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/raid1/www/Hosts/bankrupt/TCR_Public/090109.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, January 9, 2009, Vol. 13, No. 8 Headlines A+ CHILD: To Restructure Operations Under Canada's Insolvency Act ACCO BRANDS: S&P Downgrades Corporate Credit Rating to 'B+' ADANAC MOLYBDENUM: Has Until Jan. 16 to File CCAA Plan AGRIPROCESSORS INC: Buyers to Undergo Competitive Bidding Process ALLTEL COMMS: Fitch Hikes Rating to 'A' on Verizon Buyout ALLTEL COMMUNICATIONS: Moody's Upgrades Debt Rating to Baa1 AMERIQUAL GROUP: S&P Downgrades Corporate Credit Rating to 'B-' AREMISSOFT CORP: Trust Distributes $400,000 to SoftBrands ARTISTDIRECT INC: Amends Indenture with Trilogy Capital, et. al. ARVINMERITOR INC: To Dismantle Light Vehicle Systems Unit AXCESS MEDICAL: Sept. 30 Balance Sheet Upside Down by $1.2MM AXLETECH INTERNATIONAL: Moody's Withdraws 'B2' Corporate Ratings BERNARD L. MADOFF: U.S. Senators Request Information from SEC BLUE TULIP: Files for Chapter 11 Protection in Delaware BLUE TULIP: Gets Initial Approval to Access Cash Collateral BRODER BROS: Moody's Downgrades Corporate Family Rating to 'Caa3' BRUGNARA CORPORATION: Case Summary & Two Largest Unsec. Creditors BRUGNARA PROPERTIES: Case Summary & 3 Largest Unsecured Creditors CAPE ANN: Files for Chapter 7 Liquidation CASS COUNTY: Fitch Affirms Rating on $50 Mil. Hospital Bonds CHENIERE ENERGY: Board OKs Indemnification Pact for Directors CHESAPEAKE ENERGY: Aubrey McClendon Remains as CEO for 5 Years CHESTER COUNTY: S&P Gives Positive Outlook; Affirms 'BB+' Rating CHRYSLER LLC: $4-Bil. TARP Loan to Accelerate if Plan Not Viable CITIGROUP INC: Enters Mortgage Deal With Democrats in Senate CLEARWATER NATURAL: Files for Chapter 11 Bankruptcy in Kentucky CLEARWATER NATURAL: Case Summary & 16 Largest Unsecured Creditors CLUB AT WATERFORD: Files Chapter 11 Plan and Disclosure Statement CONSTAR INTL: Court Approves Protocol Limiting Equity Trading DBSI INC: 19 Units' Voluntary Chapter 11 Case Summary DELTA FINANCIAL: Second Amended Plan Declared Effective DHP HOLDING: Wants to Access Lenders' Cash Collateral ENTERCONNECT INC: Sept. 30 Balance Sheet Upside Down by $829,756 EPICEPT CORP: TBG OKs EUR1.5MM Repayment Delay Until June 30 EPICEPT CORP: Board Okays 687,500 Options Grant to Executives ERNIE HAIRE: Clients Can Continue Borrowing From Banks FANNIE MAE: Extends Foreclosure Sale and Eviction Suspension FIRST METAL: Defaults on Bond Payments; Files for Bankruptcy FLYING J: Wants Court to Enforce Bankruptcy Stay on FERC Case FRANKLIN EQUIPMENT: Will File for Chapter 7 Liquidation FRONTIER AIRLINES: Pilots Union OKs Wage Concessions Until 2011 GEN-SEE CAPITAL: SEC Sues Ponzi Scheme; Seeks Asset Freeze GENERAL MOTORS: To Get $4B from TARP on Feb. 17; Needs Viable Plan GENERAL MOTORS: No Strike Until Feb. 17, Treasury Says GMAC LLC: Nationwide Rate Incentive Financing Launched HALLMARK SYNERGY: Involuntary Chapter 11 Case Summary HALO TECHNOLOGY: May Employ Navigant Capital as Financial Advisor HAMPTONS LLC: Case Summary & Five Largest Unsecured Creditors HARRY & DAVID: September 27 Balance Sheet Upside-Down by $11MM HAWAIIAN TELCOM: Files List of Investors in Bankruptcy Court HELLER EHRMAN: BofA and Citibank Could Lose $50MM in Dispute HERTZ CORP: Bank Loan Sells at 40% Discount in Secondary Market HINSDALE GREYHOUND: Agency Asks for Probe on Co. on Law Violation IDEARC INC: Bank Loan Sells at 70% Discount in Secondary Market INDEPENDENCE TAX: September 30 Balance Sheet Upside-Down by $18MM ISLE OF CAPRI: Bank Loan Sells at 47% Off in Secondary Market JOHN VRATSINAS: Case Summary & 20 Largest Unsecured Creditors JOHNSON DAIRY: Files for Chapter 11 Bankruptcy in Colorado JOHNSON DAIRY: Case Summary & 21 Largest Unsecured Creditors JOSEPH FORTE: Charged by SEC & CFTC for $50-Mil. Ponzi Scheme JOYSTAR/TRAVELSTAR: Drew Axelrod Files for Chapter 7 Against Co. KASEY REALTORS: Files for Chapter 11 Bankruptcy Protection KING PHARMACEUTICALS: Moody's Affirms 'Ba3' Corp. Family Rating LANDSBANKI ISLANDS: Icelandic Govt' Drops Suit Over Frozen Assets LAS VEGAS SANDS: Bank Loan Trades Slightly Up in Secondary Market LEAR CORPORATION: More Operating Risks Cue Moody's Junk Ratings LINGO MEDIA: A+ Child Unit to Restructure Operations Under BIA LODGENET INTERACTIVE: To Close Atlanta Call Center, Cut 110 Jobs LYONDELL CHEMICAL: Gets Permission to Access $2 Bil. from DIP Loan LYONDELL CHEMICAL: Citi Has $2 Billion Direct Gross Exposure LYONDELL CHEMICAL: Bankruptcy Cues $1BB Credit-Default Swaps LYONDELL CHEMICAL: Non-U.S. Ops. Not Affected By Ch. 11 Filing LYONDELL CHEMICAL: Suburban Propane Denies Affiliation MASONITE INTL: Forbearance Agreements Stretched to January 31 MERISANT WORLDWIDE: Term and Revolver Debt Maturing Next Week METRO PCS: Bank Loan Trades Slightly Higher in Secondary Market MONACO COACH: Hires Advisors to Check Options, Improve Liquidity NATIONSLINK FUNDING: S&P Ups Rating on Class G to BBB- From BB+ NORBORD INC: S&P Keeps BB- Corp. Credit Rating; Outlook Negative ON SEMICONDUCTOR: Will Shut Factories, Cut Bonus Pay PAPER INT'L: Taps Fredericks Michael as Investment Bankers PAPER INTERNATIONAL: Panel Taps Bingham McCutchen as Counsel PAPER INTERNATIONAL: Panel Taps Houlihan Lokey as Finl Advisor PENN TRAFFIC: Credit Facilities Extended Through April 2010 PENN TREATY: S&P Changes Ratings to 'R' From 'CC' POWER MEDICAL: Sept. 30 Balance Sheet Upside Down by $7.7 Million PRESS EX: Files for Chapter 11 Bankruptcy Protection RECYCLED PAPER: Seeks to Scrap Contract With "Out-of-Money" Owner RENEGY HOLDINGS: Posts $4.7 Mil. Net Loss in Qtr. Ended Sept. 30 REVELSTOKE CDO: S&P Downgrades Rating on Class A-3 Notes to 'CC' RXELITE INC: Posts $10.9 Million Net Loss in Qtr. Ended Sept. 30 SALLY BEAUTY: Bank Loan Sells at Substantial Discount SARIDAKIS CONSTRUCTION: Voluntary Chapter 11 Case Summary SKYPOSTAL NETWORKS: Posts $1.3MM Net Loss in Qtr. Ended Sept. 30 SMART MOVE: Sept. 30 Balance Sheet Upside Down by $563,382 SMITTY'S BUILDING: Wants to Access $16 Million BofA DIP Facility ST. SIMONS: Case Summary & 20 Largest Unsecured Creditors STERLING GENERATION: Case Summary & 10 Largest Unsec. Creditors SUPERIOR OFFSHORE: Wants Case Converted to Chapter 7 Liquidation T3 MOTION: Posts $2.6 Million Net Loss in Quarter Ended Sept. 30 TARGA RESOURCES: Bank Loan Continues to Sell at Discount TD ROWE: Case Summary & 20 Largest Unsecured Creditors TRIBUNE CO: Wants to Carryover 33 Prepetition Non-Insiders TRIBUNE CO: Intends to Employ Sidley Austin LLP as Lead Counsel TRIBUNE CO: Taps McDermott Will & Emery LLP for Domestic Matters TRIBUNE CO: Taps Lazard Freres & Co. LLC as Financial Advisor TRIBUNE CO: Taps Alvarez & Marsal as Restructuring Advisor TROPICANA ENTERTAINMENT: Files OpCo/LandCo Restructuring Plan TROPICANA LANDCO: Bank Loan Sells at Substantial Discount US SHIPPING: Misses Dec. 31 Payment on $332.6MM Credit Facility VALLEY FORGE: Posts $4.9 Million Net Loss in Qtr. Ended Sept. 30 WORKFLOW MANAGEMENT: S&P Corrects 'D' 2nd-Lien Debt Rating to 'C' YRC WORLDWIDE: S&P Changes Outlook on 'CC' Rating to Developing * Home Prices and Sales Tumbled in October, Says Radar Logic * U.S. Bankruptcy Process Works, Weeds Out Weak, Study Says * Akerman Senterfitt Snares Keith Costa from Pullman * Stamboulidis Is Managing Partner of Baker Hostetler's NY Office * BOOK REVIEW: Voluntary Assignments for the Benefit of Creditors ********* A+ CHILD: To Restructure Operations Under Canada's Insolvency Act ----------------------------------------------------------------- A+ Child Development (Canada) Ltd., a 70.33% subsidiary of Lingo Media Corporation, is restructuring its operations. On December 23, 2008, A+ Child filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act of Canada. At the time of the filing, Michael Kraft, President & CEO of Lingo Media said in a news statement, "After an extensive strategic evaluation, A+ made the tough decision to restructure its operations. A+ will continue to evaluate all possible alternatives over the next thirty days to determine the best course of action. Lingo Media has decided to focus its resources on the expansion of our English Language Learning businesses including Speak2Me Inc. subsidiary, a new media company that focuses on online advertising in China via its Internet-based English Language Learning portal and our legacy business, Lingo Learning Inc. subsidiary, a print-based publisher of English Language Learning programs in China." A+ will continue to service its clientele through its National Support Centre while the potential for reorganization and restructuring is examined. About Lingo Media Lingo Media Corporation is a diversified online and print-based education product and services corporation. Lingo Media's Speak2Me Inc. subsidiary is a new media company that focuses on interactive advertising in China via its Internet-based English Language Learning portal. Speak2Me offers a proprietary and groundbreaking online service designed to address the rapidly growing need for conversational English learning around the world. Using robust speech recognition technology, Speak2Me provides more than 250-targeted language lesson modules involving interactive conversations with a virtual teacher. A unique social-network infrastructure also allows students to form study groups, creating an environment that, along with contests and prizes, engenders co- operation and competition, just as in a conventional classroom. In China, Lingo Media continues to expand its legacy business via its subsidiary Lingo Learning Inc., a print-based publisher of English Language Learning programs in China since 2001. Lingo Learning has an established presence in China's education market of 200 million students. To date, it has published 245 million units from its library of more than 340 program titles in China. In Canada, Lingo Media focused on early childhood cognitive development, through its subsidiary A+ Child Development Ltd., which distributed educational materials along with its unique curriculum. A+ has been operating in Canada for over ten years through its four offices in Calgary, Edmonton, Toronto and Vancouver. Lingo Media plans to introduce A+'s learning system and products to parents of pre-school children in China. On the net: http://www.lingomedia.com/and http://www.apluschilddev.com/ ACCO BRANDS: S&P Downgrades Corporate Credit Rating to 'B+' ----------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit rating on Lincolnshire, Illinois-based ACCO Brands Corp. to 'B+' from 'BB-'. At the same time, S&P lowered all of its existing issue-level ratings on the company and its subsidiaries by one notch, and affirmed the recovery ratings. In addition, Standard & Poor's removed the ratings from CreditWatch with negative implications, where S&P originally placed them on Nov. 6, 2008, following weaker-than-expected third-quarter 2008 operating performance, which resulted in tighter covenant cushion levels. The outlook is stable. "The downgrade reflects the company's weak operating performance and Standard & Poor's concerns that current economic conditions will continue to represent a challenge for ACCO to improve its financial performance and credit measures in the near term, despite implementing organizational changes and restructuring and cost-saving efforts," said Standard & Poor's credit analyst Jean C. Stout. "The revised rating also incorporates ACCO's increased bank financial covenant cushion, following its recently amended credit agreement," she continued. S&P's ratings on ACCO reflect the highly competitive and cyclical operating environment in which it operates, some customer concentration, and the company's leveraged financial profile. ACCO benefits from its leading market position, a portfolio of well-known brands, and wide geographic distribution. The outlook is stable. While S&P remains concerned about the effects of the weak economic environment on the company's operating results, S&P believes that credit measures will not change materially in the near term, including average debt to EBITDA of about 5x. S&P expects cushion under ACCO's bank financial covenants will remain at least 15%. However, S&P could revise the outlook to negative if ACCO cannot continue to reduce debt, operating performance weakens, and/or if ACCO cannot maintain adequate cushion on its financial covenants. S&P believes this would occur if sales fell by about 12% and adjusted margin contracted by 50 basis points, which S&P estimate could result in leverage of well over 5x. An outlook revision to positive is unlikely over the near term, unless ACCO can meaningfully improve its credit metrics. ADANAC MOLYBDENUM: Has Until Jan. 16 to File CCAA Plan ------------------------------------------------------ Adanac Molybdenum Corporation (CA:AUA) (PINK SHEETS: AUAYF)(FRANKFURT: A9N) obtained creditor protection under the Companies' Creditors Arrangement Act (Canada) pursuant to an initial order granted on December 19, 2008, by the Supreme Court of British Columbia. The company's Board of Directors authorized the Company to take this action as the best alternative for the long-term interests of the company, its employees, creditors and other stakeholders. Adanac has sought protection under the CCAA as its current cash in hand would not allow it to meet its current obligations. CCAA protection will stay creditors, suppliers and others from enforcing any rights against the Company and will afford the Company the opportunity to restructure its affairs. The Court has granted CCAA protection for an initial period of 28 days expiring January 16, 2009, to be extended thereafter as the Court deems appropriate. If by January 16, Adanac has not filed a Plan of Arrangement, or obtained an extension of the CCAA protection, creditors and others will no longer be stayed from enforcing their rights. While under CCAA protection, Adanac's management remains responsible for the day-to-day operations of the company, under the supervision of KPMG Inc., who is the Court-appointed Monitor, and who will be responsible for reviewing Adanac's ongoing operations, assisting with the development and filing of the Plan, liaising with creditors and other stakeholders and reporting to the Court. Although CCAA protection enables Adanac to continue with its day- to-day operations until its CCAA status changes, the implications for Adanac's shareholders are less clear. Adanac continues to explore a number of alternatives, a sale of Adanac or its assets. However, the Plan must be approved by the requisite number and value of the affected creditors, as required by law, as well as by the Court. At the end of the restructuring process, the value of what is left for shareholders will depend upon the terms of the Plan approved by the affected creditors. If the Plan is not so approved it is possible that Adanac would be placed into receivership or bankruptcy. Every effort will be made to ensure that all stakeholders of Adanac are kept informed of developments as they occur. The Order appointed KPMG Inc. as Adanac's Monitor. Inquiries may be directed to: Attn: Mr. Mark Kemp-Gee KPMG Inc. 777 Dunsmuir Street, PO Box 10426 Vancouver, BC V7Y 1K3 Tel: (604) 691-3397 Fax: (604) 691-3036 E-mail: mkempgee@kpmg.ca About Adanac Molybdenum Vancouver, British Columbia-based Adanac Molybdenum Corporation is listed on the TSX and Frankfurt exchanges and owns the Ruby Creek Project in northern British Columbia. The Company has advanced the project through feasibility studies, a production decision and has previously ordered long-lead equipment, completed permitting for construction, constructed a road to the site and secured US$80 million in bridge financing. AGRIPROCESSORS INC: Buyers to Undergo Competitive Bidding Process ----------------------------------------------------------------- The Associated Press reports that Joseph Sarachek, theChapter 11 Operating Trustee for Agriprocessors Inc. said that potential buyers of the Postville plant in Iowa will undergo a competitive bidding process. Citing officials, The AP states that as many as a dozen potential buyers want to buy the slaughterhouse. Mr. Sarachek, according to The AP, said that Agriprocessors continues to reopen many of its production lines, ensuring that the new owners will quickly be able to assume a "dominant position" in the kosher marketplace. 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. ALLTEL COMMS: Fitch Hikes Rating to 'A' on Verizon Buyout --------------------------------------------------------- Fitch Ratings has upgraded and removed from Rating Watch Positive these ratings of Alltel Corporation and subsidiaries: Alltel Corp. -- IDR to 'A' from 'B'; -- $800 million 7% notes due 2012 to 'A' from 'CCC+/RR6'; -- $200 million 6.50% notes due 2013 to 'A' from 'CCC+/RR6'; -- $300 million 7% notes due 2016 to 'A' from 'CCC+/RR6'; -- $300 million 6.80% notes due 2029 to 'A' from 'CCC+/RR6'; -- $700 million 7.875% notes due 2032 to 'A' from 'CCC+/RR6'. Alltel Communications Inc. -- IDR to 'A' from 'B'; -- Senior secured bank credit facility due 2015 to 'A' from 'BB/RR1'; -- Senior unsecured cash pay debt bank credit facility due 2015 to 'A' from 'B/RR4'; -- Senior unsecured PIK toggle debt bank credit facility due 2017 to 'A' from 'B/RR4'; -- $1 billion 10.375%/11.125% PIK toggle notes due 2017 to 'A' from 'B/RR4'. Fitch's rating upgrade is in anticipation of the close of the acquisition of Alltel by Cellco Partnership on Jan. 9. Cellco Partnership is a Delaware general partnership doing business as Verizon Wireless. Verizon Communications, Inc. owns 55% of the partnership, while Vodafone Group Plc owns 45%. The Rating Outlook is Stable. After the close of the transaction, Fitch will withdraw ratings on debt repaid. Debt not refinanced and that will remain outstanding will consist of pre-leveraged buyout Alltel Corp. debt amounting to $2.3 billion and leveraged buyout debt issued by ACI of $190 million, consisting of a portion of the 10.375%/11.125% pay-in- kind toggle notes due 2017. Following the close of the transaction, Alltel will continue as a wholly owned subsidiary of AirTouch Cellular (a subsidiary of Cellco Partnership). Cellco Partnership states that it may guarantee any or all of the Alltel Corp. debt and the PIK toggle notes but is under no obligation to do so. Fitch's 'A' ratings on the remaining Alltel debt that will remain outstanding are based on the importance of Alltel's operations to VZW and the potential support offered by VZW's strong operating profile. In addition, Fitch has assigned an 'A' rating to the $17 billion, 364-day acquisition facility co-issued by Cellco Partnership and Verizon Wireless Capital LLC that is being used to fund the acquisition of Alltel. Cellco Partnership and Verizon Wireless Capital LLC each have a Fitch IDR of 'A' and a Stable Outlook. The rating action reflects Fitch's expectation that VZW's proposed $28.1 billion acquisition of Alltel will close on Jan. 9, 2009. The receipt on Dec. 10, 2008 of commitments from eight financial institutions for $17 billion (reduced due to a subsequent financing to $14.5 billion) in senior unsecured bridge financing completed the required financing for the transaction. VZW raised in advance a significant portion of the proceeds required to close the transaction through term loans and note offerings. During 2009, VZW expects to repay the bridge financing using the proceeds from longer term debt issuances and proceeds from the sale of overlapping properties VZW agreed to divest in order to secure regulatory approvals. Fitch estimates the sale of the overlapping properties could generate in the range of $4 billion to $4.5 billion in pre-tax proceeds. The IDR's of Cellco Partnership and Verizon Wireless Capital are supported by VZW's continued strong growth of revenue, EBITDA and free cash flow as well as its strong competitive position among the four national operators. Although net subscriber additions are slowing for VZW and the industry (and will be affected in 2009 by the recessionary economy) and there is pressure on voice service revenue per customer, Fitch expects VZW's subscriber growth and high wireless data service revenue growth to contribute to total revenue growth that is above the industry average in the near term. Fitch believes long-term growth prospects for data service revenues are good, as lower price points are implemented, data-capable handsets are more widely deployed, and as new applications become available. Based on VZW's initial estimate that it will have total debt of $38 billion at the closing of the transaction, Fitch estimates initial leverage will approximate 1.7 times using VZW's and Alltel's combined EBITDA annualized for the first nine months of 2008. VZW's credit metrics should improve fairly rapidly, as in the first year after the acquisition Fitch expects VZW's strong cash flow generation to provide for approximately $10 billion of debt reduction (and more in the second year). VZW's simple free cash flow (EBITDA less capital spending) was strong for the last 12 months ending Sept. 30, 2008, at $12.2 billion. ALLTEL COMMUNICATIONS: Moody's Upgrades Debt Rating to Baa1 ----------------------------------------------------------- Moody's Investors Service upgraded to Baa1 from Caa1 the ratings for $2.3 billion of senior unsecured legacy debt at Alltel and the rating for $1 billion PIK toggle notes issued by Alltel's wholly- owned subsidiary, Alltel Communications, Inc. All of these instruments are expected to remain outstanding following the close of the pending acquisition of Alltel by Verizon Wireless. Separately, Moody's confirmed the ratings of Alltel's other non legacy debt instruments based on the expectation that they will be redeemed in full at closing, at which time Moody's will withdraw the ratings of these instruments. These actions conclude the ratings review initiated on June 6, 2008, following VZW's announcement that it entered into an agreement to acquire Alltel for about $28.1 billion in cash and assumed debt. VZW recently announced that it plans to close the acquisition of Alltel on January 9, 2008. Moody's has taken these rating actions: Issuer: Alltel Corporation -- Corporate Family Rating, Confirmed B2, to be withdrawn at close -- Probability of Default Rating, Confirmed B2, to be withdrawn at close -- $2.3 billion senior unsecured notes -- Upgraded to Baa1, from Caa1, LGD 6 (95%) Issuer: Alltel Communications, Inc. -- $14 billion senior secured term loan B due 2015 -- Confirmed Ba3, LGD2 (27%), to be withdrawn at close -- $1.5 billion senior secured revolving credit facility due 2013 -- Confirmed Ba3, LGD2 (27%), to be withdrawn at close -- $5.2 billion unsecured cash pay loan facility due 2015 -- Confirmed Caa1, LGD5 (79%), to be withdrawn at close -- $1.5 billion unsecured PIK toggle term loan facility due 2017 -- Confirmed Caa1, LGD5 (79%), to be withdrawn at close -- $1 billion senior unsecured PIK toggle notes due 2017 -- Upgraded to Baa1, from Caa1, LGD 5 (79%) -- Outlook -- Negative -- Liquidity Rating -- Affirmed SGL-2, to be withdrawn at close The upgrade of Alltel and ACI's debt ratings reflects Moody's view that the acquisition of Alltel by VZW will materially enhance Alltel's standalone credit profile despite the lack of guarantees from VZW. Moody's believes that VZW will support its subsidiary, AirTouch Cellular, which will own Alltel's acquired assets, due to their strategic importance to VZW's existing wireless operations and significant long-term opportunities to improve cash flows through cost synergies and the enhanced operating scale of the combined companies. The two notch gap from parent VZW's A2 senior unsecured ratings reflects the lack of guarantee and Moody's expectation that the operations of AirTouch Cellular will be more levered than VZW. Moody's notes that should VZW issue an irrevocable and unconditional guarantee of any Alltel debt that remains outstanding, those ratings would be raised to parity with VZW's A2 senior unsecured rating. Consistent with the negative outlook at VZW, the negative outlook for Alltel reflects execution risks in reducing financial leverage following the acquisition in a very weak economy and amid challenging credit market conditions. Moody's last rating action was on June 6, 2008, when Alltel's ratings were placed on review for possible upgrade following VZW's plans to acquire Alltel. Headquartered in Basking Ridge, New Jersey, Cellco Partnership, doing business as Verizon Wireless, is a joint venture formed in April 2000 by the combination of the United States wireless operations and interests of Verizon Communications, Inc., and Vodafone Group Plc. Verizon owns a controlling 55% interest in Verizon Wireless and Vodafone owns the remaining 45%. As of 9/30/2008, VZW was the second largest wireless services provider in the U.S with 70.8 million subscribers. VZW generated $48 billion in revenue in the twelve months ended 9/30/2008. Alltel, based in Little Rock, Arkansas, operates the nation's largest wireless network (by geography), which delivers voice and data services to nearly 14 million customers in 34 states within the United States. The company operates predominately in tier 2, tier 3 and rural markets and is a significant roaming partner to the 4 largest wireless providers (AT&T Mobility, Verizon Wireless, Sprint Nextel, and T-Mobile) mainly because of its extensive rural coverage. For the twelve months ended 9/30/2008 Alltel generated $9.5 billion in revenues. AMERIQUAL GROUP: S&P Downgrades Corporate Credit Rating to 'B-' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on AmeriQual Group LLC, including lowering the corporate credit rating to 'B-' from 'B'. The outlook is stable. "The downgrade reflects expectations of deteriorating credit protection measures in 2009, due largely to lower demand for certain military ration products, and limited visibility into the level of sales and earnings over the next two to three years," said Standard & Poor's credit analyst Christopher DeNicolo. Although demand for one of AmeriQual's main military ration products, Meals-Ready to Eat, is likely to be fairly stable in 2009, lower demand for Unitized Group Rations-A], tray packs, civilian rations, and co-manufacturing products is likely to result in much lower revenues and earnings. In addition, a combination of a higher proportion of non-MRE military rations that are less profitable and lower prices under the most recent MRE contract has brought operating margins to below 10% from about 15% in 2006. Therefore, Standard & Poor's expects credit protection measures to deteriorate in 2009, with debt to EBITDA of 5.5x-6x and funds from operations to debt below 10%. Liquidity is likely to be adequate with at least break-even free cash flow and about $15 million of revolver availability. There are no material debt maturities until 2012, but the revolver matures in 2010 and the next $5 million interest payment on the secured notes is due April 1. Revenues and earnings, and therefore credit protection measures, have been volatile the past two years. In 2007, revenues declined 16%, due mainly to lower MRE sales, but likely increased more than 50% in 2008 as a result of strong demand for UGR(A) and tray packs. This resulted in debt to EBITDA going to over 9x in 2007 from 4x in 2006 and back down to around 4.5x in 2008, with fairly constant debt levels over the period. The ratings on AmeriQual Group reflect its very weak credit protection measures, limited product diversity, and a modest revenue base, offset somewhat by its position as a leading provider of field rations to the U.S. military (75%-80% of sales). In addition, the company manufactures "shelf stable" food products for leading branded food companies and a emergency ration for nonmilitary use (20%-25%). Credit protection measures are likely to deteriorate in 2009 due to lower demand for certain military products. Still, expect financial ratios to be appropriate for the recently lowered ratings, although visibility of revenues and earnings is somewhat limited. The most likely catalyst for a change in the outlook would be deterioration in liquidity due to lower-than-expected earnings or higher-than-normal working capital requirements. Therefore, S&P could revise the outlook to negative if these conditions result in cash and revolver availability declining below $15 million. It is unlikely S&P would revise the outlook to positive in the near term due to the uncertainty of demand for the firm's key products. AREMISSOFT CORP: Trust Distributes $400,000 to SoftBrands --------------------------------------------------------- SoftBrands, Inc., has received approximately $400,000 in a distribution of net collections from the AremisSoft Corporation Liquidating Trust. SoftBrands is entitled to 10% of the net collections by the Trust, which was established following the AremisSoft bankruptcy. SoftBrands previously received distributions of net collections from the Trust of $12.6 million in June 2005 and $2.9 million in December 2003. The Trustees have indicated to claimants that they continue to aggressively pursue actions and recoveries against former AremisSoft executives and financial institutions. The Trust also continues to work closely with the U.S. Government to seek redress for former shareholders of AremisSoft. About SoftBrands SoftBrands, Inc. (NYSE Alternext: SBN), provides software solutions for businesses in the manufacturing and hospitality industries worldwide. The company has established a global infrastructure for distribution, development and support of enterprise software, and has roughly 5,000 customers in more than 100 countries actively using its manufacturing and hospitality products. SoftBrands, which has roughly 775 employees, is headquartered in Minneapolis, Minnesota, with branch offices in Europe, India, Asia, Australia and Africa. On the Net: http://www.softbrands.com/ About AremisSoft Corp. Based in Minneapolis, Minnesota, AremisSoft Corporation -- http://www.aremissoft.com/-- developed enterprise resource planning (ERP) software for midsized companies in the manufacturing (35% of sales), health care, hospitality, and construction industries. Its ERP applications automate and manage such processes as accounting, customer service, and sales and marketing for BAE SYSTEMS, Regal Hotel International, Ericsson, and other customers. The company filed for chapter 11 protection on March 15, 2002 (Bankr. D. N.J. Case No. 02-32621). Paul R. DeFilippo, Esq., at Gibbons, DelDeo, Dolan, Griffinger et al., represented the Debtor in its restructuring efforts. The Court confirmed the Debtor's Chapter 11 plan in June 2002, and the plan took effect in August 2002. Among others, the plan called for a creation of a litigation and liquidating trust. George Ellis, chairman and CEO of SoftBrands, was brought in to lead the restructuring effort. ARTISTDIRECT INC: Amends Indenture with Trilogy Capital, et. al. ---------------------------------------------------------------- ARTISTdirect, Inc., entered into a First Amendment to Convertible Subordinated Note with Trilogy Capital Partners, Inc., Randy Saaf and Octavio Herrera, the holders of a majority of the aggregate principal amount outstanding of the subordinated convertible notes. The Amendment decreases the conversion price of the Subordinated Notes from $1.55 to $1.00 per share and waives the requirement of certain holders to give 61 day written notice to increase or decrease the maximum limitation on such holders' ability to convert the Subordinated Notes held by them. A full-text copy of the First Amendment to Convertible Subordinate Notes is available for free at http://ResearchArchives.com/t/s?3705 About ARTISTdirect Inc. Headquartered in Santa Monica, California, ARTISTdirect Inc. (OTC.BB: ARTD) -- http://artistdirect.com/-- is a digital media entertainment company that is home to an online music network and, through its MediaDefender subsidiary, is a provider of anti-piracy solutions in the Internet-piracy-protection industry. At Sept. 30, 2008, the company's balance sheet showed total assets of $9.3 million and total liabilities of $48.3 million, resulting in a stockholders' deficit of $39.0 million. For three months ended Sept. 30, 2008, the company reported net loss of $9.2 million compared with net loss of $183,000 for the same period in the previous year. For nine months ended Sept. 30, 2008, the company posted net loss of $43.9 million compared with net loss of $134,000 for the same period in the previous year. As of Sept. 30, 2008, and Dec. 31, 2007, the company had $2.4 million and $4.2 million of unrestricted cash and cash equivalents. At Sept. 30, 2008, the company had a working capital deficiency of $41.0 million, because of the classification of senior secured notes payable and subordinated convertible notes payable as current liabilities, the accrual of default interest on the subordinated convertible notes payable of $5.5 million, and liquidated damages payable under registration rights agreements of $1.9 million at the date. ARVINMERITOR INC: To Dismantle Light Vehicle Systems Unit --------------------------------------------------------- ArvinMeritor, Inc., on Thursday provided an update on the previously announced process to sell its Light Vehicle Systems (LVS) business, the reorganization of LVS, and its 2009 financial reporting. "We are firmly committed to our long-term strategy of focusing on the commercial vehicle on- and off-highway market segments for both original equipment manufacturers and aftermarket customers," said Chip McClure, chairman, CEO and president of ArvinMeritor. "As previously announced, we were in negotiations to sell the LVS business group in its entirety. However, in light of the unprecedented challenges in the credit markets and the volume weakness in our industry, we have determined that in this financial environment we cannot capture the appropriate value for LVS by selling the business as a whole. We are confident that this decision will ultimately generate the best returns for our shareholders." The company will reorganize its LVS business group to include: -- Body Systems While the company continues to pursue a sale of the Body Systems business separately, it will be managed to continue to improve its financial performance and to ensure that a future sale will provide an acceptable return to ArvinMeritor shareholders. -- Chassis Systems The company will continue to explore and evaluate strategic alternatives for a timely and orderly exit from this business. -- Wheels ArvinMeritor expects to retain the Wheels business. In May 2008, ArvinMeritor announced a plan to spin off its LVS business to its shareholders within 12 months, contingent upon satisfactory financial and automotive market conditions. Due to the challenging market environment, in October 2008 the company announced that while a spin-off was still an option, it was also investigating alternatives to achieve the separation, including a potential sale. With Thursday's announcement, ArvinMeritor remains committed to separating the businesses. Management Structure During an interim period, LVS Body Systems, as well as the LVS corporate staffs, will report to Jay Craig, ArvinMeritor's chief financial officer. LVS Chassis Systems will report to Jim Donlon, executive vice president, and the Wheels business will to report to Mary Lehmann, senior vice president, Strategic Initiatives, and Treasurer. Effective immediately, Phil Martens former president of LVS will leave the company to pursue other opportunities. "We appreciate Phil's commitment, dedication and many contributions to the LVS organization," said Mr. McClure. "Phil's comprehensive industry insight, international experience and focus on new product development have been valuable assets to our company." Update on 2009 Fiscal Year Financial Reporting At the ArvinMeritor 2008 Annual Analyst Day meeting held in New York on Dec. 9, the company provided 2009 first fiscal quarter guidance and a sensitivity analysis for certain financial metrics for expected continuing operations. Due to the changes regarding LVS, the company expects the composition of continuing operations to be different than what was reflected in the news release and presentation distributed on Dec. 9, and assumed for the purposes of discussing the company's continuing operations on a going forward basis. For that reason only, the company is withdrawing the guidance and the sensitivity analysis that was provided at that time. About Light Vehicle - Body Systems and Chassis Systems ArvinMeritor's LVS Body Systems is a world leader in the design and manufacture of components, systems and modules for car and light truck window, door, access control and roof applications. The LVS Chassis Systems business is focused on components and complete suspension systems for car and light trucks for global OEMs and the aftermarket. About ArvinMeritor Based in Troy, Michigan, ArvinMeritor, Inc. -- http://www.arvinmeritor.com/-- is a premier global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company serves commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets, and light vehicle manufacturers. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM. * * * As reported by the Troubled Company Reporter on December 26, 2008, Fitch Ratings downgraded the Issuer Default Ratings of ArvinMeritor to 'B-' from 'B'. The downgrade of ArvinMeritor is based on the severe weakening of commercial truck demand in Europe that is expected to occur in 2009, expectations of continued weakness in already-weak commercial vehicle U.S. demand from depressed 2008 levels, and financial stress among ArvinMeritor's customers in this segment. ArvinMeritor receives approximately 2/3 of its revenue from its commercial vehicle systems group. ArvinMeritor's light vehicle systems segment is also expected to experience operating losses in 2009 due to severe production cutbacks in the U.S. and a steep decline in global production. ArvinMeritor has been unable to divest its light-vehicle systems operations, which are expected to produce operating losses and a deteriorating competitive position through 2009 given the low margins in the business and the sharp drop in near-term global production. ArvinMeritor currently has substantial availability under its revolving credit facility, and Fitch forecasts that additional drawings will be required in 2009, as other access to capital is limited. ArvinMeritor is also reliant on short-term receivables securitization facilities, the majority of which have recently been extended into late 2009, but the deteriorating quality of receivables or the unwillingness of banks to offer the facilities could cause the company to migrate borrowings to its revolving credit facilities, thereby utilizing a substantial portion of available liquidity. AXCESS MEDICAL: Sept. 30 Balance Sheet Upside Down by $1.2MM ------------------------------------------------------------ Axcess Medical Imaging Corporation incurred a net loss from its continuing operations amounting to $1,196,062 and $3,423,821 for the three and nine months ended September 30, 2008, respectively. In addition, as of September 30, 2008, the company had a working capital deficiency of $2,156,478 and its bank line of credit facilities had an outstanding balance of $1,924,154, which expired and are in default on October 28, 2008. "These conditions raise substantial doubt surrounding our ability to continue as a going concern for a reasonable period," Stephen Miley, chief executive officer, secretary and director, and Kay Carter, chief financial officer, disclosed in a regulatory filing dated November 14, 2008. "Our management is executing certain plans to alleviate the negative trends and conditions described above. In May 2008, we entered into a merger and financing transaction that provided $1,000,000 in proceeds to the post-merger combined companies, from the sale of convertible notes and warrants. Subsequent to September 30, 2008, we sold 1,143,750 shares of our common stock for net proceeds of $366,000. In addition, subsequent to September 30, 2008, we successfully restructured certain of our operating leases that will result in a net decrease our operating expenses. Our management is currently negotiating with financial institutions to restructure our current indebtedness to extend existing terms as well as provide additional term and revolving credit. Finally, our management is currently reviewing our operating and cost structure and believes that there are additional opportunities for cost curtailment." "Our ability to continue as a going concern is dependent on our creditor's willingness to extend and restructure our existing bank line of credit or our ability to obtain alternative financing under terms and conditions that our suitable to our management. There can be no assurances that the creditors will not call as due and payable the bank line of credit or that our management will be successful in identifying and closing new financing arrangements. Ultimately, our ability to continue as a going concern is dependent upon the achievement of profitable operations." As of September 30, 2008, the company's balance sheet showed total assets of $12,492,898, total liabilities of $13,408,113, and non- controlling interests in variable interest entities of $350,894, resulting in total stockholders' deficit of $1,266,109. A full-text copy of the company's quarterly report is available for free at: http://researcharchives.com/t/s?379e About Axcess Medical Axcess Medical Imaging Corporation, through its US Imaging Holding, LLC, subsidiary, provides diagnostic imaging services for physicians, individuals and managed care organizations through its integrated network of imaging centers located in the Southwest region of Florida. Its services include magnetic resonance imaging, or MRI, positron emission tomography, or PET, computed tomography, or CT, and other technologies. These services are non-invasive techniques that generate representations of internal anatomy on film or digital media, which are used by physicians for the diagnosis and assessment of diseases and disorders. The company also generates revenue from leasing our real estate holdings located in the Southwest region of Florida principally to commercial customers. AXLETECH INTERNATIONAL: Moody's Withdraws 'B2' Corporate Ratings ---------------------------------------------------------------- Moody's Investors Service withdrew all ratings of AxleTech International Holdings, Inc.'s, including its B2 corporate family rating. The rating action follows the recent acquisition of the company by General Dynamics and repayment of all rated debt in late December 2008. These ratings have been withdrawn: Issuer: AxleTech International Holdings, Inc. * Corporate Family Rating -- B2 * Probability of Default Rating -- B2 * 1st lien senior secured revolving credit facility -- Ba3(LGD3, 32%) * 1st lien senior secured term loan credit facility -- Ba3(LGD3, 32%) * 2nd lien senior secured term loan credit facility -- Caa1(LGD5, 80%) The last rating action on AxleTech was on September 22, 2006, when its 1st lien senior secured credit facilities were upgraded to Ba3 from B2 with no change of other ratings. AxleTech is a global supplier of planetary axles, brakes, other drivetrain components and aftermarket parts for off-highway, military and specialty vehicles. AxleTech was acquired by an investor group led by The Carlyle Group with management and Wynnchurch Capital having minority positions. Revenues in 2007 were approximately $406 million. BERNARD L. MADOFF: U.S. Senators Request Information from SEC ------------------------------------------------------------- Senators Chris Dodd (D-CT) and Richard Shelby (R-AL), Chairman and Ranking Member of the Senate Committee on Banking, Housing and Urban Affairs, announced that they are examining the reported fraud by Bernard Madoff. In a letter to Securities and Exchange Commission (SEC) Chairman Christopher Cox, the Senators specified that they are reviewing how federal regulators supervised and oversaw this firm and requested documents and other information about the case. "The Banking Committee is examining this case to determine how so many people could have been deceived and how such a massive fraud could have gone undetected for so long," said Sen. Dodd. "American investors deserve an explanation and the responsible parties must be held accountable. I am hopeful that our findings will also help inform our efforts to improve regulation so that such abuses do not occur in the future. If this financial crisis has taught us nothing else, it is that we need regulators who are committed to supervision, oversight, and protecting American investors and consumers." "It is critical that the Banking Committee fully understand what happened in the Madoff affair," said Sen. Shelby. "Why was this not caught sooner? Who is responsible? Could the massive harm that investors suffered have been prevented? The documents we are requesting will help us get to the bottom of this and inform our efforts at regulatory restructuring going forward. The American people expect accountability, and that is exactly what they should get." 