their
conduct, not properly disposed of at the pre-answer stage."
AIG couldn't pursue damages against Mr. Greenberg and the other
individual defendants for breach of fiduciary duty caused by a
change in composition of Starr International's board based upon an
alleged policy between the two companies, Dow Jones relates,
citing Judge Ramos. The report quoted Judge Ramos as saying,
"Nonetheless, to the extent that AIG is seeking to recover damages
for alleged breach of fiduciary duty by the individual defendants
based upon their alleged participation in the cancellation of a
compensation policy and subsequent misappropriation of shares that
they pledged to safeguard during an enduring and special
relationship, the pleadings sufficiently state a cause of action
for breach of fiduciary duty against defendants."
About American International Group
Based in New York, American International Group, Inc. (AIG) is the
leading international insurance organization with operation in
more than 130 countries and jurisdictions. AIG companies serve
commercial, institutional and individual customers through the
most extensive worldwide property-casualty and life insurance
networks of any insurer. In addition, AIG companies are leading
providers of retirement services, financial services and asset
management around the world. AIG's common stock is listed on the
New York Stock Exchange, as well as the stock exchanges in Ireland
and Tokyo.
During the third quarter of 2008, requirements to post collateral
in connection with AIG Financial Products Corp.'s credit default
swap portfolio and other AIGFP transactions and to fund returns of
securities lending collateral placed stress on AIG's liquidity.
AIG's stock price declined from $22.76 on Sept. 8, 2008, to $4.76
on Sept. 15, 2008. On that date, AIG's long-term debt ratings
were downgraded by Standard & Poor's, a division of The McGraw-
Hill Companies, Inc., Moody's Investors Service and Fitch Ratings,
which triggered additional requirements for liquidity. These and
other events severely limited AIG's access to debt and equity
markets.
On Sept. 22, 2008, AIG entered into an $85 billion revolving
credit agreement with the Federal Reserve Bank of New York and,
pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000
shares of Series C Perpetual, Convertible, Participating Preferred
Stock to a trust for the benefit of the United States Treasury.
At Sept. 30, 2008, amounts owed under the facility created
pursuant to the Fed Credit Agreement totaled $63 billion,
including accrued fees and interest.
Since Sept. 30, AIG has borrowed additional amounts under the
Fed Facility and has announced plans to sell assets and businesses
to repay amounts owed in connection with the Fed Credit Agreement.
In addition, subsequent to Sept. 30, 2008, certain of AIG's
domestic life insurance subsidiaries entered into an agreement
with the NY Fed pursuant to which the NY Fed has borrowed, in
return for cash collateral, investment grade fixed maturity
securities from the insurance subsidiaries.
On Nov. 10, 2008, the U.S. Treasury agreed to purchase, through
its Troubled Asset Relief Program, $40 billion of newly issued AIG
perpetual preferred shares and warrants to purchase a number of
shares of common stock of AIG equal to 2% of the issued and
outstanding shares as of the purchase date. All of the proceeds
will be used to pay down a portion of the Federal Reserve Bank of
New York credit facility. The perpetual preferred shares will
carry a 10% coupon with cumulative dividends.
AIG and the Fed also agreed to revise the existing FRBNY credit
facility. The loan terms were extended from two to five years to
give AIG time to complete its planned asset sales in an orderly
manner. The equity interest that taxpayers will hold in AIG,
coupled with the warrants, will total 79.9%.
At Sept. 30, 2008, AIG had $1.022 trillion in total consolidated
assets and $950.9 billion in total debts. Shareholders' equity
was $71.18 billion, including the addition of $23 billion of
consideration received for preferred stock not yet issued.
AMERICAN NATURAL: TSX Reinstates Trading of Common Shares
---------------------------------------------------------
American Natural Energy Corporation disclosed that, effective
Nov. 17, 2008, the common shares of the company were reinstated to
trading on the TSX Venture Exchange.
The company's common shares were suspended from trading on the
Exchange on July 25, 2007, as a result of a cease trade order
issued by the British Columbia Securities Commission, and
subsequent cease trade orders issued in Alberta, Manitoba, Ontario
and Quebec, for failure to timely file financial statements for
the fiscal year ended Dec. 31, 2006.
On Oct. 29, 2008, The Alberta Securities Commission, British
Columbia Securities Commission, Ontario Securities Commission,
Manitoba Securities Commission, and the Autorite des marches
financiers has issued an order dated revoking the cease trade
order which it issued against ANEC.
As part of the process of seeking revocation of the cease trade
orders, ANEC has filed its financial statements and management
discussion and analysis for the year ended Dec. 31, 2007, for the
three-month period ended March 31, 2008 and for the six-month
period ended June 30, 2008, and filed on SEDAR an amended Form 51-
101F1 and Form 51-101F3.
About American Natural Energy Corporation
Based in Tulsa, Oklahoma, American Natural Energy Corporation (TSX
Venture: ANR.U) -- http://www.annrg.com/-- was formed in January
2001 to focus on the acquisition, development and exploitation of
oil and natural gas reserves. ANEC's objective is to grow an oil
and natural gas reserve base through development, exploitation and
exploration drilling within the current and future boundaries of
its St. Charles Parish, Louisiana properties, including its
ExxonMobil Joint Development area.
Going Concern Doubt
Houston-based Malone & Bailey, PC, in Houston, expressed
substantial doubt about American Natural Energy Corporation'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 reported that the company has incurred
substantial losses during 2007 and 2006, has a working capital
deficiency and an accumulated deficit at Dec. 31, 2007, and is in
default with respect to certain debenture obligations.
The company's debentures in the amount of $10,825,000 which were
due on Sept. 30, 2006, have not been repaid or refinanced as of
June 3, 2008, and are in default. As of March 31, 2008, interest
in the amount of $1,732,000 on the debentures had accrued and was
unpaid when due. The company has no current borrowing capacity
with any lender.
The company also has a need for substantial funds to develop its
oil and gas properties and repay borrowings as well as to meet its
other current liabilities.
AMERICAN NATURAL: Sept. 30 Balance Sheet Upside-Down by $18MM
-------------------------------------------------------------
American Natural Energy Corporation's balance sheet at Sept. 30,
2008, showed total assets of $3,416,163 and total liabilities of
$21,466,052, resulting in a stockholders' deficit of $18,049,889.
For three months ended Sept. 30, 2008, the company incurred net
loss of $243,887 compared to net loss of $363,943 for the same
period in the previous year.
For nine months ended Sept. 30, 2008, the company reported net
loss of $859,639 compared to net loss of $2,279,354 for the same
period in the previous year.
Liquidity and Capital Resources
The company has funded its capital expenditures and operating
activities through a series of private and public debt and equity
transactions and through an increase in vendor payables and note
payables. At Sept. 30, 2008, the company does not have any
available borrowing capacity and have negative working capital of
approximately $19.3 million. The company's current liabilities
include $10.8 million of convertible secured debentures originally
due on Sept. 30, 2006, but which remain unpaid and outstanding as
of Nov. 12, 2008.
The company has substantial need for capital to develop its oil
and gas prospects and opportunities it believes that have been
identified in its ExxonMobil AMI. The company expects any future
capital expenditures for drilling and development to be funded
from the sale of drilling participations and equity capital. It
is management's plan to raise additional capital through the sale
of interests in our drilling activities or other strategic
transaction; however, the company have no firm commitment from any
potential investors and the additional capital may not be
available to the company in the future.
Its net cash provided by operating activities was $326,000 for the
nine months ended Sept. 30, 2008, as compared to net cash used by
operating activities of $1,076,000 for the nine months ended
Sept. 30, 2007, an increase of $1,402,000. The increase in net
cash provided by operating activities for the nine months ended
Sept. 30, 2008, was due to positive changes in accounts payable,
partially offset by negative changes in accounts receivable during
the period. Changes in working capital items had the effect of
increasing cash flows from operating activities by $1.3 million
during the nine months ended Sept. 30, 2008, due to an increase in
accounts payable of $1.5 million, partially offset by an increase
in accounts receivable. Changes in working capital items had the
effect of decreasing cash flows from operating activities by
$132,000 during the nine months ended Sept. 30, 2007, because
accounts payable, revenues payable and accrued liabilities
turnover exceeded that of accounts receivable.
A full-text copy of the 10-Q filing is available for free at
http://ResearchArchives.com/t/s?35ab
About American Natural Energy Corporation
Based in Tulsa, Oklahoma, American Natural Energy Corporation (TSX
Venture: ANR.U) -- http://www.annrg.com/-- was formed in January
2001 to focus on the acquisition, development and exploitation of
oil and natural gas reserves. ANEC's objective is to grow an oil
and natural gas reserve base through development, exploitation and
exploration drilling within the current and future boundaries of
its St. Charles Parish, Louisiana properties, including its
ExxonMobil Joint Development area.
Going Concern Doubt
Houston-based Malone & Bailey, PC, in Houston, expressed
substantial doubt about American Natural Energy Corporation'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 reported that the company has incurred
substantial losses during 2007 and 2006, has a working capital
deficiency and an accumulated deficit at Dec. 31, 2007, and is in
default with respect to certain debenture obligations.
AMERICAN FIBERS: Panel May Employ Lowenstein Sandler as Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware granted the
Official Committee of Unsecured Creditors appointed in AFY Holding
Company and American Fibers and Yarns Company's bankruptcy cases
authority to retain Lowenstein Sandler PC as the Committee's
counsel, effective as of Oct. 2, 2008.
As reported in the Troubled Company Reporter on Oct. 27, 2008,
Lowenstein Sandler will:
a) provide legal advice as necessary with respect to the
Committee's powers and duties;
b) assist the Committee in investigating the acts, conduct,
assets, liabilities, and financial condition of the Debtors,
the operations of the Debtors' business, potential claims,
and any other matters relevant to the cases, to the sale of
assets, financing or to the formulation of a plan of
reorganization;
c) provide legal advice as necessary with respect to any
disclosure statement and plan filed in the case and with
respect to the process for approving or disapproving
disclosure statements and confirming or denying confirmation
plan;
d) prepare on behalf of the Committee, as necessary,
applications, motions, complaints, answers, orders,
agreements, and other legal papers;
e) appear in Court to present necessary motions, applications,
and pleadings, and otherwise protecting the interests of
those represented by the Committee;
f) assist the Committee in requesting the appointment of a
trustee or examiner; and
g) perform other legal services as may be required and that are
in the best interest of the Committee and creditors.
The firm's professionals will be paid at these rates:
Designations Hourly Rates
------------ ------------
Partners $400 - $765
Counsel $335 - $405
Associates $220 - $340
Legal Assistants $120 - $210
Sharon L. Levine, Esq., a member at Lowenstein Sandler, assured
the Court that the firm does not hold any interest adverse to the
Debtors' estate and their creditors, and is "disinterested person"
as defined in Section 101(14) of the Bankruptcy Code.
About American Fibers
Headquartered in Chapel Hill, North Carolina, American Fibers and
Yarns Company -- http://www.afyarns.com/-- manufactures solution-
dyed Polypropylene yarns in its Bainbridge, Georgia and Afton,
Virginia production facilities for distribution throughout the
United States. American Fibers is 100% owned by AFY Holding
Company.
On Sept. 22, 2008, AFY Holding and American Fibers and Yarns filed
voluntary petitions seeking Chapter 11 relief (Bankr. D. Del. Lead
Case No. 08-12175). Edward J. Kosmowski, Esq., Michael R. Nestor,
Esq., Robert F. Poppiti, Jr., Esq., and Nathan D. Grow, Esq. at
Young, Conaway, Stargatt & Taylor, LLP, represent the Debtors as
counsel. RAS Management Advisors, LLC serves as the Debtors'
restructuring advoisors. Epiq Bankruptcy Solutions, LLC serves as
the Debtors' claims, noticing and balloting agent.
The U.S. Trustee for Region 3 appointed creditors to serve on an
Official Committee of Unsecured Creditors. William P. Bowden,
Esq., Don A. Beskrone, Esq, and Amanda M. Winfree, Esq., at Ashby
& Geddes, P.A., represent the Committee as Delaware counsel. When
the Debtors sought bankruptcy protection from their creditors,
they listed assets and debts of between $10 million and
$50 million each.
AMERICAN FIBERS: Panel May Retain Amper Politziner as Accountants
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware granted
the Official Committee of Unsecured Creditors appointed in AFY
Holding Company and American Fibers and Yarns Company's bankruptcy
cases authority to retain Amper, Politziner & Mattia, LLP, as the
Committee's accountants and financial advisors, nunc pro tunc to
Oct. 27, 2008.
As the Committee's accountants and financial advisors, Amper
Politziner will, among other things, analyze the financial
operations of the Debtor, perform forensic investigating services
as requested by the Committee and counsel regarding prepetition
activities of the Debtor in order to identify potential causes of
action, and assist the Committee in its review of the financial
aspects of a plan of reorganization to be submitted by the Debtor.
Allen D. Wilen, a partner at Amper Politziner, assured the Court
that the firm does not represent any interest adverse to the
Debtors' estates, creditors, or equity holders, and that the firm
is a "disinterested person" as that term is defined in Sec.
101(14) of the Bankruptcy Code.
As compensation for their services, Amper Politziner's
professionals bill:
Hourly Rate
-----------
Directors/Partners $375-$425
Managers/Senior Managers $275-$375
Seniors/Supervisors $180-$250
Staff $130-$175
Paraprofessionals $105
About American Fibers
Headquartered in Chapel Hill, North Carolina, American Fibers and
Yarns Company -- http://www.afyarns.com/-- manufactures solution-
dyed Polypropylene yarns in its Bainbridge, Georgia and Afton,
Virginia production facilities for distribution throughout the
United States. American Fibers is 100% owned by AFY Holding
Company.
On Sept. 22, 2008, AFY Holding and American Fibers and Yarns filed
voluntary petitions seeking Chapter 11 relief (Bankr. D. Del. Lead
Case No. 08-12175). Edward J. Kosmowski, Esq., Michael R. Nestor,
Esq., Robert F. Poppiti, Jr., Esq., and Nathan D. Grow, Esq. at
Young, Conaway, Stargatt & Taylor, LLP, represent the Debtors as
counsel. RAS Management Advisors, LLC serves as the Debtors'
restructuring advoisors. Epiq Bankruptcy Solutions, LLC serves as
the Debtors' claims, noticing and balloting agent.
The U.S. Trustee for Region 3 appointed creditors to serve on an
Official Committee of Unsecured Creditors. Kenneth A. Rosen,
Esq., Sharon L. Levine, Esq., Eric H. Horn, Esq., and Sean E.
Quigley, Esq., at Lowenstein Sandler PC, represents the Debtors as
counsel. William P. Bowden, Esq., Don A. Beskrone, Esq, and
Amanda M. Winfree, Esq., at Ashby & Geddes, P.A., represent the
Committee as Delaware counsel. When the Debtors sought bankruptcy
protection from their creditors, they listed assets and debts of
between $10 million and $50 million each.
ARCADIA RESOURCES: Posts $6MM Net Loss in 6 Months ended Sept. 30
-----------------------------------------------------------------
Arcadia Resources, Inc., reported its second quarter fiscal year
2009 results.
The company reported net loss of $3,235,000 for the three months
ended Sept. 30, 2008, compared to net loss of $9,174,000 for the
same period in the previous year.
The company reported net revenues of $36.9 million for the quarter
ended Sept. 30, 2008, down from net revenues of $38.0 million for
the same period a year ago. The company's net loss from
continuing operations has narrowed by $1.1 million from
$4.3 million last year to a net loss of $3.2 million for the
current quarter.
For six months ended Sept. 30, 2008, the company incurred net loss
of $6,521,000 compared to net loss of $16,602,000 for the same
period in the previous year.
The company reported net revenues of $74.3 million for the six-
months ended Sept. 30, 2008, down 2.2% from net revenues of $
76.0 million for the same period a year ago. The company's net
loss from continuing operations has narrowed by $1.4 million from
$7.9 million last year to a net loss of $6.5 million for the
current period.
Capital Resources and Liquidity
Cash flow from operations was neutral during the six months ended
Sept. 30, 2008, compared with the cash used of $8.0 million for
the same period a year ago. At the close of the period the
company had $1.8 million in additional line of credit
availability, resulting in total cash and availability of
$4.1 million, compared to total cash and availability of $4.4
million at June 30, 2008.
The company's average interest-bearing liabilities balance for the
quarter was $36.9 million compared to $37.6 million for the same
quarter last year. Total interest-bearing liabilities were
$37.5 million at Sept. 30, 2008.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $94,354,000, total liabilities of $50,044,000 and stockholders'
equity of $44,310,000.
A full-text copy of the company's 10-Q filing is available for
free at http://ResearchArchives.com/t/s?35ac
About Arcadia Resources
Headquartered in Indianapolis, Arcadia Resources Inc. (AMEX: KAD)
-- http://www.arcadiaresourcesinc.com/-- is a healthcare company
that provides healthcare, medical equipment, prescription drugs,
and medical, professional and diversified staffing.
* * *
In BDO Seidman, LLP's audit report for the company's fiscal 2007
year-end financial statements, the auditing firm expressed
substantial doubt about the company's ability to continue as a
going concern, pointing to the company's recurring losses.
In the company's audit report for the fiscal 2008 year-end
financial statements, however, BDO Seidman, LLP, issued an
unqualified audit opinion, removing the going concern issue
included in last year's audit.
The foregoing notwithstanding, and in view of the fact that the
company continues to incur losses, the Troubled Company Reporter
will continue to cover Arcadia Resources Inc. until the time that
the company has shown verifiable proof that they have reversed
this trend.
ARTES MEDICAL: Seeks Liquidation of Business in Chapter 7
---------------------------------------------------------
Artes Medical, Inc., said in a filing with the Securities and
Exchange Commission that it has filed a voluntary petition for
relief under Chapter 7 in the U.S. Bankruptcy Court for the
Southern District of California, Case No. 08-12317-7, on Dec. 1,
2008.
Bloomberg News notes that Artes Medical Inc. didn't even attempt
to reorganize. Unable to arrange new equity financing, the
Company petition for Chapter 7 liquidation.
The Bankruptcy Court assumed jurisdiction over Artes Medical and
its assets as of the date of the filing. Artes Medical has
requested the appointment of an interim trustee or an interim
trustee will be appointed.
On Nov. 21, 2008, Artes Medical reported that it was considering
the orderly liquidation of its business through a formal
bankruptcy process. Prior to that date, Artes Medical had engaged
in an extensive and protracted process to identify and secure
additional equity capital to support its long-term development and
growth. Artes Medical was forced to file the Bankruptcy Petition
as a result of decreasing consumer spending due to the severe
economic downturn that resulted in Artes Medical's sales being
significantly lower than it had forecasted for the second half of
2008, Artes Medical's difficulty in achieving conventional
financing or completing a strategic alternative, and its inability
to negotiate a resolution with its existing lender, Cowen
Healthcare Royalty Partners, L.P., that would address Artes
Medical's ongoing and future liquidity issues either through a
forbearance or bridge loan.
In July 2008, Artes Medical engaged two investment banking firms
to identify and explore potential strategic and financing
opportunities for the company, including mergers, acquisitions,
licensing and other strategic arrangements, financings or the sale
of the company. Parallel with the commencement of the equity
financing that raised approximately $2.4 million in September
2008, Artes Medical embarked on discussions with two investment
banking firms to structure and co-lead a larger equity raise upon
the completion of the company's Annual Meeting of Stockholders in
October 2008. With the delays in completing the Annual Meeting
due to the activities of a dissident investor group and the rapid
and sudden decline in the equity markets due to economic factors
and the credit crisis, it became apparent that Artes Medical's
planned equity financing could not be completed in late-2008 or
early-2009 as had been previously planned.
In August 2008, a dissident investor group, led by Dr. H. Michael
Shack, began soliciting stockholder votes on behalf of certain
stockholder proposals for the Annual Meeting. During the ensuing
proxy contest, the Shack Group contacted Artes Medical and
represented that they had an interest in making a substantial
investment in the company totaling up to $30 million. Following
multiple informal discussions between Artes Medical's directors
and the Shack Group, including a presentation to the Board of
Directors on Nov. 5, 2008, Artes Medical initiated settlement
negotiations with the Shack Group. When the Shack Group was
unable to provide evidence of any financing commitments, contrary
to their representations to Artes Medical's stockholders and its
Board of Directors, further negotiations ceased, and Artes Medical
was left to file the Bankruptcy Petition.
Artes Medical believes that its assets will be insufficient to
satisfy the claims of all creditors and it is unlikely that its
stockholders will be eligible to participate in any distributions
of the company's assets. Consistent with the filing of the
Bankruptcy Petition, Artes Medical will cease operations and it is
expected that the Chapter 7 Trustee, once appointed, will
liquidate the company and wind up its business. In accordance
with previous no-action letters issued by the Securities and
Exchange Commission, Artes Medical expects that it will cease to
file reports under the Securities Exchange Act of 1934.
Triggering Events
On Jan. 28, 2008, Artes Medical entered into a financing
arrangement with CHRP to raise $21.5 million. Under the Revenue
Interest Financing and Warrant Purchase Agreement, CHRP acquired
the right to receive a revenue interest on Artes Medical's U.S.
net product sales from October 2007 through December 2017. Under
the terms of the Revenue Agreement, the company's filing of the
Bankruptcy Petition may constitute a put option event, which if
enforced, would provide CHRP with the right to require the company
to repurchase the revenue interest from CHRP for up to $22.5
million, less payments previously made by the company under the
Revenue Agreement.
Artes Medical also entered into a Note and Warrant Purchase
Agreement with CHRP on Jan. 28, 2008, pursuant to which the
company issued CHRP a 10% senior secured note in the principal
amount of $6,500,000. Under the terms of the Note and Warrant
Agreement, CHRP can allege that by filing the Bankruptcy Petition,
Artes Medical is in default under the Note which would entitle
CHRP to accelerate and recover all principal and interest owed
under the Note, plus a prepayment penalty equal to 30% of the
outstanding principal on the Note.
Under the terms of the security agreements, Artes Medical entered
into with CHRP as part of this financing arrangement. Artes
Medical granted CHRP a first priority security interest in the
company's assets, including its intellectual property.
On Dec. 1,2008, Artes Medical received written notice from CHRP in
which CHRP asserted that a put option event under the terms of the
Revenue Agreement and an event of default under the Note had
occurred. CHRP also notified Artes Medical that it was exercising
its rights under the Revenue Agreement and the Note, and demanded
payment of $ 21.7 million under the Revenue Agreement and the
payment of $ 8.0 million under the Note. CHRP further notified
Artes Medical that it was taking actions to enforce its rights
under the security agreements the company had entered into with
CHRP.
It is unlikely that Artes Medical's stockholders will be eligible
to participate in any distributions of its assets. Bankruptcy
filings made under Chapter 7 allow a consumer or business to
liquidate assets to pay off creditors, while Chapter 11 filings
are made by companies seeking to reorganize and pay debts while
staying in business.
Shares of the company closed at 7 cents Monday on Nasdaq.
About Artes Medical
Artes Medical, Inc., incorporated in 1999, is a medical technology
company focused on the development, manufacture and
commercialization of a new category of injectable aesthetic
products for the dermatology and plastic surgery markets,
principally in the United States. The company's initial product,
ArteFill, is a non-resorbable aesthetic injectable implant for the
correction of facial wrinkles known as smile lines, or nasolabial
folds. Artes Medical received approval from the United States
Food and Drug Administration to market ArteFill in October 2006,
and commenced commercial shipments of ArteFill during the year
ended December 2007.
Artes Medical markets and sells ArteFill to dermatologists,
plastic surgeons and cosmetic surgeons in the United States
through its direct sales force. As part of its marketing and
sales program, Artes Medical trains physicians in the technique of
injecting ArteFill with the aim of optimizing patient and
physician satisfaction with its product. As of Dec. 31, 2007,
over 1,200 physicians had opened accounts with the Company to
offer ArteFill to their patients, and more than 1,000
dermatologists, plastic surgeons, and cosmetic surgeons had
completed their ArteFill training in 2007.
ATA AIRLINES: Court Okays Asset Sale to Southwest Airlines
----------------------------------------------------------
Erik Larson and Mary Schlangenstein at Bloomberg News report that
the Hon. Basil Lorch of the U.S. Bankruptcy Court in Indianapolis
has approved the sale of ATA Airlines Inc. assets to Southwest
Airlines Co. for $7.5 million.
As reported in the Troubled Company Reporter on Nov. 21, 2008,
Southwest Airlines submitted a bid that would allow the airline to
assume ATA Airlines' rights to operate at New York's LaGuardia
Airport through a purchase of ATA Airlines. The bid was submitted
in connection with the publicly disclosed auction process in the
Court and consistent with the Federal Aviation Administration's
recent rule clarification regarding LaGuardia's slots. Southwest
Airlines is working with ATA Airlines with respect to the terms
and conditions of the bid. The bid does not contemplate operating
ATA, but it is intended to allow Southwest Airlines to acquire the
LGA slots. The $7.5 million bid seeks to obtain the rights to 14
slots at LaGuardia that are held by ATA Airlines, which would
permit an operation of up to seven daily round trip flights at
LaGuardia. Southwest would not acquire, as a part of its bid, any
aircraft, facilities, or employees of ATA.
Bloomberg relates that the sale won't be executed until the Court
approves a reorganization plan for ATA Airlines.
According to Bloomberg, ATA Airlines permanently stopped operating
after filing for Chapter 11 bankruptcy on April 2, 2008. The
airline, says the report, is selling assets to repay creditors
seeking as much as $705 million.
Court documents say that ATA Airlines valued its LaGuardia slots
at $2.5 million. Bloomberg relates that ATA Airlines leased the
LaGuardia and Reagan slots to AirTran for terms that expire from
October 2009 to December 2010. AirTran, according to the report,
also presented a bid to acquire the slots.
Bloomberg states that ATA Airlines hasn't disclosed whether there
are potential buyers for its two Washington slots. ATA Airlines
won court approval to accept bids through Dec. 12 for three of its
idled Lockheed L1011 aircraft, Bloomberg reports.
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for Chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D.
Ind. Case No. 08-03675), citing the unexpected cancellation of a
key contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acts as the panel's
financial advisors. The Court gave ATA Airlines Inc. until
Feb. 26, 2009, to file its Chapter 11 plan and April 27, 2009, to
solicit acceptances of that plan.
(ATA Airlines Bankruptcy News; Bankruptcy Creditors' Services Inc.
http://bankrupt.com/newsstand/or 215/945-7000).
ATLANTA GOLD: To Complete $2.5-Mil. Private Placement
-----------------------------------------------------
Atlanta Gold Inc. plans to complete a non-brokered private
placement of up to 25,000,000 units at a price of $0.10 per unit.
Each Unit consists of one common share and one-half of one common
share purchase warrant, for maximum gross proceeds of
$2.5 million.
Each Warrant will entitle the holder to purchase one common share
of the company at a price of $0.25 per share for a period of 24
months from the closing date of the Offering. The company will
have the right to accelerate the expiry date of the Warrants if
the closing price of its common shares on the Toronto Stock
Exchange exceeds $0.50 for 20 consecutive days on which the
company's shares trade.
The private placement will be completed in reliance on the
financial hardship exemption from shareholder approval under
the rules of the TSX.
The common shares to be issued on the Offering represent
approximately 84.6% of the number of common shares currently
outstanding and represent approximately 126.9% of the outstanding
shares assuming the exercise of the Warrants. Certain insiders
of the Company, including members of the Board of Directors and
senior management, are expected to purchase approximately 29.8%
of the Offering.
The common shares to be issued and the shares potentially
issuable to insiders on exercise of the Warrants represent
approximately 37.8% of the number of shares outstanding prior to
completion of the Offering. Completion of the Offering is not
expected to result in a change in the effective control of the
company.
Under the rules of the TSX, the Offering would ordinarily require
that the company obtain shareholder approval prior to completion
of the Offering as a result of the fact that it will result in
the potential issuance of common shares representing more than
25% of the number of common shares currently outstanding and
because insiders of the company will acquire more than 10% of
the number of shares currently outstanding. However, the company
will rely on the exemption from the requirement to obtain
shareholder approval contained in Section 604(e) of the TSX
Company Manual and similar provisions of applicable provincial
securities legislation in respect of related party transactions,
on the basis that the company is in serious financial difficulty,
the Offering is designed to improve the company's financial
position and the terms of the Offering are reasonable in the
circumstances.
An independent directors' committee comprised of Eric Berentsen
and John Jackson has determined that the company meets the
requirements of this exemption. Completion of the Offering
is subject to a number of customary closing conditions, and
receipt of all necessary regulatory approvals.
"This current financing is critical to allow the company to
continue as a going concern and to provide the means to advance
the Atlanta gold project toward production. The recent global
contraction in financial markets has limited capital investment
and caused unprecedented challenges for many companies, including
Atlanta Gold. This has been particularly frustrating because we
have recently achieved several strategic objectives that we
believe position the company for success. Completion of this
financing will permit us to move the Atlanta gold project forward
toward production in 2010," says Bill Baird, Atlanta Gold
President and CEO.
The company will use the net proceeds of the Offering to explore
its Atlanta gold property located in Idaho, U.S.A., and for
working capital purposes.
The company has changed its mining strategy from bulk mining and
cyanide heap leaching, to a combined shallow open-pit and
underground operation with an on-site milling facility with no
cyanide circuit. This new mining strategy will produce both a
gravity concentrate and a precious metal rich sulphide
concentrate to be custom smelted. It will also reduce the
environmental footprint by 95% and increase expected metal
recovery rates from 63% to 90%.
About Atlanta Gold
Atlanta Gold Inc. (TSX: ATG) holds through its 100% owned
subsidiary, Atlanta Gold Corporation, a 100% interest in the
Atlanta property which comprises approximately 2,081 acres and is
located 65 miles east of Boise, in Elmore County, Idaho. A long
history of mining makes Atlanta very suitable for development of
new mining projects. The Company is focused on advancing its
core asset, Atlanta, towards mine development and production and
on acquiring, exploring and developing other attractive gold
projects.
* * *
As at Sept. 30, 2008, the company has an excess of current
liabilities over current assets of $875,219 and has recorded a
third quarter loss of $499,500. These circumstances raise
substantial doubt about its ability to continue as a going
concern. Management continues to explore financing alternatives
to raise capital. It is not possible to determine with any
certainty, the success or adequacy of these initiatives.
ATLANTIS PLASTICS: Marcus Watson Appointed as Chapter 11 Trustee
----------------------------------------------------------------
The U.S. Trustee for Region 21 asks the U.S. Bankruptcy Court for
the Northern District of Georgia to approve his appointment of
Marcus A. Watson as Chapter 11 trustee in Atlantis Plastics, Inc.,
and its affiliated debtors' bankruptcy cases.
To the best of the United States Trustee's knowledge, Mr. Watson
does not hold or represent any interest materially adverse to the
Debtors or their estates, and that Mr. Watson is a "disinterested
person" as that term is defined in Sec. 101(14) of the Bankruptcy
Code.
Mr. Watson works as a consultant at Finley, Colmer & Comany, a
financial consultancy firm based in Atlanta, Georgia. Before
joining the firm in 1994, Mr. Watson spent 14 years at Ernst &
Young, first in the audit area and ultimately as a Partner in the
Restructuring and Reorganization Group.
About Atlantis Plastics
Atlanta, Georgia-based Atlantis Plastics, Inc. (OTC:ATPL.PK)
manufactures specialty polyethylene films and molded and extruded
plastic components used in a variety of industrial and consumer
applications.
The company and nine of its debtor-affiliates filed separate
petitions for Chapter 11 relief on Aug. 10, 2008 (Bankr.
N.D. Ga. Lead Case Nos. 08-75473). David B. Kurzweil, Esq., at
Greenberg Traurig, LLP, represents the Debtors as counsel. When
the Debtors filed their schedules with the Court, they listed
total assets of $143,427,638 and total debts of $258,455,803.
ATLANTIS PLASTICS: U.S. Trustee Appoints Chapter 11 Trustee
-----------------------------------------------------------
The Hon. Paul W. Bonapfel of the United States Bankruptcy Court
for the Northern District of Georgia authorized the U.S. Trustee
for Region 21 to appoint a Chapter 11 trustee for Atlantis
Plastics Inc. and its debtor-affiliates cases.
The U.S. Trustee has selected Marcus A. Watson to oversee the
Debtors' Chapter 11 cases.
About Atlantis Plastics
Atlanta, Georgia-based Atlantis Plastics, Inc. (OTC:ATPL.PK)
manufactures specialty polyethylene films and molded and extruded
plastic components used in a variety of industrial and consumer
applications.
The Debtor filed for Chapter 11 relief on Aug. 10, 2008 (Bankr.
N.D. Ga. Case Nos. 08-75473 through 08-75481) together with
Atlantis Plastics, Inc., Atlantis Plastic Films, Inc., Atlantis
Films, Inc., Atlantis Molded Plastics, Inc., Atlantis Plastics
Injection Molding, Inc., Extrusion Masters, Inc., Linear Films,
Inc., Pierce Plastics, Inc., and Rigal Plastics, Inc.
David B. Kurzweil, Esq., at Greenberg Traurig, LLP, represents the
Debtors in their restructuring efforts. They listed assets
between of $100 million and $500 million and debts of between
$100 million and $500 million.
At Sept. 30, 2007, Atlantis Plastics' consolidated balance sheet
showed $214.0 million in total assets and $255.3 million in total
liabilities, resulting in a $41.3 million stockholders' deficit.
BALLY TOTAL: Files for Chapter 22 Due to Liquidity Crisis
---------------------------------------------------------
Bally Total Fitness Holding Corp. and its debtor affiliates filed
petitions for relief under chapter 11 of Title 11 of the United
States Code in the United States Bankruptcy Court for the Southern
District of New York on Dec. 3, 2008.
This is Bally Total's second trip to the bankruptcy court in less
than two years.
The Debtors filed for bankruptcy on July 31, 2007. As part of
those cases, the Debtors filed a prepackaged plan of
reorganization, which contemplated a deleveraging of their balance
sheets. After filing the plan, the Debtors negotiated an
investment agreement with Harbinger Capital Partners Master Fund
I, Ltd. and Harbinger Capital Partners Special Situations Fund,
LP, which reflected a Harbinger-led restructuring and
recapitalization. Under the investment agreement, Harbinger
acquired 100% of the common stock of reorganized Bally in exchange
for approximately $233.6 million in cash. On September 17, 2007,
the Court confirmed an amended plan reflecting the Harbinger
recapitalization and on October 1, 2007, the Amended Plan became
effective.
Michael W. Sheehan, CEO of Bally, relates that after emergence,
the Company incurred substantial losses from operations and
generated negative cash flow. One of the primary causes for the
Company's poor financial performance was its lack of a permanent
management team and a CEO with experience in the fitness industry.
In order to address these issues, the Company took steps to (i)
hire a CEO to lead the Company, (ii) improve membership sales and
retention, and (iii) reduce costs. Among those efforts were a
program to improve the clubs' appearance to attract new Club
Members, significant purchases of new equipment for the clubs, and
incentives to improve Club Member retention. As a further cost-
cutting measure, the Company reduced corporate headcount and began
outsourcing certain functions. Nevertheless, in the first half of
2008, the Company continued to incur a substantial loss from
operations and generate negative cash flow, resulting in EBITDA
that was dramatically below the projections
Mr. Sheehan relates that after his appointment as CEO on
July 1, 2008, he prepared a comprehensive plan to implement a
restructuring of the Company, with the goal of improving the
Company's financial position for 2009 and beyond. The
comprehensive plan contemplates an operational restructuring of
the Company's field organization as well as significant reductions
in certain corporate costs. The Company has also begun
introducing new initiatives to enhance revenues and cash flow.
Unfortunately, before the Company was able to fully implement the
Operational Restructuring and Cost Reduction Plan, and
notwithstanding a significant increase in new Club Member sign-ups
for the second quarter of 2008, the Company encountered a
liquidity crisis in the summer of 2008, Mr. Sheehan relates. He
says this crisis resulted from, among other things, a long term
decline in payment of fees and dues and increased operating
expenses and capital expenditures.
Bally Total Fitness Holding Corp. and its non-debtor affiliates
and subsidiaries are among the largest full-service commercial
operators of fitness centers in North America in terms of members,
revenues and square footage of its facilities. As of September 30,
2008, the Company operated 349 fitness centers concentrated in 26
states, collectively serving approximately 3.1 million members. In
addition, the Debtors operate 39 clubs pursuant to franchise and
joint venture agreements in the United States, Asia, Mexico, and
the Caribbean. For the nine months ending September 30, 2008, the
Company's consolidated net revenue was approximately
$479.5 million. The Debtors employ approximately 14,572
employees, of whom approximately 6,820 are full-time salaried
employees.
