/raid1/www/Hosts/bankrupt/TCR_Public/090108.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, January 8, 2009, Vol. 13, No. 7
Headlines
AGRIPROCESSOR INC: Asset Auction and Sale Seen in First Quarter
AIRBORNE HEALTH: S&P Cuts Issue-Level Rating on Loans to 'CCC-'
ALERIS INT'L: S&P Junks Corp. Credti Rating on Weak Market Demand
ALLIANCE BANK: Weiss Ratings Assigns "Very Weak" E- Rating
ALLTEL COMM: S&P Raises Rating on $1BB Unsec. Notes to A From B-
ALLTELL CORP: S&P Raises $2.3BB Unsec. Note Rating to A From B
ARAMARK CORP: Bank Loan Sells at 20% Discount in Secondary Market
ARMADA SINGAPORE: Files for Chapter 15 in New York
ARMADA SINGAPORE: Voluntary Chapter 15 Case Summary
ASARCO LLC: Wants Plan Filing Period Extended Until March 17
ASARCO LLC: Reviews Options Amid Failed Sterlite Deal
ATLANTIC WIRE: To Pay State $1.5MM for Toxic Chemicals in River
AURORA OIL: President Resigns, VP-Business Dev't. Assumes Role
AVIS BUDGET: S&P Puts CCC+ Corp. Credit Rating on Watch Positive
BALLY TOTAL: Sec. 341 Meeting Scheduled for January 13
BALLY TOTAL: Seeks Permission to Continue Using Cash Collateral
BALLY TOTAL: To Pay Prepetition Obligations to Employees
BALLY TOTAL: To Pay Critical Vendors Pre-Chapter 22 Claims
BALLY TOTAL: Wins Court Nod to Pay Sales and Use Taxes
BERKSHIRE BANK: Weiss Ratings Assigns "Very Weak" E- Rating
BERNARD L. MADOFF: SIPC to Return $500,000 Max for Each Client
BOOT HILL: Converts to Ch. 11, Will Meet Creditors on Jan. 23
BROADSTRIPE LLC: Get Initial Approval to Use $6MM BoNY Facility
BROOKE CORP: Committee Spar With Banks on Conversion Request
CB RICHARD ELLIS: Bank Loan Sells at Substantial Discount
CITY OF DETROIT: S&P Cuts General Obligation Bonds to 'BB'
COLUMBIA HOSPITAL: Case Summary & 19 Largest Unsecured Creditors
COOPER-STANDARD: May Buy $150-Mil. of Bank Debt at Discount
COUNTY BANK: Weiss Ratings Assigns "Very Weak" E- Rating
CRESCENT RESOURCES: Bank Loan Sells at Almost 75% Discount
DOLLAR GENERAL: Bank Loan Sells at Substantial Discount
DUNE ENERGY: Amends and Restates Employment Deals with Executives
EZ LUBE: Committee Opposes Quick Sale to GSO Affiliate
FANNIE MAE: Henry Paulson Outlines Four Long-Term Options
FREDDIE MAC: Henry Paulson Outlines Four Long-Term Options
FRONTIER AIRLINES: Aims to Emerge from Chapter 11 This Year
GALAXY ENERGY: Seeks to Convert Chapter 11 Case to Liquidation
GENERAL MOTORS: Inks Loan and Security Deal with the Treasury
GENERAL MOTORS: To Reduce Equity Stake in GMAC to Less than 10%
GLITNIR BANKI: Court Grants Chapter 15 Bankruptcy Protection
GMAC LLC: General Motors to Reduce Stake to Less than 10%
GRAHAM PACKAGING: Bank Loan Sells at Almost 30% Discount
GRAPHIC PACKAGING: Bank Loan Sells at Substantial Discount
GREEKTOWN CASINO: Bank Loan Sells at 55% Off in Secondary Market
HCA INC: Bank Loan Continues to Sell at Substantial Discount
HEALTH MANAGEMENT: Bank Loan Sells at Substantial Discount
HOME INTERIORS: Court Approves Sale of Assets to Home & Garden
HOMEBANC CORP: Seeks Last Extension of Plan Solicitation Period
INTERLAKE MATERIAL: Can Access $23MM NCB DIP Facility on Interim
INTERSTATE BAKERIES: Scraps Bid to Reject CBA with Local Union
INTERSTATE BAKERIES: Can File Preference Actions Until June 30
INTERSTATE BAKERIES: Seeks to Tap Kasowitz As Conflicts Counsel
JON HARDER: Case Summary & 20 Largest Unsecured Creditors
JONES APPAREL: S&P Downgrades Issue-Level Rating on Notes to 'B+'
JUNIPER CONTENT: Posts $2.1MM Net Loss in Quarter Ended Sept. 30
KB TOYS: Can Access Lenders' Cash Collateral Until January 31
KB TOYS: Will Stop Accepting Gift Cards in Stores on Sunday
L.A. UNIFIED SCHOOL: To Fire "Thousands" to Avert Bankruptcy
LEHMAN BROTHERS: Opposes N.Y. Comptroller's Trustee Request
LEHMAN BROTHERS: Wants Examiner Instead of a Trustee
LEHMAN BROTHERS: LBI Trustee Transfers $142BB to 2 Broker Dealers
LEHMAN BROTHERS: Luxemberg Unit Files for Bankruptcy in New York
LIMITED BRANDS: S&P Downgrades Ratings on Two Certs. to 'BB+'
LINENS 'N THINGS: U.S. Trustee Challenges IP Sale Bid Protections
LOHREY INVESTMENTS: Voluntary Chapter 11 Case Summary
LUMINENT MORTGAGE: Files 1st Amended Joint Plan of Reorganization
MACY'S INC: To Shut Down 10 Units; Credit Agreement Amended
MAGNETBANK: Weiss Ratings Assigns "Very Weak" E- Rating
MARANI BRANDS: Posts $773,405 Net Loss in Qtr. Ended Sept. 30
MGM MIRAGE: To Delay Hotel Opening & Cancel Condominium Project
MICHAEL VICK: Wants to Put Eight-Bedroom Home on Auction Block
MIDON RESTAURANT: Permanently Closes Wolf Road Operation
MYERS MILL: Files Plan of Liquidation and Disclosure Statement
NATIONAL BANK: Weiss Ratings Assigns "Very Weak" E- Rating
NATIONAL HEALTH: Posts $609,775 Net Loss in Qtr. Ended Sept. 30
NEUMANN HOMES: Creditors Committee Files Suit Against Ex-CEO
NEUMANN HOMES: Seeks to Sell Comerica Bank's Collateral
NEUMANN HOMES: Court Extends Plan Filing Period to March 31
OMNI NATIONAL: Weiss Ratings Assigns "Very Weak" E- Rating
ONEUNITED BANK: Weiss Ratings Assigns "Very Weak" E- Rating
PARK AVENUE BANK: Weiss Ratings Assigns "Very Weak" E- Rating
PEOPLES STATE: Weiss Ratings Assigns "Very Weak" E- Rating
PROGRESSIVE GAMING: Allows Foreclosure; Key Exec. Resigns
PROTECTION ONE: Names Jeffrey S. Nordhaus to Board of Directors
RECYCLED PAPER: Disclosure Statement Hearing Set for February 18
REDDY ICE: Appoints Kevin J. Cameron to Board of Directors
REPUBLIC WINDOWS: Union Accuses Firm of Breaching Labor Law
REYNOLDS & REYNOLDS: S&P Affirms Corporate Credit Rating at 'B+'
RIVERSIDE BANK: Weiss Ratings Assigns "Very Weak" E- Rating
ROYAL PALM: Case Summary & Largest Unsecured Creditor
SE MARINA: Case Summary & 20 Largest Unsecured Creditors
SMITTY'S BUILDING: Case Summary & 25 Largest Unsecured Creditors
SOUTHERN COMMUNITY: Weiss Ratings Assigns "Very Weak" E- Rating
SPRING POINTE: Case Summary & 20 Largest Unsecured Creditors
STATE OF FRANKLIN: Weiss Ratings Assigns "Very Weak" E- Rating
STEVE MCKENZIE: Files for Chapter 11 Bankruptcy Protection
TAYLOR-RAMSEY CORP: Case Summary & 20 Largest Unsecured Creditors
TAYLOR-RAMSEY WOOD: Case Summary & 20 Largest Unsecured Creditors
TROPICANA ENTERTAINMENT: Balks at Panel's Bid to File Own Plan
UNISYS CORP: S&P Keeps 'B+' Corp. Credit Rating; Outlook Negative
UNIFI INC: Lowers 2009 Adjusted EBITDA Guidance to $2 Million
US SHIPPING: Credit Deal Default Cues S&P to Cut Ratings to 'D'
VICORP RESTAURANTS: Sale Procedure Hearing Deferred to Jan. 16
VIRGIN MOBILE: Board Approves Cash and Equity Awards to CFO
VIRGIN MOBILE: Inks Voting Deals with Controlling Stockholders
VIRGIN MOBILE: Committee OKs Stock Awards to Directors
W.R. GRACE: Parties Present Issues for Plan Confirmation Hearing
W.R. GRACE: Various Firms Object to Reorganization Plan
W.R. GRACE: U.S. Government Objects to ZAI Settlement
W.R. GRACE: Libby Claimants Want Documents Produced
W.R. GRACE: Libby Asbestos Agencies Seek $3.25MM State Funding
WESTERNBANK: Weiss Ratings Assigns "Very Weak" E- Rating
WORLDSPACE INC: Postpones Auction to Jan. 26; Still Accepts Bids
YELLOWSTONE CLUB: Wants Loan from CrossHarbor Hiked to $22.6MM
* Jonathan Landers to Lead Milberg's Bankruptcy Practice
* Stroock Names New Partners and Special Counsel
* Chapter 11 Filings Up 62% from 2007
* Treasury Says TARP Won't Exceed $700BB to Aid Automakers
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
*********
AGRIPROCESSOR INC: Asset Auction and Sale Seen in First Quarter
---------------------------------------------------------------
Joseph E. Sarachek, the Chapter 11 Operating Trustee of
Agriprocessors Inc., said the Postville, Iowa-based kosher food
processing giant is on track to undergo a competitive bidding
process among new potential buyers in the first quarter of 2009.
Under the guidance of a veteran management team, the company
continues to enhance its reputation as a market leader by ramping
up production heading in to peak demand during the crucial
Passover season.
"If you walk the plant floor today you will find motivated,
dedicated employees working with nationally respected meat
industry executives. Highly regarded professionals including Alan
Glueck, Arnie Mikelberg and Marshall Samler have brought their
decades of meat industry expertise to bear on behalf of
Agriprocessors," Mr. Sarachek wrote in an open letter to the
company and its clients.
"Together, we are reopening up many of Agri's production lines,
ensuring that when this plant is sold to new owners it will have
the means of assuming quickly its dominant position in the
marketplace. Already many former customers have returned with the
knowledge that a strong Agri creates a genuine competitive
environment for meat and poultry products. By way of underscoring
our confidence in the future, we have placed new eggs for growing
chickens which will allow us to meet increased demand during the
upcoming Passover season," Mr. Sarachek said. "We are also taking
steps to reopen the beef lines so that the plant is processing
meat by Passover as well."
Mr. Sarachek, the Chapter 11 Operating Trustee, a principal in
Triax Capital Advisors, was appointed by the United States
Bankruptcy Court to ensure that Agriprocessors emerges from
bankruptcy as a robust, highly-valued company whose business model
and production practices ensure it resumes its role as an industry
leader.
The Triax executive stated, "The new year promises to see
energetic bidding for the Agri facility as potential owners
inspect a resurgent plant being supervised by dedicated and
skillful management and enjoying a return of long standing
customers. The fact is there is a loyal and knowledgeable
consumer market that knows Agri remains the impeccable standard of
excellence for kashrut and they want our products."
Mr. Sarachek credits Agriprocessors new management team and
dedicated employees with positioning Agriprocessors for a
successful turn around and sale. "It could not have occurred
without the support and encouragement of Agri lenders, employees,
rabbinical staff and vendors. Together, they represent a team
that is restoring this facility to its national leadership role
that will prompt vigorous bidding among investors who recognize
the inherent strength of this incredible facility. We are also
enjoying the full support and cooperation of local, state and
federal authorities."
Triax continues to work closely with its bankers to sustain
financing for the plant The reorganization, restructuring and
rebirth of Agriprocessors under new ownership represents a
significant success story amid the troubled U.S. economy.
As reported by the Troubled Company Reporter on December 16, 2008,
Quantum Capital Partners Inc. offered a deal in the U.S.
Bankruptcy Court for the Eastern District of New York to acquire
Agriprocessors Inc. According to McClatchy-Tribune, the Quantum
Capital filed to the Court a letter of intent stating that it
would pay off Agriprocessors' secured creditors, including First
Bank Business Capital, the lender that initiated foreclosure
proceedings against Agriprocessors, in exchange for a major equity
position in the debtor. The report said that the exact amount
would depend on what is left over after creditors are paid.
Quantum Capital also submitted to the Court a $28 million letter
of credit for use in paying the obligation, the report said.
McClatchy-Tribune relates that Quantum Capital is prepared to
inject $15 million into Agriprocessors to restart operations,
after acquiring First Bank's legal claims.
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). The case, according to McClatchy-Tribune, has been
transferred to Iowa. 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.
AIRBORNE HEALTH: S&P Cuts Issue-Level Rating on Loans to 'CCC-'
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered the issue-
level rating on Airborne Health Inc.'s $160 million senior secured
term loan B and $20 million senior secured revolving credit
facility to 'CCC-', one notch below the corporate credit rating,
from 'CCC'. In addition, Standard & Poor's revised the recovery
rating on this debt to '5' from '4', indicating the expectation
for modest (10%-30%) recovery in the event of a payment default.
The recovery and issue-level ratings reflect Standard & Poor's
view of weaker recovery prospects in the event of a payment
default. Based on the company's operating performance and the
current state of the capital markets, S&P believes that a payment
default will likely lead to a liquidation of assets, rather than
reorganization as a viable going concern.
Ratings List
Airborne Health Inc.
Corp. credit rating CCC/Negative/--
Ratings Lowered
To From
-- ----
$160 mil. sr secured term loan B CCC- CCC
Recovery rating 5 4
$20 mil. sr secured revol credit facility CCC- CCC
Recovery rating 5 4
ALERIS INT'L: S&P Junks Corp. Credti Rating on Weak Market Demand
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
corporate credit rating on Beachwood, Ohio-based Aleris
International Inc. to 'CCC+' from 'B'. The ratings remain on
CreditWatch with negative implications, where they were placed
Nov. 12, 2008.
"The downgrade reflects the combination of very weak end-market
demand and low aluminum prices, a trend S&P expects to continue in
the near term, as well as Aleris' reduced liquidity after the
announcement that it is voluntarily reducing the size of its
asset-based credit facility by $250.0 million," said Standard &
Poor's credit analyst Maurice Austin. As a result, the size of
the ABL is now $844.0 million.
At the end of September, the company had $424 million outstanding
on the facility, leaving only $295 million available (taking into
account the reduced borrowing base). However, an affiliate of the
primary stockholder of the company has agreed to provide a
$45 million short-term letter of credit in connection with a metal
hedging obligation, thus facilitating the release of cash as
collateral.
In resolving the CreditWatch listing, S&P will meet with
management and evaluate its operating and financial strategies in
light of the ongoing challenging operating environment. The
company's cash-generating capacity and ability to utilize the ABL
will be key components of S&P's review.
ALLIANCE BANK: Weiss Ratings Assigns "Very Weak" E- Rating
----------------------------------------------------------
Weiss Ratings has assigned its E- rating to Culver City, Calif.-
based Alliance Bank. Weiss says that the institution currently
demonstrates what it considers to be significant weaknesses and
has also failed some of the basic tests Weiss uses to identify
fiscal stability. "Even in a favorable economic environment,"
Weiss says, "it is our opinion that depositors or creditors could
incur significant risks."
Alliance Bank is not a member of the Federal Reserve. Deposits
have been insured by the Federal Deposit Insurance Corporation
since it was established on May 15, 1980. Alliance Bank maintains
a Web site at http://www.allbank.com/
FDIC data shows that Alliance Bank has five branches. At
Sept. 30, 2008, Alliance Bank disclosed $1.10 billion in assets
and $1.05 billion in liabilities in its regulatory filings.
ALLTEL COMM: S&P Raises Rating on $1BB Unsec. Notes to A From B-
----------------------------------------------------------------
Standard & Poor's Ratings Services said it raised its rating on
ALLTEL Communications Inc.'s $1 billion of unsecured paid-in-kind
notes and parent ALLTEL Corp.'s aggregate $2.3 billion of
unsecured notes, consisting of five issues, to 'A' from 'B-' and
have withdrawn the recovery rating of '6'. At the same time, S&P
removed these ratings from CreditWatch, where they had been listed
with positive implications since June 5, 2008, with the announced
agreement by Cellco Partnership (D/B/A Verizon Wireless) to
acquire ALLTEL.
These actions follow Verizon Communications Inc.'s recent 8K
filing indicating its expectation that the closing of the merger
among ALLTEL Corp., Cellco Partnership, and other legal entities
AirTouch Cellular, Abraham Merger Corp., and Atlantis Holdings LLC
will occur on Jan. 9, 2009. S&P expects these debt instruments to
remain outstanding following the close of the acquisition, and
reflect the debt rating of Verizon Communications Inc.
(A/Negative/A-1), the 55% owner of Verizon Wireless.
ALLTEL Communication's $14 billion term loan and $1.5 billion
revolving credit, which are currently rated 'BB-' with a '2'
recovery rating, remain on CreditWatch with positive implications,
but will be withdrawn with the close of the transaction, since
they will be refinanced at that time. ALLTEL Corp. and ALLTEL
Communication's 'B+' corporate credit ratings, which are also on
CreditWatch with positive implications, will likewise be withdrawn
with the completion of the merger.
ALLTELL CORP: S&P Raises $2.3BB Unsec. Note Rating to A From B
--------------------------------------------------------------
Standard & Poor's Ratings Services said it raised its rating on
ALLTEL Communications Inc.'s $1 billion of unsecured paid-in-kind
notes and parent ALLTEL Corp.'s aggregate $2.3 billion of
unsecured notes, consisting of five issues, to 'A' from 'B-' and
have withdrawn the recovery rating of '6'. At the same time, S&P
removed these ratings from CreditWatch, where they had been listed
with positive implications since June 5, 2008, with the announced
agreement by Cellco Partnership (D/B/A Verizon Wireless) to
acquire ALLTEL.
These actions follow Verizon Communications Inc.'s recent 8K
filing indicating its expectation that the closing of the merger
among ALLTEL Corp., Cellco Partnership, and other legal entities
AirTouch Cellular, Abraham Merger Corp., and Atlantis Holdings LLC
will occur on Jan. 9, 2009. S&P expects these debt instruments to
remain outstanding following the close of the acquisition, and
reflect the debt rating of Verizon Communications Inc.
(A/Negative/A-1), the 55% owner of Verizon Wireless.
ALLTEL Communication's $14 billion term loan and $1.5 billion
revolving credit, which are currently rated 'BB-' with a '2'
recovery rating, remain on CreditWatch with positive implications,
but will be withdrawn with the close of the transaction, since
they will be refinanced at that time. ALLTEL Corp. and ALLTEL
Communication's 'B+' corporate credit ratings, which are also on
CreditWatch with positive implications, will likewise be withdrawn
with the completion of the merger.
ARAMARK CORP: Bank Loan Sells at 20% Discount in Secondary Market
-----------------------------------------------------------------
Participations in a syndicated loan under which Aramark Corp. is a
borrower traded in the secondary market at 79.13 cents-on-the-
dollar during the week ended December 26, 2008, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 2.58 percentage points
from the previous week, the Journal relates. Aramark pays
interest at 187.5 points above LIBOR. The syndicated loan matures
on January 26, 2014. The bank loan carries Moody's Ba3 rating and
Standard & Poor's BB rating.
ARAMARK provides food services, facilities management, and uniform
and career apparel to health care institutions, universities and
school districts, stadiums and arenas, and businesses around the
world. ARAMARK ranked first in its industry in the 2007 FORTUNE
500 survey. Headquartered in Philadelphia, Pennsylvania, ARAMARK
has approximately 250,000 employees serving clients in 19
countries. On the Net: http://www.aramark.com/
ARMADA SINGAPORE: Files for Chapter 15 in New York
--------------------------------------------------
Armada (Singapore) Pte filed a Chapter 15 petition with the
United States Courts for the Southern District of New York,
seeking recognition of its bankruptcy proceedings in Singapore and
imposition of the automatic stay to protect its assets while it
restructures.
Armada announced January 6 that it has been granted leave to
convene a creditors' meeting to vote on a proposed Scheme of
Arrangement pursuant to Section 210 of the Companies Act of the
Republic of Singapore that will protect its assets and maximize
funds available to creditors as it restructures its business
operations.
ASPL, a privately owned holding company incorporated and based in
Singapore, is one of the world's leading dry bulk shipping
companies. It provides ocean transportation services to a
variety of major raw material and commodity shippers and consumers
located throughout the globe.
"We have achieved the best possible solution during this global
economic crisis to guarantee our return to financial health," said
Tommy Jensen Rathleff, Managing Director of Armada (Singapore).
"We expect to create a viable and sensible plan that will provide
a fundamentally sound groundwork for our business activities on a
long-term basis."
"Equally important, the plan will identify concrete steps for
maximizing returns to ASPL's creditors," said Rathleff. "To be
sure, justifying the confidence of our creditors is top priority
for ASPL as we identify and implement solutions to the challenges
that now face our industry."
Armada filed for protection from its creditors on January 6 in
Singapore following a series of collapses of dry bulk ship
operators in the third quarter last year, the Financial Times
reports.
The company has hired KPMG as its adviser, Armada Managing
Director Tommy Jensen Rathleff told Bloomberg News in a phone
interview.
Bloomberg News relates Armada said it owes at least US$500 million
to creditors including Kawasaki Kisen Kaisha Ltd which is owed
about US$95.5 million.
Armada has eight weeks to come up with a restructuring plan that
could pay creditors 30 cents on the dollar, compared with 5 cents
on the dollar at most if the company is liquidated, Bloomberg News
discloses.
According to Bloomberg News, Armada's top five creditors, based on
a filing with Singapore's High Court, are:
Transfield US$113,019,121
Kawasaki Kisen US$ 95,460,877
Pacific Bulk US$ 73,065,615
Rizzo-Bottiglieri US$ 70,382,250
Deiulemar US$ 64,369,775
Armada Armada (Singapore) Pte -- http://www.armadagroup.com/-- is
a Singapore-based ship operator.
ARMADA SINGAPORE: Voluntary Chapter 15 Case Summary
---------------------------------------------------
Chapter 15 Debtor: Armada (Singapore) Pte. Ltd.
1 Harbour Front Avenue #07-07/08
Keppel Bay Tower, Singapore 098632
Chapter 15 Case No.: 09-10105
Type of Business: The Debtor operates a shipping company.
See: http://www.armadagroup.com/
Chapter 15 Petition Date: January 7, 2009
Court: Southern District of New York (Manhattan)
Judge: James M. Peck
Chapter 15 Petitioner's Counsel: Barbra R. Parlin
barbra.parlin@hklaw.com
Holland & Knight, LLP
195 Broadway
New York, NY 10007-3189
Tel: (212) 513-3210
Fax: (212) 385-9010
Estimated Assets: $100 million to $500 million
Estimated Debts: $100 million to $500 million
ASARCO LLC: Wants Plan Filing Period Extended Until March 17
------------------------------------------------------------
ASARCO LLC and all its affiliated chapter 11 debtors ask the U.S.
Bankruptcy Court for the Southern District of Texas to extend the
exclusive period in which they may file a chapter 11 plan of
reorganization from January 16, 2009 to March 17, 2009; and extend
the period to obtain acceptances of the plan until May 18.
James R. Prince, Esq., at Baker Botts L.L.P., in Dallas, Texas,
explains that the Debtors' twelfth request for an extension is
warranted by the significant progress made in the chapter 11
cases.
Mr. Prince relates that in addition to the efforts to stabilize
the company's labor relations and business operations, the Debtors
have made substantial progress on the asset and liability side of
the balance sheet. Most recently, ASARCO achieved success in the
litigation against Americas Mining Corporation which suit could
contribute to a significant dividend to creditors. Judge Andrew
S. Hanen of the U.S. District Court for the Southern District of
Texas has not ruled on the appropriate remedy, but an order
returning the transferred shares to the estate or a comparable
damage award would significantly benefit the estate and provide a
potentially meaningful distribution to creditors at a time when
creditors need it the most.
Moreover, the Debtors, according to Mr. Prince, have spent a
significant amount of time and resources resolving their major
contingent liabilities. Although the global resolution of the
Debtors' environmental and asbestos liabilities were conditioned
on confirmation of the Debtors' Plan, the Debtors continue to make
progress in achieving a final resolution. Most of the creditor
constituents support a global resolution of the Debtors'
environmental and asbestos claims.
Mr. Prince notes that if exclusivity is terminated, the Debtors
and the creditor constituents will be required to divert resources
to address confirmation of third party plans. The Debtors and
their creditors, he says, cannot afford such unnecessary and
wasteful expense. Moreover, according to Mr. Prince, the
commodities market is extremely volatile in this strained economy.
"If the Debtors are forced to make a hasty decision regarding
their chapter 11 exit strategy, significant value may be lost."
The Court previously modified exclusivity to allow the Debtors'
parent, Asarco Incorporated, to file a plan. The Debtors, in
their request, do not seek to reimpose exclusivity as to the
Parent.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
ASARCO LLC filed for Chapter 11 protection on Aug. 9, 2005 (Bankr.
S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L.
Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P.,
and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and
Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C.,
represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When ASARCO LLC filed for protection from its creditors, it listed
US$600 million in total assets and US$1 billion in total debts.
ASARCO LLC has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for US$2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News Issue No. 95; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: Reviews Options Amid Failed Sterlite Deal
-----------------------------------------------------
ASARCO LLC and its affiliated debtors informed the U.S. Bankruptcy
Court that they continue to assess their options for emergence
from bankruptcy including entering into a settlement and amended
agreement with Sterlite (USA), Inc., pursuing a breach of contract
action against Sterlite, selling the company's assets to another
buyer, filing a stand-alone plan, or some combination of the
foregoing.
On May 30, 2008, ASARCO's Board of Directors approved and
authorized ASARCO to execute a purchase and sale agreement with
Sterlite and Sterlite Industries (India) Ltd. as guarantor,
pursuant to which Sterlite agreed to purchase substantially all of
ASARCO's operating assets for $2.6 billion. The Debtors filed a
plan of reorganization that was predicated on the closing of the
sale before the U.S. Bankruptcy Court for the Southern District of
Texas, but has deferred solicitation of votes on the plan after
Sterlite repudiated the PSA.
Sterlite and Asarco have participated in mediation ordered by
Judge Andrew S. Hanen of the U.S. District Court for the Southern
District of Texas. The parties failed to reach an agreement after
six non-consecutive days of mediation.
Grupo Mexico, S.A.B. de C.V., ASARCO LLC's ultimate parent
previously offered $2.7 billion to purchase the Debtors' assets.
However, Grupo Mexico took back its offer after Sterlite withdrew
its bid. Grupo Mexico cited reduced copper prices and unstable
market conditions.
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
ASARCO LLC filed for Chapter 11 protection on Aug. 9, 2005 (Bankr.
S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L.
Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P.,
and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and
Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C.,
represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When ASARCO LLC filed for protection from its creditors, it listed
US$600 million in total assets and US$1 billion in total debts.
ASARCO LLC has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for US$2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News Issue No. 95; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
ATLANTIC WIRE: To Pay State $1.5MM for Toxic Chemicals in River
---------------------------------------------------------------
David Funkhouser at The Hartford Courant reports that Atlantic
Wire Company, LLC, has reached a settlement with the state of
Connecticut, agreeing to pay $1.5 million in penalties for dumping
toxic chemicals into the Branford River.
According to The Hartford Courant, Atlantic Wire will also spend
almost $900,000 for clean-up.
The Hartford Courant relates that the settlement resolves a
lawsuit that Attorney General Richard Blumenthal filed against
Atlantic Wire in January 2008, as well as a civil action brought
by the Connecticut Fund for the Environment. The report quoted
Roger Reynolds, a senior attorney with the group, as saying,
"Atlantic Wire was one of a number of companies that [Connecticut
Fund for the Environment] found were chronically violating the law
without meaningful enforcement response by the state. Atlantic
Wire was a bad actor that should have been stopped years before."
Atlantic Wire, says The Hartford Courant, also pleaded guilty in a
U.S. District Court for violating the federal Clean Water Act and
lying about it in reports to the state Department of Environmental
Protection. The report states that the ruling on that case will
be on March 20, 2009.
Citing Mr. Reynolds, The Hartford Courant reports that Atlantic
Wire is given until the end of February to clean up the site.
Branford, Connecticut-based Atlantic Wire Company, LLC --
http://www.atlanticwireco.com-- manufactures low to medium carbon
and alloy steel cold-heading wire and processed rod. It also
provides custom coatings, soaps, and lubricants for the entire
range of the fastener and wire-forming industries. The company
filed for Chapter 11 protection on Aug. 12, 2008 (Bankr. D. Conn.
Case No. 08-32631). Elizabeth Theresa Arana, Esq., at Brown
Rudnick Berlack Israels LLP assists the company in its
restructuring effort. The company listed assets of $1 million to
$10 million and debts of $10 million to $50 million.
AURORA OIL: President Resigns, VP-Business Dev't. Assumes Role
--------------------------------------------------------------
Aurora Oil & Gas Corporation disclosed in a regulatory filing that
John E. McDevitt, who has served as president and chief operating
officer since January 2008, resigned effective immediately due to
family related issues. Mr. McDevitt will continue to serve as a
director of the company for the remainder of his term.
Effective immediately, the board of directors has also named
Gilbert A. Smith to replace Mr. McDevitt as president of the
company. Mr. Smith has served as the company's vice president of
business development since February 2008 and will continue in this
capacity in addition to his role as president. Mr. Smith has
nearly 40 years of domestic and international oil and gas
experience with expertise in land management, negotiations and
government relations. Mr. Smith also serves as a manager and
chief operating officer of Acadian Energy, LLC.
On Jan. 10, 2008, Aurora Oil signed a non-binding letter of intent
to acquire Acadian. In connection with the potential acquisition
of Acadian, the company entered into two separate operating
agreements with Acadian to provide services and funding for the
maintenance and preservation of Acadian properties anticipated to
be transferred to the company upon closing of the acquisition.
During October 2008, the company decided not to proceed with the
acquisition of Acadian. Acadian owes the company $200,000 for
services and funding rendered under the operating agreements.
These operating agreements are expected to be terminated by the
end of 2008.
From 2002 to 2006, Mr. Smith was vice president of Land and
Contract Administration for CDX Gas, LLC. From 1999 to 2001,
Mr. Smith worked as an independent consultant, performing
international strategic contract negotiation and business
development. Mr. Smith worked for Sun Exploration and Production
Company (subsequently name Oryx Energy Company) from 1978 through
1999 where he served in various senior management positions.
Mr. Smith's annual salary remains unchanged at $200,000 per year.
Mr. Smith is also covered under a change in control arrangement
designed to encourage key officers and employees to remain with
the company through any potential change in control.
The change of control agreement provides that during the two-year
period, the key officer or employee will (i) have a position and
duties commensurate to those of the officer prior to the change of
control, (ii) perform his or her services at a location within a
35-mile radius from the previous work site before the change in
control, and (iii) receive an annual base salary at least equal to
the employee's annual base salary prior to a change in control
unless a reduction occurs on a proportional basis simultaneously
with a Company-wide reduction in senior management salaries.
In the event of a covered termination during the two-year period
after a change of control, the arrangement provides for (i) the
payment of an amount equal to either one or two times the
employee's annual salary as specified in each employee's
individual agreement, (ii) the provision for medical and dental
benefits for up to 24 months after the date of termination, and
(iii) benefits continuation substantially similar to those to
which the employee was entitled prior to the date of termination.
In the event of Mr. Smith's termination he is entitled to one
times his annual salary or $200,000.
Mr. Smith also has a stay bonus arrangement with the company which
provides that if a change in control occurs on or before Dec. 31,
2008, and Mr. Smith remains continuously employed with the company
through such change of control, Mr. Smith would be eligible for a
stay bonus in the amount of 50% of his current annual base salary
or $100,000.
About Aurora Oil & Gas
Based in Traverse City, Michigan, Aurora Oil & Gas Corporation
(Amex: AOG) -- http://www.auroraogc.com/-- is an independent
energy company focused on unconventional natural gas exploration,
acquisition, development and production with its primary
operations in the Antrim Shale of Michigan, the New Albany Shale
of Indiana and Kentucky, and the Woodford Shale of Oklahoma.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $248,575,029, total liabilities of $134,334,630 and
shareholders' equity of $114,240,399.
For three months ended Sept. 30, 2008, the company posted net loss
of $16,694,870 compared with net loss of $3,254,294 for the same
period in the previous year.
For nine months ended Sept. 30, 2008, the company posted net loss
of $18,579,166 compared with net loss of $3,765,136 for the same
period in the previous year.
Notices of Default
As reported in the Troubled Company Reporter on Oct. 15, 2008,
Aurora Oil and Gas Corporation has received notices of defaults in
relation to its senior secured credit facility with BNP Paribas
and its second lien term loan agreement with BNP, as the arranger
and administrative agent, and several other lenders forming a
syndication. In August 2008, Laminar Direct Capital, LLC
succeeded BNP as the arranger and administrative agent for the
Term Loan.
As of the Nov. 7, 2008, the company has not paid BNP Paribas the
$2.2 million liability.
AVIS BUDGET: S&P Puts CCC+ Corp. Credit Rating on Watch Positive
----------------------------------------------------------------
Standard & Poor's Ratings Services said its ratings on Avis Budget
Group Inc. and Avis Budget Car Rental LLC, including the 'CCC+'
long-term corporate credit ratings on both entities, remain on
CreditWatch, but the implications have been revised to positive
from developing, where they were placed on Dec. 22, 2008.
On Dec. 23, 2008, car rental company Avis Budget received
commitments to renew its asset-backed bank conduit facility and
its ABS seasonal conduit facility, both of which it uses to
finance cars for its rental fleet. The company also announced on
that date that it had completed an amendment to its corporate
credit facility to replace the leverage and interest coverage
ratios with a minimum EBITDA covenant.
"While our ratings were based on the successful completion of the
financings and covenant amendments, S&P believes the company will
continue to be hurt by the weak earnings outlook for the U.S. car
rental industry, due to pressure on pricing and demand, which
began earlier in 2008; and to deteriorating automobile residual
values," said Standard & Poor's credit analyst Betsy Snyder. "We
will assess these factors to resolve the CreditWatch, which could
result in a modest ratings upgrade. S&P believes the company's
successful completion of the financings and covenant amendments
has diminished the likelihood of lower ratings," the analyst
continued.
The principal conduit facility, which was reduced to
$1.35 billion from $1.45 billion, matures Dec. 22, 2009, and the
seasonal facility, which was increased to $1.1 billion from
$1 billion, matures November 2009, following 25% reductions in
borrowing capacity in each of September and October. Initial
pricing is unchanged from the current levels, which were
established in October 2008. The corporate revolving credit
facility has been reduced to $1.15 billion from $1.5 billion, with
a 2.5% increase in pricing. A minimum corporate EBITDA covenant
replaces the leverage and interest coverage covenants through the
first quarter of 2010. Minimum corporate EBITDA is $160 million
at Dec. 31, 2008; declines to $135 million at
March 31, 2009, $95 million at June 30, 2009, and $80 million at
Sept. 30, 2009; and increases to $155 million at Dec. 31, 2009,
and $175 million at March 31, 2010.
Now that Avis Budget's conduit financings have been completed and
its corporate credit facility covenants amended, S&P will focus on
the company's expected financial performance from a reduced level
of travel due to the ongoing weaker economy, and higher
depreciation and interest expense, in addition to the effect from
the distressed auto manufacturers to resolve the CreditWatch.
BALLY TOTAL: Sec. 341 Meeting Scheduled for January 13
------------------------------------------------------
Diana G. Adams, the United States Trustee for Region 2, will
convene a meeting of creditors of Bally Total Fitness Holding
Corporation, and its 42 debtor affiliates on January 13, 2009, at
2:30 p.m., at 80 Broad Street, Fourth Floor, in New York.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in the Debtor's bankruptcy cases.
Attendance by the Debtor's creditors at the meeting is welcome,
but not required. The Sec. 341(a) meeting offers the creditors a
one-time opportunity to examine the Debtor's representative under
oath about the Debtor's financial affairs and operations that
would be of interest to the general body of creditors.
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
7on 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 Total Fitness Holding Corp. and its debtor-affiliates and
subsidiaries again filed voluntary petitions under Chapter 11 on
Dec. 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their
counsel is Kenneth H. Eckstein, Esq. at Kramer Levin Naftalis &
Frankel LLP, in New York. 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.
(Bally Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
BALLY TOTAL: Seeks Permission to Continue Using Cash Collateral
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York is
expected to enter a ruling today on Bally Total Fitness Holding
Corporation's request to continue using its lenders' cash
collateral.
The Court previously entered an interim order authorizing Bally
The Court to use cash collateral until 11:59 p.m. Eastern Time, on
January 8, 2009.
The Cash Collateral may be used during the Specified Period
solely up to the amounts, not to exceed 115% of the amounts set
forth in the Budget on a cumulative, aggregate rolling basis
measured weekly as of the close of business on Friday of each
week.
Prior to this, the Official Committee of Unsecured Creditors told
the Court that it opposes the Debtors' continued use of the Cash
Collateral, to the extent that the proposed final order granting
the Motion does not incorporate carve-out for the payment of
professionals retained by the Debtors and the Committee.
David H. Botter, Esq., at Akin Gump Strauss Hauer & Feld LLP, in
New York, counsel for the Committee, argues that the absence of a
carve-out from the Proposed Final Order will limit the Committee's
ability to acquit its fiduciary obligations to the Debtors'
unsecured creditors, in accordance with Section 1103 of the
Bankruptcy Code. In effect, he says, the estate-retained
professionals will be forced to finance the Debtors' Chapter 11
cases.
Michael W. Sheehan, chief executive officer of Bally Total
Fitness Holding Corporation, tells the Court that the Debtors are
party to a credit agreement, dated October 1, 2007, with Morgan
Stanley Senior Funding, Inc., as administrative collateral agent,
Wells Fargo Foothill, LLC, as revolving credit agent, and the CIT
Group/Business Credit, Inc., as revolving syndication agent, and
other senior secured lenders party to the Credit Agreement, which
provides for financing of up to $292,000,000, consisting of
$50,000,000 in a senior secured revolving credit facility, with a
$40,000,000 sublimit for letters of credit and a six-year
$242,000,000 senior secured term loan facility. The proceeds
from the Term Loan and the Revolver Facility were used to
refinance the amounts outstanding under the Company's debtor-in-
possession credit agreement from the Prior Bankruptcy Cases
and to provide additional working capital. Bally's obligations
under the Credit Agreement are guaranteed by most of Bally's
domestic subsidiaries.
Pursuant to a Guarantee and Collateral Agreement, dated as of
October 1, 2007, between Bally and the Agent, obligations under
the Credit Agreement are secured by first priority liens and
security interests on certain assets and property of the Debtors,
including without limitation, accounts, deposit accounts,
chattel paper, commercial tort claims, contracts, documents,
equipment, general intangibles, instruments, intellectual
property, inventory, investment property, all pledged securities,
receivables, goods, and books and records and the proceeds
thereof. The Prepetition Collateral includes cash collateral of
the Agent and the Senior Secured Lenders within the meaning of
Section 363(a) of the Bankruptcy Code.
As of the Petition Date, the Debtors had approximately
$17,000,000 of cash on hand which comprises Cash Collateral. In
addition, the Debtors forecast receipt of $3,500,000 of
additional cash in the next 45 days, which comprises proceeds of
the Senior Secured Lenders' collateral.
Mr. Sheehan told the Court that that the Debtors have an immediate
need for the use of cash collateral to sustain their businesses as
a going concern and effect a successful reorganization, including:
* the continued operation of their businesses;
* the maintenance of business relationships with vendors,
suppliers and customers; and
* the payment to employees and satisfaction of other
working capital and operational needs.
To successfully navigate through their Chapter 11 cases, the
Debtors need to maintain sufficient liquidity to support the
continued ordinary course business operations, and immediate
access to Cash Collateral will enable the Debtors to demonstrate
to their vendors, suppliers, customers and employees that they
have sufficient capital to ensure ongoing operations.
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
7on 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 Total Fitness Holding Corp. and its debtor-affiliates and
subsidiaries again filed voluntary petitions under Chapter 11 on
Dec. 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their
counsel is Kenneth H. Eckstein, Esq. at Kramer Levin Naftalis &
Frankel LLP, in New York. 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.
(Bally Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
BALLY TOTAL: To Pay Prepetition Obligations to Employees
--------------------------------------------------------
Bally Total Fitness Holding Corporation obtained permission from
the U.S. Bankruptcy Court for the Southern District of New York to
pay all obligations owed to employees prior to its Chapter 22
cases.
The Debtors employ approximately 14,570 employees, consisting of
6,820 full-time employees and 7,750 part-time employees. The
Debtors also employ approximately two temporary employees. The
Debtors incur payroll and other obligations, and provide benefits
to the Employees.
Kenneth H. Eckstein, Esq., Kramer Levin Naftalis & Frankel LLP,
in New York, the Debtors' proposed counsel, maintains that the
Employees are essential for the Debtors to effect a successful
reorganization and maintain the value of their assets and
businesses.
The Employees perform a variety of critical functions, including
operating the Debtors' facilities, maintaining equipment,
monitoring member use of equipment, recruiting new members and
providing training services to members, as well as performing
many administrative, accounting, supervisory, consultant,
management and other tasks.
The Debtors' Employee Obligations are:
(a) Unpaid compensation, which totals approximately
$10,572,000 for the most recent payroll period. As of
the Petition Date, approximately $4,172,000 in accrued
wages, salaries, vacation pay, holiday pay and overtime
pay remains unpaid to Employees. In addition, the
Debtors believe approximately $1,600,000 in accrued
sales commissions and $1,200,000 in accrued incentive
payments remain unpaid to Employees;
(b) Remitting and paying appropriate deductions and withheld
amounts, which aggregate approximately $298,714 for each
pay period.
The Debtors employ Automatic Data Processing, Inc., to
facilitate their payroll obligations, which costs them
$100,000 monthly. They also employ KRONOS, Inc., to
assist in their time keeping system, which costs $15,000
monthly;
(c) Honoring checks for and payment of reimbursable expenses,
for which the Debtors spend $225,000 on Reimbursable
Expense per month. As of the Petition Date, the Debtors
believe $35,000 in Reimbursable Expenses remained unpaid
to 86 employees; and
(d) Incentive Plans, consisting of the Field Production
Incentive Plan, the Additional Incentive Program and the
Club Closing Incentive Plan.
The Employee Benefits offered by the Debtors are:
(a) Health benefits, including medical coverage, dental
coverage, stop loss coverage, vision coverage and
assistance programs, which incur a monthly cost of
$1,345,000 in the aggregate.
In addition, the Debtors purchase stop loss coverage
to cap the Debtors' exposure for individuals at $625,000
per individual per year, at $14,800 per month. As of the
Petition Date the Debtors owe $365,000.
The Debtors also have separate COBRA costs in respect of
31 COBRA participants, costing $44,000, with $3,000
monthly fees. The Debtors receive average monthly COBRA
contributions of approximately $25,000.
The Debtors also utilize Aon Consulting as total benefits
outsourcing provider, which they pay $30,000 per month;
(b) Workers' Compensation, under which the Debtors' overall
costs were $8,200,000 in 2007. The Debtors expect costs
to be similar in 2008, at an estimated amount of
$4,800,000;
(c) Vacation time, paid time off and sick days.
(d) Paid leave, including funeral or bereavement leave, jury
duty pay, short term leave;
(e) Bally's Employee Savings Trust Plan for Administrative
Employees, a 401(k) defined contribution plan, under
which the Debtors' aggregate annual matching contributions
are $700,000 for all Employees, paid in February of the
subsequent calendar year;
(f) Employee insurance benefits, which cost the Debtors
$180,000 in 2007. The Debtors believe that $83,000 in
premiums is owing under the Employee Insurance Benefits
as of the Petition Date; and
(g) Miscellaneous employee benefits, including tuition
reimbursement, education reimbursement, relocation
expenses, and blackberry or cellular telephones for
business use, for which the aggregate cost is de minimis.
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
7on 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 Total Fitness Holding Corp. and its debtor-affiliates and
subsidiaries again filed voluntary petitions under Chapter 11 on
Dec. 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their
counsel is Kenneth H. Eckstein, Esq. at Kramer Levin Naftalis &
Frankel LLP, in New York. 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.
(Bally Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
BALLY TOTAL: To Pay Critical Vendors Pre-Chapter 22 Claims
----------------------------------------------------------
Bally Total Fitness Holding Corporation obtained interim approval
from the U.S. Bankruptcy Court for the Southern District of New
York to pay amounts owed to certain vendors for the delivery of
certain goods, supplies, and related items to their fitness clubs.
The Debtors are also allowed to pay administrative claims under
Section 503(b)(9) of the Bankruptcy Code, for goods provided to
them within 20 days immediately prior to the Petition Date, and
certain administrative expense priority claims under Sections
503(b) and 507(a)(2), for undisputed obligations arising from
purchase orders outstanding as of the Petition Date.
According to Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis
& Frankel LLP, in New York, the Debtors' proposed counsel, the
Debtors have reviewed their accounts payable and their list of
prepetition Critical Vendors, and identified those Vendors
essential to the Debtors' operations using certain criteria:
* whether the vendor is a sole-source or limited source
provider;
* the costs and delay associated with identifying and
qualifying a replacement;
* whether replacing a vendor postpetition will result in
significantly higher costs to the Debtors; and
* the overall impairment on the Debtors' operations that will
result if a particular Critical Vendor ceased or delayed
services or shipments.
The Debtors were able to identify approximately 10 Critical
Vendors, whose termination of services may cripple a large number
of the Debtors' locations and result in immediate and irreparable
harm. The Debtors believe that immediate payment to the Critical
Vendors will be crucial to their ongoing operations, and is
necessary in light of the unique services the Critical Vendors
provide.
The Critical Vendors fall into two categories:
1. The Critical Service Vendors -- for services that include
waste management, logistic services related to
transportation of retail goods, television service, and
atmospheric music at the Debtors' fitness clubs.
2. The Critical Supply Vendors -- for provision of critical
supplies that include nutritional supplements and
beverages for retail sale, fitness equipment parts,
security wristbands for a children's program, and various
business forms.
Mr. Eckstein asserted that if the Critical Vendor Claims will not
be paid Amounts, the Critical Vendors will refuse to provide
goods and services to the Debtors postpetition, which will have
an immediate detrimental impact on their ability to operate heath
club facilities, and result to a negatively effect on Club
Members, cash flow, value, and creditor recoveries.
Moreover, Mr. Eckstein maintained that even if the Critical
Vendors are replaced, the delay that will result from the change
will very likely delay the Debtors' ability to operate their
business which would be devastating to the Debtors' operations.
The Debtors have developed certain standard procedures, which the
Court has approved on an interim basis:
(a) A condition on the payment of Critical Vendor Claims, at
the Debtors' discretion, is the agreement of the
individual Critical Vendor to continue supplying goods
and services on terms consistent with historical trade
terms;
(b) The Debtors reserve the right to negotiate different
trade terms with any Critical Vendor, as a condition to
payment of any Critical Vendor Amount, to the extent the
Debtors determine that the trade terms are necessary to
procure essential goods and services;
(c) A letter will be sent to the Critical Vendors containing
(i) the amount of the Critical Vendor's prepetition
claim after accounting for set-offs,
(ii) an agreement by the Critical Vendor to be bound by
the Customary Trade Terms,
(iii) an agreement to refrain from asserting claims,
including reclamation claims, against any Debtor,
(iv) acknowledgement that it has reviewed the terms and
provisions of the applicable order and consents to
be bound thereby,
(v) an agreement that if it receives payment of a
prepetition claim but subsequently refuses to
supply goods and services to the Debtors on
Customary Trade Terms, the amount paid will be
deemed payment of outstanding postpetition
obligations owed to that Critical Vendor, and
(iv) an agreement to repay any prepetition claims
payment received, to the extent that the aggregate
amount exceeds outstanding postpetition
obligations.
The Debtors are authorized to terminate any Trade Agreement if a
Critical Vendor refuses to enter the Customary Trade Terms
following payment of a Critical Vendor claim, or fails to comply
with the Trade Agreement.
With respect to Section 503(b)(9) Claims, the Debtors are
authorized to pay those claims as administrative expense claims
in the ordinary course of business.