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. BLUE TULIP: Files for Chapter 11 Protection in Delaware ------------------------------------------------------- Reuters reports that Blue Tulip Corp. has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. According to Reuters, Blue Tulip said the economic downturn had severely hurt its performance and its ability to satisfy debt obligations. The report states that Blue Tulip is seeking the Court's permission to begin going-out-of-business sales at each of its 24 locations, and to hire liquidation firm Hilco as a consultant to help run the store closings. Blue Tulip, says the report, wants to liquidate its merchandise inventory and close its stores before the end of January. According to court document, Blue Tulip's request will be heard on Jan. 13, 2009. Blue Tulip Corp. is a retailer of gifts and entertainment products. Former Goldman Sachs retail analyst Joseph Ellis started the company in 2001. Highland Capital Partners has a 44% stake in the company, while Ellis holds a 13% stake. BLUE TULIP: Gets Initial Approval to Access Cash Collateral ----------------------------------------------------------- The Hon. Kevin Gross of the United States Bankruptcy Court for the District of Delaware authorized Blue Tulip Corporation to access, on an interim basis, cash collateral securing repayment of secured loan to its prepetition lenders until Jan. 31, 2009. The Debtor owes $3.45 million including accrued interest at 13% to the lenders as of their bankruptcy filing. The Debtor said it is in default of its debt and obligations to its lenders. The Debtor told the Court that it does not have sufficient available sources of working capital to operate its business or to maintain its property without the use of cash collateral. As adequate protection, the lenders will be granted additional and replacement, and automatically perfected postpetition security interest in and liens on all of the Debtor's assets. A hearing is set for Jan. 30, 2009, at 4:00 p.m., to consider final approval of the request. Objections, if any, are due Jan. 23, 2009. A full-text copy of the a cash collateral use budget agreed upon by the Debtor and the lenders is available for free at http://ResearchArchives.com/t/s?3786 Headquartered in Bordentown, New Jersey, Blue Tulip Corporation is a retailer of gifts and entertainment product. The company filed for Chapter 11 protection on Jan. 5, 2009 (Bankr. D. Del. Case No. 09-10015). Ryan M. Bartley, Esq., and Sean Matthew Beach, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtor in its restructuring effort. The company selected Epiq Bankruptcy Solution LLC as its claims agent. When the Debtor filed for protection from their creditors, it listed assets and debts between $1 million and $10 million. BRODER BROS: Moody's Downgrades Corporate Family Rating to 'Caa3' ----------------------------------------------------------------- Moody's Investors Service downgraded Broder Bros., Co.'s Corporate Family Rating and Probability of Default Rating to Caa3 from Caa1. Moody's also lowered the rating on the company's senior unsecured notes to Ca from Caa2. The rating outlook remains negative. The downgrade follows the company's announcement that due to softened demand, Broder believes revenues and gross profits will decline in the fourth quarter of 2008 compared to the same period in 2007 and similar negative trends are expected to continue for at least part of 2009. At the same time the company's credit metrics remain very weak with debt/EBITDA near 8.0 times and EBITA/interest near 0.9 times for the LTM period ending September 30, 2008. While Broder's liquidity over the next 12 months is adequate, liquidity over the next 24 months is weak due to a $225 million note maturity in October 2010. "As a result of the company's high financial leverage, expectations for continued weak operating performance in the current recessionary economic environment, and with the maturity of its $225 million senior unsecured notes in October 2010, the likelihood of a distressed exchange or default has increased" said Moody's Vice President and Senior Analyst Scott Tuhy. These ratings were downgraded and LGD assessments amended: -- Corporate Family Rating to Caa3 from Caa1 -- Probability of Default Rating to Caa3 from Caa1 -- $225 million Senior Unsecured Notes due 10/2010 to Ca (LGD 5, 73%) from Caa2 (LGD 5, 72%) Moody's last rating action on Broder Bros., Co. was on April 15, 2008 when the company's corporate family rating was lowered to Caa1 from B3. Broder Bros., Co., based in Trevose, Pennsylvania, is a leading distributor of imprintable sportswear and accessories in the U.S. BRUGNARA CORPORATION: Case Summary & Two Largest Unsec. Creditors ----------------------------------------------------------------- Debtor: Brugnara Corporation 224 Seacliff San Francisco, CA 94121-1028 Bankruptcy Case No.: 09-30041 Type of Business: The Debtor is a real estate company. Chapter 11 Petition Date: January 7, 2009 Court: Northern District of California (San Francisco) Judge: Thomas E. Carlson Debtor's Counsel: David N. Chandler, Esq. DChandler1747@yahoo.com Law Offices of David N. Chandler 1747 4th St. Santa Rosa, CA 95404 Tel: (707) 528-4331 Estimated Assets: $1 million to $10 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Jorei Enterprises collateral FMV: $11,350,000 LLC $4,096,000 One Park Plaza, Ste. 550 Irvine, CA 92614 Robert Kane $20,000 870 Market St., Ste. 1128 San Francisco, CA 94102 BRUGNARA PROPERTIES: Case Summary & 3 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Brugnara Properties VI 224 Sea Cliff Avenue San Francisco, CA 94121 Bankruptcy Case No.: 09-30038 Type of Business: The Debtor is a real estate company. Chapter 11 Petition Date: January 7, 2009 Court: Northern District of California (San Francisco) Judge: Dennis Montali Debtor's Counsel: Stephen D. Finestone, Esq. sfinestone@pobox.com Law Offices of Stephen D. Finestone 456 Montgomery St. 20th Fl. San Francisco, CA 94104 Tel: (415) 421-2624 Total Assets: $17,800,000 Total Debts: $ 17,540,328 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Robert Kane $8,000 870 Market St., Ste. 1128 San Francisco, CA 94102 San Francisco Water Dept. $1,328 PO Box 7369 San Francisco, CA 94120-7369 Nabil Maisari $1,000 351 California St. San Francisco, CA 94104 The petition was signed by the firm's president, Luke Brugnara. CAPE ANN: Files for Chapter 7 Liquidation ----------------------------------------- Boston Business Journal reports that Cape Ann Housing Opportunity Inc. has filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the District of Massachusetts. According to Boston Business, costs on Cape Ann's Pond View Village project in Gloucester increased and demand for condos declined. The report says that the affordable housing project couldn't keep current on a construction loan. Court documents say that Cape Ann's creditors will have a meeting on Feb. 3, 2009. Cape Ann Housing Opportunity Inc. is a nonprofit company in Boston. CASS COUNTY: Fitch Affirms Rating on $50 Mil. Hospital Bonds ------------------------------------------------------------ Fitch Ratings affirms the $50 million Cass County, Missouri hospital revenue bonds, series 2007 (Cass Medical Center Replacement Project) at 'BBB-'. The 'BBB-' rating is supported by Cass Regional's critical access hospital designation, its operating profitability, favorable market characteristics, community tax support, and its management agreement with the Hospital Corporation of America (rated 'B' by Fitch). Cass Regional received CAH designation in June 2005, which provides the hospital enhanced Medicare and Medicaid reimbursement (both payors make up a combined 53% of revenues). After receiving the designation, Cass Regional's operating margins have continued to be positive resulting in an 8.3%, 8.9%, and 4.4% in fiscal year 2007, FY06, and FY05, respectively. Recent operating performance reflects favorable reimbursement because of its CAH designation and favorable commercial contracts along with solid outpatient volume growth. The positive operating performance has led to sound liquidity resulting in days cash on hand of 170.6 days, comparing favorably to the category median of 123.5 days. Cass Regional's revenue base of $34.6 million in fiscal 2007 is average as compared to other CAHs in Fitch's portfolio; however, the hospital's size remains small and inherently more vulnerable with limited flexibility to absorb adverse events. In addition, the scope of the capital project heightens Cass Regional's exposure to construction risk. In 2007, Cass Regional maintained a leading market share of 25% (next closest competitor is Cass Regional's sponsoring hospital - HCA's Research Medical Center located in Kansas City at 14.1%) on an inpatient basis and 54.7% (next closest is HCA's Research- Belton Hospital located 16.4 miles away at 8.5%) on an outpatient basis in its primary service area. Cass Regional receives ad valorem property tax monies from the county (approximately $1.7 million in 2008) that have been annually dedicated for debt service. Finally, by virtue of its long-standing relationship with HCA, Cass Regional has directly benefited on a revenue and expense basis as HCA has leveraged its market presence to secure favorable payor rates and has passed along supply cost savings through its purchasing leverage with vendors. Credit risks include Cass Regional's high debt burden and leverage, small revenue base, and regulatory risk associated with future changes in reimbursement from governmental payors and/or changes in the CAH regulations. Although Cass Regional's debt profile is significant, it plans no further debt upon completion of the new replacement hospital. Leverage is high as maximum annual debt service as a percentage of revenue is 8.2% compared to Fitch's category median of 3.2%. Further, debt to capitalization is 60.6%, comparing unfavorably to the median of 47.1%. The Stable Rating Outlook is primarily based on Cass Regional's CAH designation, which provides revenue stability that should allow Cass Regional to continue to generate operating margins in excess of 5% over the near term. Furthermore, Fitch expects that upon completion of the replacement project, Cass Regional will strengthen its market position and allow it to grow into its current debt burden. Located in Harrisonville, Missouri in Cass County, the second fastest growing county in Missouri, approximately 37 miles southeast of Kansas City. Cass Regional is a critical access hospital with 25 acute-care beds and a 10 bed gero-psychiatric unit. Other entities include six medical clinics, eight employed family practitioners, one employed general surgeon, and five employed family nurse practitioners. Cass Regional covenants to provide audited annual financial statements 150 days after the year-end close and quarterly disclosure 45-days after the quarter close to bondholders via the NRMSIRs. Quarterly disclosure has been timely and consists of a balance sheet, income statement, and utilization statistics. CHENIERE ENERGY: Board OKs Indemnification Pact for Directors ------------------------------------------------------------- Cheniere Energy, Inc., disclosed in a filing with the Securities and Exchange Commission that its board of directors authorized the company to enter into an indemnification agreement with each of the directors of the company. The form of Agreement provides for indemnification for all expenses and claims that a director incurs as a result of actions taken, or not taken, on behalf of the company while serving as a director, officer, employee, controlling person, agent or fiduciary of the company, with the indemnification to be paid within 25 days after demand. The Agreement provides that no indemnification will generally be provided: 1) for claims brought by the director, except for a claim of indemnity under the Indemnification Agreement, if the company approves the bringing of such claim, or if the Delaware General Corporation Law requires providing indemnification because the director has been successful on the merits of the claim; 2) for claims under Section 16(b) of the Securities Exchange Act of 1934, as amended; 3) if the director did not act in good faith or in a manner reasonably believed by the director to be in or not opposed to the best interests of the company; 4) if the director had reasonable cause to believe that his or her conduct was unlawful in a criminal proceeding, or 5) if the director is adjudged liable to the company. Indemnification will be provided to the extent permitted by law, the company's certificate of incorporation and bylaws, and to a greater extent if by law the scope of coverage is expanded after the date of the Agreement. In all events, the scope of coverage will not be less than what is in existence on the date of the Agreement. A full-text copy of the Indemnification Agreement is available for free at http://ResearchArchives.com/t/s?3787 About Cheniere Energy Based in Houston, Texas, Cheniere Energy Inc. (AMEX: LNG) -- http://www.cheniere.com/-- is developing a network of three LNG receiving terminals and related natural gas pipelines along the Gulf Coast of the United States. Cheniere is pursuing related business opportunities both upstream and downstream of the terminals. Cheniere is also the founder and holds a 30.0% limited partner interest in a fourth LNG receiving terminal. Cheniere Energy, Inc. reported a net loss of $67.4 million for the third quarter of 2008 compared with a net loss of $53.5 million during the corresponding period in 2007. For nine months ended Sept. 30, 2008, the company reported net loss of $249.6 million compared with net loss of $129.1 million for the same period in the previous year. Unrestricted cash and cash equivalents at Sept. 30, 2008, was $128.3 million of which the majority was held by Cheniere Energy, Inc. Cheniere estimates remaining cash expenditures for the Creole Trail pipeline to be $11.0 million from October 2008 through completion. At Sept. 30, 2008, the company's balance sheet showed total assets of $3.0 billion and total liabilities of $3.5 billion, resulting in a stockholders' deficit of $527.1 million. CHESAPEAKE ENERGY: Aubrey McClendon Remains as CEO for 5 Years -------------------------------------------------------------- Chesapeake Energy Corp. said in a filing with the U.S. Securities and Exchange Commission that on Dec. 31, 2008, it entered into a new five-year employment agreement with its CEO Aubrey K. McClendon, in recognition of his leadership role in completing a series of transactions in 2008 that were valuable to the Company and its shareholders. As reported by the Troubled Company Reporter on Oct. 16, 2008, Chesapeake Energy said that Mr. McClendon had been forced to sell his shares to meet margin calls. Mr. McClendon had been a major holder in Chesapeake Energy, owning 33.5 million shares as of Sept. 30, 2008, a stake of more than 5%. Ben Casselman at The Wall Street Journal reports that the forced sale had caused some analysts to speculate that Mr. McClendon might leave Chesapeake Energy, which he co-founded in 1989. The Amended McClendon Agreement contains these provisions: -- a one-time $75 million incentive award that, after reduction by federal withholding taxes, is structured as a net credit against future billings from the company for well costs owed by Mr. McClendon, with a five-year clawback; -- a five-year employment commitment by Mr. McClendon; -- a cap on cash salary and bonus compensation for the next five years at 2008 levels; -- an extension of the non-competition period with respect to certain terminations by the company; and -- a reduced 2009 stock holding requirement. Well Cost Incentive Award Chesapeake Energy made the incentive award to Mr. McClendon effective Dec. 31, 2008. The total cost to the company of the award is approximately $75 million plus the employment taxes imposed on the company by law in the amount of $1.1 million. However, under GAAP accounting, the company is required to recognize the incentive award as general and administrative expense over the five-year vesting period for the clawback, resulting in an expense of approximately $15 million per year to the company beginning in 2009. In addition to state and federal income tax withholding, similar employment taxes were imposed on Mr. McClendon and withheld from the award. After deduction of the required federal and state tax withholdings, the net incentive award was approximately $43.5 million. The net incentive award can only be utilized by Mr. McClendon or his family-owned affiliates for application against costs attributable to interests in the company's wells, acquired by Mr. McClendon or his affiliates under the Founder Well Participation Program. The FWPP was approved by the company's shareholders in June 2005. Under the FWPP, Mr. McClendon has the right to elect to participate with up to a 2.5% working interest in all of the company's wells drilled during a calendar year (except for individual wells where the election would reduce the company's working interest to below 12.5%) and is required to pay the drilling, completing, operating and leasehold costs attributable to his working interest in each well (Well Costs) on the same pro rata basis as the company or other third parties that own an interest in such well. Based on the company's current development plans and Mr. McClendon's election under the FWPP to participate with a 2.5% working interest during 2009, the Well Costs under the FWPP are expected to exceed the amount of the entire FWPP Credit during 2009. After December 31, 2014, Mr. McClendon may request payment in cash of the portion of the FWPP Credit that has not been subject to the clawback or utilized to pay Well Costs. The incentive award, consisting of the FWPP Credit and Mr. McClendon's associated tax withholdings, is subject to a clawback if, during the initial five-year term of the Amended McClendon Agreement, Mr. McClendon resigns from the company or is terminated for cause by the company. The amount of the incentive award not subject to the clawback increases on a pro rata basis each calendar month that a triggering resignation or termination for cause does not occur. Thus, the amount of the clawback reduces by $1.25 million per month over the initial five-year term of the Amended McClendon Agreement. In the event that Mr. McClendon resigns or is terminated for cause during this period, the unused portion of the FWPP Credit is immediately forfeited for no consideration to Mr. McClendon. In addition, Mr. McClendon is obligated to repay to the company within 180 days the amount by which the sum of the associated tax withholdings from the incentive award plus the amount of the FWPP Credit applied against Well Costs exceeds the Vested Amount. The clawback provision does not apply if Mr. McClendon's employment is terminated (i) by the Company without cause, (ii) by Mr. McClendon if the company defaults under a material provision of the Amended McClendon Agreement, (iii) as a result of Mr. McClendon's death or disability, or (iv) after a change of control of the Company in certain circumstances. Five-Year Employment Commitment & Cap on Future Cash Compensation Mr. McClendon agreed that, absent a material breach by the Company of the Amended McClendon Agreement, he would not resign from his position for the initial five-year term of the Amended McClendon Agreement. Mr. McClendon also agreed that for the five years ending Dec. 31, 2013, his annual salary would not exceed its 2008 level of $975,000 and his annual cash bonuses would not exceed the amount awarded to him during 2008 of $1.95 million. No Lump Sum Payment upon Termination Without Cause Mr. McClendon agreed that any compensation due as a result of a termination by the company without cause would be paid out over the then remaining term of the Amended McClendon Agreement. The effect of such provision is to extend the covenant not to compete applicable against Mr. McClendon through the term of such payment, plus six months. Stock Holding Requirement Mr. McClendon's prior employment agreement required Mr. McClendon to hold shares of the company's common stock with an investment value (as defined in the prior employment agreement) equal to 500% of Mr. McClendon's annual salary and annual cash bonuses. As a result of the forced liquidation of a substantial portion of Mr. McClendon's stock holdings in the Company during October 2008, Mr. McClendon's stock ownership fell below the required amount. The Amended McClendon Agreement reduces the required percentage to 200% for 2009 in order to provide Mr. McClendon time to acquire additional shares of the Company's common stock. The required percentage reverts to 500% beginning in 2010. Part of the consideration for the foregoing reduction was the fact that the short swing profit rules under Section 16 of the Securities Exchange Act of 1934, as amended, may effectively preclude Mr. McClendon's purchases of the company's common stock through April 2009. Rationale for Incentive Award and Structure The Compensation Committee considered a number of factors in determining the amount and the form of the incentive award to Mr. McClendon and the amendments to Mr. McClendon's prior employment agreement. The Compensation Committee determined that the restrictions agreed to by Mr. McClendon, the requirement that Mr. McClendon use the FWPP Credit to invest on an at-risk basis in the company's wells and the imposition of the clawback would align Mr. McClendon's economic interests with the company's long-term business plan and the shareholders' interests while rewarding him for the leadership role he played in negotiating the 2008 transactions. The Compensation Committee considered the substantial value the 2008 transactions created for the company and its shareholders. The initial cash payment under the 2008 transactions permitted the company to recoup the cost basis of the assets sold in the 2008 transactions (book basis of approximately $1.7 billion) as well as all or virtually all of the cost basis of the interests in the Haynesville, Fayetteville and Marcellus plays retained by the company. In addition, the $4.6 billion drilling credit provides a tax efficient funding source for the development of the company's retained acreage position, and the participation of the joint venturers in future leasing will provide material subsidies for the company's ongoing leasing efforts in each of the co- development areas. In total, the company received consideration in the amount of $10.3 billion, generated a (non-GAAP) profit of $8.6 billion through the four transactions and retained majority ownership positions in the co-development areas valued at $25.9 billion on a pro-rata basis. The company believes these transactions should result in peer-group leading finding and development costs and superior financial performance by the Company over the next several years, although many factors such as the risks related to the company's business could cause actual results to differ materially from anticipated results. In addition to the success of the 2008 transactions and Mr. McClendon's leadership role in those transactions, the Compensation Committee also considered a number of other factors in modifying his prior employment agreement. One such factor was Mr. McClendon's voluntary decision not to participate in the special restricted stock grant in 2006 to the company's other employees and the supplemental restricted stock grant in 2008 to the company's other employees. Mr. McClendon's decision not to participate in such equity grants resulted in significant benefits to the company and its shareholders while representing substantial forgone value to Mr. McClendon. The Compensation Committee further determined that an award to Mr. McClendon in the form of a drilling credit not only rewarded him for his role in the company's successful 2008 transactions, but also served to align his economic interests with those of the company. Under the terms of the Amended McClendon Agreement, Mr. McClendon and his affiliates are required to use the FWPP Credit to invest in the company's drilling program in accordance with the FWPP, thereby exposing him to the same risks and benefits that accrue to the company from its drilling program. Mr. McClendon's use of the FWPP Credit is also anticipated to match the form and deferred timing of a significant portion of the drilling credits received by the company as part of the joint venture transactions. In addition, by making the FWPP Credit award to Mr. McClendon subject to a clawback, the Compensation Committee provided a simple and direct incentive to Mr. McClendon to remain with the company for at least the next five years, which corresponds to the development of the properties covered by the various joint venture transactions. Because of other entrepreneurial opportunities that exist in the industry and Mr. McClendon's reduced company stock holdings, the Compensation Committee focused on providing a retention incentive to Mr. McClendon that the Compensation Committee believed would be effective for multiple years without issuing substantial equity awards at current stock prices, which the Compensation Committee views as depressed. About Chesapeake Energy Corporation Based in Oklahoma City, Oklahoma, Chesapeake Energy Corporation (NYSE: CHK) -- http://www.chkenergy.com/-- produces natural gas in the U.S. The company's operations are focused on exploratory and developmental drilling and corporate and property acquisitions in the Mid-Continent, Fort Worth Barnett Shale, Fayetteville Shale, Permian Basin, Delaware Basin, South Texas, Texas Gulf Coast, Ark-La-Tex and Appalachian Basin regions of the United States. * * * As reported by the Troubled Company Reporter on Dec. 16, 2008, Standard & Poor's Ratings Services affirmed its rating on Chesapeake Energy Corp., including the 'BB' corporate credit rating, and removed the ratings from CreditWatch, where they had been placed with positive implications on July 9, 2008. The outlook is stable. As of Sept. 30, 2008, Oklahoma City-based Chesapeake had $14 billion in debt. As disclosed in the Troubled Company Reporter on May 22, 2008, Moody's Investors Service assigned Ba3 (LGD 4; 62%) ratings to Chesapeake Energy's pending $800 million offering of ten year senior unsecured notes and $1 billion or more offering of thirty- year contingent convertible senior notes. Moody's also moved the rating outlook up to stable from negative. Moody's also affirmed CHK's Ba2 corporate family, Baa3 hedge facility, Ba2 probability of default, SGL-3 liquidity ratings, and existing Ba3 note ratings but changed the LGD statistics from LGD 4; 61% to LGD 4; 62%. As reported in the Troubled Company Reporter on Oct. 27, 2008, Fitch Ratings affirmed Chesapeake Energy Corporation's issuer default rating at 'BB' following the company's recently announced updated financial position and plans to cut capital expenditures. The rating outlook remains negative. CHESTER COUNTY: S&P Gives Positive Outlook; Affirms 'BB+' Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services revised the outlook to positive from stable on Chester County Industrial Development Authority, Pennsylvania's revenue bonds, issued for the Avon Grove Charter School project. At the same time, S&P affirmed its 'BB+' long- term rating on the bonds. The bonds are secured by lease payments from the Avon Grove Charter School directly to a trustee. "The positive outlook is based on our view that Avon Grove School District continues to effectively transition to its new school configuration and expanded facility," said Standard & Poor's credit analyst Robin Prunty. "The rating reflects, in our view, the inherent risk associated with the charter school, the short operating history of the school, and a relatively weak liquidity position through fiscal 2008," Ms. Prunty added. The ratings also reflect what S&P see as a substantial increase in leverage with this project, which will require significant additional enrollment in the next five years to meet debt service obligations; the uncertainty associated with shifting student enrollment to a new location and the impact it might have on future demand beyond the current year; and the potential for competition from new charter schools. Partially offsetting these concerns in S&P's opinion are strong demand for the school to date based on steady enrollment increases and a substantial waiting list that is updated annually; above- average academic performance since the school began operation; adequate financial operations and reserve position with some slight improvement in liquidity through fiscal 2008; and limited additional facility needs based on the current school charter. Additional facility improvements to complete the project are planned for 2009 along with an additional bond issue. S&P could upgrade the authority to the investment-grade category if it shows a trend of consistent financial performance and steady demand following the expansion and relocation of the school facilities. The bonds are secured by a loan agreement between the authority and the charter school, in which the school is obligated to make loan payments to the trustee. Bond proceeds were used to purchase and renovate another elementary school facility to expand capacity. The charter school is located west of Philadelphia and north of Wilmington, Delaware, in Chester County. CHRYSLER LLC: $4-Bil. TARP Loan to Accelerate if Plan Not Viable ---------------------------------------------------------------- The U.S. Treasury, in its Jan. 7, 2009, report to Congress, said that its agreement with Chrysler Holding LLC, requires the automaker to submit a restructuring plan to achieve long-term viability. The agreement provides for acceleration of the loan if those goals under the plan, which are subject to review by a designee of the U.S. President, are not met. The Treasury says that it has entered into a similar agreement with General Motors Corp. On January 2, 2009, Treasury provided a three-year $4 billion loan to Chrysler Holding LLC under the new Automotive Industry Financing Program, which was implemented as part of the Emergency Economic Stabilization Act of 2008. The Chrysler loan is secured by various collateral, including parts inventory, real estate, and certain equity interests held by Chrysler. Like the GM agreement, this agreement requires Chrysler to submit a restructuring plan to achieve long-term viability for review by the President's designee and provides for acceleration of the loan if those goals are not met. The agreement includes other binding terms and conditions designed to protect taxpayer funds, including compliance with certain enhanced executive compensation and expense-control requirements. Furthermore, Treasury received a senior unsecured note of Chrysler payable to Treasury in the principal amount of $267 million. $19.4 Bill for Auto Industry To recall, the Treasury announced a new program in December, the AIFP, to prevent a significant disruption of the American automotive industry, which would pose a systemic risk to financial market stability and have a negative effect on the economy of the United States. The program requires participating institutions to implement plans that will achieve long-term viability. Participating institutions must also adhere to rigorous executive compensation standards and other measures to protect the taxpayer's interests, including limits on the institution's expenditures and other corporate governance requirements. Between December 29 and January 2, the Treasury committed to provide $19.4 billion in funds under the Troubled Assets Relief Program (TARP), with an additional $4 billion subject to certain conditions. On Dec. 29, 2008, Treasury purchased $5 billion of senior preferred equity with an 8% annual distribution right from GMAC LLC through the AIFP. Under the agreement, GMAC issued warrants to Treasury to purchase, for a nominal price, additional preferred equity in an amount equal to 5% of the preferred equity purchased. These warrants were exercised at closing of the investment transaction. The additional preferred equity provides for a 9% annual distribution right. Additionally, the Treasury committed to lend up to $1 billion of TARP funds to GM so that GM can participate in a rights offering by GMAC in support of GMAC's reorganization as a bank holding company. The rights offering is expected to close, and the loan to GM is expected to be funded, on January 16, 2009. The loan will be secured by GMAC equity interests owned by GM and those being acquired by GM in the rights offering, and it will be exchangeable at any time, at the Treasury's option, for the GMAC equity interests being acquired by GM in the rights offering. The ultimate level of funding under this facility will depend upon the level of current investor participation in GMAC's rights offering. Treasury completed an additional transaction with GM on December 31. Under the GM agreement, the Treasury will provide GM with up to a total of $13.4 billion in a three-year loan from the TARP, secured by various collateral. Treasury funded $4 billion of this loan immediately, and committed to fund an additional $5.4 billion on January 16, 2009. The Treasury will provide an additional $4 billion on February 17, 2009, subject to certain conditions. To protect taxpayers, the agreement requires GM to develop and implement a restructuring plan to achieve long-term financial viability. The restructuring plan is to be reviewed by a designee of the President, who will determine whether the goals of the restructuring have been met. If the President's Designee does not find that the goals have been met, the loan will be automatically accelerated and will come due 30 days thereafter. This agreement also includes other binding terms and conditions designed to protect taxpayer funds, including compliance with certain enhanced executive compensation and expense control requirements. Furthermore, Treasury received a warrant for shares of GM common stock and an additional senior unsecured note in the principal amount of $748.6 million. TARP Transactions Now Total $266.9 billion. The recent transactions under the newly established Automotive Industry Financing Program and Targeted Investment Program, when combined with $187.5 billion of transactions under the Capital Purchase Program and the $40 billion transaction under the program for Systemically Significant Failing Institutions, bring the total amount of transactions to $266.9 billion. The Treasury will submit the next report when transaction levels reach the $300 billion level. The Treasury said it is actively engaged in developing additional programs to strengthen our financial system so that credit flows to our communities. "We have made significant progress, but recognize there is no single action the federal government can take to end the financial market turmoil and the economic downturn." As a result of Treasury's decision to support GM, GMAC, and Chrysler, the Treasury has effectively allocated the first $350 billion from the TARP. The actual disbursement of allocated but undisbursed funds is subject, in the case of the CPP, to approval of bank capital applications, many of which remain with the regulators and will not reach Treasury for review for some weeks, and to closing of CPP transactions, which in turn remain subject to documentation, shareholder approvals in certain cases, and other closing procedures. The Treasury says, "In the very short term, the allocated but not yet disbursed TARP balances, in conjunction with the powers of the Federal Reserve and the FDIC, are likely to provide the necessary resources to address a significant financial market event." It believes, however, that the remainder of the TARP funds will be needed to support financial market stability. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. On July 31, 2008, TCR said that Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes. Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives. Fitch is also concerned with the state of the securitization market and the ability of the automakers to access this market on an economic basis over the near term, given the steep drop in residual values, higher default rates, higher loss severity being experienced and jittery capital market. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. CITIGROUP INC: Enters Mortgage Deal With Democrats in Senate ------------------------------------------------------------ Citigroup Inc. has entered into a deal with top Democrats in the Senate to proceed with a measure that would let judges set new repayment terms for millions of mortgage holders who wind up in bankruptcy court, Elizabeth Williamson at The Wall Street Journal reports, citing senators involved in the agreement. WSJ relates that 1 in 10 homeowners are either delinquent in their mortgage payments or in the process of foreclosure. The American Bankruptcy Institute reports that the number of people filing for Chapter 13 bankruptcy increased to 263,756 in the nine months of 2008, compared to 234,375 in the same period in 2007. According to WSJ, Sen. Durbin negotiated the agreement on the Senate version of a bill allowing "cramdowns," when bankruptcy judges force lenders to modify mortgages. Sen. Durbin has worked on the Senate bill for more than a year. Citing senate staffers, the report says that the agreement would be the first of several measures being drafted this year that propose to cut the principal owed by homeowners facing mortgages larger than the current value of their house. The report states that banks have opposed the legislation on grounds that cramdowns would increase borrowing costs for all home buyers and jam courts with homeowners who wouldn't otherwise declare bankruptcy. WSJ says that Sen. Christopher Dodd, Democratic chairperson of the Senate Banking Committee, supports the Senate bill. Sen. Chuck Schumer of worked with Citigroup to help come up with a compromise, according to the report. Democrats, WSJ states, want to include cramdown in the $800 billion stimulus bill, which the Congress aims to pass by the middle of February. Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. Citi had $2.0 trillion in total assets on $1.9 trillion in total liabilities as of Sept. 30, 2008. As reported in the Troubled Company Reporter on Nov. 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve will backstop residual risk in the asset pool through a non-recourse loan. CLEARWATER NATURAL: Files for Chapter 11 Bankruptcy in Kentucky --------------------------------------------------------------- Clearwater Natural Resources LP, together with its affiliates, Miller Bros. Coal LLC and Clearwater Natural Resources LLC, made a voluntary filing under Chapter 11 of the United States Bankruptcy Court for the Eastern District of Kentucky when it failed to obtain other financing outside bankruptcy. Ron M. Logan, interim chief executive officer for Clearwater Natural, related that the need for short-term liquidity compelled the company to restructure its financial affairs including its obligations under a certain secured credit agreement; however, the company and its secured lenders were unable to arrive a consensual restructuring under that deal. The company has incurred significant development costs to start up new mines during the past 12 months, Mr. Logan added. Several secured lenders agreed to provide postpetition financing to enable the company to sell their assets, on a going concern basis, to refinance its indebtedness, Mr. Logan noted. The company wants to obtain about $10 million in DIP financing with interest of 3% per annum from its secured lenders. The company listed assets between $100 million and $500 million, and debts between $50 million and $100 million in its filing. The company owes $2.8 million to Whayne Supply Company; $1.7 million to Nelson Brothers LLC; and $760,000 to Kentucky Stream. Prepetition Debt Structure The company entered into a credit agreement dated Oct. 2, 2006, with Bank of America, as administrative agent and lender, secured by liens and security interest on substantially all of the company's assets. Miller Bros guaranteed the obligations of the company under the agreement. As of its bankruptcy filing, the company owe $45.9 million consist of (i) a $44.0 million of principal; (ii) $1.2 million of forbearance fees; (iii) $1.3 million of other fees and expenses; and (iv) $773,744 of accrued interest. In addition, the face amount of outstanding undrawn letters of credit under the secured credit agreement is $11.5 million. Other secured lenders are Royal Bank of Canada, Guaranty Bank, Caterpillar Financial Service Corp., UBS Loan Finance LLC, and NM Rothschild & Sons Ltd. Professionals On Board The company seeks to employ Wyatt, Tarrant & Combs LLP and Vinson & Elkins LLP as counsels; Administar Services Group LLC as claims, noticing and balloting agent; About Clearwater Natural Headquartered in Kansas City, Missouri, Clearwater Natural Resources LP engages in coal mining in the Central Appalachian region. In August 2005, the company acquired 100% interest in Miller Bros. that became a wholly-owned operating subsidiary of the company. The company also acquired in October 2006 all interest in Knott Floyd Land Company, a medium scale coal mining company and its operations were subsequently consolidated into Miller. Through Miller, the company produces and sells coal from eleven mining operations in Eastern Kentucky and provide contracts mining services for two third-party owned mines located within the Appalachian region. CLEARWATER NATURAL: Case Summary & 16 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Clearwater Natural Resources, LP 4151 N. Mulberry Dr., Suite 245 Kansas City, MO 64116 Bankruptcy Case No.: 09-70011 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Clearwater Natural Resources, LLC 09-70013 Miller Bros. Coal, LLC 09-70012 Related Information: The Debtors engage in coal mining in the Central Appalachian region. In August 2005, Clearwater Natural Resources LP acquired 100% interest in Miller Bros. that became a wholly-owned operating subsidiary of the company. Clearwater Natural acquired in October 2006 all interest in Knott Floyd Land Company, a medium scale coal mining company and its operations were subsequently consolidated into Miller. Through Miller, Clearwater Natural produces and sells coal from eleven mining operations in Eastern Kentucky and provide contracts mining services for two third-party owned mines located within the Appalachian region. Chapter 11 Petition Date: January 7, 2009 Court: Eastern District of Kentucky Judge: William S. Howard Debtor's Counsel: Mary L. Fullington, Esq. lexbankruptcy@wyattfirm.com Wyatt, Tarrant & Combs LLP 250 West Main Street, Suite #1600 Lexington, KY 40507-1746 Tel: (859) 233-2012 --- and --- Vinson & Elkins LLP Claims, Noticing and Balloting Agent: Administar Services Group LLC Estimated Assets: $100 million to $500 million Estimated Debts: $50 million to $100 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Kayne Anderson MLP Investment loan $12,809,660 Company 717 Texas Avenue, Suite 3100 Houston, TX 77002 Tel: (713) 655-7371 BBT Fund LP loan $1,895,723 Attn: Doug Wilson 3 Greenwich office Park 51 Weavr Street Greenwich, CT 06831 Tel: (203) 422-2721 Fiduciary/Claymore MLP loan $1,183,880 Opportunity Fund c/o Fiduciary Asset Mnmgt, LLC 8112 Maryland Avenue, Ste. 400 Clayton, MO 63105 Tel: (314) 446-6795 MBC Holding loan $333,000 Gerald B. Cramer Revocable loan $102,119 Trust Journeys End Partners LLC loan $50,600 PricewaterhouseCoopers services $45,000 Edward J. Rosenthal Profit loan $11,800 Sharing Plan GSI-Greensoft Solutions services $6,630 Irrevocable Trust fba Daphna's loan $5,900 Grandchildren Jay B. Langner loan $4,700 Daphna Cramer loan $3,500 Gerald & Daphna Cramer loan $3,300 Family Fund Edward J. Rosenthal 2000 Trust loan $1,800 Computer Guidance Corp. services $0 The petition was signed by Ron M. Logan, chief restructuring officer of Clearwater Natural Resources LLC, general of the Debtor. CLUB AT WATERFORD: Files Chapter 11 Plan and Disclosure Statement ----------------------------------------------------------------- The Club at Waterford, LP, delivered to the U.S. Bankruptcy Court for the Western District of Texas on Jan. 5, 2009, a Chapter 11 Plan and Disclosure Statement explaining its Chapter 11 Plan. Debtor's Real Property The Debtor's real property assets, all of which are located near Lake Travis in Burnet County, Texas, consist of a 251.65 acre Roy Bechtol-designed golf course, a 212 lot residential subdivision of approximately 319.94 acres and a 4.23 acre non-contiguous tract near FM 1431. Plan Summary The Debtor projects sales of over $45,000,000, inclusive of Club Memberships attached to each lot, for the 212 lots comprising Phase 1 of The Club at Waterford golf and country club development Debtor also expects to sell 100 non-property owner memberships with an anticipated revenue of at least $3,000,000. Debtor also anticipates sales from the approximately 4 acre parcel at the front of the development as commercial lots or pad sites. That parcel is not encumbered by the Stark Master Fund lien and will be near the FM 1431 access to the development. The principals of the Debtor have agreed to contribute the sale proceeds of approximately 57 additional lots from a 105 acre tract currently owned by Hickory Creek Farms, LLC ("the HCF Tract') which adjoins Waterford Club Drive Loop. The projected revenues from the additional lots is $10,000,000 over the term of the Plan. The reorganized Debtor will continue to be managed by John Carlew, Wayne Ausmus, Faye Ausmus and Debra Fryar. John Carlew will oversee the management of the entire project. Wayne Ausmus will oversee the construction of the entire project. Faye Ausmus will assist with future sales, as well as oversee the development of the commercial property at the front of the project. She will also oversee any future financing that may be needed, as well as help in the promotion of future lot sales. Debra Fryar will continue to oversee the sale of all lots and manage salespeople. She is also the current Broker of Record and runs the daily operations of the sales office. Upon confirmation of the Plan all property will be revested in the reorganized Debtor, provided, however that in the event of conversion of the case to Chapter 7, the property owned by the Debtor on the date of conversion will be deemed to be property of the Chapter 7 bankruptcy estate. The HCF Tract shall not become property of the Debtor or the Debtor's estate at any time. Classification and Treatment of Classes under the Plan The Plan classifies Claims and Interests into 6 classes. The treatment of each Class of Claims and Interests are as shown below: Class 1 Administrative Claims Will be paid in full or as the same are allowed, approved, and ordered paid by the Court. Class 2 Ad Valorem Tax Claims Will be paid over a period of 60 months with statutory interest of 12%. Class 3 Mechanics Liens Will be paid the over a period Claimants with interest of 7%. Class 4 Secured Claim of Will be paid with its non- Stark default contract rate of interest over a period of no more than 60 months from the revenues generated by lot sales, golf memberships, Municipal Utility