Prepetition Capital Structure
As of September 30, 2008, the Company (including non-debtor
affiliates) had consolidated assets totaling approximately $1.376
billion and recorded consolidated liabilities totaling
approximately $1.538 billion.
As of September 30, 2008, the Debtors' total consolidated debt
(excluding trade debt) was approximately $755 million. The
Debtors' debt structure is comprised of: (i) up to $292 million of
financing provided for in a Credit Agreement; (ii) 13% Senior
Secured Notes Due 2011; (iii) the 15-5/8%/14% Senior Subordinated
Toggle Notes due 2013; and (iv) various capital leases and other
secured debt.
On October 1, 2007, Bally entered into a credit agreement arranged
by Morgan Stanley Senior Funding, Inc., as Administrative Agent
and Collateral Agent, Wells Fargo Foothill, LLC, as Revolving
Credit Agent, and the CIT Group/Business Credit, Inc., as
Revolving Syndication Agent and certain other lenders party
thereto. The Credit Agreement provided financing of up to $292
million, consisting of $50 million in a senior secured revolving
credit facility with a $40 million sublimit for letters of credit
and a six-year $242 million senior secured term loan facility.
The proceeds from the Term Loan and the Revolving Facility were
used to refinance the amounts outstanding under the Company's
prior financing agreement and to provide additional working
capital. The Credit Agreement is secured by substantially all the
Company's real and personal property, including Club Member
obligations under installment contracts, but excluding a pledge of
the Company's real property leases. As of Oct. 31, 2008, about
$240.8 million was outstanding under the Term Loan, $44.3 million
was outstanding under the Revolving Facility, and $5.7 million of
letters of credit were issued.
On Oct. 1, 2007, Bally issued $247,337,500 of the Senior Secured
Notes under an Indenture, dated as of October 1, 2007 between
Bally and U.S. Bank National Association as Trustee. The Senior
Secured Notes will mature on July 15, 2011, and the interest on
the Senior Secured Notes is payable semi-annually on January 15
and July 15 of each year. The Debtors granted a second priority
lien on certain of their assets to U.S. Bank on behalf and for the
benefit of the holders of the Senior Secured Notes.
Before the second bankruptcy filing of the Debtors, the Senior
Noteholders have formed an Ad Hoc Committee Holders of the Senior
Secured Notes. The Ad Hoc Committee is represented by:
Daniel Golden, Esq.
David Botter, Esq.
Akin Gump Strauss Hauer & Feld LLP
590 Madison Avenue
New York, NY 10022
Tel: 212-872-1000
Fax: 212-872-1002
On October 1, 2007, Bally issued $200,000,000 of the Subordinated
Toggle Notes under an Indenture, dated as of October 1, 2007,
between Bally and HSBC Bank USA, National Association, as Trustee.
The Subordinated Toggle Notes will mature on October 1, 2013. As
of Sept. 30, 2008, approximately $221 million was outstanding
under the Subordinated Toggle Notes. The Subordinated Toggle
Notes are unsecured obligations and are not guaranteed by any of
the other Debtors.
The Debtors owe $6,674,000 on equipment and other property subject
to capital leases with various third parties. The Debtors also
have additional secured debt in the approximate amount of
$1,337,000 as of September 30, 2008.
The Company said that as of June 30, 2008, Harbinger entities own
all of Bally's voting securities:
Percent
Entity Shares Owned of Stock
------ ------------ ---------
Harbinger Capital Partners
Master Fund I, Ltd. 6,000 66.67%
Harbinger Capital Partners
Special Situations Fund, L.P. 3,000 33.33%
Events Leading to Ch. 22 Filing
On July 24, 2008, the Company delivered notice to the Senior
Secured Lenders that the Company had failed to comply with the
Maximum Senior Secured Leverage Ratio for the quarter ending June
30, 2008, resulting in a default under the Credit Agreement.
Effective as of August 4, 2008, the parties entered into a
temporary limited waiver of certain events of default under the
Credit Agreement.
Due to, among other things, the turmoil in the credit markets, the
Company and the Senior Secured Lenders were unable to agree upon a
full amendment to the Credit Agreement before the Company ran out
of cash necessary to fund its operations on a day-to-day basis.
On Sept. 23, 2008, the parties executed a second waiver, which,
among other things, waived the existing defaults through Dec. 31,
2008 and also provided for the grant of additional collateral to
the Senior Secured Lenders. The Senior Secured Lenders agreed to
provide the Company with up to $20 million of additional revolving
loans and an additional $10 million in term loans senior to the
existing Term Loans.
In October 2008, the Company exhaustively explored opportunities
to obtain additional out-of-court financing from a variety of
sources, including the Senior Secured Lenders and certain of the
Senior Secured Noteholders.
Since beginning the implementation of the Operational
Restructuring and Cost Reduction Plan, the Company believed that
an out-of-court solution to its troubles would provide the maximum
benefit for all parties-in-interest. Although the Company's
EBITDA for 2008 is projected to be about $17 million, the Company
is currently projecting, assuming full implementation of the
Operational Restructuring and Cost Reduction Plan and current
revenue projections, EBITDA for 2009 of between
$50 and $60 million.
As the prospects for an out-of-court solution dwindled, however,
the Company tried to raise financing in connection with a
bankruptcy filing. The unstable credit markets have made it
particularly difficult for the Company to secure sufficient
financing. The Company also lacked sufficient unencumbered
assets, thus, obtaining debtor-in-possession financing from a
third party on a priming basis would have been difficult and
uncertain. Accordingly, the Debtors attempted to negotiate
debtor-in-possession financing with certain of the Senior Secured
Lenders and the Senior Secured Noteholders.
Chapter 22 Game Plan:
Going Concern Sale or Stand-Alone Restructuring
In connection with the negotiations for debtor-in-possession
financing, certain of the Term Loan lenders expressed an interest
in purchasing substantially all of the Debtors' assets pursuant to
a sale under section 363 of the Bankruptcy Code. As such, over
the past few weeks the Debtors have had extensive discussions with
those Term Loan lenders regarding a potential sale of the Debtors'
businesses as a going concern.
The Debtors, however, were unable to complete their negotiations
and documentation of an agreement with certain of the Term Loan
lenders before it became necessary to seek chapter 11 protection.
Nevertheless, the Company expects to continue active negotiations
with the Term Loan lenders after commencement of the Chapter 22
cases in an attempt to complete an asset purchase agreement and
debtor-in-possession financing on terms that are satisfactory and
in the best interests of the Debtors and their constituencies.
While the Debtors continue their negotiations with the Term Loan
lenders regarding a possible sale, they will also prepare for a
possible stand-alone restructuring. Given the Debtors' liquidity
crisis, it is necessary for the Debtors to be prepared for both
eventualities.
The Debtors believe that they have a strong business plan and that
a stand-alone reorganization is achievable if they are unable to
negotiate a sale of their assets on favorable terms and they are
able to obtain sufficient liquidity to bridge the next 90 days. In
addition, the Debtors intend to announce plans for streamlining
their operations footprint in various geographic regions.
Accordingly, the Debtors will work down these two paths
simultaneously, by continuing to negotiate a potential debtor in
possession financing facility and asset purchase agreement, while
at the same time trying to obtain adequate liquidity in the near
term to operate their business on a stand-alone basis. The
Debtors believe that by proceeding in this manner, they will
optimize their prospects for maximizing the value of their
estates.
About Bally Total Fitness
Based in Chicago, Illinois, Bally Total Fitness Holding Corp.
(Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates
fitness centers in the U.S., with over 375 facilities located in
26 states, Mexico, Canada, Korea, China and the Caribbean under
the Bally Total Fitness(R), Bally Sports Clubs(R) and Sports Clubs
of Canada (R) brands.
Bally Total and its affiliates filed for Chapter 11 protection
on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after
obtaining requisite number of votes in favor of their pre-
packaged chapter 11 plan. Joseph Furst, III, Esq. at Latham &
Watkins, L.L.P. represents the Debtors in their restructuring
efforts. As of June 30, 2007, the Debtors had US$408,546,205 in
total assets and US$1,825,941,54627 in total liabilities.
The Debtors filed their Joint Prepackaged Plan & Disclosure
Statement on July 31, 2007. The Court confirmed the Plan in Sept.
2007. The Plan was declared effective Oct. 1, 2007.
(Bally Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
BALLY TOTAL: Case Summary & 50 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Bally Total Fitness of Greater New York, Inc.
fka Jack LaLanne Fitness Center Inc.
dba Jack Lalanne Holiday Spa
Crunch
Crunch Fitness
Bally Total Fitness
Bally Sports Club
c/o Bally Total Fitness Holding Corp.
8700 Bryn Mawr Ave., 2nd Floor
Chicago, IL 60631
Bankruptcy Case No.: 08-14818
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Bally ARA Corporation 08-14819
Bally Fitness Franchising, Inc. 08-14820
Bally Total Fitness Holding Corporation 08-14821
Bally Franchise RSC, Inc. 08-14822
Bally Franchising Holdings, Inc. 08-14823
Bally Real Estate I LLC 08-14824
Bally REFS West Hartford LLC 08-14825
Bally Sports Clubs, Inc. 08-14826
Bally Total Fitness Corporation 08-14827
Bally Total Fitness Franchising, Inc. 08-14828
Bally Total Fitness International, Inc. 08-14829
Bally Total Fitness of California, Inc. 08-14831
Bally Total Fitness of Colorado, Inc. 08-14832
Bally Total Fitness of Connecticut Coast, Inc. 08-14833
Bally Total Fitness of Connecticut Valley, Inc. 08-14834
Bally Total Fitness of Minnesota, Inc. 08-14835
Bally Total Fitness of Missouri, Inc. 08-14836
Bally Total Fitness of Philadelphia, Inc. 08-14837
Bally Total Fitness of Rhode Island, Inc. 08-14838
Bally Total Fitness of the Mid-Atlantic, Inc. 08-14839
Bally Total Fitness of the Midwest, Inc. 08-14840
Bally Total Fitness of the Southeast, Inc. 08-14841
Bally Total Fitness of Toledo, Inc. 08-14842
Bally Total Fitness of Upstate New York, Inc. 08-14844
BTF Cincinnati Corporation 08-14845
BTF Europe Corporation 08-14846
BTF Indianapolis Corporation 08-14847
BTF Minneapolis Corporation 08-14848
BTF/CFI, Inc. 08-14849
BTFCC, Inc. 08-14850
BTFF Corporation 08-14851
Greater Philly No. 1 Holding Company 08-14852
Greater Philly No. 2 Holding Company 08-14853
Health & Tennis Corporation of New York 08-14854
Holiday Health Clubs of the East Coast, Inc. 08-14855
Holiday/Southeast Holding Corporation 08-14856
Jack LaLanne Holding Corp. 08-14857
New Fitness Holding Co., Inc. 08-14858
Nycon Holding Co., Inc. 08-14859
Rhode Island Holding Company 08-14860
Tidelands Holiday Health Clubs, Inc. 08-14861
U.S. Health, Inc. 08-14862
Related Information: The Debtors operates fitness centers in the
U.S., with over 375 facilities located in
26 states, Mexico, Canada, Korea, China and
the Caribbean under the Bally Total
Fitness(R), Bally Sports Clubs(R) and Sports
Clubs of Canada (R) brands.
The Debtors and its affiliates filed for
Chapter 11 protection on July 31, 2007
(Bankr. S.D.N.Y. Case No. 07-12396) after
obtaining requisite number of votes in favor
of their pre-packaged chapter 11 plan.
Joseph Furst, III, Esq. at Latham & Watkins,
L.L.P. represents the Debtors in their
restructuring efforts. As of June 30, 2007,
the Debtors had $408,546,205 in total assets
and $1,825,941,54627 in total liabilities.
The Debtors filed their Joint Prepackaged
Plan & Disclosure Statement on July 31, 2007.
On Aug. 13, 2007, they filed an Amended Joint
Prepackaged Plan and on Aug. 17 filed a
Modified Amended Prepackaged Plan.
Jack La Lanne Holding Corp owns 100% of the
company.
See: http://www.ballyfitness.com/
Chapter 11 Petition Date: December 3, 2008
Court: Southern District of New York (Manhattan)
Judge: Burton R. Lifland
Debtor's Counsel: Kenneth H. Eckstein, Esq.
keckstein@kramerlevin.com
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, NY 10036
Tel: (212) 715-9100
Fax: (212) 715-8000
Investment Banker and Financial Advisor: Houlihan Lokey Howard
Zukin Capital Inc.
Crisis Managers: AP Services LLC
Notice Claims and Balloting Agent: Kurtzman Carson Consultants LLC
Conflicts Counsel: Curtis, Mallet-Prevost, Colt & Mosle LLP
Special Litigation Counsel: Winston & Strawn LLP
Tax Consultants: Deloitte Tax LLP
Real Estate Advisors: Hilco Trading LLC
Estimated Assets: More than $1 billion
Estimated Debts: More than $1 billion
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
U.S. Bank National Association Debt $247,337,500
Attn: Rick Prokosch
60 Livingston Ave
EP-MN-WS3C
St. Paul, MN 55107-2292
Tel: (651) 495-3918
Fax: (651) 495-8097
HSBC Bank USA NA Debt $231,250,000
Robert Conrad
452 Fifth Ave
New York, NY 10018
Tel: (212) 525-1314
Fax: (212) 525-1300
Leo Burnett USA Inc Trade $3,841,800
c/o Paul Eichelman, Chief
Financial Officer
35 W. Wacker Drive
Chicago, IL 60601
Tel: (312) 220-1084
Fax: (312) 220-3299
Jenner & Block LLP Trade $1,714,000
Attn: Jerald S. Solovy, Esq.
330 N. Wabash Ave
Chicago, IL 60611
Tel: (312) 222-9350
Fax: (312) 527-0484
Grupo Gallegos Trade $555,090
Attn: Julie Beall
401 E. Ocean Blvd., 6Th Fl
Long Beach, CA 90802
Tel: (562) 256-3600
Fax: (562) 256-3620
NLAF Dunstan, L.P. Real $512,085
c/o AIC Ventures, L.P. Property
Paul Robshaw Lease
301 Congress Ave, Suite 320
Austin, TX 78701
Tel: (512) 476-5009
Fax: (512) 476-7779
Total Tec Systems,Inc Trade $465,122
Attn: Mery Mahieu
Div. Bell Microproducts Inc
12784 Collections Ctr Dr
Chicago, IL 60693
Tel: (772) 334-9200
Fax: (772) 334-9222
R.H. Construction, Inc. Trade $449,516
Attn: Charlene
11720 Warfield
San Antonio, TX 78216
Tel: (210) 340-4627
Fax: (210) 348-7627
Kleinberg Kaplan Wolff & Trade $436,000
Cohen, P.C.
Attn: Andrew Chonoles
551 Fifth Ave.
New York, NY 10176
Tel: (212) 880-9870
Fax: (212) 986-8866
Kirkland & Ellis LLP Trade $401,575
Attn: Michael P. Foradas
200 E. Randolph Drive
Chicago, IL 60601
Tel: (312) 861-2000
Fax: (312) 861-2200
Convergys CMG Trade $384,973
Attn: Angela Brown
1450 Solutions Center Dr
Chicago, IL 60677-1004
Tel: (513) 784-4337
S & D Cleaning Janitorial Trade $264,477.00
Attn: Ghermai Terie
11015 Hundred Bridge Ln
Sugarland, TX 77478
Tel: (612) 275-8939
Midway Bldg Janitorial Trade $239,764.00
Attn: Maria
2425 E. Devon Ave
Elk Grove Village, IL 60007
Tel: (847) 860-2800
Fax: (847) 860-5660
Flynn Construction Trade $238,396.00
600 Penn Avenue
Pittsburgh, PA 15221
Tel: (412) 243-2483
Fax: (412) 243-7925
Iovate Health Sciences Trade $235,499.54
Attn: Ivana Pojic
P.O. Box 66512
Chicago, IL 60666-0512
Tel: (888-334-4448
Fax: (905-678-3121
Mendes & Mount Trade $225,000.00
Attn: Bob
750 7th Ave
New York, NY 10019
Tel: (212) 261-8000
Fax: (212) 261-8750
CENTRAL BUILDING Trade $202,439
SERVICES,INC
Attn: Rubin Montiel
P.O. Box 8050
Bartlett, IL 60103
Tel: (630) 715-9799
Fax: (630) 671-0059
Latham & Watkins Trade $200,000
Attn: Mark D. Gerstein
233 South Wacker Dr.
Sears Tower, Suite 5800
Chicago, IL 60606
Tel: (312) 876-7700
Fax: (312) 993-9767
Chipman Adams & Defilippis Trade $190,671
Architects, Inc.
1550 N. Northwest Hwy, Suite
400
Park Ridge, IL 60068
Tel: (847) 298-6900
Fax: (847) 298-6966
Manatt, Phelps & Phillips, LLP Trade $190,000
Clayton Friedman
11355 W Olympic Blvd
Los Angeles, CA 90064
Tel: (310) 312-4000
Fax: (310) 312-4224
Polar Electro Trade $187,700
Attn: Doug Walerstein
1111 Marcus Avenue
Ste M15
Lake Success, NY 11042-1034
Tel: (800) 290-6330
Fax: (516) 364-5454
Softmart Inc. Trade $179,393
P.O. Box 8500-52288
Philadelphia, PA 19178-2288
Fax: (800) 432-0612
Optimum Nutrition Trade $178,665
Attn: Mike
3979 Paysphere Circle
Chicago, IL 60674
Tel: (800) 705-5226
Fax: (630) 236-8517
High Potential, Inc. Trade $166,000
Attn: Christian B
33 West Monroe Street #2110
Chicago, IL 60603-5411
Tel: (312) 252-8200
Fax: (312) 252-8209
STAR HRG Trade $161,733
Div. of Mega Life & Health
Insurance Co.
PO Box 37887
Phoenix, AZ 85021
Los Angeles County Tax Trade $147,849
Collector
Attn: Mark J. Saladino
P.O. Box 54027
Terminal Annex
Los Angeles, CA 90054
Tel: (213) 974-2101
Fax: (213) 626-1812
Valassis Direct Mail, Inc. Trade $146,922
Attn: Nancy Davis
pka: Advo
90469 Collection Ctr. Dr.
Chicago, IL 60693
Tel: (860) 602-3606
Fax: (860) 602-4783
401 Commercial L.P. Real $141,173
Fred Grapstein Property
401 Seventh Ave Lease
New York, NY 10001
Tel: (212-502-8100
Fax: (212-502-8715
Read Tile & Stone Trade $140,000
27 Jensen Drive
Rochester, NY 14624
Tel: (585) 247-1612
Fax: (585) 247-6038
Dell Marketing L.P. Trade $139,597
Attn: N. Whitmire
c/o Dell USA, LLP
PO Box 802816
Chicago, IL 60680-2816
Tel: (512-723-9927
Fax: (877-500-3952
Sonnenblick Del Rio Norwalk, Real $138,726
LLC Property
c/o Sonnenblick Del Rio Real Lease
Estate Development
12011 San Vicente Blvd,
Suite 300
Brentwood, CA 90049
Tel: (310) 471-9200
Fax: (310) 471-9111
WWP Amenities MPH Partner Real $136,781
LLC Property
c/o Macklowe Management Lease
Steve Martinek
767 Fifth Avenue
21st Floor
New York, NY 10153
Tel: (212) 586-4914
Fax: (212) 258-3766
Aon Consulting Trade $125,508
P.O. Box 33009
Newark, NJ 07188-0009
Tel: (312) 381-1000
Fax: (312) 701-3100
Culver Center Partners-East #1 Real $124,976
L.P. Property
Attn: Juri Ripinski Lease
3851 Overland Ave, Suite B
Culver City, CA 90232
Tel: (310) 253-9998
Fax: (310) 253-9897
Compuware Corp Trade $124,728
Attn: Amy Koska
Drawer #64376
Detroit, MI 48264-0376
Tel: (313) 227-7300
Fax: (313) 227-9568
West Coast Printing & Graphics Trade $121,715
16782 Red Hill Ave Ste A
Irvine, CA 92606
Tel: (949) 797-0140
Con Edison Trade $115,690
Attn: Jaf Station
P.O. Box 1702
New York, NY 10116-1702
Fax: (212) 475-0734
Green Light Janitorial Trade $114,839
Lilia
2333 Benson Street 2Nd Floor
Philadelphia, PA 19152
Tel: (215) 331-0744
Ketchum Directory Advertising Trade $113,577
P.O. Box 676371
Dallas, TX 75267-6371
Tel: (913) 344-1900
Carrier Corporation Trade $106,488
PO Box 93844
Chicago, IL 60673-3844
Fax: (315) 432-6620
Intercontinental Management Real $106,353
Corp Property
322 E. Illinois St Lease
Chicago, IL 60611
Tel: (312) 329-2504
Fax: (312) 329-9058
Intercontinental Management
Corp
1270 Soldiers Field Rd
Boston, MA 02135
Tel: (617) 782-2600
Fax: (617) 782-9442
Nutrio.com Trade $105,000
Aka: Nutrio, Inc.
1000 Corporate Drive, Ste 600
Ft. Lauderdale, FL 33334
Fax: (954) 938-4080
North Town Refrigeration Trade $104,941
Div. North Town Mechanical
Contractors
18 Congress Circle W.
Roselle, IL 60172
Fax: (847) 357-0844
TXU Energy Trade $104,135
PO Box 660161
Dallas, TX 75266-0161
Tel: (800) 725-7920
Prodigy Promos Trade $102,889
691 W 1200 N, Suite 400
Springville, UT 84663
Fax: (801) 491-4202
Aramark Uniform Services, Inc. Trade $101,330
Adriana Julian
1900 Progress Avenue
Columbus, OH 43207
Tel: (818-973-3646
Fax: (614-445-7366
Akin, Gump, Strauss, et al Trade $101,325
David Botter
590 Madison Ave.
New York, NY 10022
Tel: (212) 872-1000
Fax: (212) 872-1002
641 Owner, LLC Real $99,264.94
c/o Newmark Knight Frank Property
Lease
GMS, LLC
Attn: Nicole Freckleton
10 Sylvan Way 2nd Floor
Parsippany, NJ 07054
Tel: (973) 898-8888
Fax: (973) 984-0347
641 Owner, LLC
c/o Atlas Capital Group
Rich Garzon
630 Fifth Avenue, 32nd Floor
New York, NY 10011
Tel: (973) 898-8845
Fax: (973) 842-0635
Sungard Availability Services Trade $96,684.00
Po Box 91233
Chicago, IL 60693
Tel: (800) 468-7483
Bluestar Energy Services Inc Trade $96,311.22
14034 Collections Center Dr
Chicago, IL 60693
Tel: (866) 258-3782
Fax: (866) 422-2515
The petition was signed by interim chief financial officer Harvey
Rubinson.
BEAZER HOMES: Posts $951.2MM Operating Loss in FY Year Sept. 30
---------------------------------------------------------------
Beazer Homes USA, Inc., released its financial results for the
quarter and year ended Sept 30, 2008. The company previously
provided fourth quarter home closings and new home orders and its
Sept. 30, 2008 cash balance.
For the quarter ended Sept. 30, 2008, Beazer Homes reported:
-- net loss from continuing operations of $(475.2) million,
or $(12.32) per share, including non-cash pre-tax charges
related to inventory impairments and abandonment of land
option contracts of $58.8 million, impairments in joint
ventures of $6.0 million and a non-cash deferred tax
valuation allowance under SFAS 109 of $398.6 million.
For the fourth quarter of the prior fiscal year, the
company reported a net loss from continuing operations of
$(152.0) million, or $(3.95) per share.
-- home closings: 2,441 homes, a decrease of 38.2% from 3,949
in the fourth quarter of the prior year.
-- total revenues: $712.6 million, compared to $1.09 billion
in the fourth quarter of the prior year.
-- new orders: 1,083 homes, an increase of 10.3% from 982 in
the fourth quarter of the prior year.
-- net cash provided by operating activities: $291.1 million,
compared to $387.3 million in the fourth quarter of the
prior year.
For the year the ended Sept, 30, 2008, Beazer Homes reported:
-- reported net loss from continuing operations of
$(951.2) million, or $(24.68) per share, including non-
cash pre-tax charges related to inventory impairments and
abandonment of land option contracts of $510.6 million,
goodwill impairments of $52.5 million, impairments in
joint ventures of $68.8 million and a non-cash deferred
tax valuation allowance of $400.3 million. For the prior
fiscal year, net loss from continuing operations totaled
$(410.4) million, or $(10.68) per share.
-- home closings: 7,692 homes, a decrease of 36.0% from
12,020 in the prior year.
-- total revenues: $2.07 billion, compared to $3.47 billion
in the prior year.
-- new orders: 6,065 homes, a decrease of 38.8% from 9,903 in
the prior year.
-- net cash provided by operating activities: $315.6 million,
compared to $509.4 million in the prior year.
As of Sept, 30, 2008, Beazer homes reported cash and cash
equivalents of $584.3 million, compared to $454.3 million as
of Sept. 30, 2007. The company also reported backlog of 1,358
homes with a sales value of $326.6 million compared to 2,985 homes
with a sales value of $838.8 million as of Sept. 30, 2007.
"Conditions in both the overall economy and housing market came
under greater pressure during our fourth quarter and have
continued to deteriorate since that time," said Ian J. McCarthy,
President and Chief Executive Officer. "Home buyer demand for new
homes continues to be adversely affected by low levels of consumer
confidence, falling home prices, extensive new and existing home
supply and reduced access to mortgage financing. In recent months
this difficult environment has been greatly exacerbated by turmoil
in financial markets, heightened concerns about the global economy
and a substantial rise in the number of home foreclosures.
Against this backdrop we continue to focus on generating
liquidity, reducing overhead and direct costs, and limiting
investment in land and unsold home inventory. As evidenced by our
strengthened cash balance over the fiscal year, our efforts are
helping us weather this unprecedented housing environment while
positioning Beazer Homes for a return to profitability upon the
market's eventual recovery."
In connection with Beazer Homes' realignment of management,
operational and financial reporting lines and its decision to exit
a number of markets during fiscal 2008, the company has
correspondingly realigned its reportable segments as follows: West
(Arizona, California, Nevada, New Mexico and Texas), East
(Delaware, Indiana, Maryland, New Jersey, New York, North
Carolina, Pennsylvania, Tennessee and Virginia), Southeast
(Florida, Georgia and South Carolina) and Other Homebuilding. The
Other Homebuilding segment is comprised of markets the Company has
exited or is in the process of exiting including Cincinnati,
Columbus, Lexington, Columbia, Charlotte, Colorado Springs, Denver
and Fresno.
Homebuilding revenues declined 44.6% for the quarter ended
Sept. 30, 2008, due to both a 38.2% decline in home closings and a
9.9% decline in average selling price from the same period in the
prior fiscal year. Home closings declined in all regions, with
the most significant declines in the Southeast and Other
Homebuilding segments. Net new home orders totaled 1,083 for the
quarter, an increase of 10.3% from the same period in the prior
fiscal year. This year-over-year increase was driven largely by a
lower cancellation rate of 45.7% during the fourth quarter,
compared to 68.1% in the same period of the prior year. The
increase in net orders year-over-year was also achieved through a
17.2% increase in net orders in markets where the company
maintains a presence, partially offset by a 31.7% decline in net
orders in markets the company had previously announced it was
exiting.
Revenues from land and lot sales totaled $121.3 million in the
fourth quarter as Beazer Homes completed asset sales in Virginia
totaling $99.1 million, including the previously announced sale of
two condominium projects, as well as additional asset sales
primarily related to market exits.
During the fourth quarter, margins continued to be negatively
impacted by both the average sales price decline and reduced
closing volumes as compared to the same period a year ago. In
addition, Beazer Homes incurred pre-tax charges to abandon land
option contracts of $13.3 million, and to recognize inventory
impairments of $45.5 million and impairments in joint ventures of
$6.0 million.
Beazer Homes controlled 39,627 lots at Sept. 30, 2008 (73% owned
and 27% controlled under options), reflecting reductions of
approximately 14% and 36% from levels as of June 30, 2008, and
Sept. 30, 2007, respectively. As of Sept. 30, 2008, unsold
finished homes totaled 408, declining by approximately 53% from
the level a year ago. The company substantially reduced its land
and land development spending, which totaled $333 million in
fiscal 2008, compared to $824 million for the prior year.
With respect to Beazer Homes' cash position, at Sept. 30, 2008,
the company had a cash balance of $584.3 million, compared to
$314.2 million at June 30, 2008, and $454.3 million at Sept. 30,
2007. Cash provided by operating activities for the three months
and year ended Sept. 30, 2008 was $291.1 and $315.6 million,
respectively.
Tax Matters
As of Sept. 30, 2008, Beazer Homes had a non-cash deferred tax
asset valuation allowance under SFAS 109 of $400.6 million
following an assessment of the recoverability of its deferred tax
assets, which consist primarily of inventory valuation
adjustments, reserves and accruals that are not currently
deductible for tax purposes, as well as operating loss carry-
forwards from losses incurred during fiscal 2008. This reserve
reflects the company's application of SFAS 109 which requires
companies to reserve against deferred tax assets when, based on
the weight of available evidence, it is more likely than not that
some portion or all of the deferred tax asset will not be
realized. The company is now in a cumulative loss position over
the four prior years, which, among other things, the company
relied upon in reaching the determination that such a reserve was
appropriate. In future periods the reserve could be reduced based
on sufficient evidence indicating that it is more likely than not
that a portion of our deferred tax asset will be realized.
Separately and as previously announced, Beazer Homes has also
conducted an analysis of whether an 'ownership change' occurred
under Internal Revenue Code Section 382. Ownership changes under
Section 382 generally relate to the cumulative change in ownership
among shareholders with more than a 5% ownership interest over a
three year period. The company has determined that an 'ownership
change' under Section 382 did occur as of Dec. 31, 2007. As a
result, the company's ability to utilize certain of its loss
carry-forwards and recognize certain built-in losses or deductions
will be limited in the future.
Finally, notwithstanding the deferred tax asset valuation
allowance and the determination of an 'ownership change' under
Section 382, the company continues to expect to receive a cash tax
refund of approximately $150 million during fiscal 2009.
Secured Revolving Credit Facility
As a result of recording the deferred tax asset valuation
allowance, the Company's tangible net worth, as defined in its
secured revolving credit facility agreement, fell below
$350 million as of Sept. 30, 2008. Pursuant to the previously
negotiated terms of the facility, and effective as of the filing
of the company's 2008 10-K, the facility size will be reduced from
$400 million to $250 million, and the collateral value of assets
securing the facility must exceed 4.5 times outstanding loans and
letters of credit (up from 3.0 times previously). At Sept. 30,
2008, the company was in compliance with the collateral coverage
requirements but had no additional borrowing capacity. In order
to comply with the new higher collateralization requirements
effective as of the filing of the company's 2008 10-K, the company
will restrict approximately $20 million in cash to sufficiently
collateralize the outstanding letters of credit until additional
real estate collateral is added to the borrowing base. Although
the company has had no cash borrowings under the facility since
its inception in July 2007, and has no current plans that would
require cash borrowings, the company intends to add approximately
$250 million in assets to the borrowing base over the next year
which should create approximately $35 million in availability,
after providing a return of the restricted cash.
BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND FINANCIAL DATA
CONTINUING OPERATIONS
(Dollars in thousands, except per share amounts)
FINANCIAL DATA
Quarter Ended Fiscal Year Ended
September 30, September 30,
----------------------- --------------------------
2008 2007 2008 2007
--------- ---------- --------- ----------
CONSOLIDATED
STATEMENTS OF
OPERATIONS
Total revenue $ 712,649 $1,093,677 $2,074,298 $3,466,725
Home
construction
and land sales
expenses 663,259 936,973 1,886,511 2,959,660
Inventory
impairments and
option contract
abandonments 58,774 212,008 510,628 611,864
-------- --------- --------- ---------
Gross loss (9,384) (55,304) (322,841) (104,799)
Selling, general
and
administrative
expenses 99,227 111,451 344,923 413,774
Depreciation and
Amortization 9,294 10,338 27,544 33,176
Goodwill
impairment - 23,003 52,470 52,755
-------- --------- --------- ---------
Operating loss (117,905) (200,096) (747,778) (604,504)
Equity in loss
of
unconsolidated
joint ventures (6,245) (28,142) (81,314) (35,154)
Other (expense)
income (16,085) (371) (36,992) 7,499
-------- --------- --------- ---------
Loss from
continuing
operations
before income
taxes (140,235) (228,609) (866,084) (632,159)
Income tax
provision
(benefit) 334,935 (76,617) 85,164 (221,778)
-------- --------- --------- ---------
Net loss from
continuing
operations (475,170) (151,992) (951,248) (410,381)
-------- --------- --------- ---------
Net income
(loss) from
discontinued
operations 1,229 (3,240) (664) (692)
-------- --------- --------- ---------
Net loss $(473,941) $ (155,232) $ (951,912) $ (411,073)
======== ========= ========= =========
Net loss per
common share -
continuing
operations:
Basic $ (12.32) $ (3.95) $ (24.68) $ (10.68)
======== ========= ========= =========
Diluted $ (12.32) $ (3.95) $ (24.68) $ (10.68)
======== ========= ========= =========
Net income
(loss) per
common share -
discontinued
operations:
Basic $ 0.03 $ (0.08) $ (0.01) $ (0.02)
======== ========= ========= =========
Diluted $ 0.03 $ (0.08) $ (0.01) $ (0.02)
======== ========= ========= =========
Net loss per
common share:
Basic $ (12.29) $ (4.03) $ (24.69) $ (10.70)
======== ========= ========= =========
Diluted $ (12.29) $ (4.03) $ (24.69) $ (10.70)
======== ========= ========= =========
Weighted average
shares
outstanding, in
thousands:
Basic 38,561 38,475 38,549 38,410
Diluted 38,561 38,475 38,549 38,410
BEAZER HOMES USA, INC.