The Section 503(b)(9) Vendors are allowed to decline to ship
Goods based on an outstanding order, unless the Debtors issue
substitute postpetition purchase orders or obtain a Court order
confirming the administrative expense status of the Outstanding
Orders. Accordingly, the Court permits the Debtors to pay
administrative expense claims for Goods delivered in the ordinary
course of business after the Petition Date.
641 Owner LLC opposed the payment of the Critical Vendor Claims
and Section 503(b)(9) claims, asserting that the Debtors have
failed to pay a $75,000 pro-rated fixed rent for December 2008,
and $136,000 for November 2008, on account of a lease.
641 Owner maintained that the Debtors should not be permitted to
selectively pay prepetition or administrative claims, and
accordingly asked the Court to deny the Motion until the rent
payment due is paid.
Notwithstanding 641 Owner's objection, the Court granted interim
approval of the Motion.
Committee, Landlords Object
The Official Committee of Unsecured Creditors opposes the payment
of Section 503(b)(9) Claims to non-Critical Vendors at this stage
in the Debtors' Chapter 11 cases. The Committee maintains that
it is inappropriate at this time for the Debtors to make any
unnecessary payments, given their liquidity concerns, as
evidenced by the proposed budget in their request use of cash
collateral.
The Committee insists that the Bankruptcy Code does not require
Section 503(b)(9) Claims to be paid outside of a confirmed
Chapter 11 plan. Thus, the Court should not allow the Debtors to
make payments on behalf of Section 503(b)(9) Claims. The
Committee, however, does not object to the payment of Critical
Vendor Claims.
Tisano Realty Co. and High Definition Realty LLC also object to
the Motion, stating that the Debtors have outstanding rent due
for November and December 2008:
Landlord November Rent December Rent
-------- ------------- -------------
Tisano $34,537 $34,537
High Definition 40,939 23,070
In addition, Tisano asserts that the Debtors have not paid
insurance premiums totaling $14,241 that were due on December 2,
2008.
Accordingly, the Landlords ask the Court to deny the Motion until
the Debtors satisfy the outstanding payments.
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
7on 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 Total Fitness Holding Corp. and its debtor-affiliates and
subsidiaries again filed voluntary petitions under Chapter 11 on
Dec. 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their
counsel is Kenneth H. Eckstein, Esq. at Kramer Levin Naftalis &
Frankel LLP, in New York. 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.
(Bally Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
BALLY TOTAL: Wins Court Nod to Pay Sales and Use Taxes
------------------------------------------------------
Bally Total Fitness Holding Corporation obtained approval from the
U.S. Bankruptcy Court for the Southern District of New York to
remit and pay sales, use, and franchise taxes, as well as fees,
licenses, and other similar charges and assessments, as deemed
necessary or appropriate in the Debtors' discretion.
In the ordinary course of business, the Debtors collect sales
taxes from their customers, and incur use and franchise taxes and
fees, assessments and charges from various taxing and licensing
authorities for licenses, permits and other assessments required
to conduct the Debtors' businesses. The Taxes and Fees are paid
either monthly, quarterly or annually to the taxing authorities.
Kenneth H. Eckstein, Esq., Kramer Levin Naftalis & Frankel LLP,
in New York, proposed counsel to the Debtors, related that the
Debtors have been paying the Taxes and Fees as they come due in
the ordinary course. The Debtors believe there are no
prepetition Taxes and Fees due as of the Petition Date. However,
the Debtors estimate that after the Petition Date, the Taxes and
Fees that will become due is approximately $1,158,970.00.
Mr. Eckstein maintained if the Taxes and Fees are not paid
immediately when they are due, the Authorities may cause the
Debtors to be audited. Audits will unnecessarily divert the
Debtors' attention away from the reorganization process, he
stated. Furthermore, if the Debtors do not pay those amounts in
a timely manner, the Authorities may seek to lift the automatic
stay and pursue other remedies that will harm the estates,
including the suspension of the Debtors' operations and the
filing of liens.
Mr. Eckstein noted that the vast majority of the outstanding tax
liabilities are for trust fund taxes that the Debtors have
collected and hold in trust for the benefit of the Authorities.
Therefore, those funds do not constitute property of the estate,
and could not otherwise be used by the 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
7on 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 Total Fitness Holding Corp. and its debtor-affiliates and
subsidiaries again filed voluntary petitions under Chapter 11 on
Dec. 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their
counsel is Kenneth H. Eckstein, Esq. at Kramer Levin Naftalis &
Frankel LLP, in New York. 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.
(Bally Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
BERKSHIRE BANK: Weiss Ratings Assigns "Very Weak" E- Rating
-----------------------------------------------------------
Weiss Ratings has assigned its E- rating to The Berkshire Bank
based in New York City. Weiss says that the institution currently
demonstrates what it considers to be significant weaknesses and
has also failed some of the basic tests Weiss uses to identify
fiscal stability. "Even in a favorable economic environment,"
Weiss says, "it is our opinion that depositors or creditors could
incur significant risks."
Berkshire is not a member of the Federal Reserve. Deposits have
been insured by the Federal Deposit Insurance Corporation since
the financial institution was established on May 8, 1989.
Berkshire maintains a Web site at http://www.berkbank.com/
FDIC data shows that Berkshire has 13 branches in New York and New
Jersey. At Sept. 30, 2008, Berkshire disclosed $917 million in
assets and $913 million in liabilities in its regulatory filings.
BERNARD L. MADOFF: SIPC to Return $500,000 Max for Each Client
--------------------------------------------------------------
Stephen P. Harbeck, president and CEO of the Securities Investor
Protection Corporation, spoke before the committee on financial
services of the U.S. House of Representatives on Jan. 5, 2009, in
connection with the liquidation of Lehman Brothers, Inc., and
Bernard L. Madoff Investment Secutities LLC.
According to Mr. Harbeck, while the failure of Lehman Brothers
Inc. was linked to the complex, systemic failure of the
subprime mortgage situation, the failure of Bernard L. Madoff
Investment Secutities LLC, a registered securities broker-dealer
and SIPC member, involved a very different problem: the theft of
customer assets on an unprecedented scale.
The firm was placed in SIPA liquidation proceedings December 15,
2008, after the principal of the firm, Bernard Madoff, confessed
to having stolen customer property over a period of many years.
Irving H. Picard was appointed as trustee, and the law firm of
Baker & Hostetler LLP was appointed as his counsel.
Mr. Harbeck relates, "Unlike the LBI case, where customer records
were accurate, it became apparent very early in the Madoff case
that the customer statements Mr. Madoff had been sending to
investors bore little or no relation to reality."
He explains that the records sent to customers were inaccurate
when compared to the inventory of securities actually held by the
brokerage firm. For that reason, it was not possible to transfer
all or part of any customer's account to another, solvent
brokerage firm. Instead, pursuant to SIPA, Mr. Picard sought and
received authority from the Bankruptcy Court for the Southern
District of New York to publish a notice to customers and
creditors, and to mail claim forms to them, as required by law, no
later than January 9, 2009. Claim forms have been mailed to more
than 8,000 investors at their addresses as they appeared on the
Madoff's records within the last 12 months.
The trustee has requested information from each customer as to the
sums given to the Madoff brokerage firm, and sums withdrawn from
the firm, to assist in the analysis of what each customer is owed.
There are some situations, particularly where the investors have
not made withdrawals, where it will be relatively easy to
determine exactly how much a claimant put into the scheme. In
other situations, the extended time period of the deception,
coupled with numerous deposits with or withdrawal of assets from
the brokerage over time, may make that reconstruction very
difficult, Mr. Harbeck avers. The SIPC and the trustee are
committed to using all available resources to resolve these issues
quickly.
$500,000 Max for Each Claimant
Mr. Madoff has allegedly stated that he stole $50 billion from
clients. Even though this sum may include the annual "profits" he
reported to investors in his fraudulent scheme, this defalcation
is on a different order of magnitude than seen in any SIPA
liquidation that has preceded it. Until customer claims are
received and processed and further accounting and related work
accomplished, SIPC will not know the extent of the demand on its
resources.
Mr. Harbeck notes that the maximum amount under SIPA that SIPC can
advance to anyone claimant is $500,000 (including the $100,000
cash limit), even if the valid amount of the claim is much higher.
He adds that the extent of recovery by customers beyond the
amounts advanced by SIPC will depend upon the amount of customer
property that the trustee is able to recover. Most recently, the
trustee obtained a court order authorizing the release of $29
million of debtor assets to him. In addition, the trustee has
identified over $830 million in liquid assets of the defunct
brokerage firm that may be subject to recovery. Finally, the
trustee has in place a team of highly trained attorneys, forensic
accountants, and computer specialists, to assist him in locating
and recovering assets. The trustee and SIPC will be aggressive in
their pursuit of the recoveries.
The failure of the Madoff firm has broad potential consequences
for securities regulation, as well as possible effects on SIPC.
Depending on the potential cost of customer claims, SIPC will
determine whether to adjust the target balance of the SIPC Fund.
According to Bloomberg News, Mr. Harbeck said that clients might
begin recovering some of their funds as soon as next month.
About the SIPC
SIPC was created under the Securities Investor Protection Act of
1970 to provide specific financial protection to customers of
failed securities broker-dealers. Through 2007, SIPC liquidated
317 brokerage films, and returned over $15.7 billion in cash or
securities to customers. Of that sum, SIPC used $322 million from
the SIPC Fund to restore missing cash or securities. To date,
SIPC has never used any government funds or borrowed under its
commercial line of credit, Mr. Harbeck relates.
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC was a market maker in
US stocks, including all of the S&P 500 and more than 350 Nasdaq
stocks. The firm moved large blocks of stock for institutional
clients by splitting up orders or arranging off-exchange
transactions between parties. It also performed clearing and
settlement services. Clients included brokerages, banks, and
other financial institutions. In addition, Madoff Securities
managed assets for high-net-worth individuals, hedge funds, and
other institutional investors.
The firm is being liquidated in the aftermath of a fraud scandal
involving founder Bernard L. Madoff.
As reported by the Troubled Company Reporter on Dec. 15, 2008, the
Securities and Exchange Commission charged Bernard L. Madoff and
his investment firm, Bernard L. Madoff Investment Securities LLC,
with securities fraud for a multi-billion dollar Ponzi scheme that
he perpetrated on advisory clients of his firm. The estimated
losses from Madoff's fraud were at least $50 billion
Also on Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S.
District Court for the Southern District of New York granted the
application of the Securities Investor Protection Corporation for
a decree adjudicating that the customers of BLMIS are in need of
the protection afforded by the Securities Investor Protection Act
of 1970. Irving H. Picard, Esq., was appointed as trustee for the
liquidation of BLMIS, and Baker & Hostetler LLP was appointed as
counsel.
BOOT HILL: Converts to Ch. 11, Will Meet Creditors on Jan. 23
-------------------------------------------------------------
Rick Plumlee at The Wichita Eagle reports that Boot Hill Biofuels
will meet with its creditors in the U.S. Bankruptcy Court for the
District of Kansas on Jan. 23, 2009.
According to The Wichita Eagle, Boot Hill converted to Chapter 11
reorganization on Dec. 23, 2008, from Chapter 7 liquidation. The
report says that Biofuel Venture I filed a Chapter 7 petition for
Boot Hill on Dec. 1, 2008, seeking to recover its $750,000 start-
up investment.
The Wichita Eagle relates that Boot Hill's President Gary
Harshberger said that he still hopes to construct the plant, which
was first proposed in 2006. The report quoted Mr. Harshberger as
saying, "There's some issues we need to work out with a few of our
creditors. I fully hope we can come to an agreement with the ones
that have some issues of their own."
The Wichita Eagle states that when Boot the Hill Biofuels ethanol
plant was proposed, its construction was expected to cost about
$185 million. The plant was planned to be built near Wright,
north of Dodge City, and expected to produce 110 million gallons
of ethanol per year.
BROADSTRIPE LLC: Get Initial Approval to Use $6MM BoNY Facility
---------------------------------------------------------------
The Hon. Christopher S. Sontchi of the U.S. Bankruptcy Court for
the District of Delaware authorized Broadstripe LLC and its
debtor-affiliates to obtain, on an interim basis, up to $6 million
in postpetition financing under the senior secured superpriority
debtor in possession credit agreement dated Jan. 2, 2009, with a
syndicate of financial institutions, including The Bank of New
York Mellon, as administrative agent.
Judge Sontchi also authorized the Debtors to access cash
collateral securing repayment of secured loan to The Bank of New
York and NexBank SSB. The Debtors are party to (i) a second
amended and restated first lien credit agreement dated July 28,
2006, with the Bank of New York, and (ii) a second lien credit
agreement dated July 28, 2006, with NexBank.
The first lien credit facility consists of a revolving credit
facility and a term loan, which bear interest at the Base Rate
plus the applicable rate for portions and the Eurodollar rate plus
applicable rate. As of Dec. 31, 2008, the amount outstanding
under (i) the credit facility was $10.2 million priced at LIBOR
plus 7%, and (ii) the term loan was $170.6 million -- excluding
incurred but unpaid expenses -- priced at LIBOR plus 7%. On the
one hand, the second lien credit facility comprised of two term
loans: term loan C and term loan D, which provide for cash
interest to be paid on the term loans in an amount equal to LIBOR,
and PIK interest accrued on the term loans for the balance. In
march 2008, the PIK interest terms of the loans were made
consistent and now accrue at 14.5% per annum under the first
amended second lien credit facility. As of Dec. 31, 2008, the
total aggregate amount under the loans was about $102.1 million --
excluding incurred but unpaid expenses. The first lien credit
facility is secured by first liens on and security interest in
substantially all of the Debtors' assets while the other facility
is secured by second priority liens on and security interest in
substantially all of the Debtors' assets.
The DIP credit agreement provides as much as $15 million in
financing on a final basis. Proceeds of the facility will be used
for working capital and other corporate purposes of the Debtors in
the ordinary course of its business in accordance with the
proposed budget. The credit agreement will mature on the earlier
of:
a) 180 days after the Debtors' bankruptcy filing otherwise
extended by the DIP lenders to a date no later than 270
days after their bankruptcy date; or
b) the consummation of an approved plan for any loan party.
The DIP facility incurs interest at prime rate plus 9%.
The DIP agreement is subject to carve-out to pay (1) statutory
fees to the U.S. Trustee; (ii) fees payable to the clerk of the
Court; and (iii) accrued and unpaid fees and expenses, in an
amount not to exceed $500,000, incurred by professionals retained
by the Debtors.
The lenders will be granted superpriority administrative claims
status to secure the Debtors' DIP Obligations.
A final hearing before the Court is scheduled for Jan. 26, 2009,
at 1:00 p.m. Objections, if any, are due Jan. 20, 2009.
A full-text copy of the senior secured superpriority debtor in
possession credit agreement dated Jan. 2, 2009, is available for
free at http://ResearchArchives.com/t/s?376c
About Broadstripe LLC
Headquartered in Chesterfield, Missouri, Broadstripe LLC --
http://www.broadstripe.com-- provide videos and telephone
services to consumers and business in Maryland, Michigan,
Washington and Oregon. The company and fives of its affiliates
filed for Chapter 11 protection on January 2, 2009 (Bankr. D. Del.
Lead Case No. 09-10006). Ashby & Geddes, and Gardere Wynne Sewell
LLP represent the Debtors in their restructuring efforts. The
Debtors proposed FTI Consulting Inc. as their restructuring
consultant, and Epiq Bankruptcy Consultants LLC as their claims
agent. When the Debtors filed for protection from their
creditors, they listed assets and debts between $100 million and
$500 million in their filing.
BROOKE CORP: Committee Spar With Banks on Conversion Request
------------------------------------------------------------
The official committee of unsecured creditors appointed in the
bankruptcy cases of Brooke Corp. and Brooke Capital Corp. and bank
lenders Bank of New York Mellon and DZ Bank AG Deutsche Zentral-
Genossenschaftsbank spar over DZ Bank's request to convert the
Debtors' cases to chapter 7 proceedings, various reports say. The
banks provide securitization services to Brooke, according to
Bankruptcy Law360.
According to Bloomberg's Bill Rochelle, DZ Bank says the case
should be converted to Chapter 7 to avoid burning cash. Brooke,
the bank notes, has no business left.
BoNY Mellon supports the Conversion Motion. Bankruptcy Data
relates that the committee wants the request denied, arguing that
the Conversion Motion was "interposed as a leverage tactic in DZ
Bank's ongoing efforts to pressure the Chapter 11 Trustee into
agreeing to a one-sided proposal by DZ Bank and other so-called
Securitization Company Creditors, to transfer millions of dollars
of assets of the Debtors' subsidiaries to them without the benefit
of an order of this Court authorizing such asset transfers or even
a signed agreement, and grant DZ Bank and the other Securitization
Company Creditors releases from claims under section 506(c) of the
Bankruptcy Code, a proposal which both the Trustee and the
Committee have resisted."
Headquartered in Kansas, Brooke Corp. (NASDAQ: BXXX) --
http://www.brookebanker.com-- is an insurance agency and finance
company. The company owns 81% of Brooke Capital. The majority of
the company's stock was owned by Brooke Holding Inc., which, in
turn was owned by the Orr Family. A creditor of the family, First
United Bank of Chicago, was foreclosed on the BHI stock. The
company's revenues are generated from sales commissions on the
sales of property and casualty insurance policies, consulting,
lending and brokerage services.
Brooke Corp. and its affiliate, Brooke Capital Corp. filed for
Chapter 11 protection on Oct. 28, 2008 (Bankr. D. Kan. Case No.
08-22786). Angela R. Markley, Esq., is the Debtors' in-house
counsel. The Debtors listed assets of $512,855,000 and debts of
$447,382,000.
CB RICHARD ELLIS: Bank Loan Sells at Substantial Discount
---------------------------------------------------------
Participations in a syndicated loan under which CB Richard Ellis
Services Inc. is a borrower traded in the secondary market at
46.40 cents-on-the-dollar during the week ended January 2, 2009,
according to data compiled by Loan Pricing Corp. and reported in
The Wall Street Journal. This represents an increase of 1.50
percentage points from the previous week, the Journal relates. CB
Richard Ellis Services Inc. pays interest at 175 points above
LIBOR. The bank loan matures on November 15, 2013. The bank loan
carries Moody's Ba1 rating and Standard & Poor's BB+ rating.
Based in Los Angeles, California, CB Richard Ellis Group, Inc. --
http://www.cbre.com/-- offers a full range of services to
occupiers, owners, lenders and investors in office, retail,
industrial, multi-family and other commercial real estate assets
globally under the "CB Richard Ellis" brand name and provides
development services under the "Trammell Crow" brand name. The
company generates revenues on a per project or transactional basis
and from contractual management fees. CB Richard Ellis Group --
formerly known as CBRE Holding, Inc. -- was created to acquire all
of the outstanding shares of CB Richard Ellis Services, Inc.
CITY OF DETROIT: S&P Cuts General Obligation Bonds to 'BB'
----------------------------------------------------------
Standard & Poor's Ratings Services has lowered its ratings on
Detroit, Michigan's unlimited-tax and limited-tax general
obligation bonds to 'BB' from 'BBB' and 'BBB-', respectively,
based on Standard & Poor's analysis of the city's inability to
regain structural balance and the resultant ongoing financial
deterioration. The outlook is stable.
The city expects to experience an operational deficit in fiscal
2009, indicating that the structural changes that were made over
the previous several years were insufficient to withstand the
city's operational needs. In addition, economic challenges in the
city have translated directly to the financial bottom line. S&P
has not made any differentiation in the ratings between the
limited- and unlimited-tax pledge.
"We expect that progress will be made in regaining structural
balance and eliminating the negative unreserved carry-forward
balance in the general fund and that, despite any potential
changes to the leadership of the city, Detroit will stay on track
with planned financial operations improvements," said Standard &
Poor's credit analyst Jane Hudson Ridley.
The rating reflects Standard & Poor's opinion of four straight
years (2003-20006) of negative unreserved general fund balances,
caused by a structural imbalance that has been growing. The city
projects break-even operations for fiscal 2007, but is unsure at
this time if fiscal 2008 was fiscally balanced. The city has
stated that another operational draw is expected in fiscal 2009.
The rating also reflects a downward trend in some revenue sources
that has made balancing operations difficult and the continued
difficulty in assessing the city's financial position, given its
chronically late audits and its historical tendency to end the
fiscal year with results that compare unfavorably with initial
projections. The timing of the audits has caused the state of
Michigan to delay some revenue-sharing payments. Additional
rating factors include Detroit's ongoing reliance on the durable
manufacturing sector -- specifically the automobile industry --
although the city continues to work toward diversifying its
economy; and a high debt burden that places fixed-cost pressure on
operations.
In Standard & Poor's opinion, positive credit factors include a
new administration that has highlighted fiscal strength and
stability as a goal and is working toward developing and
implementing a deficit elimination plan, and substantial
investment in the city in recent years by both the private and
public sectors, which has led to improvements in the city's
"livability" standards.
Approximately $2.4 billion of debt is affected.
COLUMBIA HOSPITAL: Case Summary & 19 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Columbia Hospital for Women Medical Center, Inc.
c/o Michael M. Barch,
Liquidating Trustee
8101 Glenbrook Road
Bethesda, MD 20814
Bankruptcy Case No.: 09-00010
Chapter 11 Petition Date: January 6, 2009
Court: District of Columbia (Washington, D.C.)
Debtor's Counsel: George R. Pitts, Esq.
pittsg@dicksteinshapiro.com
Dickstein Shapiro LLP
1825 Eye Street, NW
Washington, DC 20006
Tel: (202) 420-3158
Estimated Assets: $10,000,000 to $50,000,000
Estimated Debts: $50,000,000 to $100,000,000
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Hutchinson, Michele alleged medical $22,325,813
c/o Anton M. Weiss, Esq. malpractice
Pascal & Weiss, P.C.
1008 Pennsylvania Ave., S.E.
Washington, DC 20003-2142
Tel: (202) 544-2200
Smith, Artulies K. alleged medical $5,500,000
Anton M. Weiss, Esq. malpractice
Pascal & Weiss, P.C.
1008 Pennsylvania Ave., S.E.
Washington, DC 20003-2142
Tel: (202) 544-2200
Former Employees of Columbia wages $1,411,129
Hospital for Women
c/o Robin C. Newton
Liquidating Trustee
8101 Glenbrook Road
Bethesda, MD 20814
Tel: (866) 477-6337
Adams, Wesley B. alleged medical $1,000,000
malpractice
Coleman Hutchensen - $1,000,000
Watkins & Assman Consulting service $804,270
Barnes, Karen N. alleged medical $500,000
malpractice
Kinetic Biomedical Services services $336,000
provided
State of Maryland taxes $288,377
McClandish & Lillard, P.C. service $226,104
provided
Harkavy, Kenneth contract $190,000
Jackson & Campbell, P.C. services $189,429
provided
Laboratory Corporation of services $187,637
America provided
Progressive Nursing services $171,756
provided
Carr Maloney P.C services $160,000
provided
Commonwealth of Virginia taxes $156,361
C2 Professional Services LLC services $153,879
provided
Epstein Becker & Green, P.C. services unknown
provided
GE HFS Holdings, Inc. / money loaned unknown
Heller Healthcare Finance, Inc.
The petition was signed by Michael M. Barch, liquidating trustee
of the company.
COOPER-STANDARD: May Buy $150-Mil. of Bank Debt at Discount
-----------------------------------------------------------
Bloomberg's Bill Rochelle reports that Cooper-Standard Automotive
Inc., received agreement from bank lenders to permit buying back
as much as $150 million of the secured debt at a discount. The
amount to be paid will be decided at an auction, the report says.
Cooper-Standard Holdings said in a Dec. 18 filing that, together
with Cooper-Standard Automotive Inc., an Ohio corporation; Cooper-
Standard Automotive Canada Limited, a corporation organized under
the laws of Ontario; Cooper-Standard Automotive International
Holdings B.V. (f/k/a Steffens Beheer BV), a corporation organized
under the laws of the Netherlands, the company entered into an
agreement with lenders and Deutsche Bank Trust Company Americas,
as administrative agent, amending certain provisions of their
Credit Agreement, dated as of December 23, 2004.
The Amendment provides that a Cooper-Standard entity may
voluntarily prepay, up to a maximum amount of $150,000,000, of one
or more tranches of its term loan debt under the Credit Agreement
held by participating lenders at a discount price to par to be
determined pursuant to certain auction procedures.
The prepayments may be financed with cash, if Cooper-Standard
meets, on a consolidated basis, certain conditions set forth in
the Amendment including a $125,000,000 minimum liquidity
requirement.
The prepayments may not be made from the proceeds of loans drawn
under the Credit Agreement's revolving credit facility. The
prepayments may also be financed with the proceeds of certain
equity contributions from holders of equity of Cooper-Standard
Ohio.
A full-text copy of the Amendment is available for free at:
http://researcharchives.com/t/s?377b
Lehman Commercial Paper Inc., as syndication agent, and Goldman
Sachs Credit Partners, L.P., UBS Securities LLC and The Bank of
Nova Scotia, as co-documentation agents, were also parties to the
Credit Agreement.
Cooper-Standard said Nov. 13, 2008, that it had a $32.6 million
net loss for the third quarter of 2008 compared to a net loss of
$12.8 million for the same period of 2007, due primarily to lower
North American light vehicle production, restructuring charges and
vehicle mix changes related to shifts in consumer demand.
"The global financial crisis, volatile economic conditions and
sharp decline in automotive sales presented unprecedented
challenges which impacted our performance in the third quarter of
2008," said Cooper-Standard Automotive President and Chief
Executive Officer Edward A. Hasler, in November 2008. "We were
able to offset the impact of these factors to some degree by
proactively flexing our manufacturing costs, reducing
administrative expenses and continued recovery of raw material
cost escalation. Though the economic climate continues to be
challenging, we are encouraged by the new business we have been
awarded, especially on global small car platforms, as well as
awards for products that contribute to greater fuel efficiency and
reduced emissions."
About-Cooper Standard
Cooper-Standard Automotive Inc., headquartered in Novi, Michigan,
is a leading global automotive supplier specializing in the
manufacture and marketing of systems and components for the
automotive industry. Products include body sealing systems, fluid
handling systems, and NVH control systems. Cooper-Standard
Automotive Inc. employs approximately 19,000 people globally with
more than 70 facilities throughout the world. Its Web site is
http://www.cooperstandard.com/ Cooper-Standard is a privately-
held portfolio company of The Cypress Group and Goldman Sachs
Capital Partners Funds.
As reported by the Troubled Company Reporter on Jan. 2, 2009,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Cooper-Standard Automotive Inc. to 'CC' from 'B'. At
the same time, S&P lowered the ratings on the company's various
debt issues. All ratings remain on CreditWatch with negative
implications, were they were placed on Nov. 13, 2008.
In December 2008, Moody's Investors Service lowered the corporate
rating to Caa1 while the subordinated debt became Caa3. Moody's
said its action stemmed from "dramatic production declines"
expected next year by U.S. automakers.
COUNTY BANK: Weiss Ratings Assigns "Very Weak" E- Rating
--------------------------------------------------------
Weiss Ratings has assigned its E- rating to Merced, Calif.-based
County Bank. Weiss says that the institution currently
demonstrates what it considers to be significant weaknesses and
has also failed some of the basic tests Weiss uses to identify
fiscal stability. "Even in a favorable economic environment,"
Weiss says, "it is our opinion that depositors or creditors could
incur significant risks."
County Bank deposits have been insured by the Federal Deposit
Insurance Corporation since the financial institution was
established on Dec. 22, 1977. County Bank maintains a Web site at
http://www.countybank.com/
FDIC data shows that County Bank has 41 branches. At Sept. 30,
2008, County Bank disclosed $1.8 billion in assets and
$1.7 billion in liabilities in its regulatory filings.
CRESCENT RESOURCES: Bank Loan Sells at Almost 75% Discount
----------------------------------------------------------
Participations in a syndicated loan under which Crescent Resources
is a borrower traded in the secondary market at 25.60 cents-on-
the-dollar during the week ended January 2, 2009, according to
data compiled by Loan Pricing Corp. and reported in The Wall
Street Journal. This represents a drop of 2.15 percentage points
from the previous week, the Journal relates. Crescent Resources
pays interest at 300 points above LIBOR. The bank loan matures on
November 8, 2012. The bank loan carries Moody's B1 rating and
Standard & Poor's B+ rating.
Headquartered in Charlotte, North Carolina, Crescent Resources,
LLC is a private land and commercial property development company.
The firm is jointly owned by Duke Energy and Morgan Stanley Real
Estate.
DOLLAR GENERAL: Bank Loan Sells at Substantial Discount
-------------------------------------------------------
Participations in a syndicated loan under which Dollar General is
a borrower traded in the secondary market at 76.00 cents-on-the-
dollar during the week ended January 2, 2009, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 1.00 percentage points
from the previous week, the Journal relates. Dollar General pays
interest at 275 points above LIBOR. The bank loan matures on July
7, 2014. The bank loan carries Moody's B1 rating and Standard &
Poor's B+ rating.
Based in Goodlettsville, Tennessee, Dollar General Corporation
(NYSE: DG) -- http://www.dollargeneral.com/-- is a discount
retailer with more than 8,000 neighborhood stores. Dollar General
helps shoppers Save time, Save money(R) by offering national
branded items that are frequently used and replenished such as
food, snacks, health and beauty aids, cleaning supplies, basic
apparel, house wares and seasonal items at everyday low prices in
convenient neighborhood stores.
DUNE ENERGY: Amends and Restates Employment Deals with Executives
-----------------------------------------------------------------
Dune Energy, Inc., entered into amended and restated employment
agreements with each of James A. Watt, the company's president and
chief executive officer, Alan Gaines, its Chairman, and Amiel
David, senior advisor to the board of directors.
The purpose for entering into the Amended and Restated Employment
Agreements was to revise certain provisions regarding the timing
of payments to the named executive officers to be in compliance
with Section 409A of the Internal Revenue Code of 1986, as
amended. Accordingly, the provisions relating to the payment to
the named executives upon their death, disability, resignation and
termination with and without cause, have been amended to provide
that any payments required under their respective agreement be
made in a lump sum cash payment within 15 days after the date that
the named executive officer's employment with us is terminated.
The Amended and Restated Employment Agreements further provide
that notwithstanding any provision to the contrary contained in
such agreements, in the event the named executive officer is
deemed a 'specified employee" under Section 409A of the Code, no
benefit or payment will be made to said executive on account of
such executive's "separation from service", until the later of the
date prescribed for payment in his agreement and the 1st day of
the 7th calendar month that begins after the executive's
separation from service. Except as set forth, no other amendments
were made to the original employment agreements of the three named
executive officers.
A full-text copy of the AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-- JAMES A. WATT is available for free at:
http://ResearchArchives.com/t/s?375f
A full-text copy of the AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-- ALAN GAINES is available for free at:
http://ResearchArchives.com/t/s?3760
A full-text copy of the AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-- AMIEL DAVID is available for free at:
http://ResearchArchives.com/t/s?3761
On Dec. 30, 2008, the company entered into a First Supplemental
Indenture pursuant to which the company supplemented its Indenture
dated as of May 15, 2007, relating to its 10-1/2% Senior Secured
Notes due 2012. The Supplemental Indenture adds a new covenant
pursuant to which the company has agreed that its will not redeem
its 10% Senior Redeemable Convertible Preferred Stock pursuant to
Section 9 of the Certificate of Designation with respect thereto,
prior to June 2, 2013, and that the covenant will survive the
repayment of the Notes and will further survive until the date.
The new covenant could have an effect on the timing of certain
redemption rights of holders of our Preferred Stock after Dec. 1,
2012. The Supplemental Indenture did not require the consent of
the holders of its Notes.
A full-text copy of the FIRST SUPPLEMENTAL INDENTURE is available
for free at: http://ResearchArchives.com/t/s?375e
About Dune Energy
Headquartered in Houston, Texas, Dune Energy Inc. (Amex: DNE)
-- http://www.duneenergy.com/-- is an independent exploration and
development company, with operations focused along the
Louisiana/Texas Gulf Coast and the North Texas Fort Worth Basin
Barnett Shale. Proved reserves as of Jan. 1, 2008, totaled 175
Bcfe.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $531.8 million and total liabilities of $589.2 million,
resulting ina stockholders' deficit of $57.4 million.
Cash at the end of the quarter was $33.4 million, versus
$16.8 million at year end 2007. Accounts payable have decreased
from $56.6 million at year end 2007 to $4.4 million at the end of
the third quarter. There are no cash borrowings under the
$40 million revolver. Third quarter capital spending was
$12.8 million, bringing the year to date total to $34.2 million.
For three months ended Sept. 30, 2008, the company reported net
income of $14.2 million compared with net loss of $4.9 million for
the same period in the previous year.
For nine months ended Sept. 30, 2008, the company posted net loss
of $27.5 million compared with net loss of $35.6 million for the
same period in the previous year.
* * *
Moody's Investor Service placed Dune Energy Inc.'s senior secured
debt, probability of default and long term corporate family
ratings at 'Caa2' in April 2007. The ratings still hold to date
with a stable outlook.
EZ LUBE: Committee Opposes Quick Sale to GSO Affiliate
------------------------------------------------------
The official committee of unsecured creditors of EZ Lube LLC
opposes the fast-tracked sale of the Debtor's business to an
affiliate of GSO Capital Partners LP.
Bloomberg's Bill Rochelle notes that existing shareholders and
secured creditors of EZ Lube are affiliated with GSO, and GSO has
submitted a credit bid -- using the secured creditors claims --
for the assets.
The Creditors Committee, according to the report, argued that GSO
shouldn't be allowed to pay part of the purchase price with
secured claims until the validity of the claims is established.
As reported by the Dec. 10 issue of the Troubled Company Reporter,
EZ Lube along with its affiliate, Xpress Lube-Tech Inc., filed a
voluntary petition under Chapter 11 in the United States
Bankruptcy Court for the District of Delaware in Wilmington to
facilitate a sale transaction.
The company said that it has entered into an asset purchase
agreement with EZ Lube Acquisition Company LLC, an affiliate of
its existing lenders, funds managed by GSO Capital Partners LP, on
the sale of substantially all of its assets.
About EZ Lube
Headquartered in Santa Ana, California, EZ Lube LLC --
http://www.ezlube.com/provides oil change and related services
for automobiles including: oil filter replacement, lubricating
chassis, and gearbox and brake fluid level maintenance.
On Dec. 9, 2008, EZ Lube together with Xpress Lube-Tech, Inc.,
filed for Chapter 11 (Bankr. D. Del., Lead Case No. 08-13256).
The company's attorneys are Curtis A. Hehn, Esq., and Laura Davis
Jones, Esq., at Pachulski Stang Ziehl & Jones LLP.
Broadway Advisors LLC has been tapped as financial advisor, and
Coffey Management Company as chief restructuring advisor.
In its petition EZ Lube estimated assets and debts of $100 million
to $500 million each.
FANNIE MAE: Henry Paulson Outlines Four Long-Term Options
---------------------------------------------------------
Fannie Mae and Freddie Mac have four long-term options they could
take, which are nationalization, privatization, and two "hybrid
approaches", Ronald D. Orol at MarketWatch reports, citing
Treasury Secretary Henry Paulson.
MarketWatch quoted Mr. Paulson as saying, "The first step must be
for policymakers to decide -- in light of the recent housing
bubble and the severe financial and economic penalty it has
imposed on our nation -- the role government should play in
supporting home ownership."
According to MarketWatch, Mr. Paulson will be leaving the
Treasury. President Elect Barack Obama chose New York Federal
Reserve Chairperson Timothy Geithner to take Mr. Paulson's place.
Mr. Paulson said that the outright nationalization of Freddie Mac
and Fannie Mae is a "less than optimal approach," and that their
being under conservatorship must be a temporary condition,
MarketWatch states. According to the report, Mr. Paulson said
that he was doubtful of fully privatizing Freddie Mac and Fannie
Mae. The report says that with privatization, Fannie Mae and
Freddie Mac would be broken up into entities which would lessen
risk.
MarketWatch relates that a hybrid approach would be to form a
Ginnie Mae type entity for non-Federal Housing Authority
mortgages, which would provide partial guarantee for mortgage
backed securities. The report quoted Mr. Paulson as saying,
"While such a hybrid program would clearly define the extent of
the government's guarantee, developing risk sharing parameters
compatible with profit incentives would be as problematic, and
potentially as inefficient, as in the current GSE structure."
Mr. Paulson, according to MarketWatch, supports setting up a
mortgage credit guarantor, where Congress would replace Fannie Mae
and Freddie Mac with private entities that would buy and
securitize mortgages guaranteed by the government. MarketWatch
relates that a rate setting commission that would approve mortgage
products would regulate those entities.
MarketWatch says that the Federal Reserve Bank of New York would
release today its first study reporting an aggregate amount of
Fannie Mae, Freddie Mac, and Ginnie Mae guaranteed mortgage-backed
securities that it has purchased as part of a $500 billion program
disclosed on Nov. 25, 2008, aimed at creating liquidity in the
mortgage-backed securities market and helping lower mortgage rates
to fight the housing crisis.
About Fannie Mae
The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) --
commonly known as Fannie Mae, is a shareholder-owned U.S.
government-sponsored enterprise. Fannie Mae has a federal charter
and operates in America's secondary mortgage market, providing
mortgage bankers and other lenders funds to lend to home buyers at
low rates.
Fannie Mae was created in 1938, under President Franklin D.
Roosevelt, at a time when millions of families could not become
homeowners, or risked losing their homes, for lack of a consistent
supply of mortgage funds across America. The government
established Fannie Mae to expand the flow of mortgage funds in all
communities, at all times, under all economic conditions, and to
help lower the costs to buy a home.
In 1968, Fannie Mae was re-chartered by the U.S. Congress as a
shareholder-owned company, funded solely with private capital
raised from investors on Wall Street and around the world.
Fannie Mae is the U.S. largest mortgage buyer, according to The
New York Times.
FREDDIE MAC: Henry Paulson Outlines Four Long-Term Options
----------------------------------------------------------
Fannie Mae and Freddie Mac have four long-term options they could
take, which are nationalization, privatization, and two "hybrid
approaches", Ronald D. Orol at MarketWatch reports, citing
Treasury Secretary Henry Paulson.
MarketWatch quoted Mr. Paulson as saying, "The first step must be
for policymakers to decide -- in light of the recent housing
bubble and the severe financial and economic penalty it has
imposed on our nation -- the role government should play in
supporting home ownership."
According to MarketWatch, Mr. Paulson will be leaving the
Treasury. President Elect Barack Obama chose New York Federal
Reserve Chairperson Timothy Geithner to take Mr. Paulson's place.
Mr. Paulson said that the outright nationalization of Freddie Mac
and Fannie Mae is a "less than optimal approach," and that their
being under conservatorship must be a temporary condition,
MarketWatch states. According to the report, Mr. Paulson said
that he was doubtful of fully privatizing Freddie Mac and Fannie
Mae. The report says that with privatization, Fannie Mae and
Freddie Mac would be broken up into entities which would lessen
risk.
MarketWatch relates that a hybrid approach would be to form a
Ginnie Mae type entity for non-Federal Housing Authority
mortgages, which would provide partial guarantee for mortgage
backed securities. The report quoted Mr. Paulson as saying,
"While such a hybrid program would clearly define the extent of
the government's guarantee, developing risk sharing parameters
compatible with profit incentives would be as problematic, and
potentially as inefficient, as in the current GSE structure."
Mr. Paulson, according to MarketWatch, supports setting up a
mortgage credit guarantor, where Congress would replace Fannie Mae
and Freddie Mac with private entities that would buy and
securitize mortgages guaranteed by the government. MarketWatch
relates that a rate setting commission that would approve mortgage
products would regulate those entities.
MarketWatch says that the Federal Reserve Bank of New York would
release today its first study reporting an aggregate amount of
Fannie Mae, Freddie Mac, and Ginnie Mae guaranteed mortgage-backed
securities that it has purchased as part of a $500 billion program
disclosed on Nov. 25, 2008, aimed at creating liquidity in the
mortgage-backed securities market and helping lower mortgage rates
to fight the housing crisis.
About Freddie Mac
The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE --
commonly known as Freddie Mac, is a stockholder-owned government-
sponsored enterprise authorized to make loans and loan guarantees.
Freddie Mac was created in 1970 to provide a continuous and low
cost source of credit to finance America's housing.
Freddie Mac conducts its business primarily by buying mortgages
from lenders, packaging the mortgages into securities and selling
the securities -- guaranteed by Freddie Mac -- to investors.
Mortgage lenders use the proceeds from selling loans to Freddie
Mac to fund new mortgages, constantly replenishing the pool of
funds available for lending to homebuyers and apartment owners.
FRONTIER AIRLINES: Aims to Emerge from Chapter 11 This Year
-----------------------------------------------------------
Frontier Airlines and its bankrupt units say they are on track for
a successful emergence from Chapter 11 during 2009.
Frontier Airlines recently informed the U.S. Bankruptcy Court for
the Southern District of New York that it needs an additional four
months to submit its Chapter 11 plan of reorganization. Frontier
sought a June 4 extension of its exclusive period to file a
Chapter 11 plan. The deadline currently expires Feb. 4.
Frontier has been cutting costs by negotiating new labor contracts
and trimming its plane fleet. Frontier Airlines' aircraft
appearance agents and maintenance cleaners represented by the
International Brotherhood of Teamsters have recently ratified the
long-term labor agreement with the airline. Frontier Airlines
also reached a tentative agreement for long-term wage and benefits
concessions with leaders of the Frontier Airlines Pilots
Association on December 19, 2008.
About Frontier Airlines Inc.
Headquartered in Denver, Colorado, Frontier Airlines Inc. --
http://www.frontierairlines.com/-- provides air transportation
for passengers and freight. It operates jet service carriers
linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities
in Mexico, and 1 city in Canada, as well as provide service from
other non-hub cities, including service from 10 non-hub cities to
Mexico.
Frontier Airlines and its debtor-affiliates filed for Chapter 11
protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.
08-11297 thru 08-11299.) Benjamin S. Kaminetzky, Esq., and Hugh
R. McCullough, Esq., at Davis Polk & Wardwell, represent the
Debtors in their restructuring efforts. Togul, Segal & Segal
LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is
the Debtors' Special Counsel, and Kekst and Company is the
Debtors' Communications Advisors.
(Frontier Airlines Bankruptcy News, Issue No. 29; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
GALAXY ENERGY: Seeks to Convert Chapter 11 Case to Liquidation
--------------------------------------------------------------
MJ Clark at Wyoming Business Report says that Galaxy Energy has
filed a motion in the U.S. Bankruptcy Court for the District of
Colorado for the conversion of its Chapter 11 reorganization case
to Chapter 7 liquidation.
Galaxy Energy hadn't posted any new press releases on its Web site
since March 2008, and the most recent annual report was in 2005.
Galaxy Energy said in a filing with the U.S. Securities and
Exchange Commission in February that it failed to file its yearly
or quarterly report, but said that it expected to report a loss of
$20 million for the year ended Nov. 30, 2008, compared to a net
loss of $26 million in 2007.
Wyoming Business Report states that for the nine months ended Aug.
31, 2008, Galaxy Energy lost about $8.8 million on revenue of
$419,672, compared with a loss of $14.5 million on revenue of
$447,232 in 2007.
Galaxy Energy and Dolphin Energy filed for chapter 11 protection
on March 14, 2008 (Bankr. D. Co. Case Nos. 08-13164 and 08-13166).
Alice A. White, Esq., and Douglas W. Jessop, Esq., represent the
Debtors in their restructuring efforts. Galaxy Energy listed
total assets of $43,797,124 and total debts of $54,378,324 as of
the bankruptcy filing.
GENERAL MOTORS: Inks Loan and Security Deal with the Treasury
-------------------------------------------------------------
General Motors Corporation disclosed in a filing with the
Securities and Exchange Commission that the company and certain of
its domestic subsidiaries entered into a loan and security
agreement with the United States Department of the Treasury,
pursuant to which the UST agreed to provide GM with a $13.4
billion secured term loan facility. GM borrowed
$4.0 billion under the Facility on Dec. 31, 2008, and is eligible
to borrow an additional $5.4 billion on Jan. 16, 2009, and
$4.0 billion on Feb. 17, 2009. GM's ability to make the
subsequent borrowings is subject to its satisfaction of the
requisite borrowing conditions, and, in the case of the final $4.0
billion on February 17, to the UST having funds available for this
purpose.
The loans under the Facility are scheduled to mature on Dec. 30,
2011, unless the maturity date is accelerated in the event the
President's Designee has not certified GM's restructuring plan by
the deadline for the certification. Each Loan will accrue
interest at a rate per annum equal to the three-month LIBOR rate
(which will be no less than 2.0%) plus 3.0%.
GM is required to prepay the Loans from the net cash proceeds
received from certain dispositions of collateral securing the
Loans, the incurrence of certain debt and certain dispositions of
unencumbered assets. GM may also voluntarily repay the Loans in
whole or in part at any time. Once repaid, amounts borrowed under
the Facility may not be reborrowed.
Each of GM's domestic subsidiaries that executed the Loan
Agreement guaranteed GM's obligations under the Facility and the
other guarantors' obligations under the other loan documents
pursuant to a guaranty and security agreement, dated as of
Dec. 31, 2009, made by the Guarantors in favor of the UST. The
Facility is secured by substantially all of GM's and the
Guarantors' U.S. assets that were not encumbered, including their
equity interests in most of their domestic subsidiaries and their
intellectual property, their real estate, their inventory that was
not pledged to other lenders and their cash and cash equivalents
in the U.S., subject to certain exclusions. The Facility is also
secured by GM's and the Guarantors' equity interests in certain of
their foreign subsidiaries, subject to certain exclusions. The
equity interests in domestic and foreign subsidiaries that have
been pledged to the UST have been pledged pursuant to an equity
pledge agreement, dated as of Dec. 31, 2009, made by GM and
certain of the Guarantors in favor of the UST.
The assets excluded from the UST's security interest include,
among other things, assets to the extent the grant of a security
interest in such asset: is prohibited by law or requires a consent
under law that has not been obtained, is contractually prohibited
or would result in a breach or termination of a contract or would
require a third party consent that has not been obtained, or would
result in a lien, or an obligation to grant a lien in such asset
to secure any other obligations. GM has agreed with the UST to
take, or use best efforts to take, certain actions with respect to
the UST's security interests in the Facility collateral and other
property to enable GM to grant junior liens on those assets in
favor of the UST to secure the Facility.
The Loan Agreement contains various representations and warranties
that were made by GM and the Guarantors on the initial funding
date and will be required to be made on each subsequent funding
date. The Loan Agreement also contains various affirmative
covenants requiring GM and the Guarantors to take certain actions
and negative covenants restricting their ability to take certain
actions. The affirmative covenants are generally applicable to GM
and the Guarantors and impose obligations on them with respect to,
among other things, financial and other reporting to the UST,
financial covenants, corporate existence, use of proceeds,
maintenance of Facility collateral and other property, payment of
obligations, compliance with certain laws, compliance with various
restrictions on executive privileges and compensation, divestment
of corporate aircraft, a corporate expense policy, progressing on
a restructuring plan, and a cash management plan.
GM and the Guarantors are also required to provide the President's
Designee with advance notice of proposed transactions outside the
ordinary course of business that are valued at more than $100
million and the President's Designee may prohibit any such
transaction if the President's Designee determines it would be
inconsistent with, or detrimental to, GM's or the Guarantors'
long-term viability. The "President's Designee" means one or more
officers from the Executive Branch appointed by the President of
the U.S. to monitor and oversee the restructuring of the U.S.
domestic automobile industry, and if no officer has been
appointed, the Secretary of the Treasury.
The negative covenants in the Loan Agreement generally apply to GM
and the Guarantors and restrict them with respect to, among other
things, fundamental changes, lines of business, transactions with
affiliates, liens, distributions, amendments or waivers of certain
documents, prepayments of senior loans, negative pledge clauses,
indebtedness, investments, ERISA and other pension fund matters,
Facility collateral, sales of assets and joint venture agreements.
Pursuant to the Loan Agreement, on or before Feb. 17, 2009, GM
must submit to the President's Designee a plan to achieve and
sustain GM's long-term viability, international competitiveness
and energy efficiency. The Restructuring Plan will include a
description of specific actions intended to result in these:
-- Repayment of all Loans;
-- Ability of GM and its subsidiaries to comply with Federal
fuel efficiency and emissions requirements and commence
domestic manufacturing of advanced technology vehicles;
-- Achievement by GM and its subsidiaries of a positive net
present value, using reasonable assumptions and taking into
account all existing and projected future costs;
-- Rationalization of costs, capitalization and capacity with
respect to GM's and its subsidiaries' manufacturing
workforce, suppliers and dealerships; and
-- A product mix and cost structure that is competitive in the
U.S. marketplace.