District (MUD) reimbursements and other revenues. Class 5 Priority Unsecured Will be paid over a period of Claims 60 months with interest of 6%. Class Unsecured Claims Will be paid in full with 6% 6.A (Non-Related Parties) interest over a period of 60 months. Class Unsecured Claims Will not be paid until all 6.B (Related Parties) allowed claims of Classes 2, 3, 4, 5 and 6.A have been paid in full. Class 7 Equity Interests No distribution of dividends will be made to holders of equity until Classes 2, 3, 4, 5 and 6.A have been paid in full. Clas 1 is not as true class and is neither impaired nor unimpaired. Class 1 claimants are not entitled to vote on the Plan. The remaining claims are impaired within the meaning of Sec. 1124 of the Bankruptcy Code. Pursuant to Sec. 1126(a) of the Code, any holder of an impaired claim under the Plan will be entitled to vote for or against the Plan. Mechanics/Implementation of Plan A. Lot and Commercial Property Sales Prior to the filing of the Chapter 11 petition, The Debtor had substantially completed Phase 1 of the three phase development and had 107 sales contracts in hand. The Debtor believes that the majority of those sales can be "revived" and closed. The Debtor has sought approval of the hiring of Modus, Inc., a firm which specializes in marketing golf community properties around the country. The orderly sale of residential lots to owners and to construction contractors will allow the completion and operation of the golf course, sale of memberships and will generate reimbursements from the Waterford No. 1 Municipal Utility District (approximately $16,000,000). Stark will be required to release its lien and accept from each sale the amounts set forth in the Debtor's agreement with First National of America to which Stark succeeded after deduction of 10% of the sales price for commissions and closing costs, and a $25,000 golf membership for each lot sold. B. Additional Lot Sale Proceeds To further insure the funding necessary to complete the Plan, the principals of the Debtor have agreed to contribute the sale proceeds of approximately 57 lots from the HCF Tract. The Debtor expects the added revenues from lot sales to total at least $10,000,000 during the duration of the Plan. The payment of such proceeds will continue until the completion of the Plan or the conversion of the case to Chapter 7 or the dismissal of the Plan, at which time the unsold portion of the HCF Tract will revert to Hickory Creek Farms or assigns. The Debtor believes that the current market and downturn will not affect this project as much as the rest of the country for several reasons. First of all, the Texas economy had been projected to continue to grow in the next 10 years spurred by the fact that the housing continues to be largely unaffected by the economic downturn since the Texas housing market did not see the large run up in values over the last 10 years like other areas of the country. The Debtor adds that it has been able to maintain the majority of the contracts on the books that it sold in 2006 and 2007. The Debtors say that this shows that there is still a strong demand for this type of community in the hill country. Alternatives to Debtor's Plan The alternative to Debtor's Plan is a conversion to Chapter 7 liquidation or dismissal. The Debtor believes that the most which would be gained from a Chapter 7 would be from the liquidation of the 4.23 acre tract which was acquired for $260,000. This amount would go to pay administrative expenses and the Chapter 7 Trustee's commission. Debtor does not believe that any amount would be available to pay unsecured creditors under a Chapter 7 liquidation. The Debtor's principal asset, Phase 1, including the golf course, is likely to be foreclosed upon by Stark Master Fund. There will be no distribution to creditors from this asset. Stark will lose the benefit of the main entrance and the necessary easements to reach these easements off of 1431. Stark will also lose the benefit of the easement to place the water tower for Waterford on the commercial piece of property outside the front entrance which has been found to be necessary for a gravity flow system to provide water to the development. The current developer owns and is in control of all necessary land to provide the development with these critical elements. Stark also does not have access to the intake valve from Lake Travis for the water for the community since the intake valve is located on the land owned by Wayne and Faye Ausmus. Without FM 1431 access, access to lake front, and access to the water intake valve, Phase 1 cannot stand on its own and support the golf course or have a viable plan to sell lots at fair market value. Based in Marble Falls, Texas, The Club at Waterford, LP, is a single real estate debtor. The company filed for bankruptcy protection on Oct. 6, 2008 (Bankr. W.D. Tex. Case No. 08-11925). Joseph D. Martinec, Esq., at Martinec, Winn, Vickers & McElroy, P.C., represents the Debtor as counsel. In its schedules, the Debtor listed assets of $51,507,543 and debts of $35,024,755. CONSTAR INTL: Court Approves Protocol Limiting Equity Trading ------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware has entered an order in the bankruptcy cases of Constar International Inc. and its affiliates that imposes substantial restrictions on trading in equity interests in Constar International and affiliates. Questions regarding the order may be directed to representatives of the Debtors: Wilmer Cutler Pickering Hale and Dorr LLP 399 Park Avenue New York, New York 10022 Attn: Andrew N. Goldman Tel: (212) 230-8800 The case number for the bankruptcy action is 08-13432. The proposed plan of reorganization filed in the bankruptcy case by Constar and its affiliates would, if confirmed and made effective, result in the cancellation of the current common stock of Constar International Inc. About Constar International Philadelphia-based Constar International Inc. (NASDAQ: CNST) -- http://www.constar.net/-- produces polyethylene terephthalate plastic containers for food, soft drinks and water. The company provides full-service packaging services. The company and five of its debtor-affiliates filed separate petitions for Chapter 11 relief on Dec. 30, 2008 (Bankr. D. Del. Lead Case No. 08-13432). Andrew N. Goldman, Esq., and Eric R. Markus, Esq., at Wilmer Cutler Pickering Hale and Dorr LLP are the Debtors' proposed counsel. Neil B. Glassman, Esq., and Jamie Edmonson, Esq., at Bayard, P.A., are Debtors' proposed Delaware counsel. The Debtors selected Greenhill & Co., LLC as their financial advisor and investment banker. On Dec. 31, 2008, the Court approved the employment of Epiq Bankruptcy Solutions, LLC as the Debtors' claims, noticing and balloting agent. In its petition, Constar International, Inc. listed total assets of $420,000,000 and total debts of $538,000,000 as at Nov. 30, 2008. The Debtors filed a Joint Chapter 11 Plan of Reorganization and a Disclosure Statement explaining that Plan together with their bankruptcy petitions. The Debtors expect to emerge from Chapter 11 as early as Feb. 28, 2009, or at the latest, by March 30, 2009. On the Petition Date, the Debtors promptly requested that the U.S. Bankruptcy Court for the District of Delaware set a hearing date to approve the Disclosure Statement explaining their Joint Chapter 11 Plan of Reorganization and to confirm the Plan. If the Plan is confirmed, the Effective date of the Plan is projected to be approximately 10 days after the date the Court enters the Confirmation order. DBSI INC: 19 Units' Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: DBSI Inc. 1550 S. Tech Lane Meridian, ID 83642 Bankruptcy Case No.: 08-12687 Debtor-affiliates filing separate Chapter 11 petitions on Jan. 7, 2009: Entity Case No. ------ -------- Belton Town Center Acquisition LLC 09-10034 DBSI Broadway Plaza LeaseCo LLC 09-10035 DBSI Collins Offices LLC 09-10036 DBSI Development Services LLC 09-10037 DBSI-Renaissance Flowood LLC 09-10038 DBSI Land Development LLC 09-10039 DBSI Lexington LLC 09-10040 DBSI Meridian 184 LLC 09-10041 DBSI One Hernando Center North LLC 09-10042 DBSI Republic LeaseCo LLC 09-10043 South Cavanaugh LLC 09-10044 DBSI 121/Alma Land L.P. 09-10045 DBSI 121/Alma LLC 09-10046 Debtor-affiliates filing separate Chapter 11 petitions on Nov. 10, 2008: Entity Case No. ------ -------- DBSI South 75 Center LeaseCo LLC 08-12688 DBSI 14001 Weston Parkway LeaseCo LLC 08-12689 DBSI CP Ironwood LeaseCo LLC 08-12690 DBSI Lake Ellenor LeaseCo LLC 08-12691 DBSI 12 South Place LeaseCo LLC 08-12692 DBSI 13000 Weston Parkway LeaseCo LLC 08-12693 DBSI 2001A Funding Corporation 08-12694 DBSI 2001B Funding Corporation 08-12695 DBSI 2001C Funding Corporation 08-12696 DBSI 2005 Secured Notes Corporation 08-12697 DBSI 2006 Secured Notes Corporation 08-12698 DBSI 2008 Notes Corporation 08-12699 DBSI 2nd Street Quad LeaseCo LLC 08-12700 DBSI 700 Locust LeaseCo LLC 08-12701 DBSI Abbotts Bridge LeaseCo LLC 08-12702 DBSI Allison Pointe LeaseCo LLC 08-12703 DBSI Amarillo Apartments LeaseCo LLC 08-12704 DBSI Anna Plaza LeaseCo LLC 08-12705 DBSI Arlington Town Square LeaseCo LLC 08-12706 DBSI Arrowhead LeaseCo LLC 08-12707 DBSI Avenues North Center LeaseCo LLC 08-12708 DBSI Bandera Trails LeaseCo LLC 08-12709 DBSI Battlefield Station LeaseCo LLC 08-12710 DBSI Belton Town Center LeaseCo LLC 08-12711 DBSI Breckinridge LeaseCo LLC 08-12712 DBSI Brendan Way LeaseCo LLC 08-12713 DBSI Brookfield Pelham LeaseCo LLC 08-12714 DBSI Cambridge Place LeaseCo LLC 08-12715 DBSI Carolina Commons LeaseCo LLC 08-12716 DBSI Cedar East and Cypress LeaseCo LLC 08-12717 DBSI Clear Creek Square LeaseCo LLC 08-12718 DBSI Corporate Woods LeaseCo LLC 08-12719 DBSI CP Clearwater LeaseCo LLC 08-12720 DBSI Cranberry LeaseCo LLC 08-12721 DBSI Cross Pointe LeaseCo LLC 08-12722 DBSI Crosstown Woods LeaseCo LLC 08-12723 DBSI Daniel Burnham LeaseCo LLC 08-12724 DBSI Decatur LeaseCo LLC 08-12725 DBSI Eagle Landing LeaseCo LLC 08-12726 DBSI Embassy Tower LeaseCo LLC 08-12727 DBSI Executive Dr LeaseCo LLC 08-12728 DBSI Executive Park LeaseCo LLC 08-12729 DBSI Fairlane Green LeaseCo LLC 08-12730 DBSI Fairway LeaseCo LLC 08-12731 DBSI Florissant Market Place LeaseCo LLC 08-12732 DBSI Gadd Crossing LeaseCo LLC 08-12733 DBSI Ghent Road LeaseCo LLC 08-12734 DBSI Grant Street Portfolio LeaseCo LLC 08-12735 DBSI Green Street Commons Leaseco LLC 08-12736 DBSI Guaranteed Capital Corporation 08-12737 DBSI Hampton LeaseCo LLC 08-12738 DBSI Hickory Plaza LeaseCo LLC 08-12739 DBSI Highlands & Southcreek LeaseCo LLC 08-12740 DBSI Houston Levee Galleria Leaseco LLC 08-12741 DBSI Kemper Pointe LeaseCo LLC 08-12742 DBSI Kenwood Center LeaseCo LLC 08-12743 DBSI Keystone Commerce LeaseCo LLC 08-12744 DBSI Lake Natoma LeaseCo LLC 08-12745 DBSI Lamar LeaseCo LLC 08-12746 DBSI Landmark Towers Leaseco LLC 08-12747 DBSI Lifestyle Center LeaseCo LLC 08-12748 DBSI Lincoln Park 10 LeaseCo LLC 08-12749 DBSI Mansell Forest LeaseCo LLC 08-12750 DBSI Mansell Place LeaseCo LLC 08-12751 DBSI Master Leaseco, Inc. 08-12752 DBSI Meadow Chase Apartments LeaseCo LLC 08-12753 DBSI Megan Crossing LeaseCo LLC 08-12754 DBSI Metropolitan Square LeaseCo LLC 08-12755 DBSI Missouri LeaseCo LLC 08-12756 DBSI Network LeaseCo LLC 08-12757 DBSI North Logan Retail Center LeaeCo LLC 08-12758 DBSI North Park LeaseCo LLC 08-12759 DBSI North Stafford LeaseCo LLC 08-12760 DBSI Northlite Commons II LeaseCo LLC 08-12761 DBSI Northpark Ridgeland LeaseCo LLC 08-12762 DBSI Northridge LeaseCo LLC 08-12763 DBSI Oakwood Plaza LeaseCo LLC 08-12764 DBSI Old National Town Center LeaseCo LLC 08-12765 DBSI One Executive Center LeaseCo LLC 08-12766 DBSI One Hanover LeaseCo LLC 08-12767 DBSI Park Creek-Gainesville LeaseCo LLC 08-12768 DBSI Parkway III LeaseCo LLC 08-12769 DBSI Peachtree Corners Pavilion LeaseCo LLC 08-12770 DBSI Phoenix Peak LeaseCo LLC 08-12771 DBSI Pinehurst Square East LeaseCo LLC 08-12772 DBSI Pinehurst Square West LeaseCo LLC 08-12773 DBSI Plano Tech Center LeaseCo LLC 08-12774 DBSI Portofino Tech Center LeaseCo LLC 08-12775 DBSI Properties Inc. 08-12776 DBSI Real Estate Funding Corporation 08-12777 DBSI Realty Inc. 08-12778 DBSI Road 68 Retail Center LeaseCo LLC 08-12779 DBSI Sam Houston Tech Center LeaseCo LLC 08-12780 DBSI Sapphire Pointe LeaseCo LLC 08-12781 DBSI Securities Corporation 08-12782 DBSI Sherwood Plaza LeaseCo LLC 08-12783 DBSI Shoppes at Misty Meadows LeaseCo LLC 08-12784 DBSI Shoppes at Trammel LeaseCo LLC 08-12785 DBSI Signature Place LeaseCo LLC 08-12786 DBSI Silver Lakes Leaseco LLC 08-12787 DBSI Southport Pavilion LeaseCo LLC 08-12788 DBSI Spalding Triangle LeaseCo LLC 08-12789 DBSI Spring Valley Road LeaseCo LLC 08-12790 DBSI Springville Corner Leasco LLC 08-12791 DBSI ST Tower LeaseCo LLC 08-12792 DBSI St. Andrews Place LeaseCo LLC 08-12793 DBSI Stone Glen Village LeaseCo LLC 08-12794 DBSI Stony Brook South LeaseCo LLC 08-12795 DBSI Streetside at Towne Lake LeaseCo LLC 08-12796 DBSI Topsham Fair Mall LeaseCo LLC 08-12797 DBSI Torrey Chase LeaseCo LLC 08-12798 DBSI Treasure Valley Business Center LeaseCo LLC 08-12799 DBSI Trinity Ridge Business Center LeaseCo LLC 08-12800 DBSI University Park LeaseCo LLC 08-12801 DBSI Vantage Drive LeaseCo LLC 08-12802 DBSI Watkins LeaseCo LLC 08-12803 DBSI West Oaks Square LeaseCo LLC 08-12804 DBSI Wilson Estates LeaseCo LLC 08-12805 DBSI Winchester Office LeaseCo LLC 08-12806 DBSI Windcom Court LeaseCo LLC 08-12807 DBSI Wisdom Pointe LeaseCo LLC 08-12808 DBSI Woodlands Medical Office LeaseCo LLC 08-12809 DBSI Woodside Center LeaseCo LLC 08-12810 DCJ Inc. 08-12811 DBSI Draper LeaseCo LLC 08-12812 FOR 1031 LLC 08-12813 Spectrus Real Estate Inc. 08-12814 DBSI Academy Park Loop LeaseCo LLC 08-12815 DBSI Copperfield Timbercreek LeaseCo LLC 08-12816 DBSI Corporate Center II LeaseCo LLC 08-12817 DBSI Executive Plaza LeaseCo LLC 08-12818 DBSI Northgate LeaseCo LLC 08-12819 DBSI Two Notch Rd. LeaseCo LLC 08-12820 DBSI Asset Management LLC 08-12821 DBSI 2006 Land Opportunity Fund LLC 08-12822 DBSI Shoppes at Trammel LLC 08-12823 DBSI 2007 Land Improvement & Development Fund LLC 08-12824 DBSI 2008 Land Option Fund LLC 08-12825 DBSI Alma/121 Office Commons LLC 08-12826 DBSI Cottonwood Plaza Development LLC 08-12827 DBSI Draper Technology 21 LLC 08-12828 DBSI Escala LLC 08-12829 DBSI Short-Term Development Fund LLC 08-12830 DBSI Telecom Office LLC 08-12831 DBSI Discovery Real Estate Services LLC 08-12834 Chapter 11 Petition Date: November 10, 2008 Related Information: The Debtors operate a real estate company. See: http://www.dbsi.com Court: District of Delaware (Delaware) Judge: Peter J. Walsh Debtor's Counsel: James L. Patton, Esq. bankfilings@ycst.com Joseph M. Barry, Esq. bankfilings@ycst.com Michael R. Nestor, Esq. bankfilings@ycst.com Young, Conaway, Stargatt & Taylor LLP The Brandywine Bldg. 1000 West Street, 17th Floor PO Box 391 Wilmington, DE 19899-0391 Tel: (302) 571-6684 (302) 571-6600 (302) 571-1253 http://www.ycst.com Notice Claims and Balloting Agent Claims: Kurztman Carson Consultants LLC Estimated Assets: $100 million to $500 million Estimated Debts: $100 million to $500 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ellen Kwiatkowski- investment $26,743,328 Schwinge 402 Kilarney Pass Mundeleim, IL 60060 Michael Kanoff investment $18,696,689 3500 Flamingo Drive Miami Beach, Fl 33140 Harold Rubin investment $17,854,893 100 North Street Teterboro, NJ 07608 Bill Ramsey investment $15,500,000 PO Box 690 Salinas, CA 93902 Frederick Nicholas investment $14,250,863 3844 Culver Center Street Suite B Culver City, CA 90232 Peter Evans investment $7,317,633 17046 Marina Bay Drive Huntington Beach, CA 92649 Jeffrey Johnston investment $7,200,000 1751 Wst. Citracado Pkwy. Clubhouse Escondido, CA 92029 Yim Chow investment $7,200,000 702 Los Pinos Avenue Milpitas, CA 95035 Phyllis Chu investment $6,191,068 3020 Gough Street San Francisco, CA 94123 Elizabeth Noonan investment $5,395,000 316 Chapin Lane Burlingame, CA 94010 John Roeder investment $5,375,848 PO Box 23490 San Jose, CA 95153 Jim Nicholas investment $5,325,000 385 Hilcrest Road Englewood, NJ 07632 Robert Markstein investment $5,220,000 696 San Ramon Valley Boulevard, #347 Danville, CA 94526 Robert Angelo investment $4,542,500 33316 S.E. 34th Street Washougal, WA 98671 Henry Vara investment $4,509,982 16960 Bohlman Road Saratoga, CA 95070 Alan Destefani investment $4,500,000 PO Box 20968 Bakersfield, CA 93390 Kevin Pascoe investment $4,476,000 9400 Etchart Road Bakersfield, CA 93314 Martha Walker investment $4,324,349 863 S. Bates Street Birmingham, AL 48009 Tina Bernard investment $4,277,596 19336 Collier Street Tarzana, CA 91356 Paul Wendland investment $4,208,999 1034 N. Datepalm Drive Gilbert, AZ 85234 William Marvel investment $3,579,289 492 Escondido Circle Grand Junction, CO 81503 James Fritts investment $3,424,900 309 W. Washington Street Charlestown, WV 25414 Joan Kresse investment $3,410,909 5100 Figueroa Mountain Road Los Olivios, CA 93441 John Baklayan investment $3,400,000 16105 Whitecap Land Huntington Beach, CA 92649 Robert Rifkin investment $3,360,000 697 Red Arrow Trail Palm Desert, CA 92211 Gerard Keller investment $3,200,783 12-161 Saint Andrews Drive Ranco Mirage, CA 92270 Kristi Wells investment $3,120,000 2860 Old Quarry Road West Point, IA 92656 Michael Cooper investment $3,000,000 6465 S. 3000 E, Suite Salt Lake City, UT 84121 Gladys Esponda investment $3,000,000 PO Box 609 Buffalo, NY 82834 Arthur Hossenlopp investment $3,000,000 228 18th Street Ft. Madison, IA 52627 Richard Newman investment $3,000,000 13679 Orchard Gate Road Poway, CA 92064 Bernard Posner investment $3,000,000 6222 Primrose Avenue Los Angeles, CA 90068 Kent Schroeder investment $3,000,000 5697 McIntyre Street Golden, CO 80403 Bernard Ineichen investment $2,900,000 650 South Avenue, B122 Yuma, Arizona 85346 Alan Sacks investment $2,900,000 5 Horizon Road, #1407 Fort Lee, NJ 07024 Joseph Stokley investment $2,843,461 PO Box 1231 Bethel Island, CA 94511 JoAnn Picket investment $2,800,000 3769 E. 125th Drive Thornton, CO 80241 Bill Hall investment $2,740,593 PO Box 16172 Lubbock, TX 79490 Max Buchmann investment $2,716,186 14464 Rand Rail Drive El Cajon, CA 92021 Brian Schuck investment $2,701,027 700 Maldonado Pensacola Beach, Fl 32561 James Jensen investment $2,616,648 2125 Cypress Point Discovery Bay, CA 94505 Robert Etzel investment $2,600,000 2623 Avenue H. Ft. Madison, IA 52627 Theodore Mintz investment $2,554,458 751 Georgia Trail Lincolnton, NC 28092 Joyce Jongsma investment $2,540,000 2012 E. Burrville Crete, IL 60417 Kent Wright investment $2,488,694 2115 Marwood Circle Salt Lake City, UT 84124 James Veugler investment $2,442,397 c/o Georgia Veugler Material Recovery Corp. 820 E. Terra Cotta Ave. Unit 116 Crystal Lake, IL 60014 Virgil Gentzler investment $2,427,301 2707 Bressi Ranch Way Carlsbad, CA 92009 Karen Hughes investment $2,417,886 1050 The Old Drive Pebble Drive, CA 93953 Robert Goldberg investment $2,407,915 PO Box 8807 Boise, ID 83707 DELTA FINANCIAL: Second Amended Plan Declared Effective ------------------------------------------------------- Bankruptcy Data reports that the Second Amended Joint Chapter 11 Plan of Liquidation proposed by Delta Financial Corp. and its affiliates, and their official committee of unsecured creditors, has been declared effective and the Debtors have emerged from chapter 11 protection. As reported by the Troubled Company Reporter on December 16, 2008, the U.S. Bankruptcy Court for the District of Delaware confirmed the Second Amended Plan. The Plan transfers the Debtors' assets and liabilities to a liquidating trust, which will be administered by a liquidating trustee. Bankruptcy Data says the liquidating trustee will liquidate the Debtors' remaining assets; evaluate, pursue or settle potential causes of action, as appropriate; review the universe of claims in the Chapter 11 cases; fix the allowed amount of those claims and then distribute the proceeds from the assets to the creditors in a manner consistent with the priority scheme in the Bankruptcy code. Once the liquidating trustee liquidates all assets, fixes all claims and conveys all distributions to creditors, the liquidating trustee will dissolve the liquidating trust pursuant to the terms of the Plan, Bankruptcy Data says. Founded in 1982, Delta Financial Corporation (NASDAQ: DFC) -- http://www.deltafinancial.com/-- is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming mortgage loans. The company filed a chapter 11 petition on December 17, 2007 (Bankr. D. Del. Lead Case No. 07-11880). On the same day, three affiliates filed separate chapter 11 petitions -- Delta Funding Corp., Renaissance Mortgage Acceptance Corp., and Renaissance R.E.I.T. Investment Corp. -- (Bankr. D. Del. Case Nos. 07-11881 to 07-11883). The Debtors selected Morrison & Foerster LLP as their general bankruptcy counsel and David B. Stratton, Esq. and James C. Carignan, Esq. at Pepper Hamilton LLP as their counsel. The Debtors hired AlixPartners LLP as their claims agent. The Official Committee of Unsecured Creditors retained Landis Rath & Cobb LLP as its Delaware counsel. The Debtors' amended consolidated quarterly financial condition as of Sept. 30, 2007, showed $7,223,528,000 in total assets and $7,108,232,000 in total liabilities. The Debtors' petition listed D.B. Structured Products Inc. as their largest unsecured creditor holding a $19,500,000 claim. DHP HOLDING: Wants to Access Lenders' Cash Collateral ----------------------------------------------------- DHP Holdings II Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to access cash collateral securing repayment of secured loan to their prepetition lenders. Proceeds of the cash collateral will be used to maintain ongoing- day-to-day operations and fund DHP's liquidation in accordance with the proposed budget. A full-text copy of the Debtors' Cash Collateral Budget is available for free at http://ResearchArchives.com/t/s?36ff A hearing is set for Jan. 16, 2009, at 9:30 p.m., to consider the Debtors' request. Objections, if any, are due Jan. 9, 2009, at 4:00 p.m. Prepetition Senior Indebtedness Entities with interest in the cash collateral include: -- GE Business Financial Services fka Merrill Lynch Business Financial Services, as agent under a certain credit agreement dated Dec. 6, 2004, as amended; and -- HIG Capital Partners II LP, as agent under a certain credit agreement dated June 11, 2007, as amended. The Debtors said that, prepetition, they partially funded their operations through the credit facility under the senior credit agreement composed of: a) $150 million term loan; b) $22.6 million revolving credit line; and c) $3.8 million issued letters of credit. All of the debt obligations are secured by first priority liens on substantially all of the Debtors' assets including 65% of the equity interest held by DESA LLC in non-debtor subsidiary HIG-DHP Barbados Ltd. The Debtors have defaulted under the credit agreement several times since February 2005. The senior indebtedness became due and payable in full in cash, and all commitments to lend under the transaction terminated on Nov. 29, 2008. As adequate protection of their interests in the cash collateral, the lenders will be granted replacement security interest in and lien upon all of the postpetition collateral excluding avoidance actions proceeds, and a superpriority claim as provided in Section 507(b) of the Bankruptcy Code. About DHP Holdings Headquartered in Bowling Green, Kentucky, DHP Holdings II Corporation is the parent of DESA Heating, which sells and distributes heating commercial products in Europe and Mexico under brand names including ReddyHeater, Comfort Glow and Master Portable Heaters. The company has manufacturing, storage and distribution facilities in Alabama and California. DHP Holdings II and six of its affiliates filed for Chapter 11 protection on December 29, 2008 (Bankr. D. Del. Lead Case No. 08- 13422). The company's international arm, HIG-DHP Barbados, has not filed for bankruptcy. HIG-DHP Barbados holds 100% of the equity of all foreign nondebtor subsidiaries, which manufacture, distribute and sell commercial and consumer goods in Europe, Mexico, and Canada. Bruce Grohsgal, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl Young & Jones LLP, represent the Debtors. The Debtor proposed AEG Partners as restructuring consultants, and Craig S. Dean as chief restructuring officer and Kevin Willis as assistant chief restructuring officer. The Debtora also proposed Epiq Bankruptcy Solutions LLC as claims agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million to $500 million each. According to Reuters, as of Nov. 29, the company, along with its nondebtor subsidiaries and affiliates, had assets of $132.5 million and liabilities of $133.2 million. DESA Holdings Corporation and DESA International LLC filed voluntary petitions on June 8, 2002. HIG-DESA Acquisition nka DESA LLC acquired on Dec. 13, 2002, substantially all assets of the DESA Entities for $198 million comprised of $185 million in cash plus unsecured subordinated notes in the original aggregate amount of $13 million priced at 10% per annum due payable on Dec. 24, 2007. The sale closed on Dec. 24, 2002. The Chapter 11 cases of the form DESA Entities is still active; However, activity occurring in those cases consists of limited claims resolution, and required filing of necessary postconfirmation reports and payment of postconfirmation fees. No claims of ther issues remain open between the Debtors and the former DESA Entities. According to the Troubled company Reporter on April 22, 2005, the Hon. Walter Shapero of the United States Bankruptcy Court for the District of Delaware confirmed the Second Amended Joint Plan of Liquidation of DESA Holdings Corporation and its debtor- affiliate -- DESA International LLC. The Court confirmed the Plan on April 1, 2005, and Plan took effect the same day. Kirkland & Ellis, LLP, and Pachulski, Stang, Ziehl Young Jones & Weintraub, P.C., represented the DESA entities. ENTERCONNECT INC: Sept. 30 Balance Sheet Upside Down by $829,756 ---------------------------------------------------------------- EnterConnect Inc.'s September 30, 2008, balance sheet showed total assets of $1,292,623 and total liabilities (all current) of $2,122,379, resulting in total stockholders' deficit of $829,756. For the three months ended September 30, 2008, the company posted a net loss of $1,933,487, compared with a net loss of $762,227 for the same period a year earlier. At September 30, 2008, the company had an accumulated deficit of $9.4 million and $0.4 million in non-restricted cash. Cash flows used in operations was $1.9 million during the six-month period ended September 30, 2008. "We have incurred net losses since our inception and we anticipate that we will continue to operate in a deficit position for the foreseeable future. We believe that our existing funds will be sufficient to fund our current operations through December 31, 2008, based upon our estimated future operations. Due to our inability to generate sufficient revenue to cover operating expenses, we will require additional financing in order to conduct our normal operating activities and cover our monthly expenses. There can be no assurance that we will be able to obtain the additional financing we require, or be able to obtain such additional financing on terms favorable to our company. These circumstances raise substantial doubt about our ability to continue as a going concern," Sam Jankovich, chairman, chief executive officer and principal financial officer, disclosed in a regulatory filing dated November 14, 2008. "We expect to increase our revenues during fiscal 2009. However, we cannot be certain that the anticipated revenues and corresponding cash flows will materialize. If our revenues and cash flows are not adequate to enable us to meet our obligations; we will need to raise additional funds to cover the shortfall through either commercial loans or additional public or private offerings of our securities. We are currently investigating additional funding opportunities, talking to potential investors who could provide financing." "Based on our prior success in raising capital when required through private placements and the issuance of convertible notes, we are hopeful that we will be able to secure appropriate financing in the future. We have no current commitments for additional financing, and there can be no assurance that any private or public offering of debt or equity securities or other funding arrangements could be effected on a timely basis or to an extent sufficient to enable us to continue to satisfy our capital requirements. If we fail to demonstrate an ability to generate sufficient revenue to meet our obligations and sustain our operations, our ability to continue to raise capital may be impaired and we may not be able to continue as a going concern." A full-text copy of the company's quarterly report is available for free at: http://researcharchives.com/t/s?37a6 Waiver & Amendment Agreement On December 17, 2008, EnterConnect entered into a Waiver and Amendment Agreement, with respect to its December 20, 2007 Senior Secured Convertible Notes and December 20, 2007 Warrants to Purchase Common Stock with a majority of holders of the principal amount of Notes outstanding and majority amount of Warrants outstanding. The December 17, 2008 Waiver and Amendment provides for: (i) extension of the Optional Redemption Date in the Notes from December 20, 2008 to June 20, 2009; (ii) amendment of the Conversion Price of the Notes from $0.60 to $0.10 per share, (iii) a new Optional Redemption by the company for a portion of the Notes prior to the Optional Redemption Date; (iv) waiver by the Note holders of any adjustment to the number of Warrant Shares issuable upon exercise of the SPA Warrants that would occur as a result of adjustment to the Exercise Price under the Warrants, and (v) waiver by the Note holders of the Event of Default associated with EnterConnect's failure to have the Registration Statement provided for under the December 20, 2007 Registration Rights Agreement between the company and Buyers declared effective on or before the Additional Effectiveness Deadline. Pursuant to the terms of the Notes and the Warrants, the December 17, 2008 Waiver and Amendment became effective for all Notes and Warrants upon its execution by a majority of holders of the principal amount of Notes outstanding and majority amount of Warrants outstanding. A full-text copy of the Waiver & Amendment is available for free at: http://researcharchives.com/t/s?37a5 About EnterConnect EnterConnect Inc. is a provider of enterprise-proven on-demand business portals that improve communication, collaboration and business processes to help companies increase customer satisfaction, growth and productivity. The company's portals enable customers, employees, partners, suppliers and other stakeholders to securely consolidate, collaborate and connect online -- at anytime, from anywhere -- to accelerate business on-demand. EnterConnect solutions are based on a rich technology foundation in use at more than 50 Fortune 1000 companies. EPICEPT CORP: TBG OKs EUR1.5MM Repayment Delay Until June 30 ------------------------------------------------------------ EpiCept Corporation disclosed in a filing with the Securities and Exchange Commission that its lender, Technologie-Beteiligungs GmbH der Deutschen Ausgleichsbank agreed to delay repayment of its EUR1.5 million loan until June 30, 2009. The loan was due to be repaid on Dec. 31, 2008. Interest will continue to accrue at its current rate of 7.38% and EpiCept will pay accrued interest on Dec. 31, 2008 and June 30, 2009. In August 1997, EpiCept GmbH, a subsidiary of the company, entered into a 10-year non-amortizing loan in the amount of EUR1.5 million with tbg. The loan initially bore interest at a rate of 6% per annum. In December 2007, pursuant to the terms of a repayment agreement, the company agreed to repay to tbg approximately EUR0.2 million on Dec. 31, 2007, representing all interest payable to tbg as of that date. The remaining loan balance of EUR1.5 million, plus accrued interest at a rate of 7.38% per annum beginning Jan. 1, 2008, was to be due to tbg no later than June 30, 2008. Tbg also waived certain additional interest payments of approximately EUR0.5 million provided for in the loan agreement. The company, on Nov. 26, 2008, entered into an amendment to the repayment agreement with tbg. Pursuant to the amendment, tbg agreed to allow the company to repay the remaining loan balance of EUR1.5 million plus accrued interest to tbg no later than Dec. 31, 2008, so long as the company paid to tbg EUR56,000, the interest accrued between Jan. 1, 2008 and June 30, 2008, no later than July 1, 2008. Pursuant to a second amendment to the December 2007 repayment agreement, tbg agreed to allow the company to repay the remaining loan balance of EUR1.5 million plus accrued interest to tbg no later than June 30, 2009, so long as the company pays to tbg approximately EUR56,000, the interest accrued between July 1, 2008, and Dec. 31, 2008. About EpiCept Corporation Based in Tarrytown, New York, EpiCept Corporation (NASDAQ:EPCT) -- http://www.epicept.com/-- is a specialty pharmaceutical company focused on the development of pharmaceutical products for the treatment of cancer and pain. The company has a portfolio of five product candidates in active stages of development. It includes an oncology product candidate submitted for European registration, two oncology compounds, a pain product candidate for the treatment of peripheral neuropathies and another pain product candidate for the treatment of acute back pain. The two wholly owned subsidiaries of the company are Maxim, based in San Diego, California, and EpiCept GmbH, based in Munich, Germany, which are engaged in research and development activities. EpiCept's net loss was $6.2 million compared to $7.7 million for the third quarter of 2007. For the nine months ended Sept. 30, 2008, EpiCept's net loss was $20.0 million compared to $22.4 million for the nine months ended Sept. 30, 2007. As of Sept. 30, 2008, EpiCept had approximately 76.2 million shares outstanding. At Sept. 30, 2008, the company's balance sheet showed total assets of $4.9 million and total liabilities of $20.8 million, resulting in a stockholders' deficit of $15,908 million. Going Concern Doubt Deloitte & Touche LLP, in Parsippany, New Jersey, expressed substantial doubt about EpiCept Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations and stockholders' deficit. EPICEPT CORP: Board Okays 687,500 Options Grant to Executives ------------------------------------------------------------- EpiCept Corporation disclosed in a regulatory filing that the compensation committee of its board of directors approved the grant of 687,500 options to purchase shares of the company's common stock, par value $0.0001 per share, to certain of the company's named executive officers pursuant to the company's 2005 Equity Incentive Plan. The Options expire on Jan. 5, 2019, have an exercise price of $0.63 per share, and vest ratably on a monthly basis over 48 months beginning in the month of the grant. Recipients of the Option grants are: -- John V. Talley, president and chief executive officer -- 325,000 Options; -- Robert W. Cook, chief financial officer and senior vice president, finance and administration -- 87,500 Options; -- Stephane Allard, chief medical officer -- 100,000 Options; -- Ben Tseng, chief scientific officer -- 75,000 Options; and -- Dileep Bhagwat, senior vice president, pharmaceutical development -- 100,000 Options. In a separate filing, EpiCept stated that it entered into an amendment to the employment agreement of John V. Talley, the company's chairman, president and chief executive officer. The amendment was intended to bring Mr. Talley's employment agreement into compliance with Section 409A of the Internal Revenue Code of 1986, as amended, and final Department of Treasury regulations issued thereunder. A full-text copy of the Amended Employment Agreement - J.V. Talley is available for free at: http://ResearchArchives.com/t/s?3795 The company and Robert W. Cook, the company's senior vice president and chief financial officer, entered into an amendment to Mr. Cook's employment agreement. The amendment was intended to bring Mr. Cook's employment agreement into compliance with Section 409A. A full-text copy of the Amended Employment Agreement - R.W. COOK is available for free at: http://ResearchArchives.com/t/s?3796 About EpiCept Corporation Based in Tarrytown, New York, EpiCept Corporation (NASDAQ:EPCT) -- http://www.epicept.com/-- is a specialty pharmaceutical company focused on the development of pharmaceutical products for the treatment of cancer and pain. The company has a portfolio of five product candidates in active stages of development. It includes an oncology product candidate submitted for European registration, two oncology compounds, a pain product candidate for the treatment of peripheral neuropathies and another pain product candidate for the treatment of acute back pain. The two wholly owned subsidiaries of the company are Maxim, based in San Diego, California, and EpiCept GmbH, based in Munich, Germany, which are engaged in research and development activities. EpiCept's net loss was $6.2 million compared to $7.7 million for the third quarter of 2007. For the nine months ended Sept. 30, 2008, EpiCept's net loss was $20.0 million compared to $22.4 million for the nine months ended Sept. 30, 2007. As of Sept. 30, 2008, EpiCept had approximately 76.2 million shares outstanding. At Sept. 30, 2008, the company's balance sheet showed total assets of $4.9 million and total liabilities of $20.8 million, resulting in a stockholders' deficit of $15,908 million. Going Concern Doubt Deloitte & Touche LLP, in Parsippany, New Jersey, expressed substantial doubt about EpiCept Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations and stockholders' deficit. ERNIE HAIRE: Clients Can Continue Borrowing From Banks ------------------------------------------------------ Michael Sasso at Tampa Bay Online reports that the Hon. Michael Williamson of the United States Bankruptcy Court for the Middle District of Florida has ruled that Bank of America, Chase Auto Finance, Huntington National Bank, and Harris Bank must continue lending to Ernie Haire Ford Inc.'s clients. According to Tampa Bay Online, the banks removed Ernie Haire from their dealer network after the dealership filed for Chapter 11 protection, making it harder to find financing for prospective customers. Ernie Haire's lawyers then asked the Court to force the banks to continue lending to its clients. Tampa Bay Online relates that the banks' attorneys didn't explain during a court hearing on Tuesday why their clients wanted to cut off Ernie Haire. About Ernie Haire Headquartered in Tampa, Florida, Ernie Haire Ford, Inc. -- http://ernie-haireford.dealerconnection.com-- is a Ford dealer for about 38 years. The company also sells used and new automobiles. The company filed for Chapter 11 protection on November 24, 2008 (Bankr. M.D. Fla. Case No. 08-18672). Geoffrey Todd Hodges, Esq., at G. T. Hodges, PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed assets and debts between $10 million to $50 million each. FANNIE MAE: Extends Foreclosure Sale and Eviction Suspension ------------------------------------------------------------ Fannie Mae (FNM) said it would extend the suspension of foreclosure sales and evictions from single-family properties through January 31, 2009. This action will enable the company to work with mortgage servicers to further implement the Streamlined Modification Program (SMP) announced on November 11, 2008 and initiated on December 15, 2008. The extension will also provide additional time for the company to operationalize its new National REO Rental Policy, which will allow renters in company-owned foreclosed properties to stay in their homes. Details of the new policy are expected to be announced shortly. The temporary suspension of foreclosures will allow affected borrowers facing foreclosure to retain their homes while Fannie Mae works with mortgage servicers to implement the SMP. Foreclosure attorneys and loan servicers have been instructed to use the additional time to reach out to borrowers and continue to pursue workout options. The initiative applies to loans owned or securitized by Fannie Mae. The SMP is aimed at the borrower who has missed three payments or more, owns and occupies the primary residence, and has not filed for bankruptcy. The program creates a fast-track method for getting troubled borrowers into an affordable monthly payment through a mix of reducing the mortgage interest rate, extending the life of the loan or even deferring payments on part of the principal. Servicers have flexibility in the approach, but the objective is to create a more affordable payment for borrowers at risk of foreclosure. Fannie Mae's loan servicers are prepared to work with borrowers during this suspension period, even if previous workout efforts have been unsuccessful. As part of the company's "Second Look" initiative, Fannie Mae personnel have been reviewing seriously delinquent loans to determine if the borrower has been contacted and all workout options have been exhausted. The streamlined modification program and temporary suspension of foreclosures are two of a series of steps Fannie Mae has taken to expand its foreclosure prevention efforts, which are designed to give loan servicers and foreclosure attorneys tools to find the best solution for a borrower in financial trouble. Fannie Mae and its many partners in the housing industry urge borrowers in financial difficulty to reach out to their loan servicers, regardless of whether they are facing imminent foreclosure. Solutions may be available that could make an existing mortgage more affordable. Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. Our job is to help those who house America. FIRST METAL: Defaults on Bond Payments; Files for Bankruptcy ------------------------------------------------------------ First Metals Inc. (CA:FMA:) filed with the Official Receiver on January 8, 2009, a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act. The filing was made in order to facilitate First Metal's ability to implement a restructuring plan. First Metals Inc. has not made the interest payment due December 31, 2008 on its outstanding senior secured Notes. Any actions against First Metals are automatically stayed, pending the outcome of the Proposal process, as a result of the filing. First Metals is required to file its Proposal within 30 days unless an extension is granted by the court. Based in Toronto, Ontario, First Metals produces Copper from its Fabie Mine, near Rouyn-Noranda and has the advanced Magusi Copper, Zinc, Gold and Silver deposit , located approximately 1.2 km from the Fabie Mine The Company has approximately 42.8 million shares issued and outstanding. FLYING J: Wants Court to Enforce Bankruptcy Stay on FERC Case ------------------------------------------------------------- Bankruptcy Law360 reports that Flying J Inc. has commenced an adversary proceedings asking the U.S. Bankruptcy Court for the District of Delaware to enforce the automatic stay with regard to a lawsuit pending before the Federal Energy Regulatory Commission. Flying J, the report says, argues that the proceedings the Debtor from its Chapter 11 reorganization efforts and will impair its assets. Headquartered in Ogden, Utah, Flying J Inc. -- http://www.flyingj.com-- operate an oil company with operations in the filed of exploration and refining of petroleum products. The Debtors engage in online banking, card processing truck and trailer leasing, and payroll services. The Debtors also operate about 200 travel plazas in 41 states and six Canadian provinces. The company and six of its affiliates filed for Chapter 11 protection on Dec. 22, 2008 (Bankr. D. Del. Lead Case No. 08-13384). Kirkland & Ellis LLP represents the Debtors' in their restructuring efforts and Young, Conaway, Stargatt & Taylor LLP as their Delaware Counsel. The Debtors proposed The Blackstone Group LP as financial advisor and Epiq Bankruptcy Solutions LLC as claims agent. When the Debtors filed for protection from its creditors, they listed assets more than $1 billion and debts between $100 million to $500 million. FRANKLIN EQUIPMENT: Will File for Chapter 7 Liquidation ------------------------------------------------------- Charlie Passut at Tidewater News reports that Franklin Equipment Co. will file for Chapter 7 liquidation. According to Tidewater News, Franklin Equipment said that it will close permanently. Franklin Equipment founder Roger W. Drake said in a statement, "We believe this course offers the best opportunity to have an orderly disposition of the company's assets and provide fair treatment to our creditors. This step [Chapter 7 filing] is painful for our dedicated employees, our loyal customers and our vendors, but we simply had no alternative." Tidewater News relates that Franklin Equipment blamed its collapse on the economy and competition. Franklin Equipment said in a statement, "The logging equipment business is highly cyclical . . . and purchasers of the large machines (produced by Franklin Equipment) depend on access to credit, as well as on the financial health of the lumber and pulp and paper industries. Recent downturns in those industries have combined with the unprecedented nationwide credit crisis to bring sales of Franklin's products to a standstill." According to Franklin Equipment's statement, the company has faced intense competition from giant multinational companies that increasingly dominate the market for logging and agricultural machinery. "Competitors such as Caterpillar and Deere & Company have access to financial resources, suppliers, and markets that a small, family-owned company could not match," Tidewater News quoted Franklin Equipment as saying. Franklin Equipment, Tidewater News reports, also said, "The ongoing expense of pending lawsuits also played a role in the decision to close down. Members of the (Drake) family have made substantial personal and financial sacrifices in an effort to wait out difficult conditions in the logging equipment industry. With the current economic outlook, the family simply cannot afford to absorb more losses." Headquartered in Franklin, Franklin Equipment Co. was founded in Franklin in 1962 and made diesel logging tractors, primarily for the timber harvesting industry. The company owns a retail sales and service outlet in Louisburg, North Carolina, and a foundry that makes axle and transmission housings in Independence, Oregon. The North Carolina outlet is the only company-owned dealership, but other outlets operate in 25 states and eight foreign countries. FRONTIER AIRLINES: Pilots Union OKs Wage Concessions Until 2011 --------------------------------------------------------------- Members of the Frontier Airline Pilots Association on Monday ratified a long-term labor agreement with the airline. The agreement will extend certain wage and benefit concessions through December 2011. Nearly 85% of votes cast were in favor of ratification. Of the 454 votes cast, 384 voted yes, only 70 voted no. "Our pilots once again have demonstrated their willingness to help Frontier's leadership move our airline toward sustainability and growth," said Frontier President and Chief Executive Officer Sean Menke. "This agreement is important because now 100% of our workers have made wage and benefit concessions, a factor that will prove critical in attracting exit financing for our emergence from bankruptcy," Mr. Menke added. "The leadership of the Frontier Airline Pilots Association and its members understand the challenges Frontier is facing and appreciate the joint effort made in reaching this agreement," said FAPA President John Stemmler. "This agreement is a clear demonstration of our commitment to Frontier and our belief in its long-term success." The Frontier Airline Pilots Association represents more than 600 pilots at Frontier. 