CONSOLIDATED BALANCE SHEET DATA
CONTINUING OPERATIONS
(Dollars in thousands, except per share amounts)
September 30, September 30,
2008 2007
-------------- --------------
Assets
Cash and cash equivalents $ 584,334 $ 454,337
Restricted cash 297 5,171
Accounts receivable, net 46,555 45,501
Income tax receivable 173,500 63,981
Inventory
Owned inventory 1,545,006 2,537,791
Consolidated inventory
not owned 106,655 237,382
---------- ----------
Total inventory 1,651,661 2,775,173
Residential mortgage loans
available-for-sale 94 781
Investments in unconsolidated
joint ventures 33,065 109,143
Deferred tax assets, net 20,216 232,949
Property, plant and equipment,
net 39,822 71,682
Goodwill 16,143 68,613
Other assets 76,112 102,690
---------- ----------
Total assets $ 2,641,799 $ 3,930,021
========== ==========
Liabilities and Stockholders' Equity
Trade accounts payable $ 90,371 $ 118,030
Other liabilities 358,592 453,089
Obligations related to
consolidated inventory
not owned 70,608 177,931
Senior Notes (net of discounts
of $2,565 and $3,033,
respectively) 1,522,435 1,521,967
Junior subordinated notes 103,093 103,093
Other secured notes payable 50,618 118,073
Model home financing
obligations 71,231 114,116
---------- ----------
Total liabilities 2,266,948 2,606,299
---------- ----------
Stockholders' equity:
Preferred stock (par value
$.01 per share, 5,000,000
shares authorized, no shares
issued) - -
Common stock (par value $0.001
per share, 80,000,000 shares
authorized, 42,612,801 and
42,597,229 issued and
39,270,038 and 39,261,721
outstanding, respectively) 43 43
Paid-in capital 556,910 543,705
Retained earnings 1,845 963,869
Treasury stock, at cost
(3,342,763 and 3,335,508
shares, respectively) (183,947) (183,895)
---------- ----------
Total stockholders' equity 374,851 1,323,722
---------- ----------
Total liabilities and
stockholders' equity $ 2,641,799 $ 3,930,021
========== ==========
Inventory Breakdown
Homes under construction $ 338,971 $ 787,102
Development projects
in progress 618,252 1,233,140
Land held for future
development 407,320 324,350
Land held for sale 85,736 49,473
Model homes 94,727 143,726
Consolidated inventory
not owned 106,655 237,382
---------- ----------
$ 1,651,661 $ 2,775,173
========== ==========
BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND FINANCIAL DATA
CONTINUING OPERATIONS
(Dollars in thousands)
OPERATING DATA
Quarter Ended Fiscal Year Ended
SELECTED OPERATING DATA September 30, September 30,
------------------ -------------------
2008 2007 2008 2007
-------- ------- -------- ---------
Closings:
West region 1,038 1,342 2,777 4,369
East region 733 1,017 2,405 2,821
Southeast region 455 1,019 1,515 2,970
Other homebuilding 215 571 995 1,860
------- ------- -------- ---------
Total closings 2,441 3,949 7,692 12,020
======= ======= ======== =========
New orders, net of
cancellations:
West region 440 297 2,499 3,444
East region 318 325 1,573 2,816
Southeast region 230 221 1,331 2,117
Other homebuilding 95 139 662 1,526
------- ------- -------- ---------
Total new orders 1,083 982 6,065 9,903
======= ======= ======== =========
Backlog units at end
of period:
West region 527 805
East region 485 1,317
Southeast region 306 490
Other homebuilding 40 373
------- -------
Total backlog units 1,358 2,985
======= =======
Dollar value of backlog at end
of period $326,599 $838,806
======= =======
BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND FINANCIAL DATA
CONTINUING OPERATIONS
(Dollars in thousands)
Quarter Ended Fiscal Year Ended
SUPPLEMENTAL
FINANCIAL DATA September 30, September 30,
----------------------- --------------------------
CONTINUING
OPERATIONS 2008 2007 2008 2007
-------- --------- --------- ---------
Revenues
Homebuilding
operations $ 590,138 $1,065,408 $1,914,304 $3,359,594
Land and lot
sales 121,257 25,670 155,801 99,063
Financial
Services 1,254 2,599 4,193 8,068
-------- --------- --------- ---------
Total revenues $ 712,649 $1,093,677 $2,074,298 $3,466,725
======== ========= ========= =========
Gross (loss)
profit
Homebuilding
operations $ (17,313) $ (59,881) $ (334,711) $ (116,290)
Land and lot
sales 6,675 1,978 7,677 3,423
Financial
Services 1,254 2,599 4,193 8,068
-------- --------- --------- ---------
Total gross
loss $ (9,384) $ (55,304) $ (322,841) $ (104,799)
======== ========= ========= =========
Selling, general
and administrative
homebuilding
operations $ 98,650 $ 110,410 $ 342,440 $ 410,432
Financial
services 577 1,041 2,483 3,342
-------- --------- --------- ---------
Total selling,
general and
administrative $ 99,227 $ 111,451 $ 344,923 $ 413,774
======== ========= ========= =========
SELECTED SEGMENT
INFORMATION -
CONTINUING
OPERATIONS
Revenue:
West region $ 236,734 $ 367,228 $ 674,103 $1,321,870
East region 307,873 326,858 780,380 889,597
Southeast
region 103,934 263,453 354,837 817,453
Other
homebuilding 62,854 133,539 260,785 429,737
Financial
services 1,254 2,599 4,193 8,068
-------- --------- --------- ---------
Total revenue $ 712,649 $1,093,677 $2,074,298 $3,466,725
======== ========= ========= =========
Operating (loss)
income
West region $ (439) $ (121,269) $ (140,989) $ (229,121)
East region (887) (6,933) (63,913) (66,725)
Southeast
region (21,054) 4,238 (109,675) (19,921)
Other
homebuilding (15,530) (9,926) (127,355) (55,111)
Financial
services 669 1,552 1,681 4,696
-------- --------- --------- ---------
Segment
operating
loss (37,241) (132,338) (440,251) (366,182)
Corporate and
unallocated (80,664) (67,758) (307,527) (238,322)
-------- --------- --------- ---------
Total operating
loss $(117,905) $ (200,096) $ (747,778) $ (604,504)
======== ========= ========= =========
Beazer Homes USA, Inc. (NYSE: BZH) -- http://www.beazer.com--
headquartered in Atlanta, is one of the country's 10 largest
single-family homebuilders with continuing operations in Arizona,
California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada,
New Jersey, New Mexico, New York, North Carolina, Pennsylvania,
South Carolina, Tennessee, Texas, and Virginia. Beazer Homes is
listed on the New York Stock Exchange under the ticker symbol
"BZH."
* * *
As disclosed in the Troubled Company Reporter on June 12, 2008,
Fitch Ratings downgraded Beazer Homes USA Inc.'s Issuer Default
Rating to 'B' from 'B+'; Secured revolving credit facility to 'BB-
/RR1' from 'BB/RR1'; Senior notes to 'B-/RR5' from 'B/RR5';
Convertible senior notes to 'B-/RR5' from 'B/RR5'; and Junior
subordinated debt to 'CCC/RR6' from 'CCC+/RR6'.
BELMONT COUNTY: Fitch Withdraws 'B+' Rating on Series 2008 Bonds
----------------------------------------------------------------
Fitch Ratings withdraws its 'B+' rating on the Belmont County,
Ohio (East Ohio Regional Hospital) health system refunding &
improvement revenue bonds, series 2008.
The bond issuance has been postponed indefinitely.
BENJAMIN CONSTRUCTION: Files for Chapter 11 Protection
------------------------------------------------------
The Business Journal reports that Benjamin Construction, Inc., has
filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy
Court for the Middle District of Northern Carolina, listing $2.35
million in assets and $4.86 million in liabilities.
The Business Journal relates that subcontractors have sued
Benjamin Construction in Wake, Durham, and Forsyth counties. Each
of the contractors, according to the report, claimed that they're
owed hundreds of thousands of dollars.
Jeb Jeutter, the attorney for Benjamin Construction, said that the
company faced ?monumental and unexpected cost overruns? on the
Bethany Village shopping center in Morrisville, which caused the
company to fall behind with its creditors, says The Business
Journal. Benjamin Construction, according to the report, was the
general contractor for The Village at Robinhood, a $55 million,
34-acre retail, office and residential project. The report says
that The Village was scheduled to open earlier this year, but
construction fell behind and subcontractors filed liens against
the company for unpaid work. The report states that Benjamin
Construction's contract for The Village was terminated earlier
this year, and Sexton Construction Co. in Winston-Salem took over
the project.
Work continues on Benjamin Construction's other projects, The
Business Journal reports.
John Gist founded Benjamin Construction, Inc., in 1996. The
company was incorporated in the State of North Carolina. Benjamin
Construction provides construction and facility services to
commercial property owners/managers, retail organizations,
commercial developers, and major industrial building users.
B MOSS CLOTHING: Case Summary & 232 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: B. Moss Clothing Company Ltd.
550 Meadowlands Parkway
Secaucus, NJ 07094
Bankruptcy Case No.: 08-33980
Type of Business: The Debtor sells clothing Apparels.
See: http://www.bmossclothing.com/
Chapter 11 Petition Date: December 2, 2008
Court: District of New Jersey (Newark)
Judge: Novalyn L. Winfield
Debtor's Counsel: Ilana Volkov, Esq.
ivolkov@coleschotz.com
Michael D. Sirota, Esq.
Cole, Schotz, Meisel, Forman & Leonard PA
25 Main St.
Hackensack, NJ 07601
Tel: (201) 489-3000
Fax: (201) 489-1536
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Juven's Inc./Caviar trade debt $142,080
1400 Broadway, Suite 800
New York, New York 10018
International Intimates Inc. trade debt $133,286
180 Madison Avenue, Ste. 1800
New York, NY 10016
Vetta Jewelry Inc. trade debt $123,705
29 West 36th Street, 9th flr.
New York, NY 10018
NY3 International Inc. trade debt $120,516
Shugaray LLC trade debt $101,382
DIVA Int. LLC trade debt $93,188
E-LO Sportswear LLC trade debt $89,904
Manning Trading Company trade debt $86,304
Knitwork Products Corp. trade debt $78,272
First Option/Tracy Evans Ltd. trade debt $73,610
Alyn Paige trade debt $66,751
WE Stephens Manufacturing Co. trade debt $64,412
United Parcel Service trade debt $53,501
New Angel Apparel Inc trade debt $57,267
Soxland International Inc. trade debt $53,241
Merly Diamond Ltd. trade debt $50,675
International Intimates Inc. trade debt $35,364
AW Items Inc. trade debt $34,319
PA Orginals Ltd. trade debt $33,432
Finesse Novelty Corp. trade debt $33,603
The CIT Group/Commercial unstated
Service
Rosenthal & Rosenthal LLC unstated
Sterling Factors unstated
The petition was signed by vice president Mark McNerney.
CATALYST PAPER: Moody's Affirms 'B1' CFR; Outlook Remains Negative
------------------------------------------------------------------
Moody's Investors Service affirmed Catalyst Paper Corporation's B1
corporate family rating and B2 senior unsecured debt ratings, and
assigned a SGL-3 speculative grade liquidity rating. The rating
outlook remains negative.
The rating action reflects Moody's view that the slowing global
economy, softening demand across the paper grades that Catalyst
produces, and the weakened pulp market will continue to put
pressure on the company's ratings, despite the company's recent
improved financial performance and the anticipated benefits from
declining recycled fiber and energy costs, and the weakening
Canadian dollar. Catalyst's B1 corporate family rating reflects
the company's position as one of the leading producers of
telephone directory paper in the world and specialty papers and
newsprint in Western North America, and its ownership of Western
Canada's largest recycling facility.
The company also has a proactive and experienced senior management
team that is very focused on supply management and cost control.
Offsetting these strengths is the company's exposure to newsprint
and coated paper, which continue to face significant demand
declines, limited product line and geographic diversification, and
the exposure to volatile foreign exchange and input costs. The
company also continues to face the possibility of further fiber
shortages from sawmill curtailments, which may put additional
pressure on margins.
The SGL-3 liquidity rating indicates that Catalyst has adequate
liquidity supported by the availability under its credit facility,
expectations of modest cash flow generation in the next four
quarters, no significant near term debt maturities, and
expectations that with no material cash charges financial covenant
compliance will not be problematic for the next four quarters.
Moody's considers Catalyst's alternative liquidity potential as
not being strong due to the lack on non-core assets that can be
sold to augment liquidity.
Assignments:
Issuer: Catalyst Paper Corporation
-- Speculative Grade Liquidity Rating, Assigned SGL-3
Moody's last rating action was on June 21, 2007 when the ratings
of Catalyst were affirmed and the outlook was changed to negative
from stable.
Headquartered in Richmond, British Columbia, Catalyst is the
largest producer of mechanical coated and uncoated specialty
papers and newsprint, and the only producer of lightweight coated
paper, on the west coast of North America and is also one of the
largest producers of lightweight directory paper in the world.
The company also produces market pulp and operates the largest
paper recycling operation in Western Canada.
CF HOSPITALITY: Court Terminates Exclusive Plan Filing Rights
-------------------------------------------------------------
Carla Main and Dawn McCarty of Bloomberg News report that the U.S.
Bankruptcy Court for the Middle District of Florida has terminated
CF Hospitality Inc.'s exclusive rights to propose and solicit
acceptances of a Chapter 11 plan.
According to the report, Judge Arthur Briskman granted a request
by secured lender Gramercy Investment Trust to allow it and other
parties to file competing plans.
As reported by the Troubled Company Reporter, CF Hospitality
sought an extension of its exclusive period to file a Chapter 11
plan of reorganization until Feb. 28, 2009. According to the
proposal, the plan the company intends to propose is expected to
cure a default and reinstate a loan from its secured lender
Gramercy Investment Trust, which is owed $93 million, the reports
says.
The Debtor's exclusive plan filing period currently expires Dec.
29, 2008, according to Bloomberg.
Apopka, Florida-based CF Hospitality, Inc., owns two hotels, one
in Orlando and another in Miami. The Company and a subsidiary
filed for Chapter 11 bankruptcy protection on May 1, 2008 (Bankr.
M.D. Fla. Lead Case No. 08-03518). David R. McFarlin, Esq., and
Frank M. Wolff, Esq., at Wolff, Hill, McFarlin & Herron, P.A.,
represent the Debtors in their restructuring efforts. In its
filing, the Lead Debtor listed estimated assets between
$10 million and $50 million and estimated debts between
$10 million and $50 million.
CFM US: Seeks Dec. 20 Extension to File Chapter 11 Plan
-------------------------------------------------------
CFM U.S. Corp., and its affiliates have filed before the U.S.
Bankruptcy Court for the District of Delaware a third request for
an extension of their exclusive rights to file and solicit
acceptances of a Chapter 11 plan.
The Court previously extended CFM's plan filing period to Dec. 8
and solicitation period to Feb. 6. CFM wants the Court to extend
until Dec. 20 its exclusive plan filing period, and its exclusive
solicitation period through Feb. 18.
The Debtors say the extension is warranted because they have made
substantial progress in their Chapter 11 cases. Since the
Petition Date, the Debtors obtained relief designed to minimize
disruptions to their operations as a result of the Chapter 11
proceedings, obtained court approval to reject certain executory
contracts and unexpired leases, and established bar dates for
filing proofs of claim. The Debtors have also obtained
postpetition financing to fund their Chapter 11 cases and have
consummated the sale of substantially all their assets.
Headquartered in Huntington, Indiana, CFM U.S. Corp. --
http://www.majesticproducts.com/-- manufactures two product
categories: Hearth and Heating Products and Barbecue and Outdoor
Products. The company and its affiliate, CFM Majestic U.S.
Holdings, Inc., filed for chapter 11 protection on April 9,
2008 (Bankr. D. Del. Lead Case No. 08-10668). William Pierce
Bowden, Esq., at Ashby & Geddes, represents the Debtors. The
Debtors selected Administar Services Group LLC as their claims
agent. The U.S. Trustee for Region 3 appointed seven creditors to
serve on an Official Committee of Unsecured Creditors. Patrick J.
Reilley, Esq., at Cole Schotz Meisel Forman & Leonard, P.A.,
represents the Committee in these cases. As reported in the
Troubled Company Reporter on June 18, 2008, the Debtors' summary
of schedules showed total assets of $91,316,300 and total debts of
$32,7367,890.
The Debtors' Canadian affiliates filed protection under Companies'
Creditors Arrangement Act with the Ontario Court of Justice on
April 9, 2008.
CHARMING SHOPPES: S&P Junks Sr. Unsec. Debt Rating; Outlook Stable
------------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its corporate
credit rating on Bensalem, Pennsylvania-based Charming Shoppes
Inc. to 'B-' from 'B.' S&P also lowered the rating on the
company's senior unsecured debt to 'CCC+' from 'B-'. The recovery
rating on this debt remains at '5', indicating expectations for
modest (10%-30%) recovery of principal in the event of default.
The outlook is stable.
"The downgrade is based on continued weak operating trends, which
resulted in a sharp deterioration of credit metrics," said S&P's
credit analyst Jackie E. Oberoi. Consumers' pull-back on
spending, inadequate levels of new fashion, and company-specific
merchandise misses have hurt its business.
CHEVY CHASE: S&P Junks Ratings on Classes B4 & B5 Certificates
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on three
classes of mortgage-backed certificates from Chevy Chase Funding
LLC's series 2005-2. Concurrently, S&P affirmed its 'AAA' ratings
on the A-1 and A-NA classes from this series and removed them from
CreditWatch negative, where they were placed Nov. 24, 2008. In
addition, S&P affirmed its ratings on the remaining seven classes
from the same residential mortgage-backed securities transaction,
which is backed by U.S. Alternative-A mortgage loan collateral.
The downgrades reflect S&P's opinion that projected credit support
for the affected classes is insufficient to maintain the previous
ratings, given S&P's current projected losses of 1.67%, or
US$14,058,688, for this transaction.
S&P placed its ratings on the A-1 and A-NA classes on CreditWatch
with negative implications on Nov. 24, 2008, after S&P lowered its
financial strength rating on Ambac Assurance Corp. to 'A' from
'AA'. After S&P performed a more detailed analysis of this
transaction, S&P determined that the A-1 and A-NA classes have
sufficient underlying support for them to maintain the assigned
'AAA' ratings.
Subordination provides credit support for the classes in this
transaction. As of the November 2008 remittance period, total
delinquencies (30-plus days, foreclosures, and real estate owned)
for the transaction were 19.18%, while severe delinquencies (90-
plus days, foreclosures, and REOs) were 13.92% of the
transaction's current pool balance.
The affirmations reflect adequate credit support that is
sufficient to maintain the ratings at their current levels. Each
of the affirmed classes has at least US$15,292,984 in credit
support, compared to US$10,739,306 in remaining losses that S&P
project this transaction will incur.
Ratings Lowered
Chevy Chase Funding LLC
Series 2005-2
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 16678RDP9 B BBB
B-4 16678RDQ7 CCC BB
B-5 16678RDR5 CCC B
Ratings Affirmed and Off CreditWatch Negative
Chevy Chase Funding LLC
Series 2005-2
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1 16678RDK0 AAA AAA/Watch Neg
A-NA AAA AAA/Watch Neg
Ratings Affirmed
Chevy Chase Funding LLC
Series 2005-2
Class CUSIP Rating
----- ----- ------
A-2 16678RDL8 AAA
IO AAA
NIO AAA
B-1 16678RDM6 AA
B-1NA AA
B-2 16678RDN4 A
B-2NA A
CHRYSLER LLC: UAW OKs Healthcare Payment Delays & Jobs Bank Cuts
----------------------------------------------------------------
Sharon Terlep at Dow Jones Newswires reports that the United Auto
Workers President Ron Gettelfinger said on Wednesday that the
union will let General Motors Corp., Chrysler LLC, and Ford Motor
Co. delay payments into a health-care trust and terminate the jobs
bank program for laid-off employees, to help the companies in
their plea for government loans.
As reported in the Troubled Company Reporter on Dec. 3, 2008, UAW
scheduled an emergency meeting on Dec. 3 to discuss what role the
union should play in helping GM, Ford Motor, and Chrysler become
more viable companies.
According to Dow Jones, the UAW decided to revise its 2007
contracts with GM, Chrysler, and Ford Motor to help reduce costs.
Union leaders are able to suspend the jobs bank and postpone
payments to the health-care trust without renegotiating the labor
contract, the report states, citing Mr. Gettelfinger. The union,
says the report, will have to form bargaining committees and start
talks with the companies for further changes.
Dow Jones relates that the health-care trust, or VEBA, is
considered as a key component of the firms' efforts to lessen
labor obligations. It was scheduled to start paying benefits to
retirees beginning Jan. 1, 2010, but the automakers are running
short of cash and would likely fail to secure the billions of
dollars needed to initially fund the trust, states the report.
The jobs bank program, Dow Jones reports, provides laid-off
employees with most of their pay and benefits. The program has
"shrunk dramatically," Dow Jones says, citing Mr. Gettelfinger.
The report states that GM and Ford have reduced their jobs banks
by almost 80,000 workers in recent years. GM, Ford Motor, and
Chrysler currently have about 3,500 workers in the jobs bank,
according to the report.
UAW will launch an ad campaign in support of GM, Ford Motor, and
Chrysler, Dow Jones relates. Other countries are also being asked
to extend support to their auto industries, the report states,
citing Mr. Gettelfinger.
Chrysler's Short-Term & Long-Term Viability Plan
Chrysler LLC Chairperson and CEO Bob Nardelli will wrap up a
series of "Virtual Road Show" events with an actual road trip to
Washington, D.C. Chrysler confirmed that the company's top
executive would drive a fuel-efficient hybrid vehicle to this
week's Senate and House hearings.
Mr. Nardelli and other Chrysler executives will spend the early
part of this week in discussions with a broad mix of affected
stakeholders. The company is calling the grassroots public
relations push a "Virtual Road Show," with initiatives spread
across seven states in a three-day period.
The meetings and initiatives are being organized by a number of
groups and organizations to help develop an awareness of the
integral role U.S. auto makers play in the nation's economy and
national security as well as why the temporary financial
assistance provided by a bridge loan is critical to Chrysler and
the industry. Chrysler Executive Director of Communications Lori
McTavish said, "Our goal is to meet with stakeholders to discuss
the U.S. auto industry's impact on their districts."
Chrysler will use the government loan to support ongoing
operations as the company continues to restructure the business,
including in the first quarter:
-- $8.0 billion in payments to parts suppliers $1.2 billion
for other vendors,
-- $900 million in wages,
-- $500 million in healthcare and legacy costs, and
-- $500 million in capital expenditures.
Mr. Nardelli will receive a salary of $1 a year. He has no
employment contract, no change of control agreement, "golden
parachute," and no health care or life insurance benefits from the
company. The company will negotiate concessions from all of our
constituents.
Chrysler's product plan features 24 major launches from 2009
through 2012. For the 2009 model year, 73% of Chrysler products
will offer improved fuel economy compared to 2008 models. The
company will launch additional small, fuel-efficient vehicles.
Chrysler's product plan includes the introduction of the Ram
Hybrid and its first electric-drive vehicle in 2010 with three
additional models by 2013.
Mr. Nardelli believes that further partnership, restructuring and
consolidation would make the U.S. auto industry even more viable
and competitive in the long run. Further opportunities for
technology sharing would provide fuel-efficient cars and trucks
more cost effectively and faster to market. The three-company
alliance that developed the dualmode hybrid is a good example.
Chrysler believes that it will be well-positioned to begin
repayment of the federal loans in 2012.
Details on Chrysler's Plan is available at:
http://ResearchArchives.com/t/s?35b1
Gov't Facilitated Pre-packaged Bankruptcy
The Deal Journal relates that while Ford Motor, GM, and Chrysler
continue to rule out filing for bankruptcy, Congress members and
their staffers have been meeting privately with bankruptcy experts
and bankers to understand the mechanics and costs of a pre-
packaged bankruptcy. According to The Deal, Senate Minority Whip
Jon Kyl said he has spoken to colleagues who said that they would
be open to the government facilitating a pre-packaged bankruptcy
for one or more of the three struggling Detroit companies.
The Deal states that Sen. Kyl said that he supports a plan for the
government to provide financing, while creating an account that
would ensure warrantees for owners of cars made by firms in
bankruptcy court.
The deal quoted Sen. Kyl as saying, "I'd be happy next week to
pass a bill that said for any of these three companies that go
through Chapter 11, we will provide a certain amount of DIP
[debtor-in-possession] financing" and money to backstop for car
warrantees.
Matthew Dolan and Josh Mitchell at The Wall Street Journal relate
that Ford Motor CEO Alan Mulally expressed concern on the fates of
GM and Chrysler, after the submission of the three company's
restructuring plans to the congress. Mr. Mulally told WSJ during
an interview in Washington, that he was worried about the
financial health of GM and Chrysler after the two companies told
the Congress that they needed the immediate infusion of cash to
survive.
As reported in the Troubled Company Reporter on Dec. 3, 2008, Ford
Motor said in its 33-page turnaround plan that it doesn't need
federal funds immediately and that it is asking for a
$9 billion line of credit to be available in case the recession
would be longer and deeper than expected.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K., Argentina,
Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter on Dec. 3, 2008,
Dominion Bond Rating Service downgraded the ratings of Chrysler
LLC, including Chrysler's Issuer Rating to CC from CCC (high).
Chrysler's First Lien Secured Credit Facility and Second Lien
Secured Credit Facility have also been downgraded to CCC and CC
(low) respectively. All trends are Negative. The ratings action
reflects Chrysler's challenge to maintain sufficient liquidity
balances amid severe industry conditions that have deteriorated
alarmingly over the past few months and are not expected to
improve in the near term. With this ratings action, Chrysler is
removed from Under Review with Negative Implications, where it was
placed on Nov. 7, 2008.
As reported in the Troubled Company Reporter on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
On July 31, 2008, TCR said that Fitch Ratings downgraded the
Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The
Rating Outlook is Negative. The downgrade reflects Chrysler's
restricted access to economic retail financing for its vehicles,
which is expected to result in a further step-down in retail
volumes. Lack of competitive financing is also expected to result
in more costly subvention payments and other forms of sales
incentives. Fitch is also concerned with the state of the
securitization market and the ability of the automakers to access
this market on an economic basis over the near term, given the
steep drop in residual values, higher default rates, higher loss
severity being experienced and jittery capital market.
CITADEL: Changes in Credit Agreement Won't Affect Moody's 'B3' CFR
------------------------------------------------------------------
Moody's Investors Service commented that Citadel Broadcasting
Corporation's recent amendment and waiver to its credit agreement
will not impact the company's B3 CFR and negative outlook.
While the elimination of the step-down to its total leverage
covenant in the fourth quarter of 2008 will provide additional
cushion and delay a possible covenant violation, Moody's believes
that Citadel will remain challenged in its ability to comply with
its financial maintenance covenant through fiscal year 2009, given
the current economic environment and Moody's expectations for 2009
broadcast advertising, and that the company will likely need to
seek an additional amendment/waiver. Moody's anticipates that
Citadel's operating performance will continue to face increasing
pressure as a result of the slowdown in consumer spending, its
impact on corporate profits, and the resulting cutbacks in
advertising and marketing budgets by several important advertising
industries. Consequently, Moody's rating outlook remains
negative.
On Nov. 26, 2008, Citadel entered into its Third Amendment and
Waiver to its credit agreement dated June 12, 2007. The amendment
adds a pro-forma test for each revolving credit draw, provides for
the company's consolidated total leverage covenant to remain at
8.5x through Sept. 30, 2009 with additional step-downs thereafter
(the covenant was to step-down to 7.75x on Dec. 31, 2008),
modifies the definition of "Consolidated Total Leverage Ratio" to
change the leverage ratio test from a 'net' test to a 'gross'
test, and reduces its aggregate revolving credit commitments from
US$200 million to US$150 million. In connection with the
amendment, Citadel has agreed to pay a fee of 125 basis points to
the lenders holding Tranche A Term Loans or revolving credit
commitments. The amendment will have no impact on the pricing of
the company's credit facility.
On Nov. 13, 2008, Moody's downgraded Citadel's Corporate Family
Rating to B3 and probability-of-default rating to Caa1. In
addition, Moody's lowered the company's speculative grade
liquidity rating to SGL-4.
Citadel Broadcasting Corporation, headquartered in Las Vegas,
Nevada, is a radio broadcaster comprised of 165 FM and 58 AM
stations in more than 50 markets. The company's 2007 pro-forma
revenues were approximately US$945 million.
CITIGROUP INC: Sells $5.5BB of FDIC-Guaranteed Bonds
----------------------------------------------------
Romy Varghese, Kellie Geressy, and Matthew Cowley at The Wall
Street Journal report that Citigroup Inc. has sold $5.5 billion of
Federal Deposit Insurance Corp.-guaranteed bonds.
According to WSJ, the debt was offered through the government's
Temporary Liquidity Guarantee program, which was created on
Oct. 14 to help boost the troubled financial system.
Stephen Bernard at The Associated Press relates that the
$5.5 billion in debt will be split among three bonds. One of the
bonds matures in two years while the other two mature in three
years, says the report. Citing Citigroup spokesperson Danielle
Romero, Laura Mandaro at MarketWatch states that the bonds are:
-- $3.75 billion fixed-rate offering maturing in three
years, priced at 85 basis points over the mid-point of
the Treasury interest rate swap curve;
-- $1 billion in two-year, floating-rate notes at 55 basis
points over three-month Libor; and
-- $750 million in three-year floating rate notes at 80
basis points over one-month Libor.
Based in New York, Citigroup Inc. (NYSE: C) --
http://www.citigroup.com-- is organized into four major segments
-- Consumer Banking, Global Cards, Institutional Clients Group,
and Global Wealth Management. Citi had $2.0 trillion in total
assets on $1.9 trillion in total liabilities as of Sept. 30, 2008.
As reported in the Troubled Company Reporter on Nov. 25, 2008, the
U.S. government entered into an agreement with Citigroup to
provide a package of guarantees, liquidity access, and capital.
As part of the agreement, the U.S. Treasury and the Federal
Deposit Insurance Corporation will provide protection against the
possibility of unusually large losses on an asset pool of
approximately $306 billion of loans and securities backed by
residential and commercial real estate and other such assets,
which will remain on Citigroup's balance sheet. As a fee for this
arrangement, Citigroup will issue preferred shares to the Treasury
and FDIC. In addition and if necessary, the Federal Reserve will
backstop residual risk in the asset pool through a non-recourse
loan.
CONCORD RETAIL: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Concord Retail Partners, L.P.
1301 Lancaster Avenue
Berwyn, PA 19312
Bankruptcy Case No.: 08-17600
Type of Business: The Debtor owns a shopping center in Concord
Township, Delaware County.
See: http://www.concord-partners.com/
Chapter 11 Petition Date: November 11, 2008
Court: Eastern District of Pennsylvania (Philadelphia)
Debtor's Counsel: Thomas Daniel Bielli, Esq.
tbielli@ciardilaw.com
Ciardi Ciardi & Astin, P.C.
One Commerce Square
2005 Market Street, Suite 1930
Philadelphia, PA 19103
Tel: (215) 557-3550
Fax: (215) 557-3551
Estimated Assets: $50 million to $100 million
Estimated Debts: $50 million to $100 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
HT Sweeney & Son Inc. $515,790
308 Dutton Mill Road
Brookhaven, PA 19015
Neshaminy Electric Contractors $243,427
Inc.
1700 Byberry Road
Bensalem, PA 19020
Pickering Valley Landscape Inc. $237,837
PO Box 950 Glenmoore, PA 19343
Four Quarter $215,469
A B & S Masonry $198,925
United Construction Services $114,631
Inc.
Road Con Inc. $77,430
RAS Brokerage $74,200
Wolfe Roofing and Sheet $69,256
Metal Inc.
Metro Commercial Real Estate Inc. $61,437
Ira G. Steffy & Son Inc. $61,085
Brandywine Valley Concrete $52,415
CM Construction Associates $40,030
SA Communate Co. Inc. $37,110
Latshaw Brothers Concrete $28,030
U Design Construction LLC $25,570
Sheila's Party World $25,000
The Water Works Inc. $23,345
Palntech Painting & Wall Covering $21,313
Glassworkz $17,111
The petition was signed by the company president Frederick Snow.
CONCORD RETAIL: Meeting to Form Creditors Panel on December 11
--------------------------------------------------------------
Roberta A. DeAngelis, acting United States Trustee for Region 3,
will hold an organizational meeting in the bankruptcy case of
Concord Retail Partners, LP on December 11, 2008, at 11:00 a.m.
The meeting will be held at at the Office of the United States
Trustee, 833 Chestnut Street, Suite 500, Chapter 11, 341 (a)
Meeting Room, in Philadelphia, Pennsylvania.
The sole purpose of the meeting will be to form a committee or
committees of unsecured creditors in the Debtor's cases.
The organizational meeting is not the meeting of creditors
pursuant to Section 341 of the Bankruptcy Code. A representative
of the Debtor, however, may attend the Organizational Meeting,
and provide background information regarding the bankruptcy
cases.
To increase participation in the chapter 11 proceeding, Section
1102 of the Bankruptcy Code requires that the United States
Trustee appoint a committee of unsecured creditors as soon as
practicable. The Committee ordinarily consists of the persons,
willing to serve, that hold the seven largest unsecured claims
against the debtor of the kinds represented on the committee.
Section 1103 of the Bankruptcy Code provides that the Committee
may consult with the debtor, investigate the debtor and its
business operations and participate in the formulation of a plan
of reorganization. The Committee may also perform other services
as are in the interests of the unsecured creditors whom it
represents.
The case is before the Hon. Judith K. Fitzgerald.
CONSTAR INTERNATIONAL: Misses Dec. 1 Payment on Sub Notes
---------------------------------------------------------
Carla Main and Dawn McCarty of Bloomberg News report that Constar
International Inc., didn't make the Dec. 1 interest payment of
$9.6 million on $175 million in 11% senior subordinated notes due
2012.
Constar said in a November 26 filing with the Securities and
Exchange Commission that it won't make the Dec. 1 interest payment
as part of its strategy to preserve and enhance its near-term
liquidity.
Under the terms of the indenture governing the Subordinated Notes,
the Company has a 30-day grace period to make the interest payment
before an event of default would occur. The Company has not yet
determined whether it will make the interest payment during the
grace period.
The Company acknowledged that if it does not make the interest
payment within the grace period, an event of default would occur
and the Subordinated Note holders could accelerate the maturity of
the Subordinated Notes, which would trigger a cross-default under
the Company's senior secured floating rate notes due 2012.
The Company said it is currently engaged in preliminary
discussions with holders of a majority of the Subordinated Notes
regarding a potential debt-for-equity exchange.
As of Sept. 30, 2008, the company has total assets of $462,647,000
and total debts of $565,322,000, resulting to a stockholders'
deficit of $102,675,000. The Company's outstanding debt consists
of the Subordinated Notes, $220.0 million of Senior Secured
Floating Rate Notes due February 15, 2012 and a $75.0 million
Senior Secured Asset Based Revolving Credit Facility.
The Subordinated Notes bear interest at a rate of 11.0% per annum.
Interest on the Subordinated Notes is payable semi-annually on
each December 1 and June 1. The Senior Notes bear interest at the
rate of three-month LIBOR plus 3.375% per annum. Interest on the
Senior Notes is reset and payable quarterly. Under the Revolver
Loan, interest charges for loans are calculated based on a
floating rate plus a fixed margin.
Forbearance Agreement with Citicorp
The Company's non-payment of the December 1 interest on the
Subordinated Notes is an immediate event of default under its
Credit Agreement dated as of February 11, 2005, as amended. The
Credit Agreement provided for a four-year $75-million senior
secured asset-based revolving credit facility, which together with
the sale of the Senior Notes, was used to refinance an existing
revolver and term loans.
On November 26, 2008, the Company entered into a Forbearance
Agreement under its Credit Agreement, with Citicorp USA, Inc., as
administrative agent, and the lenders and issuers party to the
Credit Agreement. Under the Forbearance Agreement, the
administrative agent, the lenders and the issuers will forbear
from exercising any remedies under the Credit Agreement as a
result of the Specified Default. If the Forbearance Agreement
terminates and the Company has not yet made the interest payment,
the administrative agent could accelerate the maturity of and
terminate the Credit Agreement. If that occurs, or if the
maturity of the Subordinated Notes or the Senior Notes is
accelerated, the Company would have to file for protection under
the federal bankruptcy laws. The Forbearance Agreement will
terminate on December 31, 2008.
According to Bloomberg News, the Subordinated Notes were quoted
Dec. 1 at 10 cents on Trace, the bond-pricing reporting system of
the Financial Industry Regulatory Agency. The Senior Notes were
quoted at 49.5 cents by Trace.
About Constar International
Philadelphia-based Constar International Inc. (Nasdaq: CNST) --
http://www.constar.net/-- is a producer of polyethylene
terephthalate plastic containers for food, soft drinks and water.
The company provides full-service packaging solutions, from
product design and engineering, to ongoing customer support. Its
customers include many of the world's leading branded consumer
products companies.
As reported by the Troubled Company Reporter on Dec. 3, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Constar International Inc. to 'SD' from 'CCC+'. At the
same time, Standard & Poor's lowered its rating on the company's
$220 million senior secured notes to 'CC' from 'CCC+' and its
rating on the $175 million senior subordinated notes to 'D' from
'CCC-'.
The downgrade follows the company's decision to not make the
Dec. 1, 2008, interest payment of approximately $9.6 million due
on its 11% senior subordinated notes due 2012.
CONSTAR INTERNATIONAL: Moody's Cuts Corp. Family Rating to Caa2
---------------------------------------------------------------
Moody's Investors Service downgraded the Corporate Family Rating
of Constar International Inc. to Caa2 from Caa1. The ratings
remain under review for possible further downgrade.
Moody's took these actions:
-- Downgraded US$220 million floating rate first mortgage note,
due 2012, to Caa1 (LGD3, 34%) from B3 (LGD3, 34%)
-- Affirmed US$175 million 11% senior subordinated notes, due
2012, Caa3 (LGD5, 84%)
-- Downgraded Corporate Family Rating to Caa2 from Caa1
-- Downgraded Probability of Default Rating to Caa2 from Caa1
The ratings remain under review for possible downgrade.
The downgrade in the Corporate Family Rating to Caa2 reflects
Constar's material operating underperformance relative to
expectations and announcement that it had not made the interest
payment due Dec. 1, 2008 on its 11% senior subordinated notes due
2012. Under the terms of the indenture for the subordinated
notes, the company has a 30 day grace period in which to make the
interest payment. As previously disclosed, Constar is in
preliminary discussions with a majority of the subordinated note
holders regarding a debt for equity swap. The company has
highlighted that one potential outcome of these discussions could
be a pre-arranged Chapter 11 bankruptcy filing. Failure to make
the interest payment within the grace period would constitute an
event of default which would entitle the subordinated note holders
to accelerate and trigger cross default provisions in the senior
secured floating rate notes due 2012.