In developing and implementing the Restructuring Plan, GM has
agreed to use its best efforts to achieve these restructuring
targets:
A. Reduction of outstanding unsecured public debt (other than
with respect to pension and employee benefit obligations)
by not less than two-thirds through conversion of existing
public debt into equity, debt and/or cash or by other
appropriate means;
B. Reduction of the total amount of compensation, including
wages and benefits, paid to its U.S. employees so that, by
no later than Dec. 31, 2009, the average of the total
amount, per hour and per person, is an amount that is
competitive with the average total amount of such
compensation, as certified by the Secretary of the United
States Department of Labor, paid per hour and per person to
employees of Nissan Motor Company, Toyota Motor Corporation
or American Honda Motor Company whose site of employment is
in the U.S;
C. Elimination of the payment of any compensation or benefits
to U.S. employees of GM or any subsidiary who have been
fired, laid-off, furloughed or idled, other than customary
severance pay;
D. Application, by Dec. 31, 2009, of work rules for the U.S.
employees of GM and its subsidiaries, in a manner that is
competitive with the work rules for employees of Nissan
Motor Company, Toyota Motor Corporation or American Honda
Motor Company whose site of employment is in the U.S.; and
E. Not less than one-half of the value of each future payment
or contribution made by GM and its subsidiaries to a
voluntary employees beneficiary association account will be
made in the form of stock of GM or one of its subsidiaries,
and the value of any payment or contribution will not
exceed the amount that was required for such period under
the settlement agreement, dated Feb. 21, 2008, among GM,
certain unions and class representatives, as in place as of
Dec. 31, 2008.
The Loan Agreement also requires GM to submit to the President's
Designee, on or before Feb. 17, 2009:
a) a term sheet signed by GM and the leadership of each major
union that represents employees of GM and its subsidiaries
providing for B, C and D;
b) a term sheet signed by GM and representatives of the VEBA
providing for E; and
c) a term sheet signed by GM and representatives of holders of
the public debt of GM and its consolidated subsidiaries
providing for A.
On or before March 31, 2009, GM is required pursuant to the Loan
Agreement to submit to the President's Designee a written
certification and report detailing the progress made by GM and its
subsidiaries on implementing the Restructuring Plan. The report
will identify and explain any deviations from the restructuring
targets described above and explain why such deviations do not
jeopardize GM's long-term viability. The report will also include
evidence satisfactory to the President's Designee that: (a) the
labor modifications in B, C and D have been approved by the
unions, (b) all necessary approvals for the VEBA modifications in
E (other than regulatory and judicial approvals which GM is
diligently pursuing) have been received and (c) an exchange offer
implementing the public debt conversion described above in A has
been commenced.
The President's Designee will review the Restructuring Plan report
and other materials submitted by GM to determine whether GM has
taken all necessary steps to achieve and sustain long-term
viability, international competitiveness and energy efficiency.
If the President's Designee determines that these standards have
been met, the President's Designee will issue a plan completion
certificate to the UST.
If the President's Designee has not issued the plan completion
certificate by March 31, 2009, or the later date, not to exceed 30
days after March 31, 2009, as determined by the President's
Designee, the maturity of any outstanding Loans will accelerate
and the Loans will become due and payable on the thirtieth day
after the certification deadline.
The Loan Agreement also contains various events of default and
entitles the UST to accelerate the repayment of the Loans upon the
occurrence and during the continuation of an event of default. In
addition, upon the occurrence and continuation of any default or
event of default, at the UST's option, the interest rate
applicable to the Loans can be increased to a rate per annum equal
to 5.0% per annum plus the interest rate otherwise applicable to
the Loans.
The events of default relate to, among other things, GM's failure
to pay principal or interest on the Loans; the Guarantors' failure
to pay on their guarantees; the failure to pay other amounts due
under the loan documents; the failure to perform the covenants in
the loan documents; the representations and warranties in the Loan
Agreement being false or misleading in any material respect;
undischarged judgments in excess of $500 million; certain
bankruptcy events; the termination of any loan documents, the
invalidity of security interests in the collateral or the
unforceability of GM's and the Guarantors' obligations; certain
prohibited transactions under ERISA; a change of control; a
default under indebtedness if the default permits or causes the
holder to accelerate the maturity of indebtedness in excess of
$100 million; the failure to comply with any law that results in a
material adverse effect; the entry into a transaction prohibited
by the President's Designee; or the failure to comply with the
Warrants or Warrant Agreement.
A full-text copy of the LOAN AND SECURITY AGREEMENT is available
for free at http://ResearchArchives.com/t/s?377e
A full-text copy of the GUARANTY AND SECURITY AGREEMENT is
available for free at http://ResearchArchives.com/t/s?377f
A full-text copy of the EQUITY PLEDGE AGREEMENT is available for
free at http://ResearchArchives.com/t/s?3780
Warrant Agreement; Additional Note
Pursuant to a warrant agreement between GM and the UST, dated as
of Dec. 31, 2008, entered into in connection with the Loan
Agreement, GM issued to the UST warrants to purchase up to
122,035,597 shares of GM common stock, par value $1-2/3, which is
equal to 19.99% of the number of shares of Common Stock that were
outstanding on Dec. 31, 2008. The exercise price of the Warrants
is $3.57 per share. The UST has agreed not to exercise voting
rights with respect to any shares of Common Stock issued upon
exercise of the Warrants. The Warrants are perpetual. However,
after the Loans under the Loan Agreement are repaid, GM will have
the right to repurchase at fair market value (i) any Warrant
Shares held by the UST and (ii) the Warrants. The Warrant
Agreement provides the UST with registration rights. The Warrants
are subject to antidilution adjustments upon the occurrence of
certain events.
Pursuant to the Warrant Agreement, GM also issued to the UST a
promissory note, dated as of Dec. 31, 2008, in a principal amount
of approximately $749 million. The aggregate amount outstanding
under the Additional Note is due on Dec. 30, 2011. GM may prepay
the Additional Note. The Additional Note bears interest, payable
quarterly at the same rate of interest as the Loans under the Loan
Agreement. If any payment on the Additional Note will not be paid
when due, or if GM or its subsidiaries will default under, or fail
to perform as required under, or will otherwise materially breach
the terms of any instrument or contract for indebtedness between
GM, on the one hand, and the UST on the other, all accrued
interest, principal and other amounts owning under the Additional
Note will immediately be due and payable, and such amount will
bear interest at the same post default interest rate as the Loans
under the Loan Agreement, in each case from the date of such non-
payment until such amount is paid in full.
A full-text copy of the WARRANT AGREEMENT is available for free
at: http://ResearchArchives.com/t/s?3781
A full-text copy of the WARRANT TO PURCHASE COMMON STOCK is
available for free at: http://ResearchArchives.com/t/s?3782
A full-text copy of the ADDITIONAL NOTE is available for free at:
http://ResearchArchives.com/t/s?3783
In connection with the closing of the Facility, the Loan Parties
delivered a waiver to the UST, and each of the SEOs and the Senior
Employees delivered waivers to the Loan Parties and to the UST, in
each case releasing the recipient from any claims related to the
changes and limitations on executive compensation required under
the Loan Agreement.
A full-text copy of the MEMBERSHIP INTEREST SUBSCRIPTION AGREEMENT
is available for free at:
http://ResearchArchives.com/t/s?3784
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 US$110.425 billion, total
liabilities of US$170.3 billion, resulting in a stockholders'
deficit of US$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 US$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.
GENERAL MOTORS: To Reduce Equity Stake in GMAC to Less than 10%
---------------------------------------------------------------
General Motors disclosed in a regulatory filing with the
Securities and Exchange Commission that it entered into various
commitments and agreements to address concerns that it would be
deemed to control GMAC for purposes of the BHC Act. The action
was in connection with the conversion of GMAC into a bank holding
company under the Bank Holding Company Act of 1956, as amended, on
Dec. 23, 2008.
On Dec. 29, 2008, GM entered into agreements related to a proposed
investment in GMAC, LLC. GM currently owns 49% of the common
equity interest in GMAC. GM entered into a membership interest
subscription agreement with GMAC and FIM Holdings LLC, the other
common equity owner of GMAC, under which GM agreed to purchase up
to $1 billion of Class B membership interests in GMAC. GM's
obligation to consummate the transactions contemplated by the
Subscription Agreement is subject to certain conditions, including
the receipt by GM from the UST of funds in an amount at least
equal to the purchase price for the New GMAC Equity, the use of
proceeds of which is limited by the UST to GM's purchase of the
New GMAC Equity. On Dec. 29, 2008, GM also accepted a commitment
letter from the UST pursuant to which the UST would provide GM up
to $1 billion to purchase the New GMAC Equity, on substantially
the terms and conditions provided under the Loan Agreement, except
that GM's obligation would be secured by a security interest in
the New GMAC Equity well as other equity interests in GMAC held by
GM and such other collateral as may be requested by the UST. GM
anticipates negotiating a loan agreement to implement the
Commitment Letter, subject to each party's approval and agreement,
which may contain different or additional terms.
The Loan Agreement provides limitations on compensation and
benefits to be paid to the senior executive officers who are Named
Executive Officers under the Proxy Rules promulgated under the
Securities Exchange Act of 1934, as amended, and to the 25 most
highly compensated employees, including the SEOs. These
limitations will be effective during the period that any Loans are
outstanding under the Facility or that the UST holds any Warrants
or Warrant Shares. GM is required to ensure that its benefit
plans as they apply to the SEOs comply with Section 111(b) of the
Emergency Economic Stabilization Act of 2008, including
prohibiting incentives for SEOs to take unnecessary and excessive
risks that threaten the value of the company; recovering any bonus
or incentive compensation paid to a SEO based on statements of
earnings, gains, or other criteria that are later proven to be
materially inaccurate; prohibiting any golden parachute payment to
any SEO; and limiting any claim to a federal income tax deduction
for certain executive remuneration. In addition, GM cannot pay or
accrue any bonus or incentive compensation to the Senior Employees
without the written approval of the President's Designee or adopt
or maintain any compensation plan that would encourage
manipulation of GM's reported earnings or enhance employee
compensation. Finally, GM is required to maintain all suspensions
and other restrictions on contributions to benefit plans that were
in place on Dec. 31, 2008.
In connection with the closing of the Facility, the Loan Parties
delivered a waiver to the UST, and each of the SEOs and the Senior
Employees delivered waivers to the Loan Parties and to the UST, in
each case releasing the recipient from any claims related to the
changes and limitations on executive compensation required under
the Loan Agreement.
A full-text copy of the MEMBERSHIP INTEREST SUBSCRIPTION AGREEMENT
is available for free at:
http://ResearchArchives.com/t/s?3784
In particular, GM committed to the Federal Reserve that it will
reduce its ownership interest in GMAC to less than 10% of the
voting and total equity of GMAC. GM's remaining equity interest
in GMAC will be transferred to one or more trusts that each has a
trustee acceptable to the Federal Reserve and the UST, and who
will be independent of GM and have sole discretion to vote and
dispose of such excess GMAC equity interests. The excess equity
must be disposed of within three years. Additionally, GM made a
number of other commitments to the Federal Reserve that are
similar to those relied upon by the Federal Reserve to ensure that
a company could not exercise a controlling influence over a bank
or bank holding company, including a commitment that GM will not
have or seek to have any representation on the board of managers
of GMAC, other than for one non-voting observer.
Vehicle Repurchase Obligations
On Nov. 28, 2008, GM and GMAC agreed to significantly expand GM's
repurchase obligations for GMAC financed inventory at certain GM
dealers. GM was obligated, pursuant to dealer agreements, to
repurchase certain GMAC financed inventory, limited to current
model year vehicles and prior year model vehicles less than 120
days in dealer inventory, in the event of a termination of the
related GM dealer's Dealer Sales and Service Agreement.
GM's agreement with GMAC requires GM to repurchase all current and
prior model year GMAC financed inventory, with limited exclusions,
in the event of a qualifying voluntary or involuntary termination
of the related GM dealer's Dealer Sales and Service Agreement.
GM's repurchase obligation excludes vehicles which are damaged,
have excessive mileage or have been altered. GM's repurchase
obligation ends on Aug. 31, 2009, for vehicles invoiced through
Aug. 31, 2008, and on Aug. 31, 2010, for vehicles invoiced through
Aug. 31, 2009.
GMAC Financing Services Arrangement
On Nov. 30, 2006, and in connection with the sale by GM of a 51%
interest in GMAC, GM and GMAC entered into a United States
Consumer Financing Services Agreement. The Financing Services
Agreement, among other things, provided that subject to certain
conditions and limitations, whenever GM offers vehicle financing
and leasing incentives to customers, it would do so exclusively
through GMAC. This requirement was effective through November
2016, and in consideration for this, GMAC paid to GM an annual
exclusivity fee and was required to meet certain targets with
respect to consumer retail and lease financings of new GM
vehicles.
Effective Dec. 29, 2008, and in connection with the approval of
GMAC's application to become a bank holding company under the BHC
Act, GM and GMAC agreed to modify certain terms and conditions of
the Financing Services Agreement. Certain of these amendments
include these:
i) for a two-year period, GM can offer retail financing
incentive programs through a third party financing source
under certain specified circumstances, and in some cases
subject to the limitation that pricing offered by such
third party meets certain restrictions, and after the two-
year period GM can offer any such incentive programs on a
graduated basis through third parties on a non-exclusive,
side-by-side basis with GMAC provided that pricing of such
third parties meets certain requirements;
ii) GMAC will have no obligation to provide operating lease
financing products; and
iii) GMAC will have no targets against which it could be
assessed penalties. After Dec. 24, 2013, GM will have the
right to offer retail financing incentive programs through
any third party financing source, including GMAC, without
any restrictions or limitations. An objective of the
Financing Services Agreement continues to be supporting
distribution and marketing of GM products. The parties
have agreed to work in good faith to execute definitive
documentation with respect to an amendment of the Financing
Services Agreement on or before March 29, 2009.
Exchange Agreement
On Dec. 29, 2008, GMAC entered into an exchange agreement with GM
and FIM, pursuant to which GMAC agreed to issue $750 million of
common equity interests to GM and FIM in exchange for a
contribution to GMAC of GM's and FIM's as assignee of Cerberus
Fund $750 million Participations under the Participation
Agreement. The transactions contemplated by the Exchange
Agreement were completed on Dec. 29, 2008.
Participation Agreement
GMAC, Residential Funding Company, LLC and GMAC Mortgage, LLC are
parties to a senior secured credit facility, guaranteed by
Residential Capital, LLC, a subsidiary of GMAC and certain of its
subsidiaries, pursuant to which GMAC provides a senior secured
credit facility with a capacity of up to $3.5 billion to RFC and
GMAC Mortgage. In connection with the GMAC Facility, GMAC, GM and
Cerberus ResCap Financing, LLC entered into a Participation
Agreement, dated June 4, 2008, pursuant to which GMAC sold GM and
the Cerberus Fund $750 million in subordinated participations in
the loans made pursuant to the GMAC Facility. GM and the Cerberus
Fund acquired 49% and 51% of the Participations. Under the
Participation Agreement, neither GM nor the Cerberus Fund were
entitled to receive any principal payments with respect to the
Participations until the principal portion of the loans retained
by GMAC have been paid in full. In connection with entering into
the Exchange Agreement, Cerberus Fund contributed and assigned its
Participation to FIM. On Dec. 29, 2008, GMAC entered into a
termination agreement with GM and FIM, pursuant to which the
parties agreed to terminate rights, title and interests of the
parties under the Participation Agreement. The parties entered
into the Termination Agreement in connection with GMAC's plans to
raise sufficient capital to meet the minimum regulatory capital
requirements and other conditions set forth by the Federal Reserve
for GMAC to become a bank holding company under the BHC Act.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
For three months ended Sept. 30, 2008, the company reported net
loss of $2.5 billion compared to net loss of $1.5 billion for the
same period in the previous year.
For nine months ended Sept. 30, 2008, the company incurred net
loss of $5.5 billion compared to $1.6 billion for the same period
in the previous year.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $211.3 billion, total liabilities of $202.0 billion and
members' equity of about $9.3 billion.
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 US$110.425 billion, total
liabilities of US$170.3 billion, resulting in a stockholders'
deficit of US$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 US$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.
GLITNIR BANKI: Court Grants Chapter 15 Bankruptcy Protection
------------------------------------------------------------
Tiffany Kary at Bloomberg News reports that Judge Stuart Bernstein
of the U.S. Bankruptcy Court for the Southern District Court of
New York granted Glitnir banki hf permission to enter Chapter 15
of the U.S. bankruptcy code on Tuesday, January 6, 2008.
Judge Bernstein, Bloomberg relates, granted the motion for
recognition but told lawyers that he wanted more information about
how Icelandic law would handle claims.
Bloomberg says the bank is shielded from lawsuits while it
reorganizes in Reykjavik.
Glitnir, Bloomberg discloses, listed both debt and assets of more
than US$1 billion in its Chapter 15 petition.
Bloomberg recalls British Virgin Islands-based SeaHAVN objected to
Glitnir's Chapter 15 petition on a limited basis, citing
litigation over a loan the bank failed to give SeaHAVN.
SeaHAVN is appealing a ruling that would force it to pay
attorneys' fees for the lawsuit, Bloomberg states.
As reported in the Troubled Company Reporter-Europe on
December 3, 2008, Bloomberg News said Glitnir filed for Chapter 15
bankruptcy protection on November 26 to stay creditor actions in
the United States. Bloomberg noted that while Glitnir
has few assets and no operations in the United States, the bank
has sold more than US$7 billion in debt offerings in the U.S.
market in a span of three years.
On Nov. 27, 2008, the Troubled Company Reporter-Europe reported
that according to Bloomberg, Glitnir's assets in the United States
comprised of bank accounts and loan provided to U.S. companies.
The bank, Bloomberg said, citing papers filed with the court,
issued 22 short- and long- term notes for about US$7 billion in
the country.
Iceland's government took control of Glitnir and two other
financial institutions -- Landsbanki Islands hf and Kaupthing Bank
hf -- after they failed to obtain short-term funding. The banks
incurred about US$61 million in debt, the report said.
About Glitnir banki
Headquartered in Reykjavik, Iceland, Glitnir banki hf --
http://www.glitnir.is/-- offers an array of financial services to
corporation, financial institutions, investors and individuals.
GMAC LLC: General Motors to Reduce Stake to Less than 10%
---------------------------------------------------------
General Motors Corp. disclosed in a regulatory filing that it
entered into various commitments and agreements to address
concerns that it would be deemed to control GMAC LLC for purposes
of the BHC Act. The action was in connection with the conversion
of GMAC into a bank holding company under the Bank Holding Company
Act of 1956, as amended, on Dec. 23, 2008.
On Dec. 29, 2008, GM entered into agreements related to a proposed
investment in GMAC, LLC. GM currently owns 49% of the common
equity interest in GMAC. GM entered into a membership interest
subscription agreement with GMAC and FIM Holdings LLC, the other
common equity owner of GMAC, under which GM agreed to purchase up
to $1 billion of Class B membership interests in GMAC. GM's
obligation to consummate the transactions contemplated by the
Subscription Agreement is subject to certain conditions, including
the receipt by GM from the UST of funds in an amount at least
equal to the purchase price for the New GMAC Equity, the use of
proceeds of which is limited by the UST to GM's purchase of the
New GMAC Equity. On Dec. 29, 2008, GM also accepted a commitment
letter from the UST pursuant to which the UST would provide GM up
to $1 billion to purchase the New GMAC Equity, on substantially
the terms and conditions provided under the Loan Agreement, except
that GM's obligation would be secured by a security interest in
the New GMAC Equity well as other equity interests in GMAC held by
GM and such other collateral as may be requested by the UST. GM
anticipates negotiating a loan agreement to implement the
Commitment Letter, subject to each party's approval and agreement,
which may contain different or additional terms.
The Loan Agreement provides limitations on compensation and
benefits to be paid to the senior executive officers who are Named
Executive Officers under the Proxy Rules promulgated under the
Securities Exchange Act of 1934, as amended, and to the 25 most
highly compensated employees, including the SEOs. These
limitations will be effective during the period that any Loans are
outstanding under the Facility or that the UST holds any Warrants
or Warrant Shares. GM is required to ensure that its benefit
plans as they apply to the SEOs comply with Section 111(b) of the
Emergency Economic Stabilization Act of 2008, including
prohibiting incentives for SEOs to take unnecessary and excessive
risks that threaten the value of the company; recovering any bonus
or incentive compensation paid to a SEO based on statements of
earnings, gains, or other criteria that are later proven to be
materially inaccurate; prohibiting any golden parachute payment to
any SEO; and limiting any claim to a federal income tax deduction
for certain executive remuneration. In addition, GM cannot pay or
accrue any bonus or incentive compensation to the Senior Employees
without the written approval of the President's Designee or adopt
or maintain any compensation plan that would encourage
manipulation of GM's reported earnings or enhance employee
compensation. Finally, GM is required to maintain all suspensions
and other restrictions on contributions to benefit plans that were
in place on Dec. 31, 2008.
In connection with the closing of the Facility, the Loan Parties
delivered a waiver to the UST, and each of the SEOs and the Senior
Employees delivered waivers to the Loan Parties and to the UST, in
each case releasing the recipient from any claims related to the
changes and limitations on executive compensation required under
the Loan Agreement.
A full-text copy of the MEMBERSHIP INTEREST SUBSCRIPTION AGREEMENT
is available for free at:
http://ResearchArchives.com/t/s?3784
In particular, GM committed to the Federal Reserve that it will
reduce its ownership interest in GMAC to less than 10% of the
voting and total equity of GMAC. GM's remaining equity interest
in GMAC will be transferred to one or more trusts that each has a
trustee acceptable to the Federal Reserve and the UST, and who
will be independent of GM and have sole discretion to vote and
dispose of such excess GMAC equity interests. The excess equity
must be disposed of within three years. Additionally, GM made a
number of other commitments to the Federal Reserve that are
similar to those relied upon by the Federal Reserve to ensure that
a company could not exercise a controlling influence over a bank
or bank holding company, including a commitment that GM will not
have or seek to have any representation on the board of managers
of GMAC, other than for one non-voting observer.
Vehicle Repurchase Obligations
On Nov. 28, 2008, GM and GMAC agreed to significantly expand GM's
repurchase obligations for GMAC financed inventory at certain GM
dealers. GM was obligated, pursuant to dealer agreements, to
repurchase certain GMAC financed inventory, limited to current
model year vehicles and prior year model vehicles less than 120
days in dealer inventory, in the event of a termination of the
related GM dealer's Dealer Sales and Service Agreement.
GM's agreement with GMAC requires GM to repurchase all current and
prior model year GMAC financed inventory, with limited exclusions,
in the event of a qualifying voluntary or involuntary termination
of the related GM dealer's Dealer Sales and Service Agreement.
GM's repurchase obligation excludes vehicles which are damaged,
have excessive mileage or have been altered. GM's repurchase
obligation ends on Aug. 31, 2009, for vehicles invoiced through
Aug. 31, 2008, and on Aug. 31, 2010, for vehicles invoiced through
Aug. 31, 2009.
GMAC Financing Services Arrangement
On Nov. 30, 2006, and in connection with the sale by GM of a 51%
interest in GMAC, GM and GMAC entered into a United States
Consumer Financing Services Agreement. The Financing Services
Agreement, among other things, provided that subject to certain
conditions and limitations, whenever GM offers vehicle financing
and leasing incentives to customers, it would do so exclusively
through GMAC. This requirement was effective through November
2016, and in consideration for this, GMAC paid to GM an annual
exclusivity fee and was required to meet certain targets with
respect to consumer retail and lease financings of new GM
vehicles.
Effective Dec. 29, 2008, and in connection with the approval of
GMAC's application to become a bank holding company under the BHC
Act, GM and GMAC agreed to modify certain terms and conditions of
the Financing Services Agreement. Certain of these amendments
include these:
i) for a two-year period, GM can offer retail financing
incentive programs through a third party financing source
under certain specified circumstances, and in some cases
subject to the limitation that pricing offered by such
third party meets certain restrictions, and after the two-
year period GM can offer any such incentive programs on a
graduated basis through third parties on a non-exclusive,
side-by-side basis with GMAC provided that pricing of such
third parties meets certain requirements;
ii) GMAC will have no obligation to provide operating lease
financing products; and
iii) GMAC will have no targets against which it could be
assessed penalties. After Dec. 24, 2013, GM will have the
right to offer retail financing incentive programs through
any third party financing source, including GMAC, without
any restrictions or limitations. An objective of the
Financing Services Agreement continues to be supporting
distribution and marketing of GM products. The parties
have agreed to work in good faith to execute definitive
documentation with respect to an amendment of the Financing
Services Agreement on or before March 29, 2009.
Exchange Agreement
On Dec. 29, 2008, GMAC entered into an exchange agreement with GM
and FIM, pursuant to which GMAC agreed to issue $750 million of
common equity interests to GM and FIM in exchange for a
contribution to GMAC of GM's and FIM's as assignee of Cerberus
Fund $750 million Participations under the Participation
Agreement. The transactions contemplated by the Exchange
Agreement were completed on Dec. 29, 2008.
Participation Agreement
GMAC, Residential Funding Company, LLC and GMAC Mortgage, LLC are
parties to a senior secured credit facility, guaranteed by
Residential Capital, LLC, a subsidiary of GMAC and certain of its
subsidiaries, pursuant to which GMAC provides a senior secured
credit facility with a capacity of up to $3.5 billion to RFC and
GMAC Mortgage. In connection with the GMAC Facility, GMAC, GM and
Cerberus ResCap Financing, LLC entered into a Participation
Agreement, dated June 4, 2008, pursuant to which GMAC sold GM and
the Cerberus Fund $750 million in subordinated participations in
the loans made pursuant to the GMAC Facility. GM and the Cerberus
Fund acquired 49% and 51% of the Participations. Under the
Participation Agreement, neither GM nor the Cerberus Fund were
entitled to receive any principal payments with respect to the
Participations until the principal portion of the loans retained
by GMAC have been paid in full. In connection with entering into
the Exchange Agreement, Cerberus Fund contributed and assigned its
Participation to FIM. On Dec. 29, 2008, GMAC entered into a
termination agreement with GM and FIM, pursuant to which the
parties agreed to terminate rights, title and interests of the
parties under the Participation Agreement. The parties entered
into the Termination Agreement in connection with GMAC's plans to
raise sufficient capital to meet the minimum regulatory capital
requirements and other conditions set forth by the Federal Reserve
for GMAC to become a bank holding company under the BHC Act.
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 US$110.425 billion, total
liabilities of US$170.3 billion, resulting in a stockholders'
deficit of US$59.9 billion.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
For three months ended Sept. 30, 2008, the company reported net
loss of $2.5 billion compared to net loss of $1.5 billion for the
same period in the previous year.
For nine months ended Sept. 30, 2008, the company incurred net
loss of $5.5 billion compared to $1.6 billion for the same period
in the previous year.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $211.3 billion, total liabilities of $202.0 billion and
members' equity of about $9.3 billion.
* * *
As reported in the Troubled Company Reporter on Dec. 15, 2008,
Standard & Poor's Ratings Services said that its ratings on GMAC
LLC (CC/Watch Neg/C) and its 100% owned subsidiary, Residential
Capital LLC (CC/Watch Neg/C) are not affected by GMAC's
announcement that it extended the early delivery time with respect
to separate private exchange offers and cash tender offers to
purchase or exchange certain of its and its subsidiaries' and
Residential Capital's outstanding notes to provide investors with
a final opportunity to consider the GMAC and Residential Capital
LLC offers.
GRAHAM PACKAGING: Bank Loan Sells at Almost 30% Discount
--------------------------------------------------------
Participations in a syndicated loan under which Graham Packaging
is a borrower traded in the secondary market at 70.50 cents-on-
the-dollar during the week ended January 2, 2009, according to
data compiled by Loan Pricing Corp. and reported in The Wall
Street Journal. This represents an increase of 1.41 percentage
points from the previous week, the Journal relates. Graham
Packaging pays interest at 200 points above LIBOR. The bank loan
matures on September 30, 2011. The bank loan carries Moody's B1
rating and Standard & Poor's B+ rating.
Headquartered in York, Pennsylvania, Graham Packaging Holdings
company, -- http://www.grahampackaging.com/-- the parent company
of Graham Packaging Company, L.P., is engaged in the design,
manufacture and sale of customized blow molded plastic containers
for the branded food and beverage, household, automotive
lubricants and personal care/specialty product categories. As of
the end of June 2008, the company operated 83 manufacturing
facilities throughout North America, Europe and South America.
The Blackstone Group is the majority owner of Graham Packaging
Holdings company.
Net income for the third quarter of 2008 was $5.68 million,
compared to a loss of $13.39 million for the third quarter of
2007.
For nine months ended Sept. 30, 2008, the company reported net
income of 37.75 million compared with net loss of $23.87 million
for the same period in the previous year.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $2.25 billion and total liabilities of $3.00 billion, resulting
in a partners' deficit of about $754.22 million.
GRAPHIC PACKAGING: Bank Loan Sells at Substantial Discount
----------------------------------------------------------
Participations in a syndicated loan under which Graphic Packaging
International is a borrower traded in the secondary market at
69.33 cents-on-the-dollar during the week ended January 2, 2009,
according to data compiled by Loan Pricing Corp. and reported in
The Wall Street Journal. This represents an increase of 1.17
percentage points from the previous week, the Journal relates.
Graphic Packaging International pays interest at 225 points above
LIBOR. The bank loan carries Moody's Ba3 rating and Standard &
Poor's BB- rating.
As reported by the Troubled Company Reporter on December 26, 2008,
participations in the bank loan traded in the secondary market at
66.44 cents-on-the-dollar during the week ended December 19, 2008.
Headquartered in Marietta, Georgia, Graphic Packaging
Corporation (NYSE:GPK) -- http://www.graphicpackaging.com/-- is
a provides paperboard packaging solutions for a variety of
products to multinational and other consumer products companies.
The company provides its customers paperboard, cartons and
packaging machines, either as an integrated solution or
separately. Its packaging products are made from a variety of
grades of paperboard. GPC manufactures its packaging products
from coated unbleached kraft paperboard and coated recycled
paperboard that it produces at its mills, and a portion from
paperboard purchased from external sources. The company
operates in four geographic areas: the United States, Central
and South America (Brazil), Europe and Asia-Pacific. GPC
conducts its business in two segments, paperboard packaging and
containerboard/other.
As reported by the Troubled Company Reporter-Latin America on
March 14, 2008, Graphic Packaging Holding Company completed its
combination of Graphic Packaging Corporation and Altivity
Packaging LLC. The combination of Graphic Packaging and Altivity
created a company with pro-forma 2007 revenues of over US$4.4
billion and pro-forma 2007 adjusted EBITDA of approximately US$553
million.
Headquartered in Carol Stream, Illinois, Altivity Packaging --
http://www.altivity.com-- produces various products such as
folding cartons, bag and plastic packaging, and decorative
laminations. Altivity Packaging also provides gift boxes for
department stores and other retail venues, as well contract
packaging services and inks and coatings. The company, which
operates about 60 manufacturing plants across the US, serves the
food, medical, and electronic industries, among others. In 2006
Altivity Packaging was established after TPG Capital's purchase
of Smurfit-Stone Container's consumer packaging unit.
* * *
As reported by the Troubled Company Reporter on March 24, 2008,
Moody's Investors Service affirmed Graphic Packaging International
Inc.'s B1 corporate family rating, B3 subordinated notes, and SGL-
3 speculative grade liquidity rating (indicating adequate
liquidity) following the announcement of the completed combination
of its operations with Altivity Packaging, LLC. Moody's also
assigned a Ba3 rating to the company's new
$1.2 billion term loan C due 2014.
The existing ratings have been downgraded on both the secured bank
facilities, to Ba3 from Ba2, and the senior unsecured notes, to B3
from B2, due to the revised capital structure. The additional
amounts of senior secured debt move the ratings of this debt
toward the B1 corporate family rating while the senior unsecured
notes are lowered by one notch. The outlook remains negative.
Proceeds from the transaction will be used to pay off Altivity's
existing debt, thus Altivity's ratings have been withdrawn.
GREEKTOWN CASINO: Bank Loan Sells at 55% Off in Secondary Market
----------------------------------------------------------------
Participations in a syndicated loan under which Greektown Casino
is a borrower traded in the secondary market at 45.20 cents-on-
the-dollar during the week ended January 2, 2009, according to
data compiled by Loan Pricing Corp. and reported in The Wall
Street Journal. This represents a drop of 2.00 percentage points
from the previous week, the Journal relates. Greektown Casino pays
interest at 250 points above LIBOR. The bank loan matures on
December 1, 2012. The bank loan is unrated.
Based in Detroit, Michigan, Greektown Holdings, LLC and its
affiliates -- http://www.greektowncasino.com/-- operates world-
class casino gaming facilities located in Detroit's historic
Greektown district featuring more than 75,000 square feet of
casino gaming space with more than 2,400 slot machines, over 70
tables games, a 12,500-square foot salon dedicated to high limit
gaming and the largest live poker room in the metropolitan Detroit
gaming market.
Greektown Casino employs approximately 1,971 employees, and
estimates that it attracts over 15,800 patrons each day, many of
whom make regular visits to its casino complex and related
properties. In 2007, Greektown Casino achieved a 25.6% market
share of the metropolitan Detroit gaming market. Greektown Casino
has also been rated as the "Best Casino in Michigan" and "Best
Casino in Detroit" numerous times in annual readers' polls in
Detroit's two largest newspapers.
The company and seven of its affiliates filed for Chapter 11
protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No.
08-53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and
Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the
Debtors in their restructuring efforts. Judy B. Calton, Esq., at
Honigman Miller Schwartz and Cohn LLP, represents the Debtors as
their special counsel. The Debtors chose Conway MacKenzie &
Dunleavy as their financial advisor, and Kurtzman Carson
Consultants LLC as claims, noticing, and balloting agent.
When the Debtor filed for protection from its creditors, it listed
consolidated estimated assets and debts of $100 million to
$500 million.
(Greektown Casino Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000).
HCA INC: Bank Loan Continues to Sell at Substantial Discount
------------------------------------------------------------
Participations in a syndicated loan under which HCA Inc. is a
borrower traded in the secondary market at 77.05 cents-on-the-
dollar during the week ended January 2, 2009, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 3.11 percentage points
from the previous week, the Journal relates. HCA Inc. pays
interest at 225 points above LIBOR. The bank loan matures on
November 6, 2013. The bank loan carries Moody's Ba3 rating and
Standard & Poor's BB rating.
As reported by the Troubled Company Reporter on January 2, 2009,
participations in the bank loan traded in the secondary market at
72.61 cents-on-the-dollar during the week ended December 26, 2008.
Headquartered in Nashville, Tennessee, HCA Inc. --
http://www.hcahealthcare.com/-- is the nation's leading provider
of healthcare services. As of June 30, 2008, HCA operated 169
hospitals and 107 freestanding surgery centers, including eight
hospitals and eight freestanding surgery centers operated through
equity method joint ventures.
At September 30, 2008, the company's consolidated balance sheet
showed $23.7 billion in total assets and $32.6 billion in total
liabilities, $969.0 million in minority interests, and $163.0
million in equity securities with contingent redemption rights,
resulting in a $10.1 billion shareholders' deficit. As of
September 30, the company had retained deficit of $10.1 billion.
Net income for the third quarter of 2008 totaled $86.0 million,
compared to $300.0 million in the prior year's third quarter.
* * *
As reported in the Troubled company Reporter on May 23, 2008,
Fitch Ratings affirmed HCA Inc.'s Issuer Default Rating at 'B';
Secured bank credit facility at 'BB/RR1'; and Senior unsecured
notes at 'CCC+/RR6'.
HEALTH MANAGEMENT: Bank Loan Sells at Substantial Discount
----------------------------------------------------------
Participations in a syndicated loan under which Health Management
Associates is a borrower traded in the secondary market at 60.93
cents-on-the-dollar during the week ended January 2, 2009,
according to data compiled by Loan Pricing Corp. and reported in
The Wall Street Journal. This represents an increase of 0.99
percentage points from the previous week, the Journal relates.
Health Management Associates pays interest at 175 points above
LIBOR. The bank loan matures on February 28, 2014. The bank loan
carries Moody's B1 rating and Standard & Poor's BB- rating.
Headquartered in Naples, Florida, HMA is an owner and operator of
acute-care hospitals in non-urban settings. The company provides
inpatient services such as general surgery, and oncology as well
as outpatient services such as laboratory, x-ray and physical
therapy services. In addition, some facilities also offer
specialty services such as cardiology, radiation therapy and MRI
scanning.
HOME INTERIORS: Court Approves Sale of Assets to Home & Garden
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
approved at a sale hearing on Dec. 23, 2008, the sale of
substantially all of the domestic assets of Home Interior & Gifts,
Inc. and Home Interiors de Puerto Rico, Inc., to Home & Garden
Party, Ltd., a Texas limited partnership, free and clear of all
liens, claims, encumbrances, and interests, for the purchase price
of $6,882,000.
On Dec. 18, 2008, a public auction sale of the Debtors' assets was
held. Home & Garden submitted the highest bid.
All outstanding objections to the sale have been overruled by the
Court.
NexBank, SSB holds as secured party for the benefit of the
Prepetition Lenders, a first priority perfected security interest
in substantially all of the Purchased Assets, pursuant to that
certain $370,000,000 Credit Agreement between the Debtor Home
Interiors & Gifts, Inc. and the Prepetition Lenders dated as of
March 31, 2004, as amended. Proceeds of the Sale are not
sufficient to satify the Prepetition Lenders' secured claims.
Nonetheless, the Prepetition Lenders have consented to the Sale,
under the terms of the order of the Court, including in particular
the provisions concerning distribution of the Sale proceeds.
Dallas County and the Carrollton-Farmers Branch ISD (together the
"Taxing Authorities") hold liens on some or all of the Purchased
Assets to secure ad valorem taxes for the tax year 2008 in an
aggregate original principal amount just under $143,000. The
Taxing Authorities have likewise consented to the Sale, including
in particular the provisions concerning the distribution of the
Sale proceeds.
A transaction fee of $350,000, less monthly fees already received
totalling $105,000, for a net remaining fee due of $245,000, plus
expenses of $7,276 is due at Closing to the Debtors' investment
bank, Houlihan Lokey Howard and Zukin Capital, Inc.
Pursuant to the Asset Purchase Agreement between Home & Garden
Party, Ltd. and Home Interiors & Gifts, Inc., dated Dec. 12, 2008,
the sale will close no later than the third business day following
the first date on which all conditions to Closing have been
satisfied or complied with or, in not all conditions have been
satisfied or complied with, all such conditions that have been so
satisfied or complied with have been waived by the party entitled
to the benefit of such condition, or at another date as mutually
agreed to by the parties.
About Home Interiors
Headquartered in Carrollton, Texas, Home Interiors & Gifts, Inc.
-- http://www.homeinteriors.com/-- manufactures, imports and
distributes indoor and outdoor home decorative accessories. It
was founded by Mary Crowley in 1957. Through its affiliates, the
company has a significant presence in Mexico, Puerto Rico, and
Canada. Annual revenue in 2007 reached $300 million. When Mary
Crowley, died in 1986, her son, Don Carter continued the business
operation nearly debt-free. In a leveraged transaction in 1998,
private equity firm of Hicks, Muse, Tate, and Furst acquired 66%
of the parent company, which resulted in the imposition of more
than $500 million in debt on the Debtors. In the face of
decreased sales and increased debt load, bondholders canceled
their debts in February 2006 in exchange for receiving most of the
outstanding equity of the Debtors.
About 40% of the goods the Debtors sell are now acquired from
manufacturers in China. In the last decade, sales volume in the
U.S. has waned, but the Debtors reported that sales in Mexico and
Puerto Rico significantly increased.
The company and six of its affiliates filed for Chapter 11
protection on April 29, 2008 (Bankr. N.D. Tex. Lead Case No.
08-31961). Andrew Jillson, Esq., Cameron Kinvig, Esq., Robert
McCormick, Esq., and Mike Massad, Esq., at Hunton & Williams, LLP,
represent the Debtors as counsel. Richard A. Lindenmuth
at Boulder International LLC, is designated as CRO. The U.S.
Trustee for Region 6 has appointed seven creditors to serve on an
Official Committee of Unsecured Creditors. Munsch Hardt Kopf &
Harr, PC represents the Committee in these cases. Kurtzman Carson
Consultants LLC is the Official Noticing and Balloting Agent. In
its schedules, Home Interiors & Gifts, Inc. listed $88,653,051 in
total assets, and $510,451,698 in total liabilities.
As reported in the Troubled Company Reporter on Dec. 11, 2008,
the Court approved the appointment by the United States Trustee of
Dennis Faulkner as Chapter 11 trustee in the Debtors' bankruptcy
cases. Dennis Faulkner, of the accounting firm of Lain, Faulkner
& Co., P.C., is a member of the American Bankruptcy Institute and
the Association of Insolvency and Restructuring Advisors. Lain,
Faulkner & Co., P.C. is an accounting firm which specializes in
bankruptcy, litigation and business advisory services.
HOMEBANC CORP: Seeks Last Extension of Plan Solicitation Period
---------------------------------------------------------------
HomeBanc Corp., asks the U.S. Bankruptcy Court for the District of
Delaware to move its deadline to solicit acceptances of its
Chapter 11 plan to April 9, 2009.
Bloomberg's Bill Rochelle notes that the fifth request for an
exclusivity extension would be the last because of an 18-month
limit set by the U.S. Bankruptcy Code.
As reported by the Troubled Company Reporter, the Debtors filed
with the Court their joint consolidated liquidating plan and
accompanying disclosure statement, dated April 30, 2008.
According to Mr. Rochelle, Homebanc said that it's working on
lawsuits that must be resolved before the proposed Chapter 11 plan
becomes feasible. A hearing on the disclosure statement to the
Plan is scheduled for Jan. 7, but the Debtor said it will again
seek an adjournment.
Since the Debtors' bankruptcy filing, Homebanc and its affiliated
debtors have been working to wind-down their operations and
liquidate their assets.
Under Homebanc's Chapter 11 plan, at least $5,000,000 will be
available for distribution to various creditors. A liquidating
agent will be appointed to, among other things, (i) make
distributions to holders of allowed claims, (ii) continue to
pursue and commence various causes of action post-confirmation,
and (iii) prosecute any necessary objections to administrative,
priority or secured claims that are filed.
A full-text copy of the Plan is available for free at
http://ResearchArchives.com/t/s?2b85
A full-text copy of the Disclosure Statement is available for
free at http://ResearchArchives.com/t/s?2b86
About HomeBanc
Headquartered in Atlanta, Georgia, HomeBanc Mortgage Corporation
-- http://www.homebanc.com/-- was a mortgage banking company
focused on originating primarily prime purchase money residential
mortgage loans in the Southeast United States.
HomeBanc Mortgage together with five affiliates filed for chapter
11 protection on Aug. 9, 2007 (Bankr. D. Del. Case Nos. 07-11079
through 07-11084). Joel A. Waite, Esq., at Young, Conaway,
Stargatt & Taylor was selected by the Debtors to represent them in
these cases. The Official Committee of Unsecured Creditors
selected the firm Otterbourg, Steindler, Houston and Rosen, P.C.
as its counsel. The Debtors' financial condition as of June 30,
2007, showed total assets of $5,100,000,000 and total liabilities
of $4,900,000,000. The Debtors' exclusive period to file a plan
ends on April 7, 2008.
INTERLAKE MATERIAL: Can Access $23MM NCB DIP Facility on Interim
----------------------------------------------------------------
The Hon. Kevin J. Carey of the United States Bankruptcy Court for
the District of Delaware authorized Interlake Material Handling
Inc. and its debtor-affiliates to obtain, on an interim basis, $23
million in postpetition financing under the secured superpriority
debtor-in-possession credit and security agreement with National
City Business Credit, as administrative agent and lender, and MB
Financial Bank N.A. and Capital One Leverage Finance Corp, as
lenders.
Judge Carey also authorized the Debtors' to use cash collateral
securing repayment of secured loan to their lenders.
The Debtors said they intend to access at least $41.4 million
in DIP financing from their lenders on a final basis. Proceeds of
the facility will be used (i) to pay fees and expenses relating to
the transaction contemplated by the DIP agreement; (ii) for
general corporate purposes; (iii) to consummate the first lien
refinancing upon entry of the financing order; and (iv) to provide
for working capital including administrative expenses in
accordance with the proposed budget.
The facility, which matures by April 30, 2009, incurs interest at
Prime plus 3.0% per annum -- but not less than 4.0% per annum --
payable in arrears on the first day of each calendar month and on
the last day of the term.
The lenders will be paid $450,000 commitment fee upon entry of the
interim DIP order.
The DIP agreement is subject to carve-out for payment of statutory
fees payable to the Office of the United States Trustee; unpaid
fees due and payable to the clerk of the Court; fees earned by any
professionals employed by the Debtors.
Furthermore, the DIP agreement contains customary and appropriate
events of default including:
a) failure to repay principal and interest;
b) failure to furnish information as required by the DIP
agreement or within 10 days of request by the DIP agent or
the lenders;
c) default of any postpetition indebtedness of more than
$250,000;
d) termination of any guaranty;
e) loss of material intellectual property;
f) payment of certain prepetition indebtedness;
g) conversion or dismissal of any of the Debtors' Chapter 11
cases;
h) termination of the Debtors' exclusivity; and
i) withdrawal of the stalking horse bidder's offer.
To secure their DIP obligations, among other things, the lenders
will be granted superpriority administrative expenses claims
status priority over all administrative expenses under Section
503(b) of the Bankruptcy Code
A hearing is set for Feb. 3, 2009, 3:00 p.m., to consider final
approval of the Debtors' request. Objections, if any, are due
Jan. 27, 2009.
Prepetition Indebtedness
On April 21, 2006, the Debtors entered into a first amended and
restated credit and security agreement with their prepetition
senior secured lenders to provide:
-- $48 million revolving credit loan and letter of credit
subfacility;
-- $15 million term loan; and
-- $3 million equipment loan.
On that same date, the Debtors entered into a credit and security
agreement with their prepetition junior lenders to provide up to
$10.5 million term loan.
As of their bankruptcy filing, approximately $35.6 million is
outstanding under the senior credit agreement and $11.5 million is
outstanding under the junior credit agreement.
A full-text copy of the Debtors' secured superpriority debtor-in-
possession credit and security agreement is available for free
at http://ResearchArchives.com/t/s?377c
A full-text copy of the Debtors' DIP budget is available for free
at http://ResearchArchives.com/t/s?377d
About Interlake Material
Headquatered in Naperville, Illinois, Interlake Material Handling
Inc. -- http://www.interlake.com-- makes steel storage racks in
the United States. The company and three of its affiliates filed
for protection on January 5, 2009 (Bankr. D. Del. Lead Case No.
09-10019). Winston & Strawn LLP represents the Debtors in their
restructuring efforts. The Debtors proposed Young, Conaway,
Stargatt & Taylor LLP, as their local counsel; Lake Pointe
Advisors LLC and Huron Consulting Services LLC as financial
advisors; and Kurtzman Carson Consultants LLC as claims agent.
When the Debtors filed for protection from their creditors, they
listed assets between $50 million and $100 million, and debts
between $100 million and $500 million.
INTERSTATE BAKERIES: Scraps Bid to Reject CBA with Local Union
--------------------------------------------------------------
Interstate Bakeries Corporation informed the U.S. Bankruptcy Court
for the Western District of Missouri that it is withdrawing,
without prejudice, its request to reject their collective
bargaining agreements with the Bakery, Confectionary, Tobacco
Workers and Grain Millers Union Local 19.
The Debtors and BCTGM Local No. 19 are parties to two CBAs, which
govern IBC's 27 employees in a thrift store and 12
shipping/sanitation employees in Pittsburgh, Pennsylvania.
The Debtors sought to reject the CBAs with BCTGM Local 19, because
unlike members of other local BCTGM unions, Local 19 failed to
ratify the modifications to their CBAs which were designed to
achieve labor cost savings contemplated in the Debtors' Amended
New Plan of Reorganization.
Paul M. Hoffman, Esq., at Stinson Morrison Hecker LLP, in Kansas
City, Missouri, informed the Court and parties-in-interest that
the Debtors' withdrawal of their CBA Rejection request is
"pursuant to separate agreements" with BCTGM Local 19.
About Interstate Bakeries
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh-baked
bread and sweet goods, under various national brand names,
including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and
Drake's(R). Currently, IBC employs more than 25,000 people and
operates 45 bakeries, as well as approximately 800 distribution
centers and approximately 800 bakery outlets throughout the
country.
The company and eight of its subsidiaries and affiliates filed for
chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6% senior subordinated convertible notes due Aug. 15, 2014) in
total debts.
The Debtors first filed their Chapter 11 Plan and Disclosure
Statement on Nov. 5, 2007. On Jan. 30, 2008, the Debtors received
court approval of the disclosure statement explaining their first
amended plan. IBC did not receive any qualifying alternative
proposals for funding its plan in accordance with the court-
approved alternative proposal procedures.