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; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) GEN-SEE CAPITAL: SEC Sues Ponzi Scheme; Seeks Asset Freeze ---------------------------------------------------------- The Securities and Exchange Commission, on Jan. 9, 2009, filed a civil injunctive action in the United Stated District Court for the Western District of New York and a motion for temporary restraining order and asset freeze against defendants Gen-See Capital Corporation a/k/a Gen Unlimited and its owner and president, Richard S. Piccoli. The SEC is also seeking an order directing the defendants to provide verified accountings and prohibiting the destruction, concealment or alteration of documents. The SEC's complaint alleges that Gen-See and Piccoli have orchestrated a Ponzi scheme and affinity fraud targeting clergy, Catholic parishioners, and senior citizens. The complaint further alleges that the defendants have raised millions of dollars from investors by promising steady, "guaranteed" returns, ranging from 7.1% to 8.3% per annum, and no fees or commissions. In November 2008 alone, the defendants raised over $500,000. The complaint further alleges that the defendants relied heavily on advertisements in newsletters published by churches and dioceses, and told investors that their money was invested in "high quality" residential mortgages that the defendants were able to purchase at a discount. In addition, the complaint alleges that the defendants did not invest the funds as promised, but instead used new investor funds to make payments to earlier investors. In addition, the complaint alleges that Gen-See's offering of securities to the public was not registered with the Commission. The SEC's complaint alleges that the defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. In addition to the emergency relief sought, the SEC also seeks preliminary and permanent injunctive relief and civil money penalties against the defendants, as well as disgorgement by the defendants of their ill-gotten gains plus prejudgment interest. [SEC v. Gen-See Capital Corp. and Richard S. Piccoli, Civil Action No. 09 CV 0014 S (W.D. N.Y.)] (LR-20848) About Gen-See Capital Located in Buffalo, New York, Gen-See Capital Corp., Gensee Capital's line of business, is a mortgage banker and correspondent. It is owned by Richard S. Piccoli. GENERAL MOTORS: To Get $4B from TARP on Feb. 17; Needs Viable Plan ------------------------------------------------------------------ The U.S. Treasury, in its Jan. 7, 2009, report to Congress, said it will provide an additional $4 billion on February 17, 2009, subject to certain conditions. The loan is provided pursuant to the new Automotive Industry Financing Program, which was implemented as part of the Emergency Economic Stabilization Act of 2008. On Dec. 31, 2008, Treasury completed a transaction with GM, under which the Treasury will provide GM with up to a total of $13.4 billion in a three-year loan from the Troubled Assets Relief Program, secured by various collateral. Treasury funded $4 billion of this loan immediately, and committed to fund an additional $5.4 billion on January 16, 2009. The Treasury will provide the remaining $4 billion on February 17. To protect taxpayers, the agreement requires GM to develop and implement a restructuring plan to achieve long-term financial viability. The restructuring plan is to be reviewed by a designee of the President, who will determine whether the goals of the restructuring have been met. If the President's Designee does not find that the goals have been met, the loan will be automatically accelerated and will come due 30 days thereafter. This agreement also includes other binding terms and conditions designed to protect taxpayer funds, including compliance with certain enhanced executive compensation and expense control requirements. Furthermore, Treasury received a warrant for shares of GM common stock and an additional senior unsecured note in the principal amount of $748.6 million $19.4 Bill for Auto Industry To recall, the Treasury announced a new program in December, the AIFP, to prevent a significant disruption of the American automotive industry, which would pose a systemic risk to financial market stability and have a negative effect on the economy of the United States. The program requires participating institutions to implement plans that will achieve long-term viability. Participating institutions must also adhere to rigorous executive compensation standards and other measures to protect the taxpayer's interests, including limits on the institution's expenditures and other corporate governance requirements. Between December 29 and January 2, the Treasury committed to provide $19.4 billion in funds under the Troubled Assets Relief Program (TARP), with an additional $4 billion subject to certain conditions. On Dec. 29, 2008, Treasury purchased $5 billion of senior preferred equity with an 8% annual distribution right from GMAC LLC through the AIFP. Under the agreement, GMAC issued warrants to Treasury to purchase, for a nominal price, additional preferred equity in an amount equal to 5% of the preferred equity purchased. These warrants were exercised at closing of the investment transaction. The additional preferred equity provides for a 9% annual distribution right. Additionally, the Treasury committed to lend up to $1 billion of TARP funds to GM so that GM can participate in a rights offering by GMAC in support of GMAC's reorganization as a bank holding company. The rights offering is expected to close, and the loan to GM is expected to be funded, on January 16, 2009. The loan will be secured by GMAC equity interests owned by GM and those being acquired by GM in the rights offering, and it will be exchangeable at any time, at the Treasury's option, for the GMAC equity interests being acquired by GM in the rights offering. The ultimate level of funding under this facility will depend upon the level of current investor participation in GMAC's rights offering. On January 2, 2009, the Treasury provided a three-year $4 billion loan to Chrysler Holding LLC under the new AIFP. The Treasury's agreement with Chrysler Holding LLC, requires the automaker to submit a restructuring plan to achieve long-term viability. The agreement provides for acceleration of the loan if those goals under the plan, which are subject to review by a designee of the U.S. President, are not met. The Chrysler loan is secured by various collateral, including parts inventory, real estate, and certain equity interests held by Chrysler. Like the GM agreement, this agreement requires Chrysler to submit a restructuring plan to achieve long-term viability for review by the President's designee and provides for acceleration of the loan if those goals are not met. The agreement includes other binding terms and conditions designed to protect taxpayer funds, including compliance with certain enhanced executive compensation and expense-control requirements. Furthermore, Treasury received a senior unsecured note of Chrysler payable to Treasury in the principal amount of $267 million. TARP Transactions Now Total $266.9 billion. The recent transactions under the newly established Automotive Industry Financing Program and Targeted Investment Program, when combined with $187.5 billion of transactions under the Capital Purchase Program and the $40 billion transaction under the program for Systemically Significant Failing Institutions, bring the total amount of transactions to $266.9 billion. The Treasury will submit the next report when transaction levels reach the $300 billion level. The Treasury said it is actively engaged in developing additional programs to strengthen the financial system so that credit flows to the communities. "We have made significant progress, but recognize there is no single action the federal government can take to end the financial market turmoil and the economic downturn." As a result of Treasury's decision to support GM, GMAC, and Chrysler, the Treasury has effectively allocated the first $350 billion from the TARP. The actual disbursement of allocated but undisbursed funds is subject, in the case of the CPP, to approval of bank capital applications, many of which remain with the regulators and will not reach Treasury for review for some weeks, and to closing of CPP transactions, which in turn remain subject to documentation, shareholder approvals in certain cases, and other closing procedures. The Treasury says, "In the very short term, the allocated but not yet disbursed TARP balances, in conjunction with the powers of the Federal Reserve and the FDIC, are likely to provide the necessary resources to address a significant financial market event." It believes, however, that the remainder of the TARP funds will be needed to support financial market stability. 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: No Strike Until Feb. 17, Treasury Says ------------------------------------------------------ John D. Stoll and Sharon Terlep at The Wall Street Journal report that the U.S. Department of Treasury said in its $13.4 billion loan agreement with General Motors Corp. that there can be no strikes pending or threatened against the loan party between Dec. 31 and Feb.17. WSJ relates that GM has to agree with the United Auto Workers union on labor concessions by Feb. 17 to meet requirements set in place by the federal government in relation to the loans granted to GM. WSJ states that by keeping UAW from holding demonstrations against the automakers, the loan agreement removes one of the union's most effective tools. The UAW has often staged strikes that have led to major costs and a lack of vehicle supply for the automakers, WSJ reports. GM Offers Nationwide GMAC Rate Incentive Financing GM Certified Used Vehicles disclosed a new nationwide GMAC rate incentive program on select GM Certified Used Vehicles, including Pontiac G6, Chevrolet Cobalt, and Impala models. The new rate incentive offer, effective Jan. 6 through March 31, 2009, provides qualified GM Certified Used Vehicles buyers with 2.9% APR financing for terms up to 36 months from GMAC Financial Services on 2004-2009 models of Pontiac G6, Chevrolet Impala, and Cobalt vehicles purchased from participating GM Certified Used Vehicles dealers. Qualified customers also can receive GMAC 4.9% APR financing for terms up to 60 months on 2004-2009 models of Chevrolet Cobalt, Impala and Trailblazer; Buick Lacrosse, GMC Envoy and Pontiac G6 vehicles at participating GM Certified Used Vehicles dealers. "Shoppers now can receive these attractive finance rates on several of our most popular GM Certified models," said Paul Pejza, manager, GM Certified Used Vehicles. "They also receive the peace of mind that comes with a bumper-to- bumper limited warranty for 12 months or 12,000 miles, whichever comes first, now standard on every GM Certified Used Vehicle." A monthly payment at 2.9% APR financing for 36 months is $29.04 for every $1,000 financed. A monthly payment at 4.9% APR financing for 60 months is $18.83 for every $1,000 financed. Average example down payment is 10 percent. Some customers will not qualify. Not available with other offers. Customers must take delivery from a participating GM Certified Used Vehicles dealer by March 31, 2009. See Consumers can go to http://www.gmcertified.comto find out more about GM Certified Used Vehicles, locate the closest GM Certified dealer, or search the industry's largest available certified pre- owned inventory, with 60,000-plus vehicles in inventory. 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. GMAC LLC: Nationwide Rate Incentive Financing Launched ------------------------------------------------------ GM Certified Used Vehicles disclosed a new nationwide GMAC rate incentive program on select GM Certified Used Vehicles, including Pontiac G6, Chevrolet Cobalt, and Impala models. The new rate incentive offer, effective Jan. 6 through March 31, 2009, provides qualified GM Certified Used Vehicles buyers with 2.9% APR financing for terms up to 36 months from GMAC Financial Services on 2004-2009 models of Pontiac G6, Chevrolet Impala, and Cobalt vehicles purchased from participating GM Certified Used Vehicles dealers. Qualified customers also can receive GMAC 4.9% APR financing for terms up to 60 months on 2004-2009 models of Chevrolet Cobalt, Impala and Trailblazer; Buick Lacrosse, GMC Envoy and Pontiac G6 vehicles at participating GM Certified Used Vehicles dealers. "Shoppers now can receive these attractive finance rates on several of our most popular GM Certified models," said Paul Pejza, manager, GM Certified Used Vehicles. "They also receive the peace of mind that comes with a bumper-to- bumper limited warranty for 12 months or 12,000 miles, whichever comes first, now standard on every GM Certified Used Vehicle." A monthly payment at 2.9% APR financing for 36 months is $29.04 for every $1,000 financed. A monthly payment at 4.9% APR financing for 60 months is $18.83 for every $1,000 financed. Average example down payment is 10 percent. Some customers will not qualify. Not available with other offers. Customers must take delivery from a participating GM Certified Used Vehicles dealer by March 31, 2009. See Consumers can go to http://www.gmcertified.comto find out more about GM Certified Used Vehicles, locate the closest GM Certified dealer, or search the industry's largest available certified pre- owned inventory, with 60,000-plus vehicles in inventory. 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. HALLMARK SYNERGY: Involuntary Chapter 11 Case Summary ----------------------------------------------------- Alleged Debtor: Hallmark Synergy Group, LLC aka Hallmark Capital Group, LLC aka Hallmark Group 6800 Sands Point Drive, Suite 111 Houston, TX 77074 Case Number: 08-38060 Involuntary Petition Date: December 19, 2008 Court: Southern District of Texas (Houston) Judge: Jeff Bohm Petitioner's Counsel: Robert Lynn Barrows, Esq. rbarrows@wdblaw.com Warren Drugan & Barrows PC 800 Broadway San Antonio, TX 78215 Tel: (210) 226-4131 Fax: (210) 224-6488 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Bartlett Cocke LP conversion of trust $664,105 2028 E. Ben White #200 fund Austin, TX 78741 HALO TECHNOLOGY: May Employ Navigant Capital as Financial Advisor ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Conecticut granted Halo Technology Holdings, Inc., and its debtor affiliates, permission to employ Navigant Capital Advisors as their financial advisor, to provide certain financial review procedures in connection with the anticipated negotiation of a comprehensive restructuring of the Debtors' capital structure. Jonathan W. Berger, a managing director at Navigant Capital, assured the Court that the firm represents no interest adverse to the Debtors, their creditors, or their estates, and that the firm is a "disinterested person" as that term is defined in Sec. 101(14) of the Bankruptcy Code. As compensation for their services, Navigant Capital's professionals bill: Senior Managing Directors $545-$695/hour Managing Directors $545-$695/hour Directors/Senior Advisors $475-$525/hour Associate Directors $445-$465/hour Managing Consultants $345-$435/hour Consultants/Associates $235-$345/hour The total amount of compensation to be paid to Navigant Capital will not exceed $40,000, plus actual and necessary disbursements. Greenwich, Connecticut-based Halo Technology Holdings, Inc. fka Warp Technology Holdings Inc. -- http://www.haloholdings.com/-- is a holding company whose subsidiaries operate enterprise software and information technology businesses. The company and its affiliates filed for chapter 11 protection on Aug. 20, 2007 (Bankr. D. Conn. Lead Case No. 07-50480). David Wallman, Esq., at The Wallman Law Firm, LLC; lawyers at Zeisler & Zeisler P.C.; and Jeffrey R. Gleit, Esq., at Kasowitz Benson Torres & Friedman, LLP, serve as the Debtors' counsel. James C. Graham, Esq., Kristin B. Mayhew, Esq., at Pepe & Hazard, and Patrick M. Birney, Esq., at Robinson & Cole LLP, represent the Official Committee of Unsecured Creditors as counsel. At March 31, 2007, the company reported total assets of $47,344,373 and total liabilities of $45,494,297. HAMPTONS LLC: Case Summary & Five Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Hamptons, LLC dba Hamptons LLC 1355 Beverly Road, Suite 240 McLean, VA 22101 Bankruptcy Case No.: 08-36417 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Land Stewards, L.C. 08-35895 Chapter 11 Petition Date: December 15, 2008 Court: Eastern District of Virginia (Richmond) Debtor's Counsel: Paula S. Beran, Esq. pberan@tb-lawfirm.com Tavenner & Beran, PLC 20 North Eighth Street, Second Floor Richmond, VA 23219 Tel: (804) 783-8300 Fax: (804) 783-0178 Estimated Assets: $1,794,000 Estimated Debts: $21,653,161 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ US Home Corporation - $2,000,000 10211 Wincopin Circle Suite 180 Columbia, MD 21044 Calvert Development borrowed funds $479,432 SK Group LLC to pay operating 1335 Beverly Road, Suite 240 expenses Mc Lean, VA 22101 Ellis LLC - $149,662 c/o Frank P. Ellis 9707 Woodlake Place New Market, MD 21774 ESD Eaglehead L.C. borrowed funds $98,341 to pay operating expenses Frederick County - $25,900 The petition was signed by John M. Clarke, manager of the member of the company. HARRY & DAVID: September 27 Balance Sheet Upside-Down by $11MM -------------------------------------------------------------- Harry & David Holdings, Inc.'s balance sheet at Sept. 27, 2008, showed total assets of $398.9 million and total liabilities of $409.8 million, resulting in a stockholders' deficit of $10.9 million. For thirteen weeks ended Sept. 27, 2008, the company reported net loss of $15.2 million compared with net loss of $16.1 million for the same period in the previous year. Inventory was $100.7 million at Sept. 27, 2008, versus $106.1 million reported in the same period last year. The 5.1% year over year decrease in inventory, in finished goods, was due to reduced production in September and offset by additional stores and the acquisitions of Wolferman's and Cushman Fruit Company, Inc. Capital expenditures were $1.7 million for the quarter ended Sept. 27, 2008, versus $6.2 million reported in the same period last year. In addition, the company has reduced or delayed discretionary capital spending. At Sept. 27, 2008, the company was in compliance with all of its covenants under the Credit Agreement. A full-text copy of the 10-Q filing is available for free at http://ResearchArchives.com/t/s?3789 About Harry & David Holdings, Inc. Headquartered in Medford, Oregon, Harry & David Holdings, Inc. -- http://www.hndcorp.com/-- is a multi-channel specialty retailer and producer of branded premium gift-quality fruit, gourmet food products and other gifts marketed under the Harry and David and Wolferman's brands. The company's marketing channels include direct marketing, business-to-business, its Harry and David stores, and wholesale distribution through select retailers. The company grows, manufactures, designs or packages products that account for the majority of its sales annually. On Aug. 8, 2008, it acquired Cushman Fruit Company, Inc. HAWAIIAN TELCOM: Files List of Investors in Bankruptcy Court ------------------------------------------------------------ Randi Petrello and Nanea Kalani at Pacific Business News report that Hawaiian Telcom has filed in the United States Bankruptcy Court for the District of Hawaii a list of investors who contributed to the buyout of the company in 2005. According to Pacific Business, Hawaiian Telcom reported $425 million in operating losses over three years, wiping out the cash injected by the Hawaiian investors into the company. The report says that the investors collectively own a 7% stake in Hawaiian Telcom, while The Carlyle Group owns the remaining 93%. Hawaiian Telcom has 103 investors in addition to four Carlyle entities, the report states. Pacific Business relates that Walter Dods, the chairperson of Hawaiian Telcom's board of directors, said that the local investors put up about $30 million, including $2 million from him and his wife, Diane. Mr. Dods, says the report, recruited the investors who took a stake in Hawaiian Telcom, and each of them contributed an average of $1 million, all of which has been lost. Local investors, Pacific Business says, include: -- Mark Fukunaga, chairman and CEO of Servco Pacific, whose company is also listed as an investor; -- David Carey and Richard Kelley of Outrigger Enterprises; -- Bert Kobayashi, chairman and CEO of Kobayashi Development Group; -- Warren Luke, chairman, president and CEO of Hawaii National Bank; -- Warren Haruki, president and CEO of Grove Farm and a former president of Verizon Hawaii; -- Robert Wo, president of C.S. Wo & Sons; -- Alan Pfleuger, president of Pfleuger Automotive Group; and -- Meredith Jayne Ching, senior vice president at Alexander & Baldwin. About Hawaiian Telcom Based in Honolulu, Hawaii, Hawaiian Telcom Communications, Inc. -- http://www.hawaiiantel.com/-- operates a telecommunications company, which offers an array of telecommunications products and services including local and long distance service, high-speed Internet, wireless services, and print directory and Internet directory services. The company and seven of its affiliates filed for Chapter 11 protection on Dec. 1, 2008 (Bankr. D. Del. Lead Case No. 08-13086). As reported by the Troubled Company Reporter on December 30, 2008, Judge Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware approved the transfer of the Chapter 11 cases to the U.S. Bankruptcy Court for the District of Hawaii before Judge Lloyd King (Bankr. D. Hawaii Lead Case No. 08-02005). Richard M. Cieri, Esq., Paul M. Basta, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard Freres & Co. LLC as investment banker; Zolfo Cooper Management LLC as business advisor; Deloitte & Touche LLP as independent auditors; and Kurztman Carson Consultants LLC as notice and claims agent. An official committee of unsecured creditors has been appointed in the case. The committee is represented by Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLC, in Honolulu, Hawaii. When the Debtors filed for protection from their creditors, they listed total assets of $1,352,000,000 and total debts of $1,269,000,000 as of Sept. 30, 2008. (Hawaiian Telcom Bankruptcy News; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000 ). HELLER EHRMAN: BofA and Citibank Could Lose $50MM in Dispute ------------------------------------------------------------ Bankruptcy Law360 reports that Heller Ehrman LLP is questioning the legitimacy of Bank of America NA and Citibank NA's attempt to go back on a 2007 order terminating their perfected security interests in the firm that could cost the banks more than $50 million. Headquartered in San Francisco, California, Heller, Ehrman, White & McAuliffe, LLP -- http://www.hewm.com/-- filed a voluntary petition under Chapter 11 of the Bankruptcy Code on December 28, 2008 (Bankr. N.D. Calif., Case No. 08-32514). Members of the firm's dissolution committee led by Peter J. Benvenutte approved a plan dated Sept. 26, 2008, to dissolve the firm. The Hon. Dennis Montali presides over the case. Greenberg Traurig LLP serves as the Debtor's main counsel. John D. Fiero, Esq., at Pachulski, Stang, Ziehl, Young and Jones, is the Debtor's co- counsel. The firm listed assets and debts between $50 million and $100 million in its filing. According to reports, the firm still has roughly $63 million in assets and 54 employees at the time of its filing. HERTZ CORP: Bank Loan Sells at 40% Discount in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which Hertz is a borrower traded in the secondary market at 58.67 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 1.60 percentage points from the previous week, the Journal relates. Hertz pays interest at 150 points above LIBOR. The bank loan matures on December 21, 2012. The bank loan carries Moody's Ba1 rating and Standard & Poor's BB+ rating. The Hertz Corporation, together with its subsidiaries engage in the car and truck rental and leasing business since 1918 and the equipment rental business since 1965. Hertz Global Holdings, Inc., is the companies' ultimate parent company. Ford Motor Company acquired an ownership interest in Hertz in 1987. Prior to this, Hertz was a subsidiary of UAL Corporation (formerly Allegis Corporation), which acquired Hertz's outstanding capital stock from RCA Corporation in 1985. On December 21, 2005, investment funds associated with or designated by Clayton, Dubilier & Rice, Inc., The Carlyle Group, and Merrill Lynch Global Private Equity -- through CCMG Acquisition Corporation, a wholly owned subsidiary of Hertz Holdings -- acquired all of Hertz's common stock from Ford Holdings LLC for aggregate consideration of $4.3 billion in cash, debt refinanced or assumed of $10.1 million and transaction fees and expenses of $447 million. In November 2006, Hertz Holdings completed its initial public offering. HINSDALE GREYHOUND: Agency Asks for Probe on Co. on Law Violation ----------------------------------------------------------------- The Associated Press reports that Timothy Connors -- the chief of the New Hampshire's Racing and Charitable Gaming Commission, which supervises race tracks -- has asked the attorney general to look into whether the Hinsdale Greyhound Park broke any laws when it declared bankruptcy in December 2008. Boston.com relates that Hinsdale Greyhound filed for Chapter 7 liquidation in December 2008. It owes money to 200 to 1,000 people or organizations, and it owes the state of Massachusetts about $4,500, Boston.com says. It is behind on its taxes to the tune of $327,000, according to the report. According to The AP, Mr. Connors wants to know whether Hinsdale Greyhound violated any law by declaring bankruptcy without informing bettors who had accounts at the track. Hinsdale Greyhound failed to fulfill its promise to cover the money in wagering accounts, the report says, citing Mr. Connors. John Sullivan, the attorney for Hinsdale Greyhound, said that some of the $400,000 to $500,000 in the accounts was used to pay off workers, and denied any law breach, The AP states. Hinsdale Greyhound Park is a racetrack that opened in 1958 as a seasonal harness track. It has featured only greyhound races since 1985. IDEARC INC: Bank Loan Sells at 70% Discount in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which Idearc is a borrower traded in the secondary market at 29.67 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 1.20 percentage points from the previous week, the Journal relates. Idearc pays interest at 200 points above LIBOR. The bank loan matures on November 17, 2014. The bank loan carries Moody's B2 rating and Standard & Poor's B- rating. Headquartered in Dallas, Texas, Idearc Inc. (NYSE: IAR) -- http://www.idearc.com/-- provides yellow and white page directories and related advertising products in the United States and the District of Columbia. Products include print yellow pages, print white pages, Superpages.com, Switchboard.com and LocalSearch.com, the company's online local search resources, and Superpages Mobile, its information directory for wireless subscribers. The company is the exclusive official publisher of Verizon print directories in the markets in which Verizon is currently the incumbent local exchange carrier. The company uses the Verizon brand on its print directories in its incumbent markets, as well as in its expansion markets. * * * As reported in the Troubled Company Reporter on Nov. 10, 2008, Moody's Investors Service has downgraded its $2,850 million senior unsecured notes, due 2016 to Caa2, LGD5, 87% from B3, LGD5, 87%. INDEPENDENCE TAX: September 30 Balance Sheet Upside-Down by $18MM ----------------------------------------------------------------- Independence Tax Credit Plus L.P.'s balance sheet at Sept. 30, 2008, showed total assets of $89,651,090 and total liabilities of $108,572,696, resulting in a partners' deficit of $18,921,606. For three months ended Sept. 30, 2008, the firm reported a net loss of $512,160 compared with a net loss of $946,810 for the same period in the previous year. For six months ended Sept. 30, 2008, the firm posted a net loss of $2,700,026 compared with a net loss of $881,844 for the same period in the previous year. Liquidity and Capital Resources Total expenses from operations for the three and six months ended Sept. 30, 2008, and 2007, excluding depreciation and amortization, interest and general and administrative-related parties, totaled $1,735,978 and $1,680,272 and $3,608,735 and $3,664,052. Accounts payable as of Sept. 30, 2008 and March 31, 2008 totaled $1,273,679 and $3,914,793. Accounts payable are short term liabilities which are expected to be paid from operating cash flows, working capital balances at the Local Partnership level, Local General Partner advances and in certain circumstances advances from the Partnership. The Partnership believes it has sufficient liquidity and ability to generate cash and to meet existing and known or reasonably likely future cash requirements over both the short and long term. In addition, accounts payable from discontinued operations, as of Sept. 30, 2008 and March 31, 2008, totaled $3,294,310 and $291,398. Accrued interest payable as of Sept. 30, 2008, and March 31, 2008, totaled $11,060,461 and $11,332,434. Accrued interest payable represents the accrued interest on all mortgage loans, which include primary and secondary loans. In addition, accrued interest payable from discontinued operations, as of Sept. 30, 2008, and March 31, 2008, totaled $878,839 and $516,823. The working capital reserve at Sept. 30, 2008, was approximately $1,782,000 at the Partnership level. A full-text copy of the 10-Q filing is available for free at http://ResearchArchives.com/t/s?378d About Independence Tax Credit Plus L.P. Based in New York, Independence Tax Credit Plus L.P., a Delaware limited partnership, was organized on Nov. 7, 1990, but had no activity until May 31, 1991, and commenced its public offering on July 1, 1991. The general partner of the Partnership is Related Independence Associates L.P., a Delaware limited partnership. The general partner of Related Independence Associates L.P. is Related Independence Associates Inc., a Delaware corporation. The ultimate parent of Related Independence Associates Inc. is Centerline Holding Company. The Partnership's business is to invest as a limited partner in other partnerships (Local Partnerships) that own leveraged apartment complexes that are eligible for the low-income housing tax credit enacted in the Tax Reform Act of 1986, some of which may also be eligible for the historic rehabilitation tax credit. Qualified Beneficial Assignment Certificates holders are entitled to tax credits over the period of the Partnership's entitlement to claim tax credits with respect to each Apartment Complex. The Partnership is currently in the process of disposing of its investments. ISLE OF CAPRI: Bank Loan Sells at 47% Off in Secondary Market ------------------------------------------------------------- Participations in a syndicated loan under which Isle of Capri Casinos is a borrower traded in the secondary market at 58.80 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 0.95 percentage points from the previous week, the Journal relates. Isle of Capri Casinos pays interest at 175 points above LIBOR. The bank loan matures on December 19, 2013. The bank loan carries Moody's B1 rating and Standard & Poor's B+ rating. Isle of Capri Casinos, Inc., located in Saint Louis, Missourri, owns and operates 18 casino properties throughout the U.S. The company also has international gaming interests in the Grand Bahamas and England. Net revenue for the 12-month period ended October 26, 2008 was about $1.1 billion. JOHN VRATSINAS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: John Vratsinas Commercial Builders, Inc. aka JVC Builders P.O. Box 7110 Des Moines, IA 50309 Bankruptcy Case No.: 09-00031 Chapter 11 Petition Date: January 7, 2009 Court: Southern District of Iowa - Database (Des Moines) Judge: Lee M. Jackwig Debtor's Counsel: Jerrold Wanek, Esq. wanek@dwx.com Garten & Wanek 835 Insurance Exchange Bldg. 505 Fifth Avenue Des Moines, IA 50309 Tel: (515) 243-1249 Fax: (515) 244-4471 Total Assets: $13,156,069 Total Debts: $9,900,790 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Advanced Fixtures, Inc. - $428,041 2655 E. Audi Murphy Parkway Farmersville, TX 75442 Carlo Steel Corp. - $422,880 3100 E. 87th Street Chicago, IL 60617 Leiden Cabinet Company - $402,133 2385 Edison Blvd. Twinsburg, OH 44087 Inside Edge Commercial I - $335,462 Lakewood Carpentry - $254,251 California Commercial - $242,948 Hy-Tek Material Handling - $241,315 Schindler Elevator Corp. - $238,125 Artisan Masonry - $218,798 Image One - $209,864 Sensormatic Electronics - $203,199 Ovation In-Store - $177,717 Aluglas - $177,287 Kole Construction - $166,057 Branch Ironworks LLC - $162,065 Chris L. Van Dyke Construction - $151,206 Apodaca Wall Systems, Inc. - $149,985 Authentic Flooring Inc. - $138,762 G. Porter and Company - $138,601 Kelso-Burnett Co. - $136,848 The petition was signed by John Vratsinas, president of the company. JOHNSON DAIRY: Files for Chapter 11 Bankruptcy in Colorado ---------------------------------------------------------- Johnson Dairy LLC and owner John D. Johnson made a voluntary filing under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Colorado, Bloomberg News reports. The company listed assets less than $50 million and debts between $50 million to $100 million, while Mr. Johnson posted assets and debts of more than $100 million, Bloomberg says. Mr. Johnson owes $1.48 million to Caterpillar Inc. and $1.26 million to Agco Corp., source notes. Bloomberg, citing papers filed with the Court, said the company will be involved in substantial litigation during the bankruptcy proceedings. According to Bloomberg, the company experienced setbacks in 2008 including a suspected arson fire, and a Food and Drug Administration fine over high levels of drugs and antibiotics in four cattle samples. H. Thomas Warwick, at the U.S. Food and Drug Administration, said in a letter dated Feb. 29, 2008, that analysis of cattle tissue samples collected from the company's cows identified the presence of Flunixin, a non-steroidal anti- inflammatory drug, in the muscle and liver tissue. Headquartered in Eaton, Colorado, Johnson Dairy LLC -- http://www.johnstondairyfarm.com-- is a family-owned dairy company. JOHNSON DAIRY: Case Summary & 21 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Johnson Dairy, LLC aka JF Cattle Co., LLC 23016 WCR 74 Eaton, CO 80615 Bankruptcy Case No.: 09-10201 Debtor-affiliate filing separate Chapter 11 petitions: Entity Case No. ------ -------- John D. Johnson 09-10203 Type of Business: The Debtor is a family-owned dairy company. See: http://www.johnsondairyfarm.com Chapter 11 Petition Date: January 8, 2009 Court: District of Colorado (Denver) Judge: Sidney B. Brooks Johnson Dairy's Counsel: Darrell G. Waas, Esq. waas@ottenjohnson.com Jeffrey Weinman, Esq. jweinman@epitrustee.com William A. Richey, Esq. lkraai@weinmanpc.com Weinman & Associates, P.C. 950 17th St., Ste. 1600 Denver, CO 80202 Tel: (303) 825-8400 Fax: (303) 825-6525 Johnson Dairy's Special Counsel: Otten Johnson Robinson Neff & Ragonetti John Johson's Counsel: Lee M. Kutner, Esq. lmk@kutnerlaw.com Kutner Miller Brinen, P.C. 303 E. 17th Ave., Ste. 500 Denver, CO 80203 Tel: (303) 832-2400 Estimated Assets Estimated Debts ---------------- --------------- Johnson Dairy $10 million to $50 million to $50 million $100 million John D. Johnson $50 million to $50 million to $100 million $100 million A. John D. Johnson's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Caterpillar Finance $1,476,709 2120 West End Avenue PO Box 34001 Nashville, TN 37203 AGCO Finance $1,264,337 PO Box 9263 Des Moines, IA 50306 B. Johnson Dairy's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Dave Dyer-TCL Farms trade debt $650,000 28842 CR 74 Eaton, CO 80615 Tel: (970) 302-0925 Western Sugar Cooperative trade debt $549,359 3289 Solutions Center Chicago, IL 60677-0001 Tel: (303) 813-3531 Northern Feed & Bean trade debt $512,114 PO Box 149 Lucerne, CO 80646-0149 Pacific Ag trade debt $349,739 Dairy Specialists trade debt $308,728 Agland trade debt $300,000 North Weld Water trade debt $266,557 Mountain Vet trade debt $221,645 Teague Diversified trade debt $200,000 Dairy Authority trade debt $153,163 A-1 Organics Inc. trade debt $150,000 Olander Farms trade debt $114,042 Farm Plan trade debt $90,000 Bovine Reproductive trade debt $80,000 McLavey, Greg trade debt $79,487 Luther Equipment trade debt $79,049 Bay, Marvin trade debt $55,500 Diamond Trucking trade debt $50,000 Fabrizius, Louie trade debt $35,931 High Country Enterprises trade debt $35,000 JOSEPH FORTE: Charged by SEC & CFTC for $50-Mil. Ponzi Scheme ------------------------------------------------------------- The Securities and Exchange Commission said on Jan. 8 that it has charged a Philadelphia-area investment fund manager and his firm for conducting a multi-million dollar Ponzi scheme, and has obtained an emergency court order freezing their assets. According to the SEC's complaint, Joseph S. Forte of Broomall, Pa., fraudulently obtained an estimated $50 million from as many as 80 investors through the sale of securities in the form of limited partnership interests in his firm, Joseph Forte, L.P. The SEC alleges that Forte told investors that he would invest the funds in an account that would trade in securities futures contracts, including S&P 500 stock index futures. According to the complaint, despite the impressive and consistent returns he reported to investors, Forte consistently lost money in the limited trading that he did, withdrew millions of dollars in so- called fees for his personal use based on the falsely inflated value of Forte LP, and used investor funds to repay other investors. "As alleged in our complaint, Forte engaged in lies, deception and rapacious behavior at the expense of innocent investors, many of whom considered themselves his friends and close acquaintances," said Daniel M. Hawke, Director of the SEC's Philadelphia Regional Office. "Using other people's money, Forte promised and reported outrageous returns over more than a 10-year period, and because of his relationships with investors was able to lull them into trusting him with their funds." Judge Paul S. Diamond, U.S. District Judge for the Eastern District of Pennsylvania, issued an order on January 7 granting a preliminary injunction, freezing assets, compelling an accounting, and imposing other emergency relief. Without admitting or denying the allegations in the Commission's complaint, Forte and Forte LP consented to the entry of the order. The SEC's complaint alleges that Forte has been conducting a Ponzi scheme since at least 1995. Forte, who has never been registered with the SEC in any capacity, has admitted that he misrepresented and falsified Forte LP's trading performance from the very first quarter. From 1995 through Sept. 30, 2008, Forte and Forte LP reported to investors annual returns ranging from 18.52 percent to as high as 37.96 percent. However, from January 1998 through October 2008, the Forte LP trading account had net trading losses of approximately $3.3 million. The SEC's complaint further alleges that in addition to misrepresenting to investors that the trading was highly successful and making huge profits, Forte and Forte LP misrepresented the use of investor funds. Although Forte claimed that he raised approximately $50 million from investors for the purpose of participating in the trading program, Forte deposited only $25.8 million in the trading account between January 1998 and October 2008, and during that same time period withdrew about $23.1 million. Forte claims that he took at least $10 to $12 million in so-called fees for his personal use based on the falsely inflated value of Forte LP. But Forte LP statements provided to investors reflect fees charged of $28.7 million between March 1995 and September 2008. He also claims he used approximately $15 to $20 million of investor funds to repay other investors -- the hallmark of a Ponzi scheme. The SEC's complaint alleges that Forte and Forte LP also lied to investors about the value of the partnership portfolio. For example, in September 2008, they reported to investors that the Forte LP portfolio had a value of more than $150 million. In fact, Forte LP's trading account at that time had a balance of only $146,814. The SEC's complaint alleges violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the emergency relief, the Commission's complaint seeks disgorgement of the defendants' ill-gotten gains plus pre-judgment interest, financial penalties, and permanent injunctions barring future violations of the antifraud provisions of the federal securities laws. CFTC's Suit The Commodity Futures Trading Commission has filed a related action against Forte. "Ponzi schemers succeed by creating an illusion of profitability through lies and deceit to lure investors to part with their money. We are committed to rooting out miscreants who, like Forte, destroy the lives of innocent victims and, ultimately, undermine the confidence of investors everywhere," said Acting Director of Enforcement Stephen J. Obie. The CFTC complaint alleges that from at least February 1995 through present, Forte fraudulently solicited approximately $50 million from dozens of individuals and entities to participate in a commodity futures pool to trade, among other things, S&P 500 stock index futures, foreign currency futures, and metal futures. In soliciting prospective and existing participants, Forte claimed he was a successful commodity futures trader and that his pool had a successful track record. For example, in a solicitation memorandum directed to a church, Forte represented that the eight- year annual return on the fund ranged from 18.52% to 36.19%. To conceal his ongoing fraud, Forte failed to register with the CFTC and provided quarterly account statements to pool participants showing consistently profitable returns of the pool and eventually reporting that as of late 2008, the pool had increased in value to over $154 million. In reality, however, Forte was neither successfully trading nor making an effort to do so. When trading, Forte purportedly sustained net losses of at least $3 million trading almost exclusively the S&P 500 futures contract on behalf of the pool. However, during a 34-month period from 2004 into 2007, Forte purportedly conducted little to no trading at all. JOYSTAR/TRAVELSTAR: Drew Axelrod Files for Chapter 7 Against Co. ---------------------------------------------------------------- George Dooley at TravelAgentCentral reports that Drew Axelrod, a veteran agent and successful meeting planner, has filed an involuntary Chapter 7 petition against JoyStar/TravelStar in the U.S. Bankruptcy Court for the Southern District of Florida. According to TravelAgentCentral, Mr. Axelrod, owed $35,491, is urging other JoyStar agents to join in the action. Mr. Axelrod said in an interview with TravelAgentCentral that JoyStar owes 15 agents an estimated $150,000 in unpaid commissions from the company. Citing Mr. Axelrod, TravelAgentCentral states that up to 50 agents may be owned as much as $250,000 in unpaid commissions. TravelAgentCentral reports that Mr. Axelrod asked that JoyStar member agents who are owed commissions to contact him by e-mail (cruisegroups@hotmail.com), and to contribute to a fund to be used in legal expenses. TravelStar/JoyStar will have 20 days from the Dec. 31, 2008, to respond to the complaint, the report states. TravelAgentCentral quoted Mr. Axelrod as saying, "It's my belief that TravelStar/JoyStar has assets and can pay these commissions due. The filing in the federal bankruptcy court will force TravelStar/JoyStar to open their books and come clean about their assets." JoyStar/TravelStar is based in Aliso Viejo, California. KASEY REALTORS: Files for Chapter 11 Bankruptcy Protection ---------------------------------------------------------- Mark Barrett at Citizen-Times.com reports that Kasey Realtors filed for Chapter 11 bankruptcy protection on Jan. 2, 2009. Citizen-Times.com states that Joseph Grier III, the attorney for Kasey Realtors, said that the company was hurt by dropping local home sales. According