Constar has also entered into a forbearance agreement under the
credit agreement for its $75 million asset based revolver due 2012
(not rated by Moody's) which is effective from Nov. 26, 2008 until
Dec. 31, 2008. The company's non payment of interest on the
subordinated notes constitutes an immediate event of default under
the credit agreement and lenders have agreed to forbear from
exercising any remedies until Dec. 31, 2008. If the Company does
not make the interest payment by the time the forbearance
agreement terminates, the lenders could accelerate the maturity
and terminate the credit agreement.
Constar's operating performance has been well below Moody's
expectations resulting in a significant deterioration in credit
metrics and potential strain on liquidity going forward. Over the
last twelve months, the company has been negatively impacted by
delays in the start up of higher margin custom product contracts,
volume declines stemming from economic softness and rising input
costs. Continued economic softness coupled with seasonal declines
in working capital and ongoing reserve requirements by lenders
would adversely affect the company's liquidity position and credit
metrics going into 2009. Further pressure on operating
performance from an unusually cold summer or delay in the start up
of new custom contracts would cause additional pressure on the
credit and liquidity profile. The company's credit profile leaves
no room for further negative variance in operating performance.
Moody's review of Constar will focus on the company's ability to
either finalize the debt-equity swap or meet the interest payment
due in the event an agreement is not reached and the impact on its
liquidity position. The review will also focus on the company's
projected operating performance going forward.
The last rating action for Constar was Oct. 21, 2008 when the
corporate family rating was downgraded to Caa1 from B3.
Based in Philadelphia, Constar International Inc. is a producer of
PET (polyethylene terephthalate) plastic containers for food, soft
drinks, and water. Consolidated revenue for the twelve months
ended Sept. 30, 2008 was approximately US$891 million.
CONSTELLATION ENERGY: Electricite de France Mulls Buying Firm
-------------------------------------------------------------
Electricite de France SA is considering purchasing Constellation
Energy Group Inc. from Warren Buffett's MidAmerican Energy
Holdings Co., Dana Cimilluca and David Gauthier-Villars at The
Wall Street Journal report, citing people familiar with the
matter.
WSJ relates that Constellation Energy had earlier turned down an
offer from EDF in favor of MidAmerican Energy. Market turmoil,
says WSJ, pushed down Constellation Energy's energy-trading
business and almost brought the company to bankruptcy. WSJ states
that Constellation Energy, needing to move quickly, accepted in
September MidAmerican Energy's $26.50-a-share offer, plus a cash
infusion of $1 billion, over a $35-a-share-deal with EDF. The
report says that EDF had teamed up with Kohlberg Kravis Roberts &
Co. and TPG to bid for Constellation Energy.
EDF, WSJ reports, said it might make a new offer, but said in
October that it was no longer interested.
According to WSJ, the sources said that EDF is considering options
to acquire Constellation Energy. WSJ relates that EDF could
provide Constellation Energy with a cash injection and purchasing
some of its nuclear assets. EDF must present an offer to purchase
Constellation Energy before Dec. 23, 2008, when Constellation
Energy's shareholders vote on the $4.7 billion deal with
MidAmerican Energy, says the report.
About Constellation Energy
Constellation Energy -- http://www.constellation.com-- a FORTUNE
125 company with 2007 revenues of $21 billion, says it is the
nation's largest competitive supplier of electricity to large
commercial and industrial customers and the nation's largest
wholesale power seller. Constellation Energy also manages fuels
and energy services on behalf of energy intensive industries and
utilities. It owns a diversified fleet of 83 generating units
located throughout the United States, totaling approximately 9,000
megawatts of generating capacity. The company delivers
electricity and natural gas through the Baltimore Gas and Electric
Company (BGE), its regulated utility in Central Maryland.
As reported in the Troubled Company Reporter on Nov. 4, 2008,
Scott+Scott LLP filed a class action lawsuit against Constellation
Energy Group, Inc., and certain officers and directors of the
company in the U.S. District Court for the District of Maryland,
for violations of the Securities Exchange Act of 1934.
Scott+Scott filed the lawsuit on behalf of those purchasing the
company's common stock during the period Jan. 30, 2008, to
Sept. 16, 2008.
Scott+Scott claimed that during the Class Period, Constellation
Energy issued materially false and misleading statements regarding
the company's operations and financial performance. Scott+Scott
said that among other things, the defendants failed to disclose
that the company's financial results were inflated by questionable
accounting practices. In addition, the company concealed the
extent of its credit exposure to failing trading partners,
particularly Lehman Brothers Holding Inc., which would affect the
company's ability to engage in energy-related trades. As a result
of defendants' false statements and omissions during the Class
Period, Constellation Energy common shares traded at artificially
inflated prices.
As of December 2007, Constellation Energy had $1.99 billion in
assets and $2.25 billion in liabilities.
ECLIPSE AVIATION: Owes $7.8 Million to LaBarge Inc.
---------------------------------------------------
St. Louis Business Journal reports that Eclipse Aviation
Corporation owes LaBarge Inc. about $7.8 million.
As reported in the Troubled Company Reporter on Nov. 26, 2008,
LaBarge held a $4.2 million claim against Eclipse Aviation.
Based on motions filed with the bankruptcy court, it appears that
a major shareholder of Eclipse Aviation may seek to acquire the
assets of the company out of the bankruptcy estate and continue
operations. As noted in its prior filings with the Securities and
Exchange Commission, LaBarge faces exposure relating to the
collection of trade receivables from Eclipse Aviation and the
recovery of the full value of inventory for orders related to the
Eclipse Aviation very light jet program. LaBarge estimates its
current exposure in the Eclipse Aviation bankruptcy proceeding to
be approximately $3.8 million in trade receivables and
approximately $4.0 million in inventory, for an aggregate
estimated exposure of approximately $7.8 million. In addition,
LaBarge's current backlog related to this program of approximately
$39.6 million may be substantially reduced.
In the event that Eclipse Aviation is able to continue operations,
LaBarge believes that there is a reasonable likelihood its
exposure in the Eclipse bankruptcy may be reduced. LaBarge also
anticipates that in the event of a continuation of Eclipse's
operations, if any, there will likely be significant further
delays in the company's shipments on the Eclipse program, which
have been on hold since August, 2008. If Eclipse Aviation fails
to continue its operations, LaBarge may not collect the trade
receivables or recover the full value of the inventory related to
this program, which could result in a charge to earnings of
approximately $7.8 million.
About Eclipse Aviation
Albuquerque, New Mexico-based Eclipse Aviation Corporation --
http://www.eclipseaviation.com/-- makes six-passenger planes
powered by two Pratt & Whitney turbofan engines. The company
filed for Chapter 11 protection on Nov. 25, 2008 (Bankr. D.
Delaware Case No. 08-13031). The company listed assets of
$100 million to $500 million and debts of more than $1 billion.
ENTELLIUM CORP: Files for Chapter 11 Protection in Washington
-------------------------------------------------------------
Puget Sound Business Journal reports that Entellium Corp. has
filed for Chapter 11 protection in the U.S. Bankruptcy Court for
the Western District of Washington.
Court documents say that Entellium listed $37.7 million in assets
and $12.7 million in liabilities. Ignition Managing Directors
Fund II was listed as one of the company's creditors, holding a
$3.5 million, says Puget Sound.
According to Pudget Sound, Entellium's former CEO Paul Thomas
Johnston and former chief financial officer Parrish L. Jones were
arrested on Oct. 8, 2008, and charged with wire fraud and lying to
investors. The FBI said that Messrs. Johnston and Jones ?devised
a scheme to defraud investors in the company by representing that
company revenues far exceeded the actual figures,? Puget Sound
relates. Ignition Managing, the report says, invested $19 million
in Entellium. Two Ignition Managing partners told government
investigators that had they known the actual revenue figures, they
wouldn't have invested in Entellium, the report states.
Seattle, Washington-based Entellium Corp. ?
http://www.entellium.com?- is a U.S. software company that
develops on-demand Customer Relationship Management software for
small and midsize businesses.
FIBERTECH POLYMERS: Assets Sold to Owner Yucaipa
------------------------------------------------
Carla Main and Dawn McCarty of Bloomberg News report that
FiberTech Polymers Inc., obtained authority from the U.S.
Bankruptcy Court for the District of California (Riverside) to
sell substantially all its assets to the existing ownership group
that includes an affiliate of Ron Burkle's Yucaipa Cos.
The Yucaipa group, according to the report, will pay $508,000 cash
while waiving all of its secured and unsecured claims.
Originally, the group was to pay $50,000 cash, Bloomberg said.
Bloomberg says the Yucaipa group has a $12 million claim that was
secured by a lien given on FiberTech's property within 90 days of
the bankruptcy filing. The company, according to Bloomberg, has
said in a court filing that the security interest might be
invalidated.
FiberTech Polymers Inc. manufactures composite boards made from
recycled wood and plastic. FiberTech filed for Chapter 11 on
Oct. 3, 2008 (Bankr. D. Calif. Case No. 08-23608). Todd C.
Ringstad, Esq., at Ringstad & Sanders LLP, in Irvine, California,
is the Debtor's bankruptcy counsel. In its bankruptcy petition,
the Debtor estimated both its assets and debts to be between $10
million and $50 million each.
FORD MOTOR: UAW OKs Healthcare Payment Delays & Halt of Jobs Bank
-----------------------------------------------------------------
Sharon Terlep at Dow Jones Newswires reports that the United Auto
Workers President Ron Gettelfinger said on Wednesday that the
union will let General Motors Corp., Chrysler LLC, and Ford Motor
Co. delay payments into a health-care trust and terminate the jobs
bank program for laid-off employees, to help the companies in
their plea for government loans.
As reported in the Troubled Company Reporter on Dec. 3, 2008, UAW
scheduled an emergency meeting on Dec. 3 to discuss what role the
union should play in helping GM, Ford Motor, and Chrysler become
more viable companies.
According to Dow Jones, the UAW decided to revise its 2007
contracts with GM, Chrysler, and Ford Motor to help reduce costs.
Union leaders are able to suspend the jobs bank and postpone
payments to the health-care trust without renegotiating the labor
contract, the report states, citing Mr. Gettelfinger. The union,
says the report, will have to form bargaining committees and start
talks with the companies for further changes.
Dow Jones relates that the health-care trust, or VEBA, is
considered as a key component of the firms' efforts to lessen
labor obligations. It was scheduled to start paying benefits to
retirees beginning Jan. 1, 2010, but the automakers are running
short of cash and would likely fail to secure the billions of
dollars needed to initially fund the trust, states the report.
The jobs bank program, Dow Jones reports, provides laid-off
employees with most of their pay and benefits. The program has
"shrunk dramatically," Dow Jones says, citing Mr. Gettelfinger.
The report states that GM and Ford have reduced their jobs banks
by almost 80,000 workers in recent years. GM, Ford Motor, and
Chrysler currently have about 3,500 workers in the jobs bank,
according to the report.
UAW will launch an ad campaign in support of GM, Ford Motor, and
Chrysler, Dow Jones relates. Other countries are also being asked
to extend support to their auto industries, the report states,
citing Mr. Gettelfinger.
Ford Motor's Business Plan
Ford Motor submitted to the Congress its comprehensive business
plan, which details the company's plan to return to profitability
and outlines a request for potential access to a temporary bridge
loan in case the current economic crisis worsens or there is a
bankruptcy of a major competitor.
In the plan, Ford Motor said that the transformation of its North
American automotive business will continue to accelerate through
aggressive restructuring actions and the introduction of more
high-quality, safe and fuel-efficient vehicles -- including a
broader range of hybrid-electric vehicles and the introduction of
advanced plug-in hybrids and full electric vehicles.
Ford Motor is asking for access to up to $9 billion in bridge
financing, but reiterated that it hopes to complete its
transformation without accessing the loan should Congress agree to
make the funds available.
Despite the serious global economic downturn, Ford said it does
not anticipate a liquidity crisis in 2009 -- barring a bankruptcy
by one of its domestic competitors or a more severe economic
downturn that would further cripple automotive sales and create
additional cash challenges.
"For Ford, government loans would serve as a critical backstop or
safeguard against worsening conditions, as we drive
transformational change in our company," said Ford Motor President
and CEO Alan Mulally, who will testify before Congress this week.
In the plan submitted to Congress, Ford Motor reiterated that its
One Ford transformation plan remains fully in place, anchored by
four key priorities:
-- Aggressively restructure to operate profitably at the
current demand and changing model mix;
-- Accelerate development of new products our customers want
and value;
-- Finance our plan and improve our balance sheet; and
-- Work together effectively as one team, leveraging our
global assets.
Ford Motor's submission to Congress included new details about the
company's future plans and forecasts, including:
-- Based on current business planning assumptions ?-
including U.S. industry sales for 2009, 2010 and 2011 of
12.5 million units, 14.5 million units and 15.5 million
units, respectively -- Ford expects both its overall and
its North American automotive business pre-tax results to
be breakeven or profitable in 2011, excluding any special
items.
-- As part of a continuing focus on building the Ford brand,
the company said it is exploring strategic options for
Volvo Car Corporation, including the possible sale of the
Sweden-based premium automaker. The strategic review is
in line with a broad range of actions Ford Motor is
taking to strengthen its balance sheet and ensure it has
the resources to fund its plan. Since 2007, Ford has
sold Aston Martin, Jaguar, Land Rover and the majority of
its stake in Mazda.
-- Ford Motor's plan calls for an investment of
approximately $14 billion in the U.S. on advanced
technologies and products to improve fuel efficiency
during the next seven years.
-- Half of the Ford, Lincoln and Mercury light-duty
nameplates by 2010 will qualify as "Advanced Technology
Vehicles" under the U.S. Energy Independence and Security
Act -- increasing to 75 percent in 2011 and more than 90%
in 2014. Ford Motor said it has included these projects
in its application to the Department of Energy for loans
under that Act and hopes to receive $5 billion in direct
loans by 2011 to support Ford Motor's investment in
advanced technologies and products.
-- From its largest light duty trucks to its smallest cars,
Ford Motor will improve the fuel economy of its fleet an
average of 14% for 2009 models, 26% for 2012 models and
36% for 2015 models -- compared with the fuel economy of
its 2005 fleet. Overall, Ford Motor expects to achieve
cumulative gasoline fuel savings from advanced technology
vehicles of 16 billion gallons from 2005 to 2015.
-- Next month at the North American International Auto Show
in Detroit, Ford Motor will discuss in detail the
company's accelerated vehicle electrification plan, which
includes bringing to market by 2012 a family of hybrids,
plug-in hybrids and battery electric vehicles. The work
will include partnering with battery and powertrain
systems suppliers to deliver a full battery electric
vehicle (BEV) in a van-type vehicle for commercial fleet
use in 2010 and a BEV sedan in 2011. Ford Motor said it
will develop these vehicles in a manner that enables it
to reduce costs and ultimately make BEVs more affordable
for consumers.
-- The 2007 UAW-Ford negotiations resulted in significant
progress being made in reducing the company's total labor
cost. Given the present economic crisis and its impact
upon the automotive industry, however, Ford Motor is
presently engaged in discussions with the UAW with the
objective to further reduce its cost structure and
eliminate the remaining labor cost gap that exists
between Ford Motor and the transplants.
-- As previously was announced, Ford Motor plans two
additional plant closures this quarter and four
additional plant closures between 2009 and 2011. The
company also has announced its intent to close or sell
what will be four remaining ACH plants. The company said
it will continue to aggressively match manufacturing
capacity to real demand.
-- Ford Motor will continue to work to reduce its dealer and
supplier base to increase efficiency and promote mutual
profitability. By year end, Ford Motor estimates it will
have 3,790 U.S. dealers, a reduction of 606 dealers
overall -- or 14% from year-end 2005 -- including a
reduction of 16% in large markets. In addition, Ford
Motor has been able to reduce the number of production
suppliers eligible for major sourcing from 3,400 in 2004
to 1,600, a reduction of 53%. Ford Motor eventually
plans to further reduce the number of suppliers eligible
for major sourcing to 750.
-- Ford Motor has decided to sell its five corporate
aircraft. In addition, Mr. Mulally said that, should
Ford Motor need to access funds from a potential
government bridge loan, he would work for a salary of $1
a year -- as a sign of his confidence in the company's
transformation plan and future.
Ford Motor also reiterated that it is canceling all bonuses to be
paid in 2009 for all management employees worldwide and foregoing
bonuses for all employees in North America. The company also will
not pay merit increases for North America salaried employees in
2009.
Ford Motor said it is moving fully ahead with plans it announced
this summer to leverage the company's global product strengths and
bring more smaller, fuel-efficient vehicles to the U.S. The plan
includes delivering best-in- class or among the best fuel economy
with every new vehicle introduced. Ford Motor also is introducing
industry-leading, fuel-saving EcoBoost engines, and doubling the
number and volume of hybrid vehicles.
This product acceleration will result in a balanced product
portfolio with a complete family of small, medium and large cars,
utilities and trucks. Ford Motor said it is increasing its
investment in cars and crossovers from approximately 60% in 2007
to 80% of its total product investment in 2010.
Gov't Facilitated Pre-packaged Bankruptcy
The Deal Journal relates that while Ford Motor, GM, and Chrysler
continue to rule out filing for bankruptcy, Congress members and
their staffers have been meeting privately with bankruptcy experts
and bankers to understand the mechanics and costs of a pre-
packaged bankruptcy. According to The Deal, Senate Minority Whip
Jon Kyl said he has spoken to colleagues who said that they would
be open to the government facilitating a pre-packaged bankruptcy
for one or more of the three struggling Detroit companies.
The Deal states that Sen. Kyl said that he supports a plan for the
government to provide financing, while creating an account that
would ensure warrantees for owners of cars made by firms in
bankruptcy court.
The deal quoted Sen. Kyl as saying, "I'd be happy next week to
pass a bill that said for any of these three companies that go
through Chapter 11, we will provide a certain amount of DIP
[debtor-in-possession] financing" and money to backstop for car
warrantees.
Matthew Dolan and Josh Mitchell at The Wall Street Journal relate
that Mr. Mulally expressed concern on the fates of GM and
Chrysler, after the submission of the three company's
restructuring plans to the congress. Mr. Mulally told WSJ during
an interview in Washington, that he was worried about the
financial health of GM and Chrysler after the two companies told
the Congress that they needed the immediate infusion of cash to
survive.
As reported in the Troubled Company Reporter on Dec. 3, 2008, Ford
Motor said in its 33-page turnaround plan that it doesn't need
federal funds immediately and that it is asking for a
$9 billion line of credit to be available in case the recession
would be longer and deeper than expected.
About Ford Motor Co.
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) --
http://www.ford.com/-- manufactures or distributes automobiles in
200 markets across six continents. With about 260,000 employees
and about 100 plants worldwide, the company's core and affiliated
automotive brands include Ford, Jaguar, Land Rover, Lincoln,
Mercury, Volvo, Aston Martin, and Mazda. The company provides
financial services through Ford Motor Credit Company.
The company has operations in Japan in the Asia Pacific region. In
Europe, the company maintains a presence in Sweden, and the United
Kingdom. The company also distributes its brands in various
Latin-American regions, including Argentina and Brazil.
* * *
As reported in the Troubled Company Reporter on Nov. 11,
2008, Moody's Investors Service lowered the debt ratings of
Ford Motor Company, Corporate Family and Probability of
Default Ratings to Caa1 from B3. The company's Speculative
Grade Liquidity rating remains at SGL-3 and the rating outlook
is negative. In a related action Moody's also lowered the
long-term rating of Ford Motor Credit Company to B3 from B2.
The outlook for Ford Credit is negative.
As reported in the Troubled Company Reporter on Oct. 10, 2008,
Fitch Ratings downgraded the Issuer Default Rating of Ford Motor
Company and Ford Motor Credit Company by one notch to 'CCC' from
'B-'.
G-I HOLDINGS: DOJ Wants Plan Filing Period Extended to March 30
---------------------------------------------------------------
The Deal's Caroly Okomo reports that the United States Justice
Department is asking the United States Bankruptcy Court for the
District of New Jersey to extend the Chapter 11 plan filing period
of G-I Holdings Inc. to March 30, 2009.
Ms. Okomo notes the deadline to file a plan is Feb. 17, 2009.
According to the Deal, the DOJ is asking for information from the
proponents of the company's Chapter 11 plan of reorganization.
The report says the DOJ asserted that the company's plan:
i) omitted critical financial information;
ii) subordinated priority taxes below unsecured non-priority
claims;
iii) favored asbestos claimants over other unsecured creditors;
and
iv) forbid constituencies including governmental regulators to
participate in a global settlement that would provide
$780 million to asbestos claimants.
The DOJ says the plan violated the absolute-priority rule by
allowing Samuel Heyman, who owns 99% of the company's stock, all
of the company's equity for zero-consideration, Ms. Okomo relates.
Pension Benefit Guaranty Corp. who guarantees eligible
underfunded pension plans, Ms. Okomo, objected to the company's
disclosure statement citing failure to disclose adequate and
accurate pension plan's status, effects of bankruptcy on pension
plan-related claims and obligations, and financial disclosures.
"This inadequacy places the pension plan and its participants in
jeopardy, making the disclosure statement objectionable," Ms.
Okomo quoted the agency as saying.
On the other hand, Century Indemnity Co. protested the company's
disclosure statement saying that it lacked vital information
including projections of recoveries for claimants and sources of
plan funding, Ms. Okomo notes.
A hearing is set for Dec. 4, 2008, to consider the motion, Ms.
Okomo notes.
About G-I Holdings
Based in Wayne, New Jersey, G-I Holdings, Inc., is a holding
company that indirectly owns Building Materials Corporation of
America, a manufacturer of premium residential and commercial
roofing products. The company filed for Chapter 11 protection on
Jan. 5, 2001 (Bankr. D. N.J. Case No. 01-30135). An affiliate,
ACI, Inc., filed its own voluntary chapter 11 petition on Aug. 3,
2001. The cases were consolidated on Oct. 10, 2001. Weil,
Gotshal & Manges LLP, and Riker, Danzig, Scherer, Hyland &
Perretti LLP, represent the Debtors. Lowenstein Sandler PC
represents the Official Committee of Unsecured Creditors. C.
Judson Hamlin was appointed by the Court as the Legal
Representative for Present and Future Holders of Asbestos Related
Demands. Keating, Muething & Klekamp, PLL, represents the
Futures Representative.
GENERAL GROWTH: Gets Extension; $1-Bil. Debt Matures Mid-December
-----------------------------------------------------------------
General Growth Properties, Inc. said on Dec. 1 that it had reached
an interim agreement with the beneficial holder of the $58 million
TRCLP Notes to extend the maturity date of the Notes to
December 11, 2008. The corporate debt was previously scheduled to
mature by Dec. 1, 2008.
General Growth said on Nov. 30 that it has reached an agreement
with its syndicate of lenders for a two-week extension of the
November 28 maturity date on its $900 million in loans secured by
the The Fashion show and The Shoppes at the Palazzo, two of the
Company's premier Las Vegas properties. "The parties are
continuing their discussions on a longer term extension," the
announcement said.
As reported by the Troubled Company Reporter on Nov. 14, General
Growth said that even if it is successful in addressing its 2008
maturities, an additional $3.07 billion in debt is scheduled to
mature in 2009.
General Growth said in a filing with the Securities and Exchange
Commission that it's working with lenders to gain more time to pay
off debt, and is also considering asset sales and other ways to
raise cash. General Growth has warned it could seek bankruptcy
protection if it is unable to roll over its debts.
About General Growth
Based in Chicago, Illinois, General Growth Properties, Inc.
(NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S.
mall owner with 200-plus shopping malls in 44 states. General
Growth is a self-administered and self-managed real estate
investment trust. General Growth owns, manages, leases and
develops retail rental property, primarily shopping centers.
Substantially all of its properties are located in the United
States, but the company also has retail rental property operations
and property management activities -- through unconsolidated joint
ventures -- in Brazil and Turkey. Its Master Planned Communities
segment includes the development and sale of residential and
commercial land, primarily in large-scale projects in and around
Columbia, Maryland; Houston, Texas; and Summerlin, Nevada, as well
as the development and sale of its one residential condominium
project located in Natick (Boston), Massachusetts.
General Growth said in a regulatory filing Sept. 30 that its
potential inability to address its 2008 or 2009 debt maturities in
a satisfactory fashion raises substantial doubts as to its ability
to continue as a going concern. General Growth had $29.6 billion
in total assets and $27.3 billion in total liabilities as at
September 30.
* * *
As reported by the Troubled Company Reporter on Nov. 18, Moody's
Investors Service has downgraded the ratings on General Growth
Properties, Inc., certain of its subsidiaries and The Rouse
Company LP (to Caa2 from B3 senior secured bank debt; to Caa2 from
B3 senior unsecured debt). The ratings remain on review for
further possible downgrade. The rating action reflects deepening
concerns in the REIT's ability to meet its near term debt
obligations and funding needs.
GENERAL MOTORS: UAW OKs Trust Payment Delay & Jobs Bank Cessation
-----------------------------------------------------------------
Sharon Terlep at Dow Jones Newswires reports that the United Auto
Workers President Ron Gettelfinger said on Wednesday that the
union will let General Motors Corp., Chrysler LLC, and Ford Motor
Co. delay payments into a health-care trust and terminate the jobs
bank program for laid-off employees, to help the companies in
their plea for government loans.
As reported in the Troubled Company Reporter on Dec. 3, 2008, UAW
scheduled an emergency meeting on Dec. 3 to discuss what role the
union should play in helping GM, Ford Motor, and Chrysler become
more viable companies.
According to Dow Jones, the UAW decided to revise its 2007
contracts with GM, Chrysler, and Ford Motor to help reduce costs.
Union leaders are able to suspend the jobs bank and postpone
payments to the health-care trust without renegotiating the labor
contract, the report states, citing Mr. Gettelfinger. The union,
says the report, will have to form bargaining committees and start
talks with the companies for further changes.
Dow Jones relates that the health-care trust, or VEBA, is
considered as a key component of the firms' efforts to lessen
labor obligations. It was scheduled to start paying benefits to
retirees beginning Jan. 1, 2010, but the automakers are running
short of cash and would likely fail to secure the billions of
dollars needed to initially fund the trust, states the report.
The jobs bank program, Dow Jones reports, provides laid-off
employees with most of their pay and benefits. The program has
"shrunk dramatically," Dow Jones says, citing Mr. Gettelfinger.
The report states that GM and Ford have reduced their jobs banks
by almost 80,000 workers in recent years. GM, Ford Motor, and
Chrysler currently have about 3,500 workers in the jobs bank,
according to the report.
UAW will launch an ad campaign in support of GM, Ford Motor, and
Chrysler, Dow Jones relates. Other countries are also being asked
to extend support to their auto industries, the report states,
citing Mr. Gettelfinger.
GM's Long-Term Viability Plan
GM submitted to the Congress on Dec. 2, 2008, a plan to use
federal bridge loans to create a leaner, more competitive company,
one that is profitable and self-sustaining for the long term.
The plan, submitted in response to Congressional hearings in
November, includes a detailed blueprint for a successful,
sustainable GM. Building on a product renaissance and
comprehensive restructuring that has been under way for several
years, the plan calls for:
-- Increased production of fuel-efficient vehicles and
energy-saving technologies;
-- Rationalization of brands, models and retail outlets;
-- Reduced wage and benefit costs, including further
reductions in executive compensation;
-- Significant capital structure restructuring;
-- Further consolidation in manufacturing operations.
GM is requesting term loans of up to $12 billion to provide
adequate liquidity levels through Dec. 31, 2009. GM anticipates
an initial draw of $4 billion in December 2008. In addition to
the bridge loans, the company is requesting a $6 billion line of
credit to provide liquidity should a severe market downturn
persist. GM's wants to repay the loans as soon as 2011.
Any draws would be conditioned on achieving specific restructuring
requirements in the plan. To help expedite these actions and
protect the taxpayers, GM is also seeking the creation of a
Federal oversight board to oversee the loans and restructuring
plan.
GM is requesting the bridge loans and credit line because of a
sharp industry-wide decline in vehicle sales. This decline, due
in large part to tight credit and record-low consumer confidence,
has led to a corresponding drop in dealer orders that is adversely
impacting GM's first-quarter production schedules, revenue
forecasts, and liquidity outlook. Federal assistance would enable
GM to weather a credit crisis that has driven U.S. industry sales
to their lowest per-capita level in half a century, and help the
company emerge fully competitive with all manufacturers operating
in the U.S.
Product Portfolio and Fuel Efficiency
GM has made significant progress in revamping its product lineup,
with new GM cars like the Chevy Malibu, Cadillac CTS, Saturn Aura
and Opel/Vauxhall Insignia earning car of the year awards. While
remaining a full-line manufacturer, GM will substantially change
its product mix over the next four years, and launch predominately
high mileage, energy-efficient cars and crossovers.
The Chevy Volt, which can travel up to 40 miles on electricity
alone, is scheduled for production in 2010, and GM is planning
other vehicles using Volt's extended-range electric drivetrain.
By 2012, more than half of GM vehicles will be flex-fuel capable,
and the company will offer 15 hybrid models. GM will continue
development of hydrogen fuel cell technology, which, when
commercially deployed, will reduce automotive emissions to just
water vapor.
During the 2009-12 plan window, GM will invest $2.9 billion in
alternative fuels and advanced propulsion technologies, which
offer fuel economy improvements ranging from 12% to 120 percent,
compared with conventional gas engines. As a result, GM could
become a significant creator of green jobs in the U.S., as well
helping suppliers and dealers transform the U.S. economy.
Market and Retail Operations
In the U.S., GM will focus its product development and marketing
efforts on four core brands -- Chevrolet, Cadillac, Buick and GMC.
Pontiac will be a specialty brand with reduced product offerings
within the Buick-Pontiac-GMC channel. Hummer has recently been
put under strategic review, which includes the possible sale of
the brand, and GM will immediately undertake a global strategic
review of the Saab brand. As part of the plan, the company also
will accelerate discussions with the Saturn retailers, consistent
with their unique relationship, to explore alternatives for the
Saturn brand.
Manufacturing and Structural Costs
GM will accelerate its current efforts to reduce manufacturing and
structural costs, building on significant progress made over the
past several years. GM currently has the most productive assembly
plants in 11 of the 20 product segments measured by the Harbour
Report, and it is a global leader in workplace safety. With the
recently negotiated wage rates, turnover expected in our
workforce, planned assembly plant consolidations, further
productivity improvements in the plan, and additional changes to
be negotiated, GM's wages and benefits for both current workers
and new hires will be fully competitive with Toyota by 2012.
Balance Sheet Restructuring
Under the plan, GM would significantly reduce the debt currently
carried on its balance sheet. GM plans to engage current lenders,
bond holders and its unions to negotiate the needed changes. GM's
plan would preserve the status of existing trade creditors and
honor all outstanding warranty obligations to both dealers and
consumers, in the U.S. and globally.
Sharon Terlep and Stephen Wisnefski at Dow Jones relate that GM
expects the government to have an important role in restructuring
its debt. The government will have a say on how the restructuring
gets done, Dow Jones says, citing GM Chief Financial Officer Ray
Young.
Dow Jones reports that Mr. Young told analysts during a conference
call that GM is working with consultants to determine how to slice
in half more than $60 billion in debt, in exchange for up to $18
billion in government loans. Mr. Young, according to the report,
said that the balance sheet restructuring may include an offer for
investors to swap debt for equity. GM would start negotiations
with stakeholders when it gets feedback from lawmakers on the
restructuring plan, the report states, citing Mr. Young.
Compensation and Dividends
The plan calls for shared sacrifice, including further reduction
in the number of executives and total compensation paid to senior
leadership. For example, the chairman and CEO will reduce his
salary to $1 per year. The plan also requires further changes in
existing labor agreements, including job security provisions, paid
time-off, and post- retirement health-care obligations. The
common stock dividend will remain suspended during the life of the
loans.
Temporary Federal Bridge Loans
GM is seeking a term bridge loan facility from the government of
$12 billion to cover operating requirements under a baseline
forecast of 12 million U.S. industry vehicle sales for 2009. In
addition, GM is seeking a revolving credit facility of $6 billion
that could be drawn should severe industry conditions continue,
resulting in sales of 10.5 million total vehicles in 2009. This
bridge loan is expected to be fully repaid by 2012 under the
baseline industry assumptions. Also, warrants issued as part of
the loans would allow taxpayers to benefit from growth in the
company's share price that might result from successful completion
of the plan.
Once GM has completed the restructuring actions laid out in the
plan, the company will be able to operate profitably at industry
volumes between 12.5 and 13 million vehicles. This is
substantially below the 17 million industry levels averaged over
the last nine years, so it is considered to be a reasonably
conservative assumption for gauging liquidity needs.
Federal Oversight Board
Given the importance and urgency of this restructuring for GM,
other domestic manufacturers and the U.S. economy as a whole, the
company supports the formation of a Federal oversight board. The
board would help facilitate restructuring negotiations with a
range of stakeholders.
GM Board of Directors supports the restructuring plan. It has
examined in detail the options currently available to GM, and
believes that the plan provides a blueprint with the best chance
for creating a new GM, one that is leaner, more globally
competitive, profitable and self-sustaining.
The Board believes that the company is fully capable of
implementing the comprehensive plan being submitted to Congress
and that management will see the company through these most
difficult and challenging times.
Gov't Facilitated Pre-packaged Bankruptcy
The Deal Journal relates that while Ford Motor, GM, and Chrysler
continue to rule out filing for bankruptcy, Congress members and
their staffers have been meeting privately with bankruptcy experts
and bankers to understand the mechanics and costs of a pre-
packaged bankruptcy. According to The Deal, Senate Minority Whip
Jon Kyl said he has spoken to colleagues who said that they would
be open to the government facilitating a pre-packaged bankruptcy
for one or more of the three struggling Detroit companies.
The Deal states that Sen. Kyl said that he supports a plan for the
government to provide financing, while creating an account that
would ensure warrantees for owners of cars made by firms in
bankruptcy court.
The deal quoted Sen. Kyl as saying, "I'd be happy next week to
pass a bill that said for any of these three companies that go
through Chapter 11, we will provide a certain amount of DIP
[debtor-in-possession] financing" and money to backstop for car
warrantees.
Matthew Dolan and Josh Mitchell at The Wall Street Journal relate
that Ford Motor CEO Alan Mulally expressed concern on the fates of
GM and Chrysler, after the submission of the three company's
restructuring plans to the congress. Mr. Mulally told WSJ during
an interview in Washington, that he was worried about the
financial health of GM and Chrysler after the two companies told
the Congress that they needed the immediate infusion of cash to
survive.
As reported in the Troubled Company Reporter on Dec. 3, 2008, Ford
Motor said in its 33-page turnaround plan that it doesn't need
federal funds immediately and that it is asking for a
$9 billion line of credit to be available in case the recession
would be longer and deeper than expected.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
As reported in the Troubled Company Reporter on Nov. 10,
2008, General Motors Corporation's balance sheet at
Sept. 30, 2008, showed total assets of $110.425 billion, total
liabilities of $170.3 billion, resulting in a stockholders'
deficit of $59.9 billion.
* * *
As reported in the Troubled Company Reporter on Nov. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings, including
the corporate credit rating, on General Motors Corp. to 'CCC+'
from 'B-' and removed them from CreditWatch, where they had been
placed with negative implications on Oct. 9, 2008. S&P said that
the outlook is negative.
Fitch Ratings, as reported in the Troubled Company Reporter on
Nov. 11, 2008, placed the Issuer Default Rating of General Motors
on Rating Watch Negative as a result of the company's rapidly
diminishing liquidity position. Given the current liquidity level
of $16.2 billion and the pace of negative cash flows, Fitch
expects that GM will require direct federal assistance over the
next quarter and the forbearance of trade creditors in order to
avoid default. With virtually no further access to external
capital and little potential for material asset sales, cash
holdings are expected to shortly reach minimum required operating
levels. Fitch placed these on Rating Watch Negative:
-- Senior secured at 'B/RR1';
-- Senior unsecured at 'CCC-/RR5'.
As reported in the Troubled Company Reporter on June 24, 2008,
DBRS has placed the ratings of General Motors Corp. and General
Motors of Canada Limited Under Review with Negative Implications.
The rating action reflects the structural deterioration of the
company's operations in North America brought on by high oil
prices and a slowing U.S. economy.