The Debtors, on Oct. 4, 2008, filed another Plan, which
contemplates IBC's emergence from Chapter 11 as a stand-alone
company. The filing of the Plan was made in connection with the
plan funding commitments, on Sept. 12, 2008, from an affiliate of
Ripplewood Holdings L.L.C. and from Silver Point Finance, LLC, and
Monarch Master Funding Ltd.
On December 5, 2008, the Bankruptcy Court confirmed IBC's Amended
New Joint Plan of Reorganization. The plan was filed October 31,
2008. The exit financings that form the basis for the Plan are
reflected in corresponding debt and equity commitments.
As reported by the Troubled Company Reporter on December 30, 2008,
Interstate Bakeries' Chief Executive Officer Craig D. Jung and
Chief Financial Officer J. Randall Vance said IBC is still
focusing on negotiating and finalizing all documentation for the
Exit Financings and satisfying the remaining conditions precedent
to closing of the various transactions contemplated under the
Plan. Although progress has been made, significant issues remain
to be resolved, the IBC Officers said.
(Interstate Bakeries Bankruptcy News; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
INTERSTATE BAKERIES: Can File Preference Actions Until June 30
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri
extended until June 30, 2009, the deadline within which Interstate
Bakeries Corporation may commence service of process on certain
preference and other potential actions.
The Court noted that except with respect to the Preference and
Prepetition Lenders Actions, specifically involving Adversary
Actions 06-04191 and 06-04192, the Service Deadline will be the
earliest of:
(i) June 30, 2009;
(ii) the 90th day after the confirmation of the Plan of
Reorganization, or March 5, 2009; or
(iii) 30 days after the Debtors receive a written demand from
the prepetition agents with respect to the Actions.
The Court clarified that the Service Deadline Extension will not
affect any agreement among the Debtors, the Prepetition Agent and
the Prepetition Lenders to resolve, settle or dismiss all or any
part of the Preference or Prepetition Lenders Action in
connection with confirmation of the Plan.
About Interstate Bakeries
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh-baked
bread and sweet goods, under various national brand names,
including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and
Drake's(R). Currently, IBC employs more than 25,000 people and
operates 45 bakeries, as well as approximately 800 distribution
centers and approximately 800 bakery outlets throughout the
country.
The company and eight of its subsidiaries and affiliates filed for
chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6% senior subordinated convertible notes due Aug. 15, 2014) in
total debts.
The Debtors first filed their Chapter 11 Plan and Disclosure
Statement on Nov. 5, 2007. On Jan. 30, 2008, the Debtors received
court approval of the disclosure statement explaining their first
amended plan. IBC did not receive any qualifying alternative
proposals for funding its plan in accordance with the court-
approved alternative proposal procedures.
The Debtors, on Oct. 4, 2008, filed another Plan, which
contemplates IBC's emergence from Chapter 11 as a stand-alone
company. The filing of the Plan was made in connection with the
plan funding commitments, on Sept. 12, 2008, from an affiliate of
Ripplewood Holdings L.L.C. and from Silver Point Finance, LLC, and
Monarch Master Funding Ltd.
On December 5, 2008, the Bankruptcy Court confirmed IBC's Amended
New Joint Plan of Reorganization. The plan was filed October 31,
2008. The exit financings that form the basis for the Plan are
reflected in corresponding debt and equity commitments.
As reported by the Troubled Company Reporter on December 30, 2008,
Interstate Bakeries' Chief Executive Officer Craig D. Jung and
Chief Financial Officer J. Randall Vance said IBC is still
focusing on negotiating and finalizing all documentation for the
Exit Financings and satisfying the remaining conditions precedent
to closing of the various transactions contemplated under the
Plan. Although progress has been made, significant issues remain
to be resolved, the IBC Officers said.
(Interstate Bakeries Bankruptcy News; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
INTERSTATE BAKERIES: Seeks to Tap Kasowitz As Conflicts Counsel
---------------------------------------------------------------
Interstate Bakeries Corporation and eight of its affiliates seek
authority from the U.S. Bankruptcy Court for the Western District
of Missouri to employ Kasowitz, Benson, Torres & Friedman LLP as
their special litigation and conflicts counsel, nunc pro tunc to
December 19, 2008.
The Debtors selected Kasowitz Benson because of the firm's
extensive experience in matters concerning complex bankruptcy and
commercial litigation. The Debtors believe that Kasowitz Benson
is well-suited to deal effectively with many of the potential
legal issues that may arise in their Chapter 11 cases.
As special litigation and conflicts counsel, Kasowitz Benson will
perform for the Debtors these professional services:
(a) advise the Debtors regarding their ability to initiate
actions to protect their rights under the exit financing,
and enforce the legally binding commitments of the parties
to the Commitment Letters for the benefit of the Debtors'
estates; and
(b) commence and conduct any and all litigation necessary or
appropriate to assert rights held by the Debtors,
including without limitation, any rights arising with
respect to the financing commitments underlying the Plan,
and protect assets of the Debtors' Chapter 11 estates or
otherwise further the goal of completing the Debtors'
successful reorganization.
Pursuant to an engagement letter between the parties, Kasowitz
Benson will be paid by the Debtors in accordance with these
hourly rates:
Partners $550 - $1,000
Special Counsel $525 - $750
Associates $275 - $675
Staff Attorneys $225 - $390
Paralegals $150 - $225
Kasowitz Benson will also be reimbursed for all actual and
necessary expenses and other charges incurred by the firm.
In addition, the Debtors will pay Kasowitz Benson a retainer
equal to $250,000 upon the Court's Court approval of the
Application.
David M. Friedman, a member of Kasowitz Benson, certified to the
Court that his firm has represented, in matters wholly unrelated
to the Debtors, certain of their non-insider shareholders and a
party potentially interested in investing in the Debtors.
However, Mr. Friedman assured the Court that his firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About Interstate Bakeries
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh-baked
bread and sweet goods, under various national brand names,
including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and
Drake's(R). Currently, IBC employs more than 25,000 people and
operates 45 bakeries, as well as approximately 800 distribution
centers and approximately 800 bakery outlets throughout the
country.
The company and eight of its subsidiaries and affiliates filed for
chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6% senior subordinated convertible notes due Aug. 15, 2014) in
total debts.
The Debtors first filed their Chapter 11 Plan and Disclosure
Statement on Nov. 5, 2007. On Jan. 30, 2008, the Debtors received
court approval of the disclosure statement explaining their first
amended plan. IBC did not receive any qualifying alternative
proposals for funding its plan in accordance with the court-
approved alternative proposal procedures.
The Debtors, on Oct. 4, 2008, filed another Plan, which
contemplates IBC's emergence from Chapter 11 as a stand-alone
company. The filing of the Plan was made in connection with the
plan funding commitments, on Sept. 12, 2008, from an affiliate of
Ripplewood Holdings L.L.C. and from Silver Point Finance, LLC, and
Monarch Master Funding Ltd.
On December 5, 2008, the Bankruptcy Court confirmed IBC's Amended
New Joint Plan of Reorganization. The plan was filed October 31,
2008. The exit financings that form the basis for the Plan are
reflected in corresponding debt and equity commitments.
As reported by the Troubled Company Reporter on December 30, 2008,
Interstate Bakeries' Chief Executive Officer Craig D. Jung and
Chief Financial Officer J. Randall Vance said IBC is still
focusing on negotiating and finalizing all documentation for the
Exit Financings and satisfying the remaining conditions precedent
to closing of the various transactions contemplated under the
Plan. Although progress has been made, significant issues remain
to be resolved, the IBC Officers said.
(Interstate Bakeries Bankruptcy News; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
JON HARDER: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Jon M. Harder
9683 Edmundson Drive SE
Salem, OR 97301
Bankruptcy Case No.: 08-37225
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Colonial Gardens, LLC 08-26655
Portland Senior Living, LLC 08-36630
Henderson Senior Living, LLC 08-36673
Medallion Assisted Living, LP 08-36638
Stayton SW Assisted Living, LLC 08-36637
Nashville Senior Living, LLC 08-07254
Anderson Senior Living Property, LLC 08-07255
Charlotte Oakdale Property, LLC 08-07256
Greensboro Oakdale Property, LLC 08-07257
Mt. Pleasant Oakdale I Property, LLC 08-07258
Mt. Pleasant Oakdale II Property, LLC 08-07259
Pinehurst Oakdale Property, LLC 08-07260
Winston-Salem Oakdale Property, LLC 08-07338
Briarwood Retirement and Assisted Living 08-07339
Community, LLC
Related Information: The Debtor is the chief executive officer
and the majority shareholder of Sunwest
Management Inc., the manager of over 280
senior living facilities around the country,
serving over 18,000 residents and employing
12,000 people. The care facilities are
owned and operated by more than 700 special
purpose entities, generally limited
liability companies that own the facilities
and the underlying real estate.
Debtor has an ownership interest in almost
all the care facility entities, which have a
value close to $2 billion -- as of earlier
this year; the current fair market value is
likely to be significantly less -- secured
debt of approximately $1.8 billion,
unsecured debt of $76 million, and annual
revenue of about $500 million. Much of the
debt has been guaranteed by Debtor, and a
portion of the debt is money borrowed by
Debtor in his own name and loaned to the
care facility entities for the benefit of
the continued operation of the care
facilities.
In addition to the Debtor's interests in the
care facilities and Sunwest, Debtor is the
sole or partial owner of other properties
and businesses, including Canyon Creek
Financial, LLC, Canyon Creek Development
Inc., Senenet and approximately 400 other
entities.
Chapter 11 Petition Date: December 31, 2008
Court: District of Oregon
Judge: Trish M. Brown
Debtor's Counsel: James Ray Streinz, Esq.
McEwan Gisvold LLP
1100 SW 6th Avenue #1600
Portland, OR 97204
Tel: (503) 412-3512
Claims Agent: Kurtzman Carson Consultants LLC
Estimated Assets: $100 million to $500 million
Estimated Debts: $100 million to $500 million
The Debtors' Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
GE Capital Healthcare secured loan $17,000,000
Services deficiency
Attn: Richard Arrowsmith
500 W. Monroe
Chicago, IL 60661
Tel: (301) 347-3124
LRS Development LLC loan $4,924,726
Attn: Steve Lee
1728 SW High Street
Portland, OR 97201
Tel: (503) 221-2077
Fax: (503) 221-1121
Dunn Family Truste loan $4,298,477
650770 Swally Road
Bend, OR 97701-8446
Tel: (541) 504-2370
Darryl Fisher loan $3,056,298
3723 SE Fairview Industrial
Drive
Salem, OR 97302
Tel: (503) 485-4591
Richard and Darlene Peters loan $1,735,181
PO Box 1827
Gresham, OR 97030
Tel: (503) 254-3223
Dan Whitaker loan $1,545,000
3690 SW Brooklane
Corvallis, OR 97333
Tel: (541) 758-8888
Timothy Casper
8070 E. Mill Plan Blvd. PMB loan $1,500,000
320
Vancouver, WA 98684
Viewpoint Bank FKA Community secured loan $1,308,724
Credit Union
9301 Winnetka Avenue
Chatsworth, CA 91311
Tel: (818) 836-6341
Fax: (818) 836-6441
George Garlic loan $1,300,000
2400 Stevens Drive, Suite B
Richland, WA 99354
Tel: (509) 375-6003
Fax: (509) 375-6032
Lee Blake loan $1,231,363
3838 Camino Del Rio North
San Diego, CA 92108
Tel: (541) 317-1547
Fax: (541) 317-1548
RG Funding loan $1,169,395
3596 Cedar Court
Washougal, WA 98671
Tel: (360) 844-5092
Karen L. Bradshaw loan $1,100,000
1483 S. Lake Crest Way
Eagle, ID 83616
Tel: (408)206-9685
Eric Jacobsen loan $1,038,719
1350 SW Radcliffe
Portland, OR 97219
Tel: (503) 675-3925
Fax: (503) 675-3927
Divine Investments loan $1,000,177
Attn: William Fisher
4036 Trailblazer Place SE
Salem, OR 97317
Tel: (541) 672-1908
Steve West loan $1,000,000
2699 Road 68
Pasco, A 99301
Tel: (509) 531-0138
Salem Investors loan $915,000
Attn: Ed Pierce
459 Fulton Street, Suite 307
San Francisco, CA 94102
Tel: (415) 922-224
Fax: (415) 922-0206
Assisted Living Alternatives loan $865,926
Inc.
Attn: Ted Chilles
625 SW Stark Street, Suite 440
Portland, OR 97204
Tel: (503) 221-11221
Capital Partners LLC loan $950,000
Attn: Richard Carney
PO Box 12888
Salem, OR 97309
Tel: (503) 588-2988
Bradshaw Charitable Trustee loan $950,000
Attn: Karen Bradshaw
1483 S. Lake Crest Way
Eagle, ID 83616
Tel: (408) 206-9685
Lloyd H. Butler loan $639,085
1214 N. 20th Avenue
Yakima, WA 98907
Tel: (509) 837-8515
Fax: (509) 248-8738
JONES APPAREL: S&P Downgrades Issue-Level Rating on Notes to 'B+'
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its issue-
level ratings on Jones Apparel Group Inc.'s unsecured note issues
of $250 million each, maturing in 2009, 2014, and 2034, to 'B+'
(one notch below the corporate credit rating) from 'BB-'.
Standard & Poor's also revised the recovery rating on these issues
to '5', indicating the expectation for modest (10%-30%) recovery
in the event of payment default, from '4'.
The issue-level rating downgrades are primarily the result of the
company's $600 million secured revolving credit facility. This
represents an amendment to the existing revolving credit facility,
which was unsecured. S&P previously assumed that the unsecured
bonds would share equally in emergence enterprise value with the
credit facility. The security interests under the proposed
amended revolving facility are dilutive to the recovery prospects
for the unsecured bonds.
Ratings List
Jones Apparel Group Inc.
Corp. credit rating BB-/Negative/--
Ratings Lowered
To From
-- ----
$250 mil. 4.25% sr nts B+ BB-
Recovery rating 5 4
$250 mil. 5.125% sr nts B+ BB-
Recovery rating 5 4
$250 mil. 6.125% sr nts B+ BB-
Recovery rating 5 4
JUNIPER CONTENT: Posts $2.1MM Net Loss in Quarter Ended Sept. 30
----------------------------------------------------------------
Juniper Content Corporation's net sales for the quarter ended
September 30, 2008, grew 8% to $675,764 as compared to net sales
of $628,273 for the third quarter of 2007. Net loss for the
quarter ended September 30, 2008, was $2.12 million, as compared
to a net loss of $1.49 million for the quarter ended
September 30, 2007. The increased loss was due primarily to a
reduction in the benefit from income taxes of $604,348 and an
increase in depreciation and amortization expense of $258,993
offset by a reduction in selling, general and administrative
expenses of $405,136.
The company was merged with privately held Firestone
Communications, Inc., on January 19, 2007.
In a regulatory filing dated November 14, 2008, Stuart B. Rekant,
chairman of the board and chief executive officer, and Herbert J.
Roberts, senior vice president, chief financial officer and
secretary, disclosed that the company has incurred significant
losses since the merger and has not generated positive cash flow
from operations.
"At September 30, 2008 the company had cash and cash equivalents
of approximately $1.6 million compared to $5.3 million at
December 31, 2007. The resulting $3.7 million decrease in cash
and cash equivalents is attributable to building the Sorpresa!
Network and its Digital Community coupled with meeting the
company's ongoing working capital needs. Management believes that
current cash levels will only be sufficient to fund the company's
operations through January 2009. During the first nine months of
fiscal 2008, specifically within our first quarter, the company
had received approximately $2.2 million from the sale of preferred
stock."
"Pursuant to an amendment dated July 31, 2008, the related party
note holder extended the commencement of principal repayments for
one year. In order to meet its future operating needs the company
will need to raise additional financing and is actively engaged in
the process of securing the additional funding through debt and
equity alternatives. Management also anticipates it will be able
to reduce or delay certain variable or discretionary costs to
potentially lessen its short-term future working capital needs.
There is no assurance that the company will be successful in such
efforts."
"In light of [these circumstances], substantial doubt is raised as
to the company's ability to continue as a going concern."
As of September 30, 2008, the company's balance sheet showed total
assets of $13,410,590, total liabilities of $4,309,222, and total
stockholders' equity of $9,101,368. Accumulated deficit reached
$13,310,497.
A full-text copy of the company's quarterly report is available
for free at: http://researcharchives.com/t/s?3779
Resignations
Raymond K. Mason, Vice Chairman of the Board of Directors of
Juniper Content Corporation, and John K. Billock, a member of the
Board, advised the company that they were resigning from the Board
on December 22, 2008. Board members Bert A. Getz, Richard
Intrator and Paul Kramer advised the company that they were
resigning from the Board on December 23, 2008. These resignations
were due to the individuals' other personal and professional
commitments and not in connection with any disagreement between
any of these individuals and the company or its management.
Mr. Mason, at the same time as his resignation, transferred to the
company (i) 20,000 Series B Units, each consisting of two shares
of Common Stock, one Class Z Warrant and one Class W Warrant, each
Warrant to purchase one share of Common Stock, (ii) an aggregate
of 2,376,696 shares of Common Stock and (iii) an aggregate of
39,670 Warrants, each to purchase one share of Common Stock of the
company, for total aggregate consideration of $1.00. These
securities will be cancelled on the books of the company. As a
result of the transfer, the total number of outstanding shares of
Common Stock of the company decreased from 5,618,127 shares to
3,201,431 shares.
About Juniper Content
Juniper Content Corporation is a media and entertainment company
focused on branded content services in high growth markets across
multiple distribution channels. The company owns and operates
Sorpresa!, the nation's first children's cable television network
broadcasting exclusively in Spanish. The company had also
provided satellite uplink services for network distribution and
production facilities and services for program production however,
pursuant to the agreements consummated on November 3, 2008, and
effective November 1, 2008, the company has completed a series of
transactions in which it transferred its facility-based physical
assets and associated lease, allowing it to withdraw from its
uplink and production services operations.
KB TOYS: Can Access Lenders' Cash Collateral Until January 31
-------------------------------------------------------------
The Hon. Kevin J. Carey of the United States Bankruptcy Court for
the District of Delaware authorized KB Toys Inc. and its debtor-
affiliates to use, on a final basis, cash collateral securing
repayment of secured loan to prepetition lenders until Jan. 31,
2009, in accordance with the budget. All objections to the motion
that were not withdrawn or resolved are overruled.
Prior to their bankruptcy filing, the Debtors entered into
separate credit agreements with:
i) GE Capital Markets Inc., as lead arranger and bookrunner,
under the credit agreement dated Jan. 31, 2007, as
amended, to provide up to $200 million in revolving loan
including letter of credit and swingline commitments, with
a sublimit for letters of $100 million;
ii) PKBT Lending LLC, as collateral agent, under the amended
restated credit agreement dated Jan. 31, 2007, as amended,
to provide at least $100 million in revolving loan; and
iii) Willing Trust Company, as collateral agent for the benefit
of certain eligible vendors, under the trade program and
security agreement dated Oct. 19, 2005, as amended.
The Debtors owe $96.4 million including amount of all letters of
credit under the GE Capital agreement; $95.0 million under the
PKBT Lending agreement; and $2.0 million under the trade program
agreement as of their bankruptcy filing.
The Debtors told the Court that they are in default of their debts
and obligations under this agreement, and any and all commitments
of the prepetition lenders to provide more funds have been
terminated.
The Debtors' cash including monies in their deposit accounts
constitute the cash collateral of the prepetition lenders.
Access to cash collateral enables the Debtors to finance their
operations to prevent immediate and irreparable harm to their
estates and creditors. The Debtors said they do not have
sufficient available sources of working capital and financing to
maintain their property and business to continue. Specifically,
proceeds of the cash collateral will be used to:
i) meet payroll obligations; and
ii) pay other expenses critical to the preservation of the
Debtors' estates.
As adequate protection of the interests of the prepetition
lenders, the Debtors granted additional and replacement perfected
postpetition security interest in and liens on any and all
property of the Debtors to the lenders.
A full-text copy of the Debtors' cash collateral budget is
available for free at http://ResearchArchives.com/t/s?3778
About KB Toys
Headquartered in Pittsfield, Massachusetts, KB Toys, Inc. --
http://www.kbtoys.com-- operates a chain of retail toy stores.
On Jan. 14, 2004, the Debtor and 69 of its affiliates filed for
protection under Chapter 11 of the Bankruptcy Code, which were
administratively consolidated under Case No. 04-10120. Two of the
200 bankruptcy cases remain open, KB Toys Inc. and KB Toy of
Massachusetts Inc. In connection with the emergence of KB Toys
from bankruptcy in August 2005, and the subsequent organizational
restructuring, the assets and operations of may of these prior
debtors were transferred among then existing debtor entities and
consolidated with KB Toys Group. Furthermore, most of the
entities involved were either dissolved or were merged into
surviving entities, and several of them changed their names. As
a result, nine Debtors and four inactive special purpose units
which are not debtors.
The company, together with eight of its affiliates, again filed
for Chapter 11 on December 11, 2008 (Bankr. D. Del. Lead Case No.
08-13269). Joel A. Waite, Esq., and Matthew Barry Lunn, Esq., at
Young, Conaway, Stargatt & Taylor LLP, represent the Debtors in
their restructuring efforts. The Debtors proposed Wilmer Cutler
Pickering Hale and Dorr LLP as their co-counsel, FTI Consulting
Inc. as financial and restructuring advisor, and Epiq Bankruptcy
Solutions LLC as claims and noticing agent. The U.S. Trustee for
Region 3 appointed seven creditors, wherein three are toymakers --
Li & Fung Toy Island Manufacturing from Honk Kong, Mattell Inc.,
and Hasbro Inc.
According to Bloomberg, KB listed assets of $241 million against
debt totaling $362 million in its Chapter 11 petition filed
on Dec. 11. The debts include $143 million in unsecured claims;
and $200 million in secured claims, including $95.1 million owed
to first-lien creditors where General Electric Capital Corp.
serves as agent; and $95 million owed to second-lien creditors.
As reported by the Troubled Company Reporter on Dec 22. 2008, the
Hon. Kevin Carey of the U.S. Bankruptcy Court for the District of
Delaware has allowed KB Toys Inc. to start going-out-of-business
sales. KB Toys expects the liquidation sales to be completed by
Feb. 9, 2009
KB TOYS: Will Stop Accepting Gift Cards in Stores on Sunday
-----------------------------------------------------------
Amy Martinez at The Seattle Times reports that KB Toys stop
accepting gift cards in stores after Sunday.
According to The Seattle Times, the Washington state Attorney
General's Office has notified consumers about the upcoming
expiration.
The Seattle Times relates that KB Toys has stores in Centralia,
North, Bend and Vancouver, Washington. The stores will close
after completing going-out-of-business sales, the report says.
Gift cards purchased at stores cannot be redeemed at KB Toys' Web
site, according to The Seattle Times. The report states that gift
cards bought online can be replaced with an electronic gift
certificate for purchases at the Web site.
Headquartered in Pittsfield, Massachusetts, KB Toys, Inc. --
http://www.kbtoys.com-- operates a chain of retail toy stores.
On Jan. 14, 2004, the Debtor and 69 of its affiliates filed for
protection under Chapter 11 of the Bankruptcy Code, which were
administratively consolidated under Case No. 04-10120. Two of the
200 bankruptcy cases remain open, KB Toys Inc. and KB Toy of
Massachusetts Inc. In connection with the emergence of KB Toys
from bankruptcy in August 2005, and the subsequent organizational
restructuring, the assets and operations of may of these prior
debtors were transferred among then existing debtor entities and
consolidated with KB Toys Group. Furthermore, most of the
entities involved were either dissolved or were merged into
surviving entities, and several of them changed their names. As
a result, nine Debtors and four inactive special purpose units
which are not debtors.
The company, together with eight of its affiliates, again filed
for Chapter 11 on December 11, 2008 (Bankr. D. Del. Lead Case No.
08-13269). Joel A. Waite, Esq., and Matthew Barry Lunn, Esq., at
Young, Conaway, Stargatt & Taylor LLP, represent the Debtors in
their restructuring efforts. The Debtors proposed Wilmer Cutler
Pickering Hale and Dorr LLP as their co-counsel, FTI Consulting
Inc. as financial and restructuring advisor, and Epiq Bankruptcy
Solutions LLC as claims and noticing agent.
According to Bloomberg, KB listed assets of $241 million against
debt totaling $362 million in its Chapter 11 petition filed
on Dec. 11. The debts include $143 million in unsecured claims;
and $200 million in secured claims, including $95.1 million owed
to first-lien creditors where General Electric Capital Corp.
serves as agent; and $95 million owed to second-lien creditors.
As reported by the Troubled Company Reporter on Dec 22. 2008, the
Hon. Kevin Carey of the U.S. Bankruptcy Court for the District of
Delaware has allowed KB Toys Inc. to start going-out-of-business
sales. KB Toys expects the liquidation sales to be completed by
Feb. 9, 2009.
L.A. UNIFIED SCHOOL: To Fire "Thousands" to Avert Bankruptcy
------------------------------------------------------------
Ramon C. Cortines, superintendent of schools of the Los Angeles
Unified School District, the second-biggest in the nation,
informed employees that the district "must make deeper than
expected budget cuts beginning this month" to avert bankruptcy.
Mr. Cortines said the District's immediate goal is address at
least a $250 million shortfall for the current school year and
begin planning for even larger deficits for the 2009-2011 school
years.
Mr. Cortines said that since the District's budget meetings eight
weeks ago, California's financial situation has worsened and as a
result the District must make the budget cuts, which would include
layoffs, beginning this month. These mid-year cuts must be
accomplished before the end of the current school year.
"We are now anticipating layoffs. We hope to do these unavoidable
reductions in force with as little disruption as possible to your
classroom, your school, your program, your office or wherever you
work for LAUSD. We will provide as much notice as we can, or is
required, through contracts with our bargaining units."
According to Bloomberg News, the District said it may have to fire
thousands of teachers and staff to avoid seeking bankruptcy
protection. As many as 2,300 teachers could face midyear layoffs
because of the state budget crisis, District officials said,
according to the Los Angeles Times.
Mr. Cortines added that he is also anticipating reassignments of
non-school-based personnel back to school sites. Some will return
to classrooms. Some will return to administrator positions.
"Because of bumping rights, others will unfortunately lose their
jobs," he said.
Mr. Cortines said that aside from the layoffs, his other
recommendations to the Los Angeles School Board include subbing
out general fund money with categorical funds, borrowing
judiciously from District reserves, offering early retirement and
increasing class sizes.
LEHMAN BROTHERS: Opposes N.Y. Comptroller's Trustee Request
-----------------------------------------------------------
Lehman Brothers Holdings Inc., and its affiliated debtors object
to the request of the New York State Comptroller for appointment
of a Chapter 11 trustee, or in the alternative, an examiner with
expanded powers.
The Debtors are now headed by Bryan Marsal of Alvarez & Marsal,
after their CEO resigned.
As reported by the Troubled Company Reporter on Nov. 14, 2008,
Thomas DiNapoli, New York State Comptroller, told the U.S.
Bankruptcy Court for the Southern District of New York that Lehman
Brothers Holdings' board of directors and chief executive officer
must be replaced by a trustee who is capable of administering the
company. CEO Richard Fuld resigned from his post in December
2008.
Harvey R. Miller, Esq., at Weil, Gotshal & Manges LLP, in New
York, asserts that there is no basis for the appointment of a
trustee in the chapter 11 cases. He says that cause does not
exist for the appointment of a chapter 11 trustee and the
appointment of a trustee is not in the interests of creditors and
the debtors' estates.
Lehman Brothers, instead, proposes that the Court order the
appointment of an examiner who can investigate the Debtors and
their affairs.
"The Comptroller's reliance upon unsubstantiated hyperbole of
media reports and unfounded rumors does not establish cause or
that the interests of the administration of the Debtors' estates
require the appointment of a trustee," Mr. Miller asserts.
He notes that in lieu of credible evidence, the Comptroller has
resorted to unfounded accusations, rumors and gross speculation to
accuse the Debtors' management, and in particular, the Chairman
and former Chief Executive Officer, Richard S. Fuld, with
gargantuan misconduct, incompetence and mismanagement without a
single shred of substantive supporting proof.
Financial Tsunami Beyond Lehman's Control
According to Mr. Miller, Lehman was a victim of a financial
tsunami that was beyond its control. He points out that under the
long term leadership of Mr. Fuld, Lehman had become one of the
premier independent investment banking concerns in the world and
had steadily provided significant returns to its investors,
employees and shareholders.
"Likewise, the Comptroller is oblivious to the critical facts that
caused the financial meltdown that engulfed Lehman and, generally,
the financial markets, including, inter alia, the failure of
government authorities to appropriately regulate and oversee
financial markets and the deficiencies of rating agencies."
Mr. Miller points out that pursuant to Section 1104(a) of the
Bankruptcy Code, unless there is a clear and convincing
showing of credible evidence establishing cause, the appointment
of a trustee should be denied. He asserts that:
(i) The Comptroller has failed to provide any admissible proof
upon which an adjudication may be made as to the asserted
"fraud, dishonesty, incompetence, or gross mismanagement"
on the part of Mr. Fuld or the Board of Directors before or
after the commencement of the chapter 11 cases.
(ii) The Comptroller ignores actual facts including, that the
Chairman of the Federal Reserve System and the United
States Treasury Department, as well as others, failed to
foresee the oncoming financial tsunami, as did most of the
economists and financial analysts.
Mr. Miller cites testimony by Ben S. Bernanke, the Chairman of the
Board of Governors of the Federal Reserve System Reserve, in March
2007 that the "principal source" of the slowdown in the U.S.
economy's growth, was the result of a "substantial correction in
the housing market." In July 2007, Mr. Bernanke stated that the
subprime crisis would result, at most, in a loss of $50 billion to
$150 billion. Later, in October 2007, Mr. Bernanke remarked that
despite the recent turmoil in the financial markets which could be
attributed to the subprime crisis, the "banking system [was]
healthy."
Mr. Miller added that less than six months later, buttressed by
emergency financing of $30 billion provided by the Federal
Reserve, Bear Stearns Companies, Inc. was compelled to sell itself
to JPMorgan Chase. Mr. Bernanke defended the decision of the
Federal Reserve to, in effect, bail out Bear Stearns and its
stockholders, by relying upon Depression-era authority that it
had not used in over 60 year. Notwithstanding the crisis
precipitated by the near collapse of Bear Stearns and its rescue
by the Federal Reserve and U.S. Treasury Department, Mr. Bernanke
continued to predict that economic growth in the United States
would resume in the second half of 2008.7
Mr. Miller further relates that at the time of its collapse, Bear
Stearns' debt to equity ratio was estimated to be 33 to 1, while
Lehman was able to reduce the its ratio to 21.4:1.
According to Mr. Miller, throughout 2008, Lehman worked closely
with the Securities and Exchange Commission and the Federal
Reserve in the interests of protecting its business and its
economic stakeholders. Nevertheless, it was determined that
unlike Bear Stearns, Lehman was not eligible for a bailout or
support by the federal government.
"Importantly, the decision to let Lehman fail was not based upon a
determination that its management was either incompetent or had
grossly mismanaged Lehman or engaged in fraudulent conduct.,"
Mr. Miller asserts. He notes that, as Mr. Bernanke acknowledged,
"there was no funding to allow [the Federal Reserve] to address
[Lehman's] situation."
"Board Qualified to Run Lehman"
Mr. Miller asserts that the Comptroller's additional allegations
that the Board is unqualified and ill-suited to supervise the
administration of the chapter 11 cases are without merit.
He asserts that each member of the Board was elected by the
shareholders of LBHI on the basis of merit and not pursuant to any
machinations by Mr. Fuld. He points out that a review of the
directors qualifications establishes beyond doubt that they are
executives with substantial experience in public management, the
financial services industry and the operations of large and
complex businesses.
Mr. Miller adds that the Comptroller's statements that Mr. Fuld
and the Board failed to take appropriate action or prepare for the
chapter 11 cases is without foundation and contrary to the facts.
He cites, among other things, Lehman's actions aimed to strengthen
its financial condition in 2008, which included: (i) closing down
its mortgage origination business; (ii) reducing its leveraged
loan exposure; (iii) reducing its total assets by $188 billion,
by, among other actions, specifically reducing residential and
commercial real-estate assets by 38%; and (iv) dramatically
reducing its net leverage to one of the best leverages on Wall
Street.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- was the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers led 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 offered 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.
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.
On Sept. 19, 2008, the Honorable Gerard E. Lynch, Judge of the
United States District Court for the Southern District of New
York, entered an order commencing liquidation of Lehman Brothers,
Inc., pursuant to the provisions of the Securities Investor
Protection Act in the case captioned Securities Investor
Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV-
8119 (GEL). James W. Giddens has been appointed as trustee for
the SIPA liquidation of the business of LBI
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. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only $2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
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.
(Lehman Brothers Bankruptcy News; Bankruptcy Creditors' Service,
Inc., <http://bankrupt.com/newsstand/>or 215/945-7000).
LEHMAN BROTHERS: Wants Examiner Instead of a Trustee
----------------------------------------------------
Lehman Brothers Holdings Inc., and its affiliated debtors tell the
U.S. Bankruptcy Court for the Southern District of New York, that
instead of appointing a trustee, as requested by the New York
State Comptroller, it should appoint an examiner.
Thomas DiNapoli, New York State Comptroller, has asked the
Bankruptcy Cour to appoint a Chapter 11 trustee to oversee LBHI's
estate. Mr. DiNapoli said that Lehman Brothers Holdings' board of
directors and chief executive officer must be replaced by a
trustee who is capable of administering the company. Bryan Marsal
of Alvarez & Marsal now heads Lehman after CEO Richard Fuld
resigned from his post in December 2008.
Lehman Brothers say that every effort should be made to avoid
duplication of efforts and preserve the resources of the Debtors'
estates. In that respect, the appointed Examiner should be
directed to use the financial and investigative expertise of
Alvarez & Marsal and not engage other financial advisors.
Harvey R. Miller, Esq., at Weil, Gotshal & Manges LLP, in New
York, asserts that Alvarez & Marsal has the financial expertise
and experience that will be needed by the examiner and is
independent, disinterested and objective. Use of their expert
services, rather than incurring additional expenses for additional
advisors, is in the best interests of the estates and their
stakeholders.
The Debtors suggest that, as agreed with Walt Disney Co., any
examiner appointed be charged with the duties to investigate,
among other issues:
-- Whether Lehman Brothers Commercial Corporation has
any administrative claims against LBHI resulting from
LBHI's cash sweeps of LBCC's cash balances, if any, after
September 15, 2008, the commencement date of LBHI's
chapter 11 case.
-- An investigation of all voluntary and involuntary transfers
to, and transactions with, affiliates, insiders and creditors
of LBCC or its affiliates, in respect of foreign exchange
transactions and other assets that were in the possession or
control of LBCC at any time commencing on September 15, 2008
through October 3, 2008, the day that LBCC commenced its
chapter 11 case.
-- Whether LBCC has more than colorable claims against LBHI for
potentially insider preferences arising under the Bankruptcy
Code or state law.
-- Whether LBCC has more than colorable claims against LBHI or
any other entities for potentially voidable transfers or
incurrences of debt, under the Bankruptcy Code or otherwise
applicable law.
-- Whether there are more than colorable claims for breach of
fiduciary duties and/or aiding or abetting any such breaches
against the officers and directors of LBCC and/or other
Debtors arising in connection with the financial distress of
the Lehman enterprise prior to the commencement of the LBHI
chapter 11 case on September 15, 2008.
-- Whether assets of LBCC or other direct and indirect
subsidiaries of LBHI were transferred to Barclays Capital
Inc. as a result of the sale to Barclays Capital Inc. that
was approved by order of the Bankruptcy Court dated September
20, 2008, and whether consequences to LBCC of the
consummation of the transaction created more than colorable
causes of action that inure to the benefit of its creditors.
-- The inter-company accounts and transfers among LBHI and its
direct and indirect subsidiaries, including but not limited
to, LBI, LBIE, Lehman Brothers Special Finance and LBCC,
during the 30-day period preceding the commencement of the
LBHI chapter 11 case on September 15, 2008.
-- The transactions and transfers, including but not limited to
the pledging or granting of collateral security interest
among the debtors and the prechapter 11 lenders and/or
financial participants including but not limited to, JPMorgan
Chase, Citigroup, Inc., Bank of America, the Federal Reserve
Bank of New York and others.
-- The transfer of the capital stock of certain subsidiaries of
LBI on or about September 19, 2008 to Lehman ALI Inc.
-- The events that occurred from September 4, 2008 through
September 15, 2008 that may have resulted in commencement of
the LBI chapter 11 case.
Lehman Brothers said that until the Examiner has filed his or her
report, it should be barred from making any public disclosures
concerning his investigation.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- was the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers led 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 offered 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.
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.
On Sept. 19, 2008, the Honorable Gerard E. Lynch, Judge of the
United States District Court for the Southern District of New
York, entered an order commencing liquidation of Lehman Brothers,
Inc., pursuant to the provisions of the Securities Investor
Protection Act in the case captioned Securities Investor
Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV-
8119 (GEL). James W. Giddens has been appointed as trustee for
the SIPA liquidation of the business of LBI
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. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only $2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
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.
(Lehman Brothers Bankruptcy News; Bankruptcy Creditors' Service,
Inc., <http://bankrupt.com/newsstand/>or 215/945-7000).
LEHMAN BROTHERS: LBI Trustee Transfers $142BB to 2 Broker Dealers
-----------------------------------------------------------------
Stephen P. Harbeck, president and CEO of the Securities Investor
Protection Corporation, spoke before the committee on financial
services of U.S. House of Representatives on Jan. 5, 2009, in
connection with the liquidation of Lehman Brothers, Inc., and
Bernard L. Madoff Investment Secutities LLC.
Mr. Harbeck recounts that the Lehman Brothers Inc. liquidation was
preceded by the Chapter 11 filing of Lehman Brothers Holdings Inc.
on September 15, 2008. LBHI owned the SIPC member brokerage firm,
LEI, which in turn held securities customer accounts.
In order to facilitate the sale of brokerage assets, SIPC
initiated a customer protection proceeding on Friday, September
19. On application by SIPC to the United States District Court
for the Southern District of New York, LBI was placed in SIPA
liquidation, James W. Giddens was appointed as trustee, and the
law firm of Hughes Hubbard & Reed LLP was appointed as his
counsel. That day, upon removal of the proceeding by the District
Court, the United States Bankruptcy Court for the Southern
District of New York held an extended hearing and approved the
sale of assets of LBI to Barclays Bank.
According to Mr. Harbeck, over the following weekend, the trustee
for LBI transferred customer account positions, which contained
$142 billion in customer assets, to two broker-dealers, one of
which was the brokerage arm of Barclays. As a result, many of the
customers of the defunct firm were able to exercise control over
their respective portfolios in a seamless way. "While much
remains to be done in every aspect of the LBI matter, the initial
stages have proceeded very well."
About the SIPC
SIPC was created under the Securities Investor Protection Act of
1970 to provide specific financial protection to customers of
failed securities broker-dealers. Through 2007, SIPC liquidated
317 brokerage films, and returned over $15.7 billion in cash or
securities to customers. Of that sum, SIPC used $322 million from
the SIPC Fund to restore missing cash or securities. To date,
SIPC has never used any government funds or borrowed under its
commercial line of credit, Mr. Harbeck relates.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- was the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers led 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 offered 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.
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.
On Sept. 19, 2008, the Honorable Gerard E. Lynch, Judge of the
United States District Court for the Southern District of New
York, entered an order commencing liquidation of Lehman Brothers,
Inc., pursuant to the provisions of the Securities Investor
Protection Act in the case captioned Securities Investor
Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV-
8119 (GEL). James W. Giddens has been appointed as trustee for
the SIPA liquidation of the business of LBI
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. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only $2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
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.
(Lehman Brothers Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service, Inc., <http://bankrupt.com/newsstand/>or
215/945-7000).
LEHMAN BROTHERS: Luxemberg Unit Files for Bankruptcy in New York
----------------------------------------------------------------
Debtor: Lehman Brothers Holdings Inc.
745 Seventh Avenue
New York, NY 10019
Bankruptcy Case No.: 08-13555
Type of Business: The Debtor is an investment bank. The
company serves the financial needs of
corporations, governments and municipalities,
institutional clients, and high net worth
individuals worldwide. Founded in 1850, Lehman
Brothers is involved in equity and fixed income
sales, trading and research, investment
banking, private investment management, asset
management and private equity. The company
operates in three segments: Capital Markets,
Investment Banking, and Investment Management.
It has regional headquarters in London and
Tokyo, and operates in a network of offices
around the world. It has about 28,000 full-
time employees.
See: http://www.lehman.com/
Debtor-affiliate filing separate Chapter 11 petitions on
January 7, 2009:
Entity Case No.
------ --------
Luxembourg Residential Properties Loan 09-10108
Finance S.a.r.l.
Debtor-affiliates filing separate Chapter 11 petitions on
September 15, 2008:
Entity Case No.
------ --------
LB 745 LLC 08-13600
PAMI Statler Arms LLC 08-13664
Lehman Brothers Commodity Services Inc. 08-13885
Lehman Brothers Finance SA 08-13887
Lehman Brothers Special Financing Inc. 08-13888
Lehman Brothers Derivative Products Inc. 08-13899
Lehman Commercial Paper Inc. 08-13900
Lehman Brothers Commercial Corporation 08-13901
Lehman Brothers Financial Products Inc. 08-13902
Fundo de Investimento Multimercado Credito Privado 08-13903
Lehman Scottish Finance L.P. 08-13904
CES Aviation LLC 08-13905
CES Aviation V LLC 08-13906
CES Aviation IX LLC 08-13907
East Dover Limited 08-13908
Chapter 11 Petition Date: September 15, 2008
Court: Southern District of New York (Manhattan)
Debtor's Counsel: Harvey R. Miller, Esq.
harvey.miller@weil.com
Richard P. Krasnow, Esq.
Lori R. Fife, Esq.
Shai Y. Waisman, Esq.
Jacqueline Marcus, Esq.
Alfredo R. Perez, Esq.
Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, NY 10153
Tel: (212) 310-8000
Fax: (212) 310-8007
http://www.weil.com/
Total Assets Total Debts
------------ -----------
Lehman Brothers $639 billion $613 billion
LB 745 More than $1 billion More than $1 billion
Lehman Brothers More than $1 billion More than $1 billion
Commodity
Lehman Brothers More than $1 billion More than $1 billion
Finance
Lehman Brothers More than $1 billion More than $1 billion
Special
Lehman Brothers More than $1 billion More than $1 billion
Derivative
Lehman Commercial More than $1 billion More than $1 billion
Paper
Lehman Brothers More than $1 billion More than $1 billion
Commercial
Lehman Brothers More than $1 billion More than $1 billion
Financial
Fundo de More than $1 billion More than $1 billion
Investimento
Lehman Scottish More than $1 billion More than $1 billion
Finance
CES Aviation More than $1 billion More than $1 billion
LLC
CES Aviation More than $1 billion More than $1 billion
V LLC
CES Aviation More than $1 billion More than $1 billion
IX LLC
East Dover More than $1 billion More than $1 billion
Limited
PAMI Statler $20 million $38 million
A. Lehman Brothers' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Citibank, N.A., as indenture bond debt $138,000,000,000
trustee, and The Bank of New
York Mellon Corporation (with
respect to the Euro Medium
Term Notes only, as indenture
trustee, under the Lehman
Brothers Holdings. Senior
Notes.
Citibank, N.A.
399 Park Avenue
New York, NY 10043
Attn: Wafaa Orfy
Tel: (800) 422-2066
Fax: (212) 816-5773
The Bank of New York
One Canada Square
Canary Wharf, London E14 5AL
Attn: Raymond Morison
Tel: 44-207-964-8800
The Bank of New York bond debt $15,000,000,000
Mellon Corporation, as
indenture trustee under the
Lehman Brothers Holdings
Inc. subordinated debt.
The Bank of New York
Mellon Corporation
101 Barclay Street
New York, NY 10286
Attn: Chris O'Mahoney
Tel: (212) 815-4107
Fax: (212) 815-4000
AOZORA bank loan $463,000,000
1-3-1 Kudan-Minami
Chiyoda-ku, Tokyo 102-8660
Tel: 81-3-5212-9631
Fax: 81-3-3265-9810
Mizuho Corporate Bank Ltd. bank loan $289,000,000
Global Syndicated Financi
Division
1-3-3, Marunochi, Chiyoda-ku
Tokyo, Japan 100-8210
Timothy White
Managing Director - Head of
Originations Corporate and
Investment Bank Department
1251 Avenue of the Americas
32nd floor
New York, NY 10020-1104
Tel: (212) 282-3360
Fax: (212) 282-4487
Citibank N.A. Hong Kong bank loan $275,000,000
Branch
Financial Institutions Group
Asia Pacific
44f Citibank Tower
3 Garden Rd.
Central Hong Kong
Michael Mauerstein
MD - FIG
388 Greenwich Street
New York, NY 10013
Tel: (212) 816-3431
BNP Paribas bank loan $250,000,000
787 7th Avenue
New York, NY 10019
Tel: (212) 841-2084
Shinesi Bank Ltd. bank loan $231,000,000
1-8, Uchisaiwaicho 2-
Chome
Chiyoda-ku, Tokyo 100-8501
Tel: 81-3-5511-5377
Fax: 81-3-4560-2834
UFJ bank Limited bank loan $185,000,000
2-7-1, Marunouchi
Chiyoda-ku, TKY 100-8388
Stephen Small
vice president
head of financial
institutions
Bank of Tokyo-Mitsubishi
UFJ Trust Company
1251 Avenue of the Americas
New York, New York
10020-1104
Tel: (212) 782-4352
Fax: (212) 782-6445
Sumitomo Mitsubishi bank loan $177,000,000
Bank Corp.
13-6 Nihobashi-
Kodenma-Cho, Chuo-ku,
Tokyo, 103-0001
Yas Imai
Senior Vice President
Head of Financial
Institution Group
Sumitomo Mistui Banking
Corporation
277 Park Avenue
New York, NY 10172
Tel: (212) 224-4031
Fax: (212) 224-4384
Svenska Handelsbanken letter of credit $140,610,543
153 E. 53rd St., 37th floor
New York, NY 10022
Tel: (212) 258,9487
KBC Bank letter of credit
$100,000,000
125 W. 55th St.
New York, NY 10019
Tel: (212) 258-9487
Mizuho Corporate Bank Ltd. bank loan $93,000,000
1-3-3, Marunouchi
Chiyoda-ku, TKY 100-8219
Timothy White
Managing Director - Head of
Originations Corporate and
Investment Bank Department
1251 Avenue of the Americas
32nd floor
New York, NY 10020-1104
Tel: (212) 282-3360
Shinkin Central Bank bank loan $93,000,000
8-1, Kyobashi 3-Chome
Chuo-ku, Tokyo 104-0031
Shuji Yamada
Deputy General Manager
Financial Institution Dept.
Shinkin Central Bank
3-7, Yaesu 1-chome, Chuo-ku
Tokyo 104-0028
Tel: 81-3-5202-7679
Fax: 81-3-3278-7051
The Bank of Nova Scotia bank loan $93,000,000
Singapore Branch
1 Raffles Quay #201-01
One Raffles Quay North
Tower
Singapore 0485583
George Neofitidis
Director Financial
Institutions Group
One Liberty Plaza
New York, NY 10006
Tel: (212) 225-5379
Fax: (212) 225-5254
Chuo Mitsui Trust & Banking bank loan $93,000,000
3-33-1 Shiba, Minato-ku,
Tokyo, 105-0014
Tel: 81-3-5232-8953
Fax: 81-3-5232-8981
Lloyds Bank letter of credit $75,381,654
1251 Avenue of the Americas
39th Floor
P.O. Box 4873
New York, NY 10163
Tel: (212) 930-8967
Fax: (212) 930-5098
Hua Nan Commercial Bank bank loan $59,000,000
Ltd.
38 Chung-King South
Road Section 1
Taipei, Taiwan
Bank of China bank loan $50,000,000
New York Branch
410 Madison Avenue
New York, NY 10017
Tel: (212) 936-3101
Fax: (212) 758-3824
Nippon Life Insurance Co. bank loan $46,000,000
1-6-6, Marunouchi,
Chiyoda-ku, Tokyo 100-8288
Takayuki Murai
Deputy General Manager
Corporate Finance Dept. #1
Nippon Life Insurance Co.