to Citizen-Times.com, some homes sold through the Multiple Listing Service in Buncombe County through November 2008 were about 27% lower compared to November 2007. The report says that the total dollar value of all home sales in the county declined more than 30% to $632.8 million from $915.9 million. Kasey Realtors faced difficulty in paying its rent, the report states, citing Mr. Grier. Kasey Realtors, dba Coldwell Banker Kasey & Associates, is a real estate brokerage. KING PHARMACEUTICALS: Moody's Affirms 'Ba3' Corp. Family Rating --------------------------------------------------------------- Moody's Investors Service affirmed King Pharmaceuticals' Ba3 Corporate Family Rating and stable outlook, and upgraded King's amended and restated $475 million senior secured first lien revolving credit facility to Ba2 from Ba3. King's new $200 million senior secured first lien term loan is currently not rated. Proceeds from the credit facilities along with existing cash on hand were utilized to acquire Alpharma, Inc. for approximately $1.6 billion on December 30, 2008. Simultaneously, Moody's lowered King's Speculative Grade Liquidity Rating to SGL-2 from SGL-1. Following these rating actions, the rating outlook remains stable. The affirmation of King's Ba3 Corporate Family rating reflects: (1) the sound strategic rationale for the transaction, which expands King's scale and diversity and its expertise in the pain market; (2) Moody's assumption that King will comfortably maintain key credit ratios at least within Moody's "Ba" ranges, including adjusted CFO/Debt of 15% to 25% and FCF/Debt of 10% to 15%. The SGL rating was lowered to SGL-2 from SGL-1. King's liquidity remains good following the transaction, but reduced from its prior levels due to very slim revolver cushion and a significant reduction in cash on hand. Moody's understands that King has drawn $425 million from the $475 million revolver, and also has $12 million of letters of credit outstanding. The size of the revolver also steps down over time, eventually reaching $150 million. The rating outlook remains stable. Although the Alpharma acquisition makes strategic sense, King faces integration risks and pipeline execution risks related to the late-stage pipelines of both King and Alpharma. Successful integration of Alpharma and timely FDA approvals of Remoxy, Acurox and Embeda could create positive rating pressure. Conversely, weak pipeline execution or additional debt-financed acquisitions could create negative rating pressure. The upgrade to Ba2 from Ba3 on King's $475 million revolving credit facility reflects the amended collateral package, now consisting of an all-asset pledge including hard assets and intellectual property. The Ba2 rating on the revolving credit facility also reflects loss absorption provided by King's $400 million senior unsecured convertible notes due 2026, which Moody's does not rate. This rating was upgraded: - $475 million senior secured revolving credit facility due 2012, to Ba2 (LGD2, 28%) from Ba3 (LGD4, 52%) These ratings were affirmed: - Ba3 Corporate Family Rating - Ba3 Probability of Default Rating The $200 million senior secured first lien term loan due December 2012 is currently not rated by Moody's. The Speculative-Grade Liquidity Rating has been lowered to SGL-2 from SGL-1 Moody's is withdrawing these ratings, which were assigned to credit facilities originally proposed in September 2008: - $150 million senior secured first lien revolving credit facility, Ba2 (LGD3, 33%) - $350 million senior secured first lien term loan A due 2013, Ba2 (LGD3, 33%) - $500 million senior secured first lien term loan B due 2014, Ba2 (LGD3, 33%) The last rating action on King took place on September 25, 2008, when Moody's affirmed King's ratings in conjunction with new credit facilities being proposed. King Pharmaceuticals, Inc., headquartered in Bristol, Tennessee, is a vertically integrated pharmaceutical company that develops, manufactures, markets and sells branded pharmaceutical products. The company targets specialty-driven pharmaceutical markets, with a focus on neuroscience, hospital and acute care medicines. King reported total revenues of approximately $1.2 billion for the first nine months of 2008. LANDSBANKI ISLANDS: Icelandic Govt' Drops Suit Over Frozen Assets ----------------------------------------------------------------- The Government of Iceland has decided to examine any and all possibilities of Iceland seeking redress before the European Court of Human Rights for the application by UK authorities of the Anti- Terrorism, Crime and Security Act 2001 against Landsbanki Islands hf. last year. Furthermore, the Government repeats its previous declaration of strong support for legal proceedings by Kaupthing Bank's Resolution Committee against actions taken by the UK Financial Services Authority (FSA) on October 8, 2008, on which date the FSA took control of the operations of Singer & Friedlander, resulting in the insolvency of the parent company. The Resolution Committee has decided to bring suit, on the Bank's behalf, against the UK authorities and enjoys the full support of the Icelandic government in its suit. This support is provided in accordance with an Act of the Icelandic parliament Althingi, adopted on December 20, 2008, authorizing the Minister of Commerce to provide financial support for such litigation. The Government of Iceland will also support possible legal action taken by the Resolution Committee of Landsbanki against UK authorities; such action, however, is not entirely subject to the same time constraints as is the suit to be brought by the Resolution Committee of Kaupthing Bank. It should be pointed out that the Government of Iceland has obtained an opinion from the UK legal office of Lovells concerning possible legal action by the Icelandic state against UK authorities to test the legitimacy of the Landsbanki Freezing Order issued by the authorities on October 8, 2008, on the basis of this same Anti-Terrorism, Crime and Security Act. The UK legal counsel were requested to assess whether the Freezing Order could be invalidated by a UK court on the grounds that it was illegal and whether the Icelandic state could sue for damages resulting from the Freezing Order in a UK court. Legal counsel were of the opinion that there was scant possibility that the Icelandic government could have the Freezing Order invalidated by a UK court. They provided detailed grounds for this conclusion, based on legal principles and precedent in the UK, and were of the opinion that the legislation granted the UK authorities very broad authorization to apply the provisions on freezing of assets. They were also of the opinion that there was no probability of the Icelandic state being awarded compensation by a UK court as a result of the Freezing Order. The Icelandic Attorney General and the Foreign Ministry's expert in international law agreed with this opinion. As a result, the Icelandic government has decided not to bring suit against the UK authorities in a UK court at this stage. As previously mentioned, however, it intends to examine exhaustively other options for international legal action, including in particular the European Court of Human Rights. In addition, the Government of Iceland reiterates its steadfast conviction that the above-mentioned actions by the UK authorities were wrongful and unjustified, and has made a formal request to the UK authorities that the Freezing Order be canceled. About Landsbanki Headquartered in Reykjavik, Iceland, Landsbanki Islands hf. -- http://www.landsbanki.is/-- is a financial institution. The Bank filed for Chapter 15 protection on Dec. 9, 2008 (Bankr. S.D. N.Y. Case No.: 08-14921). Gary S. Lee, Esq., at Morrison & Foerster LLP, represents the Debtor. When it filed for protection from its creditors, it listed assets and debts of more than US$1 billion each. LAS VEGAS SANDS: Bank Loan Trades Slightly Up in Secondary Market ----------------------------------------------------------------- Participations in a syndicated loan under which Las Vegas Sands is a borrower traded in the secondary market at 43.89 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 1.06 percentage points from the previous week, the Journal relates. Las Vegas Sands pays interest at 175 points above LIBOR. The bank loan matures on May 1, 2014. The bank loan carries Moody's B2 rating and Standard & Poor's B+ rating. As reported reported in the Troubled Company Reporter on January 2, 2009, participations in the bank loan traded in the secondary market at 42.05 cents-on-the-dollar during the week ended December 26, 2008. Based in Las Vegas, Nevada, Las Vegas Sands Corp. (NYSE: LVS) -- http://www.lasvegassands.com/-- owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo and convention center. The company also owns and operates the Sands Macao, the first Las Vegas-style casino in Macao, China. As of Sept. 30, 2008, the company has $14.7 billion in total assets, and $12.4 billion in total liabilities. Unrestricted cash balances as of September 30, stood at $1.28 billion while restricted cash balances were $239.1 million. Of the restricted cash balances, $199.6 million is restricted for Macao-related construction and $32.3 million is restricted for construction of Marina Bay Sands in Singapore. As of Sept. 30, total debt outstanding, including the current portion, was $10.35 billion. * * * As reported by the Troubled company Reporter on November 14, 2008, Moody's Investors Service lowered the ratings of Las Vegas Sands, Corp. and its subsidiaries, including Venetian Casino Resort, LLC and Venetian Macao Limited. The ratings Moody's re also placed on review for possible further downgrade. The two-notch downgrade reflects Las Vegas Sands' considerable leverage, the continuation of significant negative trends in Las Vegas, and expectation that these trends will continue in the foreseeable future. The downgrade also considers recent visitation restrictions in Macao, China that will likely slow Las Vegas Sands' rate of growth in that market, at least until the Chinese government decides to relax these travel restrictions. Las Vegas Sands, Corp. ratings lowered and placed on review for possible downgrade: -- Corporate family rating to B2 from Ba3 -- Probability of default rating to B2 from Ba3 -- $250 million 6.375% senior notes to B2 from Ba3 Venetian Casino Resort, LLC (and its co-issuer Las Vegas Sands, LLC) ratings lowered and placed on review for possible downgrade: -- $1 billion revolver expiring 2012 to B2 from Ba3 -- $3 billion term loan due 2014 to B2 from Ba3 -- $600 million delay draw term loan due 2014 to B2 from Ba3 -- $400 million delay draw term loan due 2013 to B2 from Ba3 Venetian Macao Limited ratings lowered and placed on review for possible downgrade: -- $700 million revolver expiring 2011 to B2 from B1 -- $1.8 billion term loan due 2013 to B2 from B1 -- $100 million term loan due 2011 to B2 from B1 -- $700 million delay draw term loan due 2012 to B2 from B1 LEAR CORPORATION: More Operating Risks Cue Moody's Junk Ratings --------------------------------------------------------------- Moody's Investors Service lowered the Corporate Family and Probability of Default ratings of Lear Corporation, to Caa2 from B3. In a related action, the rating of the senior secured term loan was lowered to Caa1 from B2, and the rating on the senior unsecured notes was lowered to Caa2 from B3. The ratings remain on review for further possible downgrade. The lowering of Lear's Corporate Family Rating to Caa2 reflects the substantially riskier operating environment facing the company as a result of rapidly deteriorating conditions in the North American and European auto markets. The weakening business environment will cause further erosion of the company's operating performance and Moody's anticipates that financial metrics will be at levels best associated with the Caa rating category going into 2009. Moreover, as a result of the continued deterioration, the company recently announced that it will seek an amendment and waiver for covenant compliance under its bank credit facilities. In late October the company had indicated in its earnings announcement that it did not anticipate any near term covenant compliance problems, yet the rapid deterioration in the business is now likely to cause covenant breeches, prompting the company's decision to seek amendments and waivers from its bank group. The ratings also considers that Lear has borrowed the full amount available under its revolving credit facility, bolstering its cash balance which, according to the company, stood at about $1.6 billion as of December 31, 2008. Lear will seek to complete the amendment and waiver prior to finalizing its 2008 financial statements, but the terms and conditions under which banks might be willing to provide the amendments and waivers are unclear at this time. Accordingly, the ratings remain under review for possible downgrade, pending the company's ability to successfully achieve the needed amendments while sustaining an adequate liquidity profile. Lear's Speculative Grade Liquidity rating of SGL-4 indicates weak liquidity over the next twelve months. Lear has stated that as of December 31, 2008, it had approximately $1.6 billion of cash and cash equivalents on hand. However, Moody's believes that cash balances could be meaningfully reduced by 2010 due to cash requirements for the company's operations, the maturity of a portion the revolving credit in March 2010, and any potential debt repayment which might be required as part of negotiating a successful amendment. In addition, Lear has a EUR315 million factoring facility which expires in April 2011 ($233 million was outstanding at September 27, 2008), and the availability of that facility could be adversely affected by certain rating downgrades. Lear has $1.29 billion of revolving credit facilities, composed of an $822 million facility maturing in January 2012 and a $468 million facility maturing in March 2010. Lear has fully borrowed available amounts under these facilities in order to bolster its liquidity position. The bank debt is secured by the capital stock of all the company's domestic subsidiaries and a portion of the first tier foreign subsidiaries, and certain domestic assets subject to the 10% lien limitation within the company's bond indentures. Above these levels, collateral must be shared with the bonds. Moody's review will assess the company's ability to adapt its operations to an environment of lower and more volatile automotive demand and to achieve adequate earnings and cash flow to support its existing debt obligations. The review will also focus on Lear's ability to successfully amend its bank credit facilities to accommodate the weaker environment while maintaining an adequate cash balance to support the business. The review will consider the potential implications of any concessions which might be needed to achieve the bank amendments and the potential impact on the company's other debt obligations. Ratings Lowered: -- Corporate Family Rating, to Caa2 from B3 -- Probability of Default, to Caa2 from B3 -- Senior Secured Term Loan, to Caa1 (LGD3, 42%) from B2 (LGD3, 42%) -- Senior Unsecured Notes, to Caa2 (LGD4 58%) from B3 (LGD4, 58%) -- Speculative Grade Liquidity Rating to SGL-4 from SGL-3 The last rating action was on December 12, 2008 when Lear's Corporate Family Rating was lowered to B3 and the ratings put under review for further downgrade. Lear Corporation, headquartered in Southfield, Michigan, is focused on providing complete seat systems, electrical distribution systems and various electronic products to major automotive manufacturers across the world. The company had revenue of $16.0 billion in 2007 and employed approximately 91,000 employees in 34 countries. Following the disposition of its interior business, Lear expects its ongoing revenues to approximate $14.0 billion. LINGO MEDIA: A+ Child Unit to Restructure Operations Under BIA -------------------------------------------------------------- A+ Child Development (Canada) Ltd., a 70.33% subsidiary of Lingo Media Corporation, is restructuring its operations. On December 23, 2008, A+ Child filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act of Canada. At the time of the filing, Michael Kraft, President & CEO of Lingo Media said in a news statement, "After an extensive strategic evaluation, A+ made the tough decision to restructure its operations. A+ will continue to evaluate all possible alternatives over the next thirty days to determine the best course of action. Lingo Media has decided to focus its resources on the expansion of our English Language Learning businesses including Speak2Me Inc. subsidiary, a new media company that focuses on online advertising in China via its Internet-based English Language Learning portal and our legacy business, Lingo Learning Inc. subsidiary, a print-based publisher of English Language Learning programs in China." A+ will continue to service its clientele through its National Support Centre while the potential for reorganization and restructuring is examined. About Lingo Media Lingo Media Corporation is a diversified online and print-based education product and services corporation. Lingo Media's Speak2Me Inc. subsidiary is a new media company that focuses on interactive advertising in China via its Internet-based English Language Learning portal. Speak2Me offers a proprietary and groundbreaking online service designed to address the rapidly growing need for conversational English learning around the world. Using robust speech recognition technology, Speak2Me provides more than 250-targeted language lesson modules involving interactive conversations with a virtual teacher. A unique social-network infrastructure also allows students to form study groups, creating an environment that, along with contests and prizes, engenders co- operation and competition, just as in a conventional classroom. In China, Lingo Media continues to expand its legacy business via its subsidiary Lingo Learning Inc., a print-based publisher of English Language Learning programs in China since 2001. Lingo Learning has an established presence in China's education market of 200 million students. To date, it has published 245 million units from its library of more than 340 program titles in China. In Canada, Lingo Media focused on early childhood cognitive development, through its subsidiary A+ Child Development Ltd., which distributed educational materials along with its unique curriculum. A+ has been operating in Canada for over ten years through its four offices in Calgary, Edmonton, Toronto and Vancouver. Lingo Media plans to introduce A+'s learning system and products to parents of pre-school children in China. On the net: http://www.lingomedia.com/and http://www.apluschilddev.com/ LODGENET INTERACTIVE: To Close Atlanta Call Center, Cut 110 Jobs --------------------------------------------------------------- LodgeNet Interactive Corporation disclosed in a filing with the Securities and Exchange Commission that it will be closing its Atlanta, Georgia call center facility during the first quarter of 2009. The company related that the move was part of its on-going efforts to enhance profitability. On Dec. 12, 2008, the company said that it would be transitioning calls from hotel guests requiring assistance to connect to the Internet to a call center operated by a third party specializing in providing support to Internet customers. The closing of the Atlanta call center location will result in a decrease of the company's employees by approximately 110 full time positions, representing approximately 9% of its total workforce. These reductions are in addition to the reduction in force disclosed on Nov. 24, 2008, and will be completed by the end of the first quarter of 2009. The company's existing call center in Sioux Falls, South Dakota, which handles calls from hotels related to the company's video systems, will handle calls from hotel customers, as well as calls that require detailed technical knowledge or are escalated from the third party call center. All customer service operations will continue to be based in the United States. As a result of the closing of the Atlanta customer service location, the company expects to incur a charge of approximately $550,000 in the fourth quarter of 2008 for employee related expenses and $350,000 in the first quarter of 2009 for other exit- related costs arising from contractual and other obligations. The charges are not expected to affect the company's compliance with its financial covenants during the fourth quarter of 2008 or for the first quarter of 2009 because related cash expenditures during the period will be offset by cash savings on salaries and related expenses. It is anticipated that the foregoing action will reduce the company's expenses during the second through fourth quarters of 2009 by a total of approximately $2 million. About LodgeNet Interactive Based in Sioux Falls, South Dakota, LodgeNet Interactive Corporation (NASDAQ: LNET) -- http://www.lodgenet.com/-- is a provider of media and connectivity solutions designed to meet the unique needs of hospitality, healthcare and other guest-based businesses. LodgeNet Interactive serves more than 1.9 million hotel rooms representing 9,300 hotel properties worldwide in addition to healthcare facilities throughout the United States. The company's services include: Interactive Television Solutions, Broadband Internet Solutions, Content Solutions, Professional Solutions and Advertising Media Solutions. LodgeNet Interactive Corporation owns and operates businesses under the industry leading brands: LodgeNet, LodgeNetRX, and The Hotel Networks. LodgeNet Interactive Corporation's balance sheet at Sept. 30, 2008, showed total assets of $637,497,000 and total liabilities of $717,457,000, resulting in a stockholders' deficit of $79,960,000. LodgeNet Interactive Corporation's balance sheet at Sept. 30, 2008, showed total assets of $637,497,000 and total liabilities of $717,457,000, resulting in a stockholders' deficit of $79,960,000. For three months ended Sept. 30, 2008, the company incurred net loss of $6,278,000 compared to net loss of $11,410,000 for the same period in the previous year. For nine months ended Sept. 30, 2008, the company reported net loss of $26,750,000 compared to net loss of $46,305,000 for the same period in the previous year. LYONDELL CHEMICAL: Gets Permission to Access $2 Bil. from DIP Loan ------------------------------------------------------------------ Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York granted Lyondell Chemical Company and its U.S. affiliates permission to borrow about $2 billion in postpetition financing, including a "super emergency" $100 million loan, that would fund their restructuring. According to Bloomberg News, the Court approved the loan at half- past midnight, after lenders spent five hours negotiating to resolve objections to the biggest bankruptcy loan in U.S. history. The accord brought in new lenders and excluded one, the company's partial owner, Access Industries Holdings LLC. Lyondell, according to the report, can use $2.167 billion while it seeks final approval of the total $8 billion DIP loan. Access Industries previously announced that it has committed to provide $750 million of the total $3.25 billion of new money DIP financing arranged by LyondellBasell. Bloomberg said that Appaloosa Management L.P., objected to the $8 billion DIP loan saying it and other holders of first-lien secured debt may not be protected by the plan to roll up pre-bankruptcy debt with the new loan. A group of pre-bankruptcy lenders including hedge funds Silver Point Capital LP, Western Asset Management Co. and Highland Capital Management LP also objected to the loan in court documents, saying they weren't contacted about participating in the debtor-in-possession loan. They said that Access, an insider, shouldn't participate in a roll-up plan that gives an advantage to it and other lenders. Under the proposed DIP financing, $3.25 billion of prepetition secured debt will be rolled up and treated as a postpetition secured claim, and, thus, will be treated ahead of other pre- bankruptcy claims. An evidentiary hearing on the DIP Financing Motion was proposed for January 7, 2009, at 4:00 p.m. prevailing New York time. The DIP Facility consists of: -- $1.515 billion of revolving credit secured by receivables and inventory; -- $3.25 billion of available term loans, secured by priming liens; and -- a modified roll-up of $3.25 billion in existing senior secured debt, which will be secured by a priming lien junior to the liens granted to lenders under the new revolving and term loans and which will be subject to restructuring pursuant to a plan of reorganization. The maturity date of the facilities will be the earliest of: (i) stated maturity, which will be December 15, 2009, (ii) the effective date of any Chapter 11 plan of any Debtor, (iii) the date that is 30 days after entry of an interim order approving hte DIP loans if the Court has not granted final approval by that date; and (iv) the acceleration of the loans or termination of the commitments under either of the Facilities, including, without limitation, as a result of the occurrence of an event of Default. About LyondellBasell Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries -- http://www.lyondellbasell.com/-- the world's third largest independent chemical company. Lyondellbasell produces polypropylene and advanced polyolefins products, is a leading supplier of polyethylene, and a global leader in the development and licensing of polypropylene and polyethylene processes and related catalyst sales. LyondellBasell became saddled with debt as part of the $12.7 billion merger. About a year after completing the merger, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc., filed for Chapter 11. LyondellBasell is not part of the bankruptcy filing. LyondellBasell's non-U.S. operating entities are also not included in the Chapter 11 filing. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemical estimated that consolidated assets total $27.12 billion and debts total $19.34 billion as of the bankruptcy filing date. (Lyondell Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LYONDELL CHEMICAL: Citi Has $2 Billion Direct Gross Exposure ------------------------------------------------------------ Citi said that as of December 31, 2008, its direct gross exposure to LyondellBasell was approximately $2.0 billion. Citi currently holds this exposure primarily in its Institutional Clients Group. The fourth quarter pre-tax impact related to LyondellBasell is estimated to be approximately $1.4 billion recorded primarily as a loan loss reserve build. The final impact on Citi's fourth quarter financial results could differ from the impact disclosed above due to closing and other adjustments. In addition, Citi said it is participating in LyondellBasell's debtor-in-possession financing. As reported in the Jan. 7, 2009 issue of the Troubled Company Reporter, Lyondell has made arrangements for up to $8 billion in DIP financing to fund continuing operations. Of this total, $3.25 billion consists of new funding; $3.25 billion represents a refinancing of certain obligations under LyondellBasell's existing senior secured credit facilities; and $1.515 billion represents replacement of existing working capital facilities. Lyondell Chemical Company, LyondellBasell's U.S. unit that filed for bankruptcy protection under Chapter 11, listed Citibank as one of its top five largest secured claims, holding $2,657,354,259 in prepetition claim, secured by certain material assets of the Debtors. About LyondellBasell Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries -- http://www.lyondellbasell.com/-- the world's third largest independent chemical company. Lyondellbasell produces polypropylene and advanced polyolefins products, is a leading supplier of polyethylene, and a global leader in the development and licensing of polypropylene and polyethylene processes and related catalyst sales. LyondellBasell became saddled with debt as part of the $12.7 billion merger. About a year after completing the merger, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc., filed for Chapter 11. LyondellBasell is not part of the bankruptcy filing. LyondellBasell's non-U.S. operating entities are also not included in the Chapter 11 filing. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemicals estimated that consolidated assets total $27.12 billion and debts total $19.34 billion as of the bankruptcy filing date. (Lyondell Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LYONDELL CHEMICAL: Bankruptcy Cues $1BB Credit-Default Swaps ------------------------------------------------------------ Bloomberg News reports that credit-default swaps traders will settle about $1.1 billion of derivatives protecting against a default by bankrupt Lyondell Chemical Co. The International Swaps and Derivatives Association, Inc., said Jan. 7 that it will launch a CDS auction protocol to facilitate the settlement of credit derivatives trades referencing three entities in the LyondellBasell group, one of the world's largest polymers, petrochemicals and fuels companies. The three entities are Lyondell Chemical Company, Equistar Chemicals, LP, and Millennium America Inc. In addition, LCDX dealers are expected to vote on whether to hold an auction for loan-only CDS transactions referencing Lyondell Chemical Company. If those firms vote to hold an auction, ISDA will publish auction terms for this auction, similar to the documentation for the recent Tribune loan-only CDS auction. LyondellBasell Industries announced on Tuesday, January 6 that in order to facilitate a restructuring of its debts, its U.S. operations and one of its European holding companies, Basell Germany Holdings GmbH, have voluntarily filed to reorganize under Chapter 11 of the US Bankruptcy Code. The Protocol will be open to ISDA members and non-members alike. ISDA will publish further details in due course and these will be available at http://www.isda.org/ About LyondellBasell Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries -- http://www.lyondellbasell.com/-- the world's third largest independent chemical company. Lyondellbasell produces polypropylene and advanced polyolefins products, is a leading supplier of polyethylene, and a global leader in the development and licensing of polypropylene and polyethylene processes and related catalyst sales. LyondellBasell became saddled with debt as part of the $12.7 billion merger. About a year after completing the merger, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc., filed for Chapter 11. LyondellBasell is not part of the bankruptcy filing. LyondellBasell's non-U.S. operating entities are also not included in the Chapter 11 filing. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemicals estimated that consolidated assets total $27.12 billion and debts total $19.34 billion as of the bankruptcy filing date. LYONDELL CHEMICAL: Non-U.S. Ops. Not Affected By Ch. 11 Filing -------------------------------------------------------------- LyondellBasell Industries issued a statement Jan. 8 clarifying that its non-U.S. operations are not affected by the Chapter 11 filing by Lyondell Chemical Co. and other affiliates. "In view of the many inquiries received by LyondellBasell questioning whether operations outside the United States are impacted by our Chapter 11 restructuring filings, we would like to stress that none of our operations outside the United States are impacted. No LyondellBasell company or affiliate located outside of the United States has applied for or become involved in insolvency or bankruptcy proceedings in their respective home countries. All of LyondellBasell's non-U.S. companies are conducting business as usual with no impact from the Chapter 11 restructuring filing by our U.S. operations and one European holding company. All LyondellBasell companies remain committed to maintaining mutually- beneficial relationships with suppliers and customers and to serving and operating in the market as they did before this voluntary action by the company. Confusion apparently resulted from the inclusion of Basell Germany Holdings GmbH in the Chapter 11 filing, the only entity among the 79 LyondellBasell affiliates that is not registered in the United States. The filing by Basell Germany Holdings GmbH was not a result of insolvency under German law. Rather, including this non-U.S. holding company allows it to benefit from the special financing package that has been negotiated with lenders in connection with the Chapter 11 filing. The German holding company also will benefit from the moratorium on obligations under the existing financing arrangements that result from the filing." About LyondellBasell Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries -- http://www.lyondellbasell.com/-- the world's third largest independent chemical company. Lyondellbasell produces polypropylene and advanced polyolefins products, is a leading supplier of polyethylene, and a global leader in the development and licensing of polypropylene and polyethylene processes and related catalyst sales. LyondellBasell became saddled with debt as part of the $12.7 billion merger. About a year after completing the merger, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc., filed for Chapter 11. LyondellBasell is not part of the bankruptcy filing. LyondellBasell's non-U.S. operating entities are also not included in the Chapter 11 filing. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemicals estimated that consolidated assets total $27.12 billion and debts total $19.34 billion as of the bankruptcy filing date. LYONDELL CHEMICAL: Suburban Propane Denies Affiliation ------------------------------------------------------ Suburban Propane Partners, L.P., disclaimed any affiliation with the recently announced Chapter 11 bankruptcy filing by LyondellBasell Industries and its affiliates. In a press release issued by Lyondell, Suburban Propane GP, Inc., was listed as one of the affiliated entities of Lyondell that was included in the voluntary petition for relief under Chapter 11 of the Bankruptcy Code. Suburban Propane Partners clarifies that neither Suburban Propane Partners, L.P., nor any of its affiliates including its general partner Suburban Energy Services Group LLC and its operating subsidiaries Suburban Propane, L.P., Suburban Heating Oil Partners, LLC and Agway Energy Services, LLC, has any affiliation with any entity of Lyondell and, as such, is in no way impacted by the Lyondell bankruptcy filing. The Partnership ended its fiscal 2008 with more than $137.6 million of cash on hand which is expected to provide sufficient liquidity to fund its ongoing operations without an immediate need to access its established working capital facility. The Partnership has one of the strongest distribution coverage ratios among its peers and is in a position of financial strength. Suburban Propane Partners, L.P. -- http://www.suburbanpropane.com/ -- is a publicly-traded master limited partnership listed on the New York Stock Exchange. Headquartered in Whippany, New Jersey, Suburban has been in the customer service business since 1928. The Partnership serves the energy needs of more than 900,000 residential, commercial, industrial and agricultural customers through more than 300 locations in 30 states. About LyondellBasell Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries -- http://www.lyondellbasell.com/-- the world's third largest independent chemical company. Lyondellbasell produces polypropylene and advanced polyolefins products, is a leading supplier of polyethylene, and a global leader in the development and licensing of polypropylene and polyethylene processes and related catalyst sales. LyondellBasell became saddled with debt as part of the $12.7 billion merger. About a year after completing the merger, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc., filed for Chapter 11. LyondellBasell is not part of the bankruptcy filing. LyondellBasell's non-U.S. operating entities are also not included in the Chapter 11 filing. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemicals estimated that consolidated assets total $27.12 billion and debts total $19.34 billion as of the bankruptcy filing date. MASONITE INTL: Forbearance Agreements Stretched to January 31 ------------------------------------------------------------- Masonite International Inc. has entered into an extension of the forbearance agreement it previously reached with holders of a majority of the senior subordinated notes due 2015 issued by two of the Company's subsidiaries. Masonite also announced that it delivered a draft business plan to its bank lenders and the noteholders' advisors by the December 19, 2008 deadline, providing for an extension of a separate forbearance agreement with the lenders to January 15, 2009. Masonite continues to pursue opportunities to develop an appropriate capital structure to support its long-term strategic plan and business objectives. Masonite first announced that it had entered into the forbearance agreement with the noteholders on November 17, 2008. The agreement has since been signed by holders of 94% of the Company's senior subordinated notes due 2015 issued by its subsidiary Masonite Corporation having an aggregate principal amount of $412 million and by holders of 58% of the Company's senior subordinated notes due 2015 issued by its subsidiary Masonite International Corporation having an aggregate principal amount of $358 million - - Canadian Notes. Under terms of the extended forbearance agreement, which is effective from December 31, 2008, through January 31, 2009, the noteholders executing the forbearance agreement agreed that during such period they will not exercise rights and remedies against the Company with respect to the Company's failure to: (i) make the interest payment due on October 15, 2008; and (ii) comply with the reporting requirements of sections 1009(a)(1) and (2) under the applicable indentures. The forbearance agreement terminates prior to January 31, 2009, upon certain events. Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The company provides these products to its customers in more than 70 countries around the world. The company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. Default Under Credit Facilities The company was not in compliance with the financial covenants contained under its senior secured credit agreement as at Sept. 30, 2008. The company has said it continues to negotiate with the lenders party to the senior secured credit agreement regarding an amendment to the terms of the agreement and a waiver of its non-compliance. On November 25, 2008, the company entered into an amendment to its credit agreement and an extension of the forbearance agreement dated September 16, 2008, with its bank lenders. The extension provides the company time to develop a revised business plan for 2009, which will serve as the basis of its efforts to create an appropriate capital structure to support Masonite's long-term business objectives. The forbearance agreement termination date is the earliest of December 19, 2008, any other Event of Default, and any Termination Event as defined in the Bondholder Forbearance Agreement dated November 17, 2008. The forbearance agreement can also be terminated if the company fails to deliver certain financial information by agreed upon dates. The amendment with the lenders provides for the December 19, 2008 deadline to be further extended to January 15, 2009, provided that Masonite (1) delivers a draft business plan by December 19, 2008, (2) reviews the plan with the bank lenders by December 22, 2008, (3) delivers a final business plan by January 15, 2009; and (4) complies with a number of other provisions related to the negotiation of a consensual restructuring plan. As of December 23, 2008, no agreement has been reached and there can be no guarantee that an agreement will be reached on terms acceptable to the company or its lenders. On September 16, 2008, the Agent, on behalf of the lenders, under the company's credit facility provided notice under the company's senior subordinated note indentures of the imposition of a payment blockage period with respect to the company's Notes. Such notice was permitted by the terms of the indentures as a result of the company's non-compliance with certain financial covenants under its credit facility. The company is not permitted for a period of up to 179 days from September 16, 2008 to make interest or principal payments under the Notes. In accordance with this restriction, the company did not make a scheduled payment of interest on the Notes when due on October 15, 2008 although it had sufficient cash on hand to make such payment. Failure to make such interest payment within 30 days of October 15, 2008 constituted an event of default under the note indentures, permitting holders of at least 30% in principal amount of outstanding notes to declare the full amount of the notes immediately due and payable. On November 17, 2008, the company entered into a forbearance agreement with holders of a majority of the Notes issued by two of the company's subsidiaries. Masonite expects that the forbearance agreement will provide the company additional time and flexibility as it continues to pursue opportunities to develop an appropriate capital structure to support its long-term strategic plan and business objectives. The forbearance agreement was effective through December 31, 2008. The company has said its ability to continue as a going concern is dependent upon its ability to complete a successful renegotiation of its Credit Agreement terms and Notes. * * * As reported in the Troubled company Reporter on Sept. 1, 2008, Standard & Poor's Ratings Services lowered its long-term corporate credit ratings on Masonite International Inc. (Masonite) and its subsidiaries, Masonite International Corp. and Masonite US Corp., to 'CCC+' from 'B-'. S&P also lowered the senior secured debt rating on Masonite to 'B' from 'B+'. The ratings remain on CreditWatch with negative implications, where they were placed April 18, 2008. MERISANT WORLDWIDE: Term and Revolver Debt Maturing Next Week ------------------------------------------------------------- Bloomberg's Bill Rochelle notes that Merisant Worldwide Inc. has a $35 million revolving credit and a $7.4 million term loan that mature on Jan. 11. In its Form 10-Q submitted to the Securities and Exchange Commission in November 2008, the company acknowledged that it is highly leveraged. At Sept. 30, 2008, the company and its subsidiaries, including Merisant Company, had $553,557,000 of long-term debt outstanding, consisting of $135,136 aggregate principal amount of the Company's 121/4% senior subordinated discount notes due 2014, $225,000,000 aggregate principal amount of Merisant's 91/2% senior subordinated notes due 2013, and $193,421,000 aggregate principal amount outstanding under Merisant's senior credit agreement, excluding capital lease obligations of $89 and unused commitments on the revolving portion of the Senior Credit Agreement of $21,000,000. At September 30, 2008, borrowings under the Senior Credit Agreement included $7,416,000 (Term A) aggregate principal amount of term loans bearing annual interest of 8.35%, $174,005,000 (Term B) aggregate principal amount of term loans bearing annual interest of 6.40% and $12,000,000 aggregate principal amount in revolver commitments, bearing annual interest of 5.97%. The Term A loans are euro-denominated and are translated into U.S. dollars at the spot rate as of September 30, 2008. The Term A loans and the revolver commitment are scheduled to terminate in January 2009 and all amounts thereunder are scheduled to be repaid. Most of the Term B loans ($171,803,000) are due at its final maturity in January 2010. Additionally, interest on the Discount Notes will become payable in cash commencing on May 15, 2009. Semiannual interest payments of $8.6 million are required. The indenture governing the Notes limits Merisant's ability to pay dividends or loan cash to the Company, which has no operations of its own. As of November 13, 2008, borrowings under Merisant's revolving credit facility were $28,000,000. In aggregate, during the twelve months ending September 30, 2009, the company and Merisant are scheduled to pay $78,300,000 of principal and interest under the Company and Merisant's primary debt obligations. "Given the disruptions in the credit and financial markets in recent months, uncertainty exists as to whether we will be able to generate results from operations or consummate transactions sufficient to enable us to make all of these payments," Merisant said in their third quarter 2008 report. Merisant said it is engaged in discussions with certain of its secured lenders and debt security holders as well as potential financing sources with regard to refinancing or restructuring all or a portion of its debt obligations. "However, there can be no assurance that we will be able to refinance, replace or amend our outstanding debt obligations on terms favorable to us, or at all, particularly given current financial conditions." About Merisant Worldwide Headquartered in Chicago, Merisant Worldwide, Inc. is a leading global producer and marketing of low-calorie and zero calorie tabletop sweeteners, including Equal(R) and PureVia(TM). Equal(R) is sweetened with aspartame. Sales were approximately $277 million for the twelve months ended September 30, 2008. * * * As reported by the Jan. 7, 2009 issue of the Troubled Company Reporter, Moody's Investors Service lowered the ratings of Merisant Worldwide, Inc., including the company's probability of default and corporate family ratings to Ca from Caa3. The ratings agency said the company's weak credit metrics severely limit its financial flexibility, especially in the current credit market. As reported by the TCR on Dec. 19, 2008, Standard & Poor's Ratings Services said that it lowered its ratings on Chicago, Illinois- based Merisant Worldwide Inc. and operating company Merisant Co., including its corporate credit rating, to 'CC' from 'CCC'. METRO PCS: Bank Loan Trades Slightly Higher in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which Metro PCS Wireless is a borrower traded in the secondary market at 78.93 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 0.90 percentage points from the previous week, the Journal relates. Metro PCS Wireless pays interest at 225 points above LIBOR. The bank loan matures on October 11, 2013. The bank loan carries Moody's Ba3 rating and Standard & Poor's BB- rating. As reported reported in the Troubled Company Reporter on January 2, 2009, participations in the bank loan traded in the secondary market at 77.70 cents-on-the-dollar during the week ended December 26, 2008. MetroPCS Wireless Inc., a wholly owned subsidiary of MetroPCS Communications Inc., provides unlimited use wireless service for a flat monthly fee with no signed contract in major metropolitan markets of the U.S. The company is based in Dallas, Texas. MONACO COACH: Hires Advisors to Check Options, Improve Liquidity ---------------------------------------------------------------- Monaco Coach Corporation has engaged Imperial Capital, LLC as a financial advisor to assist the Company with its evaluation of strategic alternatives. The Company intends to consider a variety of financial and strategic alternatives including joint ventures, mergers or other strategic transactions, with a focus on improving liquidity and maintaining its strong balance sheet. In addition, Monaco Coach Corporation has retained Avondale Partners, LLC to evaluate strategic alternatives for Signature Motorhome Resorts business and BMO Capital Markets has been retained for its equine trailer division, Bison Manufacturing, LLC and its specialty trailer division, Roadmaster LLC. Kay Toolson, the Company's CEO, commented, "Monaco will continue to execute its business plan while maintaining its tradition as a leading national manufacturer of recreational vehicles. We are confident that our retention of Imperial Capital will help us capitalize on our competitive position and the strength of our brands in order to maximize long-term value." The Company cautions that there can be no assurance that this evaluation will result in any specific financial or strategic transactions. About Monaco Coach Corporation Monaco Coach Corporation -- http://www.monaco-online.comor http://www.trail-lite.com-- a leading national manufacturer of motorized and towable recreational vehicles, is ranked as the number one producer of diesel-powered motorhomes. Dedicated to quality and service, Monaco Coach is a leader in innovative RVs designed to meet the needs of a broad range of customers with varied interests and offers products that appeal to RVers across generations. Headquartered in Coburg, Oregon, with manufacturing facilities in Oregon and Indiana, Monaco Coach Corporation -- http://www.monaco- online.com or http://www.trail-lite.com-- offers a variety of motorized and towable recreational vehicles, from entry-level priced towables to custom-made luxury models under the Monaco, Holiday Rambler, Safari, Beaver, McKenzie, and R-Vision brand names. The company maintains RV service centers in Harrisburg, Oregon and Wildwood, Florida and operates motorhome-only resorts in California, Florida, Nevada and Michigan. Monaco Coach trades on the New York Stock Exchange under the symbol "MNC." NATIONSLINK FUNDING: S&P Ups Rating on Class G to BBB- From BB+ --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on two classes of commercial mortgage pass-through certificates from NationsLink Funding Corp.'s series 1998-2. Concurrently, S&P affirmed its ratings on three other classes from this series. The raised ratings reflect increased credit enhancement levels due to the paydown of the mortgage pool balance. The affirmed ratings reflect adequate credit enhancement levels through various stress scenarios. The ratings are constrained by reduced diversification, as there are only 34 loans remaining in the collateral pool. As of the Dec. 22, 2008, remittance report, the trust collateral consisted of 35 mortgage loans with an aggregate principal balance of $144.3 million, down from 376 loans totaling $1.6 billion at issuance. An additional loan ($4.0 million, 3%) paid off after the Dec. 22, 2008, remittance report was issued, which reduced the loan count to 34. The master servicer, Midland Loan Services Inc., reported full-year 2007 financial information for 97% of the pool. Based on this information, Standard & Poor's calculated a weighted average debt service coverage of 1.66x. The pool contains 21 fully amortizing loans ($23.7 million, 16%) and nine defeased loans ($11.6 million, 8%). One asset ($1.6 million, 1%) is currently with the special servicer, LNR Partners Inc. This asset is classified as being in foreclosure, and is the only delinquent loan in the pool. To date, the trust has experienced aggregate losses totaling $30.4 million. Excluding the one asset with the special servicer, three assets ($12.6 million, 9%) in the pool have reported low DSC, one of which is currently a credit concern. The Golden Villa and Rose Haven Nursing Homes and Heritage and Village Manor Nursing Homes asset ($8.2 million, 6%), the fifth-largest exposure in the pool, consists of two cross-collateralized and cross-defaulted loans backed by a total of four health care properties. The year-end 2007 DSC for this exposure was 0.69x, which reflects a 55% decline from issuance. The DSC decline is primarily due to decreased base rents resulting from lower occupancy levels. The consolidated occupancy was 54% at June 2008. The top 10 real estate exposures have an aggregate outstanding balance of $112.5 million (78%). Year-end 2007 financial information was available for all of the top 10 exposures, and Standard & Poor's used this information to calculate a weighted average DSC of 1.68x. One of the top 10 exposures is on the master servicer's watchlist and is discussed above. Standard & Poor's reviewed property inspection reports provided by the master servicer for all of the properties collateralizing the top 10 loans. Eleven were classified as "good," one was classified as "excellent," and one was classified as "poor." The Medical Village Office Building loan ($1.6 million, 1%) is the asset with the special servicer. The loan is secured by a 30,025- sq.