GLOBAL CROSSING: S&P Assigns 'CCC+' Issue-Level Rating
------------------------------------------------------
Standard & Poor's Ratings Services said it assigned a 'B-'
corporate credit rating to Bermuda-based global communications
solutions provider Global Crossing Ltd. In addition, S&P assigned
a 'CCC+' issue-level rating and a '5' recovery rating to GCL's
US$350 million term loan due 2012. The '5' recovery rating
indicates expectations for modest (10%-30%) recovery in the event
of a payment default. The outlook is stable.
"The ratings on GCL reflect the company's vulnerable position in
the highly competitive long-haul telecommunications industry that
is dominated by large, well-capitalized competitors," said S&P's
credit analyst Naveen Sarma, "along with poor industry dynamics,
including oversupply and continued price compression despite
increased demand for bandwidth due to increased broadband
communications services and Internet content."
GREATWIDE LOGISTICS: Lists $600 Million in Debts
------------------------------------------------
Mark B. Solomon at DC Velocity reports that Greatwide Logistics
Services has listed debts of about $600 million.
According to DC Velocity, Greatwide Logistics suffered from
increasing fuel costs, flat shipping volumes, and a demand for $32
million in additional collateral from Liberty Mutual for continued
insurance coverage.
As reported in the Troubled Company Reporter on Nov. 26, 2008,
Greatwide Logistics obtained final approval of its $73.6 million
financing facility. The company received interim approval on
Oct. 22, 2008. The financing, coupled with the cash generated
from Greatwide Logistics' daily operations, is more than adequate
to meet the daily operating needs of the business and provides
additional operational and financial stability as Greatwide
Logistics proceeds with its financial restructuring and proposed
sale.
DC Velocity states that Centerbridge Capital and DE Shaw,
Greatwide Logistics' first lien lenders who will provide the
$73.6 million DIP financing, want to acquire the company from
Hicks Holdings and Bahrain's Investcorp. According to the report,
the sale will be conducted under a provision of the federal
bankruptcy code, which allows other firms to offer bids that the
Court may consider to be superior to that of the first lien
holders. Centerbridge Capital and DE Shaw are expected to prevail
because rival bidders would be reluctant to take on an enormous
debt load in return for ownership, the report says, citing a
source familiar with Greatwide Logistics.
About Greatwide Logistics Services, Inc.
Headquartered in Irving, Texas, Greatwide Logistics Services Inc.,
is a non-asset based North American provider of "closed loop"
transportation services to the grocery and consumer products
sectors.
The company also provides non-asset-based truckload management,
truck brokerage and warehouse and distribution logistics services.
Greatwide Logistics is a wholly-owned subsidiary of GWLS Holdings,
Inc.
GWLS Holdings, Inc. and its related debtors filed petitions under
Chapter 11 the U.S. Bankruptcy Court for the District of Delaware
on October 20. The debtors have requested that these cases be
jointly administered under case number 08-12430. The Honorable
Peter J. Walsh is presiding over these cases.
GROUPE AEROPLAN: Payment Acceleration Won't Affect Aeroplan Rating
------------------------------------------------------------------
Standard & Poor's Ratings Services said that Groupe Aeroplan
Inc.'s announcement to temporarily accelerate its payments to Air
Canada (B/Watch Neg/--) for flight reward tickets issued through
to May 29, 2009, would not by itself affect the corporate credit
rating on Groupe Aeroplan (BBB-/Positive/--). With the announced
change, Groupe Aeroplan will accelerate approximately
CUS$70 million in payments to Air Canada by the end of 2008 and
all advances should revert back to the original schedule by July
or August 2009.
S&P expects the change to have a limited impact on Groupe
Aeroplan's financial risk profile given the small amount involved
(about 11% of cash balances as at Sept. 30, 2008, and less than
one-quarter of 2008 estimated operating cash flow) and the
temporary nature of the arrangement. As Air Canada is a major
redemption partner to Groupe Aeroplan, S&P believes its ability to
maintain its flight operations remains important to the
attractiveness of the Aeroplan loyalty program. S&P has factored
into the rating this dependency and the likelihood of operational
disruptions at Air Canada.
HAWAIIAN TELECOM: Gets Interim Okay to Use $75MM Cash Collateral
----------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
authorized, on an interim basis, Hawaiian Telecom Communications,
Inc. to use $75 million of its lenders' cash collateral to
continue to fund its business in the ordinary course, without
interruption.
The company said it will pay suppliers for all postpetition goods
and services in the normal course of business.
In addition, the Court also approved the company's motions to
continue to pay and honor all employee wage and benefit programs,
and customer programs.
"Customers, employees and suppliers can rest assured that we are
dedicated to them and have the capital to stand by our
commitments," said Eric K. Yeaman, Hawaiian Telecom's president
and chief executive officer. "We have reached our first
milestone in this process and these approvals reinforce the value
of Hawaiian Telecom to the people of Hawaii and its viability
going forward," Mr. Yeaman continued.
"We will continue to be unwavering in our dedication to our
customers and keenly focused on reducing our debt while building
our business," Mr. Yeaman added.
The hearing is set for Jan. 5, 2009, to consider final approval of
the proposed cash collateral use.
About Hawaiian Telecom
Headquartered Honolulu, Hawaii Hawaiian Telecom
Communications, Inc. -- http://www.hawaiiantel.com/-- operates
a telecommunications company, which offers an array of
telecommunications products and services including local and
long distance service, high-speed Internet, wireless services,
and print directory and Internet directory services. The company
and five of its affiliates filed for Chapter 11 protection on
Dec. 1, 2008 (Bankr. D. Del. Lead Case No. 08-13086). Richard M.
Cieri, Esq., Paul M. Basta, Esq., and Christopher J. Marcus,
Esq., at Kirkland & Ellis LLP, represent the Debtors in their
restructuring efforts. The Debtors proposed Lazard Freres & Co.
LLC as investment banker; Zolfo Cooper Management LLC as business
advisor; Deloitte & Touche LLP as independent auditors; and
Kurztman Carson Consultants LLC as notice and claims agent. When
the Debtors filed for protection from their creditors, they listed
total assets of $1,352,000,000 and total debts of $1,269,000,000
as of Sept. 30, 2008.
HAWAIIAN TELCOM: Got Investment Offer from Carlyle Pre-Bankruptcy
-----------------------------------------------------------------
Hawaiian Telcom Communications Inc., disclosed that it received an
investment proposal from shareholder Carlyle Group prior to its
bankruptcy filing.
For the past 125 years, Hawaiian Telcom has served as the
incumbent local exchange carrier for the State of Hawaii. In May
2005, Hawaiian Telcom became a standalone telecommunications
provider after The Carlyle Group, consisting of Carlyle Partners
III Hawaii, L.P., CP Coinvestment III, L.P. and Carlyle Hawaii
Partners L.P. purchased the Hawaiian Telcom businesses from
Verizon Communications Inc.
Chief Financial Officer Robert F. Reich, in an affidavit submitted
to the U.S. Bankruptcy Court for the District of Delaware, said
that since the acquisition, Hawaiian Telcom has faced significant
short- and long-term challenges. These include, among other
things, keeping pace with quickly-evolving telecommunications
technologies, overcoming difficulties with respect to the
transition of certain back-office functions from Verizon and
satisfying its capital expenditure needs while meeting its debt
service requirements.
In connection with various strategic initiatives aimed at
improving operating results, Hawaiian Telcom, in early 2008,
introduced a new management team. One of the new management
team's most significant efforts has been to try to reduce Hawaiian
Telcom's debt obligations to allow the Company to use its cash
resources to execute on its revised strategic business plan. In
September 2008, with Hawaiian Telcom's assistance, a group of the
senior lenders under Hawaiian Telcom's senior secured credit
facility and certain holders of the Senior Notes Due 2013, who
claim to own not less than 50% of such Notes, organized and
retained professional advisors.
As a result of its efforts, Hawaiian Telcom has received a
conditional equity investment proposal from The Carlyle Group as
part of a financial restructuring and continues to maintain an
active dialogue with third parties regarding potential equity
investments and a potential sale of all or substantially all of
Hawaiian Telcom's assets.
But after analyzing its options, Hawaiian Telcom determined it is
in the best interests of all stakeholders for each of the Debtors
to file a voluntary petition for relief under chapter 11,
Mr. Reich relates.
The Company has listed total assets of $1,352,000,000 and debts of
$1,269,000,000 as of September 30, 2008. Recovery by creditors
and interest holders will be identified in a Chapter 11 plan to be
presented to parties for approval and to the Court for
confirmation. Secured creditors will have priority over unsecured
creditors, and equity holders are treated as junior to unsecured
creditors.
According to Bloomberg News, Honolulu-based Hawaiian Telcom is the
10th-largest incumbent local exchange carrier in the U.S. with
524,000 switched access lines.
About Hawaiian Telcom Communications
Hawaiian Telcom Communications, Inc., fka Verizon Hawaii, Inc.,
fka GTE Hawaiian Telephone Company Incorporated, has been a
leading provider of telecommunications services in the state of
Hawaii since 1883. Hawaiian Telcom, Inc., incorporated in 1883 as
Mutual Telephone Company, has been Hawaii's incumbent local
exchange carrier or ILEC for 125 years. From 1967 to 2005,
Verizon Communications Inc. operated Hawaiian Telcom's businesses
as a separate Hawaii division.
Hawaiian Telcom Communications, along with seven affiliates filed
for Chapter 11 protection on Dec. 1, 2008 (Bankr. D. of Delaware,
Lead Case No. 08-13086). The Debtors have tapped Richard M.
Cieri, Esq., Paul M. Basta, Esq., and Christopher J. Marcus, Esq.,
at Kirkland & Ellis LLP, in New York, as bankruptcy counsel.
The Debtors have tapped Domenic E. Pacitti, Esq., Michael
Yurkewicz, Esq., Klehr, Harrison, Harvey, at Branzburg & Ellers
LLP, in Wilmington, Delaware, as restructuring and conflicts
counsel. Lazard Freres & Co. LLC, is the Debtors' investment
banker, and Zolfo Cooper is the business advisor. The Debtors
have engaged Kurztman Carson Consultants LLC as claims and
noticing agent in their Chapter 11 cases. In its bankruptcy
petition, the Company listed total assets of $1,352,000,000 and
debts of $1,269,000,000 as of September 30, 2008.
HERNANDO OAKS: Bankruptcy Doesn't Affect Hernando Oaks II Project
-----------------------------------------------------------------
Michael D. Bates at Hernando Today reports that that Hernando
Oaks, LLC's bankruptcy doesn't include Hernando Oaks II LLP's
residential development at Hernando Oaks.
Hernado Today relates that Hernando Oaks, LLC, is only responsible
for the commercial development, golf course, and clubhouse of the
gated subdivision on U.S. 41.
As reported in the Troubled Company Reporter on Nov. 28, 2008,
Hernando Oaks, LLC, filed for Chapter 11 protection a day before
the "courthouse auction" of its Brooksville golf course. The golf
course was foreclosed by RMC Hernando Oaks. Tampa Bay Business
relates that RMC Hernando Oaks had filed a lawsuit against
Hernando Oaks LLC, Hernando Oaks II LLP, Frederic Streck, Lennar
Homes Inc., Tindale-Oliver & Associates Inc., and BankAtlantic
Bancorp Partners Inc., and a circuit court judge ruled on Aug. 4
that the defendants pay RMC Hernando about $1.86 million for a
first mortgage. The court then ordered that the golf course be
auctioned on Nov. 25y.
Hernado Today states that project and county officials including
County Commissioner Dave Russell believe that Hernando Oaks, LLC,
will be able to rebound. The report quoted Mr. Russell as saying,
"Eventually, that project will be built up because it is a viable
project. It's just been a victim of the downturn in the economy."
Hernando Oaks, LLC, maintains a strong, active homeowners'
association and neighbors are ?in-tune? with developments,
Hernando Today says, citing County Commissioner John Druzbick.
Gulf Breeze, Florida-based Hernando Oaks, LLC --
http://www.hernandooaksgolf.com/-- dba Hernando Oaks Golf &
Country Club, is a 626-acre residential, gated golfing community
north of Tampa Bay in west central Florida. The company filed for
Chapter 11 protection on Nov. 24, 2008 (Bankr. M. D. Fla. Case No.
08-18669). Scott A Stichter, Esq., at Stichter, Riedel, Blain &
Prosser represents the company in its restructuring effort. The
company listed assets of $1,000,001 to $10,000,000 and debts of
$1,000,001 to $10,000,000.
HINES HORTICULTURE: Wants Until March 18, 2009, to File Ch.11 Plan
------------------------------------------------------------------
Hines Horticulture Inc. and its debtor-affiliates ask the United
States Bankruptcy Court for the District of Delaware to extend
their exclusive periods to:
a) file a Chapter 11 plan until March 18, 2009, and
b) solicit acceptances of that plan until May 18, 2009.
The Debtors say they have an urgent need to continue to pursue
the sale of substantially all of their assets and other
restructuring alternative.
The Debtors remind the Court that they have filed a proposed
stalking-horse agreement with Black Diamond Capital Management
LLC; However, Black Diamond unable to secure requisite financing
during the past several months due to the credit market crisis.
The Debtor say they have secured financing on Nov. 21, 2008.
The Debtors further say that they are now seeking for court
approval for their proposed bidding procedures and stalking-horse
agreement.
A hearing is set for Dec. 16, 2008, at 11:30 a.m., to consider
approval of the motion. Objections, if any, are due Dec. 9,
2008, by 4:00 p.m.
About Hines Horticulture
Headquartered in Irvine, California, Hines Horticulture, Inc. --
http://www.hineshorticulture.com/-- operates nursery facilities
located in Arizona, California, Oregon and Texas. Through its
affiliate, the company produces and distributes horticultural
products. The company and its affiliate, Hines Nurseries, Inc.,
filed for Chapter 11 protection on Aug. 20, 2008 (Bankr. D. Del.
Case No.08-11922). Anup Sathy, Esq., and Ross M. Kwasteniet,
Esq., at Kirkland & Ellis, LLP, represent the Debtors in their
restructure efforts. Robert S. Brady, Esq., and Edmon L. Morton,
Esq., at Young, Conaway, Stargatt & Taylor, serve as the Debtors'
co-counsel. The Debtors selected Epiq Bankruptcy Solutions LLC as
their voting and claims agent, and Financial Balloting Group LLC
as their securities voting agent. The U.S. Trustee for Region 3
appointed creditors to serve on an Official Committee of
Unsecured Creditors for the Debtors' case. When the Debtors
filed for protection from their creditors, they listed assets and
debts of between $100 million and $500 million each.
INTROGEN THERAPEUTIC: Files for Chapter 11 Bankruptcy in Texas
--------------------------------------------------------------
Introgen Therapeutics, Inc. filed a voluntary petition under
Chapter 11 in the U.S. Bankruptcy Court, Western District of
Texas as part of its ongoing restructuring.
The company said it expects that the Chapter 11 process will
facilitate the implementation of the company's recently announced
strategic reorganization. As part of this filing, the company is
seeking Court approval of a sales procedures motion that will
allow it to market its therapeutic portfolio and other assets to
prospective buyers.
The company further said it expects to continue core activities
pertaining to each of its business units during the
reorganization process and expects to emerge from Chapter
11 during 2009.
"In light of our current financial state and recent market
conditions, the company believes today's actions represent the
wisest alternative for our shareholders, creditors and other
stakeholders," said David Enloe, Introgen's president and CEO.
"We are very optimistic about the promise of our contract
manufacturing business and will continue to focus on growing
our customer base in this area. At the same time, we will
continue to work with our investment banking and other advisors
to explore financial alternatives for our therapeutic portfolio."
Last week, the company said that it had strategically reorganized
the company's operations to focus on the expansion of near-term
revenues from its manufacturing and service business, Introgen
Technical Services, Inc., and it reduced its staff accordingly.
In conjunction with the filing, the company filed a variety of
customary "first day" motions to support its employees and
vendors during the reorganization process. As part of these
motions, the company has asked the Court for permission to
continue paying employee wages and salaries and to provide
employee benefits without interruption.
Additionally, during the restructuring process, vendors and
business partners should expect to be paid for post-filing goods
sold and services rendered to the company in the ordinary course
of business.
Introgen's Chapter 11 proceedings can be found at:
http://brownmccarroll.com/introgen.
About Introgen
Introgen Therapeutics, Inc. (NASDAQ:INGN) --
http://www.introgen.com-- operates biopharmaceutical company
focused on the use of naturally occurring tumor suppressors to
fight cancer. Introgen Technical Services --
http://www.its-gmp.com-- is a wholly owned subsidiary of
Introgen.
JEVIC TRANSPORTATION: Wants March 17 Deadline to File Plan
----------------------------------------------------------
Carla Main and Dawn McCarty of Bloomberg News report that
Jevic Transportation Inc., has asked the U.S. Bankruptcy Court for
the District of Delaware to extend until March 17 its exclusive
period to file a Chapter 11 plan.
Bloomberg News says that the extension is needed to allow the
company to continue negotiations to secure funding to take them
through the plan process, according to court papers. This is the
second extension requested by the company.
Based in Delanco, New Jersey, Jevic Transportation Inc. --
http://www.jevic.com/-- provides trucking services. The company
has two units: Jevic Holding Corp. and Creek Road Properties.
Neither of the units have assets nor operations. The company and
its affiliates filed for chapter 11 protection on May 20, 2008
(Bankr. D. Del. Case No. 08-11008). Domenic E. Pacitti, Esq., and
Michael W. Yurkewicz, Esq., at Klehr Harrison Harvey Branzburg &
Ellers, in Wilmington, Delaware, represent Jevic Transportation.
The U.S. Trustee for Region 3 has appointed five creditors to
serve on an Official Committee of Unsecured Creditors. Robert J.
Feinstein, Esq., Bruce Grohsgal, Esq., and Maria A. Bove, Esq., at
Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware,
represent the Official Committee of Unsecured Creditors.
Before filing for bankruptcy, the Debtors initiated an orderly
wind-down process. As a part of the wind-down process, the
Debtors have ceased substantially all of their business and
terminated approximately 90% of their employees. The Debtors
continue to manage the wind-down process in attempt to deliver all
of the freight that is in their system and to retrieve their
assets.
When the Debtors filed for protection against their creditors,
they listed assets and debts between $50 million and $100 million.
JPMORGAN CHASE: Fitch Puts Ratings on 9 Classes on Negative Watch
-----------------------------------------------------------------
Fitch Ratings places these classes of JP Morgan Chase Commercial
Mortgage Securities Corp, pass-through certificates, series 2006-
CIBC15 on Rating Watch Negative:
-- $29.1 million class F at 'BBB+'; Rating Watch Negative;
-- $26.5 million class G at 'BBB'; Rating Watch Negative;
-- $21.2 million class H at 'BBB-'; Rating Watch Negative;
-- $7.9 million class J at 'BB+'; Rating Watch Negative;
-- $10.6 million class K at 'BB'; Rating Watch Negative;
-- $7.9 million class L at 'BB-'; Rating Watch Negative;
-- $2.6 million class M at 'B+'; Rating Watch Negative;
-- $5.3 million class N at 'B'; Rating Watch Negative;
-- $5.3 million class O at 'B-'; Rating Watch Negative.
Fitch also revises the Rating Outlook on one class:
-- $26.5 million class E at 'A-'; Outlook Negative.
The classes have been placed on Rating Watch Negative due to the
default and subsequent transfer to special servicing of four loans
(5.7%). Three of the loans (2.2%) were considered Fitch Loans of
Concern at the last review. The Negative Rating Outlook of the E
class reflects a potential decrease in credit enhancement which
may not support a 'A-' rating.
The largest specially serviced loan, the Lightstone Portfolio
(3.5%), is 60 days delinquent and was transferred to special
servicing in October 2008 due to imminent default. The Lightstone
Portfolio is secured by four anchored retail properties located in
Martinsburg, WV; Rome, GA; Hermitage, Philadilphia; and Cleveland,
Tennessee. As of Year End 2007, the property had a cumulative
servicer reported DSCR of 1.08x and an occupancy of 95%. The
properties then declined as of March 31, 2008 to a DSCR and
occupancy of 0.95x and 93.7%, respectively. The borrower has
approached the lender indicating that that they would like to
surrender the properties and is cooperating in the appointment of
a receiver.
The second largest loan (1.1%) is secured by five multifamily
properties located in Indiana and Ohio. The loan is 90 days
delinquent and was transferred in June 2008 due to payment
default. Receivers have been appointed for all properties and
have taken over management.
The third largest loan (0.7%) is a 410,307 sf distribution center
located in Columbus, Ohio. The loan is current; however, the
borrower has become worried about meeting his debt obligations.
The loan was transferred to special servicing in November 2008 due
to the parent company's bankruptcy filing.
The smallest loan (0.4%) is secured by an office building located
in Reno, Nevada. The loan is 90 days delinquent and was
transferred in September 2008 due to imminent default.
The sponsor is in the process of selling the asset and the special
servicer is awaiting a written proposal.
Fitch will resolve the rating watch status and revisit the
outlooks of the classes as more information on potential workout
strategies and updated property valuations are available.
JPMORGAN CHASE: Investors Want to Flee From Highbridge Capital
--------------------------------------------------------------
Jenny Strasburg at The Wall Street Journal reports that investors
have asked to withdraw 36% of the assets from J.P. Morgan Chase &
Co.'s multistrategy fund, Highbridge Capital Management.
Citing people familiar with Highbridge Capital, WSJ relates that
the investor pullout and investment losses could reduce the once
$15 billion fund to $6 billion. The report states that due to
woes in the convertible-bond market -- one of Highbridge Capital's
primary areas of focus ? caused a 25% performance decline in the
fund this year. J.P. Morgan, says the report, would lose hundreds
of millions of dollars in fees that Highbridge Capital contributes
to the bank. When Highbridge Capital makes money, 25% of the
profits will go to the fund's mangers, while sources say half goes
to J.P. Morgan, WSJ reports.
WSJ quoted J.P. Morgan's asset-management business chief Jes
Staley as saying, "Highbridge was a significant catalyst to
pushing J.P. Morgan successfully into alternative asset
management, but unfortunately any performance-based business
increases the volatility to your top-line revenue number."
Highbridge Capital's assets have dropped to less than
$20 billion this year, from almost $38 billion in 2007, WSJ
states.
Highbridge Capital Management, LLC, founded in 1992, is a multi-
strategy global hedge fund with over $17 billion in current assets
under management and 160 employees. The fund specializes in non-
traditional investment management strategies with offices in New
York, London, and Hong Kong. Highbridge has expertise across a
range of arbitrage and absolute return investment strategies in
the global equity markets. JPMorgan Asset Management formed a
strategic partnership with Highbridge by purchasing a majority
interest in the firm in December 2004.
JPMorgan Chase & Co. (NYSE: JPM) -- http://www.jpmorganchase.com/
-- is a global financial services firm with assets of about
$2.3 trillion and operations in more than 60 countries. The firm
provides services in investment banking, financial services for
consumers, small business and commercial banking, financial
transaction processing, asset management, and private equity. A
component of the Dow Jones Industrial Average, JPMorgan Chase
serves millions of consumers in the U.S. and many of the world's
most prominent corporate, institutional and government clients
under its J.P. Morgan, Chase, and WaMu brands.
KAUPTHING BANK: Files for Chapter 15 Bankruptcy in New York
-----------------------------------------------------------
Kaupthing Bank hf., on Sunday, November 30, 2008 filed a voluntary
petition under Chapter 15 of the US Bankruptcy Code, in order to
seek US recognition of the bank's moratorium, which has been
granted by the District Court of Reykjavik, Iceland.
The purpose of the filing is to obtain protection for the Bank's
assets in the US, similar to the moratorium protection in the
European Economic Area, pursuant to Directive 2001/24/EC on the
reorganization and winding-up of credit institutions, in order to
be able to maximize recovery to, and provide for an equitable
distribution of value among, all creditors. The bank has
furthermore, at a hearing on December 1, been granted provisional
injunctive relief under the US Bankruptcy Code.
Kaupthing, Reuters relates, filed the petition with the U.S.
bankruptcy court for the Southern District of New York.
Citing a court filing by Olafur Gardarsson, a court-appointed
assistant who is managing the bank's reorganization, Reuters
discloses Kaupthing has about US$14.8 billion of principal assets,
including US$222 million located in the United States, and US$26
billion of principal indebtedness.
Mr. Gardarsson, Reuters notes, asked to have Kaupthing's court
proceedings in Iceland recognized in the United States.
"The ultimate goal of Kaupthing is to satisfy the claims of all
creditors and to try to preserve the value of the bank's assets to
the
extent possible," Mr. Gardarsson was quoted by Reuters as saying.
Reykjavik Court Grants Moratorium
As reported in the TCR-Europe, on November 24, 2008 the District
Court of Reykjavik granted Kaupthing a moratorium on payments to
creditors. In the opinion of the Resolution Committee, applying
for the moratorium was a necessary step in order to ensure that
all creditors of Kaupthing are treated fairly and appropriately,
in accordance with Icelandic law and EU directives. It will
provide Kaupthing with appropriate protection from legal action,
while retaining a banking license sufficient to support its
assets.
The moratorium will also give Kaupthing the opportunity to
continue discussions with the bank's creditors with the aim of
maximizing recovery for all stakeholders. As has been announced
previously, an Informal Creditors' Committee (ICC) has been
formed. The moratorium will assist in making Kaupthing's ongoing
co-operation with the ICC more effective. It is intended that a
second meeting with the ICC will be held in December.
Mr. Olafur Gardarsson, Advocate to the Supreme Court of Iceland,
has been hired as Moratorium Supervisor. He will work with the
Resolution Committee, which will continue to wield the powers of
the Board of Directors of Kaupthing in accordance with Icelandic
law. His aims are consistent with those of the Resolution
Committee, namely, to preserve assets and to optimize recovery for
the creditor body.
The moratorium has been granted until Friday, February 13, 2009,
at 2:00 p.m. Icelandic time. The Moratorium Supervisor is obliged
to summon Kaupthing's creditors to a meeting to be held not later
than three days prior to that date. The moratorium process can,
at a maximum, last for 24 months.
Nyi Kaup?ing banki hf. (New Kaupthing Bank), which assumed the
Icelandic operations of Kaupthing on October 21, 2008, is not
affected by the moratorium.
About Kaupthing Bank
Headquarted in Reykjavik, Iceland, Kaupthing Bank --
http://www.kaupthing.com-- is engaged in the provision of
financial services, such as private banking, asset management,
pension services, brokerage services, investment banking, as well
as
corporate and retail banking. The Bank's offer is targeted at
companies, institutional investors and individuals. The Bank is
operational in thirteen countries, including Luxembourg,
Switzerland,
the Nordic countries, the United Kingdom and the United States.
The
main subsidiaries include Kaupthing Singer & Friedlander and FIH
Erhvervsbank.
* * *
As reported in the Troubled Company Reporter-Europe on
October 13, 2008, Fitch Ratings downgraded Kaupthing Bank hf.'s
Long-term Issuer Default rating to 'D' from 'CCC' and removed it
from Rating Watch Evolving. This follows the announcement that
Kaupthing is now subject to similar arrangements as its two
Icelandic peers, Glitnir Banki and Landsbanki Islands, with the
Icelandic authorities effectively seizing control of the bank.
At the same time, Moody's Investors Service downgraded the bank
financial strength rating (BFSR) of Kaupthing Bank hf to E from
D+, its long-term deposit ratings to Caa1 from Baa3, the long-term
senior debt ratings to Caa2 from Ba1. In addition, Moody's
downgraded the bank's subordinated debt to C from Ba2 and its
preferred stock to C from B1. The bank's short-term rating was
downgraded to Not-Prime from P-3. Moody's is maintaining
Kaupthing's long-term deposit ratings, the long-term senior debt
ratings and its BFSR on review for further possible downgrade.
KGEN LLC: Moody's Downgrades Rating on $400 Mil. Facility to 'B1'
-----------------------------------------------------------------
Moody's Investors Service has downgraded the rating on KGen LLC's
US$400 million senior secured credit facility to B1 from Ba3. The
rating is under review for further downgrade. The downgrade
reflects Moody's reduced expectations for KGen's financial
performance going forward due to continued weakness of the
merchant wholesale energy markets in which its generating units
are located.
The company has repaid just US$3.5 million in principal of its
US$200 million term loan as of Sept. 30, 2008. While Moody's
recognized that KGen's funds from operations could be negative in
FY 2007 and FY 2008 due to substantial major maintenance costs
forecast during this period, Moody's anticipated that financial
performance would improve considerably in FY 2009. However,
KGen's 2009 operating budget revealed that management's revised
forecast for the year was well below Moody's most conservative
outlook as well as the sponsor's base case forecast at the time of
the financing. Based upon the budget, cash flow available for
debt service is expected to be nearly half that projected in
Moody's downside case. A portion of this shortfall is
attributable to US$9 million in deferred major maintenance costs
originally scheduled for 2008, but most of it is due to weak
demand for merchant energy.
Moreover, the company significantly underperformed budget in the
first quarter. Given the June 30 fiscal year end, this reflects
the peak season and is typically the company's most lucrative
period. Results would have been even worse were it not for a
short-term hedge put in place on one of the units. As a result,
it is highly unlikely that the company will be able to achieve its
budgeted results for the year, notwithstanding management
expectations of significant savings on the budgeted general and
administrative expenses following a major restructuring earlier
this year. Even if the company is able to achieve its budget for
the next three quarters, Moody's calculates that cash flow
available for debt service for the year could be far short of the
amount needed for interest and principal and the company may be
forced to rely on its balance sheet and/or external sources of
liquidity in order to service its debt.
While the debt service reserve is consistent with the financing
terms, the US$7.2 million currently available represents less than
six months of debt service based upon its hedged interest rates.
In addition, the company had US$17 million in its major
maintenance reserve and US$10 million in unrestricted cash as of
the beginning of its fiscal year. While unrestricted cash had
increased to US$44 million by the end of the first quarter,
Moody's expects that the company will have to use a substantial
portion of this to cover its fixed expenses for the remainder of
the year due to the heavy seasonality of its cash flows. There
were no draws on the US$80 million revolver as of June 30, though
there were US$12.5 million in letters of credit issued under the
revolver in addition to a US$100 million LC issued under the LC
facility itself.
The review will assess the company's first quarter results more
closely and the reasons for its continued underperformance, along
with management's strategy to address the company's problems. In
addition, the review will consider the likelihood that and the
extent to which the company may need to draw on its debt service
reserve and/or rely on external sources of liquidity to service
its debt this year, as well as any potential restrictions on its
ability to do so.
KGen is a portfolio of one simple cycle and four combined cycle
gas fired generating facilities serving the Entergy, Southern, and
TVA subregions of SERC, with a total capacity of 3,030 MWs. One
of the facilities comprising approximately 20% of the total
capacity is under contract with Georgia Power (Senior Unsecured
debt rated A2) until 2012. The other facilities are completely
merchant. The project benefits from very low leverage relative to
similar power projects rated by Moody's located in other parts of
the country.
However, this is not sufficient to mitigate its significant
merchant exposure and the generally unfavorable nature of the SERC
market, which is the least deregulated wholesale energy market in
the country and is characterized by significant market power
exercised by the load serving entities, a lack of transparency and
liquidity, and an excess of gas-fired generating capacity.
The last rating action with respect to KGen was on Jan. 18, 2007,
when Moody's assigned Ba3 ratings with a stable outlook on KGen's
first lien credit facilities
KGen's ratings were assigned by evaluating factors Moody's believe
are relevant to the credit profile of the issuer, such as i) the
business risk and competitive position of the company versus
others within its industry, ii) the capital structure and
financial risk of the company, iii) the projected performance of
the company over the near to intermediate term, and iv)
management's track record and tolerance for risk. These
attributes were compared against other issuers both within and
outside of KGen's core industry and KGen's ratings are believed to
be comparable to those of other issuers of similar credit risk.
KOBRA PROPERTIES: Judge McManus Approves First Day Motions
----------------------------------------------------------
The Hon. Michael S. McManus of the United States Bankruptcy Court
for the Eastern District of California granted most of Kobra
Properties' first day motions allowing the company and its
related entities to operate on a business as usual basis as it
works to restructure under Chapter 11.
The company's related restaurant operations are not affected by
its Chapter 11 filing.
"Judge McManus' ruling is a positive step toward reorganizing
Kobra for the benefit of its creditors and the protection of its
employees," said Leonard Shulman, of Shulman Hodges & Bastian
LLP, Kobra's proposed bankruptcy counsel. "In addition to
granting most of Kobra's motions, the Court provided valuable
insights into the type of plan that will ultimately be necessary
for Kobra to emerge from bankruptcy even stronger than before."
The Court granted Kobra to (i) pay its employees their pre-
bankruptcy wages, salaries, commissions and benefits. Employees
will be paid as usual as the bankruptcy case proceeds; and (ii)
treat the bankruptcy cases of its affiliated entities, Kobra
Properties, G.P., Kobra Preserve, LLC, and Vernon Street
Associates, LLC, as a single entity to be jointly administered
during the bankruptcy, thus minimizing the administrative burdens
multiple cases would have created, making the process easier for
creditors and reducing the amount of professional fees.
In addition, the Court approved a consolidated list of creditors
and interested parties to whom Kobra may give notice of events
occurring during the bankruptcy.
The Court further approved the company's motion to use its cash
on hand and future monies received from operations during the
bankruptcy for its ongoing expenses. Since these the company
related entities own 80 properties with an aggregate value in
excess of $530 million, these funds are critical for Kobra to
maintain its operations during bankruptcy. The Court's order
allows the company to use the funds for an interim period pending
a final hearing on the issue to be held on Dec. 9, 2008.
The Court deferred ruling on two of Kobra's motions. The first
of those motions requested permission for Kobra to abandon its
interest in certain parcels of real property which were either
unnecessary for its reorganization and had no value to their
respective estates. The second related to its request to employ
bankruptcy counsel. The hearing on those motions is scheduled
for Dec. 16, 2008.
"We're very pleased by today's rulings," said Kobra founder and
president Abe Alizadeh. "We'll be moving quickly to present our
reorganization plan and are optimistic it will be confirmed,
allowing us to fairly meet our financial obligations, protect our
employees and restructure the company so we emerge from
bankruptcy as quickly as possible."
About Kobra Properties
Headquartered in Roseville, California, Kobra Properties develops
and operates non-residential buildings. The company and two of its
affiliates filed for Chapter 11 protection on Nov. 25, 2008
(Bankr. E.D. Calif. Lead Case No. 08-37271). Leonard M. Shulman,
Esq., at Shulman Hodges & Bastian LLP, represents the Debtors' in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed assets and debts
between $10 million and $50 million each.
LANDAMERICA FINANCIAL: Fails Due to Real-Estate Insurance Decline
-----------------------------------------------------------------
Ales Frangos at The Wall Street Journal reports that a weakening
real-estate title-insurance business and a cash crunch linked to
illiquid investments LandAmerica Financial Group, Inc., made in
its 1031 Exchange Services subsidiary made the company fail to
meet its obligations to hundreds of 1031 clients.
WSJ relates that LandAmerica Financial's collapse real-estate
investors seeking -- retirees and a public company -- had
$400 million on deposit with the 1031 Exchange Services to take
advantage of a real-estate strategy called 1031 exchange, which
lets investors delay capital-gains taxes on the proceeds from
recently sold property, as long as the investor lets a third party
hold the funds. Investors, says WSJ, must reinvest the money in a
new property within six months. According to WSJ, investors
couldn't access the funds after LandAmerica Financial filed for
bankruptcy protection.
LandAmerica Financial said in court documents that it had put much
of the money it was holding for real-estate investors into
commingled accounts that invested in auction-rate securities that
have become illiquid. WSJ states that LandAmerica Financial had
guaranteed the money. The report says that LandAmerica Financial,
after the auction-rate securities market seized earlier this year,
lent its 1031 unit about $65 million to meet client redemptions.
LandAmerica Financial was able to sell about $70 million of the
auction-rate securities back to issuers, for 80 cents on the
dollar, court documents say. LandAmerica, WSJ states, continued
to take in new clients.
According to WSJ, customers are angry at LandAmerica Financial for
continuing to solicit business and put their money in the
commingled funds even after it had admitted its problems with
auction-rate securities.
About LandAmerica Financial
LandAmerica Financial Group, Inc. is a leading provider of real
estate transaction services with offices nationwide and a vast
network of active agents. LandAmerica serves its agent,
residential, commercial and lender customers throughout the
United States, Mexico, Canada, the Caribbean, Latin America,
Europe and Asia.
LandAmerica Financial Group and its affiliate LandAmerica 1031
Exchange Services, Inc. filed for Chapter 11 protection Nov. 26,
2008 (Bankr. E. D. Virginia, Lead Case No. 08-35994).