Tel: 81-3-5533-9814
Fax: 81-3-5533-5208
ANZ Banking Group bank loan $44,000,000
Limited
18th Floor Kyobo Building
1 Chongro 1 Ku,
Chongro Ka,
Seoul, Korea
Michael Halevi
Director, Financial
Institutions
ANZ Banking Group
1177 Avenue of Americas
New York, NY 10036
Tel: (212) 810-9871
Fax: (212) 801-9715
Standard Chartered Bank bank loan $41,000,000
One Madison Avenue
New York, NY 10010-3603
Bill Hughes
SVP-FIG
Standard Chartered bank
One Madison Avenue
New York, NY 10010-3603
Tel: (212) 667-0355
Fax: (212) 667-0273
Standard Chartered Bank letter of credit $36,114,000
One Madison Avenue
New York, NY 10010-3603
Bill Hughes
SVP-FIG
Standard Chartered bank
One Madison Avenue
New York, NY 10010-3603
Tel: (212) 667-0355
Fax: (212) 667-0273
First Commercial Bank bank loan $25,000,000
Co. Ltd.
New York Agency
750 3rd Avenue, 34th Floor
New York, NY 10017
Jason C. Lee
Deputy General Manager
First Commercial Bank Co.
Ltd.
New York Agency
750 3rd Avenue, 34th Floor
New York, NY 10017
Tel: (212) 599-6868
Fax: (212) 599-6133
Bank of Taiwan bank loan $25,000,000
New York Agency
100 Wall Street, 11th Floor
New York, NY 1005
Eunice S.J. Yeh
Senior Vice President &
General Manager
100 Wall Street, 11th floor
New York, NY 10005
Tel: (212) 968-0580
Fax: (212) 968-8370
DnB NOR Bank ASA bank loan $25,000,000
NO-0021, Olso, Norway
Stranden 21, Aker Brygge
Tel: 47 22 9487 46
Fax: 47 22 48 29 84
Australia and New Zealand bank loan $25,000,000
Banking Group Limited
Melbourne Office
Level 6, 100 Queen
Street Victoria
Melbourne, VIC 3000
Australia
Michael Halevi
Director, Financial
Institutions
ANZ Banking Group
1177 Avenue of Americas
New York, NY 10036
Tel: (212) 810-9871
Fax: (212) 801-9715
Australia National Bank letter of credit $12,588,235
1177 Avenue of the
Americas, 6th Floor
New York, NY 10036
Michael Halevi
Director, Financial
Institutions
ANZ Banking Group
1177 Avenue of Americas
New York, NY 10036
Tel: (212) 810-9871
Fax: (212) 801-9715
National Australia Bank letter of credit $10,294,163
245 Park Avenue, 28th Fl.
New York, NY 10167
Michael Halevi
Director, Financial
Institutions
ANZ Banking Group
1177 Avenue of Americas
New York, NY 10036
Tel: (212) 810-9871
Fax: (212) 801-9715
Taipei Fubon Bank, New bank loan $10,000,000
York Agency
100 Wall Street, 14th floor
NY NY 10005
Tel: (212) 968-9888
Fax: (212) 968-9800
B. LB 745's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Rocky-Forty-Ninth LLC ground lease $0
c/o The Rockefeller Group
1221 Avenue of the Americas
New York, NY 10020
C. PAMI Statler's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Steingass trade debt $76,372
754 Progress Drive
Medina, OH 44256
Statler Arms Garage LLC litigation $50,000
1111 Euclid Ave. claim
Cleveland, OH 44115
Illuminating trade debt $40,182
P.O. Box 3638
Akron, OH 44309
TD Security trade debt $19,795
P.O. Box 81357
Cleveland, OH 44181
Marble Care trade debt $16,270
5184 Richmond Rd
Cleveland, OH 44146
IGS trade debt $13,901
P.O. Box 631919
Cincinnati, OH
WCCV trade debt $13,598
3479 State Rd.
Cuyahoga Falls, OH 44223
Demann trade debt $9,350
16919 Walden
Cleveland, OH 44128
Dominion trade debt $5,335
P.O. Box 26225
Richmond, VA 23260
Midwest Realty Advisors, LLC trade debt $5,000
37848 Euclid Avenue
Willoughby, OH 44094
RMC trade debt $3,340
P.O. Box 31315
Rochester, NY 14603
Republic Waste trade debt $3,338
P.O. Box 9001826
Louisville, KY 40290
Division Water trade debt $3,124
P.O. Box 94540
Cleveland, OH 44101
NorthEast trade debt $3,088
P.O. Box 9260
Akron, OH 44305
Time Warner trade debt $2,831
P.O. Box 0901
Carol Stream, IL 60132
Best Karpet trade debt $2,689
1477 E 357 street
EastLake, OH 44095
AT&T trade debt $2,232
P.O. 8100
Aurora, IL 60507
Account Temps trade debt $2,087
12400 Collections Drive
Chicago, IL 60693
Rentokil trade debt $1,742
8001 Sweet Valley Dr
Valleyview, OH 44125
LIMITED BRANDS: S&P Downgrades Ratings on Two Certs. to 'BB+'
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class A and B certificates from the $25 million PPLUS Trust Series
LTD-1 and the 7.00% callable units from the $25 million Structured
Asset Trust Unit Repackagings Limited Brands Inc. Debenture Backed
Series 2005-3 to 'BB+' from 'BBB-'.
The rating actions follow the Dec. 19, 2008, lowering of the
rating on the underlying securities, the 6.95% debentures due
March 1, 2033, issued by Limited Brands (BB+/Stable/B-1).
Both deals are pass-through transactions, the ratings on which are
based solely on the rating assigned to the underlying collateral,
the 6.95% debentures due March 1, 2033, issued by Limited Brands.
LINENS 'N THINGS: U.S. Trustee Challenges IP Sale Bid Protections
-----------------------------------------------------------------
Bankruptcy Data reports that Roberta A. DeAngeles, acting United
States Trustee for Region 3, objected Linens 'n Things' request
for approval of, among other things:
-- certain bidding procedures with respect to the sale of
certain intellectual property assets;
-- bidding protections with respect to the stalking horse
bidder; and
-- the sale of IP assets to the highest and best bidder
free and clear of all liens, interests, claims and
encumbrances on the following grounds.
According to Bankruptcy Data, the U.S. Trustee argues that the a)
the break-up fee and expense reimbursement are unreasonably high
and not appropriate under relevant Third Circuit law, (b) certain
other bid requirements and protections will make it difficult to
attract competitive bidders and (c) the Debtors propose to sell
customer lists and other assets that can be defined as personably
identifiable information, which implicates Section 332 of the
Bankruptcy Code and may necessitate the appointment of a consumer
privacy ombudsman.
Linens 'n Things Inc., which is closing its remaining 370 stores,
is auctioning off its trademarks, trade names and other
intellectual property. As reported by The Troubled Company
Reporter on December 30, 2008, the proposed procedures require:
-- competing bids to be submitted by Jan. 14, and
-- an auction will be conducted Jan. 15.
The U.S. Bankruptcy Court for the District of Delaware will
convene a hearing Jan. 8 to consider approval of the proposed
procedures.
Linens has signed a purchase agreement with Gordon Brothers Retail
Partners LLC and Hilco Merchant Resources LLC, who were among the
liquidators conducting the going-out-of-business sales. Gordon
and Hilco will acquire the intellectual property for $1 million
cash plus a 25% interest in the equity of the company that takes
ownership of the property. The liquidators will pay costs to cure
contract defaults and assume specified debt.
About Linens 'n Things, Inc.
Headquartered in Clifton, New Jersey, Linens 'n Things, Inc. --
http://www.lnt.com/-- is the second largest specialty retailer of
home textiles, housewares and home accessories in North America.
As of Sept. 30, 2008, Linens 'n Things operated 411 stores in 47
states and seven provinces across the United States and Canada.
The company is a destination retailer, offering one of the
broadest and deepest selections of high quality brand-name as well
as private label home furnishings merchandise in the industry.
Linens 'n Things has some 585 superstores (33,000 sq. ft. and
larger), emphasizing low-priced, brand-name merchandise, in more
than 45 states and about seven Canadian provinces. Brands include
Braun, Krups, Calphalon, Laura Ashley, Croscill, Waverly, and the
company's own label. Linens 'n Things was acquired by private
equity firm Apollo Management in 2006.
On May 2, 2008, these Linens entities filed chapter 11 petition
(Bankr. D. Del.): Linens Holding Co. (08-10832), Linens 'n Things,
Inc. (08-10833), Linens 'n Things Center, Inc. (08-10834),
Bloomington, MN., L.T., Inc. (08-10835), Vendor Finance, LLC (08-
10836), LNT, Inc. (08-10837), LNT Services, Inc. (08-10838), LNT
Leasing II, LLC (08-10839), LNT West, Inc. (08-10840), LNT
Virginia LLC (08-10841), LNT Merchandising company LLC (08-10842),
LNT Leasing III, LLC (08-10843), and Citadel LNT, LLC (08-10844).
Judge Christopher S. Sontchi presides over the case.
Mark D. Collins, Esq., John H. Knight, Esq., and Jason M. Madron,
Esq., at Richards, Layton & Finger, P.A., are Linens 'n Things'
bankruptcy counsel. The Debtors' special corporate counsel are
Holland N. O'Neil, Esq., Ronald M. Gaswirth, Esq., Stephen A.
McCaretin, Esq., Randall G. Ray, Esq., and Michael S. Haynes,
Esq., at Morgan, Lewis & Bockius, LLP. The Debtors' restructuring
management services provider is Conway Del Genio Gries & Co., LLC.
The Debtors' CRO and Interim CEO is Michael F. Gries, co-founder
of Conways Del Genio Gries & Co., LLC. The Debtors' claims agent
is Kurtzman Carson Consultants, LLC. The Debtors' consultants are
Asset Disposition Advisors, LLC, and Protivit, Inc. The Debtors'
investment bankers are Financo, Inc., and Genuity Capital Markets.
When it filed for bankruptcy, Linens' original plan was to shed
off 120 underperforming stores, but keep most of its 589-store
portfolio in the U.S. and Canada open. However, further
deterioration of the economy in the U.S., and tight deadlines set
by banks who gave the Clifton, New Jersey-based retailer
$700,000,000 to fund its restructuring, pushed the company to
close more stores, and ultimately fold up. (Bankruptcy News About
Linens 'n Things; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
LOHREY INVESTMENTS: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: Lohrey Investments, LLC
6 Leeward Rd.
Belvedere Tiburon, CA 94920-2321
Bankruptcy Case No.: 09-10007
Chapter 11 Petition Date: January 5, 2009
Court: Northern District of California (Santa Rosa)
Judge: Alan Jaroslovsky
Debtor's Counsel: Craig K. Welch, Esq.
welch@welcholrich.com
Welch and Olrich LLP
809 Petaluma Blvd. N.
Petaluma, CA 94952
Tel: (707) 782-1790
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor does not have any creditors who are not insiders.
The petition was signed by managing member David W. Lohrey
LUMINENT MORTGAGE: Files 1st Amended Joint Plan of Reorganization
-----------------------------------------------------------------
Luminent Mortgage Capital, Inc., and its debtor-affiliates filed
with the U.S. Bankruptcy Court for the District of Maryland on
Dec. 31, 2008, their First Amended Joint Plan of Reorganization
and Disclosure Statement explaining said Plan.
The Debtors believe that absent the consideration being provided
by Arco Capital Corp. and GGRE, LLC (the "ACC Parties") under the
Plan Support and Forbearance Agreement, dated Sept. 4, 2008, by
and among the Debtors, the ACC Parties, the Senior Noteholders,
the Senior Indenture Trustee and WAMU Capital Corp., there is
little or no likelihood that there would be unencumbered assets
available. Thus, the Debtors believe that acceptance of the Plan
is in the best interests of Creditors.
Plan Summary
The Plan provides for:
-- The consummation of the transactions contemplated by the
Exit Financing Agreement with Arco Capital Corp. on the
Effective Date of the Plan, the proceeds of which will be
used to make a number of the payments contemplated by the
Plan;
-- The conversion of Debtor Luminent Mortgage Capital, Inc.,
from a publicly traded real estate investment trust into a
private asset management company and the issuance of the
Reorganized Equity Units and the Reorganized Preferred
Equity Units to certain classes of Creditors;
-- The payment in full of all Allowed Other Secured Claims;
-- The payment in full of all Allowed Priority Non-Tax Claims;
-- The payment in full of all Allowed Unclassified Claims;
-- The distribution of the Reorganized Equity Units, the
Reorganized Preferred Equity Units, the Convenience Class
Fund (which will be available to make distributions to
Holders of Allowed Convenience Class Claims) and the
Unsecured Distribution Fund (which will be available to
make distributions to Holders of Allowed 4(a)Claims other
than the ACC Parties); and
-- The cancellation of all outstanding Interests in the
Debtors.
As defined in the First Amended Joint Plan of Reorganization of
Luminent and its affiliated debtors, the Reorganized Equity Units
refers to the common shares, membership interests or other common
equity interests of Luminent after it becomes a Reorganized
Debtor.
The Reorganized Preferred Equity Units refers to the preferred
equity interests issued by Luminent after it becomes a Reorganized
Debtor and converts to a private entity. The Preferred Equity
Units will be perpetual and will have an aggregate liquidation
preference in the amount of $2.75 million. Dividends on the
Preferred Equity Units will not be payable in cash, but rather,
will accrete until redemption or liquidation at the rate of 9.0%
per annum during the first year after the Effective Date, 10.0%
per annum during the second year after the Effective Date, and
11.0% per annum thereafter. The Reorganized Preferred Equity
Units (i) may be redeemed at any time at Reorganized Luminent's
sole election upon payment of the aggregate liquidation preference
plus all accreted and unpaid dividends, and (ii) will be redeemed
upon any change of control of Luminent (including by means of
dispositions of assets) upon payment of the aggregate liquidation
preference plus all accreted and unpaid dividends.
Events Leading to Chapter 11 Filing
As a result of those market conditions in the mortgage industry
during the last 18 months, the secondary market for many fixed
income securities, especially mortgage-backed securities,
effectively closed. As a result, the company simultaneously
experienced a significant increase in margin calls from its
repurchase agreement counterparties, or repurchase agreement
lenders, and a decrease in the amount of financing its lenders
would provide on a given amount of collateral. Prices for even
the highest quality AAA-rated bonds dropped precipitously. These
events resulted in a rapid and significant loss of liquidity
forcing the company to sell investment assets at significant
losses and write down investments held in its portfolio to reflect
reductions in the fair value of the investments.
Plan Support and Forbearance Agreement
Prior to the Petition Date, defaults and events of default that
would, with the passage of time, constitute a default have
occurred under various of the Debtors' Credit Facilities,
including the Credit Agreement Documents, the Expansion
Term Loan Agreement Documents, the Mortgage Repurchase Agreements,
the Senior Note Indenture Documents, the TRUPS Indentures, and the
WAMU Term Note.
The TRUPS Indentures refer to (i) that certain Junior Subordinated
Indenture between Luminent and JPMorgan Chase Bank, National
Association, as Trustee, dated March 15, 2005 Junior (the "TRUPS
Indenture I"), and (ii) that certain indenture between Luminent
and Wilmington Trust Company, as Trustee, dated Dec. 15, 2005 (the
"TRUPS Indenture II").
As a result of the existing defaults under the Mortgage Repurchase
Agreements, GGRE, LLC closed out and otherwise exercised its
contractual remedies under the MRAs, and the ACC Parties exercised
their rights to (i) take control of various of the Debtors'
deposit accounts (collectively, the "Frozen Deposit Accounts"),
and (ii) receive payment of some or all of the funds on deposit in
the Frozen Deposit Accounts (the "Frozen Deposit Account Funds").
After good faith, arms' length negotiations, the ACC Parties,
WAMU, the Trustee and the Convertible Noteholders agreed with the
Debtors to engage in various transactions intended to restructure
and recapitalize the Debtors. In connection with documenting the
agreement regarding the Restructuring Transactions, the Parties
entered into the Plan Support and Forbearance Agreement, dated
Sept. 4, 2008.
In order to implement the Restructuring Transactions, (i) the
Debtors agreed to commence voluntary bankruptcy cases and seek
confirmation of the Plan, which contains the terms and conditions
required under the Plan Support Agreement, (ii) the ACC Parties
agreed to (a) provide a debtor-in-possession financing facility to
the Debtors in accordance with the timetable and amounts contained
in the budget set forth in the Plan Support Agreement, (b) fund
the payment on the Effective Date of the Convenience Class Fund,
and the Unsecured Distribution Fund, in exchange for the issuance
to the ACC Parties or their designees of Reorganized Preferred
Equity Units, (c) fund the payment on the Effective Date of the
amounts to be paid on account of the Federal Tax Claims, and (d)
provide post-confirmation financing to the Reorganized Debtors in
accordance with the terms of the Exit Financing Agreement with
Arco Capital Corp. In connection with and as consideration for
the ACC Parties' release of the Frozen Deposit Accounts, the
release of the Frozen Deposit Account Funds, the commitment to
provide DIP Financing and post-confirmation financing and the
commitment to fund the Convenience Class Fund and the Unsecured
Distribution Fund, the Debtors and each of the Creditors to the
Plan Support Agreement have agreed to release each of the ACC
Parties from any and all claims pursuant to the terms and
conditions as set forth in the Plan Support Agreement.
In order to facilitate the Restructuring Transactions, each of the
creditor parties to the Plan Support Agreement agreed to forbear
in exercising their respective remedies against the Debtors and to
cast all votes that they or any of their affiliates are entitled
to cast to accept the Plan. Pursuant to the Plan Support
Agreement, the Debtors agreed to file the Plan and Disclosure
Statement, to seek to obtain confirmation of the Plan as soon as
reasonably practicable, and to cause the Effective Date of the
Plan to occur on or before March 2, 2009.
Summary of Treatment of Allowed Claims and Interests
In accordance with Sec. 1123(a)(1) of the Bankruptcy Code,
Administrative Claims and Priority Tax Claims are not classified
under the Plan.
Administrative Claims will receive 100% payment in Cash. Priority
Tax Claims will receive (i) the amount of the Allowed Claim in one
cash payment or (ii) payment of the Allowed Claim over a period
not to exceed 5 years with interest.
The Plan segregates the Allowed Claims and Interests into 8
Classes.
Priority Non-Tax Claims under Class 1 are unimpaired under the
Plan. Allowed Class 1 Claims will be paid in full, in Cash.
Secured Claims of Arco Capital Corp. and GGRE, LLC (the "ACC
Parties") under Class 2, with estimated Allowed Claims of
$28,883,346, are impaired under the Plan. Holders of Allowed
Class 2 Claims will receive (i) 51% of the Reorganized Equity
Units, (ii) $1,300,000, (iii) the Preferred Equity Units, and (iv)
such other consideration as is provided under the terms of the
Plan Support Agreement.
Other Secured Claims under Class 3 are unimpaired under the Plan.
Allowed Class 3 Claims will be paid 100% of the Allowed amount of
such Claims.
General Unsecured Claims Against Luminent under Classes 4(a) and
(b), with estimated allowed Claims of $297,054,107, are impaired
under Plan. Holders of Allowed 4(a) Claims will receive their
Ratable Portion of (i) the Unsecured Distribution Fund, and (ii)
41% of the Reorganized Equity Units, taking into account the
Holders in Classes (4)(b) and 5(b) to determine such Ratable
Portion. Holders of Allowed Class 4(b) Claims will receive their
Ratable Portion of 41% of the Reorganized Equity Units, taking
into account the holders of Allowed Claims in Classes (4)(a) and
5(b) to determine such Ratable Portion.
Convenience Class Claims Against Luminent under Classes 5(a) and
(b), with estimated Allowed Claims of $2,300,000, are impaired
under the Plan. Holders of Allowed Class 5(a) Claims will receive
their Ratable Portion of the Convenience Class Fund. Holders of
Allowed Class 5(b) Claims will receive their Ratable Portion of
41% of the Reorganized Equity Units, taking into account the
Holders of Allowed Claims in Classes (4)(a) and 4(b) to determine
such Ratable Portion.
Subordinated TRUPS Claims under Class 6, with estimated Allowed
Claims of $92,788,000, are impaired under the Plan. Allowed Class
6 Claims will not receive any property under the Plan.
Subsidiary Debtor Unsecured Claims under Class 7 are impaired
under the Plan. Allowed Class 7 Claims will not receive any
property under Plan.
Class 8 Interests are impaired under the Plan. Allowed Class 8
Interests will not receive any property under the Plan and will be
cancelled on the Effective Date.
Who May Vote
Only holders of Claims in Secured Claims of ACC Parties in Class
2, General Unsecured Claims Against Luminent in Classes 4(a) and
(b), Convenience Class Claims Against Luminent in Classes 5(a) and
5(b) are entitled to vote under the Plan.
Priority Non-Tax Claims under Class 1 and Other Secured Claims
under Class 3 are not entitled to vote.
Subordinated TRUPS Claims in Class 6, Subsidiary Debtor Unsecured
Claims in Class 7, and Interests in Class 8 are deemed to have
voted to reject the Plan.
Cramdown
Pursuant to the "cramdown" provisions of the Bankruptcy Code, the
Debtors may seek confirmation of the Plan, despite the non-
acceptance of one or more impaired Classes of Claims and or
Interests, as set forth in Sec. 1129(b) of the Bankruptcy Code.
Means of Implementation of the Plan
On the Effective Date, the Reorganized Debtors will execute
the documents required to close and perform the transactions
contemplated by the Exit Financing Agreement. Proceeds from the
Exit Financing Agreement will be used to (i) repay the Debtors'
obligations to Arco under the DIP Facility, (ii) fund the
distribution to the ACC Parties required under the Plan, and
(iii) provide the Reorganized Debtors with working capital for
their business operations. In addition, on the Effective Date,
the ACC Parties will fund the (i) Unsecured Distribution Fund
and (ii) the Convenience Class Fund, which amounts will be
distributed by the Debtors to the Holders of Allowed Claims in
Classes 4(a) and 5(a) under the Plan.
Effective as of the Effective Date, the existing Interests of
Luminent will be cancelled and Luminent will issue both the
Reorganized Equity Units and the Reorganized Preferred Equity
Units and Luminent will take such steps as are necessary to
memorialize the conversion from a public to a private company.
The Reorganized Equity Units will be distributed as follows: (i)
51% to Arco, or its designee, on account of Arco's Allowed Class 2
Claims; (ii) 41% to Holders of Allowed Unsecured Claims in Classes
4(a), 4(b) and 5(b), or to the Disputed Claims Reserve to the
extent that Disputed Unsecured Claims exist; and (iii) 8% to
Reorganized Luminent to be distributed in accordance with the
employee incentive program described in the Plan Support
Agreement. All of the Reorganized Preferred Equity Units will be
distributed to Arco, or its designee, in accordance with the Plan
Support Agreement and the Plan.
A full-text copy of the Debtors' Disclosure Statement, dated
Dec. 31, 2008, explaining the Debtors' First Amended Joint Plan of
Reorganizations, is available for free at:
http://bankrupt.com/misc/LuminentMortgageDS.pdf
A full-text copy of the Debtors' First Amended Joint Plan of
Reorganization, dated Dec. 31, 2008, is available for free at:
http://bankrupt.com/misc/LuminentMortgage1stAmendedJointPlan.pdf
About Luminent Mortgage
Luminent Mortgage Capital, Inc. (OTCBB: LUMCE) is a real estate
investment trust, or REIT, which, together with its subsidiaries,
has historically invested in two core mortgage investment
strategies. Under its Residential Mortgage Credit strategy, the
company invests in mortgage loans purchased from selected high-
quality providers within certain established criteria as well as
subordinated mortgage-backed securities and other asset-backed
securities that have credit ratings below AAA. Under its Spread
strategy, the company invests primarily in U.S. agency and other
highly-rated single-family, adjustable-rate and hybrid adjustable-
rate mortgage-backed securities.
Luminent and nine of its subsidiary debtors filed separate
petitions for Chapter 11 relief on Sept. 5, 2008 (Bankr. D. Md.
Lead Case No. 08-21389). Joel I. Sher, Esq., at Shapiro Sher
Guinot & Sandler, represents the Debtors as counsel. The U.S.
Trustee for Region 4 appointed creditors to serve on an Official
Committee of Unsecured Creditors. Jeffrey Neil Rothleder, Esq.,
at Arent Fox LLP, represents the Creditors Committee as counsel.
In its operating report for the month of September 2008, Luminent
Mortgage Capital, Inc. reported $1,960,516 in total assets and
$374,868,632 in total liabilities, resulting in a $372,908,116
stockholders' deficit. Full-text copies of the Debtors' operating
report for September 2008 are available for free at:
http://researcharchives.com/t/s?345b
At March 31, 2008, Luminent Mortgage Capital, Inc.'s consolidated
balance sheet showed $3,757,205,000 in total assets,
$3,980,417,000 in total liabilities, and $223,212,000 in
stockholders' deficit.
Luminent and its debtor-subsidiaries continue to operate their
business as debtors-in-possession under the jurisdiction of the
Bankruptcy Court and in accordance with the applicable provisions
of the Bankruptcy Code and orders of the Bankruptcy Court.
MACY'S INC: To Shut Down 10 Units; Credit Agreement Amended
-----------------------------------------------------------
Macy's Inc. would close 10 of its 860 locations, Vanessa O'Connell
and Kris Hudson at The Wall Street Journal reports, citing a
person familiar with the matter.
WSJ quoted Macy's spokesperson Jim Sluzewski as saying, "We have
said that we will continue to prune stores on an as needed basis
over time."
According to WSJ, Macy's reported $30 million in losses in the
first nine months of 2008, after sales dropped about 4.3%. WSJ
relates that a steep decline in consumer spending made the 2008
holiday season the bleakest in almost two decades.
WSJ states that through a national ad campaign and exclusive deals
with brands like Tommy Hilfiger, Martha Stewart, and Donald Trump,
Macy's has been able to leverage its heft. Macy's, says the
report, also added new categories like toys by leasing space to
retailers that include FAO Schwarz.
Macy's is still being questioned whether its $11.5 billion
acquisition of former rival May Co. in 2005 gave it too many
underperforming stores, according to WSJ. Macy's, WSJ states,
took in more than 400 of the former May Co. stores in 2006,
resulting in two or more Macy's in some cities and even in the
same mall.
Credit Agreement Amended
Macy's said in a filing with the Securities and Exchange
Commission on Jan. 7, 2009, that on Jan. 5, 2009, the Amended and
Restated Credit Agreement dated Aug. 30, 2007, among Macy's Inc.,
its wholly owned subsidiary Macy's Retail Holdings, Inc., the
lenders party thereto and JPMorgan Chase Bank, N.A., as
administrative agent and paying agent, and Bank of America, N.A.,
as administrative agent, was amended and restated.
The amendment and restatement of the Credit Agreement had no
effect on the size or maturity of the credit facility, the
commitments of the lenders or the letters of credit currently
outstanding.
Under the Amended Credit Agreement, Macy's is required to maintain
(1) a ratio of consolidated EBITDA to consolidated net interest
expense of no less than 3.00 to 1.00 through Oct. 30, 2010, and
3.25 to 1.00 thereafter, and (2) a ratio of consolidated
indebtedness to consolidated EBITDA of no more than 4.90 to 1.00
through Oct. 31, 2009, 4.75 to 1.00 from Nov. 1, 2009, to Oct. 30,
2010, and 4.50 to 1.00 thereafter, all as calculated in accordance
with the provisions of the Amended Credit Agreement. These
requirements replace the requirements in the Credit Agreement that
previously required Macy's to maintain a ratio of consolidated
EBITDA to consolidated net interest expense of no less than 3.25
to 1.00 and a ratio of consolidated net debt to the sum of
consolidated net debt plus consolidated net worth of no more than
0.62 to 1.00.
The Amended Credit Agreement also contains certain new or amended
covenants that provide for, among other things, limitations on
subsidiary indebtedness, limitations on liens and sale/leaseback
transactions, limitations on dividends or other distributions in
respect of equity interests and repurchases of equity interests,
and limitations on specified intercompany transactions.
All obligations of MRHI under the Amended Credit Agreement are
guaranteed by existing and future domestic subsidiaries of MRHI,
subject to such guarantees being released in specified
circumstances.
Macy's paid the lenders a customary fee for entering into the
Amended Credit Agreement. In addition, fees and interest rates
under the Amended Credit Agreement increased.
On Jan. 5, 2009, in connection with the execution of the Amended
Credit Agreement, Macy's, MRHI, the MRHI subsidiaries parties
thereto and JPMorgan Chase, as paying agent, entered into an
Amended and Restated Guarantee Agreement, whereby Macy's and the
MRHI subsidiaries agreed to guarantee the obligations of MRHI
under the Amended Credit Agreement.
About Macy's Inc.
Based in Cincinnati and New York, Macy's Inc. (NYSE: M) fka
Federated Department Stores Inc. -- http://www.fds.com/-- is one
of the nation's premier retailers. The company operates more than
850 department stores in 45 states, the District of Columbia,
Guam, and Puerto Rico under the names of Macy's and
Bloomingdale's. The company also operates macys.com,
bloomingdales.com and Bloomingdale's By Mail.
MAGNETBANK: Weiss Ratings Assigns "Very Weak" E- Rating
-------------------------------------------------------
Weiss Ratings has assigned its E- rating to Salt Lake City-based
MagnetBank. Weiss says that the institution currently
demonstrates what it considers to be significant weaknesses and
has also failed some of the basic tests Weiss uses to identify
fiscal stability. "Even in a favorable economic environment,"
Weiss says, "it is our opinion that depositors or creditors could
incur significant risks."
MagnetBank is not a member of the Federal Reserve. Deposits have
been insured by the Federal Deposit Insurance Corporation since
the financial institution was established on Sept. 29, 2005.
MagnetBank maintains a Web site at http://www.magnetbank.com/
At Sept. 30, 2008, MagnetBank disclosed $301 million in assets and
$285 million in liabilities in its regulatory filings.
MARANI BRANDS: Posts $773,405 Net Loss in Qtr. Ended Sept. 30
-------------------------------------------------------------
As of September 30, 2008, Marani Brands, Inc., had an accumulated
deficit of $6,008,243 and incurred a net loss for the three months
ended September 30, 2008 of $773,405. "The company's current
business plan requires additional funding beyond its anticipated
cash flows from operations. These and other factors raise
substantial doubt about the company's ability to continue as a
going concern," Ara Zartarian, chief executive officer, president
and director, and Ani Kevorkian, chief financial officer, chief
operating officer, and director, disclosed in a regulatory filing
dated November 14, 2008.
"The ability of the company to continue as a going concern is
dependent upon its ability to raise additional capital and achieve
profitable operations."
"We have continuing losses from operations, and our working
capital is insufficient to meet our planned business objectives.
The existence of these recurring losses from operations may make
it more difficult for us to raise additional debt or equity
financing needed to run our business, and are not viewed favorably
by analysts or investors. Furthermore, if we are unable to raise
a significant amount of proceeds from private placements, public
offerings or other financings, this may cause our cessation of
business resulting in investors losing the value of their
investment in us."
"A major factor in the company's net losses was the recent
investments by the company in expanded operations and a marketing
campaign relating to its primary product, Marani Vodka. Management
believes that these expenses are necessary to expand the business
of the company."
"We currently have monthly working capital needs of approximately
$156,000. This amount is expected to increase in 2008-2009,
primarily due to these factors:
-- continued expansion of our administrative and operational
infrastructure in connection with anticipated increase in
our business activities, and
-- continued expansion of our marketing and sales programs."
"During the year ended June 30, 2008, we received proceeds of
$7,502,500 from the sale of common stock. In addition, we issued
shares of our common stock in payment of:
-- $70,449 for services rendered by third parties,
-- $422,216 for certain debt obligations, and
-- $10,648,654 for direct offering services."
"During the period ending September 30, 2008, we issued 250,000
common shares in payment of services rendered totaling $62,500."
"To date, we have relied on funding from investors, our officers
and directors, and our limited sales to fund operations. To date,
we have generated little revenue and have extremely limited cash
liquidity and capital resources."
As of September 30, 2008, the company's balance sheet showed total
assets of $5,487,303, total liabilities of $413,800, and total
stockholders' equity of $5,073,503.
A full-text copy of the company's quarterly report is available
for free at: http://researcharchives.com/t/s?377a
Chairman Resigns
On November 19, 2008, Margrit Eyraud resigned from her position as
Chairman of the Board of Directors and as a Director, by letter to
the company's Board of directors of same date.
The November 19, 2008 resignation of Ms. Eyraud as Chairman of the
Board of Directors and as a Director follows her resignation as
Chief Executive Officer and President of the company on October 1,
2008. On October 2, 2008 the company executed a Transition
Agreement and Mutual Release with Ms. Eyraud, by which the
company agreed to a severance package for the benefit of Ms.
Eyraud.
According to CEO Ara Zartarian, Ms. Eyraud's November 19, 2008
letter of resignation contains unspecified and unsupported
assertions that (i) she was resigning as Chairman of the company's
Board as a result of (i) an alleged breach of the Transition
Agreement by the company , (ii) her "disagreement with the
decisions" of current management "regarding the direction of the
company and its business operations," and (iii) what she
"believe[s] to be questionable practices and transactions" engaged
in by the company.
"Management of the company has examined Ms. Eyraud's unspecified
and unsupported allegations, and has concluded that it has fully
performed all aspects of and its obligations under the Transition
Agreement, as well as the discharge its duties of employing best
practices and appropriate business judgment concerning the
company's present and future business operations."
"During the month that has passed since Ms. Eyraud's resignation
as President and CEO, she has not communicated any disagreement
with the company regarding its management decisions, or any
transaction entered into by the company."
About Marani Brands, Inc.
Marani Brands, Inc., brands, markets and distributes fine wine and
spirit products in the United States. Its signature product
"Marani Vodka" is a premium vodka manufactured exclusively for
Marani in Armenia. Marani Vodka is made from winter wheat
harvested in Armenia, distilled three times, aged in oak barrels
lined with honey and skimmed dried milk, then filtered twenty-five
times. Marani Vodka was awarded the gold medal in the
International Spirit Competition, held in San Francisco,
California, in both 2004 and 2007, and the 5 Diamond Award by the
American Academy of Hospitality and Sciences in March 2008.
MGM MIRAGE: To Delay Hotel Opening & Cancel Condominium Project
---------------------------------------------------------------
CityCenter Holdings, LLC, a joint venture between MGM MIRAGE and
Infinity World Development Corp, reported certain scope changes
related to The Harmon Hotel & Spa which include postponing the
opening of the hotel to late 2010 and canceling The Harmon
residential condominium component.
CityCenter Holdings is currently developing a 67-acre vertical
city on the Las Vegas Strip. The Harmon is just one component of
the CityCenter complex. Once complete, The Harmon Hotel & Spa
will feature approximately 400 rooms and suites. The Harmon as
developed would have had approximately 200 residential units, of
which 88 are under contract to be sold. Purchasers will be
entitled to receive refunds of their deposits, but will be given
the opportunity to purchase units at the Residences at Mandarin
Oriental Las Vegas, Vdara and Veer Towers. Construction at The
Harmon will continue through completion of the structure and
exterior, with interior fit out to be deferred.
With the cancellation of The Harmon residential component as well
as other additional cost savings the company now anticipates total
cost savings of approximately $600 million up from its previously
stated $400 million. In addition, by postponing The Harmon Hotel
by one year CityCenter will defer approximately
$200 million in construction costs to complete the interior fit
out of The Harmon.
"By canceling The Harmon condominium component, we will be able to
avoid the need for substantial redesign of The Harmon resulting
from contractor construction errors," said Robert Baldwin,
President and CEO of CityCenter. "In taking these steps related
to The Harmon we can remain focused on maximizing the operating
performance of Aria, Mandarin, and Vdara to their desired levels."
All other components of CityCenter remain on schedule for a
December 2009 opening. "The construction progress to date on this
enormous project is nothing short of incredible," said Mr.
Baldwin. "Over the next 11 months we will begin energizing these
architecturally beautiful buildings with the hiring of more than
12,000 individuals for this dynamic resort complex. Creating this
many jobs will have a tremendous impact for both Las Vegas and the
State of Nevada for many years to come."
"We have full confidence in the long term future of the Las Vegas
market and the success of CityCenter," said Chris O'Donnell, Chief
Executive Officer of Infinity World Development Corp. "This is an
appropriate action in the current circumstances."
In October 2008, CityCenter secured a $1.8 billion senior bank
credit facility which can be increased to $3.0 billion. Both
sponsors continue to actively pursue additional financing for the
project.
"These scope changes received overwhelming support from our
CityCenter bank group," said Dan D'Arrigo, Executive Vice
President and CFO of MGM MIRAGE. "CityCenter has two supportive
sponsors who are fully committed to this project. We will
continue to seek financing that is in the best interest of
CityCenter as well as its sponsors."
CityCenter Accepts Job Applications
CityCenter started accepting applications via
www.citycentercareers.com on Jan. 5, 2009, to fill more than
12,000 jobs, marking the largest single new employment opportunity
currently offered by any corporation in the U.S.
"Today [Jan. 5] is a momentous occasion for us; we're proud to be
creating 12,000 new jobs at CityCenter that will be filled by
smart, passionate individuals from throughout the state and
country," said Bobby Baldwin, CityCenter's president and CEO. "We
welcome individuals of all experience levels and backgrounds to
submit their applications today."
CityCenter will be hiring for positions at ARIA Resort & Casino,
Vdara Hotel and Crystals, the development's retail and
entertainment district. In addition, Mandarin Oriental, Las Vegas
and The Harmon Hotel, Spa & Residences, each managed by other
companies, will be accepting applications through the Web site
beginning Spring 2009. Opportunities are available in a variety
of categories including food and beverage, hotel operations,
casino operations, retail management, entertainment, finance,
human resources, facilities, security and more.
About MGM Mirage
Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) --
http://www.mgmmirage.com/-- is a hotel and gaming company. It
owns and operates 17 properties located in Nevada, Mississippi
and Michigan, and has investments in three other properties in
Nevada, New Jersey and Illinois.
* * *
As reported in the Troubled Company Reporter on Oct. 9, 2008,
Tamara Audi at The Wall Street Journal reports that MGM Mirage
needs to raise about $1.2 billion to complete the financing of its
CityCenter project in Las Vegas.
As reported in the Troubled Company Reporter on Oct. 7, 2008, MGM
Mirage said that CityCenter, its joint development project with
Dubai World, completed the first phase of its $3.0 billion
financing package by securing a $1.8 billion senior bank credit
facility. The facility matures in April 2013 and is expected to
be increased to a total amount of $3.0 billion as additional
commitments are received. CityCenter has received additional
signed commitment letters totaling in excess of $500 million,
which commitments are expected to be added to the facility once
completed. MGM Mirage and Dubai World continue to work with
additional lenders and will seek the remaining commitment amounts
through a syndication process beginning on Oct. 7, 2008. The
gross project budget consists of $9.3 billion of construction
costs (including capitalized interest), $1.7 billion of land, $0.2
billion of preopening expenses, and $0.1 billion of intangible
assets. CityCenter is scheduled to be completed in December 2009.
According to WSJ, MGM Mirage is working to secure 41.2 billion in
financing to round out the $3 billion needed to complete the
project. Jim Murren, MGM Mirage's chief operating officer and
president, said that he hopes to have the remaining funds
committed by Oct. 31, WSJ says.
As reported in the Troubled Company Reporter on Nov. 3, 2008,
Moody's Investors Service downgraded MGM MIRAGE's (MGM) Corporate
Family rating and Probability of Default rating to Ba3 from Ba2.
Moody's also downgraded MGM's senior unsecured bond rating to Ba3
from Ba2 and its senior subordinated bond rating to B2 from B1.
Moody's also assigned a (P)Ba1 provisional rating to the company's
proposed benchmark senior secured guaranteed note. All ratings
remain on review for further possible downgrade. The company's
Speculative Grade Liquidity rating was also downgraded to SGL-4
from SGL-3.
As reported by the TCR on Oct. 31, 2008, Standard & Poor's Ratings
Services lowered its corporate credit and issue-level ratings on
Las Vegas-based MGM MIRAGE and its subsidiaries by one notch. The
corporate credit rating was lowered to 'BB-' from 'BB', and the
rating outlook is negative.
According to the TCR on Dec. 18, 2008, MGM MIRAGE's (MGM) Rating
Outlook remains Negative following the announcement that it
entered into an agreement to sell Treasure Island (TI) to Phil
Ruffin for $775 million. Fitch believes the gaming operating
environment and forward outlook continue to weaken, which offsets
MGM's enhanced near-term liquidity profile.
Fitch's ratings on MGM are:
-- Issuer Default Rating 'BB-';
-- Senior secured notes 'BB';
-- Senior unsecured credit facility 'BB-';
-- Senior unsecured notes 'BB-';
-- Senior subordinated notes 'B'.
MICHAEL VICK: Wants to Put Eight-Bedroom Home on Auction Block
--------------------------------------------------------------
Larry O'Dell at The Associated Press reports that Michael Vick
will ask the permission of the Hon. Frank Santoro of the U.S.
Bankruptcy Court for the Eastern District of Virginia to auction
his eight-bedroom home in Atlanta.
According to The AP, the house had been put on sale for more than
a year. Mr. Vick, says the report, had cut the price for the
house to $4.1 million from $4.5 million. Gwinnett County property
records say that Mr. Vick purchased the house in 2005 for about
$3.7 million. The report states that Mr. Vick wants to sell the
house by Feb. 16.
Mr. Vick said in a disclosure statement that real estate agents
have shown the house more than 30 times to potential buyers and
have aggressively marketed the property in publications, direct
mailings, and on the Internet. According to the disclosure
statement, Mr. Vick still owes $2.8 million on the mortgage. The
AP relates that the Internal Revenue Service and creditors have
filed liens against the house, which Mr. Vick proposes to sell
"free and clear of all liens, claims and encumbrances." The
report states that Funari Realty is marketing the property.
The AP reports that Mr. Vick still owns three other homes in
Virginia. According to court documents, Mr. Vick is trying to
sell houses in Williamsburg and Suffolk, but will keep one in
Hampton.
Mr. Vick's attorneys are trying to get their client transferred to
Virginia from Kansas, by Jan. 20, 2009, about six months before
his expected release from prison.
Michael Vick filed for Chapter 11 protection on July 7, 2008
(Bankr. E.D. Va. Case No. 08-50775). Dennis T. Lewandowski, Esq.,
and Paul K. Campsen, Esq., at Kaufman & Canoles, P.C., represent
Mr. Vick in his bankruptcy case. Mr. Vick listed assets of
$16.1 million and debts of $20.4 million in his bankruptcy filing.
MIDON RESTAURANT: Permanently Closes Wolf Road Operation
--------------------------------------------------------
James Schlett at Gazette Reporter says that Donald Cepiel has
closed his Midon Restaurant Corp. on Wolf Road.
Gazette Reporter quoted Midon Restaurant attorney Francis Brennan
as saying, "The closing is permanent and is not part of a Chapter
11 reorganization plan."
Midon Restaurant, says Gazette Reporter, tried renegotiating in
December 2008 the terms of its lease with the landlord of its
Colonie facility, a former Arizona Fitness Factory. Mr. Cepiel
had spent $2.5 million renovating the 16,200-square-foot building,
according to the report.
The nation's recession adversely affected the Wolf Road operation,
Gazette Reporter says, citing Mr. Brennan. An ice storm on Dec.
11, 2008, ice storm knocked out the restaurant's power, forcing it
to close over the weekend and cancel several scheduled holiday
parties, the report states.
According to Gazette Reporter, Midon Restaurant leased most of its
gaming and kitchen equipment, which would be repossessed by their
owners instead of liquidated. Mr. Brenan said that Midon
Restaurant had a revenue-sharing agreement with Tricorp
Amusements, Gazette Reporter says.
Wynantskill, New York-based Midon Restaurant Corp., dba Old
Chicago, filed for Chapter 11 protection on June 9, 2008 (Bankr.
N.D. N.Y. Case No. 08-11852). Francis J. Brennan, Esq., at Nolan
& Heller LLP assists the company in its restructuring effort. The
company listed assets of less than $50,000 and debts of
$1 million to $10 million
MYERS MILL: Files Plan of Liquidation and Disclosure Statement
--------------------------------------------------------------
Myers Mill, LLC, and fourteen other debtor-affiliates submitted to
the U.S. Bankruptcy Court for the Eastern District of North
Carolina on Dec. 19, 2008, a Joint Plan of Liquidation and
Disclosure Statement detailing information about the Debtors and
the Debtors' Joint Plan of Liquidation.
The other 14 Debtors are:
Case No.
--------
Eagles Trace, LLC 08-04293-8
Aumond Glen, LLC 08-04294-8
Back Creek Farms Subdivision, LLC 08-04295-8
Saddlebrook Subsidivision, LLC 08-04296-8
Chandler Oaks, LLC 08-06507-8
Kelsey Glen, LLC 08-06508-8
River Chase Subdivision, LLC 08-06509-8
The Heights Subdivision, LLC 08-06502-8
The Rapids at Belmeade, LLC 08-06504-8
Water Mill, LLC 08-06506-8
Lismore Park, LLC 08-07026-8
The Village at Windsor Creek, LLC 08-07020-8
Old Towne, LLC 08-07170-8
Caledonia Subdivision, LLC 08-07535-8
The Debtors conclude that the Plan provides the greatest recovery
to creditors and is in the best interest of creditors. The
Debtors believe that the Plan provides creditors with a recovery
that has a present value at least equal to the present value of
the distribution that the creditors would receive if the Estate
were liquidated under chapter 7 of the Bankruptcy Code.
The Court will convene a hearing on Feb. 11, 2009, at 10:00 a.m.
to consider the adequacy of the Disclosure Statement for the
Debtors' Joint Plan of Liquidation. The deadline for the filing
of objections to the Disclosure Statement is Feb. 4, 2009.
Summary of Plan
The Plan consists of separate Chapter 11 Plans for each of the 15
Debtors named above. Because the Plans provide for identical
treatment of similarly situated classes of creditors, the Plan
groups the Debtors as the Reorganizing Debtors and the Non-
Operating Debtors. In order for a Debtor to be a Reorganizing
Debtor, certain conditions must be satisfied, otherwise such
Debtor will be categorized as a Non-Operating Debtors. Caledonia,
Eagle's Trace, Chandler Oaks, The Rapids at Belmeade, Saddlebrook,
and any other Debtors that fail to meet the conditions necessary
to be categorized as a Reorganizing Debtor will be Non-Operating
Debtors.
A. Reorganizing Debtors.
The Plan provides that the Reorganizing Debtors will continue to
operate and exist after the Effective Date, as part of a newly
created entity (NewCo), an entitly established pursuant to the
Plan. On the Effective Date, the Reorganizing Debtors will merge
into NewCo, which will issue new equity as described in the Plan.
The Reorganizing Debtors will continue to sell lots and use the
net proceeds from lot sales to fund continued construction,
operations necessary to complete lots for sale and make payments
to creditors. Net Proceeds of Sale are defined in the Plan to
mean the proceeds remaining after payment of (i) the seller's
closing costs, including attorney's fees, property taxes,
commission, if any, and any other customary item; (ii) the credits
to the purchaser to refund its deposit under the contract, if any;
and (iii) the amounts necessary to fund remaining construction for
such quarter, if any, to the extent not paid by bank advances or
other investment. Upon the sale of lots, the First Priority
Lender will receive 85% of the Net Proceeds of Sale. The
Reorganizing Debtors will receive 15% of the Net Proceeds of Sale.
All payments to creditors other than the First Priority Lender to
be made by the Reorganizing Debtors will be made out of this 15%.
In addition, J. Franklin Martin will pledge certain assets as
collateral for the payment of administrative claims. This
collateral may be pledged to secure any new financing obtained.
While the Reorganizing Debtors are filing a joint plan that
provides for similar treatment for classes of creditors, the
Reorganizing Debtors' liabilities are not being consolidated.
Liens currently secured by one project will remain secured only by
that project and creditors will receive payments only from the
liquidation of property owned by the Debtor that owes such
creditor the obligation.
The Plan contemplates that, on the first business day after the
Effective Date, the NewCo Debtors will merge with and into NewCo.
NewCo will issue stock to its members after an Operating Agreement
is drafted. The members of NewCo will be some or all of the
members and managers of Landcraft Management, LLC, the Debtors'
affiliate and managing member.
Aumond Glen and Myers Mill will be Reorganizing Debtors, without
the need to satisfy any conditions precedent, as these Debtors
have already assumed their contracts with their builders. The
following Debtors will be categorized as Reorganizing Debtors only
if the following conditions precedent have been satisfied:
Back Creek will be a Reorganizing Debtor if:
1. Contract with Eastwood is assumed; or
2. Contract with Atreus Communities of Charlotte, Inc.
is assumed; or
3. Eastwood or Atreus letters of credit are drawn; or
Old Towne will be a Reorganizing Debtor if:
1. If the contract with Eastwood is assumed; or
2. The Debtor is entitled to retain the proceeds of
the Eastwood letter of credit.