-ft. medical office property in Bountiful, Utah. The asset was transferred to the special servicer in July 2008 when the borrower was unable to pay off the loan on its July 1, 2008, maturity date. Foreclosure was filed on Oct. 27, 2008, but the special servicer is simultaneously working to negotiate and document a deed-in-lieu of foreclosure. An appraisal has been ordered and is pending. The reported DSC for this asset was 0.85x for the six months ended June 30, 2008, and occupancy at the property was 60% as of the same period. At this time, S&P expects minimal loss upon the eventual resolution of the asset. Midland reported a watchlist of four loans totaling $11.9 million (8%), including the fifth-largest exposure in the pool. The three other loans are on the watchlist due to low DSC caused by increased expenses. Standard & Poor's stressed various assets in the mortgage pool as part of its analysis, including the asset with the special servicer, those on the watchlist, and those with credit issues. The resultant credit enhancement levels adequately support the raised and affirmed ratings. Ratings Raised NationsLink Funding Corp. Commercial mortgage pass-through certificates series 1998-2 Rating ------ Class To From Credit enhancement (%) ----- -- ---- ---------------------- F BBB+ BBB 45.76 G BBB- BB+ 37.51 Ratings Affirmed NationsLink Funding Corp. Commercial mortgage pass-through certificates series 1998-2 Class Rating Credit enhancement (%) ----- ------ ---------------------- H B+ 15.53 J B- 10.03 X AAA N/A N/A - Not applicable. NORBORD INC: S&P Keeps BB- Corp. Credit Rating; Outlook Negative ---------------------------------------------------------------- Standard & Poor's Ratings Services said it removed the ratings on Norbord Inc. from CreditWatch with negative implications, where they were placed Oct. 24, 2008. The ratings, including the 'BB-' long-term corporate credit rating on the company, are unchanged. The outlook is negative. "We removed the ratings from CreditWatch because Norbord's liquidity position has improved following completion of its C$240 million equity offering," said Standard & Poor's credit analyst Jatinder Mall. Standard & Poor's believes that the company now has sufficient liquidity to steer through the current depressed market conditions for oriented strandboard. Furthermore, S&P expects the company to finalize bank covenant amendments by the end of January allowing for a greater cushion. The additional equity means that Brookfield Asset Management Inc. (A-/Stable/A-2) will now own about 75% of Norbord's common shares. The ratings on Norbord reflect what S&P see as challenging market conditions for OSB producers, negative EBITDA generation, very weak credit metrics, and exposure to volatile OSB prices. S&P believes the company's low-cost operations and good market position partially offset these risks. Norbord is the second-largest OSB producer in the world, with annual capacity of more than 5 billion square feet. The company also produces other wood products such as particleboard, medium density fiberboard, and hardwood plywood. Its operating facilities are in North America and Europe. The negative outlook reflects Standard & Poor's view of continued challenging market conditions for OSB and S&P's expectations of Norbord's negative free cash flow generation in 2009. While S&P expects additional liquidity to be sufficient for the company to weather current market conditions, S&P could lower the ratings on Norbord if OSB prices decline leading to a larger cash burn than currently expected and a reduced cushion under Norbord's revised bank covenants. An upgrade is unlikely given current market conditions and would require that the company's financial performance improve significantly from current levels and for it to sustain a leverage ratio of 3.0x-3.5x and a funds-from- operations-to-debt ratio of 20%-25%. ON SEMICONDUCTOR: Will Shut Factories, Cut Bonus Pay ---------------------------------------------------- ON Semiconductor Corporation is taking additional cost reduction measures. In the fourth quarter of 2008 the company began taking initial actions to reduce overall spending levels. The actions included the reduction of 2009 planned capital expenditures to $50 to $60 million from normalized yearly levels of approximately $130 to $140 million, temporary site shutdowns during the fourth quarter of 2008, a hiring freeze, the elimination of second half of 2008 bonus payments and strict controls over all discretionary spending. The company is also planning a series of additional permanent and temporary actions to reduce its overall cost structure. These planned actions include: -- factory closures planned for the end of 2009 will be brought forward to the middle of 2009; -- evaluation of other front-end manufacturing locations are ongoing with the objective of closing an additional location by the end of 2009; -- factory shutdowns for 4 to 6 weeks in the first and second quarter of 2009; -- three weeks of unpaid time off for senior executives in both the first and second quarter of 2009 (equates to an approximate 23 percent decrease in base salary); -- two weeks of unpaid time off or a 4 day work week (based upon local legal requirements) for other employees in both the first and second quarter of 2009 (equates to an approximate 15 percent decrease in base salary); -- no annual merit increases; -- no bonus payments expected to be paid in 2009; -- a reduction in worldwide personnel of approximately 1,500 which equates to a reduction of approximately 10 percent of total payroll expenses The combination of these and other actions the company is taking is expected to reduce total fixed costs by approximately $40 to $50 million a quarter, of which approximately $10 to $15 million will be from temporary actions. These actions are expected to reduce operating expenses by approximately $20 million from the third quarter of 2008 run-rates and exclude the operating expense impact associated with the Catalyst Semiconductor acquisition which closed in the fourth quarter of 2008. The company expects initial benefits from these actions to start in the first quarter of 2009 and to increase throughout the year. Once completed, these actions are expected to reduce the revenues required for cash breakeven to approximately $340 million a quarter. To execute these cost reduction actions, the company anticipates it will use approximately $20 to $30 million of cash over the next 5 quarters and incur restructuring and other charges, a portion of which will be recorded in the fourth quarter of 2008. The company also announced today that it is revising its fourth quarter 2008 outlook provided on its earnings release and conference call on Oct. 30, 2008. The company had previously guided fourth quarter 2008 revenues to be approximately $500 to $550 million or down approximately 5 to 14 percent sequentially from the third quarter of 2008. As a result of the continued deterioration in the global economy, ON Semiconductor now anticipates fourth quarter revenues to be approximately $480 to $490 million or down approximately 16 to 17 percent sequentially from the third quarter of 2008. Due to the timing of the availability of inventory and sales distribution information from our distribution partners globally and ON Semiconductor's related recognition of revenue on a sell-thru basis, the company will provide full details on fourth quarter and 2008 annual results in its earnings release to be scheduled during the first week of February. "Our updated fourth quarter 2008 revenue outlook reflects the reduction in demand we have experienced as a result of deteriorating conditions in the global economy," said Keith Jackson, ON Semiconductor president and CEO. "In the fourth quarter of 2008 we utilized approximately $49.4 million of cash to repurchase $60.9 million of our zero coupon convertible senior subordinated notes and still managed to grow our cash and cash equivalents balance by around $30 million to approximately $450 million. Based on the limited visibility we have for the first quarter of 2009, we anticipate another challenging quarter for the semiconductor industry and the company with revenues down more than normal seasonality. While we are hopeful that the economy will improve as we move through 2009, we have and will continue to examine our overall spending and are prepared to take additional actions to ensure we remain competitive and are positioned to generate positive free cash flow in this challenging environment." In the fourth quarter of 2008, the company will also evaluate the carrying value of its goodwill outstanding as of the end of the third quarter of 2008. This is expected to result in a non-cash impairment charge to be recorded in the fourth quarter of 2008 which will be described in further detail in our earnings release and SEC filings. About ON Semiconductor With its global logistics network and strong product portfolio, ON Semiconductor (NASDAQ: ONNN) is a preferred supplier of high performance energy efficient, silicon solutions to customers in the power supply, automotive, communication, computer, consumer, medical, industrial, mobile phone, and military/aerospace markets. The company's broad portfolio includes power, signal management, analog, DSP, advance logic, clock management, non-volatile memory and standard component devices. Global corporate headquarters are located in Phoenix, Arizona. The company operates a network of manufacturing facilities, sales offices and design centers in key markets throughout North America, Europe, and the Asia Pacific regions. For more information, visit http://www.onsemi.com. As reported in the Troubled Company Reporter on Oct. 8, 2008, Standard & Poor's Ratings Services placed its 'BB-' corporate credit and other ratings on Phoenix, Arizona-based ON Semiconductor Corp. on CreditWatch with negative implications following the company's announcement that it is joining San Jose, California-based Microchip Technology Inc.'s bid to purchase Atmel Corp. for $2.3 billion in cash. As reported by the TCR on May 9, 2008, Moody's Investors Service upgraded ON Semiconductor Corporation's corporate family rating to Ba3 from B1 and senior secured debt ratings to Baa3 from Ba1. Simultaneously, Moody's assigned a speculative grade liquidity rating of SGL-1. The outlook is stable. PAPER INT'L: Taps Fredericks Michael as Investment Bankers ---------------------------------------------------------- Paper International, Inc., and Fiber Management of Texas, Inc., ask the U.S. Bankruptcy Court for the Southern District of New York for authority to employ Fredericks Michael & Co. as their investment bankers in connection with the possible sale of Paper International's equity shares in Durango McKinley Paper Company. McKinley is wholly owned by Paper International, Inc. McKinley's operations largely consist of a paper division that operates a recycled linerboard manufacturing facility in Prewitt, New Mexico. The McKinley paper division sell its products primarily in the United States. The Debtors selected Fredericks Michael because of the firm's extensive experience in executing cross-border mergers, acquisitions, divestigutes and strategic alliances, as well as its extensive experience advising clients in the paper and packaging industries. As the Debtors' investment bankers, Fredericks Michael, effective Nov. 1, 2008, has agreed to: a) review and analyze the Debtors' business, operations and financial projections in order to estimate a value for McKinley's business;] b) prepare a summary that describes McKinley's operations that will be utilized as part of an initial marketing approach to potential buyers; c) prepare a descriptive memorandum including certain information with respect to McKinley and provide the memorandum to each qualified and interested buyer after receipt of a signed confidentiality agreement; d) formulate a list of potential buyers for McKinley, including potential strategic buyers and, if appropriate, potential financial buyers; e) assist International in evaluating potential buyers from the prepared list for an initial approach to determine their level of interest in the acquisition of McKinley or its business unit; f) request, to the extent possible, interested parties tosubmit bids for the assets being sold, including their proposed purchase price, structure and source of financing; g) qualify certain of the interested parties for further negotiations; h) assist Paper International, and work with Paper International's legal and other advisors, in coordinating the drafting of the definitive sales agreements, due diligence, final negotiations related to the closing of the transactions, conducting the Bankruptcy Court-approved sale process (and auction, if any), providing testimony before the Bankruptcy Court to the extent necessary or appropriate, and consultation with Paper International's creditors including any official or unofficial committee; i) meet with designated International representatives at specified time intervals throughout the process to present progress reports and discuss next steps and other important issues relating to the sale processes; and j) work with the Debtors and their tax advisors to structure any sale transaction to maximize tax benefits. As set forth in the Engagement Letter, Fredericks will be compensated as follows: a) A monthly fee of $10,000, payable upon the Court's approval of the application, and on the first day of each month thereafter until the completion of the Chapter 11 cases or the termination of Frederick Michael's employment. 100% of the monthly fees paid for the first six months of the engagement will be credited against any Transaction Fee. b) In addition to the monthly Fee and in the event that a transaction with a party that has been identified to Paper International is consummated, Fredericks Michael will be paid a minimum net Transaction Fee of $300,000. In the event that (i) McKinley is sold to a third-party buyer other than the Identified Bidder, or (ii) Identified Bidder increases the purchase price set forth in the Identified Bidder Transaction and such transaction is consummated, the Transaction Fee will be (x) $300,000, plus (y) five 5% of the net increased sale proceeds received by Paper International from the sale of McKinley above the total Transaction Value set forth in the Identified Bidder Transaction (including any break-up fee and expense reimbursement payable to Identified Bidder); c) In the event the bid by the Identified Bidder is, at the time of any proposed auction, (i) non-binding; (ii) subject to financing; or (iii) withdrawn or disqualified from the bidding process, and Paper International enters into an agreement to sell McKinley to a party other than the Identified Bidder, the Transaction Fee will equal 1% of the Transaction Value, rather than the aforementioned Transaction Fee structure of (x) $300,000, plus (y) 5% of the net increased sale proceeds over the Identified Bidder's bid; d) For the purpose of calculating the Transaction Fee for the sale of the stock of the McKinley Stock, the Transaction Value will equal the total proceeds and other consideration paid to Paper International for the McKinley Stock, including, without limitation, cash and instruments. The Transaction Value will be deemed to include amounts paid or to be paid into escrow; e) In the event the sale of McKinley is restructured as a sale of the assets of McKinley, Paper International, as 100% shareholder of McKinley, will use its best efforts to cause McKinley to enter into an agreement with Fredericks Michael to accomplish such sale, and in such event the current agreement will terminate and be without full force and effect. The Transaction Fee in such sale will be payable by McKinley, and the Transaction Value will equal the total proceeds and other consideration paid to McKinley, including, without limitation: (i) cash and all other assumed or carved out working capital; (ii) liabilities, including all debt, pension liabilities and guarantees, directly or indirectly, assumed, refinanced or extinguished, and (iii) any value of related assets separately acquired if it were the case, such as brand names, non-competing contracts, client contracts, real estate and leases, concessions, administrative-technical advisory, and similar; f) In addition to any fees that may be payable to Fredericks Michael and, regardless of whether any transaction occurs, Paper International will promptly reimburse Fredericks Michael for all reasonable and reasonably documented expenses incurred in connection with this engagement; generally these expenses include out-of-pocket travel costs, document production charges and other out-of-pocket expenses, and will also include the reasonable and documented fees of outside counsel and other professional advisors. Fredericks Michael will also include an additional fixed charge of 3% of the Monthly Fee to cover expenses that Fredericks Michael accounting systems do not specifically charge to clients; and g) As part of the compensation payable to Fredericks Michael, Paper International agrees to the indemnification, contribution and related provisions set forth in the Engagement Letter. Blake Davies, a managing director at Fredericks Michael, assures the Court that the firm does not hold or represent any interest adverse to the Debtors' estates and that the firm is a "disinterested person," as that term is defined in Sec. 101(14) of the Bankruptcy Code as modified by section 1107(b) of the Bankruptcy Code. About Paper International Headquartered in Prewitt, New Mexico, Paper International, Inc. -- http://www.internationalpaper.com/-- is the wholly-owned direct subsidiary of Corporacion Durango, S.A.B. de C.V., a corporation organized under the laws of Mexico, which maintains its principal place of business in Durango, Mexico. The Debtor currently owns 100% of the equity shares in Fiber Management of Texas, Inc., a corporation organized under the laws of Texas, as well as 100% of the equity shares in non-debtor Durango McKinley Paper Company, a New Mexico company. Paper International is a holding company which has no employees, no operations, and whose primary assets are its ownership interests in Durango McKinley and Fiber Management. Before August 2008, Fiber Management's primary business was the procurement of paper materials to manufacture recycled paper products for use by Durango McKinley and other paper manufacturing affiliates of Corporacion Durango located in Mexico. In August 2008, Fiber Management ceased procuring fiber and began winding up all of its business operations. The company and Fiber Management filed for Chapter 11 protection on Oct. 6, 2008 (Bankr. S.D. N.Y. Lead Case No.08-13917). Larren M. Nashelsky, Esq., and Lorenzo Marinuzzi, Esq., at Morrison & Foerster LLP, represent the Debtors as counsel. APS Services, LLC, serves as the Debtors' crisis managers. The Debtors designated Meade Monger, a managing director of AlixPartners, LLP, an affiliate of AP Services, as its chief restructuring officer. The Court appointed Kurtzman Carson Consultants, LLC as claims agent in the Debtors' bankruptcy case. Corporacion Durango filed a voluntary petition for Chapter 15 on Oct. 6, 2008 (Bankr. S.D. N.Y. case no. 08-13911) in connection with its reorganization case in Mexico under Mexico's Ley de Concurson Mercantiles in the District Court for Civil Matters for the District of Durango. PAPER INTERNATIONAL: Panel Taps Bingham McCutchen as Counsel ------------------------------------------------------------ The official committee of unsecured creditors appointed in Paper International, Inc., and Fiber Management of Texas, Inc.'s bankruptcy cases ask the U.S. Bankruptcy Court for the Southern District of New York for authority to retain Bingham McCutchen LLP as counsel for the Committee, nunc pro tunc to Oct. 20, 2008. As counsel for the Committee, Bingham McCutchen will render bankruptcy and restructuring legal services to the Committee as needed throughout the course of the Debtors' bankruptcy cases. As compensation for their services, Bingham McCutchen's professionals bill: Partners & Of Counsel $385-$970 per hour Counsel & Associates $210-$565 per hour Paraprofessionals $120-$330 per hour Michael J. Reilly, a partner at Bingham McCutchen, assures the Court that the firm does no hold or represent any interest adverse to the Debtors in the matters for which the firm is proposed to be retained, and that the firm is a "disinterested person" as that term is defined in Sec. 101(14) of the Bankruptcy Code. About Paper International Headquartered in Prewitt, New Mexico, Paper International, Inc. -- http://www.internationalpaper.com/-- is the wholly-owned direct subsidiary of Corporacion Durango, S.A.B. de C.V., a corporation organized under the laws of Mexico, which maintains its principal place of business in Durango, Mexico. The Debtor currently owns 100% of the equity shares in Fiber Management of Texas, Inc., a corporation organized under the laws of Texas, as well as 100% of the equity shares in non-debtor Durango McKinley Paper Company, a New Mexico company. Paper International is a holding company which has no employees, no operations, and whose primary assets are its ownership interests in Durango McKinley and Fiber Management. Before August 2008, Fiber Management's primary business was the procurement of paper materials to manufacture recycled paper products for use by Durango McKinley and other paper manufacturing affiliates of Corporacion Durango located in Mexico. In August 2008, Fiber Management ceased procuring fiber and began winding up all of its business operations. The company and Fiber Management filed for Chapter 11 protection on Oct. 6, 2008 (Bankr. S.D. N.Y. Lead Case No.08-13917). Larren M. Nashelsky, Esq., and Lorenzo Marinuzzi, Esq., at Morrison & Foerster LLP, represent the Debtors as counsel. APS Services, LLC, serves as the Debtors' crisis managers. The Debtors designated Meade Monger, a managing director of AlixPartners, LLP, an affiliate of AP Services, as its chief restructuring officer. The Court appointed Kurtzman Carson Consultants, LLC as claims agent in the Debtors' bankruptcy case. Corporacion Durango filed a voluntary petition for Chapter 15 on Oct. 6, 2008 (Bankr. S.D. N.Y. case no. 08-13911) in connection with its reorganization case in Mexico under Mexico's Ley de Concurson Mercantiles in the District Court for Civil Matters for the District of Durango. PAPER INTERNATIONAL: Panel Taps Houlihan Lokey as Finl Advisor -------------------------------------------------------------- The official committee of unsecured creditors appointed in Paper International, Inc., and Fiber Management of Texas, Inc.'s bankruptcy cases ask the U.S. Bankruptcy Court for the Southern District of New York for authority to retain Houlihan Lokey Howard & Zukin Capital, Inc., as financial advisor to the Committee, nunc pro tunc to Nov. 14, 2008. As the Committee's financial advisor, Houlihan Lokey will provide investment banking services to the Committee and to an ad hoc group of holders of 10.5% senior Notes due 2017 of Corporacion Durango, S.A.B. de C.V. pursuant to the terms and conditions of the engagement letter agreement between the Committee, the Ad Hoc Group, Corporacion Durango and Houlihan Lokey. Christopher R. Di Mauro, a managing director at Houlihan Lokey, assures the Court that the firm does no hold or represent any interest adverse to the Debtors or their estates, their creditors, or any other party in interest in the Debtors' bankruptcy cases or their respective attorneys in the matters on which Houlihan Lokey is proposed to be retained, and that the firm is a "disinterested person" as that term is defined in Sec. 101(14) of the Bankruptcy Code. As compensation for its services, Houlihan Lokey will be paid: a) a Monthly Fee equal to $100,000 per month; b) a Deferred Fee equal to $1,000,000. The Deferred Fee will be earned and payable upon the earlier of (i) confirmation of a Chapter 11 plan of reorganization or liquidation or (ii) the disposition of substantially all the assets or operations of the Debtors, through any sale transaction. The Deferred Fee will be paid in cash; and c) Reibursement for reasonable out-of-pocket exenses. Given the dual nature of Houlikan Lokey's engagement, which will benefit both the Committee and the Ad Hoc Group, Houlihan Lokey is being separately compensated for its work on behalf of the Ad Hoc Group. About Paper International Headquartered in Prewitt, New Mexico, Paper International, Inc. -- http://www.internationalpaper.com/-- is the wholly-owned direct subsidiary of Corporacion Durango, S.A.B. de C.V., a corporation organized under the laws of Mexico, which maintains its principal place of business in Durango, Mexico. The Debtor currently owns 100% of the equity shares in Fiber Management of Texas, Inc., a corporation organized under the laws of Texas, as well as 100% of the equity shares in non-debtor Durango McKinley Paper Company, a New Mexico company. Paper International is a holding company which has no employees, no operations, and whose primary assets are its ownership interests in Durango McKinley and Fiber Management. Before August 2008, Fiber Management's primary business was the procurement of paper materials to manufacture recycled paper products for use by Durango McKinley and other paper manufacturing affiliates of Corporacion Durango located in Mexico. In August 2008, Fiber Management ceased procuring fiber and began winding up all of its business operations. The company and Fiber Management filed for Chapter 11 protection on Oct. 6, 2008 (Bankr. S.D. N.Y. Lead Case No.08-13917). Larren M. Nashelsky, Esq., and Lorenzo Marinuzzi, Esq., at Morrison & Foerster LLP, represent the Debtors as counsel. APS Services, LLC, serves as the Debtors' crisis managers. The Debtors designated Meade Monger, a managing director of AlixPartners, LLP, an affiliate of AP Services, as its chief restructuring officer. The Court appointed Kurtzman Carson Consultants, LLC as claims agent in the Debtors' bankruptcy case. Corporacion Durango filed a voluntary petition for Chapter 15 on Oct. 6, 2008 (Bankr. S.D. N.Y. case no. 08-13911) in connection with its reorganization case in Mexico under Mexico's Ley de Concurson Mercantiles in the District Court for Civil Matters for the District of Durango. PENN TRAFFIC: Credit Facilities Extended Through April 2010 ----------------------------------------------------------- The Penn Traffic Company amended its existing credit agreements and closed the sale of its wholesale business segment and related accounts receivable to C&S Wholesale Grocers, Inc. Penn Traffic will be completing the pay down of $32 million, or 62% of its outstanding funded debt, by its fiscal year-end, using proceeds from the wholesale divestiture as well as from two recently announced store sales. Specifically, the company will pay down its $17 million revolving line of credit to zero and approximately $15 million of the company's $25 million supplemental real estate facility. The company's $6 million term loan will continue to remain outstanding. The company believes these actions will significantly improve availability in excess of outstanding letters of credit. The company's lenders have agreed to amendments and waivers to the existing credit agreements and provided the necessary consent to allow Penn Traffic to complete the all-cash transaction and debt pay down. Penn Traffic has also secured a new extension, through April 2010, of its existing working capital revolver and supplemental real estate facility, which maintain the existing pricing structure. "Penn Traffic enters the new year as a renewed company, squarely focused on our P&C, Quality and BiLo banners and the consumers they serve," stated President and Chief Executive Officer Gregory J. Young. "I am confident that today Penn Traffic is a stronger company with a brighter future than it had one year ago. Our work continues. Our team is committed to rebuilding the company during what may be the most challenging recession our industry, communities and customers have faced in generations," he added. "The wholesale divestiture and debt reduction we've just completed are the latest steps forward, and demonstrate the actions we continue to take as part of our strategy to rebuild the company, restore profitability and position Penn Traffic for long-term success." During the past 18 months Penn Traffic has resolved many of its legacy legal and regulatory issues, exited the unprofitable commercial bakery business and lowered corporate administrative expenses. The company continues to evaluate its retail store portfolio and intends to dedicate resources to investment in remodels, renovations and expansions of certain of its top- performing and highest-potential store locations. About Penn Traffic Headquartered in Syracuse, New York, The Penn Traffic Company ("Pink Sheets": PTFC) -- http://www.penntraffic.com/-- owns and operates 91 supermarkets in Upstate New York, Pennsylvania, Vermont and New Hampshire under the P&C, Quality and BiLo banners. Penn Traffic has been in and out of Chapter 11 bankruptcy twice. Its first trip to the bankruptcy court was in June 1999. Penn Traffic again filed for chapter 11 protection on May 30, 2003 (Bankr. S.D.N.Y. Case No. 03-22945). Kelley Ann Cornish, Esq., at Paul Weiss Rifkind Wharton & Garrison, represented the Debtors in their restructuring efforts. When the grocer filed for protection from creditors, it listed $736,532,614 in total assets and $736,532,610 in total debts. The Court confirmed the Debtor's First Amended Plan of Reorganization on March 17, 2005. The Plan became effective April 13, 2005, allowing it to formally emerge from Chapter 11. Under the Plan, the Debtor gave all the stock to unsecured creditors while cutting the store count almost in half, according to Bloomberg. PENN TREATY: S&P Changes Ratings to 'R' From 'CC' ------------------------------------------------- Standard & Poor's Ratings Services said that it revised its counterparty credit and financial strength ratings on Penn Treaty Network America Insurance Co. to 'R' from 'CC', indicating that the company is under regulatory supervision owing to its financial condition. Standard & Poor's also said that it removed these ratings from CreditWatch, where they were placed on Oct. 3, 2008, with negative implications. The rating action resulted from an announcement by the Pennsylvania Insurance Commissioner that the Commonwealth Court had approved his petition for an Order of Rehabilitation for PTNA, placing the company under the statutory control of the Pennsylvania Insurance Department. POWER MEDICAL: Sept. 30 Balance Sheet Upside Down by $7.7 Million ----------------------------------------------------------------- Power Medical Interventions, Inc., posted a net loss of $9,267,823 for the three months ended September 30, 2008, and a net loss of $32,959,007 for the nine months ended September 30, 2008. As of September 30, 2008, the company's balance sheet showed total assets of $37,031,430 and total liabilities of $44,800,992, resulting in total shareholders' deficit of $7,769,562. Accumulated deficit reached $206,869,901. President and Chief Executive Officer Michael P. Whitman disclosed in a regulatory filing dated November 14, 2008, that since the company's inception, it has financed its operations primarily through private placements of its preferred stock, unsecured borrowings from its stockholders, a credit facility, the issuance in March 2007 of its convertible notes in the aggregate principal amount of $25.0 million and its initial public offering in October 2007, in which it received net proceeds, after underwriting discounts and offering expenses, of approximately $42 million. "In September 2008, we also received $12.5 million in up-front license fees from our agreement with Intuitive [Surgical, Inc.] An additional $7.5 million of milestone payments may become payable to us contingent upon the successful achievement of certain development milestones. We expect to achieve the development milestone necessary for us to receive the first $2.5 million milestone payment during the first half of 2009, and to receive the remaining milestone payments by mid-to late 2010. Our principal sources of liquidity as of September 30, 2008 consisted of cash and cash equivalents of $15.9 million and our accounts receivable balance of $1.6 million." "We believe that our cash and cash equivalents, together with the first milestone payment under our Intuitive agreement, which we expect to receive during the first half of 2009, will be sufficient to meet our anticipated cash requirements through the fourth quarter of 2009, however, there can be no assurance in this regard. We have implemented plans to reduce our cash used in operations through reductions in headcount and other spending programs throughout the company. Such costs include certain sales and marketing costs, clinical research costs, employee bonuses, professional education, and capital expenditures. Our future cash requirements will depend on many factors, primarily including our ability to increase our sales and improve our gross margins, our ability to achieve the development milestones under our agreement with Intuitive and receive the related milestone payments and the success of our recently announced restructuring initiative in reducing our operating expenses. Our ability to meet our obligations in the normal course of business beyond 2009 will be dependent on our increasing our customer and revenue base, continuing to control expenses and securing additional external financing which we are actively pursuing through various structures. We have no arrangements to obtain additional financing, and there can be no assurance that such financing, if required or desired, will be available in amounts or on terms acceptable to us, if at all. These conditions raise substantial doubt about our ability to continue as a going concern." A full-text copy of the company's quarterly report is available for free at: http://researcharchives.com/t/s?37a2 Changes in Management Team Effective December 26, 2008, John Gandolfo resigned from his position as Chief Financial Officer for personal reasons. Mr. Gandolfo will continue to maintain a close relationship with the company in an advisory role through a portion of 2009. In this role, Mr. Gandolfo will continue to develop financing options for PMI. Patricia Steffan, vice president of finance at Power Medical for the last seven years, acted as interim Chief Financial Officer, effective December 26, 2008. The company has initiated an executive search for Mr. Gandolfo's replacement. About Power Medical Interventions Power Medical Interventions, Inc. -- http://www.pmi2.com/-- is the world's sole provider of computer-assisted, power-actuated surgical stapling products. PMI's Intelligent Surgical Instruments(TM) enable less invasive surgical techniques to benefit surgeons, patients, hospitals and healthcare networks. PMI manufactures durable recyclable technology to reduce medical waste and help keep the planet clean. The company was founded in 1999, and is headquartered in Langhorne, Pennsylvania, with additional offices in Germany, France, and Japan. PRESS EX: Files for Chapter 11 Bankruptcy Protection ---------------------------------------------------- Michael Hinman at Tampa Bay Business Journal reports that Press Ex Inc. has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Middle District of Florida. Tampa Bay Business relates that Press Ex listed $1 million to $10 million in assets and $1 million to $10 million in liabilities. The report says that Press Ex's largest unsecured creditors come from Elof Hansson Paper & Board of Elmsford and Workman Properties of Clearwater, each owed about $250,000. According to the report, Press Ex also owes $491,000 to 18 of its largest creditors. Press Ex leased a building at the Rubin Center in Clearwater in January 2007, Tampa Bay Business states. Published reports say that it agreed to a 60-month lease at the time valued at $718,000. Press Ex Inc. is a Clearwater printing company that offers 48-hour turnaround services. It offers in-house printing work of business cards, flyers, posters and mail service using a pair of seven- color presses. RECYCLED PAPER: Seeks to Scrap Contract With "Out-of-Money" Owner ----------------------------------------------------------------- Recycled Paper Greetings, Inc., and its affiliated debtors ask the U.S. Bankruptcy Court for the District of Delaware to enter orders: -- authorizing the rejection of a Corporate Services Agreement, dated December 5, 2005, between Recycled Paper Greetings, Inc. and Monitor Clipper Partners, LLC, nunc pro tunc, as of Jan. 2, 2009l; -- setting a deadline by which MCP must file any claims it has against the Debtors, including any claims arising from the rejection of, or related to, the Services Agreement that MCP may assert in RPG's Chapter 11 cases; -- establishing procedures for the timely disposition of the MCP Claim, if any; and -- disallowing any MCP Claim in its entirety or, in the alternative, estimating any MCP Claim at zero dollars for allowance, treatment and distribution purposes pursuant to such procedures. Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., explains that the termination of the Services Agreement is a necessary component of the prepackaged Plan of Reorganization filed by RPG on January 2, 2009. As reported by the Troubled Company Reporter, the Plan is premised on rival American Greeting Corporation's acquisition of RPG. Mr. Collins notes that absent the termination of the MCP Services Agreement by February 28, 2009, American Greeting has the right to terminate the agreement upon which the Plan is based, potentially derailing a prepackaged plan supported by all of the Debtors' constituencies except one -- MCP5 -- an out-of-the-money equity sponsor and counterparty to the Services Agreement. The Plan effectuates the restructuring of the Debtors by the implementation of an Agreement, dated December 30, 2008, among RPG, RPG Holdings and American Greetings Corporation, under which the Debtors would be relieved of the debt incurred in connection with MCP's leveraged buy-out of RPG in December 2005. The Debtors believe that the Plan and the Agreement represent the best possible outcome for the Debtors' stakeholders. The Prepetition Lenders hold approximately $207 million of secured debt, incurred to effect MCP's highly leveraged majority share acquisition of RPG in the LBO. All of the Prepetition Lenders have voted in favor of the POR, which provides for recoveries to them that are substantially less than the amount of their secured claims. Thus, MCP's equity interests are worthless. However, despite the absence of any viable alternative to the POR, MCP has set out on a course to derail the POR in an effort to unfairly leverage its position as majority shareholder. This comes through clearly in MCP's press release issued on the Petition Date. Mr. Collins notes that MCP caused RPG to enter into the Services Agreement, which was a condition precedent to the LBO. Thus, for all intents and purposes, MCP was on both sides of the transaction and "negotiated" the terms of the Services Agreement with itself. Under the Services Agreement, MCP was to be paid a fee of $500,000 per year in exchange for the possible provision of advisory and other services to RPG, and MCP was entitled to the reimbursement of certain expenses and, in certain circumstances, MCP would receive a financial advisory fee, commonly known as a "success fee," if certain transactions were completed. The terms of the Services Agreement, according to Mr. Collins, were not the product of arms' length negotiations but, rather, were imposed on RPG by MCP as part of its "price" for doing the LBO and have served as a means for MCP to siphon precious cash from the Debtors despite their substantial performance shortfall and precarious financial circumstances -- at a time when a dividend almost certainly would have been illegal under Delaware law. The Services Agreement remains unduly burdensome to the Debtors and provides no benefit to their estates. If the Services Agreement were permitted to stand, the Debtors would be required to pay perpetual Annual Fees relating to "management and advisory" services from MCP even though, among other things, (a) MCP has not provided any services or assistance in the Debtors' restructuring, (b) MCP would not be providing such services post- reorganization and (c) certain of the tasks for which MCP could earn a fee would require MCP to be retained as an estate professional under section 327 of the Bankruptcy Code, which approval is not being sought and would almost certainly not be granted. Accordingly, the Debtors seek to reject the Services Agreement, nunc pro tunc, as of the Petition Date. In addition, the Debtors anticipate, based on their numerous inquiries to MCP and the Press Release, that MCP will assert a claim. Given that the Plan has been accepted by 100% of all creditors entitled to vote, the quick disposition of this insider claim is critical to the Debtors' successful restructuring, Mr. Collins relates. Pursuant to Section 9.1(d) of the Plan, it is a condition precedent to the Effective Date of the Plan that the MCP Claim either be disallowed in its entirety or estimated in an amount acceptable to AG and each of the Administrative Agents under the First Lien Credit Agreement and Second Lien Credit Agreement, as applicable. Pursuant to Section 3.4 of the Agreement, if the Plan is not effective by February 28, 2009, AG may terminate the Agreement. Accordingly, RPG asserts that the prompt disallowance of the MCP Claim or, alternatively, the estimation of the MCP Claim for allowance, treatment and distribution purposes is critical to the Debtors' successful reorganization. The Debtors intend to object to any MCP Claim and believe that any such claim should be disallowed in its entirety or, alternatively, estimated at zero dollars for allowance, treatment and distribution purposes, pursuant to sections 502(b)(4) and 502(d) of the Bankruptcy Code. RPG has scheduled a Jan. 12 hearing on its proposal. Objections are due Jan. 9, 2008. 