Dion W. Hayes, Esq., and John H. Maddock III, Esq., at
McGuireWoods LLP, are the Debtors' bankruptcy counsel.
In its bankruptcy petition, LFG listed total assets of
$3,325,100,000, and total debts of $2,839,800,000 as of Sept. 30,
2008. (LandAmerica Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
LEHMAN BROTHERS: SIPC Says All Claims Must be Filed With Giddens
----------------------------------------------------------------
The Securities Investor Protection Corporation said that an
estimated 925,000 claims forms have been mailed [Tues]day to
customers and creditors of Lehman Brothers Inc.
SIPC stressed that all claims must be filed with the court-
appointed trustee, James W. Giddens, who is overseeing the
Lehman Brothers' liquidation process.
According to SIPC, the trustee and his staff, former Lehman
Brothers Inc. personnel, the Securities and Exchange Commission,
the Commodity Futures Trading Commission, the Federal Reserve
Bank of New York, and the Depository Trust Clearing Corporation,
over 135,000 former LBI customer accounts already have been
transferred either to Neuberger Berman or to Barclays Capital.
SIPC says the transfer of customer accounts in a liquidation
proceeding of unprecedented size has been handled in record time.
The procedures being followed in the account transfer process
and liquidation of Lehman Brothers reflect the safeguards
provided by the securities laws and the Securities Investor
Protection Act in protecting customer assets.
The claims forms and related documents are also available online
at http://www.lehmantrustee.comand on the SIPC Web site at
http://www.sipc.org/cases/sipccasesopen.cfm.
About SIPC
The Securities Investor Protection Corporation is the U.S.
investor's first line of defense in the event a brokerage firm
fails, owing customer cash and securities that are missing from
customer accounts.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy Sept. 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The Sept. 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16
(Case No. 08-13600). Several other affiliates followed
thereafter.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on Sept. 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on Sept. 16. The
two units of Lehman Brothers Holdings, Inc., which has filed for
bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of
JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc.
reported about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
MEG ENERGY: Moody's Reviews 'Ba3' Ratings for Possible Downgrade
----------------------------------------------------------------
Moody's Investors Service placed MEG Energy Corp.'s ratings under
review for possible downgrade. Ratings affected include MEG's Ba3
Corporate Family Rating, Ba3 rated US$50 million senior first
secured bank revolver, and Ba3 rated US$700 million delayed draw
senior first secured term loan. The rating outlook was stable.
MEG is a privately-held Canadian oil sands project development
firm that holds 353 million barrels of net proven bitumen reserves
(437 million barrels gross) and 1.185 billion of net proven plus
probable reserves. The project has been traditionally heavily
funded with equity, completing its last equity issuance of
CDN$564 million in March 2008.
The review for downgrade reflects i) that expanded revolver
capacity and back-up liquidity may not be in place until first
quarter 2009, ii) the fact that MEG's current debt and equity fund
raising effort takes place during very challenging market
conditions, iii) Moody's expect lower cash flow coverage upon
project start-up due to down-cycle oil prices, and iv) the need to
assess the odds that material Phase II production will be reached
by year-end 2009 and full design levels reached during the course
of second half 2010.
Due to market conditions, MEG postponed a third quarter 2008 note
offering. It currently it is engaged in follow-up meetings with
private equity investors to raise a targeted CDN$500 million or
more. MEG believes existing investors will participate in that
effort. MEG also intends to expand and extend its US$50 million
revolver, expiring in April 2009, to US$150 million but believes
approvals by revolver participants would not be received until
first quarter 2009.
As of Sept. 30, 2008, MEG had cash reserves of about CDN$370
million, with an additional CDN$62 million in a debt service
reserve account. In addition, MEG has a US$50 million revolving
credit facility, which it uses to issue letters of credit, with
US$31 currently available for use. As of Sept. 30, MEG had
approximately US$689 million (CDN$730 million) in term loans
outstanding that mature in March 2013 and book net worth was
CDN$2.2 billion.
Until new equity funding is raised, MEG will limit capital
spending to cover only remaining Phase II outlays and a small
level of preliminary Phase IIB and other outlays. With sharply
scaled back outlays, Moody's estimates that MEG has adequate
funding for Phase II until roughly mid-2009. Fourth quarter 2008
capital spending is budgeted for just under CDN$150 million
(including roughly CDN$15 million of capitalized interest), with
first quarter 2009 outlays set for just over C$145 million, second
quarter 2009 just over CDN$75 million, and second half 2009 at
less than CDN$20 million in capital outlays.
Phase II production is expected to commence by third, if not
second, quarter, 2009. First material operating cash flow would
not occur until fourth quarter 2009, rising thereafter on growing
production through first half 2010 and reaching full Phase II
production of 22,000 Bpd (incremental to current Phase I pilot
production) by fourth quarter 2010.
MEG's Phase I pilot project has performed well, with production
averaging 2,486 barrels per day in third quarter 2008 and 2,932
Bpd over the first 25 days of September 2008. This is on par with
Phase I design capacity of 3,000 Bpd. MEG is encouraged by
attaining an attractive steam oil ratio approximately 2.4-to-1,
competitive with other SAGD operators in the Christina Lake area
and lower than other Alberta SAGD projects.
The ratings have factored in the inherent risks of project delays,
cost-overruns, and start-up complications into the ratings but
that leeway has been consumed by the delay in raising term debt
and equity funding and expected weaker cash flows than expected
once Phase II comes on line. While Phase I pilot performance has
exceeded MEG's expectations, Phase II start-up is more
complicated, including the commissioning and start-up of
cogeneration systems, a commercial scale water recycle and vapor
recovery system, and 29 horizontal well pairs.
MEG's ratings have been assigned by evaluating factors that
Moody's believes are relevant to the company's risk profile, such
as the company's (i) business risk and competitive position
compared with others within the industry; (ii) capital structure
and financial risk; (iii) projected performance over the near to
intermediate term; and (iv) management's track record and
tolerance for risk. These attributes were compared against other
issuers both within and outside MEG's core industry; MEG's ratings
are believed to be comparable to those of other issuers with
similar credit risk.
The last rating action was on June 20, 2007 when MEG's existing
ratings were confirmed and a stable outlook re-assigned.
MEG Energy Corp. is headquartered in Calgary, Alberta, Canada.
NEW CENTURY: Files Disclosure Statement Explaining Joint Plan
-------------------------------------------------------------
Gulf Coast Oil Corp., Century Resources, Inc. and New Century
Energy Corp. filed with the U.S. Bankruptcy Court for the Southern
District of Texas on Nov. 10, 2008, a disclosure statement
explaining their Joint Plan of Reorganization filed Nov. 7, 2008.
Plan Terms
According to the Disclosure Statement, the purpose of the Plan is
to restructure the existing debt obligations of the Debtors
through the issuance of the New Notes that will replace the
prepetition debt obligations owed to Laurus through the
Reorganized Debtors' continued operations post-confirmation. The
Plan is to be implemented, if accepted and approved by the
Bankruptcy Court, in its entire form.
On the Effective Date, the structure of the Reorganizaed Debtors
shall remain as it existed prepetition.
The primary purpose of the Plan is to restructure the Debtors'
debt obligations in a manner to allow them to pay their debts in
full over time. If consummated, the Plan will allow the Debtors
to pay off their prepetition debt obligations, and to finance
their operations on more favorable terms.
Summary of Anticipated Distributions Under the Plan
Administrative Claims and priority Tax Claims, which are
unclassified, are unimpaired and will receive full payment in
Cash.
a) Class 1 - Priority Non-Tax Claim
Each holder of an Allowed Priority Non-Tax Claim Under Class 1
will receive, in full satisfaction of its claim, in the sole
discretion of the Debtors, either Cash equal to the unpaid portion
of such Allowed Class 1 Claim or such other treatment as to which
Debtors and such holder will have agreed upon in writing.
b) Class 2 - Secured Lender Claim
Unless the Bankruptcy Court finds that it is not feasible for the
Debtors to make the payments required under the New Notes, each
holder of an Allowed Class 2 Secured Lender Claim will receive on
the Initial Distribution Date, its Ratable Portion of the New
Notes. If the Court finds that it is not feasible for the Debtors
to make the payments required under the New Notes, then the
Debtors' assets will be subject to auction after the Effective
Date as set forth in Sec. 8.2 of the Plan, and each holder of an
Allowed Class 2 Secured Lender Claim will receive its Ratable
Portion of the proceeds of such auction.
c) Class 3 - Other Secured Claim
Each holder of an Allowed Class 3 Other Secured Claim shall
receive on the Initial Distribution Date or 15 days after the
Claim Allowance Date, whichever is later, Cash in an amount equal
to such Allowed Other Secured Claim or such other treatment as the
Debtors and such holder shall have agreed upon in writing.
d) Class 4 - General Unsecured Claim
Unless the Bankruptcy Court finds that it is not feasible for the
Debtors to make the payments required under the New Notes to the
holders of Class 2 Secured Lender Claims then, on the Distribution
Date, or 15 days after the Claim Allowance Date, whichever is
later, each holder of an Allowed Class 4 General Unsecured Claim
will be paid the full amount of its Allowed Claim or such other
amount as the Debtors and the holder of such claim agree. If the
Court finds that it is not feasible for the Debtors to make the
payments, then Allowed Class 4 General Unsecured Claims shall
receive the amount, if any, remaining after implementation of the
auction procedures described in Sec. 8.2 of the Plan, after
payments to holders of Allowed Claims in Classes 2 and 3.
e) Class 5 - Equity Interests in Century Resources
Each holder of Equity Interests in Century Resources under Class 5
shall receive, in complete settlement, satisfaction, and discharge
of its Interests, 100% of the Reorganized Century Resources
Interest.
f) Class 6 - Equity Interests in Gulf Coast Oil
Each holder of Equity Interests in Gulf Coast Oil under Class 6
shall receive, in comlete settlement, satisfaction, and discharge
of its Interests, 100% of the Reorganized Gulf Coast Oil Interest.
g) Class 7 - Equity Interests in New Century
Each holder of Equity Interests in New Century under Class 6 shall
receive, in comlete settlement, satisfaction, and discharge of its
Allowed Class 7 Equity Interest, their Ratable Portion of
Reorganized New Century Interests.
Holders of Claims Entitled to Vote
Class 1 (Priority Non-Tax Claims), Class 5 (Century Resources
Equity Interests), Class 6 (Gulf Coast Equity Interests), and
Class 7 (New Century Equity Interests) are conclusively presumed
to have accepted the Plan and and their votes are not being
solicited.
Each of Class 2 (Secured Lender Claims), Class 3 (Other Secured
Claims), and Class 4 (General Unsecured Claims) is entitled to
vote to accept or reject the Plan.
Disclosure Statement Hearing Date
A hearing to consider approval of the Debtors' proposed Disclosure
Statement is scheduled for Dec. 8, 2008. If the Disclosure
Statement is approved, a confirmation hearing on the Debtors'
proposed Joint Plan of Reorganiation is scheduled for Jan. 8,
2009.
A full-text copy of the Debtors' Joint Plan of Reorganization,
dated Nov. 7, 2008, is available for free at:
http://researcharchives.com/t/s?35ad
A full-text copy of the Debtors's Disclosure Statement in support
of Debtors' Joint Plan of Reorganization, dated Nov. 10, 2008, is
available for free at:
http://researcharchives.com/t/s?35ae
About New Century Energy
Based in Houston, Gulf Coast Oil Corp., Century Resources, Inc.
and New Century Energy Corp. are engaged in independent oil and
gas exploration and production. The Debtors' major areas of
operations are located onshore United States, primarily in
McMullen, Matagorda, Wharton, Goliad and Jim Hogg Counties in
Texas.
All of the Debtors oil and gas properties are operated by Century
Resources, a wholly owned operating subsidiary of New Century.
Title ownership of the various oil and gas properties are held in
three entities - Gulf Coast Oil, another wholly owned
subsidiary of New Century; New Century and Century Resources, with
all field operations conducted under the name of Century
Resources. The working interest ownership of the various
operated properties range from 80% in the Sargent South Field in
Matagorda County, Texas, to 100% in the San Miguel Creek Field
(McMullen County, Texas), Mustang Creek Field (McMullen and
Atascosa Counties, Texas), Prado Field (Jim Hogg County, Texas),
Soleberg Wilcox Field (Goliad County, Texas), and Tenna Field
(Wharton County, Texas). Additionally, the Debtors own a 15.20%
non-operated working interest with a 12.214% net revenue interest
in the Wishbone Field in McMullen County, Texas.
The Debtors filed separate petitions for Chapter 11 relief on
July 28, 2008 (Bankr. S.D. Tex. Lead Case No. 08-50213). Chasless
L. Yancy, Esq., and David A. Zdunkewicz, Esq., at Andrews & Kurth
represent the Debtors as counsel. As of March 31, 2008, Gulf
Coast had total assets of $51,901,717 and total debts of
$75,326,678.
NEW JERSEY HEALTH: Fitch Cuts Rating on $900 Mil. Bonds to 'BB+'
----------------------------------------------------------------
Fitch Ratings has downgraded to 'BB+' from 'BBB' the underlying
rating on approximately $900 million New Jersey Health Care
Facilities Financing Authority and New Jersey Economic Development
Authority bonds issued on behalf of Saint Barnabas Health Care
System. The Outlook is revised to Negative.
The rating downgrade to 'BB+' reflects the increasing likelihood
of an event of default stemming from declining liquidity and
ongoing operating and investment losses that have occurred over
the last two fiscal years and that continue for the nine month
period ending Sept. 30, 2008. SBHCS lost $24.1 million from
operations in 2006, $19.3 million from operations in 2007 and
$33.2 million YTD for the period ending Sept. 30, 2008 (which
includes $9.9 million for prior year medical denials and
$5.8 million of impairment losses related to its investment
portfolio), producing operating margins of negative 1.1%, negative
0.8%, and negative 1.8%, respectively.
Non-operating income offset the operating losses in fiscal year
2006 and 2007, producing excess margins of $24.5 million (1.1%
excess margin) and $3.8 million (0.2% excess margin),
respectively, but for the nine month period ending Sept. 30, the
SBHCS posted $14.6 million of non-operating losses, producing
negative excess income of $47.8 million (negative excess margin of
2.7%). This compares unfavorably with Fitch's rating medians for
the non-investment grade category of 0.3% operating margin and
1.9% excess margin. In addition, market volatility coupled with
the lack of cash flow generation has pressured liquidity
indicators. Days cash on hand has declined from 108 days in 2006
to 103 days in 2007 and to 87 days year to date, reflecting
$54 million in unrealized losses as of Sept. 30, 2008. For the
remaining quarter of the year, losses on SBHCS' investment
portfolio are expected to be especially severe.
Saint Barnabas faces escalating operational pressures primarily
due to an increasingly unfavorable operating environment in one of
its northern New Jersey markets (particularly in Newark, New
Jersey), a shift in payor mix stemming from the closures of nearby
facilities and ongoing market volatility, exacerbated by the
continuing impact of the six-year $265 million settlement with the
U.S. Department of Justice negotiated in 2006. In 2008, the New
Jersey Commission on Rationalizing Health Care Resources published
its final report, which included the recommendation to allow those
hospitals deemed nonessential to close.
Additionally, the state reduced charity reimbursement by $111
million in its 2008/2009 operating budget. While all of SBHCS'
hospitals were deemed to be essential, the system still lost $11
million in charity care reimbursement, with a $7 million reduction
in funding for SBHCS' Newark Beth Israel Medical Center, which is
now serving a portion of the population that predominantly used
the recently closed Saint James Medical Center and Columbus
Hospital.
In response, management has quickly implemented a financial
turnaround plan that identified $70 to $80 million in expense
reductions intended to return SBHCS to profitability by 2009,
engaged a management consultant to help create and implement a
strategic restructuring of system operations, and renegotiated
managed care contract increases totaling $90 million. Management
has reduced expenses by an annualized $42 million, including a 350
full-time equivalent staff reduction and is selling four of its
nine nursing homes, which is expected to net SBHCS approximately
$30 million. Three other nursing homes will be restructured.
Management is pursuing the divestiture or closure of Kimball
Medical Center, which is expected to lose $8 million from
operations in 2008.
Credit strengths include SBHCS' position as the largest health
care systems in New Jersey by a considerable margin. SBHCS has
more than 2,300 acute care beds in service in the state and
accounts for 17% of total discharges. The next largest system,
Robert Wood Johnson Health System has a 7% market share. More
than 4,700 physicians, 25% of the state's physician population,
are affiliated with SBHCS. Saint Barnabas Medical Center and
Newark Beth Israel Medical Center, the two flagship facilities,
are major teaching affiliates of the University of Medicine and
Dentistry in New Jersey. Saint Barnabas Medical Center and
Community Medical Center are two of the oldest and largest
providers in the state. SBHCS also provides certain unique
services. It is the only certified burn treatment facility in the
states and the only lung transplant center. It is one of the top
ten facilities in the nation for heart transplants and the state's
second largest employer.
The Outlook is revised to Negative as operating performance
remains challenged. Four of SBHCS' seven hospitals are
unprofitable due primarily to Medicare and Medicaid reimbursement
that does not cover expenses and payor mix changes occurring in
the Newark, NJ market. In addition, SBHCS is facing declining
profitability at Saint Barnabas Medical Center and Community
Memorial Medical Center. Management reports that it intends to
meet with the rating agencies and other market participants by
mid-January 2009 to present further details on its operational
restructuring program. Based on previous management discussions
and the severity of the operating decline, Fitch does not expect a
return to profitability in the near term, barring a substantial
restructuring of SBHCS' operations. Continued decline in
profitability or liquidity could necessitate further rating
action.
SBHCS consists of six free-standing acute care hospitals, a
children's hospital, a free-standing psychiatric hospital, nine
long-term care facilities, and other various other health care
entities operating in northeastern and coastal New Jersey, with
corporate headquarters located in West Orange. SBHCS had total
revenues of $2.3 billion in 2007. SBHCS covenants to disclose to
bondholders on a quarterly basis.
Fitch currently rates SBHCS' outstanding issues:
-- New Jersey Health Care Facilities Financing Authority revenue
refunding bonds (Saint Barnabas Health Care System Issue),
series 2006A;
-- New Jersey Health Care Facilities Financing Authority revenue
refunding bonds (Saint Barnabas Health Care System Issue),
series 2006B;
-- New Jersey Health Care Facilities Financing Authority revenue
and bonds (Saint Barnabas Health Care System Issue), series
2001A;
-- New Jersey Health Care Facilities Financing Authority insured
revenue and bonds (Saint Barnabas Health Care System Issue),
series 2001B (insured: FSA);
-- New Jersey Health Care Facilities Financing Authority revenue
and refunding bonds (Community Medical Center/Kimball Medical
Center/Kensington Manor Care Center), series 1998 (insured:
FSA);
-- New Jersey Health Care Facilities Financing Authority revenue
and refunding bonds (Saint Barnabas Medical Center/West
Hudson Hospital), series 1998A (insured: MBIA);
-- New Jersey Health Care Facilities Financing Authority revenue
and refunding bonds (Saint Barnabas Health Care System
Issue), series 1998B (insured: MBIA);
-- New Jersey Health Care Facilities Financing Authority revenue
and refunding bonds (Kensington Manor Issue), series 1998C
(insured: MBIA);
-- New Jersey Health Care Facilities Financing Authority revenue
bonds (Shoreline Behavioral Health Center), series 1997
(insured: MBIA);
-- New Jersey Economic Development Authority revenue bonds
(Saint Barnabas Realty Development Corporation Project),
series 1997A (insured: MBIA);
-- New Jersey Economic Development Authority revenue bonds
(Clara Maass Health System Obligated Group Project), series
1996 (insured: FSA).
NEW YORK TIMES: Cuts Quarterly Dividend by 74% to Conserve Cash
---------------------------------------------------------------
Russell Adams at The Wall Street Journal reports that The New York
Times Co. has cut its quarterly dividend by 74%, as part of an
effort to conserve cash.
According to WSJ, the dividend is the chief source of income for
many members of the Ochs-Sulzberger family, which controls The NY
Times through ownership of most of a special class of supervoting
shares. The report says that the dividend brought the family
about $25 million per year.
WSJ relates that trustees of the Ochs-Sulzberger Trust said that
they supported the dividend cut, because "serves the best
interests of The New York Times Co. and all of its shareholders.
The Trustees recognize that while this is very difficult for all
shareholders, it is the appropriate and prudent business response
given the extraordinary challenges of the current economic
environment."
The NY Times said that it has taken steps to lower debt and
increase liquidity, including reevaluating its assets, WSJ
reports. According to the report, those steps should help appease
investors who have pushed NY Times to reduce costs and sell
underperforming assets like the Boston Globe. The NY Times, says
the report, has laid off employees, merged sections of the NY
Times and Globe to reduce printing costs, and consolidated New
York area printing plants this year.
NY Times has $46 million in cash and about $1.1 billion of debt,
according to WSJ.
The New York Times Co. operates as a diversified media company in
the United States. It operates in two segments, News Media and
About Group. The company was founded in 1896.
OAKRIDGE HOMES: Court Denies Appointment of Chapter 11 Trustee
--------------------------------------------------------------
The Hon. Kathleen Thompson of the U.S. Bankruptcy Court for the
Central District of California denied in its entirety the motion
of Cathay Bank for the appointment of a Chapter 11 trustee in
Oakridge Homes LLC's bankruptcy case.
Cathay Bank is the first trust deed holder on the Debtor's 20-lot
residential subdivision in Stevenson Ranch, California.
As reported in the Troubled Company Reporter on Nov. 12, 2008, the
Debtor presented these arguments in support of its opposition to
the appointment of a Chapter 11 trustee:
a) The slow pace of the sale of the vacant lots is not reason
enough for the appointment of a trustee. The Debtor told the
Court that it is aggressively marketing the lots, and that
the lack of sale closings was not the result of "fraud or
"gross mismanagement," as Cathay accuses.
b) There is no evidence of wrongdoing and there is no need for
the appointment of a trustee. The appointment of a Chapter
11 trustee would only cause more delays and would just burden
the estate with statutory expenses.
c) It is not "fraud" that Tammy Castro backed out of the sale of
Lot No. 2 for financial reasons, or that the sale of Lots 11,
12 and 13 to Dana Kellstrom is not finalized because he is
interested in purchasing different lots than those identified
in the Sale Motion. The Debtor told the Court that it
rejected an offer from Mr. Kellstrom to purchase three prime
lots after a careful determination was made that the offer
did not meet the particular lots' values.
d) The Debtor has not provided evidence that a trustee would be
more successful in selling the lots because, for the four
months between Feb. 13, 2008, and June 13, 2008, the Debtor
was overseen by a receiver who did not consummate a single
sale.
3) Cathay Bank has not met the required burden of proving by
clear and convincing evidence that the appointment of a
trustee is in the best interests of creditors.
Based in Valencia, California, Oakridge Homes, LLC is a
homebuilder. The company filed for Chapter 11 on June 13, 2008
(C.D. Calif. Case No. 08-13977). Gil Hopenstand, Esq., Ron
Bender, Esq., and Tania M. Moyron, Esq., at Levene,
Neale, Bender, Rankin & Brill LLP, represent the Debtor as
counsel. The company listed assets of $20,038,129 and liabilities
of $28,552,123.
OAKRIDGE HOMES: Plan Filing Period Extended to February 10, 2009
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
extended Oakridge Homes, LLC's exclusive periods to:
a) file a plan through and including Feb. 10, 2009; and
b) solicit acceptances of said plan through and including
April 13, 2009.
The Debtor's exclusive period to file a plan expired last Nov. 12,
2008, as last extended.
Based in Valencia, California, Oakridge Homes, LLC is a
homebuilder. The company filed for Chapter 11 on June 13, 2008
(C.D. Calif. Case No. 08-13977). Gil Hopenstand, Esq., Ron
Bender, Esq., and Tania M. Moyron, Esq., at Levene,
Neale, Bender, Rankin & Brill LLP, represent the Debtor as
counsel. The company listed assets of $20,038,129 and liabilities
of $28,552,123.
ORAGENICS INC: Appeals Securities Delisting Action of NYSE-A
------------------------------------------------------------
Oragenics, Inc., dba ONI BioPharma Inc., received a letter from
the NYSE Alternext US LLC confirming the Exchange's intention to
proceed with the filing of an application with the Securities and
Exchange Commission to delist the common stock of the company from
the Exchange. The notice from the Exchange indicates that the ASE
staff has decided that the company does not meet these continued
listing standards under the ASE Company Guide: Section 1003(a)(ii)
in that the company's stockholders' equity is less than $4 million
and it has sustained losses in three of its four most recent
fiscal years.
On Oct. 31, 2008, the company filed a request to appeal the
Exchange's determination and requested a hearing before a panel of
the Exchange. As of the date hereof, no date has been set for
such hearing, but the hearing is expected to be held within 45
days. During this period, the company's common stock will
continue to be listed on the Exchange pending the outcome of the
appeal. The company plans to appeal and if the company's position
is accepted by the panel, this would allow the company to continue
its listing. However, there can be no assurance that the
company's request for continued listing will ultimately be
granted. Also, while the company is considering alternatives for
repositioning itself on other exchanges, including ongoing
discussions with potential listing sponsors and market makers, the
company expects that its shares will be listed on another exchange
or quoted on a quotation medium prior to any termination in
trading on the ASE. If the company's appeal be denied, management
does believe that after the effectiveness of the company's
delisting, trading in the company's common stock would be
conducted on the OTC Bulletin Board in the United States.
About Oragenics
Headquartered in Alachua, Florida, Oragenics, Inc. (AMEX: ONI) --
http://www.oragenics.com/-- fka Oragen, Inc., operates as an
early-stage biotechnology company in the United States. It
primarily focuses on developing technologies associated with oral
health, broad-spectrum antibiotics, and other general health
benefits. The company develops SMaRT Replacement Therapy, which
is a painless topical treatment for protection against tooth
decay; and Mutacin 1140, an antibiotic with anti-microbial
activity against gram-positive bacteria, including methicillin-
resistant and vancomycin-resistant Staphylococcus aureus. The
company was founded in 1996.
Going Concern Doubt
As reported in the Troubled Company Reporter on July 24, 2008,
Kirkland Russ Murphy & Tapp, PA, in Clearwater, Florida, raised
substantial doubt about the ability of Oragenics, Inc., to
continue as a going concern after auditing the company's financial
statements for the year ended Dec. 31, 2007. The auditing firm
pointed to the company's recurring operating losses, negative
operating cash flows and accumulated deficit.
PILGRIM'S PRIDE: Gets Interim Approval for $450MM DIP Financing
---------------------------------------------------------------
Although Pilgrim's Pride Corporation and its debtor-affiliates'
businesses generally generate sufficient cash to fund their
operations on a long-term basis, in the short-term the Debtors
project that they will need the liquidity provided by the proposed
postpetition financing in addition to the use of the cash that
they generate to fund their operations and to pay the costs and
expenses of administering their Chapter 11 cases.
Before the Petition Date, the Debtors and their financial
advisors, Lazard Freres & Co., surveyed various sources of
postpetition financing. Of the possible sources they approached,
they were only able to solicit proposals from two parties who
indicated interest in providing postpetition financing and
provided concrete pricing and structure proposals.
Ultimately, the prepetition lenders led by Bank of Montreal as
agent, were willing to extend postpetition financing. Pursuant
to DIP Financing documents that are subject to definitive
documentation, the consortium of lenders agreed to extend up to
$365,000,000 of postpetition financing on an interim basis and up
to $450,000,000 on a final basis. The Lenders' commitments:
Lender DIP Commitment
------ --------------
Bank of Montreal $100,000,000
Wells Fargo Bank National Association $100,000,000
Cooperatieve Centrale
Raiffeisen-Boerenleenbank, B.A.,
"Rabobank Nederland" New York Branch $100,000,000
U.S. Bank National Association $45,000,000
ING Capital LLC $30,000,000
Calyon New York Branch $30,000,000
Natixis New York Branch $30,000,000
SunTrust Bank $10,000,000
First National Bank of Omaha $5,000,000
--------------
Total $450,000,000
==============
The Debtors and the DIP Lenders have agreed on a budget
projecting cash flow for thirteen weeks beginning the week ended
December 6, 2008, to the week ending Feb. 28, 2009. A full-
text copy of the DIP Budget is available for free at:
http://ResearchArchives.com/t/s?35b4
According to the Debtors' proposed counsel, Martin A. Sosland,
Esq., at Weil, Gotshal & Manges, LLP, in Dallas, Texas, the DIP
Credit will be available solely for, among others, loans and
letters of credit for payment of normal operating expenses
consistent with the Budget, loans for payment of payment of the
professional fees and expenses of the DIP Agent and the
prepetition BMO Lenders.
On Dec. 2, 2008, the Debtors sought and obtained interim approval
from the U.S. Bankruptcy Court for the Northern District of Texas
of its DIP Motion. A full-text copy of the Interim DIP Order is
available for free at:
http://ResearchArchives.com/t/s?35b5
The salient terms of the DIP Financing are:
DIP Loan Borrower: Pilgrim's Pride Corporation
Guarantors: Each of the direct and indirect domestic
subsidiaries of PPC, which are debtors-
in-possession
DIP Agent: Bank of Montreal, as administrative and
collateral agent
DIP Commitment: A non-amortizing revolving credit
facility in an aggregate principal amount
of $450,000,000 for revolving advances to
the Borrower, and a $20,000,000 Letter of
Credit Sublimit
Available
Borrowing Base: The lesser of (i) the DIP Commitment or
(ii) the Borrowing Base, which is the sum
of:
* 80% of the then outstanding unpaid
amount of Eligible Receivables; plus
* 65% of the value of Eligible
Inventory consisting of feed grains,
feed and ingredients located at the
Borrower's or a Guarantor's feed
mills or is prepaid in full and is
in transit from the seller thereof
to the Borrower or Guarantor; plus
* 65% of the lower of cost or fair
wholesale market value of Eligible
Inventory consisting of dressed
broiler chickens and commercial
eggs; plus
* 65% of the Value of Eligible
Inventory consisting of live broiler
chickens; plus
* 65% of the standard cost value of
Eligible Inventory consisting of
prepared food products; plus
* 100% of the Agreed Upon Values of
Eligible Inventory consisting of
breeder hens, breeder pullets,
commercial hens, commercial pullets
and hatching eggs; plus
* 40% of the actual costs of Eligible
Inventory consisting of packaging
materials, vaccines, general
supplies, and maintenance supplies;
minus
* the aggregate principal amount of
all loans, letters of credit and
unreimbursed drawings under letters
of credit outstanding under the
Prepetition BMO Credit Facilities;
minus
* the outstanding amount of Secured
Grower Payables that are more than
15 days past due; minus
* a good-faith estimate of the Carve-
Out Amount acceptable to the
Required Lenders; minus
* a good faith estimate of all claims
under Section 503(b)(9) of the
Bankruptcy Code; provided that the
Borrowing Base as determined on any
date will not exceed 222% of the
amount included.
Closing Date: The Closing Date will occur immediately
upon entry of an Interim Financing Order
but no later than December 10, 2008.
Maturity Date: December 1, 2009, subject to extension
for up to an additional six months.
Termination Date: The DIP Commitment will terminate on the
earliest to occur of the (a) Maturity
Date; (b) the date that a plan of
reorganization of any Debtor confirmed by
the Court becomes effective; or (c) the
date the DIP Lenders terminate the DIP
Commitment based on the occurrence of an
Event of Default.
Interest Rate: Principal accrues at 8.0% per annum plus
the Base Rate.
Fees: Fees include (a) a closing fee in an
amount equal to 2.5% of the DIP
Commitment, (b) a DIP Agent's fee in the
amount of $125,000, payable to the DIP
Agent for its own use and benefit, and
(c) a fee of 0.50% per annum on the
unused available DIP Commitment, payable
monthly in arrears to the DIP Agent.
Indemnification: PPC and the Subsidiary Guarantors agree
to indemnify the DIP Agent, the L/C
Issuer, each Lender, and any security
trustee against all losses, claims,
damages, penalties, judgments,
liabilities and expenses.
All obligations of PPC and the Subsidiary Guarantors to the DIP
Lenders in respect of the DIP Credit, including, without
limitation, all accrued interest, costs, fees and expenses will
be secured by:
(a) First priority liens, mortgages and security interests, in
all of the Debtors' property, including, without
limitation, real property, the Cash Collateral Account,
other than any equity interest of Avicola Pilgrim's Pride
de Mexico, S. de. R.L. de C.V.;
(b) A valid, binding, continuing, enforceable, fully-priming
lien, and security interest in the BMO Prepetition
Collateral and the CoBank Prepetition Collateral.
The DIP Priming Liens on the Prepetition Collateral is senior in
all respects to the security interests in, and liens on, the
Prepetition Collateral of the Prepetition Lenders.
The liens and security interests granted to the DIP Lenders are
subject to a Carve-Out, which means an administrative expense
carve-out in the amount of $5,000,000 for (a) the payment of
costs of winding up the Chapter 11 cases and the professional
fees and disbursements of professionals hired by the Debtors and
any official committee appointed in the Chapter 11 cases incurred
after the Termination Date, plus (b) professional fees and
disbursements incurred or accrued and pending applications for
professional fees and disbursements of the Debtors' and any
official committee's professionals prior to the Termination Date
and U.S. Trustee fees.
No part of the Carve-Out, however, will be used to object to or
contest any postpetition lien or Postpetition Obligations or to
challenge any prepetition lien of the Prepetition BMO Agent or
the Prepetition BMO Lenders, or to otherwise seek affirmative
relief against the DIP Agent, the Lenders, the Prepetition BMO
Agent or the Prepetition BMO Lenders.
Events of Default include the usual provisions as deemed
appropriate by the DIP Lenders, together with the Events of
Default which are substantially the same as those in the
Prepetition BMO Credit Agreement. Among others, the DIP
Agreements provide that a default will occur if:
(a) the Borrower or any Subsidiary, or any member of its
Controlled Group, will fail to pay when due an amount or
amounts aggregating in excess of $10,000,000, which it
will have become liable to pay to the Pension Benefit
Guaranty Corporation or to a Plan under Title IV of the
Employee Retirement Income Security Act;
(b) a trustee under Chapter 11 will be appointed in any of the
Chapter 11 cases;
(c) an order of the Court will be entered in any of the
Chapter 11 cases appointing an examiner or other person
with enlarged powers relating to the operation of the
business under Section 1106(b); or
(d) the DIP Orders are be amended, reversed, stayed, vacated
or modified, in the case of an amendment or modification
in a manner which materially and adversely affects the
rights of the Lenders or the DIP Agent.
The Borrower and each Guarantor unconditionally agrees to forever
indemnify and covenants not to sue for any claim for contribution
against, each Indemnitee for any damages arising out of any of:
-- any presence, Release, threatened Release or disposal of
any hazardous or toxic substance or petroleum by the
Borrower or any Subsidiary or otherwise occurring on or
with respect to its Property;
-- the operation or violation of any Environmental Law,
whether federal, state, or local, and any regulations
promulgated thereunder, by the Borrower or any Subsidiary
or otherwise occurring on or with respect to its Property;
-- any claim for personal injury or property damage in
connection with the Borrower or any Subsidiary or otherwise
occurring on or with respect to its Property; or
-- the inaccuracy or breach of any environmental
representation, warranty or covenant by the Borrower.
A full-text copy of the DIP Agreement, subject to definitive
documentation, is available for free at:
http://ResearchArchives.com/t/s?35b2
In support of the Debtors' DIP Financing and Cash Collateral
request, they filed with the Court a declaration of Barry
Stratton, a vice president of the Bank of Montreal in its special
assets division. A full-text copy of the Stratton Declaration is
available for free at:
http://ResearchArchives.com/t/s?35b3
Judge D. Michael Lynn, in the Interim Order, ruled that the rights
of any official committee or Chapter 11 trustee appointed in the
Debtors' case are reserved except with respect to any provision
required in connection with Section 364, including Section 364(e).
Judge Lynn held in the Interim Order that notwithstanding any
contrary provision in the Order, to the extent General Electric
Capital Corporation holds perfected, valid security interests or
liens that are senior to the prepetition liens or security
interests of the prepetition BMO Lenders, then:
-- the liens, replacement liens, and security interests
granted to the DIP Agent, DIP Lenders, Prepetition Agents
and Prepetition Lenders will not prime or be senior to the
GECC Liens; and
-- in the event any property subject to the GECC Liens is
sold, the proceeds will not be governed by the Interim DIP
Order.
Judge Lynn will convene a hearing on Dec. 17, 2008, at 10:30 a.m.,
to consider final approval of the DIP Motion. Objections are due
Dec. 10, 2008.