River Chase will be a Reorganizing Debtor if:
1. If the contract with Eastwood is assumed; or
2. The Eastwood letter of credit is drawn.
Lismore Park will be a Reorganizing Debtor if:
1. If the contract with Eastwood is assumed; or
2. The Eastwood letter of credit is drawn.
Village at Windsor Creek will be a Reorganizing Debtor if:
1. If the contract with Eastwood is assumed; or
2. The Eastwood letter of credit is drawn.
Kelsey Glen will be a Reorganizing Debtor if:
1. If the contract with Eastwood is assumed; or
2. The Eastwood letter of credit is drawn.
The Heights will be a Reorganizing Debtor if:
1. If the contract with Eastwood is assumed; or
2. The Eastwood letter of credit is drawn.
Water Mill will be a Reorganizing Debtor if:
1. If the contract with Eastwood or Keystone is
assumed; or
2. The Eastwood letter of credit is drawn.
B. Non-Operating Debtors
The second group of Debtors (the Non-Operating Debtors) will be
comprised of Caledonia, Eagle's Trace, Chandler Oaks, The Rapids
at Belmeade, Saddlebrook, and any remaining Debtor that does not
fulfill its conditions precedent to becoming a Reorganizing
Debtor.
The Non-Operating Debtors have determined that the projects they
own are not sufficiently healthy enough to survive in the current
market conditions without additional financing or builder
contracts. Each of these projects lacks sufficient value to
obtain the infusion of new money that would be required in order
to complete these projects since the existing lenders are no
longer advancing for the completion of these projects. The only
option would be to sell these properties in their current
condition; however, these projects are unlikely to sell for
anything in excess of the debt to the existing lienholder if sold.
These properties will have the stay lifted as of the Effective
Date, if it has not been previously terminated, to allow for a
foreclosure of the property. Alternatively, the Non-Operating
Debtors will sell the property to the existing First Priority
Lender, free and clear of liens, in an amount equal to the
outstanding balance owed to the First Priority Lender as of the
date of sale by a credit bid. Creditors in these cases will
receive distributions only in the event excess proceeds remain
after the foreclosure by the First Priority Lender, or in the
event of any collection of the accounts receivable owed by
Landcraft, if any.
Classification and Treatment of Classes of Creditors
The classification and treatment for each Debtor has been grouped
into one of two categories, as described in the Summary of Plan.
Creditors within each category will receive the same treatment.
The exact class to which each creditor is assigned is as shown on
Exhibit "B" of the Disclosure Statement.
I. Reorganizing Debtors
Ad Valorem Taxes under Class 2 and Tax Claims under Class 3 are
unimpaired under the Plan. Ad valorem taxes on property of the
Debtors' estates will be paid from the net proceeds of sale, in
accordance with the proceeds of the Bankruptcy Code. No tax
claims under Class 3 have been filed.
Administrative Claims under Class 1, First Priority Lender Claims
under Class 4, Junior Deed of Trust Holders & TIC Owners under
Class 5, Mechanic's Liens under Class 6, Builder Contracts Assumed
by the Debtors under Class 7, Executory Contracts Rejected by the
Debtors under Class 8, Claims of J. Franklin Martin under Class 9,
General Unsecured Creditors under Class 10, and Equity Security
Holders under Class 11 are all impaired under the Plan.
Each holder of a First Priority Lender Claim under Class 4 will
retain all of its liens, with the priority thereof, as existed on
the Petition date until its claim is paid in full. On the
Effective Date, title to the property securing such lien will be
transferred to NewCo via a bankruptcy deed or general warranty
deed. Upon the sale of lots, the First Priority Lender will
receive 85% of the Net Proceeds of Sale. Any deficiency claims
arising from the liquidation of the collateral securing these
claims will be treated in Class 10 herein.
Junior Deed of Trust Holders and TIC Owners under Class 5 will
retain all of their respective liens as existed on the Petition
Date, until the claims are paid in full. On the Effective Date,
title to the property securing such lien will be transferred to
NewCo via a bankruptcy deed or general warranty deed. This Class
will receive the net sales proceeds remaining after payment of (i)
the allowed claims in Classes 1, 2, 3, 4, and 6; (ii) allowed
claims in Class 8 but only to the extent such liens currently have
priority over the liens held by Class 8 and only to the extent the
value of the collateral is sufficient to treat such claim as
secured; and (iii) allowed claims in Class 10, but not exceeding
10% of the allowed claims in this class. Any deficiency claims
arising from the liquidation of the collateral securing these
claims will be treated in Class 10 herein.
J. Franklin Martin will waive all claims against the Debtors
arising from amounts advanced to the Debtors and secured by deeds
of trust and any administrative claims shown on Exhibit "D".
Allowed General Unsecured Creditors Claims, as determined by the
Court as of the Petition Date (without post-petition interest,
attorneys' fees or costs) will be paid from net sale proceeds (i)
otherwise due to Class 5 up to 10% of the allowed claims, and (ii)
to the extent available from net sale proceeds after payment in
full of all allowed Class 5 claims, and any other assets recovered
by the Debtors.
All membership interests in the Debtors will be canceled upon the
Effective Date and members of the Debtors will receive nothing
from the Debtors on account of their existing equity interest.
II. Non-Operating Debtors
Tax Claims under Class 3 are unimpaired under the Plan. Costs and
expenses of administration, if any , will be paid in cash and in
full including accruals to date of payment within 30 days from the
Effective Date of the Plan. Secured Claims, if any, will be paid
the full amount of their allowed claims from sale proceeds, in
accordance with the priorities of the Bankruptcy Code. Unsecured
priority tax claims, if any, will be paid the full amount of their
allowed claims from the net proceeds of sale, if any, from other
assets distributed by the Debtors, or from funds advanced to the
Debtors, but in any event in cash (i) of a total value, as of the
Effective Date, equal to the allowed amount of such claim; (ii)
over a period ending not later than five (5) years after the
Petition Date; and (iii) in a manner not less favorable than the
most favored nonpriority unsecured claim provided for by the Plan.
Administrative Claims under Class 1, Ad Valorem Taxes under Class
2, First Priority Lender Claims under Class 4, Junior Deed of
Trust Holders & TIC Owners under Class 5, Mechanic's Liens under
Class 6, Executory Contracts under Class 7, Claims of J. Franklin
Martin under Class 8, General Unsecured Creditors under Class 9,
and Equity Security Holders under Class 10 are all impaired under
the Plan.
Administrative costs and expenses approved by the Court will
receive pro rata distributions from any assets available for
distribution, in accordance with the priorities of the Bankruptcy
Code. Ad valorem property taxes will be the responsibility of the
purchaser of the property of the Debtors.
The automatic stay will be lifted on the Effective Date and the
First Priority Lenders will have the right to exercise their
rights under their existing loan documents. Any deficiency claims
arising from the liquidation of the collateral securing these
claims will be treated in Class 9 herein.
J. Franklin Martin will waive all claims against the Debtors
arising from amounts advanced to the Debtors and secured by deeds
of trust and any administrative claims shown on Exhibit "D".
It is not anticipated that General Unsecured Creditors under Class
9 will receive any distributions after a liquidation of the real
property.
All membership interests in the Debtors under Class 10 will be
canceled upon the Effective Date and members of the Debtors will
receive nothing from the Debtors on account of their existing
equity interest.
Who May Vote
Creditors holding allowed claims are entitled to vote to accept or
reject the Debtors' Joint Plan of Reorganization. Classes of
Claims that are not impaired are deemed to have accepted the Plan.
In the event any class of creditors rejects the Plan, the Debtors
intend to seek confirmation under the "cramdown" provisions of the
Bankruptcy Code.
Means of Execution
The Debtors' inventory consists of lots located in the various
subdivisions owned by the Debtors. All property sold under the
Debtors' Plan will be sold free and clear of liens, regardless of
who is the final purchaser for such lots. In order to expedite
the sale process, provide clear title to the lots sold, and
satisfy certain anticipated requirements of title insurance
companies providing title insurance to the purchasers of lots,
simultaneous with the entry of the Order Confirming Plan, the
Debtors may ask the Court to enter a new free and clear order,
which will remove any restrictions on the sale of property free
and clear of liens contained in the earlier Free and Clear Orders
that have been entered. No further motions related to the sales
of property will be required; provided however, the Debtors may
file such motions and seek such orders to the extent needed to
provide reasonable comfort or accommodation to the lot purchasers.
Upon the sale of any of the Reorganizing Debtors' property, the
liens secured by such property will attach to the net proceeds of
sale.
Any funds received from sources other than the liquidation of
property will be distributed in accordance with the priorities of
the Bankruptcy Code and will be made within a reasonable time
after such funds are received. It is expected that the main
source of the recovery will be from funds receved from Landcraft,
if any amounts are actually determined to be owed and are paid by
Landcraft. Prior to the Petition Date, the Debtors advanced or
received funds through Landcraft. A list of such amounts that are
due to or due from Landcraft, as of June 30, 2008, is shown on
Exhibit "C". Exhibit "B" lists the amounts owed to Landcraft as
of the Petition Date, which updates the amounts shown on Exhibit
"C", for cases filed in September or October of 2008. All of
these amounts are owed as unsecured claims, either of the Debtors
or of Landcraft.
A full-text copy of the Disclosure Statement explaining the
Debtors Joint Plan of Liquidation, dated Dec. 19, 2008, is
available for free at:
http://bankrupt.com/misc/MyersMill.DisclosureStatement.pdf
Headquartered in Charlotte, North Carolina, real estate company
Myers Mill LLC filed for Chapter 11 protection on Sept. 22, 2008
(Bankrk. E.D. N.C. Case No. 08-06508). In its schedules, the
company listed total assets of $13,986,640 and total debts of
$10,817,772.
The Debtors are North Carolina and South Carolina limited
liability companies that engage in the business of land
development. The Debtors' members are J. Franklin Martin, Scott
A. Stover, and Matthew A. McDonald. The Debtors' affiliate and
managing member, Landcraft Management, LLC and its predecessor
Landcraft Properties, Inc. have been engaged in the real estate
development business for over 20 years. J. Franklin Martin, Scott
A. Stover, and Matthew A. Mcdonald are the sole members of
Landcraft. Each of the Debtors is the owner of a single piece of
real estate, which is in the process of being developed into a
subdivision.
Some of the Debtors are currently being managed by Landcraft
Communities, LLC, which is a limited liability company owned by
Messrs. Martin, Stover, and McDonald, on an interim basis. The
remaining Debtors are being managed by Landcraft Management, LLC.
On June 27, 2008, Eagle Creek, Eagles Trace, Back Creek, Aumond
Glen, and Saddlebrook filed their Chapter 11 cases. On Sept. 22,
2008, The Heights, Kelsey Glen, The Rapids at Belmeade, Water
Mill, Chandler Oaks, Myers Mill, and River Chase filed their
Chapter 11 petitions. On Oct. 9, 2008, The Village at Windsor
Creek and Lismore Park filed their Chapter 11 petitions. On
Oct. 15, 2008, Old Towne filed its Chapter 11 petition. On
Oct. 29, 2008, Caledonia filed its Chapter 11 petition.
NATIONAL BANK: Weiss Ratings Assigns "Very Weak" E- Rating
----------------------------------------------------------
Weiss Ratings has assigned its E- rating to Berkeley, Ill.-based
National Bank of Commerce. Weiss says that the institution
currently demonstrates what it considers to be significant
weaknesses and has also failed some of the basic tests Weiss uses
to identify fiscal stability. "Even in a favorable economic
environment," Weiss says, "it is our opinion that depositors or
creditors could incur significant risks."
National Bank of Commerce is chartered as a National Bank, and
primarily regulated by the Office of the Comptroller of the
Currency. Deposits have been insured by the Federal Deposit
Insurance Corporation since July 13, 1967. The financial
institution was established on July 26, 1966. National Bank of
Commerce maintains a Web site at
http://www.natlbankofcommerce.com/
FDIC data shows that National Bank of Commerce has two branches in
Illinois. At Sept. 30, 2008, National Bank of Commerce disclosed
$459 million in assets and $453 million in liabilities in its
regulatory filings.
NATIONAL HEALTH: Posts $609,775 Net Loss in Qtr. Ended Sept. 30
---------------------------------------------------------------
National Health Partners, Inc.'s net loss decreased $373,642 to
$609,775 for the three months ended September 30, 2008, from
$983,417 for the three months ended September 30, 2007. The
decrease of $373,642 was primarily due to decreases of $641,766
for direct costs incurred in connection with the sale of the
company's membership programs and $332,219 for other general and
administrative expenses, partially offset by a decrease of
$498,176 in revenue and increases of $62,898 for professional fees
and $51,662 for employee compensation expense. "We expect to
begin generating a net profit from operations during 2009 as the
recurring membership fees from our increasing membership base
overtake the costs associated with obtaining and retaining
members," Chief Executive Officer David M. Daniels disclosed in a
regulatory filing dated November 14, 2008.
Mr. Daniels relates that the company has historically incurred
significant losses, which raises substantial doubt about the
company's ability to continue as a going concern.
"To date, our capital needs have been met primarily through sales
of our equity and debt securities and proceeds received upon the
exercise of warrants held by our security holders. We do not
currently maintain a line of credit or term loan with any
commercial bank or other financial institution. We have used the
proceeds from the exercise of warrants and our private offerings
of securities to pay virtually all of the costs and expenses we
have incurred."
"We believe that our current cash resources will not be sufficient
to sustain our current operations for the next 12 months. We will
need to obtain additional cash resources within the next 12 months
to enable us to pay our ongoing costs and expenses as they are
incurred and finance the growth of our business. We intend to
obtain these funds through internally generated cash flows from
operating activities and proceeds from the issuance of debt and
equity securities. The sale of equity or convertible debt
securities would result in additional dilution to our
shareholders. The issuance of debt would result in increased
expenses and could subject us to covenants that may have the
effect of restricting our operations. We have not made
arrangements to obtain additional financing and we can provide no
assurance that additional financing will be available in an amount
or on terms acceptable to us, if at all. If we are unable to
obtain additional funds when they are needed or if such funds
cannot be obtained on terms favorable to us, we may be unable to
execute upon our business plan or pay our costs and expenses as
they are incurred, which could have a material, adverse effect on
our business, financial condition and results of operations."
As of September 30, 2008, the company's balance sheet showed total
assets of $1,947,592, total liabilities of $162,424, and total
stockholders' equity of $1,785,168.
A full-text copy of the company's quarterly report is available
for free at: http://researcharchives.com/t/s?3776
About National Health
National Health Partners, Inc., sells membership programs that
encompass all aspects of healthcare, including physicians,
hospitals, ancillary services, dentists, prescription drugs and
vision care through a national healthcare savings network called
"CARExpress". The company derives almost all of its revenue from
the monthly membership fees it receives from its members. It
markets its programs through a direct sales force, brokers and
agents, unions and associations, chambers of commerce, and a
variety of other organizations.
NEUMANN HOMES: Creditors Committee Files Suit Against Ex-CEO
------------------------------------------------------------
The official committee of unsecured creditors of Neumann Homes,
Inc., filed a lawsuit against former chief executive officer,
Kenneth Neumann, and his wife, Jean, for allegedly receiving more
than $20 million in tax payment refunds.
The Committee asserts that the Neumanns received refunds of tax
payments that were made by, and are the rightful property of, the
Debtors.
On behalf of the Creditors Committee, Gregory Otsuka, Esq., at
Paul Hastings Janofsky & Walker, in Chicago, Illinois, contends
that Mr. Neumann appropriated the amounts for his personal
benefit "in the form of the election of Subchapter C instead of
Subchapter S corporate status and the election to carry back
instead of carry forward" the net operating losses of the
Debtors.
Neumann Homes was structured as a Subchapter S corporation for
the period from January 1991 to September 17, 2007, during which
time Mr. Neumann was the sole voting shareholder. As a
Subchapter S corporation, the tax liability for the Debtors'
taxable income was passed through to shareholders.
On September 21, 2007, however, Mr. Neumann caused Neumann Homes
to revoke its status as a Subchapter S corporation and become a
Subchapter C corporation, which made the Debtor responsible for
paying its own federal income taxes. "[Mr.] Neumann took this
step for his personal financial benefit, not for any business
purpose in the interest of Neumann Homes," Mr. Otsuka argues.
The Committee contends that Mr. Neumann directed Neumann Homes to
make payments for his federal and state income taxes as well as
those of his wife, to fund his tax liabilities attributable to
Neumann Homes' income. "These and other distributions from
Neumann Homes left the company inadequately capitalized," Mr.
Otsuka says.
Mr. Otsuka tells the Court that a loan agreement between Neumann
Homes and Residential Funding Corporation, one of the Debtors'
prepetition lenders, restricted the percentage of net income that
could be distributed to Mr. Neumann. Specifically, the agreement
limited payment of a cash dividend to Mr. Neumann to not more
than 30% of Neumann Homes' adjusted net income if the Debtor's
ratio of total liabilities to net worth equaled or exceeded
3.5 to 1, and not more than 50% of the Debtor's adjusted net
income if its ratio of total liabilities to net worth is less
than 3.5 to 1.
The Committee believes that Mr. Neumann directed Neumann Homes in
2004 to make payments for shareholders' tax liabilities
attributable to the Debtor's income for $10,644,327 in 2004, and
$13,894,915 in 2005, some or all of which was for his tax
liabilities. According to Mr. Otsuka, the 2005 payment for tax
purposes raised dividend distributions to a level above that
permitted under the RFC Loan Agreement. He noted that the total
2005 dividend to Mr. Neumann was 54.53% of Neumann Homes' net
income, which was out of compliance with the covenant for 2005 by
$1,443,483.
Believing that the excessive 2005 dividend was necessary to pay
taxes attributable to Neumann Homes' earnings, RFC reportedly
waived compliance with the covenant in the RFC Loan Agreement
restricting distribution to Mr. Neumann for 2005 on the condition
that the Debtor further restricts its 2006 dividend payments to
account for the $1,443,483 overpayment in 2005.
Based on Neumann Homes' 2006 financial condition, Mr. Neumann
ultimately repaid the Debtor $1.5 million to satisfy the
conditions of RFC's covenant waiver.
Meanwhile, Neumann Homes experienced substantial net operating
losses in both 2006 and 2007.
Under the Internal Revenue Code, net operating losses can be
carried back to the two prior operating years or carried forward
to offset the earnings of future years. Once such an election is
made, it is irrevocable for that tax year.
Mr. Otsuka contends that having caused Neumann Homes to convert
to a Subchapter C corporation prior to its bankruptcy filing, Mr.
Neumann took the position that he had the sole discretion to make
the election and did so without allegedly consulting Neumann
Homes or considering the Debtor's best interests. "Specifically,
on information and belief, [Mr.] Neumann elected to carry back
the 2006 and 2007 NOLs to 2004 and 2005," Mr. Otsuka said. He
stated that Mr. Neumann and his wife, who filed a joint tax
return, have applied to the IRS for total tax refunds based on
the net operating loss carry-backs for 2006 and 2007 of about $25
million for tax years 2004 and 2005.
Even though Neumann Homes paid the 2004 and 2005 taxes in the
first instance on Mr. Neumann 's behalf, the tax refunds for tax
years 2004 and 2005 either have been or will be issued to Mr.
Neumann and his wife personally, and are no longer available to
the Debtor by virtue of Mr. Neumann's appropriation of the right
to make the carry-back or carry-forward election as well as by
means of his conversion of Neumann Homes to a Subchapter C
corporation, Mr. Otsuka tells the Court.
Mr. Neumann and his wife allegedly have received a substantial,
multi-million dollar tax refund for 2004 and a substantial multi-
million dollar tax refund for 2005 will be forthcoming at any
time, according to Mr. Otsuka.
"The transfer of the NOL carry-back or carry-forward election and
resulting tax refunds to [the Neumanns] have resulted or will
result in property of Neumann Homes being transferred to the
defendants and that transfer should be avoided," Mr. Otsuka
argues.
Accordingly, the Committee asks the Court to:
(a) avoid the transfers of any amount or property of the
Debtors' estates to the Neumanns that are considered
fraudulent or preferential pursuant to provisions under
the Bankruptcy Code;
(b) enter a monetary judgment against the Neumanns in the
amount of the tax refunds from 2004 and 2005, plus
interest;
(c) award it damages for claims of unjust enrichment and
breach of fiduciary duty of the Neumanns;
(d) rule on the imposition of a constructive trust to ensure
the ultimate distribution of the tax refunds to the
Debtors' unsecured creditors;
(e) enjoin the Neumanns from dissipating the anticipated tax
refunds;
(f) direct an accounting for the period from January 2004 to
the present to include any refunds received by the
Neumanns from the Internal Revenue Service; any
distributions from the Debtor for purposes of tax
liabilities; and any payments made by the Neumanns to the
Internal Revenue Service; and
(g) award it for attorney's fees and litigation costs.
About Neumann Homes
Headquartered in Warrenville, Illinois, Neumann Homes Inc. --
http://www.neumannhomes.com/-- develops and builds residential
real estate throughout the Midwest and West US. The company is
active in the Chicago area, southeastern Wisconsin, Colorado, and
Michigan. The company has built more than 11,000 homes in some
150 residential communities. The company offers formal business
training to employees through classes, seminars, and computer-
based training.
The company filed for Chapter 11 protection on Nov. 1, 2007
(Bankr. N.D. Ill. Case No. 07-20412). George Panagakis, Esq., at
Skadded, Arps, Slate, Meagher & Flom L.L.P., was selected by the
Debtors to represent them in these cases. The Official Committee
of Unsecured Creditors has selected Paul, Hastings, Janofsky &
Walker LLP, as its counsel in these bankruptcy proceeding. When
the Debtors filed for protection from its creditors, they listed
assets and debts of more than $100 million.
(Neumann Bankruptcy News, Issue No. 25; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000)
NEUMANN HOMES: Seeks to Sell Comerica Bank's Collateral
-------------------------------------------------------
Neumann Homes, Inc., asks the U.S. Bankruptcy Court for the
Northern District of Illinois to approve the sale of Comerica
Bank's collateral in three residential developments.
The collateral, which consist of real and personal properties,
are located in Sheldon Estates, the Village Park at Stonewood,
and Stonewood Place. The properties secure the loan which the
Debtors availed from Comerica Bank for the construction of homes
in those subdivisions.
The proposed order provides for the sale of the properties to
Comerica Bank through a credit bid, contemplated to occur no
later than Dec. 31, 2008.
In return for the sale, the Debtors won't have to repay Comerica
Bank of their debt totaling more than $1 million, except for the
$100,000 secured by the Bank's mortgage on their properties in
The Towns at Stonegate Pointe, Village at Stonegate Pointe and
Towns at Central Boulevard. Comerica Bank is also required under
the proposed order to release its liens on those properties, if
the Debtors succeed in selling them and pay the Bank 50% of the
net proceeds from the sale beyond the first $250,000 of the
proceeds.
The proposed order, however, drew opposition from the Parks at
Stonewood Association, which urged the Court to compel the
Debtors to pay $50,900 to the Association before granted
permission to sell the properties. PSA's claim is on account of
the annual association dues for each of the 43 condominium units
that Neumann Homes, Inc., owned in Park at Stonewood. PSA
allegedly holds liens on each unit, which secure payment of the
annual dues.
A hearing to consider approval of the sale is scheduled for
Jan. 13, 2009.
About Neumann Homes
Headquartered in Warrenville, Illinois, Neumann Homes Inc. --
http://www.neumannhomes.com/-- develops and builds residential
real estate throughout the Midwest and West US. The company is
active in the Chicago area, southeastern Wisconsin, Colorado, and
Michigan. The company has built more than 11,000 homes in some
150 residential communities. The company offers formal business
training to employees through classes, seminars, and computer-
based training.
The company filed for Chapter 11 protection on Nov. 1, 2007
(Bankr. N.D. Ill. Case No. 07-20412). George Panagakis, Esq., at
Skadded, Arps, Slate, Meagher & Flom L.L.P., was selected by the
Debtors to represent them in these cases. The Official Committee
of Unsecured Creditors has selected Paul, Hastings, Janofsky &
Walker LLP, as its counsel in these bankruptcy proceeding. When
the Debtors filed for protection from its creditors, they listed
assets and debts of more than $100 million.
(Neumann Bankruptcy News, Issue No. 25; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000)
NEUMANN HOMES: Court Extends Plan Filing Period to March 31
-----------------------------------------------------------
Neumann Homes, Inc., and its affiliates obtained an order from the
U.S. Bankruptcy Court for the Northern District of Illinois
extending their exclusive right file a Chapter 11 plan through
March 31, 2009, and their exclusive right to solicit votes for
that plan extended through June 30, 2009.
The Debtors asked for the additional time so that they could
finalize the disposition of IndyMac Bank's collateral and
monetize their remaining properties and claims, among other
things.
About Neumann Homes
Headquartered in Warrenville, Illinois, Neumann Homes Inc. --
http://www.neumannhomes.com/-- develops and builds residential
real estate throughout the Midwest and West US. The company is
active in the Chicago area, southeastern Wisconsin, Colorado, and
Michigan. The company has built more than 11,000 homes in some
150 residential communities. The company offers formal business
training to employees through classes, seminars, and computer-
based training.
The company filed for Chapter 11 protection on Nov. 1, 2007
(Bankr. N.D. Ill. Case No. 07-20412). George Panagakis, Esq., at
Skadded, Arps, Slate, Meagher & Flom L.L.P., was selected by the
Debtors to represent them in these cases. The Official Committee
of Unsecured Creditors has selected Paul, Hastings, Janofsky &
Walker LLP, as its counsel in these bankruptcy proceeding. When
the Debtors filed for protection from its creditors, they listed
assets and debts of more than $100 million.
(Neumann Bankruptcy News, Issue No. 25; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000)
OMNI NATIONAL: Weiss Ratings Assigns "Very Weak" E- Rating
----------------------------------------------------------
Weiss Ratings has assigned its E- rating to Atlanta, Georgia-based
Omni National Bank. Weiss says that the institution currently
demonstrates what it considers to be significant weaknesses and
has also failed some of the basic tests Weiss uses to identify
fiscal stability. "Even in a favorable economic environment,"
Weiss says, "it is our opinion that depositors or creditors could
incur significant risks."
Omni National Bank is chartered as a National Bank, and regulated
primarily by the Office of the Comptroller of the Currency.
Deposits have been insured by the Federal Deposit Insurance
Corporation since it was established on Mar. 8, 1976. Omni
National Bank maintains a Web site at http://www.onb.com/
FDIC data shows that Omni National Bank has eleven branches. At
Sept. 30, 2008, Alliance Bank disclosed just over $1 billion in
assets and $982 million in liabilities in its regulatory filings.
ONEUNITED BANK: Weiss Ratings Assigns "Very Weak" E- Rating
-----------------------------------------------------------
Weiss Ratings has assigned its E- rating to Boston, Mass.-based
OneUnited Bank. Weiss says that the institution currently
demonstrates what it considers to be significant weaknesses and
has also failed some of the basic tests Weiss uses to identify
fiscal stability. "Even in a favorable economic environment,"
Weiss says, "it is our opinion that depositors or creditors could
incur significant risks."
OneUnited is not a member of the Federal Reserve. Deposits have
been insured by the Federal Deposit Insurance Corporation since
the financial institution was established on August 2, 1982.
OneUnited maintains a Web site at http://www.oneunited.com/
FDIC data shows that OneUnited has 10 branches in California,
Florida and Massachusetts. At Sept. 30, 2008, Berkshire disclosed
$625 million in assets and $631 million in liabilities in its
regulatory filings.
PARK AVENUE BANK: Weiss Ratings Assigns "Very Weak" E- Rating
-------------------------------------------------------------
Weiss Ratings has assigned its E- rating to The Park Avenue Bank
based in Manhattan. Weiss says that the institution currently
demonstrates what it considers to be significant weaknesses and
has also failed some of the basic tests Weiss uses to identify
fiscal stability. "Even in a favorable economic environment,"
Weiss says, "it is our opinion that depositors or creditors could
incur significant risks."
Park Avenue is not a member of the Federal Reserve. Deposits have
been insured by the Federal Deposit Insurance Corporation since
the financial institution was established on Nov. 6, 1987. Park
Avenue maintains a Web site at http://www.parkavenuebank.com/
FDIC data shows that Park Avenue has five branches in New York.
At Sept. 30, 2008, Park Avenue disclosed $478 million in assets
and $457 million in liabilities in its regulatory filings.
PEOPLES STATE: Weiss Ratings Assigns "Very Weak" E- Rating
----------------------------------------------------------
Weiss Ratings has assigned its E- rating to Hamtramck, Mich.-based
Peoples State Bank. Weiss says that the institution currently
demonstrates what it considers to be significant weaknesses and
has also failed some of the basic tests Weiss uses to identify
fiscal stability. "Even in a favorable economic environment,"
Weiss says, "it is our opinion that depositors or creditors could
incur significant risks."
Peoples State Bank is not a member of the Federal Reserve.
Deposits have been insured by the Federal Deposit Insurance
Corporation since Dec. 20, 1934. The financial institution was
established on Feb. 11, 1909. Peoples State Bank maintains a Web
site at http://www.psbnetbank.com/
FDIC data shows that Peoples State Bank has eleven branches in
Michigan. At Sept. 30, 2008, Peoples State Bank disclosed
$470 million in assets and $432 million in liabilities in its
regulatory filings.
PROGRESSIVE GAMING: Allows Foreclosure; Key Exec. Resigns
---------------------------------------------------------
Progressive Gaming International Corporation's assets are expected
to be sold by its lenders on January 15, 2009.
Progressive Gaming said Dec. 24, 2008, that it is cooperating with
its senior secured lender, Private Equity Management Group
Financial Corporation, to conduct a sale of substantially all of
the company's assets pursuant to a Notification of Disposition of
Collateral received on December 17, 2008.
According to Progressive, the sale of collateral will occur on
January 15, 2009, to the highest qualified bidder unless the
company redeems the collateral anytime before the sale by paying
all obligations in the amount of approximately $17 million --
before adjustment for amounts repaid to PEM in December 2008 of
approximately $1.1 million -- and all reasonable expenses of the
Agent.
According to Standard & Poor's Ratings Services, Progressive
Gaming had violated covenants under its senior credit facilities
for the quarter ended Sept. 30, 2008. On Nov. 7, 2008, PGIC's
senior lender issued an acceleration notice for the company's
senior secured revolving credit facility and term loan.
Subsequent to this, the lenders entered into a forbearance
agreement which expired on Nov. 21, 2008.
Meanwhile, the company said Jan. 6 that its employment agreement
with Heather A. Rollo would be terminated effective Jan. 8, 2009,
in light of her resignation from the company. Ms. Heather, the
executive vice president, chief financial officer, and treasurer,
plans to leave the company to pursue other interests.
About Progressive Gaming
Progressive Gaming International Corporation --
http://www.progressivegaming.net/-- is a leading global supplier
of integrated casino and jackpot management solutions for the
gaming industry.
Standard & Poor's Ratings Services said that it lowered its
corporate credit rating on Progressive Gaming International
Corporation to 'D' from 'CCC', after Progressive announced on
Dec. 24, 2008, that it will allow its secured lender to foreclose
on its assets.
PGIC had violated covenants under its senior credit facilities for
the quarter ended Sept. 30, 2008. On Nov. 7, 2008, PGIC's senior
lender issued an acceleration notice for the company's senior
secured revolving credit facility and term loan. Subsequent to
this, the lenders entered into a forbearance agreement which
expired on Nov. 21, 2008. The ratings were lowered ratings to 'D'
because the forbearance agreement between the lenders and PGIC has
expired without the loans being repaid, and because the lenders
are now pursuing recovery through the sale of collateral.
PROTECTION ONE: Names Jeffrey S. Nordhaus to Board of Directors
---------------------------------------------------------------
Protection One, Inc., disclosed in a filing with the Securities
and Exchange Commission that Jeffrey S. Nordhaus was appointed to
the boards of directors of the company and its subsidiary,
Protection One Alarm Monitoring, Inc.
Mr. Nordhaus was also appointed to the Compensation Committee of
the board effective Dec. 16, 2008, to fill the vacancy created by
Henry Ormond's resignation.
Each of Mr. Ormond and Mr. Nordhaus is a designee of POI
Acquisition, LLC, the company's largest stockholder and an
affiliate of Quadrangle Group LLC, pursuant to the terms of the
amended and restated stockholders agreement, dated as of April 2,
2007, among the company, Quadrangle and affiliates of Monarch
Alternative Capital LP.
Based in Lawrence, Kansas, Protection One, Inc. (Nasdaq:PONE), and
its affiliate, Protection One Alarm Monitoring, Inc. --
http://www.ProtectionOne.com-- are vertically integrated national
providers of sales, installation, monitoring, and maintenance of
electronic security systems to homes and businesses, as measured
by recurring monthly revenue, and has been recognized as one of
"America's Most Trustworthy Companies" by Forbes.com. Network
Multifamily, Protection One's wholly owned subsidiary, is the
largest security provider to the multifamily housing market. The
company also owns the nation's largest provider of wholesale
monitoring services, the combined operations of CMS and Criticom
International. As of Sept. 30, 2008, the company served
approximately 837,000 residential and business customers and
approximately 1.0 million sites through its wholesale operations.
The company's net loss for the quarter ended Sept. 30, 2008,
increased to $11.1 million, from $8.7 million in 2007 and adjusted
EBITDA declined to $27.1 million from $30.2 million.
As of Sept. 30, 2008, the company's balance sheet shows
$644.9 million in total assets, $708.6 million in total
liabilities, resulting in $63.7 million in stockholders' deficit.
RECYCLED PAPER: Disclosure Statement Hearing Set for February 18
----------------------------------------------------------------
Recycled Paper Greetings Inc. and its debtor-affiliates will
present on Feb. 18, 2009, at 10:00 a.m., before the Hon. Kevin
Gross of the United States Bankruptcy Court for the District of
Delaware to consider the adequacy of a disclosure statement for
their prepackaged joint Chapter 11 plan of reorganization dated
Jan. 2, 2009. Objections, if any, are due Feb. 4, 2009.
A plan confirmation hearing will take place on that date after
Debtors' disclosure statement is approved.
Overview of the Plan
American Greeting will acquire the new RPG Holdings Capital Stock
to be issued under the plan. The aggregate consideration to be
provided by American Greeting on the plan's effective date for the
stock purchase comprised of:
a) cash in the amount equal to the sum of (i) the American
Greeting first lien cash amount; (ii) the amount of the DIP
financing claims outstanding on the plan's effective date,
up to $10 million less the total amount of the DIP
financing claims held by American Greeting; (iii) the
amount of unpaid reimbursable professional fees; (iv) the
lesser of $1 million or the amount excluded liabilities;
and (v) an amount equal to the adjustment, if any, made to
consideration to be paid to the first lien lenders and
second lien lenders as provided in the agreement.
b) the contributed American Greeting first-lien debt;
c) the American Greeting notes and New AG notes for
distribution to holders of first lien lender claims and
second lien lender claims as provided for in the plan; and
d) all other liabilities as provided for and in accordance
with the terms of the agreement and the plan.
The plan classified interests against and liens in the Debtors in
nine classes. The classification of treatment of interests and
claims are:
Treatment of Claims
Type Estimated
Class of Claims Treatment Recovery
----- --------- --------- ---------
NA DIP financing 100%
claims
NA Administrative
Expense Claims 100%
NA Priority tax
claims
NA Compensation 100%
and Reimbursement
claims
1 Other Priority unimpaired 100%
2 Secured Tax unimpaired 100%
claims
3 First Lien impaired 62.2%
Lender Claims
4 Second Lien impaired 11.3%
5 General Unsecured unimpaired 100%
6 Contingent and impaired 0%
Insider Claims
against RPG
Holdings and RPG
7 Intercompany unimpaired 0%
claims
8 Equity Interests unimpaired 100%
in RPG
9 Equity Interests unimpaired 0%
in RPG Holdings
Class 1, 2 and 5 will receive payment in full.
Holders of Class 3 first lien lender claims will receive a pro
rata share of cash, the American Greeting notes, and about
$19.5 million of New AG notes, subject to adjustment, as set forth
in the plan.
Holders of Class 4 second lien lender claims will receive a pro
rata share of $13.1 million of AG notes, subject to adjustment, as
set forth in the plan.
Equity interest in RPG and its subsidiaries will be retain but
holders of equity interest in RPG holdings will not receive any
distribution under the plan. Class 6 and 7 will not receive any
distribution as well.
A full-text copy of the Debtors' disclosure statement is available
for free at:
http://ResearchArchives.com/t/s?3774
A full-text copy of the Debtors' prepackage joint Chapter 11 plan
of reorganization is available for free at:
http://ResearchArchives.com/t/s?3775
About Recycled Paper
Headquartered in Chicago, Illinois, Recycled Paper Greetings Inc.
designs, manufactures, and distributes greetings cards and social
expression products throughout the U.S. and Canada. RPG is the
third largest greeting card company in North America. The company
and three of its affiliates filed for Chapter 11 protection on
Jan. 2, 2009 (Bankr. D. Del. Lead Case No. 09-10002). Michael F.
Walsh, Esq. and Rachel Ehrlich Albanese, Esq., at Weil, Gotshal &
Manges LLP, represent as the Debtors' bankruptcy counsel. Mark D.
Collins, Esq., Chun I. Jang, Esq., and Lee E. Kaufman, Esq., at
Richards, Layton & Finger, P.A., represents as the Debtors' local
counsel. The Debtor proposed Rothschild Inc. as financial and
restructuring advisor and Kurtzman Carson Consultants LLC as
claims and noticing agent. When the Debtors filed for protection
from their creditors, they listed assets and debts between $100
million to $500 million each.
REDDY ICE: Appoints Kevin J. Cameron to Board of Directors
----------------------------------------------------------
Reddy Ice Holdings, Inc., appointed Kevin J. Cameron to its board
of directors effective Dec. 31, 2008.
Mr. Cameron has more than 10 years of corporate governance and
strategy experience. In 2003, Mr. Cameron co-founded Glass Lewis
& company, an independent research firm focused on issues of
corporate governance. From 2001 to 2002, Mr. Cameron handled
corporate affairs for Moxi Digital, a technology venture focused
on digital entertainment. From 1997 to 2001, he was employed by
NorthPoint Communications, a publicly-traded broadband
telecommunications company. Prior to 1997, Mr. Cameron was an
attorney with the corporate law firm of Kellogg, Huber, Hansen,
Todd & Evans in Washington D.C. and served as a law clerk to the
Hon. James L. Buckley of the United States Court of Appeals for
the District of Columbia Circuit.
Mr. Cameron earned a law degree from the University of Chicago and
an undergraduate degree from McGill University. Mr. Cameron also
serves as a director of Keryx Biopharmaceuticals, Inc. and as a
member of the Shamrock Activist Value Fund's Advisory Panel.
Mr. Cameron filled a vacancy created by the resignation, of
Christopher S. Kiper from the board. Mr. Kiper served on the
board as a designee of Shamrock Activist Value Fund, L.P., the
company's largest stockholder. Mr. Cameron has been designated by
SAVF as Mr. Kiper's replacement pursuant to the letter agreement
dated as of April 17, 2008, between the company and SAVF.
"We are pleased to welcome [Mr.] Cameron to our board of
directors," commented Gilbert M. Cassagne, the company's chief
executive officer and president. "We look forward to the insights
and perspectives that his corporate governance, legal, and capital
markets expertise will provide. On behalf of the entire Reddy Ice
team, I would also like to thank [Mr.] Kiper for his dedicated
service to the board and the company."
About Reddy Ice Holdings, Inc.
Reddy Ice Holdings, Inc., through its wholly-owned subsidiary,
Reddy Ice Corporation, manufactures and distributes packaged ice
products. Reddy Ice is a manufacturer of packaged ice products in
the United States and serves approximately 82,000 customer
locations in 31 states and the District of Columbia. Typical end
markets include supermarkets, mass merchants, and convenience
stores.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $472.3 million, total liabilities of $458.9 million and
stockholders' equity of about $13.4 million.
For three months ended Sept. 30, 2008, the company reported net
loss of $112.9 million compared to net loss of $16.5 million for
the same period in the previous year.
For nine months ended Sept. 30, 2008, the company reported net
loss of $110.6 million compared to net loss of $16.9 million for
the same period in the previous year.
REPUBLIC WINDOWS: Union Accuses Firm of Breaching Labor Law
-----------------------------------------------------------
The Associated Press reports that the United Electrical Workers,
which represents Chicago workers at Republic Windows and Doors,
has gone to the National Labor Relations Board.
According to The AP, the union filed documents with the Board,
accusing Republic Windows of violating labor law by hastily
removing machinery from the plant as it closed. The AP relates
that Republic Windows gave workers a few days' notice in December
before laying them off. The union is asking that the equipment be
returned in hopes that the plant could one day resume operations,
the report says, citing union spokesperson Leah Fried.
The AP states that about 200 employees held demonstrations against
Republic Windows, occupying the plant for almost a week until the
company agreed to demands for severance and accrued vacation pay.
Chicago, Illinois-based Republic Window and Doors --
http://www.republicwindows.com-- manufactures custom-crafted
vinyl windows for new construction homebuilders, home improvement
dealers, and direct commercial accounts throughout the United
States.
As reported by the Troubled Company Reporter on Dec. 17, 2008,
Republic Windows and Doors said it filed for Chapter 7 liquidation
on Dec. 15, 2008, as a requirement of Bank of America in the
negotiated settlement with the United Electrical.
REYNOLDS & REYNOLDS: S&P Affirms Corporate Credit Rating at 'B+'
----------------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed its ratings on
Dayton, Ohio-based Reynolds & Reynolds Co., including its 'B+'
corporate credit rating. In addition, S&P revised the outlook to
stable from positive.
"The outlook revision reflects our lack of clarity regarding
Reynolds' ongoing business and financial strategy," said Standard
& Poor's credit analyst Philip Shrank. While leverage has
declined to below-6x levels from about 7x at the time of its
acquisition by privately held and unrated Universal Computer
Systems in late 2006, S&P has no view into its longer term
financial targets, as well as its growth strategies and business
initiatives. "As a result, it is not clear whether the recent
leverage improvement will be continued or even sustained," added
Mr. Shrank.
RIVERSIDE BANK: Weiss Ratings Assigns "Very Weak" E- Rating
-----------------------------------------------------------
Weiss Ratings has assigned its E- rating to Cape Coral, Fla.-based
Riverside Bank of the Gulf Coast. Weiss says that the institution
currently demonstrates what it considers to be significant
weaknesses and has also failed some of the basic tests Weiss uses
to identify fiscal stability. "Even in a favorable economic
environment," Weiss says, "it is our opinion that depositors or
creditors could incur significant risks."
Riverside is chartered as a Federal Reserve Member, and is
primarily regulated by the Federal Reserve Board. Deposits have
been insured by the Federal Deposit Insurance Corporation since
the financial institution was established on Dec. 15, 1997.
Riverside maintains a Web site at http://www.riversidegc.com/
FDIC data shows that Riverside has 15 branches in Florida. At
Sept. 30, 2008, Riverside disclosed $554 million in assets and
$536 million in liabilities in its regulatory filings.
ROYAL PALM: Case Summary & Largest Unsecured Creditor
-----------------------------------------------------
Debtor: Royal Palm Senior Investors, LLC
c/o PADC Hospitality Corp. I, LLC
550 Biltmore Way, Suite 970
Coral Gables, FL 33134
Bankruptcy Case No.: 09-10105
Chapter 11 Petition Date: January 6, 2009
Court: Southern District of Florida (Miami)
Judge: Robert A Mark
Debtor's Counsel: Paul L. Orshan, Esq.
plorshan@orshanpa.com
2506 Ponce de Leon Blvd.
Coral Gables, FL 33134
Tel: (305) 529-9380
Fax: (305) 402-0777
Estimated Assets: Less than $50,000
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditor:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Carbon Capital II Inc. mezzanine debt $30,000,000
c/o Detra Shaw-Wilder, Esq.
Kozyak Tropin & Throckmorton
2525 Ponce de Leon Blvd.
Coral Gables, FL 33134
The petition was signed by R. Donahue Peebles, president of PADC
Hospitality Corp. I LLC.
SE MARINA: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: SE Marina Way Partnership, LP
dba Marina Del Sol
c/o Tracy Suttles
1940 Fountain View Drive, #187
Houston, TX 77057
Bankruptcy Case No.: 09-80004
Chapter 11 Petition Date: January 6, 2009
Court: Southern District of Texas (Galveston)
Judge: Letitia Z. Clark
Debtor's Counsel: Bennett G. Fisher, Esq.
bgf@fisherlaw.net
Fisher and Associates PC
1800 Two Houston Center
909 Fannin St.
Houston, TX 77010-0000
Tel: (713) 223-8400
Fax: (713) 609-7766
Estimated Assets: $1,000,000 to $10,000,000
Estimated Debts: $10,000,000 to $50,000,000
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Madison Realty Capital, LP bank loan $13,782,994
Nolan Shanahan
900 Third Avenue, 16th Floor
New York, NY 10022
Tel: (646) 563-8993
Texas General Land Office - $1,768
PO Box 12057
Austin, TX 78711
City Of League City - $1,698
PO Box 2008
League City, TX 77574-2008
Cananwill - $1,393
Direct Energy - $1,313
Premium Assignment Corporation - $1,050
The Boaters Directory - $988
Grainger - $931
Texas General Land Office - $884
JB Services Int'l., Inc. - $862
J A Ramirez - $853
Ameriwaste Of Texas LLC - $762
Weeks Co. - $445
Office Depot - $438
Centerpoint Energy - $385
Diamond Ice Express - $289
Equipment Depot - $281
Verizon Southwest 7905 - $269
DHL - $252
Galveston County - $0
The petition was signed by Tracy Suttles, manager of the general
partner of the company.
SMITTY'S BUILDING: Case Summary & 25 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Smitty's Building Supply, Inc.
dba Smitty's Millwork & Supply
dba Smitty's Induserve
fdba Smitty's Lumberteria
fdba Marvin Window and Door Showplace
8457 Richmond Highway
Alexandria, VA 22309
Bankruptcy Case No.: 09-10040
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
SBS Acquisition Corp. 09-10041
SBS Window Division Corp. 09-10042
Windowsmith, Inc. 09-10043
Chapter 11 Petition Date: January 5, 2009
Court: Eastern District of Virginia (Alexandria)
Judge: Stephen S. Mitchell
Debtor's Counsel: Kristen E. Burgers, Esq.
keburgers@venable.com
Lawrence Allen Katz, Esq.
lakatz@venable.com
Venable LLP
8010 Towers Crescent Drive, Suite 300
Vienna, VA 22182-2707
Tel: (703)760-1609
Fax: (703) 821-8949
Estimated Assets: $10,000,000 to $50,000,000
Estimated Debts: $10,000,000 to $50,000,000
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
S&D Manassas, LLC loan $4,800,000
c/o John Ritzert, Esq.
Ritzert & Leyton, P.C.
11350 Random Hills Road
Suite 400
Fairfax, VA 22030
Lightstyles Ltd. trade debt and $3,217,218
1261 Claremont Road note holder
Carlisle, PA 17015
717-241-6442
Marvin Window and Door note holder $592,000
Showplace, Inc.
Robert & Susan Slagle
1261 Claremont Road
Carlisle, PA 17013
717-241-6442
Snavely Forest Products trade debt $519,661
Fairfax Millwork and Building note holder $508,000
Culpeper Wood Preservers trade debt $457,114
Anderson Logistics trade debt $440,312
Wolf Distributing Co. trade debt $419,754
Atlantic Forest Products trade debt $376,046
Madison Wood trade debt, note $322,739
BWI of PA, Inc. trade debt $301,170
Rocco Building Supplies, LLC trade debt $297,138
American Wood Moulding Corp. trade debt $183,565
U.S. Lumber Group, Inc. trade debt $180,224
Middle Atlantic Wholesale trade debt $166,791
Lumb
Brunswick Valey Lumber Inc. trade debt $160,040
Reeb Millwork Corp. trade debt $158,614
Plunkett Webster trade debt $146,357
Jeld-Wen Windows & Doors trade debt $132,217
True Value Company trade debt $108,096
Virginia Department of - $104,868
Taxation
Capitol Building Supply trade debt $100,820
Wholesale Millwork, Inc. trade debt $91,391
Caron Lane LLC - $88,992
Kaiser Permanente - $84,380
The petition was signed by Patrick Smith, chief executive officer
of the company.
SOUTHERN COMMUNITY: Weiss Ratings Assigns "Very Weak" E- Rating
---------------------------------------------------------------
Weiss Ratings has assigned its E- rating to Fayetteville, Ga.-
based Southern Community Bank. Weiss says that the institution
currently demonstrates what it considers to be significant
weaknesses and has also failed some of the basic tests Weiss uses
to identify fiscal stability. "Even in a favorable economic
environment," Weiss says, "it is our opinion that depositors or
creditors could incur significant risks."
Southern Community Bank is not a member of the Federal Reserve.
Deposits have been insured by the Federal Deposit Insurance
Corporation since the financial institution was established on
June 2, 2000. Southern Community Bank maintains a Web site at
http://www.southercommunitybank.com/
FDIC data shows that Southern Community Bank has seven branches in
Georgia. At Sept. 30, 2008, Southern Community Bank disclosed
$415 million in assets and $389 million in liabilities in its
regulatory filings.