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. RENEGY HOLDINGS: Posts $4.7 Mil. Net Loss in Qtr. Ended Sept. 30 ---------------------------------------------------------------- Renegy Holdings, Inc., posted a net loss of $4,732,000 for the three months ended September 30, 2008, and a net loss of $12,242,000 for the nine months ended September 30, 2008. Robert W. Zack, executive vice president and chief financial officer, disclosed in a regulatory filing dated November 14, 2008, that the company had incurred significant losses and negative cash flows since inception. The company has financed its operations and the construction of a 24-megawatt facility near Snowflake, Arizona primarily through the issuance of bonds, borrowings under construction and term loans with a bank, cash and short-term investments, sale proceeds, equity infusions, proceeds from the issuance of convertible debt, and borrowings under a line of credit. The Snowflake plant is currently generating and selling commercial power to Arizona Public Service Co. and Salt River Project in accordance with the terms of power purchase agreements with those parties. According to Mr. Zack, the company has significant negative cash flows due to (i) the Snowflake plant operations not yet fully stabilizing, (ii) costs of biomass fuel aggregation, (iii) corporate overhead, and (iv) interest payment obligations. "The company is aggressively seeking third party debt and equity financing and is negotiating a potential sale of the company. Additionally, the company is negotiating a potential transaction to monetize production tax credits and other tax attributes of its Snowflake plant. No assurance can be given that the company will be able to secure additional financing on acceptable terms, or at all, or that a sale of the company will occur." Mr. Zack related that the company's cash balances, along with any cash generated from its Snowflake operations, are not sufficient to continue to meet its liquidity requirements. "[In addition], disruptions in the capital and credit markets experienced during 2008 have adversely affected our ability to raise equity capital or borrow money from banks or other potential lenders. If the company is unable to secure additional financing . . . in the very near future, or otherwise extend the company's cash resources, the company would be forced to cease operations. [These] conditions raise substantial doubt about the company's ability to continue as a going concern." As of September 30, 2008, the company's balance sheet showed total assets of $88,037,000, total liabilities of $68,836,000, and total stockholders' equity of $19,201,000. The company's balance sheet also showed strained liquidity with total current liabilities of $14,109,000 exceeding total current assets of $12,171,000. A full-text copy of the company's quarterly report is available for free at: http://researcharchives.com/t/s?37a4 Comerica Credit Pact Amended On November 26, 2008, the company entered into a second modification to its credit agreement with Comerica Bank, Robert M. Worsley, Christi M. Worsley, the Robert M. and Christi M. Worsley Revocable Trust, NZ Legacy, LLC, and New Mexico & Arizona Land Company, LLC, to modify certain terms and conditions of the company's credit agreement with Comerica entered into March 28, 2008, as modified by the first modification to the credit agreement on November 14, 2008. Among other things, the Second Modification includes these changes to the terms and conditions of the Credit Agreement: (i) Comerica agrees to increase the non-revolving line of credit facility amount under the Credit Agreement from $6,200,000 to $6,500,000 and (ii) delivery of $3,000 to Comerica as consideration for increasing the maximum amount to be borrowed. A full-text copy of the Second Modification is available for free at: http://researcharchives.com/t/s?37a3 $12.3 Million Financing In a press release dated January 2, 2009, Renegy Holdings disclosed that it executed an agreement to secure $12.3 million of tax equity financing from an institutional equity investor in exchange for a partial interest in its 24-megawatt Snowflake biomass power generation facility. The tax equity investment, which is expected to close in mid-January, will provide the investor with access to the federal production tax credits, depreciation benefits and certain cash flows that will be generated by Renegy's Snowflake plant over the next 10 years. Renegy also announced plans to downsize the number of its employees by 47% and restructure its business with the objective of positioning the company to fully fund its operations through future cash flows generated by the Snowflake plant. "Closing this financing transaction will allow us to monetize the tax attributes of our Snowflake plant that we are unable to take advantage of today, and apply these funds toward improving our financial outlook as we move into 2009," Bob Worsley, Chairman and CEO of Renegy, stated in a press release. The closing of the transaction is contingent upon approval of the Federal Energy Regulatory Commission, and upon term conversion of the company's project debt with CoBank. CoBank has agreed to term conversion, subject to the establishment of a debt service reserve in the approximate amount of $2.76 million. Comerica Bank is expected to issue a letter of credit in that amount for the account of the company in order to satisfy the DSR requirement, and Mr. Worsley has agreed with the company to reimburse Comerica directly for any amounts drawn on the letter of credit. Meridian Investments, Inc., acted as the exclusive investment advisor to Renegy in managing the tax equity transaction. Renegy plans to use funds from the tax equity investment to: -- Repay all funds borrowed under its line of credit with Comerica Bank; -- Fund final outstanding construction and start-up costs associated with completion of the Snowflake facility; -- Fund certain cash reserve accounts; and -- Pay severance and other costs associated with executing its restructuring plans. Renegy's restructuring plans call for significant cost cutting measures that include substantially decreasing its corporate overhead, reducing its business development activities until conditions in the capital and credit markets improve, and narrowing the scope of its operations to focus on operating its Snowflake plant. As part of these initiatives, the company is pursuing a reduction in force focused primarily on corporate and administrative personnel, including certain executive officer and other senior management positions. By early January, Renegy plans to reduce its workforce to a total of 48 employees, of which seven employees will constitute its corporate staff, representing a 47% reduction in force compared with 90 employees at September 30, 2008. Additional layoffs may ensue during the first quarter of 2009. Staff reductions are being carefully targeted to maintain focus and minimize any impact on the continued operations of the company's Snowflake plant and its associated fuel aggregation business. Additionally, as part of its restructuring activities, the company is actively pursuing a strategy that will enable it to deregister its common stock and delist from the NASDAQ Capital Market in order to terminate its associated reporting obligations with the Securities and Exchange Commission and eliminate the significant costs of being a listed public reporting company. The company expects to record restructuring charges of approximately $2.0 million, the majority of which will be recorded in the first quarter of 2009. The company anticipates there will be additional future costs relating to the continued evaluation of its business and its goal of further reducing expenses. To help minimize the costs associated with its restructuring activities, Renegy's senior executives have agreed to modifications of their employment agreements providing for both a reduction in and deferral of severance compensation. Further, President and Chief Operating Officer Hugh Smith, Chief Financial Officer Rob Zack and Senior Vice President, Business Development & Public Affairs Scott Higginson all moved to a part-time status with the company effective January 3, 2009, with the intent of phasing out their positions over the next few months. Renegy Holdings entered into letter agreements on December 18, 2008, amending employment agreements with Messrs. Smith, Zack, and Higginson. Among others, the letter agreements provide that: -- Mr. Smith's employment with the company is reduced to part- time status effective January 3, 2009. Mr. Smith continues to serve as the company's President and Chief Operating Officer and is obligated to dedicate a minimum of nine hours per week to the company. He will be paid $1,600 per week plus $165 per hour for any time in excess of nine hours per week. -- Mr. Zack's employment with the company is reduced to part- time status effective January 3, 2009. Mr. Zack continues to serve as the company's Chief Financial Officer and Executive Vice President and is obligated to dedicate a minimum of eight hours per week to the company. He will be paid $1,000 per week plus $125 per hour for any time in excess of eight hours per week. -- Mr. Higginson's employment with the company is reduced to part-time status effective January 3, 2009, and Mr. Higginson no longer serves as an officer of the company as of January 3. Mr. Higginson is obligated to dedicate a minimum of eight hours per week to the company. He will be paid $1,200 per week plus $150 per hour for any time in excess of eight hours per week. The remaining corporate staff has begun to assume the responsibilities of Messrs. Smith, Zack, and Higginson's positions. Renegy also terminated its corporate headquarters lease effective December 31, 2008, to further reduce operating expenses, and is returning to a smaller office located in Mesa, Arizona. "Our corporate infrastructure had been established to position the company for rapid growth in the biomass power generation industry using access to the capital and credit markets to execute our vision," commented Mr. Worsley. "However, turbulent conditions in the financial markets over the course of 2008 negatively impacted our ability to secure the funding necessary to pursue our planned growth strategy and maintain our overhead costs. As a result, we are taking aggressive steps to significantly downsize our operations and position the company to become a self-sustaining business with the cash flow generated by our Snowflake plant. While these decisions are never easy, especially when layoffs ensue, we believe we are taking the appropriate actions to reduce our losses and preserve the cash flow necessary for us to weather this difficult economic environment." Renegy believes the actions it is taking will strengthen its Snowflake power generating asset and contribute to the plant's continued success. Renegy also plans to continue exploring other strategic alternatives for the business, including a potential sale of the company. About Renegy Holdings Renegy Holdings, Inc., -- http://www.renegy.com/-- based in Tempe, Arizona, is a renewable energy company engaged in biomass power generation utilizing wood waste as a primary fuel source. Renegy's current biomass power generating assets include a 24-MW facility near Snowflake, Arizona that commenced commercial operations in June 2008, and an idle 13-MW biomass plant in Susanville, California. Renegy's other business activities include an established fuel aggregation and wood products division, which collects and transports forest thinnings and woody waste biomass fuel to its power plants, and which sells logs, lumber, shaved wood products and other high value wood by-products to provide additional value to its primary business operations. REVELSTOKE CDO: S&P Downgrades Rating on Class A-3 Notes to 'CC' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class A-2 and A-3 notes from Revelstoke CDO I Ltd. S&P removed the rating on the class A-3 notes from CreditWatch with negative implications. The class A-2 rating remains on CreditWatch negative, indicating a heightened likelihood of further downgrades. At the same time, S&P affirmed the 'AAA' rating on the class A-1 notes. The CreditWatch placements primarily affect transactions for which a significant portion of the collateral assets currently have ratings on CreditWatch with negative implications or have significant exposure to assets rated in the 'CCC' category. The two downgraded tranches have a total issuance amount of $310 million. Revelstoke CDO I Ltd. is a U.S. cash flow high- grade structured finance collateralized debt obligation of asset- backed securities that was collateralized at origination primarily by 'AAA' through 'A' rated tranches of residential mortgage-backed securities and other SF securities. The CDO downgrades reflect a number of factors, including credit deterioration and recent negative rating actions on U.S. subprime RMBS. To date, including the CDO tranches listed below and including actions on both publicly and confidentially rated tranches, S&P has lowered its ratings on 4,104 tranches from 919 U.S. cash flow, hybrid, and synthetic CDO transactions as a result of stress in the U.S. residential mortgage market and credit deterioration of U.S. RMBS. In addition, 990 ratings from 446 transactions are currently on CreditWatch with negative implications for similar reasons. In all, S&P has downgraded $488.531 billion of CDO issuance. Additionally, S&P's ratings on $10.470 billion of securities have not been lowered but are currently on CreditWatch with negative implications, indicating a heightened likelihood of future downgrades. Standard & Poor's will continue to monitor the CDO transactions it rates and take rating actions, including CreditWatch placements, when appropriate. Rating Actions Rating ------ Transaction Class To From ----------- ----- -- ----- Revelstoke CDO I Ltd. A-2 BBB/Watch Neg A+/Watch Neg Revelstoke CDO I Ltd. A-3 CC CCC-/Watch Neg Rating Affirmed Transaction Class Rating ----------- ----- ------ Revelstoke CDO I Ltd. A-1 AAA Other Rating Reviewed Transaction Class Rating ----------- ----- ------ Revelstoke CDO I Ltd. B CC RXELITE INC: Posts $10.9 Million Net Loss in Qtr. Ended Sept. 30 ---------------------------------------------------------------- RxElite, Inc., posted a net loss of $10,965,762 for the three months ended September 30, 2008, compared with a net loss of $3,163,017 for the same period a year earlier. For the nine months ended September 30, 2008, the company posted a net loss of $24,395,201, compared with a net loss of $12,325,534 for the same period a year earlier. In a regulatory filing dated November 14, 2008, Shannon M. Stith, vice president finance, disclosed that as of September 30, 2008, the company had current assets of $8,315,839, including cash and equivalents of $1,348,216, accounts receivable of $987,229, inventory of $5,172,498 and other current assets of $807,896. "As of September 30, 2008, we had current liabilities of $11,753,181, consisting primarily of accounts payable of $7,794,452, accrued rebates of $612,538, accrued interest expense of $543,750, and accrued payroll expenses of $780,551, and notes payable to former preferred shareholders of $1,555,623. As a result, as of September 30, 2008, we had a working capital deficit of $3,437,342." "We have funded our operating losses primarily from proceeds from the sale of our common stock and proceeds from the issuance of convertible debentures and notes payable to related parties." "The company has incurred losses since inception and may continue to incur losses for the foreseeable future. These conditions raise substantial doubt about the ability of the company to continue as a going concern. The company's business plan anticipates that its immediate future activities will be funded from operations. The company is currently seeking strategic alternatives for future growth and continued operations. These alternatives include but are not limited to the sale of a subsidiary, joint venture, and sale of some or all of the company to outside groups." As of September 30, 2008, the company's balance sheet showed total assets of $33,029,092, total liabilities of $18,958,181 and total stockholders' equity of $14,070,911. Accumulated deficit reached $53,030,881. A full-text copy of the company's quarterly report is available for free at: http://researcharchives.com/t/s?378b Minrad Terminates Distribution Agreement On November 21, 2008, Minrad International Inc. notified the company that the Exclusive Manufacturing and Distribution Agreement dated June 9, 2004, as amended, between RxElite Holdings and Minrad terminated for non-payment of outstanding amounts. The agreement provided, among other things, that RxElite Holdings be Minrad's exclusive distributor of the anesthetic gases Enflurane, Isoflurane and Sevoflurane in the United States human market and be granted the exclusive right to purchase other generic inhalation anesthetic products and Isoflurane for distribution for veterinary uses in the United States. In a press release, RxElite said it will continue to supply products to its customers from existing inventory while working through supply arrangements from alternative sources. RxElite will work closely with its customers and vendors to ensure an ongoing supply of RxElite's key anesthetic gas products. Earl Sullivan Appointed New President & CEO On November 21, 2008, Jonathan Houssian resigned as President and Chief Executive Officer of the company and assumed the position of Senior Vice President of Sales and New Business Development. On the same date, the Board of Directors of the company appointed Earl Sullivan as President and Chief Executive Officer. Mr. Sullivan, 36, has served as chief operating officer since October 11, 2007, and from July 13, 2007 to October 11, 2007, as executive vice president of operations. Mr. Sullivan has been the executive vice president of RxElite Holdings since May 2002. Effective December 5, 2008, Mr. Houssian resigned his positions as a director and an officer of the company and RxElite Holdings. About RxElite RxElite, Inc. -- http://www.RxElite.com/-- develops, manufactures, and markets generic prescription drug products in specialty generic markets. These markets include products in the areas of anesthesia, sterile liquid dose drugs (including respiratory inhalation drugs, ophthalmics, and injectable drugs), and complex active pharmaceutical ingredients. SALLY BEAUTY: Bank Loan Sells at Substantial Discount ----------------------------------------------------- Participations in a syndicated loan under which Sally Beauty Co. is a borrower traded in the secondary market at 68.40 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 a drop of 1.00 percentage points from the previous week, the Journal relates. Sally Beauty Co. pays interest at 250 points above LIBOR. The bank loan matures on November 18, 2013. The bank loan carries Moody's B2 rating and Standard & Poor's BB rating. Based in Denton, Texas, Sally Beauty Holdings Inc. (NYSE: SBH) -- http://www.sallybeautyholdings.com/-- is an international specialty retailer and distributor of professional beauty supplies. Through the Sally Beauty Supply and Beauty Systems Group businesses, the company sells and distributes through over 3,500 stores, including approximately 200 franchised units, throughout the United States, the United Kingdom, Canada, Puerto Rico, Mexico, Japan, Ireland, Spain and Germany. Beauty Systems Group stores, branded as CosmoProf or Armstrong McCall stores, along with its outside sales consultants, sell up to 9,800 professionally branded products including Paul Mitchell, Wella, Sebastian, Goldwell, and TIGI which are targeted exclusively for professional and salon use and resale to their customers. SARIDAKIS CONSTRUCTION: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: Saridakis Construction, Inc. 654 S Irena Avenue Redondo Beach, CA 90277 Bankruptcy Case No.: 09-10214 Type of Business: The Debtor operates a construction company that offers remodeling and restoration services. Chapter 11 Petition Date: January 6, 2009 Court: Central District Of California (Los Angeles) Judge: Alan M. Ahart Debtor's Counsel: Michael Jay Berger, Esq. mikeberger@aol.com 9454 Wilshire Blvd., 6th Flr. Beverly Hills, CA 90212-2929 Tel: (310) 271-6223 Fax: (310) 271-9805 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor did not file a list of 20 largest unsecured creditors. The petition was signed by Lisa Saridakis, chief financial officer and secretary of the company. SKYPOSTAL NETWORKS: Posts $1.3MM Net Loss in Qtr. Ended Sept. 30 ---------------------------------------------------------------- SkyPostal Networks, Inc., posted a net loss of $1,362,762 for the three months ended September 30, 2008, compared with a net loss of $654,006 for the same period a year earlier. The company posted a net loss of $2,003,994 for the nine months ended September 30, 2008. The increase in net loss in the quarter ended September 30, 2008 compared with the prior year is largely due to the operating loss of $1,273,777 for the period. Total non-recurring, non-cash gains of $1.6 million on the adjustment to the value of the put option and put of 160,000 shares in the second quarter of 2008 reduced the net loss. In a regulatory filing dated November 14, 2008, Chief Executive Officer Albert Hernandez disclosed that the company has incurred operating losses from operations of $3,145,180 in the nine months ended September 30, 2008, and cash flow from operations has been negative for each of the quarters of 2008. "These factors raise substantial doubt about the company's ability to continue as a going concern." "The company's cash position at September 30, 2008 was $497,269. The company has arranged a line of credit of $1,200,000 with a factor with whom it has previously worked. Subject to satisfactorily completing due diligence, the company can borrow up to eighty percent of the value of eligible receivables. This line may provide cash to the company for a certain period of time but it does not represent a long term solution. The company is exploring several other alternatives for financing and additional equity capital but there can be no assurances that these efforts will be successful. Management has also identified opportunities to lower operating and administrative costs and increase revenue in an effort to reduce the current negative cash flow. These measures include payroll reduction, implementation of programs to increase efficiency of sorting operations and curtailment of general expenses." "As of September 30, 2008, the company had no indebtedness, with the exception of a share option agreement entered into with a shareholder on April 1, 2007 and a non-compete agreement entered into with the same shareholder beginning April 1, 2008." "In addition to solving the immediate cash shortage, the company intends to seek out future acquisitions in order to achieve operating income sufficient to cover other expenses and achieve a net profit. To complete [these] acquisitions, the company may require additional financing for which the company has no financing commitments and for which management believes no assurances can be given that such financing commitments will be obtained. The company also plans to seek out new customers and to increase business with existing customers as additional means to increase tonnage and reach profitability." As of September 30, 2008, the company's balance sheet showed total assets of $4,226,091, total liabilities of $1,700,978, and total stockholders' equity of $2,525,113. Accumulated deficit reached $15,879,339. A full-text copy of the company's quarterly report is available for free at: http://researcharchives.com/t/s?3794 CFO Resigns Clement Harary, the company's chief financial officer, resigned his position effective November 30, 2008, to pursue other interests. There were no disagreements between the company and Mr. Harary on any accounting, or other, policies or practices. A.J. Hernandez, the company's chief operating officer, will assume the CFO responsibilities. About SkyPostal SkyPostal Networks, Inc. -- http://www.skypostal.com/-- is an international wholesale mail distribution company that specializes in hand delivery of commercial mail, periodicals and parcel post into the Latin America-Caribbean (LAC) region. SkyPostal is the largest private postal network in Latin America, delivering more than 60 million mail items each month through its network of local private postal operators. SkyPostal handles mail from European postal administrations, major publishers, mail consolidators, international mailers and financial institutions that require time-defined and reliable delivery of their mail, magazines and mail order parcels. SMART MOVE: Sept. 30 Balance Sheet Upside Down by $563,382 ---------------------------------------------------------- Smart Move, Inc., reported a net loss of $3.8 million in the third quarter of 2008, compared with a net loss of $3.2 million in the third quarter of 2007. For the nine months ended Sept. 30, 2008, the company reported a net loss of $10 million compared with a net loss of $7.1 million in the same period in 2007. The company noted that approximately 58% of the third quarter net loss reflected net non-cash items compared to approximately 42% for the same period in 2007. Chris Sapyta, president and CEO, disclosed in a regulatory filing dated November 14, 2008, that the company has sustained substantial operating losses since inception and has used substantial amounts of working capital in its operations. "These conditions raise substantial doubt in the company's ability to continue as a going concern. Realization of a major portion of the assets reflected on the accompanying balance sheet is dependent upon continued operations of the company which, in turn, is dependent upon the company's ability to meet its financing requirements and succeed in establishing profitability of its future operations. Management's plans include increasing revenue opportunities directly through new marketing programs targeted to the relocation industry, partnerships with van lines and other strategic alliances. The company has implemented an affiliate program designed to work with local movers to use its services to provide inter-state moves. In addition, the company is working with corporate relocation companies to use its services for their corporate customers. The company's Board of Directors has authorized management to explore the full range of strategic alternatives available to address financing objectives and enhance shareholder value. The alternatives being pursued include raising capital through commercial loans, equipment leasing transactions and additional public or private offerings of the company's securities. Concurrently, the company will evaluate cost control measures such as restructuring current debt obligations, reductions of workforce, changes in storage options and changes in transportation providers. The company expects to increase its revenues during fiscal 2008. However, there can be no assurance that the anticipated revenues and corresponding cash flows will materialize. At March 31, 2008, the company indicated that it would require additional funding of approximately $2,500,000 during 2008 in order to finance its operations, make debt payments and implement its business plan. During the second and third quarters of 2008, the company received $2,005,000 of this necessary funding including $750,000 from the Operating and Security Agreement, $505,000 from the May 2008 private placement of Secured Notes, and $750,000 from an equity investment. As of November 14, 2008, the company has yet to secure commitments to fulfill the balance of its projected $2,500,000 requirement." At September 30, 2008 the company had an accumulated deficit of $24,023,642 and negative working capital of $11,000,790. "As of September 30, 2008, we were in default with respect to $6,779,153 or approximately 45% in principal amount of our outstanding convertible promissory notes. Our significant debt requires us to use our limited cash flow for the payment of these debt obligations. These large debt service payments as well as the amounts of interest converted to equity have caused us to incur significant interest expense which has increased our historical net loss and will increase our current and future net loss," Mr. Sapyta said. As of September 30, 2008, the company's balance sheet showed total assets of $15,657,322, total liabilities of $16,220,704, and total shareholders' deficit of $563,382. A full-text copy of the company's quarterly report is available for free at: http://researcharchives.com/t/s?378e Bridge Loan On November 26, 2008, a Bridge Loan Agreement was entered into between the company and John Thomas Bridge & Opportunity Fund, L.P. in the principal amount of $300,000 with a maturity date of March 31, 2009. The agreement contains provisions for earlier mandatory prepayment if one or more new financings aggregating $5,000,000 are consummated prior to the March 31, 2009, stated maturity date. The bridge loan terms also provide for a further extension of up to two months for repayment if required to complete new financings. The loan bears interest at the rate of 10% per annum, also due and payable at maturity. The bridge loan is unsecured and provides Smart Move with working capital to meet short-term needs while the company pursues opportunities for long- term funding or financing for its working capital requirements. The company paid two placement agent that are registered FINRA brokers an aggregate fee equal to 12% of the gross proceeds at the closing of the bridge loan. In connection with the bridge loan funding and as additional risk- related consideration agreed to be paid to the lender for making the short-term loan on an unsecured basis, the company issued its unsecured 10% debenture and also agreed, subject to satisfaction of all listing requirements of the American Stock Exchange, to issue certain equity consideration in the form of restricted securities. The company also agreed to issue a three-year common stock purchase warrant to acquire 200% of the common shares issued at an exercise price per share equal to 150% of the issue price. The company and the investor also entered into a Registration Rights Agreement. A full-text copy of the Bridge Loan Agreement is available for free at: http://researcharchives.com/t/s?378f A full-text copy of the Debenture Agreement is available for free at: http://researcharchives.com/t/s?3790 A full-text copy of the Warrant to Purchase Common Stock is available for free at: http://researcharchives.com/t/s?3791 A full-text copy of the Registration Rights Agreement is available for free at: http://researcharchives.com/t/s?3793 About Smart Move Smart Move, Inc., is a logistics company providing services through deployment of a fleet of company owned, SmartVault(TM) shipping containers to execute the movement of goods. Smart Move utilizes its proprietary and licensed technologies to manage its fleet of assets, providing superior security, scheduling flexibility and expedited service on behalf of its customers and alliance partners. Smart Move sells its services direct to moving consumers, and provides moving capacity and guaranteed logistic services to van lines and agents nationwide. Smart Move has operations in the top 60 cities in the USA and can service over 92 percent of the US population. SMITTY'S BUILDING: Wants to Access $16 Million BofA DIP Facility ---------------------------------------------------------------- Smitty's Building Supply Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Eastern District of Virginia for authority to obtain as much as $16.0 million in debtor-in-possession financing under the postpetition credit and security agreement with Bank of America, N.A., as lender. The Debtors owe $12.3 million in loans plus interests, cost and interest to the lender as of their bankruptcy filing. The Debtors said the proposed postpetition financing is comprised of (i) a $10.5 million revolving loan note; and (ii) $5.5 million senior term loan note. The DIP facilities will mature by Aug. 15, 2009. Proceeds of the facilities will be used to (i) repay in full all prepetition obligations as of the Debtors' bankruptcy filing, and (ii) provide working capital, costs and professionals fees. Under the agreement, the DIP loans incur interest at BBA 1-month LIBOR + 450 basis points. To secure their DIP obligations, the lender will be granted superiority claims status on account of the obligations under the credit agreements. There is a $250,000 carve-out for payment of fees and expenses incurred by professionals retained by the Debtors. A hearing is set for Feb. 28, 2009, at 9:30 a.m., to consider approval of the Debtors' request. A full-text copy of the revolving loan note is available for free at: http://ResearchArchives.com/t/s?379a A full-text copy of the term loan note is available for free at: http://ResearchArchives.com/t/s?379b A full-text copy of the postpetition credit and security agreement is available for free at: http://ResearchArchives.com/t/s?379d A full-text copy of the 13-week cash flow budget is available for free at: http://ResearchArchives.com/t/s?379d About Smitty's Building Headquartered in Alexandria, Virginia, Smitty's Building Supply Inc. supplies building materials in Washington, D.C. The company and three of its affiliates filed for Chapter 11 protection on Jan. 5, 2009 (Bankr. D. Del. Lead Case No. 09-10040). Kristen E. Burgers, Esq., and Lawrence Allen Katz, Esq., at Venable LLP, represent the Debtors in their restructuring efforts. Epiq Bankruptcy Solutions LLC serves as the Debtors' claims agent. When the company filed for protection from their creditors, they listed assets and debts between $10 million and $50 million in their filing. ST. SIMONS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: St. Simons Lodging, LLC fka Joe McDonough, LLC dba The Ocean Lodge Hotel 907 Beachview Drive St. Simons Island, GA 31522 Bankruptcy Case No.: 08-21445 Chapter 11 Petition Date: December 31, 2008 Court: Southern District of Georgia (Brunswick) Judge: John S. Dalis Debtor's Counsel: Carole T. Hord, Esq. Schreeder, Wheeler & Flint, LLP 1100 Peachtree Street, N.W., Suite 800 Atlanta, GA 30309-4516 Tel: (404) 681-3450 Fax: (404) 681-1046 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 ------ --------------- ------------ Comvox Systems, LLC trade debt $34,000 5570-403 Florida Mining Blvd. S., Jacksonville, FL 32257 Points North trade debt $7,990 568 Peachtree Parkway Cumming, GA 30041 Cardmember Service trade debt $5,330 P.O. Box 15153 Wilmington, DE 19886-5153 The Westport Group trade debt $5,000 Atlanta Business Chronicle trade debt $3,495 Quantum Communications trade debt $3,280 Tuxedo Road trade debt $3,100 Hambright & Associates Design trade debt $2,806 Inc. Georgia Power trade debt $2,801 Atcomm Publishing trade debt $2,401 Franklin Security Premium trade debt $825 Finance Southern Distinction Magazine trade debt $750 Sysco trade debt $637 Rent All of Glynn Party Store trade debt $548 St. Simons Seafood, Inc. trade debt $388 Super Soaker Irrigation and trade debt $350 Landscape Hasty's Communications East, trade debt $336 Inc. Dade Paper & Bag Co. trade debt $230 Southland Waste Systems trade debt $222 - Brunswick Premier Printing trade debt $187 The petition was signed by Joseph N. McDonough, manager of the company. STERLING GENERATION: Case Summary & 10 Largest Unsec. Creditors --------------------------------------------------------------- Debtor: Sterling Generations, LLC 4393 Commons Drive East Destin, FL 32541 Bankruptcy Case No.: 09-50004 Chapter 11 Petition Date: January 6, 2009 Court: Northern District of Florida (Panama City) Judge: Lewis M. Killian Jr. Debtor's Counsel: Louis L. Long, Jr., Esq. long@chesserbarr.com Chesser & Barr, P.A. 1201 Eglin Parkway Shalimar, FL 32579 Tel: (850) 651-9944 Fax: (850) 651-9867 Estimated Assets: Less than $50,000 Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Central Progressive Bank final judgment $15,814,566 111 North Oak Street Hammond, LA 70401 Peggy C. Brandon taxes owed $77,583 PO Box 2285 Panama City, FL 32402 AI Group trade debt $15,050 3424 Peachtree Dr., Ste.1600 Atlanta, GA 30326 American Arbitration Assn. services rendered $6,950 L3 Communications Titan Corp. trade debt $3,840 Reece Hoopes and Fincher services rendered $3,604 Atlantic Hospitality Advisors trade debt $3,540 Bishops Family Buffet arbitration award $2,250 Wilson Price Barranco services rendered $1,300 Plymouth Park Tax Services LLC tax lien unknown Tuba IV LLC tax lien unknown The petition was signed by managing member Garret McNeil. SUPERIOR OFFSHORE: Wants Case Converted to Chapter 7 Liquidation ---------------------------------------------------------------- Louis E. Schaefer, Jr., and Schaefer Holdings LP, creditor and equity holder of Superior Offshore International Inc., ask the United States Bankruptcy Court for the Southern District of Texas to convert the Debtor's Chapter 11 restructuring case to Chapter 7 liquidation proceeding. Mr. Schaefer says there is no reasonable likelihood that a plan will be confirmed. He said that amended Chapter 11 plan filed by the Debtor on Dec. 23, 2008, is defective. The amended plan will not yield and equal or higher payout to claimants that would a case under Chapter 7, Mr. Schaefer asserts. According to Mr. Schaefer, the amended plan violated the fair and equitable requirements of Section 1129 of the United States Bankruptcy Code. He points out, among other things, that the amended plan improperly provide for the treatment of Class 7 and 8 claims because the procedure for the claims in not to be determined until postconfirmation. Mr. Schaefer asserts that the Chapter 7 will maximize the value to creditors and will eliminate unnecessary administrative expenses incurred by various committees and professionals in the Debtor's case. About Superior Offshore Headquartered in Houston Texas, Superior Offshore International Inc. (Nasdaq: DEEP) -- http://www.superioroffshore.com/-- provides subsea construction and commercial diving services to the offshore oil and gas industry. The company's construction services include installation, upgrading and decommissioning of pipelines and production infrastructure. The company operates a fleet of seven service vessels and provides remotely operated vehicles and saturation diving systems for deepwater and harsh environment operations. Superior Offshore International, Inc., filed for bankruptcy protection on April 24, 2008 (Bankr. S.D. Tex. Case No. 08-32590). The Debtors listed total assets of $67,587,927 and total liabilities of $54,359,884 in its schedules. David Ronald Jones, Esq., and Joshua Walton Wolfshohl, Esq., at Porter & Hedges LLP, represent the Debtor as counsel. The U.S. Trustee for Region 7 appointed five creditors to serve on an Official Committee of Unsecured Creditors. Douglas S. Draper, Esq., at Heller Draper Hayden Patrick & Horn LLC, and Michael D. Rubenstein, Esq., at Liskow Lewis, represent the Committee as counsel. As of June 23, 2008, the Debtor has $67,587,927 in total assets and $54,359,884 in total debts. T3 MOTION: Posts $2.6 Million Net Loss in Quarter Ended Sept. 30 ---------------------------------------------------------------- T3 Motion, Inc., posted a net loss of $2,695,183 for the three months ended September 30, 2008, compared with a net loss of $1,745,964 for the same period a year earlier. Ki Nam, chairman of the board and chief executive officer, and Kelly Anderson, executive vice president and chief financial officer, disclosed in a regulatory filing dated November 14, 2008, that the company has sustained operating losses since its inception on March 16, 2006, and has used substantial amounts of working capital in its operations. "Further, at September 30, 2008, accumulated deficit amounted to $20,285,274. These factors raise substantial doubt about the company's ability to continue as a going concern for a reasonable period of time." "Management believes that its current sources of funds and liquid assets will allow the company to continue as a going concern through at least the end of 2008. The company started selling its vehicles in 2007 and it has obtained equity financing, net of offering costs, in 2008 from third parties of $6,669,163 through September 30, 2008, and may raise additional debt or equity capital to finance future activities during 2009. As of October 31, 2008, the company had $42,930 in cash and cash equivalents. The company intends to raise additional debt or equity capital in order to generate cash required to continue as a going concern. In light of these plans, management is confident in the company's ability to continue as a going concern." As of September 30, 2008, cash and cash equivalents were $174,839, or 2.4% of total assets compared to $4,932,272, or 64.7% of total assets as of December 31, 2007. The decrease in cash and cash equivalents during the nine months ended September 30, 2008, was primarily attributable to increase of net cash used in operating and investing activities offset in part by equity financing from sale of stock. As of September 30, 2008, the company's balance sheet showed total assets of $7,416,767, total liabilities (all current) of $4,272,821, and total stockholders' equity of $3,143,946. A full-text copy of the company's quarterly report is available for free at: http://researcharchives.com/t/s?37a7 Promissory Note Maturity Date Extended T3 Motion issued to Immersive Media Corporation a Promissory Note dated as of December 31, 2007, in the original promissory note amount of $2,000,000. The company and the Lender agreed to extend the maturity date the outstanding balance of $1,000,000 from December 31, 2007 to March 31, 2009. In the event that the company receives (i) $10,000,000 or more in a private placement financing or (ii) $15,000,000 or more in equity financing at any time after December 19, 2008, and before March 31, 2010, the Note will become immediately due and payable. All interest accrued on the Note and the company's payables to certain parties will be repaid immediately after the company's receipt of proceeds from a lender of a pending bridge debt financing. The Lender will receive warrants to purchase up to 250,000 shares of the company's common stock at $2.00 per Share, for extending the Note. The terms of the Warrants will be substantially similar to the warrants to be issued by the company in its next equity financing. The Lender will receive a Warrant to purchase 50,000 Shares if the Note is not repaid by March 31, 2009. For every month that the Note remains outstanding thereafter, the Lender will receive an additional Warrant for 16,667 Shares. A full-text copy of the Amendment is available for free at: http://researcharchives.com/t/s?37a8 About T3 Motion T3 Motion, Inc., develops and manufactures T3 vehicles, which are electric three-wheel stand-up vehicles that are directly targeted to the public safety and private security markets. T3 vehicles have been designed to tackle a host of daily professional functions, from community policing to patrolling of airports, military bases, campuses, malls, public event venues and other high-density areas. TARGA RESOURCES: Bank Loan Continues to Sell at Discount -------------------------------------------------------- Participations in a syndicated loan under which Targa Resources Inc. is a borrower traded in the secondary market at 64.17 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. Targa Resources Inc. pays interest at 200 points above LIBOR. The bank loan matures on October 31, 2012. The bank loan is unrated. As reported reported in the Troubled Company Reporter on January 2, 2009, participations in the bank loan traded in the secondary market at 66.17 cents-on-the-dollar during the week ended December 26, 2008. Targa Resources, Inc. is headquartered in