About Pilgrim's Pride
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. In addition, the company owns 34
processing plants in the United States and 3 processing plants
n Mexico. The processing plants are supported by 42 hatcheries,
31 feed mills and 12 rendering plants in the United States and 7
hatcheries, 4 feed mills and 2 rendering plants in Mexico.
Moreover, the company owns 12 prepared food production facilities
in the United States. The company 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.
Pilgrim's Pride Corporation and six other affiliates filed Chapter
11 petitions on December 1, 2008 (Bankr. N. D. of Texas, Lead Case
No. 08-45664). Pilgrim's Pride has engaged Stephen A. Youngman,
Esq., Martin A. Sosland, Esq., and Gary T. Holzer, Esq., at Weil,
Gotshal & Manges LLP, as bankruptcy counsel. The Debtors have
also tapped Baker & McKenzie LLP as special counsel. Lazard
Freres & Co., LLC is the company's investment bankers and William
K. Snyder of CRG Partners Group LLC as chief restructuring
officer. The company's claims and noticing agent is Kurtzman
Carson Consulting LLC. Pilgrim's Pride had total assets of
$3,847,185,000, and debts of $2,700,139,000 as of June 28, 2008.
(Pilgrim's Pride Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
PILGRIM'S PRIDE: Gets Interim OK to Access $300MM Cash Collateral
-----------------------------------------------------------------
To address Pilgrim's Pride Corporation and its debtor-affiliates'
working capital needs and fund their reorganization efforts, the
Debtors also require the use of the cash collateral, including to
repurchase receivables, securing the Debtors' more than
$2,700,000,000 of prepetition debts. Coupled with the proceeds of
the DIP Credit Facility, the use of the Cash Collateral will
provide the Debtors with necessary additional capital to operate
their businesses, pay their employees, maximize value, and
successfully reorganize under Chapter 11.
During the Dec. 2, 2008, hearing, Judge D. Michael Lynn of the
U.S. Bankruptcy Court for the Northern District of Texas
authorized the Debtors, on an interim basis, to use the Cash
Collateral. The Court will convene a final hearing on December
17. Objections are due December 10.
As adequate protection, Bank of Montreal, as agent under the
Debtors' $300,000,000 prepetition revolving credit facility, will
receive a replacement lien to secure the loans made, and letters
of credit issued pursuant to the Prepetition BMO Credit Agreement
on all Postpetition Collateral for and to the extent of the
postpetition use of any of the property of Pilgrim's Pride
Corporation in which the Prepetition BMO Agent has a valid,
perfected, non-avoidable prepetition lien, and proceeds thereof
and for any postpetition diminution in value of the Prepetition
BMO Collateral.
CoBank ACB, as agent under the Debtors' prepetition $550,000,000
revolving credit facility and $750,000,000 term loan, will
receive, as adequate protection, a replacement lien to secure the
loans made under the Prepetition CoBank Credit Agreement on all
Postpetition Collateral for and to the extent of postpetition use
of the any of the property of PPC in which the Prepetition CoBank
Agent has a valid, perfected, non-avoidable prepetition lien and
proceeds thereof and for any postpetition diminution in value of
the Prepetition CoBank Collateral.
The adequate protection granted to BMO and CoBank are subordinate
only to (a) the liens granted to the DIP Agent and the DIP
Lenders to secure the DIP Obligations; (b) the Carve-Out; (c)
Permitted Liens; (d) in the case of the Replacement Lien granted
to the Prepetition BMO Agent on property that was subject to a
first priority lien in favor of the Prepetition CoBank Agent
prior to the Petition Date, the Replacement Lien granted to the
Prepetition CoBank Agent; and (e) in the case of the Replacement
Lien granted to the Prepetition CoBank Agent on property of the
type described in the Prepetition BMO Security Agreement, the
Replacement Lien granted to the Prepetition BMO Agent.
The Replacement Liens granted to the Prepetition BMO Agent and
the Prepetition CoBank Agent on property that was unencumbered
before the Petition Date will rank pari passu with each other.
As further adequate protection, the Debtors will pay to the
Prepetition BMO Agent and the Prepetition CoBank Agent on the
closing date of the DIP Credit Agreement all interest accrued on
the prepetition obligations to that date and thereafter will pay
interest monthly in arrears at the non-default rate set forth in
the Prepetition BMO Credit Agreement and the Prepetition CoBank
Credit Agreement and accrue monthly the difference between the
default rate and the non-default rate to be payable at the
Termination Date.
In addition, as further adequate protection all of the
Prepetition Agents' and the Prepetition Lenders' reasonable fees
and expenses, and reasonable professionals' fees and expenses
will be funded through loans under the DIP Credit Agreement,
charged to the Debtors' account and will be deemed to constitute
an item paid in accordance with the 13-Week Budget.
About Pilgrim's Pride
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. In addition, the company owns 34
processing plants in the United States and 3 processing plants
n Mexico. The processing plants are supported by 42 hatcheries,
31 feed mills and 12 rendering plants in the United States and 7
hatcheries, 4 feed mills and 2 rendering plants in Mexico.
Moreover, the company owns 12 prepared food production facilities
in the United States. The company 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.
Pilgrim's Pride Corporation and six other affiliates filed Chapter
11 petitions on December 1, 2008 (Bankr. N. D. of Texas, Lead Case
No. 08-45664). Pilgrim's Pride has engaged Stephen A. Youngman,
Esq., Martin A. Sosland, Esq., and Gary T. Holzer, Esq., at Weil,
Gotshal & Manges LLP, as bankruptcy counsel. The Debtors have
also tapped Baker & McKenzie LLP as special counsel. Lazard
Freres & Co., LLC is the company's investment bankers and William
K. Snyder of CRG Partners Group LLC as chief restructuring
officer. The company's claims and noticing agent is Kurtzman
Carson Consulting LLC. Pilgrim's Pride had total assets of
$3,847,185,000, and debts of $2,700,139,000 as of June 28, 2008.
(Pilgrim's Pride Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
PLATINA ENERGY: Files for Chapter 11 Bankruptcy in Texas
--------------------------------------------------------
Platina Energy Group Inc. made a voluntary filing under Chapter
11 of the Bankruptcy Code in the United States Bankruptcy Court
for the Southern District of Texas, according to Dawn McCarty of
Bloomberg News.
The company, Ms. McCarty says, did not disclose reasons why it
filed for bankruptcy.
The company said that it is presently in default with Trafalgar
Capital for failure to make its September and October payments on
the obligations due to the firm of about $4,500,000. The company
further said that it is now in talks with Trafalgar and made a
good faith payment of $50,000.
The company has less than $50,000 in assets and less than $10
million in debts in its filing, Ms. McCarty notes. The company
listed $11,717,135 in assets and $13,094,732 in debts as of Sept.
30, 2008, according to a regulatory filing with the Securities
and Exchange Commission on Nov. 19, 2008.
A full-text copy of the company's quarterly report for the period
September 30, 2008, is available for free at:
http://ResearchArchives.com/t/s?35a7
Headquartered in Dallas, Texas, Platina Energy Group Inc. (NASDAQ
OTCBB: PLTG) -- http://www.platinagroup.com/-- operates an
exploration and diversified company.
POTLACH CORP: S&P Keeps Developing Watch on BB Corp. Credit Rating
------------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings,
including its 'BB' corporate credit rating, on Potlatch Corp.
remain on CreditWatch with developing implications. S&P placed
the ratings on CreditWatch on April 17, 2008, in connection with
the planned spin-off of its pulp-based manufacturing businesses.
"The spin-off will become effective on Dec. 16, 2008, but the
ratings remain on CreditWatch to reflect S&P's continued
uncertainty regarding the ultimate strategic direction and future
financial policy of the company after the spin-off," said S&P's
credit analyst Andy Sookram.
In resolving the CreditWatch listing, S&P will meet with Potlatch
management to discuss its near-to-intermediate term business and
financial strategies. Upside rating potential is predicated on
the company pursuing a relatively conservative financial policy
that would be considered more in-line with a higher rating.
Conversely, a more aggressive posture toward shareholder-oriented
policies or acquisitions could result in a lower rating.
PURE DIAMONDS: Has 210 Days to Comply With Listing Requirements
---------------------------------------------------------------
The Toronto Stock Exchange is reviewing the common shares of Pure
Diamonds Exploration Inc. with respect to meeting the continued
listing requirements.
The company has 210 days in which to regain compliance with these
requirements pursuant to the Remedial Review Process.
Headquartered in Vancouver, British Columbia, Pure Diamonds
Exploration Inc. (Symbol: PUG) -- http://www.pure-diamonds.ca/--
engages in diamond exploration in Canada for 12 years.
QUANTUM CORP: S&P Cuts Sub. Debt Rating to 'CCC'; Outlook Negative
------------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
corporate credit rating on San Jose, California-based Quantum
Corp. to 'B-' from 'B', its senior secured debt to 'B-' from 'B+',
and its subordinated debt rating to 'CCC' from 'CCC+'. S&P also
revised its recovery rating on the senior secured debt to '3' from
'2'. The outlook is negative.
The rating reflects the company's product concentration in legacy
tape-related storage, challenges to upgrade and update its product
offering, and high leverage. Consistent cash flow generation and
a good market position offset these factors. Quantum is a leading
vendor of data backup, recovery, and archive solutions. Quantum
had about US$473 million of operating lease-adjusted debt as of
September 2008.
The outlook is negative. While cash flow remains positive and the
company's small base of new products have received market
acceptance, the company faces a potential breach of its credit
agreements in two quarters. Based on adequate liquidity, a
payment default is unlikely in the near term, but, covenant
defaults are a clear possibility.
"We could lower the ratings if December operating results
deteriorate ?- specifically, if EBITDA is below September levels
?- and if debt is not reduced such that clearance of the March
covenant stepdown is in further in doubt, unless the covenants are
modified," said S&P's credit analyst Lucy Patricola.
"While unlikely in the near-to-intermediate term, the outlook
could stabilize if Quantum is successful in the marketplace,
improves earnings, or if it modifies covenants and refinancing
terms in its bank agreements to alleviate the risk of covenant
default," she continued.
RADNOR HOLDINGS: U.S. Trustee Protests Changes in Chapter 11 Plan
-----------------------------------------------------------------
Roberta A. DeAngelis, the U.S. Trustee for Region 2, objects
motion to modify first amended joint Chapter 11 plan of
liquidation filed by Radnor Holding Corporation and its debtor-
affiliates before the United States Bankruptcy Court for the
District of Delaware.
The Trustee argues that the amendments could affect certain claims
recoveries under the plan, which failed to meet the requirements
set fort in Section 1129(a) of the Bankruptcy Code.
The Trustee asserts that the amended plan does not provide for the
payment in full of allowed priority tax claims, allowed priority
non-tax claims and allowed administrative claims. The claimants
are expected to receive a pro rata share, if any, of a percentage
of future distributions to the secured lenders, the Trustee points
out.
According to the Troubled Company Reporter on Nov. 7, 2008,
the Debtors asked the Court for authority to modify their first
amended joint Chapter 11 plan of liquidation dated March 20,
2008. In addition, the Debtors delivered to the Court a second
amended joint Chapter 11 plan of liquidation dated Oct. 31, 2008,
which contemplates, among other things:
i) no substantive consolidation;
ii) no cram down of secured lender Wells Fargo Bank, N.A.; and
iii) certain distributions to secured lenders will be channeled
to creditors holding allowed administrative, priority and
non-tax priority claims.
The Debtors may move to dismiss certain of their Chapter 11 cases
if the second amended plan is rejected or, in the alternative,
convert certain of their cases to Chapter 7 liquidations.
About Radnor Holdings
Based in Radnor, Pennsylvania, Radnor Holdings Corporation
-- http://www.radnorholdings.com/-- manufactured and
distributed a broad line of disposable food service products in
the United States, and specialty chemicals worldwide. The Debtor
and its affiliates filed for chapter 11 protection on Aug. 21,
2006 (Bankr. D. Del. Lead Case No. 06-10894). Gregg M. Galardi,
Esq., Mark L. Desgrosseilliers, Esq., Sarah E. Pierce, Esq.,
Timothy R. Pohl, Esq., Patrick J. Nash, Jr., Esq., and Rena
M. Samole, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP,
represent the Debtors. The U.S. Trustee recently disbanded the
Official Committee of Unsecured Creditors. When the Debtors
filed for protection from their creditors, they listed total
assets of $361,454,000 and total debts of $325,300,000.
SHEARIN FAMILY: Gets Final OK for DIP Loan from RBC
---------------------------------------------------
Carla Main and Dawn McCarty of Bloomberg News report that Shearin
Family Investments LLC received final approval to borrow funds
under a postpetition financing facility with RBC Real Estate
Finance Inc.
When it filed for bankruptcy, Shearin owed RBC Real Estate almost
$30 million under five notes for its condominium projects.
As reported by the Troubled Company Reporter on Nov. 26, the U.S.
Bankruptcy Court for the Eastern District of North Carolina
granted the Debtor interim authority to borrow funds from RBC Real
Estate Finance to complete some or all of its waterfront, high-
rise condominium project in Indian Beach, Carteret County, North
Carolina known as The Nautical Club.
The Debtor told the Court that it is unable to obtain unsecured
credit allowable as an administrative expense.
Pursuant to the Financing Arrangement, RBC agrees to lend to the
Debtor these additional amounts:
a) $332,428 with respect to the September Draw under the
Building Contract;
b) the amounts as may be necessary to pay for the Project's
utility and insurance costs for the duration of the Debtor's
case; and
c) such amounts as RBC may approve in its sole discretion
for payments to Centurion Construction Co. under the Building
Contract and Site Work Contract.
In addition, RBC has agreed to lend to the Debtor, subject to 72
hours' advance notice to all creditors:
a) advances for other improvements to the property owned by the
Debtor and securing RBC;
b) payment of retainage owed under the various contract; and
c) Any other Contract involving the Project.
The Debtor owes RBC Real Estate Finance, through a loan
participation agreement with other lenders, relating to financing
for the Project, approximately $29,978,053 in principal, interest,
and late fees, secured by a Deed of Trust on the Project property
inn the aggregate amount of $32,300,000.
The terms of RBC's post-petition financing, including interest
rate, maturity, and events of default, are the same terms as found
in the Promissory Note from the Debtor to RBC dated Oct. 9, 2007,
in the original principal amount of $12,400,000.
Based in Rocky Mount, North Carolina, Shearin Family Investments,
LLC owns and operates a condominium resort in Carteret County, in
North Carolina. The company filed for Chapter 11 relief on
Oct. 13, 2008 (Bankr. E.D. N.C. Case No. 08-07082). Trawick H.
Stubbs, Jr., Esq., at Stubbs & Perdue, P.A. represents the Debtor
as counsel. When the Debtor filed for protection from its
creditors, it listed assets of $46,327,546 and debts of
$49,260,007.
SUNWEST MANAGEMENT: 2 Assisted Living Homes File for Chapter 11
---------------------------------------------------------------
Jeff Manning at The Oregonian reports that Portland Senior Living
LLC -- doing business as Hawthorne Gardens Assisted Living
Community -- and Stayton S.W. Assisted Living, doing business as
Lakeside Assisted Living Community, have filed for Chapter 11
protection on Monday in the U.S. Bankruptcy Court for the District
of Oregon.
Principals of Sunwest Management own Portland Senior and Lakeside
Assisted Living, says The Oregonian. Another Sunwest Management
operation in Dallas, Texas, also went bankrupt, according to the
report.
The filings, states The Oregonian, bring to 13 the number of
Sunwest Management-affiliated retirement communities that sought
court protection from creditors.
Pete Springer at Obp.org relates that Sunwest Management said in
August that the bankruptcies are due to the credit crisis, debts,
and loan defaults.
Salem, Oregon-based Sunwest Management Inc. --
http://www.sunwestmanagement.com/-- manages 275 assisted-living
facilities in 36 states. Sunwest Management was founded in 1991
with a portfolio of three properties: two retirement communities
and one skilled nursing community. It has a network of regional
managers that handles various services from accounting to
operations.
Sunwest Management has put 10 assisted living centers -- two in
Oregon -- into Chapter 11 bankruptcy. Briarwood Retirement and
Assisted Living Community LLC, which owns a retirement center in
Springfield, and Century Fields Retirement and Assisted Living
Community LLC, which owns a center in Lebanon, filed for Chapter
11 on Aug. 19, 2008. On Aug. 17, 2008, eight Sunwest-affiliated
LLCs filed for Chapter 11 bankruptcy protection from creditors in
Tennessee.
TALECRIS BIOTHERAPEUTICS: Moody's Lifts Corp. Family Rating to B3
-----------------------------------------------------------------
Moody's Investors Service upgraded the ratings of Talecris
Biotherapeutics, Inc. (Corporate Family and Probability of Default
Ratings to B3 from Caa1 and First Lien Term Loan to B2 from Caa1)
and assigned a stable outlook. At the same time, due to updates
in Moody's assumptions using the Loss Given Default Methodology,
LGD assessments have been changed. This concludes the rating
review that was initiated on Aug. 13, 2008.
The rating upgrade and stable outlook reflect Moody's expectation
that the company's new supply agreement with CSL combined with
better than expected center licensing and throughput, should
substantially lift supply constraints over the foreseeable future.
In addition, based on recent improvements in performance, Talecris
should be able to comply with its covenants over the next several
quarters. However, ongoing quarterly step-down provisions provide
some risk.
Diana Lee, a Senior Credit Officer at Moody's, said "Although
concerns regarding Talecris's supply constraints have been
alleviated, ongoing improvements in performance will be necessary
for future covenant compliance."
The stable outlook further assumes that although high working
capital needs will likely require additional draws on the
company's revolver, this reduction in financial flexibility will
be temporary.
The last credit action taken for Talecris occurred on Aug. 13,
2008, when the ratings were placed under review for possible
upgrade following the concurrent signing of a plasma supply
agreement and a definitive merger agreement with CSL.
If the merger does occur as planned, Moody's expects to ultimately
withdraw Talecris's existing debt ratings. Moody's believes that
a change of control would be considered an event of default under
the current bank agreements, which would require debt to be
repaid. Moody's understands that this merger is subject to
certain regulatory approvals, and if the approvals are not
obtained within one year from the date of signing, either party
would have the right to terminate the transaction.
The principal methodology used in rating Talecris was the Global
Medical Products & Device Industry Methodology, which can be found
at www.moodys.com in the Credit Policy & Methodologies directory,
in the Ratings Methodologies subdirectory. Other methodologies
and factors that may have been considered in the process of rating
this issuer can also be found in the Credit Policy & Methodologies
directory.
Talecris Biotherapeutics, Inc.
Ratings upgraded:
-- Corporate Family Rating to B3 from Caa1
-- Senior Secured First Lien Term Loan to B2, LGD3, 38% from
Caa1, LGD3, 45%
-- PDR to B3 from Caa1
Rating confirmed:
-- Senior Secured Second Lien Term Loan at Caa2, LGD5, 89%
Talecris Biotherapeutics, Inc. is a leading global manufacturer of
plasma-derived, protein-based products for individuals suffering
from life-threatening diseases. Talecris began operations on
April 1, 2005, when the US assets of Bayer AG's worldwide plasma
derived products business were acquired by financial sponsors,
Cerberus Capital Management and Ampersand Ventures.
THORNBURG MORTGAGE: Suspended From NYSE Trading Starting Dec. 5
---------------------------------------------------------------
Thornburg Mortage, Inc., said in a regulatory filing with the
Securities and Exchange Commission that it received on December 1,
2008, notice from NYSE Regulation, Inc., that the NYSER has
determined that the company's common stock should be suspended
from trading prior to market opening on Friday, December 5, 2008.
The NYSER based its determination on the fact that the Common
Stock price had fallen below the New York Stock Exchange's
continued listing standard for average closing price of less than
$1.00 over a consecutive 30 trading day period and had not
regained compliance with this standard within the required six
month period. The company does not intend to appeal the NYSER's
determination.
The company said it expects the Common Stock to be quoted on the
OTC Bulletin Board or Pink Sheets following suspension from the
NYSE.
The New York Stock Exchange also has struck these classes of
Thornburg securities from listing:
-- 10% Series F Cumulative Convertible Redeemable Preferred
Stock;
-- 7.50% Series E Cumulative Convertible Redeemable Preferred
Stock;
-- Series D Adjustable Rate Cumulative Redeemable Preferred
Stock; and
-- 8.00% Series C Cumulative Redeemable Preferred Stock
Additionally, Thornburg said that on November 26, 2008, it issued
additional warrants exercisable into 276,519,943 shares of common
stock. The move, the company said, satisfied the final condition
to the triggering event, resulting in the termination of the
company's Principal Participation Agreement, dated March 31, 2008,
with certain parties. The Principal Participation Agreement
entitled the Participants to receive monthly payments in an amount
equal to the principal payments received on a certain portfolio of
the company's mortgage securities after deducting principal
payments due under the financing agreements that relate to such
assets, beginning March 16, 2009 through March 31, 2015, unless
earlier terminated.
Pursuant to the company's Purchase Agreement, dated March 31,
2008, with a group of investors, these conditions -- which have
now all been satisfied -- were required to be satisfied for the
Principal Participation Agreement to terminate prior to its
maturity date -- the Triggering Event:
1. approval of an amendment to the charter to increase the
number of authorized shares of capital stock to 4 billion
shares -- which was obtained at the company's 2008 Annual
Meeting of Shareholders held on June 12, 2008;
2. completion of a tender offer for at least 66-2/3% of the
outstanding shares of each series of the company's
preferred stock on or prior to December 31, 2008 -- which
was successfully completed on November 21, 2008;
3. approval from the holders of the company's common stock,
par value $0.01, and 10% Series F Cumulative Convertible
Redeemable Preferred Stock entitled to cast 66-2/3% of the
votes entitled to be cast on the matter, voting together
as a single class -- which was obtained at the 2008 Annual
Meeting -- and holders of 66-2/3% of the outstanding
shares of each series of Preferred Stock, each voting as a
separate class, of an amendment to the company's charter
to modify the terms of each series of Preferred Stock to
eliminate certain rights of the Preferred Stock -- which
was obtained by a consent solicitation sought in
connection with the Tender Offer; and
4. the issuance of the Additional Warrants to the Subscribers
-- which were issued on November 26, 2008.
The Principal Participation Agreement was entered into in
connection with a financing transaction Thornburg entered into on
March 31, 2008.
Thornburg said the Additional Warrants are immediately exercisable
at an exercise price of $0.01 per share. Prior to their exercise,
the Additional Warrants remain subject to certain anti-dilution
protections. The Additional Warrants are governed by a Warrant
Agreement, dated March 31, 2008, among the company and the
investors.
Thornburg also related that due to the satisfaction of the
Triggering Event, pursuant to the terms of the Indenture governing
the company's Senior Subordinated Secured Notes due 2015, on
November 26, the interest rate on the Senior Subordinated Notes
was reduced from 18% to 12% per annum and all interest accrued in
excess of 12% per annum at that time was cancelled. The decrease
in the interest rate on the Senior Subordinated Notes is
anticipated to result in savings of approximately $75.9 million
per year in interest payments, the company said.
As reported by the Troubled Company Reporter, pursuant to the
Purchase Agreement, Thornburg raised an aggregate of $1.15 billion
from the sale of Senior Subordinated Secured Notes due 2015,
detachable Class B warrants exercisable for 16,860,705 shares of
Thornburg's common stock, par value $0.01 per share, and interests
in the Principal Participation Agreement, dated March 31, 2008,
with MatlinPatterson entities, namely MP TMA LLC and MP TMA
(Cayman) LLC and their affiliates, as the lead investor.
In addition, $200 million was originally placed in escrow by
investors, of which approximately $11.4 million was withdrawn on
June 30, 2008, and Thornburg placed detachable Class B warrants
exercisable into 2,932,336 shares of Common Stock. On October 1,
2008, due to the failure to satisfy certain conditions in the
Purchase Agreement, $188.6 million of Escrowed Funds were released
to the escrow subscribers and, in connection with the release of
such funds, the holders of the Senior Subordinated Notes became
entitled to receive Escrowed Warrants exercisable into 3,156,037
shares of Common Stock, of which MP TMA LLC and MP TMA (Cayman)
LLC received Escrowed Warrants exercisable into 1,004,389 and
299,171 shares of Common Stock, respectively.
Orrick, Herrington & Sutcliffe LLP and Venable LLP represent
Thornburg in connection with the 2015 Notes.
About Thornburg Mortgage Inc.
Based in Santa Fe, New Mexico, Thornburg Mortgage Inc. (NYSE: TMA)
-- http://www.thornburgmortgage.com/-- is a single-family
residential mortgage lender focused principally on prime and
super-prime borrowers seeking jumbo and super-jumbo adjustable-
rate mortgages. It originates, acquires, and retains investments
in adjustable and variable rate mortgage assets. Its ARM assets
comprise of purchased ARM assets and ARM loans, including
traditional ARM assets and hybrid ARM assets.
As reported by the Troubled Company Reporter on November 20, 2008,
Thornburg has not paid the interest payment due on Nov. 15, 2008,
on its 8% Senior Notes, because it currently does not have
available funds to do so. The company is in active negotiations
with the counterparties to the Override Agreement and expects to
pay the $12.2 million interest payment once an amended and
restated agreement has been reached with the counterparties to the
Override Agreement and within the 30-day grace period under the
indenture.
TUCSON ELECTRIC: S&P Upgrades Corporate Credit Rating to 'BB+'
--------------------------------------------------------------
Standard & Poor's Ratings Services raised Tucson Electric Power
Co.'s corporate credit rating to 'BB+' from 'BB'. At the same
time, the secured ratings were raised to 'BBB+' from 'BBB' and the
unsecured notes were raised to 'BBB- from 'BB+'. The respective
recovery ratings of '1+' and '2' remain unchanged. The outlook is
stable.
"The upgrades reflect the Arizona Corporation Commission's
approval of TEP's rate case settlement, with modifications," said
S&P's credit analyst Antonio Bettinelli. "With this order, TEP's
generation operations are re-regulated, which should allow the
company to better match revenues with expenses."
The order provides for an estimated 6% increase in retail base
rates that should allow the company to stabilize cash flows at
modestly stronger levels and, importantly, provides the company
with a beneficial purchased power and fuel adjustment clause that
will mitigate TEP's significant exposure to unplanned outages and
unexpected increases in fuel and purchased power costs and reduce
cash flow volatility. Under a rate freeze, in place since 1999,
the Tucson-based utility was not able to defer these costs for
future collection in rates.
TEP is a vertically integrated, investor-owned utility in Arizona,
serving 400,000 customers within Tucson and southeastern Arizona.
The company is a wholly owned subsidiary of UniSource.
VALLEY CLUB: Asks Court to Dismiss Case; Cal National Objects
-------------------------------------------------------------
Valley Club Homes, LLC asks the U.S. Bankruptcy Court to dismiss
its Chapter 11 bankruptcy case on these grounds:
a. The sole remaining parcel of real property that it holds
consists of a residence encumbered by a first deed of
trust lien in favor of Mountain West Bank. The Debtor does
not believe there is equity in this property after payment of
the secured debt, continuing interest, as well as payment of
closing costs, to retire any of its unsecured debts. D.L.
Evans Bank and California National Bank have both obtained
relief from stay from the Court permitting them to foreclose
on the properties encumbered by them.
b. Debtor does not believe there is current source of repayment
for any of the unsecured creditors of the estate under
current market conditions.
c. As a result of the foregoing, Debtor does not believe there
is sufficient property available to the estate for the Debtor
to either formulate a Chapter 11 plan or for a Chapter 7
trustee to provide any effective relief for the Chapter 7
unsecured creditors.
In addition, the Debtor relates that it has failed to obtain
financing as contemplated in its Chapter 11 plan and disclosure
statement.
Upon further review, however, the Debtor now believes it will be
unable to reorganize its affairs or to amend the disclosure
statement in a manner sufficient to satisfy the adequacy
requirements of the Bankruptcy Code.
Objection of California National Bank
California National objects and says that dismissal of the case is
not in the best interests of creditors or the estate, and will
prejudice all parties-in-interest in the Debtor's case.
California National has filed its own motion for the conversion of
the Debtor's bankruptcy case to a Chapter 7 proceeding, saying
that:
a) the Chapter 11 case was filed by the Debtor in bad faith;
b) there is substantial or continuing loss to or diminution of
the estate, and absence of a reasonable likelihood of
rehabilitation;
c) the Debtor has grossly mismanaged its case; and
d) the Debtor has failed to file a disclosure statement or
confirm a plan within the time fixed by this title or by
order of the Court.
About Valley Club Homes
Headquartered in Ketchum, Idaho, Valley Club Homes LLC owns and
operates The Village Green at the Valley Club, a high-end
subdivision and golf course in Wood River Valley. According to
the Idaho Mountain Express, Village Green was approved by the
Blaine County Commission in spring 2005. Its development plan
included a nine-hole Tom Fazio golf course and construction of 43
custom homes, valued at about $3 million each.
The company filed for Chapter 11 protection on April 29, 2008
(Bankr. D. Idaho Case No. 08-40339). Joseph M. Meier, Esq., at
Cosho Humphrey, LLP, in Boise, Idaho, represents the Debtor as
counsel. In its amended schedules which was filed with the Court
on Oct. 21, 2008, the Debtor listed total assets of $32,435,402
and total debts of of $24,380,856.
VALUE FAMLY: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Value Family Properties - Indian Creek, LP
5400 Parker Henderson Road
Fort Worth, TX 76119
Bankruptcy Case No.: 08-45794
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Value Family Properties - Hickory Creek, LP 08-45795
Value Family Properties - Denton, LP 08-45796
Value Family Prop- West Atlanta LLC 08-84255
Value Family Prop- Homes Atlanta LLC 08-84355
Value Family Properties, Pine Lake, LLC 08-84324
Type of Business: The Debtors operates a homebuilding company.
See: http://www.valuefamilyproperties.com/
Chapter 11 Petition Date: December 2, 2008
Court: Northern District of Texas (Ft. Worth)
Debtor's Counsel: Mark Joseph Petrocchi, Esq.
mpetrocchi@gpaplaw.com
Goodrich Postnikoff Albertson
& Petrocchi, LLP
777 Main Street, Suite 1360
Ft. Worth, TX 76102
Tel: (817) 335-9400
Fax: (817)338-9209
Estimated Assets: $1 million to $10 million
Estimated Debts: $10 million to $50 million
The Debtors did not file a list of 20 largest unsecured creditors.
The petition was signed by David Stewart.
VERSO TECHNOLOGIES: Plan Filing Period Extended to Jan. 30, 2009
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia
extended on Nov. 25, 2008, subject to objection by any party in
interest filed within 30 days entry of the order, Verso
Technologies and its affiliated debtors' exclusive periods to:
a) file a plan through and including Jan. 30, 2009; and
b) solicit acceptances of said plan through and including
March 31, 2009.
This is the second extension granted to the Debtors. On Aug. 25,
2008, the Court granted extensions of the exclusive periods for
filing a plan and soliciting acceptances until Nov. 20, 2008, and
Jan. 19, 2009, respectively.
The Debtors told the Court that they have concluded the sales of
the various business units and resolved the "call center"
adversary proceeding against two former employees, and have
focused their attention on formulating a plan of reorganization.
Due to the complexity of their cases, however, the Debtors say
they require more time to formulate their plan.
About Verso Technologies
Headquartered in Atlanta, Georgia, Verso Technologies Inc.
(OTC:VRSOQ) -- http://www.verso.com/-- provides
telecommunications service in the United States. The company and
its affiliates manufacture, deliver, and provide support for
hardware, software and service solutions primarily to large
wireline, cellular, wireless and satellite carriers.
The company and four of its affiliates filed for Chapter 11
protection on April 25, 2008 (Bankr. N.D. Ga. Lead Case No.
08-67659). J. Robert Williamson, Esq., at Scroggins and
Williamson, James R. Sacca, Esq., and John D. Elrod, Esq., at
Greenberg Traurig, LLP represent the Debtors as counsel. The
Debtors selected Logan and Company Inc. as their claims agent.
Darryl S. Laddin, Esq., and Stephen M. Dorvee, Esq., at Arnall
Golden Gregory LLP represent the Official Committee of Unsecured
Creditors as counsel. When the Debtors filed for protection from
their creditors, they listed total assets of $34,263,000 and total
debts of $36,657,000.
WAVE SYSTEMS: Sept. 30 Balance Sheet Upside-Down by $5 Million
--------------------------------------------------------------
Wave Systems Corp.'s balance sheet at Sept. 30, 2008, showed total
assets of $2,985,012 and total liabilities of $7,979,702,
resulting in a stockholders' deficit of $4,994,690.
Net loss for three months ended Sept. 30, 2008, was 5,604,732
compared to net loss of $4,777,700 for the same period in the
previous year.
Wave's Q3 2008 net revenues rose 6% to $1,835,000, compared to Q3
2007 net revenues of $1,734,000, reflecting increased bundled
software royalties, well as growth in contribution from software
license upgrades.
For nine months ended Sept. 30, 2008, the company reported net
loss of $17,254,675 compared to net loss of $14,663,994 for the
same period in the previous year
Subsequent to the close of Q3 2008, Wave completed a $721,500
offering of Series J convertible preferred stock and began to
implement a series of cost reduction measures aimed at reducing
the company's ongoing operating expenses.
Wave has experienced net losses and negative cash flow from its
operations since its inception, and, as of Sept. 30, 2008, had an
accumulated deficit of $340,738,325. Total stockholders' deficit
as of Sept. 30, 2008, was $4,994,690. Wave has financed its
operations through Sept. 30, 2008, through the issuance of Class A
and B Common Stock and various series of preferred stock.
Sources and Uses of cash
As of Sept. 30, 2008, Wave had $696,847 in cash and cash
equivalents. As of Dec. 31, 2007, Wave had $3,714,030 in cash
and cash equivalents. The decrease in cash and cash equivalents
of $3,017,183, resulted from $10,842,387 used in operating
activities, $558,162 used in investing activities for the
acquisition of capital assets offset by $8,383,366 generated
through financing activities, from the sale of 8,783,440 shares
of Class A Common Stock, including 209,857 shares sold pursuant
to Wave's Employee Stock Purchase Plan, the sale of 220 shares of
Series I Preferred Stock and proceeds from a capital lease
obligation. At Sept. 30, 2008, Wave had negative working capital
of $5,833,999.
Liquidity Requirements and Future Sources of Capital
Wave estimates that its total expenditures to fund operations for
the twelve-months ending Sept. 30, 2009 will be approximately
$25,500,000, including research and development, acquisition of
capital assets, sales and marketing, general corporate expenses
and overhead.
Expected sources of capital include:
ú cash on hand of $696,847 as of Sept. 30, 2008;
ú gross margin contribution from sales and licensing of
products; and
ú additional financings.
Given Wave's capital requirements for the twelve-month period
ending Sept. 30, 2009, and Wave's cash on hand as of Sept. 30,
2008, Wave will be required to raise additional capital to fund
its operations.
Wave may obtain additional funding as needed from further sales of
newly issued shares of Class A common stock and a series of
preferred stock under our $25,000,000 shelf registration statement
that the company filed on April 18, 2008, that the Securities and
Exchange Commission declared effective on June 23, 2008.
Approximately $22,480,000 in gross proceeds is available under the
shelf registration statement filed on April 18, 2008, and declared
effective by the Commission on June 23, 2008, which may be
utilized for future financings. Wave can provide no assurances as
to whether it will be successful in raising the needed capital to
continue as a going concern.
A full-text copy of the 10-Q filing is available for free at
http://ResearchArchives.com/t/s?35aa
About Wave Systems
Headquartered in Lee, Mass., Wave Systems Corp. (Nasdaq : WAVX)
-- http://www.wave.com/-- provides software to help solve
critical enterprise PC security challenges such as strong
authentication, data protection, network access control and the
management of these enterprise functions.
Going Concern Doubt
As reported in the Troubled Company Reporter on March 28, 2008,
KPMG LLP, in Boston, expressed substantial doubt about Wave
Systems Corp.'s ability to continue as a going concern after
auditing the company's consolidated financial statements for the
years ended Dec. 31, 2007, and 2006. The auditing firm pointed to
the company's recurring losses from operations and accumulated
deficit.
The company's balance sheet as of June 30, 2008, showed
$2.16 million in total assets, $5.12 million in total current
liabilities, and $2.96 million in shareholders' deficit. The
company had $335.1 million in accumulated deficit.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $5.12 million in total current
assets available to pay $1.4 million in total current liabilities.