SPRING POINTE: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Spring Pointe, LLC
P.O. Box 5021
Grants Pass, OR 97527
Bankruptcy Case No.: 09-30070
Chapter 11 Petition Date: January 5, 2009
Court: District of Oregon
Judge: Trish M. Brown
Debtor's Counsel: Joseph A. Field, Esq.
joe@fieldjerger.com
Field Jerger LLP
610 S.W. Alder #910
Portland, OR 97205
Tel: (503) 228-9115
Total Assets: $1,943,566
Total Debts: $159,381,571
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
LRS Development, LLC loan to debtor $27,149
1728 S.W. High Street
Portland, OR 97201
Divine Investments, LLC loan to debtor $27,014
4036 Trailblazer Place, S.E.
Salem, OR 97317
Senenet, Inc. - $25,000
3723 Fairview Industrial Drive
S.E.
Salem, OR 97302
Sunwest Management, Inc. precautionary $16,000
Dunn Family Comm. Prop. Trust loan to debtor $8,619
Redwood Center loan to debtor $7,218
Pacific Power precautionary $3,500
TruGreen Landcare Inc. precautionary $3,322
Alliance Insurance Group precautionary $2,734
Signaling System Solutions precautionary $2,550
Umpqua Dairy Products precautionary $1,500
Terra Firma Landscaping precautionary $1,440
Avista Utilities precautionary $1,100
City of Grants Pass precautionary $1,000
Ikon Financial Services precautionary $720
Southern Oregon Sanitation precautionary $600
Charter Communications precautionary $500
Mt. HOod Solutions Co precautionary $500
Integra Telecom Inc. precautionary $440
Capital Premium Financing, precautionary $415
Inc.
The petition was signed by Pat Feahy, managing member of the
company.
STATE OF FRANKLIN: Weiss Ratings Assigns "Very Weak" E- Rating
--------------------------------------------------------------
Weiss Ratings has assigned its E- rating to Johnson City, Tenn.-
based State of Franklin Savings Bank. Weiss says that the
institution currently demonstrates what it considers to be
significant weaknesses and has also failed some of the basic tests
Weiss uses to identify fiscal stability. "Even in a favorable
economic environment," Weiss says, "it is our opinion that
depositors or creditors could incur significant risks."
State of Franklin Saving Bank (now doing business as Jefferson
Federal Bank, according to FDIC records) is chartered asan FDIC
Savings Bank. Deposits have been insured by the Federal Deposit
Insurance Corporation since the financial institution was
established on Feb. 21, 1996. State of Franklin Savings Bank
maintains a Web site at http://www.stateoffranklin.com/
FDIC data shows that State of Franklin has 14 branches in
Tennessee. At Sept. 30, 2008, State of Franklin disclosed
$331 million in assets and $320 million in liabilities in its
regulatory filings.
STEVE MCKENZIE: Files for Chapter 11 Bankruptcy Protection
----------------------------------------------------------
Chattanoogan.com reports that Steve McKenzie has filed for a
Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Eastern
District of Tennessee.
Chattanoogan.com relates that Mr. McKenzie listed over
$151 million in liabilities and $100 million to $150 million in
assets. The report says that Kyle Weems is assisting Mr. McKenzie
in his restructuring effort. The report states that Mr. McKenzie
had filed a Chapter 11 petition for McKenzie Development, LLC,
last year.
According to Chattanoogan.com, Mr. McKenzie became wealthy as a
pioneer in the lucrative check cashing business. He then ventured
into real estate, trucking, and other businesses, says the report.
Chattanoogan.com says that creditors having secured claims against
Mr. McKenzie include:
-- the Bank of Cleveland, $200,000;
-- First Tennessee Bank of Memphis, $200,000; and
-- the Chattanooga law firm of Grant, Konvalinka and
Harrison, $385,000.
Chattanoogan.com reports that creditors having unsecured non-
priority claims against Mr. McKenzie are:
-- AmSouth/Regions Bank of Birmingham,
-- Athens Federal Community Bank of Athens,
-- Bank of Cleveland,
-- BB&T Bank of Wilson,
-- Community Trust and Banking of Ooltewah,
-- Combelt Bank and Trust of Pittsfield,
-- Cornerstone Community Bank of Chattanooga,
-- First Bank of Tennessee in Spring City,
-- First Tennessee Bank of Memphis,
-- First Volunteer Bank of Benton,
-- FSG Bank of Chattanooga,
-- Green Bank of Knoxville,
-- Integrity Bank of Smyrna,
-- National Bank of Tennessee at Newport,
-- Northwest Georgia Bank at Ringgold,
-- Regions Bank of Birmingham
-- Sevier County Bank,
-- Southeast Bank and Trust of Athens,
-- Southern Heritage Bank of Cleveland,
-- BunTrust Bank of Baltimore, and
-- Synovus Capital of Birmingham.
According to Chattanoogan.com, a meeting of creditors will be held
on Jan. 27j, 2009.
Steve "Toby" McKenzie is a businessman in Cleveland.
TAYLOR-RAMSEY CORP: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Taylor-Ramsey Corporation
134 Elon Road
Madison Heights, VA 24572
Bankruptcy Case No.: 09-10017
Chapter 11 Petition Date: January 6, 2009
Court: Middle District of North Carolina (Greensboro)
Debtor's Counsel: Charles M. Ivey, III, Esq.
jlh@imgt-law.com
Ivey, McClellan, Gatton, & Talcott, LLP
Suite 500, 100 S. Elm St.
Greensboro, NC 27401
Tel: (336) 274-4658
Fax: (336) 274-4540
Estimated Assets: $0 to $10,000
Estimated Debts: $1,000,000 to $100,000,000
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Turman Sawmill, Inc. trade debt $242,392
82 Oak Street
Brookneal, VA 24528
Abenaki Timber Corporation trade debt $147,328
P.O. Box 599
Kingston, NH 03848
Campbell Lumber Co., Inc. trade debt $122,746
P.O. Box 239
North Garden, VA 22959-0239
East Ohio Lumber Co., Inc. trade debt $104,837
Gardner & Sons Sawmilling, trade debt $91,407
Inc.
Kidd Timber Company, Inc. trade debt $86,813
A.B. Lumber trade debt $79,153
MK Hardwoods trade debt $65,059
Ramsey & Son Lumber Company trade debt $56,338
Campbell Lumber Co. of NB, trade debt $52,858
Inc.
Wengered Logging & Lumber trade debt $52,205
Bennett Log & Lumber Company trade debt $45,839
CWT, Inc. trade debt $44,933
H & H Industries trade debt $44,674
Campbell Lumber Co., Inc. trade debt $38,645
Marcus Cox & Sons, Inc. trade debt $36,631
Trents Sawmill, Inc. trade debt $35,251
Caskie & Frost trade debt $34,997
TLC Sales Inc. trade debt $33,115
Pamplin Forest Products trade debt $23,390
The petition was signed by George P. Ramsey III, president of the
company.
TAYLOR-RAMSEY WOOD: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Taylor-Ramsey Wood Preserves, Inc.
134 Elon Road
Madison Heights, VA 24572
Bankruptcy Case No.: 09-10018
Chapter 11 Petition Date: January 6, 2009
Court: Middle District of North Carolina (Greensboro)
Debtor's Counsel: Charles M. Ivey, III, Esq.
jlh@imgt-law.com
Ivey, McClellan, Gatton, & Talcott, LLP
Suite 500, 100 S. Elm St.
Greensboro, NC 27401
Tel: (336) 274-4658
Fax: (336) 274-4540
Estimated Assets: $0 to $10,000
Estimated Debts: $1,000,000 to $100,000,000
The Debtor's largest unsecured creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Arbortech Forest Products trade debt $153,443
Arch Treatment trade debt $172,326
Northern Neck Lumber Co., Inc. trade debt $72,647
Rhino Brothers Inc. trade debt $48,681
International Paper trade debt $46,710
Chips, Inc. trade debt $39,942
Weyerhaeuser Corporation trade debt $35,463
Fortner Lumber Company trade debt $30,095
Jim White Southern, Inc. trade debt $28,915
West Fraser, Inc. trade debt $22,306
Simpson Lumber Company trade debt $20,313
Barnes Wood & Lumber Co., Inc. trade debt $13,090
Specialty Timber trade debt $12,546
Wood Preservers, Inc. trade debt $11,917
Gladys Timber Products trade debt $11,690
T.K. Lindsey Co., Inc. trade debt $8,717
Lindsey Leasing trade debt $8,575
Builders First Source trade debt $7,853
Acme Wood Preserving, Inc. trade debt $4,627
S.C. Dunn & Sons trade debt $3,331
The petition was signed by George P. Ramsey III, president of the
company.
TROPICANA ENTERTAINMENT: Balks at Panel's Bid to File Own Plan
--------------------------------------------------------------
Tropicana Entertainment, LLC, informs the U.S. Bankruptcy Court
for the District of Delaware that it will file a plan of
reorganization by Jan. 12, 2009, the last day for which it has the
exclusive right to file a plan. Tropicana adds that it has worked
diligently with two groups of bank lenders regarding the terms of
its plan, and it has made great progress on a number of critical
issues in their chapter 11 cases
Accordingly, Tropicana asks the Bankruptcy Court to deny a request
by their official committee of unsecured creditors to file a
competing plan for lack of cause. The Creditors Committee has
asked the Court to (1) modify the Debtors' exclusive periods to
file a plan of reorganization and to solicit acceptances, solely
with respect to the Creditors Committee, (2) authorize the
Creditors Committee to file its own plan of reorganization and an
accompanying disclosure statement, and (3) place any disclosure
statement and plan filed by the Creditors Committee on the same
approval track as any of those filed by the Debtors to the extent
that the Debtors file a plan on or before January 12.
Before filing for bankruptcy protection, Tropicana, in 2007,
entered into credit facilities to finance its acquisiton of Aztar
Corp.'s five casinos. The OpCo Credit Facility -- an aggregate
$1,710,000,000 secured credit facility provided by Credit Suisse
as collateral agent and administrative agent -- constituted the
largest portion of the Aztar Acquisition financing. The LandCo
Credit Facility, provided by Credit Suisse, Cayman Islands, as the
sole administrative agent, partly financed the Aztar Acquisition.
As of April 30, 2008, approximately $1,300,000,000 of the
principal amount was outstanding under the OpCo Term Facility, and
approximately $21,000,000 of the principal amount was outstanding
under the OpCo Revolving Facility. As of April 29, 2008,
$440,000,000 of the principal amount was outstanding under the
LandCo Credit Facility.
Lee Kaufman, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, asserts that the additional cost and delay
and the Debtors' diligent reorganization efforts and progress to
formulate its own plans mandate the denial of the Creditors
Committee's Motion, Mr. Kaufman asserts.
"The perfect storm of credit markets in crisis and a failing
economy have left the Debtors at the mercy of the OpCo Lenders and
the LandCo Lenders, whose adequate protection payments likely will
choke off the Debtors' liquidity before Memorial Day," Thomas F.
Driscoll III, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in
Wilmington, Delaware, has said, on behalf of the Creditors
Comittee.
The Creditors Committee believes that the Debtors "should be
fighting with everything they have to regain the Tropicana
Atlantic City Assets and obtain access to its cash flow, retain
the Tropicana Las Vegas, find new DIP financing, and strongly
consider a 'cram-up' plan of reorganization, all of which would
buy the Debtors more time to ride out the storm and allow the
Debtors' estates to recognize the significant value that is
trapped in the enterprise due to the current difficulties in the
exit financing markets.
The Creditors Committee fears that due to the pressures of the
OpCo Lenders and the state of the gaming markets, the Debtors may
be forced to sell the Tropicana Atlantic City at far below fair
market value, and due to the dwindling EBITDA experienced by the
Tropicana Las Vegas during these challenged markets, the Debtors
may hand over all equity in Tropicana Las Vegas, which lies at the
center of the Tropicana portfolio, to the LandCo Lenders at half
of its actual value, Mr. Driscoll tells the Court.
The Creditors Committee must act to adequately safeguard the
interests of unsecured creditors by filing an alternative plan of
reorganization for creditor consideration, Mr. Driscoll asserts.
Lenders: Dispute Over Values Not Valid Basis
On behalf of the steering committee of Lenders under the Credit
Agreement dated January 3, 2007, as amended, among the Debtors,
the Lenders and Credit Suisse, as administrative agent and
collateral agent, Michael R. Lastowski, Esq., at Duane Morris LLP,
in Wilmington, Delaware, argues that disagreement over plan values
and other terms of a plan is not a valid basis for terminating the
Debtors' Exclusivity Period.
Mr. Lastowski notes that the Creditors Committee is entitled to,
and will have, its day in Court to litigate disputes about the
value of the Debtors' assets in connection with the confirmation
of the Debtors' plan of reorganization. He contends that the
Creditors Committee is attempting to use that issue to hinder the
plan process and to use the resulting delay against all other
constituencies in the Debtors' Chapter 11 cases.
Credit Suisse, the administrative agent under the OpCo Credit
Facility, argues that the Creditors Committee Motion should be
denied because, among other things, (a) the Creditors Committee
has no legal authority, (b) equity dictates that if the Court were
to determine to terminate the Debtors' Exclusive Periods, all
creditors should have equal rights to propose, file and solicit
acceptances of a reorganization plan, (c) granting the Motion
would prejudice the LandCo Lenders, and (d) the Motion is replete
with false statements.
Onex Corporation, on behalf of itself and certain of its
affiliates, joins in the arguments made by Credit Suisse. Onex
Corp. owns claims under the LandCo secured credit agreement.
The Creditors Committee has responded that despite the objections
to its proposal, legal precedent exists in support of its proposal
to file a competing plan. Citing In re United Press Int'l, Inc.,
60 B.R. 265, 271 n.12 (Bankr. D.C. 1986), among others, Mr.
Driscoll points out that courts have acknowledged that the
statutory mandate of Section 1121(d), coupled with the broad
equitable powers granted under Section 105(a) of the Bankruptcy
Code, authorize bankruptcy courts to modify exclusivity to enable
a party, particularly an official creditors committee as fiduciary
representative, to file a competing plan of reorganization, if
warranted under the facts and circumstances of the case.
About Tropicana Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada and Atlantic City, New Jersey.
Tropicana Entertainment LLC filed for Chapter 11 protection on
May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor-
affiliates filed for separate Chapter 11 petitions but with no
case numbers assigned yet. Kirkland & Ellis LLP and Mark D.
Collins, Esq., at Richards Layton & Finger, represent the Debtors
in their restructuring efforts. Their financial advisor is Lazard
Ltd. Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors'
Web site administration agent. AlixPartners LLP is the Debtors'
restructuring advisor.
Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell
LLP represent the Official Committee of Unsecured Creditors in
this case. Capstone Advisory Group LLC is financial advisor to
the Creditors' Committee.
The Court has extended the Debtors' exclusive period to file a
plan through and including Jan. 12, 2009, and to solicit votes
on the plan through and including March 13, 2009.
(Tropicana Bankruptcy News, Issue No. 25; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
UNISYS CORP: S&P Keeps 'B+' Corp. Credit Rating; Outlook Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised its
outlook on Blue Bell, Pennsylvania-based Unisys Corp. to negative
from stable. At the same time, S&P affirmed the 'B+' corporate
credit rating on the company.
"The outlook revision reflects our concerns that global economic
weakness will pressure operating profitability and weaken debt
protection metrics," said Standard & Poor's credit analyst Martha
Toll-Reed. In addition, the continuation of currently constrained
credit market conditions could impede Unisys' ability to revise
and/or extend credit facilities, leading to reduced liquidity over
the near-to-intermediate term.
S&P's ratings on Unisys reflect the company's revenue declines
over the past two years, weak profitability measures in comparison
to its peers, and challenging market conditions. However, Unisys
maintains a good competitive position, especially in the federal
government and public sector and a moderately leveraged financial
profile, which has provided additional support for the current
rating.
Revenues were $1.3 billion in the September 2008 quarter, down 6%
from the prior year, primarily driven by the impact of economic
uncertainty in Unisys's important financial services customer
base. Highly competitive industry conditions and global economic
weakness will continue to challenge Unisys' efforts to preserve
operating profitability, despite additional cost reduction actions
announced in December 2008. Although the technology segment
accounts for only 12% of total revenues, the timing and volume of
less-predictable equipment orders adds volatility to quarterly
operating results. Adjusted EBITDA margins were 8% in the
September 2008 quarter, down about 1% from the prior-year period.
Cost reductions and EBITDA improvement over the past year,
combined with modest debt reductions, have resulted in a
moderately leveraged financial profile for the rating, which
provides some headroom for near-term earnings weakness. Adjusted
debt (including capitalized operating leases and off-balance sheet
receivables financing) to EBITDA was 3x as of September 2008, down
from 3.8x in the year-earlier period.
UNIFI INC: Lowers 2009 Adjusted EBITDA Guidance to $2 Million
-------------------------------------------------------------
Unifi, Inc. disclosed in a filing with the Securities and Exchange
Commission that it revised its Adjusted EBITDA guidance for its
2009 second fiscal quarter, which ended Dec. 28, 2008, to a
forecasted range of $2 to $4 million from the previous guidance of
$8 to $9 million given on its earnings call on Oct. 30, 2008.
The revised guidance is a result of significant decreases in
consumer spending coupled with high supply chain inventories
across the company's key business segments. Reductions in the
company's orders across the quarter were a result of year-over-
year declines of 4% in October and 7% in November of retail
apparel sales, 11% in October and 13% in November of retail
furnishing sales and a 16% year to date decline in automotive
sales.
"We are disappointed in having to revise our guidance at this
time, particularly after the significant improvements we have made
to our business in the past year," said Bill Jasper, president and
CEO for Unifi. "We expected the December quarter to be a very
challenging one, but the speed and severity of the declines in
spending have been much greater than anticipated. We expect sales
to recover somewhat during the first six months of calendar 2009,
as supply chain inventories get replenished, even though consumer
spending is expected to remain weak. Accordingly, we now expect
Adjusted EBITDA for the 2009 fiscal year to be in the range of
$40 to $45 million. We continue to face these challenges with a
solid balance sheet and strong liquidity and we remain committed
to our strategies. Our emphasis remains on controlling costs and
optimizing the supply chain supporting our base business, while
focusing on growing our premium value-added products and our
operations in China and Brazil."
The company also disclosed that it has closed on the sale of
certain real property and related assets located in Yadkinville,
N.C., for $7.0 million. The sale will result in net proceeds of
$6.6 million to the company and a net pre-tax gain of $5.2 million
for the current quarter. Furthermore, the company disclosed that
$8.8 million of net cash proceeds from asset sales of collateral
has become "Excess Collateral Proceeds" under the terms of the
company's indenture for its $190 million 11.5% Senior Secured
Notes. While there is no requirement in the Indenture to use
Excess Collateral Proceeds to offer to repurchase the Bonds (at
par) prior to the time the amount of Excess Collateral Proceeds
reaches $10.0 million, the company may elect, from time to time,
to make the offers earlier, at its discretion.
Additionally, the company may also from time to time seek to
retire or purchase a portion of the Bonds in open market
purchases, in privately negotiated transactions or otherwise. The
retirement or purchases of the Bonds may come from the operating
cash flows of the business or other sources and will depend upon
prevailing market conditions, liquidity requirements, contractual
restrictions and other factors, and the amounts involved may be
material.
Adjusted EBITDA represents pre-tax income before interest expense,
depreciation and amortization expense and loss or income from
discontinued operations, adjusted to exclude restructuring
charges, SG&A severance charges, equity in earnings and losses of
unconsolidated affiliates, write down of long-lived assets and
equity affiliates, non-cash compensation expense, gains and losses
on sales of property, plant and equipment, hedging gains and
losses, deposit write offs, asset consolidation and optimization
expense, and Kinston shutdown costs. The company presents
Adjusted EBITDA as a supplemental measure of its performance and
ability to service debt. The company also presents Adjusted
EBITDA because it believes such measure is frequently used by
securities analysts, investors and other interested parties in the
evaluation of companies in its industry and in measuring the
ability of "high-yield" issuers to meet debt service obligations.
It is not practical to provide a reconciliation of the company's
2009 second fiscal quarter or 2009 fiscal year forecasted Adjusted
EBITDA to the most directly comparable GAAP measure, pre-tax
income, because certain items cannot be reasonably estimated or
predicted at this time.
Unifi, Inc., in a separate filing, disclosed that it entered into
an amendment to the Supplemental Key Employee Retirement Plan.
The SERP was amended to make changes to the plan to comply with
the requirements of Section 409A of the Internal Revenue Code of
1986, as amended.
The amendment revised the definition of "Separation from Service"
to satisfy the requirements of Section 409A, and specifies the
time period during which benefits will be paid to participants
with regard to termination of employment, including for death and
disability, in order to comply with the 6 month distribution delay
rule under Section 409A.
A full text copy of the supplemental key employee retirement plan
amendment 2008-1 is available for free at
http://ResearchArchives.com/t/s?376e
About Unifi
Headquartered in Greensboro, North Carolina, Unifi Inc. (NYSE:
UFI) -- http://www.unifi.com/ -- is a diversified producer and
processor of multi-filament polyester and nylon textured yarns and
related raw materials. Key Unifi brands include, but are not
limited to: aio(R) - all-in-one performance yarns, Sorbtek(R),
A.M.Y.(R), Mynx(R) UV, Repreve(R), Reflexx(R), MicroVista(R), and
Satura(R). Unifi's yarns and brands are readily found in home
furnishings, apparel, legwear, and sewing thread, as well as
industrial, automotive, military, and medical applications.
The company reported net loss of $676,000, compared to net loss of
$9.2 million for the same period in the previous year.
Cash-on-hand at the end of September was $20.4 million, which
increased from the $20.2 million cash-on-hand at the end of June.
Total cash and cash equivalents at the end of September, including
restricted cash, were $47.7 million compared to
$55.6 million at the end of June.
* * *
Unifi Inc. continues to carry Moody's Investor Service's Caa2
senior secured debt rating which was placed in December 2007.
US SHIPPING: Credit Deal Default Cues S&P to Cut Ratings to 'D'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on U.S. Shipping Partners L.P. to 'D' from 'CCC'. At the
same time, S&P lowered the ratings on the senior secured debt to
'D' from 'CCC', while leaving the recovery rating on this debt
unchanged at '3', indicating expectations of meaningful (50%-70%)
recovery in the event of a payment default. At the same time, S&P
lowered the rating on the senior secured notes to 'D' from 'CC',
the same as the corporate credit rating, while leaving the
recovery rating unchanged at '6', indicating expectations of a
modest (0%-10%) recovery in the event of a payment default.
The rating actions follow U.S. Shipping's announcement that it was
in default under the terms of its senior credit agreement, after
failing to make principal and interest payments due on
Dec. 31, 2008. The company also announced that it entered into a
forbearance agreement with its lenders that terminates on Feb. 10,
2009. During the term of the forbearance agreement, the
company will attempt to negotiate a debt restructuring and explore
strategic alternatives including the possible sale of the
partnership. "Our view is that the relatively short forbearance
period coupled with tight credit market environment will likely
not result in a resumption of full debt service," said Standard &
Poor's credit analyst Funmi Afonja.
VICORP RESTAURANTS: Sale Procedure Hearing Deferred to Jan. 16
--------------------------------------------------------------
At the behest of Vicorp Restaurants, Inc., the U.S. Bankruptcy
Court for the District of Delaware moved to Jan. 16 the hearing to
consider bidding procedures proposed by the Debtor in connection
with their asset sale. This is the second time the bidding
procedures hearing was moved.
Vicorp is seeking to sell its assets to an entity formed by
Fidelity National Special Opportunities Inc. and Newport Global
Advisors, or to another party with a higher and better bid at the
auction. Fidelity/Newport has been selected as stalking horse
bidder.
According to Bloomberg's Bill Rochelle, the official committee of
unsecured creditors of Vicorp has sought permission to file under
seal its objection to the sale to Fidelity/Newport. The Committee
says that its objection is based on confidential information
obtained from the Debtor.
The U.S. Trustee, the report adds, also objected to the sale.
As reported by the Dec. 22, 2008 issue of the Troubled Company
Reporter, Vicorp Restaurants Inc., has asked the Court to approve
procedures for the sale of substantially all its assets to
Fidelity/Newport Global Advisors, or to another party at an
auction. Vicorp has signed a letter of intent with
Fidelity/Newport to sell most of its assets for 59 million in
cash. The sale will be subject to higher and better offers at an
auction. Under the bid procedures, Vicorp contemplated this
schedule:
-- deadline for competing bids will be January 9.
-- an auction will be held Jan. 13 if multiple bids are
received by the bid deadline.
-- Vicorp will present the results of the auction at the
Jan. 16 sale hearing.
The Cash Portion of the Purchase Price will include a $20 million
equity contribution.
The Debtors relate that pursuant to the Revised Second Amendment
DIP Order, dated Oct. 10, 2008, the Debtors are required to sell
substantially all of their assets on or before Jan. 31, 2009.
The Debtors intend to file with the Court an executed copy of the
Stalking Horse Agreement with the Purchaser no later than
Dec. 17, 2008.
Pursuant to the Letter of Intent, Fidelity/Newport will not
purchase (i) the California locations and the equipment, (ii) the
Hopkins location and the equipment and (iii) the Toughy and
Western location and the equipment.
If Fidelity/Newport is not designated as the Successful Bidder at
the conclusion of the Auction, the Debtors request authority to
pay Fidelity/Newport from the sale proceeds as a superpriority
administrative expense claim pursuant to Section 503(b) of the
Bankruptcy Code a Break-Up fee in the amount equal to 3% of the
Cash Portion of the Purchase Price, a maximum of $1,770,000, based
upon the cash bid of $59,000,000, and an expense reimbursement not
to exceed $750,000. The Break-Up Fee and Expense Reimbursement
shall be paid in cash irrespective of the form of consideration
received by the Debtors.
About VICORP Restaurants
Headquartered in Denver, Colorado, VICORP Restaurants, Inc. and VI
Acquisition Corp. -- http://www.vicorpinc.com/-- operate family-
dining restaurants under the Village Inn and Bakers Square brands.
The Debtors also operate 3 pie production facilities that produce
pies that are offered in the Debtors' restaurants and are sold to
select third-party customers including supermarkets and other
restaurant chains.
The Debtors filed separate petitions for Chapter 11 relief on
April 3, 2008 (Bankr. D. Del. Lead Case No. 08-10623). Kimberly
Ellen Connolly Lawson, Esq., Kurt F. Gwynne, Esq., and Richard A.
Robinson, Esq., at Reed Smith LLP, Ann C. Cordo, Esq., and Donna
L. Culver, Esq., at Morris Nichols Arsht & Tunnell, and Joseph E.
Cotterman, Esq., at Gallagher & Kennedy, P.A., represent the
Debtors as counsel. The Debtors selected The Garden City
Group, Inc. as their claims agent. Abhilash M. Raval, Esq.,
Dennis Dunne, Esq., and Samuel Khalil, Esq., at Milbank Tweed
Hadley & McCloy LLP, Domenic E. Pacitti, Esq., and Michael W.
Yurkewicz, Esq., at Klehr Harrison Harvey Branzburg & Ellers,
represent the Official Committee of Unsecured Creditors of the
Debtors.
When the Debtors filed for protection from their creditors, they
listed estimated assets of $100 million to $500 million and debts
of $100 million to $500 million.
VIRGIN MOBILE: Board Approves Cash and Equity Awards to CFO
-----------------------------------------------------------
The Compensation Committee of the board of directors of Virgin
Mobile USA, Inc., approved awards for the year ended Dec. 31,
2009, to John Feehan, chief financial officer of the company.
Based on the methodology in determining award amounts, the total
value of the awards for 2009 granted by the Compensation Committee
to Mr. Feehan (including both cash and equity compensation) was
between the 25th and 50th percentile of the value of annual grants
for chief financial officers at companies in the company's peer
groups.
Mr. Feehan received a grant of 400,000 restricted stock units
pursuant to the 2007 Omnibus Incentive Compensation Plan. This
grant was awarded subject to approval by the company's
stockholders of the issuance of additional shares of authorized
but unissued and unreserved shares of the company's Class A common
stock reserved for issuance under the Omnibus Plan. One-third of
Mr. Feehan's RSU grant will vest on each of these dates: Jan. 1,
2010, Jan. 1, 2011, and Jan. 1, 2012.
The Compensation Committee established a target cash award of
$750,000 for Mr. Feehan pursuant to the company's 2009 Mid-Term
Bonus Plan, subject to the company's performance against targets
for Net Service Revenue and EBITDA in 2009. The actual cash
payout to Mr. Feehan pursuant to the Mid-Term Bonus Plan will be
determined based on the company's performance relative to targets
for Net Service Revenue and EBITDA for the year 2009 and made in
these percentages as of these dates: 30% of actual cash payout on
Feb. 28, 2010; 30% of actual cash payout on Aug. 31, 2010; and 40%
of actual cash payout on Feb. 28, 2011.
The company intends to provide additional information regarding
the compensation awarded to Mr. Feehan and its other named
executive officers for the year ended Dec. 31, 2008, in the proxy
statement for the company's 2009 annual meeting.
Pursuant to Section 5.1 of the company's Amended and Restated
Certificate of Incorporation and Section 7.08 of the Amended and
Restated Limited Partnership Agreement of the Operating
Partnership, SK Telecom USA, Inc. exchanged its interest in the
Operating Partnership for company Class A common stock. After the
conversion, SK Telecom USA, Inc. holds approximately 17% of the
company's Class A common stock.
About Virgin Mobile USA Inc.
Headquartered in Warren, New Jersey, Virgin Mobile USA Inc. (NYSE:
VM) -- http://www.virginmobileusa.com/-- is a provider of
wireless, pay-as-you-go communications services without annual
contracts. Voice pricing plans range from monthly options with
unlimited nights and weekends to by-the-minute offers, allowing
consumers to adjust how and what they pay according to their
needs. Virgin Mobiles full slate of handsets, including the Wild
Card, Super Slice and Cyclops, are available at top retailers in
more than 35,000 locations nationwide and online, with Top-Up
cards available at more than 130,000 locations.
Virgin Mobile USA Inc.'s balance sheet at Sept. 30, 2008, showed
total assets of $395.9 million and total liabilities of
$751.4 million resulting in a shareholders' deficit of about
$355.5 million.
VIRGIN MOBILE: Inks Voting Deals with Controlling Stockholders
--------------------------------------------------------------
Virgin Mobile USA, Inc. disclosed in a filing with the Securities
and Exchange Commission that it entered into a voting agreement
with SK Telecom USA, Inc. On Dec. 9, 2008, the company entered
into additional, separate agreements with each of Corvina Holdings
Limited, an affiliate of the Virgin Group and Sprint Ventures,
Inc., an affiliate of Sprint Nextel Corporation.
Under the terms of the agreements, each Controlling Stockholder
has agreed to vote its shares of the company's capital stock in
favor of a proposal to increase the shares reserved for issuance
under the company's 2007 Omnibus Incentive Compensation Plan at a
special meeting of company stockholders. Sprint Nextel has agreed
to vote its Class B common stock in favor of the proposal so long
as it continues to be recommended by the majority of independent
directors of the Company at the time of the special meeting. The
Virgin Group has agreed to vote its stock in favor of the proposal
so long as it continues to be approved by the majority of the full
board of directors of the company at the time of the special
meeting. T hese votes will be counted to satisfy the approval
requirements of the New York Stock Exchange.
As of Dec. 9, 2008, taking into account the conversion of SK
Telecom's interest in Virgin Mobile USA, L.P. into Class A common
stock of the company, the Controlling Stockholders collectively
represented approximately 60% of the voting power of the company's
capital stock.
A full-text copy of the VOTING AGREEMENT BETWEEN VIRGIN MOBILE
USA, INC. AND CORVINA HOLDINGS LIMITED is available for free at:
http://ResearchArchives.com/t/s?3771
A full-text copy of the VOTING AGREEMENT BETWEEN VIRGIN MOBILE
USA, INC. AND SPRINT VENTURES, INC. is available for free at:
http://ResearchArchives.com/t/s?3772
A full-text copy of the VOTING AGREEMENT BETWEEN VIRGIN MOBILE
USA, INC. AND SK TELECOM USA, INC. is available for free at:
http://ResearchArchives.com/t/s?3773
Common Stock Delisting
Virgin Mobile received notice from the New York Stock Exchange
that it is not in compliance with certain listing criteria. The
company is considered below the applicable standards because the
average market capitalization of its Class A common stock and
substantial equivalents, including limited partnership interests
in Virgin Mobile USA, L.P., its operating partnership, over a
period of 30 trading days is less than $100 million. As of
Nov. 11, 2008, the company's 30 trading-day average market
capitalization was approximately $89.8 million.
Under NYSE regulations, Virgin Mobile USA has 45 days from receipt
of the notice to submit a business plan that demonstrates the
company's ability to restore compliance with the continued listing
criteria within 18 months. Virgin Mobile USA has notified the
Exchange of its intention to submit this plan on a timely basis
and to work closely with NYSE staff to assess its performance
relative to the plan.
In addition, the company expected to receive notification from the
NYSE that the average share price of its Class A common stock has
been less than $1.00 per share for 30 trading days. In order for
the company to comply with NYSE regulations, the average closing
share price of its Class A common stock must average or exceed
$1.00 per share for 30 consecutive trading days.
About Virgin Mobile USA Inc.
Headquartered in Warren, New Jersey, Virgin Mobile USA Inc. (NYSE:
VM) -- http://www.virginmobileusa.com/-- is a provider of
wireless, pay-as-you-go communications services without annual
contracts. Voice pricing plans range from monthly options with
unlimited nights and weekends to by-the-minute offers, allowing
consumers to adjust how and what they pay according to their
needs. Virgin Mobiles full slate of handsets, including the Wild
Card, Super Slice and Cyclops, are available at top retailers in
more than 35,000 locations nationwide and online, with Top-Up
cards available at more than 130,000 locations.
Virgin Mobile USA Inc.'s balance sheet at Sept. 30, 2008, showed
total assets of $395.9 million and total liabilities of
$751.4 million resulting in a shareholders' deficit of about
$355.5 million.
VIRGIN MOBILE: Committee OKs Stock Awards to Directors
------------------------------------------------------
Virgin Mobile USA, Inc., disclosed in a regulatory filing with the
Securities and Exchange Commission that the Compensation Committee
of the board of directors of approved awards of restricted stock
units to the directors of the company, effective immediately.
Thomas O. Ryder, chairman of the board of directors, was awarded
48,000 RSUs, and all other directors were awarded 32,000 RSUs.
One-third of each RSU grant will vest on each of these dates: Nov.
1, 2009, Nov. 1, 2010, and Nov. 1, 2011.
The awards were approved subject to approval by the company's
stockholders of the issuance of additional shares of authorized
but unissued and unreserved shares of the company's Class A common
stock reserved for issuance under the 2007 Omnibus Incentive
Compensation Plan.
The company intends to provide additional information regarding
the compensation awarded to its directors for the year ended
Dec. 31, 2008, in the proxy statement for the company's 2009
annual meeting.
In a separate filing, the company disclosed that Frances Brandon-
Farrow resigned from the company's board of directors, effective
immediately. Pursuant to (1) Section 2.1(iii) of the Amended and
Restated Stockholders' Agreement by and among the company, Corvina
Holdings Limited, Cortaire Limited, a company incorporated in the
British Virgin Islands, SK Telecom USA Holdings, Inc., and Sprint
Ventures, Inc., and (2) Article II, Section 2 of the company's
Second Amended and Restated Bylaws, the Virgin Group may designate
up to three members of the company's board of directors. Prior to
her resignation, Ms. Brandon-Farrow had been a Virgin Group
designee.
The Virgin Group has named Gordon D. McCallum as its new designee
to the board of directors. Mr. McCallum has been chief executive
officer of Virgin Management Limited a U.K.-based management
services company, since September 2005. From January 1998 to
September 2005, Mr. McCallum worked at Virgin Management as its
group strategy director.
Additionally, the company disclosed that it has amended its chief
executive officer, Daniel H. Schulman,'s Amended and Restated
Employment Agreement. The Amendment is intended to ensure that
Mr. Schulman's Amended and Restated Employment Agreement complies
with Section 409A of the Internal Revenue Code.
A full-text copy of the AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT is
available for free at: http://ResearchArchives.com/t/s?376f
About Virgin Mobile USA Inc.
Headquartered in Warren, New Jersey, Virgin Mobile USA Inc. (NYSE:
VM) -- http://www.virginmobileusa.com/-- is a provider of
wireless, pay-as-you-go communications services without annual
contracts. Voice pricing plans range from monthly options with
unlimited nights and weekends to by-the-minute offers, allowing
consumers to adjust how and what they pay according to their
needs. Virgin Mobiles full slate of handsets, including the Wild
Card, Super Slice and Cyclops, are available at top retailers in
more than 35,000 locations nationwide and online, with Top-Up
cards available at more than 130,000 locations.
Virgin Mobile USA Inc.'s balance sheet at Sept. 30, 2008, showed
total assets of $395.9 million and total liabilities of
$751.4 million resulting in a shareholders' deficit of about
$355.5 million.
W.R. GRACE: Parties Present Issues for Plan Confirmation Hearing
----------------------------------------------------------------
W.R. Grace & Co., together with the official committee of asbestos
personal injury claimants, the asbestos PI future claimants'
representative and the official committee of equity security
holders formed in W.R. Grace's bankruptcy cases, proposes these
specific issues for the two-phase confirmation hearing of the
Joint Plan of Reorganization:
(a) Phase I -- impairment of Class 9 creditors and insurance
neutrality.
(b) Phase II -- all remaining confirmation issues not
identified and resolved in Phase I; the Scotts' Company
LLC's rights under vendor endorsements; and the scope of
indemnity provisions in the settlement agreements with
insurers in relation to tort claims against those
insurers, which claims relate to the Debtors' Libby,
Montana operations.
The Official Committee of Unsecured Creditors, in response,
complains that the topic designation is ambiguous.
The Creditors' Committee tells the U.S. Bankruptcy Court for the
District of Delaware that the purpose of the Designation as it
related to Class 9 was to have the Plan Proponents specifically
articulate what confirmation issue or issues "raised by and
specific to the Debtors' lenders under the Prepetition Credit
Facilities" the Plan Proponents wanted to have addressed in Phase
I. This information, Lewis Kruger, Esq., at Stroock & Stroock &
Lavan LLP, in New York, asserts, is necessary so that the
Creditors' Committee, creditors holding claims in Class 9, as well
as the Court, will know for certain what is to be addressed in
each of the Confirmation Hearing phases and which of the various
deadlines in the CMO are applicable to each confirmation issue.
Mr. Kruger points out that it appears from the Designation that
the Plan Proponents are proposing the issue of impairment be
addressed in Phase I and that other issues relating to Class 9
and the related claims be addressed in Phase II, including
application of the fair and equitable standard and the absolute
priority rule under Section 1129(b) of the Bankruptcy Code.
What is not clear, the Committee complains, is whether the Plan
Proponents' identification of "impairment of Class 9 creditors"
is the issue of impairment solely with respect to the claims of
the Debtors' bank debt holders, or whether the Plan Proponents
seek to expand Phase I issues to include impairment of Class 9 in
addition to those pertaining to the claims of the bank lenders.
If the latter, the Committee objects to the Designation because
the Plan Proponents would now be seeking to address confirmation
issues in Phase I beyond those expressly provided for by the CMO.
Although the advisors to the Creditors' Committee are evaluating
whether the revised treatment accorded in the Plan to the claims
of other unsecured creditors in Class 9 leaves those claims
unimpaired, the Committee, relying on the CMO, fully expected all
impairment issues, other than those specific to the bank debt
holder claims, to be addressed in Phase II, Mr. Kruger tells the
Court.
Accordingly, because additional discovery is not necessary with
respect to the bank debt claims, the Creditors' Committee allowed
the Phase I written discovery deadline to pass without serving
any demands on the Debtors, Mr. Kruger says. However, the
Committee is contemplating whether discovery is necessary with
respect to the possible impairment of Other Unsecured Creditors,
the deadline for which is January 23, 2009. As a result, the
Committee will be prejudiced if the Plan Proponents are permitted
to expand the scope of the Phase I confirmation issues after the
expiration of the January 23 discovery deadline.
The Committee thus asks the Court to limit Class 9-related Phase
I issues to issues of impairment as raised by and specific to the
bank debt holders.
In a separate filing, BNSF Railway Company and its predecessors,
the Great Northern Railway Company, the Burlington Northern
Railroad Company, and The Burlington Northern & Santa Fe Railway
Company, assert that the objections they have previously raised
in the Debtors' bankruptcy cases, including any additional
objections that will be raised in the final Plan objections, as
well as those of the Debtors' insurers and Scotts Company, should
be heard during Phase I of the confirmation hearing, pursuant to
the Case Management Order.
Interrogatories & Document Requests
David M. Bernick, Esq., at Kirkland & Ellis LLP, in Chicago,
Illinois, notified the Court that he has served copies of the
Debtors' Phase I requests for production of documents to several
objecting parties. He said he also served a copy of the Debtors'
responses and objection to Royal Insurance Company's first set of
request for admission to parties-in-interest.
The Debtors related that they have served a copy of their
response to the Libby Claimants' first set of request for
production of documents relating to the Plan confirmation.
The PI Committee also related that it has served a copy of its
first set of requests for the production of documents and first
set of interrogatories directed to:
* the Libby Claimants,
* PI FCR,
* BNSF Railway Company, and
* Maryland Casualty Company, Continental Casualty Company,
Fireman's Fund Insurance Company, Arrowood Indemnity
Company, Federal Insurance Company, Zurich Insurance
Company, Century Indemnity Company and Seaton Insurance
Company.
The PI Committee said they have served copies of the expert
reports of Laura Welch, M.D., and Dr. William Longo, which the PI
Committee believes are relevant only to Phase II confirmation
hearing issues.
The Libby Claimants also said they have served copies of these
expert witness reports in Court:
-- Report by Dr. Alan C. Whitehouse, dated Dec. 29, 2009
-- Report by Dr. Arthur Frank, dated Dec. 19, 2008
-- Report by Dr. Trey Spear, dated Dec. 29, 2008
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -
- http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on Jan. 14, 2008. (W.R. Grace Bankruptcy News Issue No.
177, Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
W.R. GRACE: Various Firms Object to Reorganization Plan
-------------------------------------------------------
Various parties have submitted objections to the proposed
confirmation of W.R. Grace & Co.'s First Amended Joint
Reorganization Plan. These parties say that the Plan cannot be
confirmed pursuant to Section 1129 of the Bankruptcy Code:
-- Travelers Casualty and Surety Company, formerly known as
The Aetna Casualty and Surety Company;
-- Continental Casualty Company and Continental Insurance
Company, collectively as CNA;
-- Allstate Insurance Company, as successor-in-interest to
Northbrook Excess and Surplus Insurance Company, formerly
Northbrook Insurance Company;
-- Zurich Insurance Company, Zurich International (Bermuda)
Ltd., and Maryland Casualty Company;
-- Fireman's Fund Insurance Company, Allianz S.p.A., formerly
known as Riunione Adritica di Sicurta, collectively as
FFIC;
-- AXA Belgium, as successor to Royale Belge SA;
-- Seaton Insurance Company and OneBeacon America Insurance
Company;
-- Columbia Insurance Company, formerly known as Republic
Insurance Company and Government Employees Insurance
Company;
-- certain London Market Insurance Companies;
-- Federal Insurance Company; and
-- Arrowood Indemnity Company, formerly known as Royal
Indemnity Company.
(1) Travelers Casualty
Travelers Casualty points out that the Plan defines any
indemnification claim by Travelers under its prepetition
agreements with the Debtors as an Indirect Personal Injury Trust
Claim that will be paid initially at 25% to 35% of its value.
Moreover, Travelers Casualty notes that it may recover only a
portion of any defense and indemnity costs incurred in the event
it is sued post-confirmation by a third party.
Travelers Casualty maintains that by failing to provide for full
payment of its indemnification claims, the Plan, in effect,
alters the terms of their Prepetition Agreements in violation of
Section 1129(a).
Travelers Casualty also notes that the Trust Distribution
Procedures do not contain provisions to address how the Asbestos
PI Trust will resolve indemnification claims under prepetition
settlement agreements with the Debtors' other insurers, and
therefore do not contain provisions confirming that the Asbestos
PI Trust will abide by their Prepetition Agreements in resolving
any indemnification claims by Travelers. Travelers Casualty also
asserts that should the Prepetition Agreements be treated as
executory contracts, the Prepetition Agreements must be assumed
and assigned pursuant to their terms.
The Prepetition Agreements provide that the Debtors will
indemnify Travelers against third party claims under the
insurance policies issued by Travelers.
(2) CNA
CNA argues that since the Plan diminishes its rights to
recoveries from the Debtors and may impair its rights, the Plan
is not "insurance neutral" with respect to CNA. This lack of
insurance neutrality and other defects in the Plan and Plan
Documents prevent satisfaction of the confirmation requirements
under Section 1129, CNA maintains.
(3) FFIC
In the same light, FFIC, citing the case of Combustion
Engineering, Inc., relates that the United States Court of
Appeals for the Third Circuit recognized that reorganization
plans can be insurance neutral when it leaves unaltered parties'
claims, defenses and rights under the subject insurance policies
and by the terms of the plan, those claims, defenses and rights
pass through the bankruptcy case unaffected by the terms of the
Plan.
According to FFIC, the Debtors' Plan does not satisfy Section
1129(a)(3) because, among others, the Plan provides the Asbestos
PI Trust the exclusive right and obligation to review, process
and pay Asbestos PI Claims without allowing FFIC's participation.
The Plan thus violates FFIC's contractual rights with respect to
the Debtors' duty to cooperate under the related insurance
policies, FFIC maintains.
Allstate Insurance Company, Columbia, et. al., and Zurich, et
al., concur with FFIC's arguments in each of their objections.
(4) Zurich
Zurich further argues that Maryland Casualty's claims may include
claims that should be separately classified from Class 6 claims
and should be treated least as favorably as Class 9 claims.
Zurich says the Plan's treatment of Maryland's claims may be
inadequate in the event protection from the injunction provisions
under the Plan, which enjoin third parties from prosecuting any
Asbestos PI Claim against Maryland Casualty, is reduced or
otherwise altered by the Court.
Along the same line, AXA Belgium points out that although an
Asbestos Insurance Transfer Agreement under the Plan irrevocably
transfers and grants to Asbestos PI Trust all asbestos insurance
rights, the Agreement does not transfer from the insured to the
Asbestos PI Trust any of the insured' obligations, thus stripping
AXA Belgium of several contractual rights. The Plan's definition
of "Asbestos Insurance Rights" also does not include any
obligation on the part of the insured, AXA Belgium complains.
The London Market Insurers shares this concern.
(5) AXA Belgium
AXA Belgium also notes that under the Plan, Asbestos Insurance
Entities will be bound by the Court's findings that transfers of
all rights under the Asbestos Insurance Transfer Agreement is
valid and enforceable against any Asbestos Insurance Entity
notwithstanding any anti-assignment provision in any Asbestos
Insurance Policy. AXA Belgium contends that assignment of
insurance under the Plan is not valid and enforceable under the
Bankruptcy Code, as a matter of law.
Seaton finds the revised schedule of settled asbestos insurance
companies accompanying the Plan inaccurate, vague and ambiguous
with respect to certain asbestos insurance policies. Seaton says
this may render the Asbestos PI Channeling Injunction under the
Plan less than adequate.
(6) Federal Insurance Arrowood
In separate filings, Federal Insurance and Arrowood complain that
the Plan is not insurance neutral. Federal contends that the
Plan has not been proposed in good faith pursuant to the
Bankruptcy Code because it impairs Federal's rights under the
insurance policies.
Arrowood says the Plan is unconfirmable to the extent that it
purports to upgrade the Debtors' bargained-for exchange in the
1995 Settlement Agreement. Arrowood points out that while
bankruptcy courts may allow debtors to escape burdensome
contracts by rejecting them, they cannot rewrite contracts to
allow debtors to continue to perform on more favorable terms.
With these arguments, the objectors ask the Court not to confirm
the Plan.
Interrogatories & Document Requests
CNA; OneBeacon America and Seaton Insurance; the Government
Employees Insurance and Columbia Insurance; and Federal Insurance
Company and Government Employees, separately notified the Court
that they have filed their first set of interrogatories,
admissions and requests for production of documents directed to
the Debtors, the Official Committee of Asbestos Personal Injury
Claimants and the Future Claimants Representative.
Zurich said that it has served copies of its joinder in CNA's
first set of interrogatories, first request for admission and the
production of documents directed to the Debtors, the PI FCR, and
the PI Committee.
Maryland Casualty said it has also served copies of its joinder
in the Plan Proponents' first request for production of documents
and first set of interrogatories, directed to The Scotts Company
LLC, to BNSF, and the Libby Claimants to parties-in-interest.
Travelers disclosed that it served to the Debtors copies of its
first set of request for admission.
Allianz S.p.A, formerly known as Riunione Adriatica Di Sicurta
and FFIC, notified the Court that they have served notices on
certain insurers' first set of interrogatories, first set of
requests for production of documents and admissions directed to
the Debtors, the PI Committee, and PI FCR to parties-in-interest.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -
- http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on Jan. 14, 2008. (W.R. Grace Bankruptcy News Issue No.
177, Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
W.R. GRACE: U.S. Government Objects to ZAI Settlement
-----------------------------------------------------
The United States Government and Lukins & Annis, P.S., object to
the U.S. ZAI Claimants' motion to approve the class settlement
with the W.R. Grace & Co. The settlement has been submitted to
the U.S. Bankruptcy Court for the District of Delaware for
approval.
Assistant Attorney General Gregory Katsas, Esq., relate that on or
before the October 31, 2008 ZAI Bar Date, the U.S. Department of
Agriculture, Forest Service, filed a ZAI proof of claim asserting
property damages against the Debtors.
The Class Settlement defines the "Class" as "all holders of U.S.
ZAI Claims that were filed with the U.S. Bankruptcy Court for the
District of Delaware on or before the U.S. ZAI Bar Date."
The Government objects to the Class Settlement's definition of
"Class" because that definition would include the Government.
Mr. Katsas argues that the Government cannot, by law, be a member
of a class represented by private counsel, without its consent,
which is given only in exceptional circumstances not present in
the Debtors' bankruptcy cases.
Federal law, Mr. Katsas points out, provides that "the conduct of
litigation in which the United States, an agency, or the officer
thereof is a party, or is interested . . . is reserved to
officers of the Department of Justice, under the direction of the
Attorney General." He adds that Section 519 of Title 28 states
that "[e]xcept as otherwise authorized by law, the Attorney
General shall supervise all litigation to which the United
States, an agency, or officer thereof is a party . . ."
Thus, Mr. Katsas asserts that a class represented by private
counsel cannot, as a matter of law, include the United States or
any of its agencies as a class member because private counsel is
not authorized to represent the United States and cannot bind the
United States.
The Government objects to the Class Settlement Agreement only to
the extent that the definition of the "Class" includes the United
States. If the Government is expressly excluded as a Class
member without prejudice to its claims, then the Government would
withdraw its objection to the ZAI Claimant's Motion, Mr. Katsas
tells the Court.
Lukins & Annis Objects to Counsel Fees Approval
Lukins & Annis, in a separate filing, objects to the motion to
the extent that it contains certain factual representations and
statements that could be seen as seeking preliminary approval of
entitlement of fees and costs for legal work benefiting the class
of ZAI claimants.
Lukins & Annis relates that it hired the Scott Law Group and
Darrell W. Scott, Esq., through December 31, 2003. During that
period, the Washington and Montana class actions were filed, the
Washington class action was certified and the Debtors filed their
bankruptcy proceedings.
Following Mr. Scott's termination of employment with Lukins &
Annis, he continued to represent the Washington class and the
putative national class and Mr. Scott and Lukins & Annis
attempted to reach an agreement on sharing of fees, Lukins &
Annis says. No agreement was reached and it is assumed that a
court order determining the entitlement to fees will be required.
Based on this, Lukins & Annis asks that the Order on the
Settlement contain no provisions that would be deemed, explicitly
or implicitly, to be rulings on the entitlement to fees and costs
resulting from legal work which benefited the ZAI class of
claimants.
Lukins & Annis reserves all rights with regard to entitlement to
fees and costs arising from its legal work for the ZAI claimants.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -
- http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on Jan. 14, 2008. (W.R. Grace Bankruptcy News Issue No.
177, Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
W.R. GRACE: Libby Claimants Want Documents Produced
---------------------------------------------------
The claimants allegedly injured by asbestos exposure from W.R.
Grace & Co.'s operations in Libby, Montana, ask the U.S.
Bankruptcy Court for the District of Delaware to compel W.R. Grace
& Co. to produce, on or before January 20, 2009, documents and
information in conjunction with confirmation of the Debtors' Plan
of Reorganization.
The Libby Claimants also asks the Court to compel the Official
Committee of Asbestos Personal Injury Claimants to respond to
their interrogatories no later than January 23, 2009. The Libby
Claimants, through their counsel, Adam G. Landis, Esq., at Landis
Rath & Cobb LLP, in Wilmington, Delaware, have served copies of
their second interrogatories on the Asbestos PI Committee on
December 23, 2008.
Mr. Landis asserts that the Libby Claimants should not be in a
position where the Debtors can selectively utilize data without
being required to provide the Libby Claimants with equal access.
The Libby Claimants have served their first request to produce
documents in conjunction with Plan Confirmation Interrogatories
on the Asbestos PI Committee pursuant to which the Libby
Claimants officially sought the Debtors to produce the personal
inquiry questionnaires, proofs of claim and the Rust Consulting
database. The Debtors, however, objected to the document request
on confidentiality and relevance grounds.
Mr. Landis also served copies of the Libby Claimants' amended
first interrogatories on the Debtors, the Official Committee of
Asbestos Personal Injury Claimants, the Asbestos PI Future
Claimants' Representative, and the Official Committee of Equity
Security Holders.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -
- http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on Jan. 14, 2008. (W.R. Grace Bankruptcy News Issue No.
177, Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
W.R. GRACE: Libby Asbestos Agencies Seek $3.25MM State Funding
--------------------------------------------------------------
The Western News reported that on Dec. 23, 2008, the Lincoln
County, Montana Community Advisory Group sent a letter to Gov.
Schweitzer requesting for $3.25 million to be included in the
biennium budget to continue asbestos-related health funding.
The state funding will benefit agencies not covered by the W.R.
Grace-Libby Medical Plan, which does not cover oxygen, lung
surgeries or the draining of fluid from the lungs and does not
recognize pain as a symptom of asbestos-related diseases, the
report said.
State funding could help asbestos-related agencies stay afloat,
the report said. Without continued state funding, local
officials in Lincoln County, Montana believe several asbestos-
related agencies in the county will not survive 2009, the report
related.
"If the state doesn't step up to the plate, these agencies will
end," Tanis Hernandez, outreach coordinator with the Center for
Asbestos Related Disease, told the newspaper. "The more people
the governor knows are impacted by this funding, the better off
the community will be in getting the money allocated to asbestos-
related health care."
Lincoln County is home to W.R. Grace & Co.'s former Libby
vermiculite mine. The extent of Grace's liability towards the
citizens affected by asbestos-related diseases is still in
dispute. A trial on the criminal case against former Grace
executives relating to the Libby mine will be held in Feb. 2009.
The report said Montana Gov. Brian Schweitzer's office is hearing
about importance of the state funding issue to Lincoln County
through a letter as well as a pending community petition.
The report related that on Dec. 23, 2008, the Lincoln County
Community Advisory Group sent a letter to Gov. Schweitzer
requesting that $3.25 million be included into the biennium
budget to continue asbestos-related health funding. The state
funding will benefit agencies not covered by the W.R. Grace-Libby
Medical Plan, which does not cover oxygen, lung surgeries or the
draining of fluid from the lungs and does not recognize pain as a
symptom of asbestos-related diseases.
Grace's Payments Related to Libby
Grace was required by a federal court in 2003 to reimburse the
U.S. Government for $54.5 million, plus interest, in costs
expended through December 2001, and for all appropriate future
costs to complete asbestos-related remediation relating to the
Libby area. These costs include cleaning or demolition of
contaminated buildings, excavation and removal of contaminated
soil, health screening of Libby residents and former mine
workers, and investigation and monitoring costs.
In June 2008, Grace and the U.S. Department of Justice agreed to
settle the EPA's cost recovery claims with respect to the Libby
operations for $250 million, which includes the $54.5 million
2003 payment.
Future Mesothelioma Epidemic in Libby
Drs. Alan Whitehouse and Brad Black of CARD, in a report
published in July 2008, predicts an epidemic of mesothelioma -- a
cancer caused by exposure to asbestos -- in years to come in
Libby.
The physicians said mesothelioma appears "decades later." Grace
purchased the Libby mine in 1963 and operated it until 1990;
vermiculite processing activities continued until 1992. Dr.
Whitehouse said "the extent of the epidemic of environmental
mesothelioma due to exposures based at Libby will probably not
peak for another 10 to 20 years" because Grace operated the Libby
mine from 1963 until 1990.
Grace said it may pay as much as $280,000,000 in fines if
convicted in the Libby criminal case.
Grace's Asbestos PI Settlement
Grace, in April 2008, reached an agreement settling all of its
present and future asbestos-related PI claims through a trust to
be established under Section 524(g) of the Bankruptcy Code. The
trust will be funded by:
-- Cash in the amount of $250,000,000;
-- Warrants to acquire 10,000,000 shares of Grace common stock
at an exercise price of $17.00 per share, expiring one year
from the effective date of a plan of reorganization;
-- Rights to proceeds under Grace's asbestos-related insurance
coverage;
-- The value of cash and stock under the litigation settlement
agreements with Sealed Air Corporation and Fresenius
Medical Care Holdings, Inc.; and
-- Deferred payments at $110,000,000 per year for five years
beginning in 2019, and $100,000,000 per year for 10 years
beginning in 2024; the deferred payments would be
obligations of Grace backed by 50.1% of Grace's common
stock to meet the requirements of Section 524(g).
The Sealed Air settlement payment consists of (i) $512,500,000,
in cash, plus interest accrued from December 21, 2005, until the
Plan's effective date, at a rate of 5.5% per annum compounded
annually; and (ii) 18,000,000 shares of Sealed Air common stock.
As of January 6, 2009, (Eastern Time), Sealed Air stocks are
priced at $15.33 per share, placing a value of about $257,940,000
on the settlement pact.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -
- http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on Jan. 14, 2008. (W.R. Grace Bankruptcy News Issue No.
177, Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
WESTERNBANK: Weiss Ratings Assigns "Very Weak" E- Rating
--------------------------------------------------------
Weiss Ratings has assigned its E- rating to Mayaguez, P.R.-based
Westernbank. Weiss says that the institution currently
demonstrates what it considers to be significant weaknesses and
has also failed some of the basic tests Weiss uses to identify
fiscal stability. "Even in a favorable economic environment,"
Weiss says, "it is our opinion that depositors or creditors could
incur significant risks."
Westernbank is not a member of the Federal Reserve. Deposits have
been insured by the Federal Deposit Insurance Corporation since it
was established on April 30, 1958. Westernbank maintains a Web
site at http://www.wbpr.com/
FDIC data shows that Westernbank has 55 branches. At Sept. 30,
2008, Westernbank disclosed $16.7 billion in assets and
$15.9 billion in liabilities in its regulatory filings.
WORLDSPACE INC: Postpones Auction to Jan. 26; Still Accepts Bids
----------------------------------------------------------------
WorldSpace Inc., asks the U.S. Bankruptcy Court for the District
of Delaware to approve the postponement of the auction of its
assets by two weeks. Worldspace proposes:
-- an extension of the bidding deadline from Jan. 7 to Jan. 21.
-- a new auction date on Jan. 26,
-- a hearing to consider approval of the sale on Jan. 28.
According to Bloomberg's Bill Rochelle, WorldSpace has not yet
signed any purchase agreement with a bidder, and said that
interested parties were asking for more time to study financial
information.
Mr. Rochelle added that to accommodate the delay, the lenders
agreed to extend the maturity of the $13 million in financing to
Jan. 29.
As reported by the Troubled Company Reporter on Dec. 22, 2008,
WorldSpace Inc. obtained approval from the Court to auction off
its business on Jan. 12, 2008. The Court approved bidding
procedures, which sets a Jan. 7 deadline for initial bids and a
sale hearing on Jan. 14. The report adds that WorldSpace has not
named a stalking horse bidder.
To finance its Chapter 11 case, WorldSpace has obtained a
$13 million debtor-in-possession financing from holders of senior
secured and convertible notes issued prepetition. WorldSpace owes
$36.1 million on the senior secured notes and $53.1 million on the
convertible debt.
About WorldSpace
WorldSpace, Inc. (WSI) -- http://www.1worldspace.com/-- and its
debtor- and non-debtor affiliates provide satellite-based radio
and data broadcasting services to paying subscribers in ten
countries throughout Europe, India, the Middle East, and Africa.
The Debtors and their affiliates operate two geostationary
satellites, AfriStar and Asia Star, which are in orbit over Africa
and Asia. The Debtor and two of its affiliates filed for Chapter
11 bankruptcy protection on Oct. 17, 2008 (Bankr. D.Del., Case No.
08-12412 - 08-12414). Mames E. O'Neill, Esq., Laura Davis Jones,
Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl &
Jones, LLP, represent the Debtors as counsel.
The U.S. Trustee for Region 3 appointed creditors to serve on an
Official Committee of Unsecured Creditors. Neil Raymond Lapinski,
Esq., and Rafael Xavier Zahralddin-Aravena, Esq., at Elliot
Greenleaf represent the Committee as counsel. When the Debtors
filed for bankruptcy, they listed total assets of $307,382,000 and
total debts of $2,122,904,000.
YELLOWSTONE CLUB: Wants Loan from CrossHarbor Hiked to $22.6MM
--------------------------------------------------------------
Yellowstone Mountain Club LLC seeks permission from the U.S.
Bankruptcy Court for the District of Montana to increase the
debtor-in-possession financing funded by CrossHarbor Capital
Partners LLC from $19.75 million to $22.6 million.
According to Bloomberg's Bill Rochelle, the company said that it
informed the Bankruptcy Court last month that it would seek an
increase to cover additional expenses. The CrossHarbor loan,
according to the report, requires having a confirmed plan of
reorganization by March 31 or the immediate commencement of a
process for selling the project.
As reported by the Dec. 1, 2008 issue of the Troubled Company
Reporter, Judge Ralph B. Kirscher authorized Yellowstone Club to
borrow about $20 million from CrossHarbor.
According to Newswest.net, Credit Suisse provided a $4.5 million
debtor-in-possession loan to run Yellowstone Club through the end
of November. Citing sources, Newswest.net reported that the deal
with Credit Suisse collapsed when the bank failed to round up
money when Yellowstone Club needed a larger financial package to
get the club through the ski season.
Newwest.net states that CrossHarbor Capital has invested about
$100 million to acquire real estate and construct houses and
condominiums at Yellowstone Club. CrossHarbor Capital, according
to the report, was in talks with Yellowstone Club owner Edra
Blixseth's ex-husband and the club's founder, Tim Blixseth, for
more than a year to buy the club before it collapsed this year.
About Yellowstone Club
Yellowstone Club -- http://www.theyellowstoneclub.com/-- is a
private golf and ski community with more than 350 members,
including Bill Gates and Dan Quayle. It is located near Big Sky,
Montana. It was founded in 1999.
As reported in the Troubled Company Reporter on Nov. 13, 2008,
Yellowstone Club filed for Chapter 11 bankruptcy protection in the
U.S. Bankruptcy Court for the District of Montana. In its
bankruptcy petition, it listed debts of more than $360 million.
* Jonathan Landers to Lead Milberg's Bankruptcy Practice
--------------------------------------------------------
Jonathan M. Landers, nationally recognized authority in bankruptcy
and insolvency law, has joined Milberg LLP as a partner. He will
be resident in Milberg's New York headquarters and will head the
Firm's bankruptcy practice.
Mr. Landers has extensive experience in bankruptcy, insolvency,
restructuring, financing transactions, purchase/sale of assets and
bankruptcy and insolvency litigation matters, representing
debtors, lenders and lending syndicates, large creditors,
litigation defendants and asset sellers and purchasers. He is one
of only sixty-five members of the prestigious National Bankruptcy
Conference, a member of the American College of Bankruptcy
(founding class), and has been recognized repeatedly in The Guide
to the World's Leading Insolvency Lawyers and The Best Lawyers in
America -- most recently in the 2009 edition. Mr. Landers was
listed in The Legal 500 US, 2008 edition as a leading corporate
restructuring attorney.
"Given the turmoil in the economy, a growing number of individuals
and institutions are in need of representation," said Mr. Landers.
"After considering numerous options, I joined Milberg because of
its first-rate litigation team and its leading efforts in many of
the economic and legal issues of the day. Milberg fights
tirelessly for justice on behalf of consumers and investors, and,
given today's economic climate, I believe that my area of
expertise serves to perfectly complement the Firm's first-rate
financial and litigation practice," he said.
"This is an auspicious time for Jon to join Milberg and represent
those needing counsel on bankruptcy and insolvency," stated
Sanford P. Dumain, the chair of Milberg's Executive Committee.
"His extraordinary stature in the legal, academic and business
communities and his legal vision and acumen will provide great
value and leadership to the Firm and its practice."
Before joining Milberg LLP, Mr. Landers served as lead counsel for
numerous clients, including: debtors The Finova Group, Inc., Hoop
(Disney Stores), Odyssey Group (North Face and Head Sportswear),
Divi Hotels and S.S. Retail Stores; secured lenders in the cases
of Insilco and Concap I, II, IV, and V (involving real estate
loans aggregating $500+MM); and represented Merrill Lynch in the
Enron and Adelphia bankruptcies; Wells Fargo Bank in the Placid
and Penrod bankruptcies; and Dial Corporation in the Greyhound and
Bergner bankruptcies; asset purchasers in the U.S. Aggregates,
Greate Bay Casinos, Liquor Barn, Sonic Telecommunications, Grand
Palais Riverboat and Rivermeadows (Crescent H Ranch) bankruptcies;
and was lead counsel for lending groups (including Wells Fargo
Bank, Bracton Corporation, successor to Crocker National Bank, and
Bank of Montreal) in numerous workout and restructuring
transactions; and Citibank in connection with the liquidation and
bankruptcy of a number of major U.S. law firms, most recently,
Heller Ehrman, Thelen and Brobeck.
Mr. Landers graduated from Colgate University (where he was
elected to Phi Beta Kappa), and magna cum laude from the Harvard
Law School (where he was an Editor of the Harvard Law Review).
Mr. Landers previously was a partner in Gibson, Dunn and Crutcher
and has been a Professor of Law at the Universities of Kansas and
Illinois, a Visiting Professor of Law at the University of
Chicago, a Visiting Scholar at the American Bar Foundation, a
Visiting Professor at the University of California Law School
(Boalt Hall), and the Distinguished Visiting Professor at the
University of San Francisco Law School.
Mr. Landers is the co-author of three books on
bankruptcy/creditors' rights and civil procedure, and the author
of more than 25 published articles on bankruptcy, creditors'
rights and other areas, has testified a number of times before
congressional committees, and is a frequent speaker before bar
associations and continuing legal education institutes. He is a
Contributing Editor of Norton on Bankruptcy, and a member of the
Board of Editors of the Norton Bankruptcy Law Advisor.
About Milberg
Milberg LLP -- http://www.milberg.com-- has been representing
individual and institutional investors for nearly 40 years and
serves as lead counsel in federal and state courts throughout the
United States.
* Stroock Names New Partners and Special Counsel
------------------------------------------------
Stroock & Stroock & Lavan LLP named three new Partners and six new
Special Counsel, effective January 1, 2009.
"These are exceptional attorneys, in active, growing practices. We
are confident that they will continue to contribute to the Firm
and to our clients' businesses," said Stuart H. Coleman, Stroock's
co-managing partner.
The new Partners and Special Counsel are:
(A) Keith M. Andruschak (Partner - Insurance, New York)
Mr. Andruschak focuses his practice on transactions involving the
insurance industry, including mergers and acquisitions of
insurers, reinsurers, agencies and administrators, assumption and
indemnity reinsurance, demutualizations, structured lending,
insurance-linked securities and other capital raising activities.
He also advises clients in connection with unique insurance and
annuity product design, alternative risk transfer arrangements and
derivatives. His clients include domestic and foreign commercial
and investment banks, life and property/casualty insurers and
reinsurers, hedge funds and private equity investors. Mr.
Andruschak was formerly a Special Counsel at Stroock.
(B) Glenn Borin (Special Counsel - Tax Certiorari, New York)
Mr. Borin is Co-Manager of the Tax Certiorari Group. Mr. Borin was
formerly Chair of the Assessment Review Commission for Nassau
County. Prior to that, he was Deputy Commissioner of NYC's
Department of Finance. Mr. Borin was also Chief of Staff and
Counsel for the NYC Tax Commission and Special Tax Certiorari
Counsel for the NYC Law Department. He has taken part in several
thousand cases involving valuation or exemption of major
commercial, residential and utility properties.
(C) Joseph B. Giminaro (Special Counsel - Tax Certiorari,
New York)
Mr. Giminaro is Co-Manager of the Tax Certiorari Group. Mr.
Giminaro handles major real estate tax cases before the NYC Tax
Commission, as well as pre-trial tax certiorari negotiations and
litigation matters. He provides advice on real estate tax issues
relating to new acquisitions and development projects. He has
successfully negotiated multi-million dollar assessment reductions
for office buildings, hotels, shopping centers, industrial
facilities, residential buildings, cooperatives and condominiums.
Mr. Giminaro previously managed the tax certiorari practices at
Shea & Gould and Graubard Mollen & Miller, and is the former Chief
Real Estate Counsel to the NYC Department of Finance.
(D) Stuart A. Graiwer (Partner - Real Estate, Los Angeles)
Mr. Graiwer concentrates in all aspects of commercial real estate,
including the representation of private and institutional
investors in connection with the acquisition, sale, development
and financing of a variety of asset classes, including office
buildings, mixed-use projects, hotels, multi-family and
residential developments, industrial parks and retail centers.
Mr. Graiwer has particular expertise in the structuring of complex
joint venture and partnership agreements, including the
structuring and re-structuring of debt and equity investments. Mr.
Graiwer represents investors at all levels of the capital
structure, including mortgage and mezzanine financings,
convertible debt and preferred equity.
(E) Christine M. Hilla (Special Counsel - Real Estate,
New York)
Ms. Hilla concentrates in real estate transactions and specializes
in the law of condominiums, cooperatives and fractional ownership.
She has expertise in matters relating to the planning,
structuring, financing, development, formation, registration and
management of mixed-use, commercial and residential developments
in New York. She represents builders, lenders and owners in fee
and leasehold developments and she has extensive experience in
contract negotiations, closings, construction and brokerage
issues. Ms. Hilla is a Commissioned Officer in the United States
Navy Reserve and recently completed an overseas deployment
supporting Operation Enduring Freedom.
(F) Manuel E. Lauredo (Special Counsel - Real Estate,
New York)
Mr. Lauredo practices in all areas of commercial real estate,
including the representation of private and institutional
investors, developers and lenders in connection with the
acquisition, sale, development, leasing and financing of office,
residential, retail and industrial properties. Mr. Lauredo's
recent representations included a real estate investment fund in a
construction loan for a residential condominium project on the
Upper West Side of New York City as well as a pension fund in the
acquisition and financing of a mixed-use residential and retail
development in Austin, Texas.
(G) Leah A. Melone (Special Counsel - Corporate, New York)
Ms. Melone has experience in a variety of financing transactions,
including acquisition financings, project financings, mezzanine
financings, secured and unsecured lending transactions, senior and
subordinated debt financings, asset based and cash flow based
lending, workout and restructuring, Chapter 11 debtor in
possession and exit financing. Her lending experience includes
representation of both lenders and borrowers, private equity funds
and hedge funds. Ms. Melone was recently involved in the
representation of an ad hoc committee of second lien holders of
$350MM of debt of Vertis in connection with the structuring of the
prepackaged Chapter 11 merger between Vertis and American Color
Graphics, Inc.
(H) JiAe Moon (Special Counsel - Class Action Litigation,
Los Angeles)
Ms. Moon specializes in the defense of quasi-class and class
actions, handling matters in state and federal courts around the
country. Ms. Moon focuses on the representation of financial
services companies, such as credit card issuers, national banks
and federally chartered savings and loan associations. Ms. Moon
worked on Guilford v. Washington Mutual Bank, wherein Stroock
obtained an important decision from the California Court of Appeal
that the state law invoked by plaintiffs was preempted by Office
of Thrift Supervision regulation. Ms. Moon has handled the defense
of class actions involving credit card and gift card disputes,
including the enforceability of arbitration provisions between the
card issuer and the consumer.
(I) Matthew A. Schwartz (Partner - Financial Restructuring,
New York)
Mr. Schwartz focuses his practice on private equity transactions,
mergers and acquisitions, debt and equity financings,
restructurings and workouts, and a variety of other investments
and transactions. He has extensive experience representing
private equity firms, hedge funds, corporate clients and
bondholder and creditor committees in all aspects of the
structuring, negotiation, financing and implementation of these
transactions. Mr. Schwartz also regularly advises investors and
companies in a broad range of corporate, securities law, capital
raising, corporate governance and strategic matters.
Stroock & Stroock & Lavan LLP -- http://www.stroock.com/-- is a
law firm providing transactional and litigation guidance to
leading multinational corporations, investment banks and venture
capital firms in the U.S. and abroad. Stroock's practice areas
include: capital markets/securities, commercial finance, mergers &
acquisitions and joint ventures, private equity/venture capital,
private funds, derivatives and commodities, employment law and
benefits, energy, infrastructure and project finance,
entertainment, environmental, financial restructuring, financial
services litigation, insurance, intellectual property, investment
management, litigation, personal client services, real estate,
structured finance and tax. Stroock has offices in New York, Los
Angeles and Miami.
* Chapter 11 Filings Up 62% from 2007
-------------------------------------
Bloomberg News' Bill Rochelle, citing data compiled by
Automated Access to Court Electronic Records, a service of
Jupiter ESources LLC in Oklahoma City, said that 10,084 entities
filed for Chapter 11 -- which allows a filer to either reorganize
or liquidate -- in 2008. The 2008 figures were 62% above 2007 and
101% higher from 2006.
AACER also said that a total of 1,095,000 filings were made by
companies and individuals in all versions of bankruptcy law.
According to the report, this amounted to a 32% increase from 200.
* Treasury Says TARP Won't Exceed $700BB to Aid Automakers
----------------------------------------------------------
U.S. Treasury Secretary Henry Paulson said that the Congress
shouldn't use more of a $700 billion bank bailout fund to provide
ailing automakers with cash, MarketWatch reports.
According to MarketWatch, the Treasury allocated on Dec. 19 about
$13.4 billion of Troubled Asset Relief Program, the bank bailout
fund, in cash infusions to General Motors Corp. and Chrysler LLC.
As reported by the Troubled Company Reporter on Dec. 26, 2008, Mr.
Paulson urged the Congress to release the rest of the funds from
TARP. The government's bailout of the auto industry drained what
remained in the first half of $700 billion TARP fund. Mr. Paulson
asked the lawmakers to release the second $350 billion "to support
financial market stability." While the first
$350 billion has been allocated, not all of the money has been
spent and Treasury could tap the unused funds.
MarketWatch quoted Mr. Paulson as saying, "The purpose of the TARP
was to deal with financial instability. I hope that as additional
moneys are needed, that they would come from other sources than
the TARP," and that "the only decision maker" about how the second
traunch of the $700 billion fund should be used is Mr. Obama. "If
they would like us to notify Congress on their behalf for the
second take down of the $350 billion traunch, we will work with
them on that," Mr. Paulson added.
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
-------------------------------------------------------------
In Re Dowdy, Alan G.
Bankr. W.D. Mich. Case No. 08-10308
Chapter 11 Petition filed November 19, 2008
See http://bankrupt.com/misc/miwb08-10308.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/vaeb08-17684.pdf
In Re Sol NMN Holcomb
Bankr. E.D. Tenn. Case No. 08-52439
Chapter 11 Petition filed December 5, 2008
See http://bankrupt.com/misc/tneb08-52439.pdf
In Re 4CorporateGolf, Inc.
dba Genesis Creative Advertising & Development
Bankr. E.D. Pa. Case No. 08-18077
Chapter 11 Petition filed December 8, 2008
See http://bankrupt.com/misc/paeb08-18077.pdf
In Re Angel's Trucking L. L. C.
Bankr. E.D. Va. Case No. 08-17684
Chapter 11 Petition filed December 10, 2008
See http://bankrupt.com/misc/vaeb08-17684.pdf
In Re Chila LLC
Bankr. D. N.J. Case No. 08-34608
Chapter 11 Petition filed December 11, 2008
Filed as Pro Se
In Re Coogan, Inc.
Bankr. D. N.J. Case No. 08-34660
Chapter 11 Petition filed December 11, 2008
See http://bankrupt.com/misc/njb08-34660.pdf
In Re FB Realty LLC
Bankr. E.D. N.Y. Case No. 08-48474
Chapter 11 Petition filed December 11, 2008
See http://bankrupt.com/misc/nyeb08-48474.pdf
In Re Woods, William Keith
dba WM. Keith Woods, DMD
dfba Center for Dental Health
Bankr. M.D. Tenn. Case No. 08-11667
Chapter 11 Petition filed December 11, 2008
See http://bankrupt.com/misc/tnmb08-11667.pdf
In Re WMC Marketing
Bankr. C.D. Calif. Case No. 08-27874
Chapter 11 Petition filed December 15, 2008
Filed as Pro Se
In Re Oaktree Consolidated Equity Inc.
Bankr. E.D. Calif. Case No. 08-38495
Chapter 11 Petition filed December 15, 2008
Filed as Pro Se
In Re J & J Academics, Inc.
Bankr. S.D. Fla. Case No. 08-29118
Chapter 11 Petition filed December 15, 2008
See http://bankrupt.com/misc/flmb08-29118.pdf
In Re Person, George T.
Bankr. N.D. Ill. Case No. 08-34175
Chapter 11 Petition filed December 15, 2008
Filed as Pro Se
In Re 200 Washington Street, LLC
Bankr. D. Mass. Case No. 08-19559
Chapter 11 Petition filed December 15, 2008
See http://bankrupt.com/misc/mab08-19559.pdf
In Re Polak, Louis M.
Bankr. E.D. N.Y. Case No. 08-48579
Chapter 11 Petition filed December 15, 2008
See http://bankrupt.com/misc/nyeb08-48579.pdf
In Re Michelina's Italian Eatery, Inc.
Bankr. W.D. N.Y. Case No. 08-23210
Chapter 11 Petition filed December 15, 2008
See http://bankrupt.com/misc/nywb08-23210.pdf
In Re Eastern Orthodox Foundation
Bankr. W.D. Pa. Case No. 08-71385
Chapter 11 Petition filed December 15, 2008
See http://bankrupt.com/misc/pawb08-71385.pdf
In Re Wasson, James Edward
Bankr. D. S.C. Case No. 08-08070
Chapter 11 Petition filed December 15, 2008
See http://bankrupt.com/misc/scb08-08070.pdf
In Re San Carlos Court, LLC
Bankr. N.D. Calif. Case No. 08-57269
Chapter 11 Petition filed December 16, 2008
Filed as Pro Se
In Re Off Campus Bar & Grill, LLC
Bankr. N.D. Ga. Case No. 08-13783
Chapter 11 Petition filed December 16, 2008
See http://bankrupt.com/misc/ganb08-13783.pdf
In Re Fiske-Grenier, Inc.
Bankr. D. Mass. Case No. 08-19594
Chapter 11 Petition filed December 16, 2008
See http://bankrupt.com/misc/mab08-19594.pdf
In Re Mashali, Farhalla M.
dba New England Medical Care Ins.
dba NEMCare
Bankr. D. Mass. Case No. 08-19606
Chapter 11 Petition filed December 16, 2008
See http://bankrupt.com/misc/mab08-19606.pdf
In Re B.M.F. Properties, Inc.
Bankr. W.D. Mich. Case No. 08-11197
Chapter 11 Petition filed December 16, 2008
See http://bankrupt.com/misc/miwb08-11197p.pdf
See http://bankrupt.com/misc/miwb08-11197c.pdf
(Affiliate's Pending Case, In Re Robert A. &
Marilyn J. Forton, Bankr. W.D. Mich. 08-08856,
Filed Oct. 6, 2008)
In Re Apex IT, Inc.
Bankr. D. Minn. Case No. 08-36633
Chapter 11 Petition filed December 16, 2008
See http://bankrupt.com/misc/mnb08-36633.pdf
In Re Gobbato, Kary Lyn
Bankr. D. Nev. Case No. 08-25027
Chapter 11 Petition filed December 16, 2008
See http://bankrupt.com/misc/nvb08-25027.pdf
In Re Claude's Construction, Inc.
Bankr. E.D. N.C. Case No. 08-09076
Chapter 11 Petition filed December 16, 2008
See http://bankrupt.com/misc/nceb08-09076.pdf
In Re Rivertown Investments, LLC
Bankr. N.D. N.Y. Case No. 08-14187
Chapter 11 Petition filed December 16, 2008
See http://bankrupt.com/misc/nynb08-14187.pdf
In Re Paige Restaurant Group, LLC
Bankr. S.D. N.Y. Case No. 08-15055
Chapter 11 Petition filed December 16, 2008
See http://bankrupt.com/misc/nysb08-15055.pdf
In Re Freeman, Brady Dean
Bankr. D. S.C. Case No. 08-08105
Chapter 11 Petition filed December 16, 2008
See http://bankrupt.com/misc/scb08-08105.pdf
In Re West, Billy R.
dba Turkey Creek Overalls and More
dba West Enterprises
Bankr. M.D. Tenn. Case No. 08-11865
Chapter 11 Petition filed December 16, 2008
See http://bankrupt.com/misc/tnmb08-11865.pdf
In Re Carter's Dozer and Backhoe Service LLC
Bankr. S.D. W.Va. Case No. 08-30849
Chapter 11 Petition filed December 16, 2008
See http://bankrupt.com/misc/wvsb08-30849.pdf
In Re Boarding House Supper Club, LLP
Bankr. E.D. Wis. Case No. 08-33659
Chapter 11 Petition filed December 16, 2008
See http://bankrupt.com/misc/wieb08-33659.pdf
In Re Glass Slipper, LLC
Bankr. D. Ariz. Case No. 08-18249
Chapter 11 Petition filed December 17, 2008
See http://bankrupt.com/misc/azb08-18249.pdf
In Re Dorset, David Cabaniss
Bankr. M.D. Fla. Case No. 08-12004
Chapter 11 Petition filed December 17, 2008
Filed as Pro Se
In Re Cuba International Liquors Corporation
dba D'Liquors at Brickell
dba D'Gourmet Choice
Bankr. S.D. Fla. Case No. 08-29386
Chapter 11 Petition filed December 17, 2008
See http://bankrupt.com/misc/flsb08-29386p.pdf
See http://bankrupt.com/misc/flsb08-29386c.pdf
In Re AAA Van Lines, Inc.
Bankr. N.D. Ga. Case No. 08-85820
Chapter 11 Petition filed December 17, 2008
See http://bankrupt.com/misc/ganb08-85820.pdf
In Re Downtown Food Enterprises, Inc.
dba Downtown Gyros and Cafeteria
dba Downtown Gyros
Bankr. N.D. Ill. Case No. 08-34449
Chapter 11 Petition filed December 17, 2008
See http://bankrupt.com/misc/ilnb08-34449.pdf
In Re Thomas, Eugene J.
fka Jamil, Eugene
Bankr. E.D. Mich. Case No. 08-70844
Chapter 11 Petition filed December 17, 2008
See http://bankrupt.com/misc/mieb08-70844p.pdf
See http://bankrupt.com/misc/mieb08-70844c.pdf
In Re Jamil, Walter T.
Bankr. E.D. Mich. Case No. 08-70828
Chapter 11 Petition filed December 17, 2008
See http://bankrupt.com/misc/mieb08-70828p.pdf
See http://bankrupt.com/misc/mieb08-70828c.pdf
In Re Sunflower Resources Corp.
Bankr. E.D. N.Y. Case No. 08-48596
Chapter 11 Petition filed December 17, 2008
Filed as Pro Se
In Re Verdon, John A.
Bankr. S.D. N.Y. Case No. 08-37827
Chapter 11 Petition filed December 17, 2008
See http://bankrupt.com/misc/nysb08-37827.pdf
In Re McDaniel, John E.
aka Jack McDaniel
Bankr. E.D. Pa. Case No. 08-18286
Chapter 11 Petition filed December 17, 2008
See http://bankrupt.com/misc/paeb08-18286p.pdf
See http://bankrupt.com/misc/paeb08-18286c.pdf
In Re One Lynch, LLC
Bankr. E.D. Pa. Case No. 08-18280
Chapter 11 Petition filed December 17, 2008
See http://bankrupt.com/misc/paeb08-18280.pdf
In Re Hoby, Inc.
Bankr. W.D. Pa. Case No. 08-28410
Chapter 11 Petition filed December 17, 2008
See http://bankrupt.com/misc/paeb08-28410.pdf
In Re Nance Ventures, LLC
dba Leather Today
Bankr. S.D. Tex. Case No. 08-38013
Chapter 11 Petition filed December 17, 2008
See http://bankrupt.com/misc/txsb08-38013.pdf
In Re Kelley, Charles Joshua
Kelley, Natasha L.
dba Josh Kelley Enterprises, Inc.
dba Tidy Car Wash and Limousine Service
Bankr. N.D. Ala. Case No. 08-84152
Chapter 11 Petition filed December 18, 2008
See http://bankrupt.com/misc/alnb08-84152.pdf
In Re Robin Lynn Mills, Inc.
Bankr. N.D. Ala. Case No. 08-42848
Chapter 11 Petition filed December 18, 2008
See http://bankrupt.com/misc/alnb08-42848.pdf
In Re Young, Bruce N.
dba Animal Clinic
Bankr. N.D. Ala. Case No. 08-84150
Chapter 11 Petition filed December 18, 2008
See http://bankrupt.com/misc/alnb08-84150.pdf
In Re Rathjen, Tanya Renee
aka Snyder-Rathjen, Tanya
aka Snyder, Tanya
Bankr. D. Ariz. Case No. 08-18380
Chapter 11 Petition filed December 18, 2008
Filed as Pro Se
In Re Service Truck Equipment Company
Bankr. D. Ariz. Case No. 08-18447
Chapter 11 Petition filed December 18, 2008
See http://bankrupt.com/misc/azb08-18447.pdf
In Re Elmeniawy, Amal M.
Bankr. C.D. Calif. Case No. 08-20293
Chapter 11 Petition filed December 18, 2008
Filed as Pro Se
In Re Atherton, Arlene R.
Bankr. N.D. Calif. Case No. 08-57350
Chapter 11 Petition filed December 18, 2008
Filed as Pro Se
In Re Glenwood Properties Inc.
Bankr. N.D. Ill Case No. 08-34720
Chapter 11 Petition filed December 18, 2008
See http://bankrupt.com/misc/ilnb08-34720.pdf
In Re Waterford Properties, Inc.
Bankr. W.D. N.Y. Case No. 08-23243
Chapter 11 Petition filed December 18, 2008
See http://bankrupt.com/misc/nywb08-23243.pdf
In Re Barba, Inc.
Bankr. S.D. N.Y. Case No. 08-15073
Chapter 11 Petition filed December 18, 2008
Filed as Pro Se
In Re Overland Security Corp.
Bankr. D. P.R. Case No. 08-08622
Chapter 11 Petition filed December 18, 2008
See http://bankrupt.com/misc/prb08-08622.pdf
In Re LOPC Landscape, Inc.
dba Texas Premier Landscape
Bankr. N.D. Tex. Case No. 08-36521
Chapter 11 Petition filed December 18, 2008
See http://bankrupt.com/misc/txnb08-36521.pdf
In Re North American Electrical Contractors, Inc.
Bankr. N.D. Tex. Case No. 08-36530
Chapter 11 Petition filed December 18, 2008
See http://bankrupt.com/misc/txnb08-36530.pdf
In Re Kreisler, Barbara P.
Bankr. E.D. Va. Case No. 08-17899
Chapter 11 Petition filed December 18, 2008
Filed as Pro Se
In Re Grubbs, Phillip Charles
Bankr. D. Ariz Case No. 08-18517
Chapter 11 Petition filed December 19, 2008
See http://bankrupt.com/misc/azb08-18517.pdf
In Re Mid-America Insulation, Inc.
Bankr. W.D. Ark. Case No. 08-75223
Chapter 11 Petition filed December 19, 2008
See http://bankrupt.com/misc/arwb08-75223.pdf
In Re Schram, Stanley
Schram, Susan
Bankr. C.D. Calif. Case No. 08-28222
Chapter 11 Petition filed December 19, 2008
See http://bankrupt.com/misc/cacb08-28222.pdf
In Re Eaton Precision Machining, Inc.
Bankr. E.D. Calif. Case No. 08-38788
Chapter 11 Petition filed December 19, 2008
See http://bankrupt.com/misc/caeb08-38788.pdf
In Re Konczakowski, Michael
Bankr. W.D. La. Case No. 08-51470
Chapter 11 Petition filed December 19, 2008
See http://bankrupt.com/misc/lawb08-51470.pdf
In Re High Street Partners, LLC
Bankr. D. Maine Case No. 08-21511
Chapter 11 Petition filed December 19, 2008
See http://bankrupt.com/misc/meb08-21511.pdf
In Re Anesthetics of Worcester, P.C.
Bankr. D. Mass. Case No. 08-19748
Chapter 11 Petition filed December 19, 2008
See http://bankrupt.com/misc/mab08-19748.pdf
In Re Strategic Designworks, Inc.
Bankr. D. Mass. Case No. 08-19747
Chapter 11 Petition filed December 19, 2008
See http://bankrupt.com/misc/mab08-19747.pdf
In Re Wrentham Antiques Marketplace, Inc.
Bankr. D. Mass. Case No. 08-19742
Chapter 11 Petition filed December 19, 2008
See http://bankrupt.com/misc/mab08-19742.pdf
In Re Kimstrac, L.L.C.
dba Chamnari Authentic Korean B.B.Q.
Bankr. W.D. La. Case No. 08-13751
Chapter 11 Petition filed December 20, 2008
See http://bankrupt.com/misc/lawb08-13751.pdf
In Re Toledo Hardwoods, LLC
Bankr. W.D. La. Case No. 08-13751
Chapter 11 Petition filed December 20, 2008
See http://bankrupt.com/misc/lawb08-13751.pdf
In Re Transed, Inc.
Bankr. N.D. N.Y. Case No. 08-14248
Chapter 11 Petition filed December 21, 2008
See http://bankrupt.com/misc/nynb08-14248.pdf
In Re Empresas de Madera, Inc.
(Gonzalez Cabinet)
Bankr. D. P.R. Case No. 08-08701
Chapter 11 Petition filed December 21, 2008
See http://bankrupt.com/misc/prb08-08701.pdf
In Re M&M Global Electronics, Inc.
dba Cell Depot
dba Cell Depot/Verizon Wireless
Bankr. M.D. Fla. Case No. 08-20451
Chapter 11 Petition filed December 22, 2008
See http://bankrupt.com/misc/flmb08-20451.pdf
In Re Zaczac, Lourdes
Bankr. M.D. Fla. Case No. 08-12225
Chapter 11 Petition filed December 22, 2008
See http://bankrupt.com/misc/flmb08-12225.pdf
In Re Trinity Garage Doors & Openers, Inc.
Bankr. N.D. Ga. Case No. 08-86231
Chapter 11 Petition filed December 22, 2008
See http://bankrupt.com/misc/ganb08-86231.pdf
In Re Bugsy's Blinds LLC
dba Maverick Installation Services
Bankr. D. Nev. Case No. 08-25327
Chapter 11 Petition filed December 22, 2008
Filed as Pro Se
In Re Scibilia, James Lee
dba Sole Officer and Shareholder of Thrillz, Inc.
dba James L. Scibilia
Kathi A Scibilia
Bankr. W.D. N.Y. Case No. 08-23267
Chapter 11 Petition filed December 22, 2008
See http://bankrupt.com/misc/nywb08-23267.pdf
In Re Murfreesboro Insulation & Afterpaint Specialists, LLC
Bankr. M.D. Tenn. Case No. 08-12089
Chapter 11 Petition filed December 22, 2008
See http://bankrupt.com/misc/tnmb08-12089.pdf
In Re P & A Restaurants, Inc.
Bankr. N.D. Tex. Case No. 08-36569
Chapter 11 Petition filed December 22, 2008
Filed as Pro Se
In Re Tri-S Investigations, Inc.
Bankr. S.D. W.Va. Case No. 08-40326
Chapter 11 Petition filed December 22, 2008
See http://bankrupt.com/misc/wvsb08-40326.pdf
In Re Ashek, Samir
Bankr. D. Ariz. Case No. 08-18675
Chapter 11 Petition filed December 23, 2008
Filed as Pro Se
In Re Cynergy Group International, LLC
Bankr. C.D. Calif. Case No. 08-32411
Chapter 11 Petition filed December 23, 2008
See http://bankrupt.com/misc/cacb08-32411.pdf
In Re Morse, Craig H.
Bankr. S.D. Calif. Case No. 08-13179
Chapter 11 Petition filed December 23, 2008
Filed as Pro Se
In Re A & M Machine Shop, Inc.
Bankr. D. Md. Case No. 08-27103
Chapter 11 Petition filed December 23, 2008
See http://bankrupt.com/misc/mdb08-27103.pdf
In Re Williams, John L.
Bankr. E.D. Mich. Case No. 08-71337
Chapter 11 Petition filed December 23, 2008
See http://bankrupt.com/misc/mieb08-71337.pdf
In Re Morris, Jasn Kendell
Bankr. N.D. Miss. Case No. 08-15515
Chapter 11 Petition filed December 23, 2008
See http://bankrupt.com/misc/msnb08-15515p.pdf
See http://bankrupt.com/misc/msnb08-15515c.pdf
In Re D & V Trucking, Inc.
Bankr. E.D. N.C. Case No. 08-09293
Chapter 11 Petition filed December 23, 2008
See http://bankrupt.com/misc/nceb08-09293.pdf
In Re Christopher's Pizza Inc.
dba Christopher's Pizza and Subs
Bankr. W.D. N.Y. Case No. 08-15545
Chapter 11 Petition filed December 23, 2008
See http://bankrupt.com/misc/nywb08-15545.pdf
In Re Donohue, Jeff
Kathi A Scibilia
Bankr. C.D. Calif. Case No. 08-32556
Chapter 11 Petition filed December 24, 2008
Filed as Pro Se
In Re Knight Landscape Construction, Inc.
Bankr. N.D. Calif. Case No. 08-57529
Chapter 11 Petition filed December 24, 2008
Filed as Pro Se
In Re Beacon Hill Preparatory Academy, Inc
Bankr. N.D. Ill. Case No. 08-35236
Chapter 11 Petition filed December 24, 2008
See http://bankrupt.com/misc/ilnb08-35236.pdf
In Re Aste, Robert J.
Bankr. D. N.J. Case No. 08-35648
Chapter 11 Petition filed December 24, 2008
See http://bankrupt.com/misc/njb08-35648.pdf
In Re John T. Whitmer Associates, PLLC
dba Radiance Medspa of Westchester
Bankr. S.D. N.Y. Case No. 08-23883
Chapter 11 Petition filed December 24, 2008
See http://bankrupt.com/misc/nysb08-23883.pdf
In Re Briggs, Jona A.
Bankr. S.D. Ala. Case No. 08-15162
Chapter 11 Petition filed December 26, 2008
See http://bankrupt.com/misc/alsb08-15162.pdf
In Re Meier, Craig
Bankr. D. Ariz. Case No. 08-18814
Chapter 11 Petition filed December 26, 2008
See http://bankrupt.com/misc/azb08-18814.pdf
In Re M.A. Verde Partners, LLC
Bankr. D. Ariz. Case No. 08-18825
Chapter 11 Petition filed December 29, 2008
Filed as Pro Se
In Re Brock, Tamara L.
aka Village Pizza
Bankr. C.D. Calif. Case No. 08-20580
Chapter 11 Petition filed December 29, 2008
Filed as Pro Se
In Re R&P Ventures LLC
dba Thai Spice
Bankr. C.D. Calif. Case No. 08-18594
Chapter 11 Petition filed December 29, 2008
See http://bankrupt.com/misc/cacb08-18594.pdf
In Re Novillos, Hilario
Novillos, Alejandra
Bankr. N.D. Calif. Case No. 08-32517
Chapter 11 Petition filed December 29, 2008
Filed as Pro Se
In Re W.H. Construction, Inc.
Bankr. S.D. Ind. Case No. 08-15944
Chapter 11 Petition filed December 29, 2008
See http://bankrupt.com/misc/insb08-15944p.pdf
See http://bankrupt.com/misc/insb08-15944c.pdf
In Re Megie, Raymond David
Megie, Roseanne Lynn
Bankr. E.D. Mich. Case No. 08-35421
Chapter 11 Petition filed December 29, 2008
See http://bankrupt.com/misc/mieb08-35421p.pdf
See http://bankrupt.com/misc/mieb08-35421c.pdf
In Re LRA Associates, Inc.
dba Nathan's Famous
Bankr. D. N.J. Case No. 08-35781
Chapter 11 Petition filed December 29, 2008
See http://bankrupt.com/misc/njb08-35781.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.
The Sunday TCR delivers securitization rating news from the week
then-ending.
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 2009. 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 ***