WAVE SYSTEMS: Suspends Unit's TVTonic Services to Save on Costs
---------------------------------------------------------------
Wavexpress, a subsidiary of Wave Systems Corp., suspended its
TVTonic consumer media service and is exploring opportunities to
sell or license its technology to third parties that may provide
download and play services.
Steven Sprague, president and CEO of Wave Systems, commented,
"Given the difficult economic climate, we believe that we need to
focus our resources on Wave's core security solutions business and
that we can no longer fund Wavexpress' operations at current
levels. Wavexpress' suspension of its TVTonic service will result
in material reductions in staffing, infrastructure and other costs
that have historically been funded by Wave."
Wave estimates that these measures will reduce consolidated
operating costs by approximately $800,000 per quarter. A small
staff will remain in place at Wavexpress in order to support
efforts to license or sell the Wavexpress technology to third
parties.
About Wave Systems
Headquartered in Lee, Massachusetts, Wave Systems Corp. (Nasdaq :
WAVX) -- http://www.wave.com/-- provides software to help solve
critical enterprise PC security challenges such as strong
authentication, data protection, network access control and the
management of these enterprise functions.
Going Concern Doubt
As reported in the Troubled Company Reporter on March 28, 2008,
KPMG LLP, in Boston, expressed substantial doubt about Wave
Systems Corp.'s ability to continue as a going concern after
auditing the company's consolidated financial statements for the
years ended Dec. 31, 2007, and 2006. The auditing firm pointed to
the company's recurring losses from operations and accumulated
deficit.
The company's balance sheet as of June 30, 2008, showed
$2.16 million in total assets, $5.12 million in total current
liabilities, and $2.96 million in shareholders' deficit. The
company had $335.1 million in accumulated deficit.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $5.12 million in total current
assets available to pay $1.4 million in total current liabilities.
WELLMAN INC: Sept. 30 Balance Sheet Upside-Down by $268 Million
---------------------------------------------------------------
Wellman Inc.'s balance sheet at Sept. 30, 2008, showed total
assets of $436,100,000, total liabilities of $704,500,000,
resulting in a stockholders' deficit of $268,400,000.
For the three months ended Sept. 30, 2008, the company reported
net loss of $50,500,000.
Net sales of Wellman amounted to $233,600,000.
In the nine month period, it reported net loss of $84,100,000.
At Sept. 30, 2008, the company's cash and cash equivalents were
$2,100,000.
A full-text copy of Wellman's Third Quarter Results on Form 10-Q
is available at http://ResearchArchives.com/t/s?3580
About Wellman Inc.
Headquartered in Fort Mill, South Carolina, Wellman Inc. ([OTC]:
WMANQ.OB) -- http://www.wellmaninc.com/-- manufactures and
markets packaging and engineering resins used in food and beverage
packaging, apparel, home furnishings and automobiles. They
manufacture resins and polyester staple fiber a three major
production facilities.
The company and its debtor-affiliates filed for Chapter 11
protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No. 08-10595).
Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York
City, represents the Debtors. Lazard Freres & Co., LLC, acts as
the Debtors' financial advisors and investment bankers. Conway,
Del Genio, Gries & Co., LLC, was also retained as the Debtors'
chief restructuring advisor.
The United States Trustee for Region 2 has appointed seven members
to the Official Committee of Unsecured Creditors. Mark R.
Somerstein, Esq., at Ropes & Gray LLP, serves as the Committee's
bankruptcy counsel. FTI Consulting, Inc., acts as the panel's
financial advisors.
Wellman Inc., in its bankruptcy petition, listed total assets of
$124,277,177 and total liabilities of $600,084,885, as of Dec. 31,
2007, on a stand-alone basis. Debtor-affiliate ALG, Inc., listed
assets between $500 million and $1 billion on a stand-alone basis
at the time of the bankruptcy filing. Debtor-affiliates Fiber
Industries Inc., Prince Inc., and Wellman of Mississippi Inc.,
listed assets between $100 million and $500 million at the time of
their bankruptcy filings.
On a consolidated basis, Wellman Inc., and its debtor-affiliates
listed $512,400,000 in total assets and $730,500,000 in
liabilities as of June 30, 2008.
Wellman filed a restructuring plan before the Bankruptcy Court on
June 25, 2008. (Wellman Bankruptcy News; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000).
* Fitch Changes Not-For-Profit Hospital Sector Outlook to Negative
------------------------------------------------------------------
Fitch Ratings has revised its Outlook on the U.S. not-for-profit
hospital sector to Negative from Stable. The Outlook revision
reflects Fitch's observation and expectation of material weakening
in several areas affecting hospital creditworthiness. Fitch
expects that rating downgrades will exceed rating upgrades for the
next 18 to 36 months.
While bond ratings contemplate a certain amount of performance
variability due to business cycles and other reasons, the combined
effects of investment portfolio losses, increasing uncompensated
care, and higher capital costs are adversely affecting many
hospitals' credit profiles. Further, state and federal budgetary
pressures stemming from the economic downturn are anticipated to
constrain governmental reimbursement programs, while the business
sector is expected to continue to shift healthcare costs to its
employees. These factors, coupled with projections for increasing
unemployment over the next several months and declines in acute
care utilization, are expected to depress operating profitability
for the next few years.
The equity market downturn, which began over a year ago and
accelerated this fall, has eroded the liquidity cushion that many
hospitals amassed from 2004 to 2007. While unrestricted reserves
in many cases are still substantial, observed drops in days cash
on hand of 20%-30% from 2007 to 2008 are not uncommon. The credit
rating implications vary from institution to institution, and
partially depend on the absolute liquidity level. For example, a
decline from 100 DCOH to 70 DCOH is more troubling than a drop
from 250 DCOH to 175 DCOH.
As the economy slides into what many expect to be a prolonged and
severe recession, hospitals have begun to observe two expected
results: increasing uncompensated care and declining utilization.
Both factors have reduced operating profitability, and are
expected to do so over the next several months. Fitch also
expects fiscal pressures at state and federal levels to curtail
growth in governmental funding levels, further challenging bottom
lines.
Finally, hospitals' access to low cost capital is not expected to
substantially improve over the near term. As a result, higher
capital costs will be unavoidable for many institutions, as
hospitals are forced to debt finance committed projects at higher
interest rates, and as liquidity enhancement for variable rate
demand obligations remains scarce and expensive.
These negative factors have not affected Fitch-rated hospitals
equally. Generally, higher rated systems, which tend to be those
that built up larger reserves of unrestricted cash and
investments, those having geographic diversification sufficient to
offset sharp losses in certain markets, and those that
consistently posted strong operational profitability through
effective management practices, are better equipped to withstand
the effects of an economic slump and reimbursement pressures.
These organizations also tend to have better access to capital,
more financial flexibility, and ample resources to continue to
make capital investments to ensure their competitiveness.
However, the effect has been and is expected to be more severe for
lower rated credits, which are often smaller and operate in single
competitive markets, exhibit profit volatility, or show flat or
declining utilization trends. Fitch expects to see rating
downgrades moderately weighted toward lower rated hospitals, as
well as an increase in merger activity as these more challenged
providers seek to best serve their communities through
partnerships with stronger entities.
In response to the events and conditions of the past several
months, and in anticipation of continued economic and regulatory
stress, most hospitals have taken steps to address the difficult
operating environment's effect on creditworthiness by curtailing
or deferring capital spending, reducing staffing to bolster
profitability, and, in some cases, adjusting investment
allocations to limit further equity losses. Fitch believes these
actions, as well as the sector's substantial profitability and
balance sheet strength built up over the past several years,
should mitigate the brunt of the challenging headwinds for many
hospitals.
* Gruppo Levey Forms New Practice Group on Restructuring
--------------------------------------------------------
Gruppo, Levey & Co. has formed a new practice group focused on
restructuring options for middle-market companies that are
experiencing financial distress.
According to the company, the group will be led by Managing
Director Mark DeGennaro and will work closely with entities that
are undergoing financial hardship due to the current economic
climate. "Market conditions are very challenging for all types of
businesses today, and particularly those that rely on
discretionary consumer spending or are in need of a restructured
capital base," said Mr. DeGennaro. "Balance sheets of lenders
have been impaired, defaults by middle market companies are
rising, the credit markets are very tight, and the weaknesses in
the economy continue to accelerate.
"These challenges are daunting, and it's important that mid-market
companies avoid a bunker mentality and proactively seek
professional advice to help them navigate through a down market,"
Mr. DeGennaro continues.
The company's new practice group will work with financially
challenged corporations to customize and implement sound
restructuring plans. The company will advise companies on balance
sheet restructuring, raising additional equity capital, debt
replacement/restructuring, distressed mergers and acquisitions,
and sales of non-core assets to repay debt, both in and out of the
bankruptcy court process.
"[Mr. DeGennaro] and his team will be able to leverage our core
expertise in helping companies survive or sell to another
purchaser at the best value possible in a very tough environment
where speed to closure is of utmost importance," said Claire
Gruppo, Co-Founder and President of Gruppo, Levey & Co. "Our new
group will be able to build on our past successes, industry
expertise and relationships to create or preserve value."
The company has advised in numerous distressed situations,
including: the bankruptcy sales of Lillian Vernon, DIMAC, Edison
Brother Stores, proteam.com and U.S. Mills; the purchase of the
Scholastic At Home business by Sandvik AS; the secured credit
facility financing of Cornerstone Brands; and the acquisition of
numerous distressed properties for Fingerhut.
About Gruppo Levey
Gruppo, Levey & Co. -- www.glconline.com -- is an independent
private investment banking firm specializing in multi-channel
retail, marketing services, media, and business-to-business (B2B)
distribution. The company provides sell-side and acquisition
transaction services; raises growth capital and debt financing;
advises companies, debtors, trustees and special committees on
restructurings, recapitalizations and corporate reorganizations;
and provides fairness opinions, due diligence and served as a
trusted advisor, in to entrepreneurs, financial sponsors,
corporate boards and family business owners in transactions
encompassing many business segment including retailers selling in
all channels, B2B marketers, targeted media firms, specialty
publishers, database/analytics companies and online/lead
generation businesses.
* Moody's Says Federal Initiatives Help Short-term Market Recovery
------------------------------------------------------------------
Recent initiatives by U.S. monetary authorities and their
counterparts across the globe appear to be successfully
alleviating strains on money markets by adding to secondary market
liquidity, providing guarantees, and by reinforcing investor
confidence in short-term markets, according to a pair of recent
reports from Moody's Investors Service.
Following a high water mark of US$2.1 trillion in prime money
market fund assets in early September, about US$500 million was
withdrawn from prime funds in the wake of the Lehman Brothers'
Sept. 15 bankruptcy. Some of these assets flowed into government-
oriented funds, and the redemption activity also coincided with a
decline in commercial paper outstandings. The U.S. Treasury and
Federal Reserve Bank responded to the decline in prime fund assets
with new programs that contribute to secondary market liquidity
and stabilize outflows by guaranteeing net asset values of
participating money funds. Total money market assets have since
rebounded to an all-time high level of US$3.7 trillion by the end
of November.
"The cumulative effect of the Federal programs has been improved
market access for short-term borrowers and has also increased
flexibility to prime money market funds in particular," says
Moody's Vice President Martin Duffy, an author of both reports.
"Recently," he said, "the pace of redemption activity in prime
money funds has slowed ? and, in some cases, even reversed -- and
the more stable cash flows have now begun to ease the urgent need
for money-fund managements to force-sell assets into weak
markets." As a result, the analyst states, spreads have tightened.
Duffy also emphasized that regulatory bodies, along with fund
management firms, are expected to confront the challenges of
sustaining the confidence of investors generally, and
institutional investors in particular, upon the expiry of these
programs and beyond. "Removal of the programs will likely be a
delicate undertaking," said Duffy.
One initiative, the Money Market Investor Funding Facility
launched by the Federal Reserve Bank of New York, provides an
additional source of liquidity through a facility that will
purchase eligible money market instruments from eligible money
market funds. It was established with the ABCP Money Market
Mutual Fund Liquidity Facility on Sept. 19.
The Commercial Paper Funding Facility, established on Oct. 7,
provides a liquidity backstop to commercial paper issuers and
improves their market access. Both MMIFF and AMLF provide
secondary market purchase capacity for money fund assets. "All
four programs, along with the FDIC initiatives, do different
things but work in concert to reduce strains in the money markets
from an investor and issuer perspective," said Duffy.
The MMIFF will provide secondary market liquidity for a money
market fund's bank-related holdings, thereby improving a fund's
ability to liquidate these holdings to meet sudden redemptions.
"By providing support to the money market funds, both the MMIFF
and the ABCP Money Market Mutual Fund Liquidity Facility will also
provide indirect assistance to banks, as well as to other money
market-fund management firms," said Duffy. "Since the beginning
of the crisis, these firms have been shoring up prime money market
funds in connection with their exposure to impaired securities
and, to a more limited extent, to alleviate liquidity strains."
He said strains on the market had resulted in shortening of money
market tenors on investments, "but it is a positive indication
that weighted average maturities in prime money market funds have
begun to extend, and thus Moody's are now seeing momentum in funds
that are purchasing instruments over longer time horizons -- also
a very good sign."
Duffy believes that the CPFF has begun reversing the decline in
commercial paper outstanding by providing backstop support and
market access to eligible corporate obligors out to 90 days.
Other positive factors reinforcing Moody's view are stronger
secondary market support for short-term borrowers and improved
market access for issuers seeking to extend maturities. "A
sustained period of confidence among short-term investors should
generally result in more efficient funding for issuers," said
Duffy, who added that recent declines in LIBOR rates have also
contributed to the improved tone in short-term markets.
Money market fund sponsors continue to review their approved lists
of eligible credits. According to Duffy, "money funds with
diversified shareholder base and familiarity with cash-flow
patterns can now better structure their portfolio liquidity, which
also mitigates the potential adverse impact of redemptions."
* Richardson Taps Robert Shenfeld to Join Bankruptcy Group
----------------------------------------------------------
Richardson & Patel LLP said another development in its Bankruptcy
and Reorganization Practice with the addition of Robert C.
Shenfeld.
Mr. Shenfeld's focus is on creative solutions to complicated
problems caused by financial instability. He joined the firm on
Nov. 17, 2008 and adds to the powerhouse team of David Weinstein,
Sharon Weiss and Aram Ordubegian.
"Our firm made a significant investment this year, well ahead of
many of our competitors, to ensure that we provide clients with
superior, multi-disciplinary legal advice by building out a
Bankruptcy and Reorganization Practice Group capable of
predicting, meeting and servicing the legal and economic
challenges of our clients' success -? not just survival ?- in the
current economic climate," said firm Managing Partner,
Nimish Patel.
"The addition of David [Weinstein], Sharon [Weiss] and Aram
[Ordubegian] earlier this year was a huge win for us and adding
Rob [Shenfeld] to our team brings our game to an entirely new
level," added Mr. Patel.
The firm has long been a player in the corporate securities
space in representing public companies with their financing needs
through PIPE's and APO's. Its rolodex of hedge fund contacts
presents a new opportunity in these turbulent economic times.
Adding the Bankruptcy and Reorganization Practice Group was part
of their synergistic strategy in delivering new services to those
same contacts.
"[Mr. Shenfeld's] unique background of having advised clients
embroiled in some of the past decade's largest and most
sophisticated reorganization cases and having been an integral
member of two of the country's most respected and largest
bankruptcy firms, along with his consulting experience in the
investment community, is the final ingredient in our business
strategy of becoming a preeminent reorganization firm that
provides large firm expertise while maintaining intimate
attention to client relationships," explained David Weinstein,
Partner-in-Charge of the Bankruptcy and Reorganization Practice
Group.
About Richardson & Patel
Richardson & Patel LLP -- http://www.richardsonpatel.com/--
focuses on business reorganization & bankruptcy law, corporate &
securities law, mergers & acquisitions, corporate finance, and
business, securities & employment litigation.
* S&P Downgrades Ratings on 25 Tranches From 7 Hybrid CDO Deals
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 25
tranches from seven U.S. cash flow and hybrid collateralized debt
obligation transactions. S&P removed 10 of the lowered ratings
from CreditWatch with negative implications. At the same time,
S&P placed one rating on Pacific Bay CDO Ltd. on CreditWatch with
negative implications. The ratings on 14 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 25 downgraded U.S. cash flow and hybrid tranches have a total
issuance amount of US$3.378 billion. Four of the seven 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. The other three affected transactions are high-grade
SF CDOs of ABS that were collateralized at origination primarily
by 'AAA' through 'A' rated tranches of RMBS and other SF
securities. The CDO downgrades reflect a number of factors,
including credit deterioration and recent negative rating actions
on U.S. subprime RMBS.
To date, including the CDO tranches listed below and including
actions on both publicly and confidentially rated tranches, S&P
has lowered its ratings on 4,073 tranches from 912 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, 1,002 ratings from 444 transactions are
currently on CreditWatch with negative implications for the same
reasons. In all, S&P has downgraded US$483.830 billion of CDO
issuance. Additionally, S&P's ratings on US$11.656 billion of
securities have not been lowered but are currently on CreditWatch
with negative implications, indicating a high likelihood of future
downgrades.
S&P will continue to monitor the CDO transactions it rates and
take rating actions, including CreditWatch placements, when
appropriate.
Ratings And CreditWatch Actions
Rating
------
Transaction Class To From
----------- ----- -- ----
Ayresome CDO I Ltd. A-1b BBB+/Watch Neg AAA/Watch Neg
Ayresome CDO I Ltd. A-2 CCC BBB/Watch Neg
Ayresome CDO I Ltd. A-3 CCC BBB/Watch Neg
Ayresome CDO I Ltd. B CC BB/Watch Neg
Ayresome CDO I Ltd. C CC B-/Watch Neg
Ayresome CDO I Ltd. D CC CCC-/Watch Neg
Duke Funding High Grade I A-1 LTa A/Watch Neg AA+/Watch Neg
Duke Funding High Grade I A-1 LTb1 A/Watch Neg AA+/Watch Neg
Duke Funding High Grade I A-1LT b2 A/Watch Neg AA+/Watch Neg
Duke Funding High Grade I A-2 B+/Watch Neg BBB/Watch Neg
Duke Funding High Grade I B CC CCC-/Watch Neg
Fort Dearborn CDO I Ltd. A-1LA Inv B/Watch Neg BBB-/Watch Neg
Fort Dearborn CDO I Ltd. X CCC BBB-/Watch Neg
G Street Finance Ltd. A-1LT-a A-/Watch Neg AA
G Street Finance Ltd. A-1LT-b A-/Watch Neg AA
G Street Finance Ltd. A-2 BBB+/Watch Neg A/Watch Neg
G Street Finance Ltd. B BBB-/Watch Neg BBB/Watch Neg
G Street Finance Ltd. C CCC- B+/Watch Neg
G Street Finance Ltd. D CC CCC-/Watch Neg
Liberty Harbour CDO Ltd. 2005-1
A LT-1 BB/Watch Neg BBB+/Watch Neg
Pacific Bay CDO Ltd. A-2 AAA/Watch Neg AAA
Pacific Bay CDO Ltd. B BBB/Watch Neg AA/Watch Neg
Pacific Bay CDO Ltd. C B/Watch Neg A-/Watch Neg
Pacific Bay CDO Ltd. Pre Shares CC BB+
South Coast Funding VI Ltd. B BBB/Watch Neg A-/Watch Neg
South Coast Funding VI Ltd. C CCC+ B/Watch Neg
Other Ratings Reviewed
Transaction Class Rating
----------- ----- ------
Ayresome CDO I Ltd. A-1a AAA
Ayresome CDO I Ltd. Combo Secs CC
Diversified Asset Securitization A-1 AA+
Holdings II L.P.
Diversified Asset Securitization A-1L AA+
Holdings II L.P.
Duke Funding High Grade I Ltd. C-1 CC
Duke Funding High Grade I Ltd. C-2 CC
Duke Funding High Grade I Ltd. D CC
Fort Dearborn CDO I Ltd. A-1LB CC
Fort Dearborn CDO I Ltd. A-2L CC
Fort Dearborn CDO I Ltd. A-3L CC
Fort Dearborn CDO I Ltd. B-1L CC
G Street Finance Ltd. E CC
Liberty Harbour CDO Ltd. 2005-1 B CC
Liberty Harbour CDO Ltd. 2005-1 C CC
Liberty Harbour CDO Ltd. 2005-1 Combo Nts CC
Liberty Harbour CDO Ltd. 2005-1 D CC
Niagara CDO Ltd. A AA
Pacific Bay CDO Ltd. A-1 AAA
South Coast Funding VI Ltd. A-1 AAA
South Coast Funding VI Ltd. A-2 AAA/Watch Neg
Zais Investment Grade Ltd. VIII A-1 BBB/Watch Neg
Zais Investment Grade Ltd. VIII A-2 CCC-/Watch Neg
Zais Investment Grade Ltd. VIII B CC
Zais Investment Grade Ltd. VIII C CC
Zais Investment Grade Ltd. VIII D CC
* U.S. in Recession Since Dec. 2007, Says NBER
----------------------------------------------
The National Bureau of Economic Research said that that the United
States has been in recession since December 2007.
The Business Cycle Dating Committee of the NBER has determined
that the decline in economic activity in 2008 met the standard for
a recession.
According to the NBER, a recession is a significant decline in
economic activity spread across the economy, lasting more than a
few months, normally visible in production, employment, real
income, and other indicators. A recession begins when the economy
reaches a peak of activity and ends when the economy reaches its
trough. Between trough and peak, the economy is in an expansion.
"All evidence other than the ambiguous movements of the quarterly
product-side measure of domestic production confirmed that
conclusion. Many of these indicators, including monthly data on
the largest component of GDP, consumption, have declined sharply
in recent months," the Committee stated.
The committee identified December 2007 as the peak month, after
determining that the subsequent decline in economic activity was
large enough to qualify as a recession. Payroll employment, the
number of filled jobs in the economy based on the Bureau of Labor
Statistics' large survey of employers, reached a peak in December
2007 and has declined in every month since then.
The Committee does not adopt the definition that a recession is
two consecutive quarters of decline in real GDP. It notes that
as an example, the last recession, in 2001, did not include two
consecutive quarters of decline. The Committee acknowledged that
as of Nov. 28, the economy had not yet experienced two consecutive
quarters of decline.
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
-------------------------------------------------------------
In Re The Sonora Environmental Trust
Bankr. D. Ariz. Case No. 08-15250
Chapter 11 Petition Filed October 29, 2008
Filed as Pro Se
In Re Health Staffers of Michigan, Inc.
Bankr. W.D. Mich. Case No. 08-09990
Chapter 11 Petition Filed November 7, 2008
See bankrupt.com/misc/miwb08-09990.pdf
In Re Records Thump Inc.
Bankr. C.D. Calif. Case No. 08-17568
Chapter 11 Petition Filed November 18, 2008
See http://bankrupt.com/misc/cacb08-17568.pdf
In Re Thompson, Randall John
Thompson, Karen Gay
Bankr. D. Nebr. Case No. 08-82977
Chapter 11 Petition Filed November 18, 2008
See http://bankrupt.com/misc/neb08-82977.pdf
In Re Rio Mesa 139, LLC
Bankr. D. Ariz. Case No. 08-16666
Chapter 11 Petition Filed November 19, 2008
Filed as Pro Se
In Re Pizza Enterprises, Inc.
dba Dominos Pizza
Bankr. S.D. Calif. Case No. 08-11734
Chapter 11 Petition Filed November 19, 2008
See http://bankrupt.com/misc/casb08-11734.pdf
In Re Seritex Inc.
Bankr. N.D. Ill. Case No. 08-31615
Chapter 11 Petition Filed November 19, 2008
See http://bankrupt.com/misc/ilnb08-31615.pdf
In Re Rollin In The Dough, Ltd.
Bankr. D. Nev. Case No. 08-52247
Chapter 11 Petition Filed November 19, 2008
See http://bankrupt.com/misc/nvb08-52247.pdf
In Re Realty Pros of Utah, Inc.
dba ProStar RealitGroup
Bankr. D. Utah Case No. 08-28148
Chapter 11 Petition Filed November 19, 2008
Filed as Pro Se
In Re Mexican Garden Restaurant, Inc.
Bankr. E.D. Va. Case No. 08-17259
Chapter 11 Petition Filed November 19, 2008
See http://bankrupt.com/misc/vaeb08-17259.pdf
In Re Professional Building Structures, Inc.
Bankr. E.D. Wash. Case No. 08-04827
Chapter 11 Petition Filed November 19, 2008
See http://bankrupt.com/misc/waeb08-04827.pdf
In Re Ramm It-Compaction Specialist, Inc.
Bankr. D. Nev. Case No. 08-23793
Chapter 11 Petition Filed November 20, 2008
See http://bankrupt.com/misc/nvb08-23793.pdf
In Re Mills Contracting, Inc.
Bankr. D. N.J. Case No. 08-33027
Chapter 11 Petition Filed November 20, 2008
See http://bankrupt.com/misc/njb08-33027.pdf
In Re Mills Transportation, Inc.
Bankr. D. N.J. Case No. 08-33037
Chapter 11 Petition Filed November 20, 2008
See http://bankrupt.com/misc/njb08-33037.pdf
In Re Phillip Barry LLC
Bankr. E.D. N.Y. Case No. 08-47899
Chapter 11 Petition Filed November 20, 2008
Filed as Pro Se
In Re Salem Custom Countertops, LLC
Bankr. W.D. Wis. Case No. 08-16170
Chapter 11 Petition Filed November 20, 2008
See http://bankrupt.com/misc/wiwb08-16170.pdf
In Re Hornsby, Ralph W., Sr.
Hornsby, Candace S.
Bankr. N.D. Ala. Case No. 08-83812
Chapter 11 Petition Filed November 21, 2008
See http://bankrupt.com/misc/alnb08-83812.pdf
In Re Pope Dickson & Son, Inc.
Bankr. N.D. Ga. Case No. 08-83851
Chapter 11 Petition Filed November 21, 2008
See http://bankrupt.com/misc/ganb08-83851.pdf
In Re Scorpio Spirits, Inc.
dba Earl's Super Liquors
Bankr. D. Md. Case No. 08-25453
Chapter 11 Petition Filed November 21, 2008
See http://bankrupt.com/misc/mdb08-25453.pdf
In Re Marine Services, Inc.
Bankr. W.D. Ark. Case No. 08-74819
Chapter 11 Petition Filed November 24, 2008
See http://bankrupt.com/misc/arwb08-74819.pdf
In Re Osuna, Maria G.
Bankr. C.D. Calif. Case No. 08-26583
Chapter 11 Petition Filed November 24, 2008
See http://bankrupt.com/misc/cacb08-26583.pdf
In Re Morgan & Associates, LLC
Bankr. N.D. Ga. Case No. 08-84119
Chapter 11 Petition Filed November 25, 2008
See http://bankrupt.com/misc/ganb08-84119.pdf
In Re Neuro Diagnostics, Inc.
fdba Cici's Pizza
Bankr. N.D. Ga. Case No. 08-83949
Chapter 11 Petition Filed November 24, 2008
See http://bankrupt.com/misc/ganb08-83949.pdf
In Re Martinez, Rogelio R.
Bankr. N.D. Ill. Case No. 08-32055
Chapter 11 Petition Filed November 24, 2008
See http://bankrupt.com/misc/ilnb08-32055.pdf
In Re Filippatos, Parisis G.
aka Filippatos, Gerry
Bankr. S.D. N.Y. Case No. 08-14691
Chapter 11 Petition Filed November 24, 2008
See http://bankrupt.com/misc/nysb08-14691.pdf
In Re Paralegals Plus, Inc.
Bankr. N.D. Tex. Case No. 08-36071
Chapter 11 Petition Filed November 24, 2008
See http://bankrupt.com/misc/txnb08-36071.pdf
In Re Nelcoss, Inc.
dba Jalapenos Bar & Grill
Valentinos
Bankr. S.D. Tex. Case No. 08-10648
Chapter 11 Petition Filed November 24, 2008
See http://bankrupt.com/misc/txsb08-10648.pdf
In Re Premier Chrysler, Jeep, Dodge LLC
Bankr. M.D. Fla. Case No. 08-07432
Chapter 11 Petition Filed November 25, 2008
See http://bankrupt.com/misc/flmb08-07432.pdf
In Re Caylix Supper Club & Fine Dining LLC
Bankr. D. Nev. Case No. 08-24184
Chapter 11 Petition Filed November 25, 2008
See http://bankrupt.com/misc/nvb08-24184.pdf
In Re Chriswell Classic Leather & Design Gallery, LL
Bankr. D. Ariz. Case No. 08-17210
Chapter 11 Petition Filed November 26, 2008
See http://bankrupt.com/misc/azb08-17210.pdf
In Re DeMay, Barry John
Bankr. M.D. Fla. Case No. 08-07499
Chapter 11 Petition Filed November 26, 2008
See http://bankrupt.com/misc/flmb08-07499.pdf
In Re Van der Molen, Edward
Van der Molen, Deborah
Bankr. N.D. Ill. Case No. 08-32493
Chapter 11 Petition Filed November 26, 2008
See http://bankrupt.com/misc/ilnb08-32493.pdf
In Re R & J Sports Page Inn, Inc.
Bankr. S.D. Ill. Case No. 08-32703
Chapter 11 Petition Filed November 26, 2008
See http://bankrupt.com/misc/ilsb08-32703.pdf
In Re Alexiou, Teresa
Bankr. S.D. Ind. Case No. 08-14866
Chapter 11 Petition Filed October 26, 2007
Chapter 11 Petition Split November 26, 2008
(The case was split from In re Anastasios Alexiou,
Bankr. S.D. Ind. Case No. 07-10546. The Court on
entered an order dismissing the case of Joint
Debtor Teresa Alexiou November 26, 2008.)
In Re Bradley, Darrel Sidney
dba Sibley Asset Management Trust
Bankr. S.D. Ind. Case No. 08-14859
Chapter 11 Petition Filed November 26, 2008
See http://bankrupt.com/misc/insb08-14859.pdf
In Re Romano, Arthur Michael
Romano, Susan Wallace
Bankr. D. Mass. Case No. 08-19058
Chapter 11 Petition Filed November 26, 2008
See http://bankrupt.com/misc/mab08-19058.pdf
In Re Brown and Associates, Ltd.
Bankr. D. Nebr. Case No. 08-83078
Chapter 11 Petition Filed November 26, 2008
See http://bankrupt.com/misc/neb08-83078p.pdf
http://bankrupt.com/misc/neb08-83078c.pdf
In Re Seven Hills, Inc.
dba Seven Hills of Istanbul Mediterranean Gr
Bankr. D. N.J. CaseNo. 08-33642
Chapter 11 Petition Filed November 26, 2008
See http://bankrupt.com/misc/njb08-33642.pdf
In Re Milton Motors, Inc.
Bankr. S.D. Tex. Case No. 08-37549
Chapter 11 Petition Filed November 26, 2008
See http://bankrupt.com/misc/txsb08-37549.pdf
In Re Eaglerock Trailer, Inc.
Bankr. S.D. Tex. Case No. 08-37550
Chapter 11 Petition Filed November 26, 2008
See http://bankrupt.com/misc/txsb08-37549.pdf
In Re Rose-Lopez, Sonya Sue
aka Sonya Rose
Bankr. N.D. Ga. Case No. 08-23482
Chapter 11 Petition Filed November 28, 2008
Filed as Pro Se
In Re Nunu, Abraham Nicola
Bankr. E.D. Mich. Case No. 08-69305
Chapter 11 Petition Filed November 28, 2008
See http://bankrupt.com/misc/mieb08-69305.pdf
In Re Davin Investments, Inc.
Bankr. W.D. Pa. Case No. 08-27990
Chapter 11 Petition Filed November 28, 2008
See http://bankrupt.com/misc/pawb08-27990.pdf
In Re Parker, Lois Michele
Bankr. N.D. Ga. Case No. 08-84350
Chapter 11 Petition Filed November 29, 2008
See http://bankrupt.com/misc/ganb08-84350.pdf
In Re Williams, Randall Edward
dba Randy Williams Construction
Williams, Alanna Lineth
Bankr. M.D. Tenn. Case No. 08-11320
Chapter 11 Petition Filed November 30, 2008
See http://bankrupt.com/misc/tnmb08-11320.pdf
In Re Fallone Enterprises, LLC
Bankr. W.D. N.Y. Case No. 08-23113
Chapter 11 Petition Filed December 2, 2008
See http://bankrupt.com/misc/nywb08-23113.pdf
In Re FA & RA Foods, Inc.
aka Chenoa Foods
Bankr. N.D. Ill. Case No. 08-32931
Chapter 11 Petition Filed December 2, 2008
See http://bankrupt.com/misc/ilnb08-32931.pdf
In Re Fearless Music, Inc.
Bankr. S.D. N.Y. Case No. 08-14804
Chapter 11 Petition Filed December 1, 2008
See http://bankrupt.com/misc/nysb08-14804p.pdf
http://bankrupt.com/misc/nysb08-14804c.pdf
In Re Patriot Investments LLC
Bankr. E.D. Calif. Case No. 08-37701
Chapter 11 Petition Filed December 2, 2008
Filed as Pro Se
In Re Sansu, Inc.
dba Bauman's Jewels of the World
Bankr. W.D. N.Y. Case No. 08-23101
Chapter 11 Petition Filed December 2, 2008
See http://bankrupt.com/misc/nywb08-23101.pdf
In Re Williams, Sarah
Bankr. M.D. Fla. Case No. 08-11466
Chapter 11 Petition Filed December 2, 2008
Filed as Pro Se
In Re Silver Screen Entertainment LLC
Bankr. C.D. Calif. CaseNo. 08-17935
Chapter 11 Petition Filed December 2, 2008
Filed as Pro Se
In Re S.O.P. Community and Economic Development Corp
Bankr. N.D. Tex. Case No. 08-45768
Chapter 11 Petition Filed December 2, 2008
See http://bankrupt.com/misc/txnb08-45768.pdf
In Re Martirossian, Virginia
aka Commercial Property Investment
Bankr. C.D. Calif. CaseNo. 08-19724
Chapter 11 Petition Filed December 2, 2008
Filed as Pro Se
In Re Steward, Thomas E.
aka TOM
Bankr. D. Ariz. Case No. 08-17325
Chapter 11 Petition Filed December 1, 2008
Filed as Pro Se
In Re Office Furniture Discounters, Inc.
dba Office Furniture Outlet
Bankr. C.D. Calif. CaseNo. 08-26979
Chapter 11 Petition Filed December 1, 2008
See http://bankrupt.com/misc/cacb08-26979.pdf
In Re Jetplate Systems, LLC
Bankr. M.D. Fla. Case No. 08-19230
Chapter 11 Petition Filed December 1, 2008
See http://bankrupt.com/misc/flmb08-19230.pdf
In Re One Stop Bridal Warehouse
Bankr. S.D. Fla. Case No. 08-28308
Chapter 11 Petition Filed December 1, 2008
Filed as Pro Se
In Re Ricky's Candy, Cones, and Chaos, Inc.
Bankr. D. N.J. CaseNo. 08-33881
Chapter 11 Petition Filed December 1, 2008
See http://bankrupt.com/misc/njb08-33881p.pdf
http://bankrupt.com/misc/njb08-33881c.pdf
In Re Hammar Properties, Inc.
Bankr. W.D. N.Y. Case No. 08-15263
Chapter 11 Petition Filed December 1, 2008
See http://bankrupt.com/misc/nywb08-15263.pdf
In Re 1001 Castle Realty Group Corp.
Bankr. S.D. N.Y. Case No. 08-14795
Chapter 11 Petition Filed December 1, 2008
Filed as Pro Se
In Re C. Prince & Associates Consulting, Inc.
Bankr. N.D. Tex. Case No. 08-36252
Chapter 11 Petition Filed December 1, 2008
Filed as Pro Se
In Re Greater Macedonia Primitive Baptist Church
Bankr. N.D. Tex. Case No. 08-36210
Chapter 11 Petition Filed December 1, 2008
See http://bankrupt.com/misc/txnb08-36210.pdf
In Re The Cottages of Joshua, LLC
Bankr. N.D. Tex. Case No. 08-45733
Chapter 11 Petition Filed December 1, 2008
See http://bankrupt.com/misc/txnb08-45733.pdf
In Re Triton Networks
Bankr. N.D. Tex. Case No. 08-36253
Chapter 11 Petition Filed December 1, 2008
See http://bankrupt.com/misc/txnb08-36253.pdf
*********
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. Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa,
Luke Caballos, Sheryl Joy P. Olano, Carlo Fernandez, 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 ***