Houston, Texas. As of March 31, 2008, TRI had consolidated total assets of $3.6 billion and LTM EBITDA of approximately $377 million. On a consolidated basis, it owns or operates approximately 11,000 miles of natural gas pipelines, approximately 700 miles of NGL pipelines, and 22 natural gas processing plants with access to natural gas supplies in the Permian Basin, north Texas, onshore southern Louisiana, and the Gulf of Mexico. In addition, TRI has a NGL logistics and marketing business, with 16 storage, marine and transport terminals with above ground NGL storage capacity of approximately 900 MBbl, net NGL fractionation capacity of approximately 300 MBbl/d, and NGL storage wells with a capacity of approximately 67 MMBbl. TRI owns 24.5% of the outstanding units and the 2% GP interest in Targa Resources Partners LP (NGLS). Because it is the GP and therefore has control, TRI consolidates NGLS in its financial statements. NGLS' assets include natural gas gathering and processing operations in north Texas, the Permian Basin, and southwest Louisiana. NGLS had total assets of approximately $1.5 billion and LTM EBITDA of approximately $199 million as of March 31, 2008. TD ROWE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------ Debtor: TD Rowe Amusements, Inc. aka TD Rowe (Detroit) aka TD Rowe of N CA dba Coin Amusement aka TD Rowe Corp aka T.D. Rowe aka TD Rowe El Paso aka TD-Rowe aka TD Rowe (Dallas) aka TD Rowe (Los Angeles) aka TD Rowe (El Paso) aka TD Rowe/Oakland aka T.D. Rowe - Los Angeles aka TD Rowe Corporation 3315 West 12th Street Houston, TX 77008 Bankruptcy Case No.: 08-15638 Chapter 11 Petition Date: December 15, 2008 Court: Western District of Oklahoma (Oklahoma City) Debtor's Counsel: Sam G. Bratton, II, Esq. sbratton@dsda.com Doerner Saunders Daniel & Anderson 320 South Boston, Suite 500 Tulsa, OK 74103 Tel: (918) 582-1211 Total Assets: $1,957,866 Total Debts: $11,258,168 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Hill & Robbins, P.C. professional fees $48,484 The Toy Barn amusement product $32,939 Global VR league fees $32,845 Tax Assessor / Collector taxes $24,406 Sam's Club Direct cigarettes $22,847 Liberty Mutual insurance $21,570 OK Manufacturing equipment or $20,112 The Hartford insurance $19,337 Cigna Healthcare insurance $17,691 Five Star Redemption equipment or $15,384 part purchases Betson Enterprises equipment or $14,624 part purchases Hein & Associates LLP professional fees $14,541 American Changer-Services equipment or $12,392 part purchases City of Commerce City taxes $12,293 Incredible Technologies league fees $10,904 E Cast league fees $10,384 Laramie County taxes $10,296 The Salt Group professional fees $9,925 Happ Controls equipment or $9,916 part purchases King Plush amusement product $9,148 The petition was signed by Donald A. Towner, president, chief executive officer and secretary of the company. TRIBUNE CO: Wants to Carryover 33 Prepetition Non-Insiders ---------------------------------------------------------- Tribune Co. debtor-affiliates KWGN Inc. and KPLR Inc. seek authority from the U.S. Bankruptcy Court for the District of Delaware to implement a retention plan for 33 key, non-insider and non-management employees who are necessary for an effective and orderly transition of operations under a local marketing agreement entered into by KWGN in Denver, Colorado, and a shared services agreement entered into by KPLR in St Louis, Missouri. The Debtors relate that the total cost of the proposed retention plan is $384,317. KWGN entered into a prepetition local marketing agreement with Community Television of Colorado, LLC, and Community Television of Colorado License, LLC, which agreement integrated certain operations of KDVR, Community Colorado's Fox affiliate in Denver, and KWGN. Under the agreement, KDVR and KWGN will operate out of Community Colorado's KDVR studios with Community Colorado, as an independent contractor, providing operating and programming related services. KPLR also entered into a prepetition shared services agreement with Community Television of Missouri, LLC, and Community Television of Missouri License, LLC, which agreement integrated certain operations of KTVI, Community Missouri's Fox affiliate in St. Louis, and KPLR. Under the agreement, KPLR and KTVI will operate out of KPLR's studios with Community Missouri, acting as an independent contractor. The integration of facilities, use of combined news operations, and realization of certain programming efficiencies in intended to significantly reduce the Debtors' costs, streamline their operations, and enable them to deliver a better and higher- quality product to their customers and viewers, Norman L. Pernick, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., in Wilmington, Delaware, proposed attorneys for the Debtors, tells the Court. This transition, Mr. Pernick says, requires both the short-term retention and continued employment by the Debtors of certain key non-insider and non-management employees whose positions will be eliminated as a result of consolidation of operations under the transition agreements, but who are necessary to effectuate a smooth and orderly integration of the relevant Denver and St. Louis broadcast stations under the Agreements. The Transitional Employees provide a wide range of required services to the Denver and St. Louis television stations, including advertising sales and traffic support; engineering; and production assistance for the local news, Mr. Pernick adds. Accordingly, the Debtors ask for the Transitional Employees to remain in their current employment for a short period of time as the Agreements are fully implemented. In return, the Debtors intend to pay the Transitional Employees their retention compensation. The termination dates for the Transitional Employees are staggered between December 31, 2008, and March 2009. The Debtors currently employ 20 full-time, non-union Transitional Employees at KWGN and five non-union and eight union Transitional Employees at KPLR. Based on the Debtors' estimate, the retention payments for all Transitional Employees would equal to $684,364 with the employees at KWGN receiving $420,432 and the employees at KPLR receiving $263,9323. The Debtors tell the Court that they will only be liable for $384,317 of the costs as Community has agreed to reimburse the Debtors $300,046 of the total payment. The Debtors ask the Court to approve the Transitional Employee Retention Program. Without the retention program, the Debtors face a risk that their business operations, their agreements with Community, and their ability to successfully deliver local area news and programming to residents of Denver and St. Louis metropolitan could be adversely impacted, Mr. Pernick says. Headquartered in Chicago, Illinois, Tribune Company -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08-13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. (Tribune Bankruptcy News Issue No. 6; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Intends to Employ Sidley Austin LLP as Lead Counsel --------------------------------------------------------------- Pursuant to Section 327(a) of the Bankruptcy Code, Tribune Co. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Sidley Austin LLP as their lead reorganization and bankruptcy counsel, nunc pro tunc to the Petition Date. As a result of more than 20 years of service as outside counsel to the Debtors, Sidley Austin has developed extensive and detailed knowledge of all aspects of the Debtors' business operations, says David P. Eldersveld, vice president, deputy general counsel and secretary of Tribune Company. As bankruptcy counsel, Sidley Austin will: (a) provide legal advice with respect to the Debtors' powers and duties as debtors-in-possession in the continued operation of their business; (b) take all necessary action on behalf of the Debtors to protect and preserve the Debtors' estates, including prosecuting actions on behalf of the Debtors, negotiating any and all litigation in which the Debtors are involved, and objecting to claims filed against the Debtors' estates; (c) prepare on behalf of the Debtors all necessary motions, answers, orders, reports and other legal papers in connection with the administration of the Debtors' estates; (d) attend meetings and negotiate with representatives of creditors and other parties-in-interest, attend court hearings, and advise the Debtors on the conduct of their Chapter 11 cases; (e) perform any and all other legal services for the Debtors in connection with the Chapter 11 cases and with implementation of the Debtors' plan of reorganization; (f) advise and assist the Debtors regarding all aspects of the plan of confirmation process, including negotiating and drafting a plan of reorganization and accompanying disclosure statement, securing the approval of a disclosure statement, soliciting votes in support of plan confirmation, and securing confirmation of plan; (g) provide legal advice representation with respect to various obligations of the Debtors and their managers and officers; (h) provide legal advice and perform legal services with respect to matters involving the negotiation of the terms and the issuance of corporate securities, matters relating to corporate governance and the interpretation, application or amendment of the Debtors' organizational documents, including their limited liability company agreements, material contracts, and matters involving the fiduciary duties of the Debtors and their officers and managers; (i) provide legal advice and legal services with respect to litigation, tax and other general non-bankruptcy legal issues for the Debtors to the extent requested by the Debtors; and (j) render other services as may be in the best interests of the Debtors. The Debtors intend to pay Sidley for its legal services on an hourly basis in accordance with its ordinary customary rates and to reimburse for its actual and necessary costs and expenses: Professional Rate per Hour ------------ ------------- Partners $575 - $1,100 Counsel and senior counsel $400 - $875 Associates $240 - $650 Para-professionals $95 - 385 James F. Conlan, Esq., a partner at Sidley Austin LLP, assures the Court that his firm does not hold or represent any interest adverse to the Debtors' estates upon which it is to be engaged, and is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Mr. Conlan discloses that Sidley Austin has received an advance retainer of approximately $4,500,000 from November 24 to December 4, 2008, in connection with the Debtors' restructuring efforts. The firm has also received about $2,991,701 in fees and $51,615 in expenses within one year prior to the Petition Date on account of legal services rendered in connection with the restructuring efforts of the Debtors. Highest Bankruptcy Counsel Hourly Rate Charging $1,100 per hour for a Sidley Austin partner is the "highest hourly rate I have seen or heard of for a bankruptcy lawyer," Lynn LoPucki, a bankruptcy law teacher at the University of California in Los Angeles told Bloomberg News. Bloomberg said Sidley Austin's $1,100 hourly rate surpasses the rates charged by Weil. Gotshal & Manges LLP in the bankruptcy case of Lehman Brothers Holdings, Inc. Weil Gotshal partners, led by Harvey Miller, charge $650 to $950 an hour. Headquartered in Chicago, Illinois, Tribune Company -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08-13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. (Tribune Bankruptcy News Issue No. 6; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Taps McDermott Will & Emery LLP for Domestic Matters ---------------------------------------------------------------- Pursuant to Section 327(e) of the Bankruptcy Code, Tribune Co. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ McDermott Will & Emery LLP as special counsel for general domestic legal matters nunc pro tunc to the Petition Date. According to the Debtors, McDermott has agreed to continue to advise them in their Chapter 11 cases. McDermott has been an outside counsel to the Debtors and their debtor affiliates for more than 20 years. McDermott will assist the Debtors in a wide variety of general domestic legal matters including tax, employment benefits, employment, corporate, real estate, and other legal matters that may arise in the ordinary course of their business. The Debtors propose to pay McDermott for their legal services on an hourly basis in accordance with its customary rates: Partners & Counsel $445-$1,010 Associates $285-$590 Paraprofessionals $105-$345 According to the Debtors, McDermott has received a retainer amounting to $500,000, in connection with its representation on the general domestic legal matters. A portion of the retainer has been applied to all prepetition fees and expenses incurred, and the remainder will constitute a general retainer for postpetition services and expenses, the Debtors tell the Court. Moreover, the Debtors note, in addition to the retainer, McDermott has received approximately $7,037,500, within one year prior to the Petition Date on account of the services it rendered. Blake D. Rubin, a partner of McDermott Will & Emery LLP, assures the Court that his firm does not hold or represent any interest adverse to the Debtors or their estates with respect to the matters for which it is to be employed. Headquartered in Chicago, Illinois, Tribune Company -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08-13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. (Tribune Bankruptcy News Issue No. 6; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Taps Lazard Freres & Co. LLC as Financial Advisor ------------------------------------------------------------- Tribune Co. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Lazard Freres & Co. LLC as investment banker and financial advisor pursuant to Sections 327(a) and 328(a) of the Bankruptcy Code. The Debtors relate they have engaged Lazard to provide general investment banking and financial advice in connection with their attempts to complete a strategic restructuring, reorganization and recapitalization and to prepare for the commencement of their Chapter 11 cases. The Debtors believe that Lazard's general restructuring experience and expertise, and knowledge of the capital markets and its merger and acquisition capabilities will be beneficial in pursuing the services provided in an engagement letter. As financial advisor, Lazard to: (a) review and analyze the Debtors' business, operations and financial projections; (b) evaluate the Debtors' potential debt capacity in light of their projected cash flows; (c) assist in the determination of a capital structure; (d) assist in the determination of a range of values; (e) advise the Debtors on tactics and strategies for negotiating with the stakeholders; (f) render financial advice and participate in meetings or negotiations with stakeholders or rating agencies or other appropriate parties in connection with any restructuring; (g) advise the Debtors on the timing, nature and terms of new securities, other consideration or other inducements to be offered pursuant to the restructuring; (h) advise and assist the Debtors in evaluating potential financing transactions and to execute appropriate agreements, contact potential sources of capital, and assist in implementing financing; (i) assist the Debtors in preparing documentation within Lazard's area of expertise that is required in connection with restructuring; (j) assist in identifying and evaluating candidates for a potential Majority Disposition, and advice in connection with negotiations and aid in the consummation of a Majority Disposition; (k) attend meetings of the Board of Directors and its committees with respect to matters on which it has been engaged; (l) provide testimony in any proceeding before the Court; and (m) provide with other financial restructuring advice. The Debtors ask the Court to excuse Lazard from maintaining time records as set forth in Rule 2016 of the Federal Rules of Bankruptcy Procedures and the United States Trustee Fee Guidelines in connection with the services to be rendered pursuant to the Engagement Letter. According to the Debtors, Lazard will present reasonably detailed descriptions of its services and the approximate time expended. The Debtors propose to pay Lazard: (a) a monthly fee of $200,000, payable on the first day of each month until the expiration of its engagement. One- half of all monthly fees paid in respect of the months following the 12th month will be credited against any Restructuring or Disposition Fee; (b) $16,000,000, payable upon the earlier of consummation of a Majority Disposition or a restructuring; (c) in the event the Debtors request Lazard's assistance in connection with any disposition of a portion of the business, assets or securities of the Debtors that would not constitute a Majority Disposition, the parties will mutually agree in good faith on a fee to be paid to Lazard on consummation of any transaction; and (d) reasonable out-of-pocket expenses; As part of the compensation payable to Lazard, the Debtors agree to indemnify and to provide contribution and reimbursement. However, the Debtors will not indemnify Lazard for claim or expense that is judicially determined to have arisen from bad faith, self-dealing, breach of fiduciary duty, willful misconduct or gross negligence. James E. Millstein, a managing director of Lazard Freres & Co. LLC, assures the Court that his firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code and does not hold or represent an interest adverse to the Debtors or their estates. Headquartered in Chicago, Illinois, Tribune Company -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08-13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. (Tribune Bankruptcy News Issue No. 6; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Taps Alvarez & Marsal as Restructuring Advisor ---------------------------------------------------------- Tribune Co. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Alvarez & Marsal North America, LLC, as their restructuring advisors. Tribune Company's vice president, deputy general counsel and secretary, David P. Elderveld, relates Alvarez & Marsal has devoted substantial amounts of time and effort prior to the Petition Date in advising and assisting the Debtors with respect to ongoing bank negotiations, supporting the financial department in the management of its liquidity resources, assisting the Debtors in their contingency planning efforts and supporting the Debtors in securing postpetition financing. As restructuring advisor, Alvarez & Marsal will: (a) assist the Debtors in the preparation of financial related disclosures required by the Court, including the Schedules of Assets and Liabilities, the Statement of Financial Affairs and Monthly Operating Reports; (b) assist to the Debtors with information analyses required pursuant to their postpetition financing; (c) assist with the identification and implementation of short-term cash management procedures; (d) assist with the identification of executory contracts and leases and performance of cost or benefit evaluations with respect to the affirmation or rejection of each; (e) assist the Debtors' management team and counsel focused on the coordination of resources related to the ongoing reorganization effort; (f) assist in the preparation of financial information for distribution to creditors including cash flow projections and budgets, cash receipts and disbursement analysis, analysis of various asset and liability accounts, and analysis of proposed transactions for which the Court approval is sought; (g) attend at meetings and assist in discussions with potential investors, banks and other secured lenders, the Official Committee of Unsecured Creditors, the United States Trustee, other parties-in-interest and professionals hired as requested; (h) analyze creditor claims by type, entity, and individual claim and assist with the development of databases; (i) assist in the preparation of information necessary for the confirmation of a plan of reorganization in the Chapter 11 cases, including information contained in the disclosure statement; (j) assist in the evaluation and analysis of avoidance actions, including fraudulent conveyances and preferential transfers; and (k) render other general business consulting or other assistance as the Debtors' management or counsel may deem necessary and consistent with the role of a financial advisor and not duplicative of services provided by other professionals in the Chapter 11 proceeding. The Debtors will pay Alvarez & Marsal according to its customary hourly rates: Managing Directors $525-$750 Directors/Senior Directors $375-$550 Associates/Senior Associates $275-$450 Administration/Analysts $175-$350 The Debtors will reimburse A&M for reasonable and necessary expenses incurred in connection with the Debtors' Chapter 11 cases, including but not limited to, transportation costs, lodging, food, telephone, copying, and messenger services. Thomas E. Hill, a managing director with Alvarez & Marsal North America, LLC, assures the Court that his firm is not a creditor of the Debtors within the meaning of Section 101(10) of the Bankruptcy Code. During the 90-day period prior to the Petition Date, Alvarez & Marsal received approximately $1,050,000 from the Debtors for professional services performed and expenses incurred. The Debtors say that the unapplied residual retainer amounting to $350,000, will constitute a general retainer for postpetition services, will not be segregated in a separate account, and will be held until the end of the Chapter 11 cases and applied to Alvarez & Marsal's finally approved fees. Headquartered in Chicago, Illinois, Tribune Company -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08-13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. (Tribune Bankruptcy News Issue No. 6; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENTERTAINMENT: Files OpCo/LandCo Restructuring Plan ------------------------------------------------------------- Tropicana Entertainment LLC and its affiliates filed before the U.S. Bankruptcy Court for the District of Delaware a Chapter 11 plan of reorganization for entities led by Tropicana Entertainment, and another by Tropicana Las Vegas Holdings. Bloomberg News notes that the Plans were filed hours before the bankruptcy judge was scheduled to hear a request by the official committee of unsecured creditors of Tropicana creditors for permission to file a competing proposal for reorganizing the company. Tropicana has not yet filed a disclosure statement, which would explain in detail the treatment of creditors and expected recovery under the Plan. Both Plans, however, propose to pay secured creditors -- the LandCo and Opco claims in full in cash or through the return of the collateral securing their claims. Holders of administrative claims and claims on account of the Debtors' debtor-in-possession financing will be paid in full. Unsecured creditors will obtain recovery from funds obtained by a liquidating trust. William Yung, founder of Columbia Sussex, will lose his equity interests in Tropicana. Mr. Yung acquired Aztar Corp. for $2.8 billion in 2007, and renamed the company Tropicana Entertainment. He has been removed as a member of the Tropicana Board pursuant to mismanagement allegations. Holders of claims under the Debtors' prepetition credit facilities, referred to as the LandCo and OpCo Credit Facilities, will obtain shares of stock of Reorganized LandCo and OpCo, respectively. Holders of OpCo Credit Facility Claims will also receive notes and certain sale proceeds. Both unsecured creditors and holders of OpCo and LandCo Credit Facilities are impaired -- meaning they won't receive full recovery -- and will be entitled to vote on the Plans. Mr. Yung will be deemed to reject the Plans on account of his zero recovery. Before filing for bankruptcy protection, Tropicana, in 2007, entered into credit facilities to finance its acquisition 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. A copy of the Plan of Reorganization for the OpCo Debtors -- comprising Adamar Garage Corporation; Argosy of Louisiana, Inc.; Atlantic-Deauville Inc.; Aztar Corporation; Aztar Development Corporation; Aztar Indiana Gaming Company, LLC; Aztar Indiana Gaming Corporation; Aztar Missouri Gaming Corporation; Aztar Riverboat Holding Company, LLC; Catfish Queen Partnership in Commendam; Centroplex Centre Convention Hotel, L.L.C.; Columbia Properties Laughlin, LLC; Columbia Properties Tahoe, LLC; Columbia Properties Vicksburg, LLC; CP Baton Rouge Casino, L.L.C.; CP Laughlin Realty, LLC; Jazz Enterprises, Inc.; JMBS Casino LLC; Ramada New Jersey Holdings Corporation; Ramada New Jersey, Inc.; St. Louis Riverboat Entertainment, Inc.; Tahoe Horizon, LLC; Tropicana Entertainment Holdings, LLC; Tropicana Entertainment Intermediate Holdings, LLC; Tropicana Entertainment, LLC; Tropicana Express, Inc.; and Tropicana Finance Corp. -- is available for free at: http://bankrupt.com/misc/Tropicana_OPCo_Plan.pdf A copy of the Plan of Reorganization for the LandCo Debtors -- comprising Adamar of Nevada; Hotel Ramada of Nevada; Tropicana Development Company, LLC; Tropicana Enterprises; Tropicana Las Vegas Holdings, LLC; Tropicana Las Vegas Resort and Casino, LLC; and Tropicana Real Estate Company, LLC -- is available for free at: http://bankrupt.com/misc/Tropicana_LandCo_Plan.pdf 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; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA LANDCO: Bank Loan Sells at Substantial Discount --------------------------------------------------------- Participations in a syndicated loan under which Tropicana Landco is a borrower traded in the secondary market at 40.40 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 1.40 percentage points from the previous week, the Journal relates. Tropicana Landco pays interest at 225 points above LIBOR. The bank loan matures on July 3, 2008. Moody's has withdrawn its rating on the bank loan. Standard & Poor's does not rate the loan. 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; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) US SHIPPING: Misses Dec. 31 Payment on $332.6MM Credit Facility --------------------------------------------------------------- U.S. Shipping Partners, L.P., did not pay the principal or interest payment due on December 31, 2008, under its senior credit agreement. As a result, an event of default has occurred under the senior credit agreement, U.S. Shipping said in a Jan. 5 filing with the Securities and Exchange Commission. According to the regulatory filing, lenders holding a majority-in- interest of the outstanding loans may at any time direct the administrative agent to declare all outstanding obligations under the senior credit agreement to be immediately due and payable and to pursue their rights and remedies under the senior credit agreement. At December 31, 2008, an aggregate of $332.6 million was outstanding under the senior credit agreement. U.S. Shipping, however, says that it has entered into a forbearance agreement with holders of a majority-in-interest of the outstanding loans under the senior credit agreement. The lenders agreed to forbear from taking any action or exercising any right or remedy permitted to be taken or exercised under the senior credit agreement and related loan documents as a result of U.S. Shipping's failure to make the December 31, 2008, principal and interest payments under the senior credit agreement. A copy of the Forbearance Agreement is available at: http://researcharchives.com/t/s?378c The Forbearance Agreement will terminate on the earliest to occur of (i) 5:00 p.m. (Eastern time) on February 10, 2009; (ii) the occurrence and continuance of any event of default other than the U.S. Shipping's failure to make the December 31, 2008 principal and interest payments under the senior credit facility and (iii) the failure by U.S. Shipping to comply with any of the provisions of the Agreement. During the term of the Forbearance Agreement, U.S. Shipping has agreed to engage in good faith negotiations with the administrative agent and the lenders regarding restructuring and strategic alternatives, which will include a possible sale of the business. Failure of U.S. Shipping to conduct good faith negotiations will constitute an event of default and result in a termination of the Forbearance Agreement. The lenders' prior waiver of any potential defaults under the financial covenants set forth in the senior credit agreement for the quarters ended September 30, 2008, and December 31, 2008, will expire January 31, 2009, which will result in the occurrence of an event of default under the senior credit agreement, and a termination of the Forbearance Agreement, absent an additional waiver or agreement to forbear by the lenders. U.S. Shipping said there can be no assurance that the lenders will not accelerate the outstanding obligations and pursue their remedies under the senior credit agreement after January 31, 2009. In addition, U.S. Shipping said that its failure to make the Dec. 31, 2008 principal and interest payments under the senior credit facility constitutes an event of default under its interest rate swap agreements. As a result, the counterparty to each interest rate swap agreement may, upon prior notice, elect to terminate such agreement early. If U.S. Shipping's interest rate swap agreement with the administrative agent is early terminated, the firm estimates it would owe approximately $14.9 million under such agreement. If its interest rate swap agreement with Lehman Brothers Special Financing Inc. is early terminated, U.S. Shipping estimates it would owe approximately $9.9 million under the agreement. U.S. Shipping acknowledges that there can be no assurance that the counterparties to these interest rate swap agreements will not early terminate the agreements and seek payment of these obligations. Due to the Forbearance Agreement, however, the counterparties would be unable to require the administrative agent to foreclose on U.S. Shipping's assets during the term of the Forbearance Agreement. U.S. Shipping is due to make an interest payment Feb. 15 on a second-lien loan, Bloomberg's Bill Rochelle reports. About U.S. Shipping Partners L.P. U.S. Shipping Partners L.P. is a leading provider of long-haul marine transportation services for refined petroleum, petrochemical and commodity chemical products in the U.S. domestic "coastwise" trade. Its existing fleet consists of twelve tank vessels: five integrated tug barge units; one product tanker; three chemical parcel tankers and three ATBs. U.S. Shipping has embarked on a capital construction program to build additional ATBs and, through a joint venture, additional tank vessels that upon completion will result in U.S. Shipping having one of the most modern versatile fleets in service. For additional information about U.S. Shipping Partners L.P., please visit http://www.usslp.com/ VALLEY FORGE: Posts $4.9 Million Net Loss in Qtr. Ended Sept. 30 ---------------------------------------------------------------- Louis J. Brothers, president, secretary and treasurer of Valley Forge Composite Technologies, Inc., disclosed in a regulatory filing dated November 14, 2008, that the company incurred losses for the past two fiscal years and had a net loss of $4,991,647 for the three months ended September 30, 2008, and a net loss of $5,587,113 for the nine months ended September 30, 2008. "Our auditors have expressed substantial doubt that we can continue as a going concern." "Historically, we have relied on revenues, debt financing and sales of our common stock to satisfy our cash requirements. For the nine months ended September 30, 2008, we received cash proceeds of $120,700 from revenues, $343,000 from sales of our common stock and $1,260,000 in debt financing. For the year ended December 31, 2007, we received cash proceeds from debt financing of $160,000 and sales of our common stock of $914,000. For the nine months ended September 30, 2008, we issued 3,237,516 shares and 2,500,000 warrants for services. For the year ended December 31, 2007, we issued 659,333 shares for services. Management anticipates that we will continue to issue shares for services in the short term." "Between December 31, 2007 and September 30, 2008, our capital requirements have largely been met through sales of securities. We recorded $132,000 from a sale of a momentum wheel to NASA in May, 2008. Until we are able to generate significant revenues from our core homeland security-related detection technologies, we anticipate being dependent on sales of securities to finance our ongoing capital requirements." According to Mr. Brothers, management intends to finance the company's 2008 operations primarily with the revenue from product sales and any cash short falls will be addressed through equity financing, if available. "Management expects revenues will be realized but not to the point of profitability in the short term. We will need to continue to raise additional capital, both internally and externally, to cover cash shortfalls and to compete in our markets. At our current revenue levels, management believes we will require an additional $1,000,000 during the next 12 months to satisfy our cash requirements of approximately $95,000 per month. These operating costs include cost of sales, general and administrative expenses, salaries and benefits and professional fees. We have insufficient financing commitments in place to meet our expected cash requirements for 2008 and we cannot assure you that we will be able to obtain financing on favorable terms. If we cannot obtain financing to fund our operations in 2008, then we may be required to reduce our expenses and scale back our operations." As of September 30, 2008, the company's balance sheet showed total assets of $1,591,629, total liabilities of $603,043, and total shareholders' equity of $988,586. A full-text copy of the company's quarterly report is available for free at: http://researcharchives.com/t/s?378a About Valley Forge Composites Valley Forge Composite Technologies, Inc., was incorporated in Pennsylvania on November 21, 1996, and re-domiciled as a Florida corporation on August 7, 2007. It changed its name to Valley Forge Detection Systems, Inc. Simultaneously, the business segments of the former Pennsylvania company were split into new Florida corporations, with VFDS' aerospace segment assigned to Valley Forge Aerospace, Inc.; VFDS' personnel screening technologies assigned to Valley Forge Imaging, Inc., and VFDS' development and commercialization of potential new product lines assigned to Valley Forge Emerging Technologies, Inc. The Company is the 100% shareholder of its four subsidiaries. WORKFLOW MANAGEMENT: S&P Corrects 'D' 2nd-Lien Debt Rating to 'C' ----------------------------------------------------------------- The previous version of this report published earlier incorrectly stated that the rating on Workflow Management's second-lien debt was lowered to 'D'. In fact, this rating was lowered to 'C'. A corrected version follows. Standard & Poor's Ratings Services lowered its corporate credit rating on Stamford, Connecticut-based Workflow Management Inc. to 'D' from 'CCC'. In addition, the issue-level ratings on the company's $40 million secured revolving credit facility and $275 million first-lien term loan were lowered to 'D' from 'B-', and the issue-level rating on the company's $140 million second- lien term loan was lowered to 'C' from 'CC'. The rating actions stem from the company's decision to withhold its $6.875 million quarterly amortization payment on its first- lien term loan due Dec. 31, 2008. Although the company has continued to make interest payments on its indebtedness, the missed amortization payment will, if not cured or waived within 45 days of Dec. 31, 2008, result in a cross-default under the company's second-lien credit agreement. As of today, lenders have not exercised remedies available to them under the credit agreements, nor has a forbearance agreement been reached. YRC WORLDWIDE: S&P Changes Outlook on 'CC' Rating to Developing --------------------------------------------------------------- Standard & Poor's Ratings Services revised the implications of its CreditWatch review of YRC Worldwide Inc. (CC/Watch Dev/--) to developing from negative. The revision follows news of the Overland Park, Kansas-based trucking company's terminated debt tender offer and negotiations with its bank group to modify terms on its revolving credit and asset backed securitization facilities. In addition, S&P placed its 'CCC+' issue-level ratings on Yellow Corp.'s and Yellow Freight System Inc.'s industrial development bonds on CreditWatch with developing implications given the uncertainty of the eventual corporate credit rating. On Dec. 4, 2008, S&P lowered ratings on YRC to current levels and placed them on CreditWatch negative following the company's announcement of a distressed debt tender offer. The tender offer expired on Dec. 23, 2008, without ratification of the proposed wage concessions by the Teamsters union. Given that the terms of the tender offer required ratification, the tender offer was terminated on Dec. 24, 2008. YRC expects its union employees to ratify the wage concessions in early January and anticipates an amendment to its credit facilities in late January. In addition, YRC has entered into a definitive agreement to sell and lease back a pool of its terminal facilities with a transaction valued at approximately $150 million, with annual lease payments of $21 million. "We will meet with management to discuss YRC's liquidity position, capital structure, and operating prospects to resolve the CreditWatch," said Standard & Poor's credit analyst Anita Ogbara. "We could take interim rating actions as more information becomes available, in advance of a resolution of the CreditWatch review." * Home Prices and Sales Tumbled in October, Says Radar Logic ------------------------------------------------------------ According to the October 2008 RPXTM Monthly Housing Market Report released by Radar Logic Incorporated, home prices and sales volumes decreased more in October 2008 than in any other October since the beginning of Radar Logic's data, January 2000. Five Metropolitan Statistical Areas (MSA) saw their largest monthover- month declines and 13 MSAs saw their largest year-over-year declines. Home sales across the 25 MSAs declined by 14.9% during October but sales in Sun Belt cities remained elevated relative to October 2007 due to rapid growth in motivated sales during the intervening year. The large concentrations of motivated sales relative to total transactions weighed heavily on prices. As a result, eight of the ten MSAs with the largest year-over-year increases in sales were also among the ten MSAs that experienced the greatest year-over-year price declines. "Motivated sales continue to be a major factor in most markets tracked by the RPX," said Michael Feder, CEO of Radar Logic. "Until action, if any, out of Washington becomes clear, it is difficult to know if this is a long-term phenomenon or if it will work its way through and, as a result, prices will begin to recover." Key observations by Radar Logic were: * For the fourth month in a row, Milwaukee, WI was at the top of the 25-MSA ranking in October. Home prices in Milwaukee were 5.3% higher than they were a year before, making Milwaukee the only MSA tracked by Radar Logic to experience year-over-year price appreciation in October. * San Francisco was at the bottom of the rankings with 34.4% year-over-year price decline. * Detroit, Las Vegas, Phoenix, San Diego and Seattle saw their largest month-over-month price declines since January 2000. * Though motivated sales across the 25 MSAs grew 193% between January 1 and October 31, the rate of growth slowed over the first three quarters and turned negative in October, when 18 of 25 MSAs saw motivated sales decrease. According to a report by Bloomberg's Bill Rochelle, the Institute for Supply Management reported yesterday that its index of non- manufacturing businesses was 40.6 for December, the second-worst on record. The report adds that the National Association of Realtors index of pending home resales was down 4% in November. * U.S. Bankruptcy Process Works, Weeds Out Weak, Study Says ----------------------------------------------------------- With high-profile company bankruptcies becoming distressingly common, many would be hard-pressed to find an upside. According to a new study by three finance researchers at the University of Utah's David Eccles School of Business, however, there might be a silver lining of sorts: the effectiveness of the U.S. bankruptcy system. They found that 80% of fundamentally sound companies -- those with good business models but too much debt -- reorganized and emerged from Chapter 11 with only 7% fewer assets. On the other hand, just 37% of economically distressed companies - - those with severe business problems such as poor management, outdated technology or flawed business models -- reorganized with less than 50% of their original assets. The remainder were liquidated or purchased by other firms. In addition, all reorganized firms had reduced debt by 50% by the time they emerged from Chapter 11. "We found that the bankruptcy system is largely successful at helping fundamentally strong companies recover, while dismantling weaker companies whose troubles are more severe," says Elizabeth Tashjian, associate professor of finance and a member of the Academic Advisory Council of the Turnaround Management Association. The study reviews data from 530 companies that entered bankruptcy between 1991 and 2004, making it more comprehensive than previous research, says Ms. Tashjian. "There's no question that the process isn't perfect, but it seems that Chapter 11 is doing what it's supposed to do," she says, "taking away assets from firms that are destroying their value and retaining them in firms with a good chance of surviving and creating value." While previous research has focused on the average outcomes of firms entering Chapter 11, Ms. Tashjian says she and her co- authors -- Utah professor of finance Michael Lemmon and Ph.D. student Yung-Yu Ma -- recognize that firms file for bankruptcy for different reasons. The researchers used two accounting variables: operating earnings to assets, with profit margins adjusted by industry, and debt to value: the amount of leverage a company has. Financially distressed firms tended to have bad debt ratios but good operating performance. With economically distressed firms, it was the other way around. The finance department in David Eccles School of Business has been ranked 20th for research productivity from 2003 to 2007 by the Finance Management Association and Arizona State University which annually evaluate finance departments worldwide. * Akerman Senterfitt Snares Keith Costa from Pullman ---------------------------------------------------- Akerman Senterfitt announced the continued expansion of its New York office and Bankruptcy practice group, with new attorney Keith N. Costa joining the firm as a Shareholder. Mr. Costa's practice focuses on Bankruptcy and Creditors' Rights matters, representing debtors and creditors, both secured and unsecured, in bankruptcy proceedings of all types nationwide. He joins the firm from Pullman & Comley, LLC, where he served as partner for more than three years. Mr. Costa will be an immediate asset to the Bankruptcy and Corporate Practice Groups at Akerman. He brings an extensive background in bankruptcy proceedings, having served as both a Chapter 11 Trustee and Examiner and worked on numerous Chapter 7 and Chapter 11 cases for Fortune 500 companies. Prior to rejoining private practice, he served with the U.S. Department of Justice for over 10 years, initially as Assistant U.S. Trustee in the Southern District of New York leading litigation and administration for the district with direct supervision of forty- nine Chapter 7 Trustees. Mr. Costa later served as Senior Trial Counsel in the District of Connecticut, overseeing a diverse Chapter 7 and Chapter 11 caseload and a panel of twelve Chapter 7 Trustees. Prior to Pullman & Comley, LLC, Mr. Costa was a Partner at Cohn Birnbaum & Shea P.C., another Connecticut-based law firm with a New York office, which he personally launched. Mr. Costa previously was Of Counsel with Cummings & Lockwood LLC. He earned his law degree from American University and is admitted to practice in the U.S. District Courts for the District of Connecticut, the Southern District of New York, the Eastern District of New York, and the Northern District of New York. In addition, Mr. Costa has been admitted to the New York and District of Columbia bars. Akerman's Bankruptcy & Creditors' Rights Practice Group represents creditors, creditors' committees, lenders, bankruptcy trustees and other parties in all aspects of bankruptcy law, debtor/creditor relations, and insolvency problems. With a team of more than 30 attorneys across the country, the group is capable of handling a number of complex cases, simultaneously, while pursuing the appropriate legal avenues under state and/or federal law in all types of commercial and residential development mortgage foreclosures and receiverships, in addition to serving as receivers in many SEC cases. Akerman's clients include leading national banks, as well as a variety of CMBS special servicers, private equity lenders and other financial institutions. About Akerman Senterfitt Akerman is ranked among the top 100 law firms in the United States by The National Law Journal NLJ 250 (2007) in number of lawyers and is the largest firm in Florida. With more than 500 lawyers and governmental affairs professionals, the firm serves clients in major business centers throughout the United States, including Miami, New York, Washington D.C. and Los Angeles. On the Net: http://www.akerman.com/ * Stamboulidis Is Managing Partner of Baker Hostetler's NY Office ----------------------------------------------------------------- The national law firm of Baker & Hostetler LLP has announced that George A. Stamboulidis has been named Managing Partner of the firm's New York office. Mr. Stamboulidis is succeeding Paul Eyre, who held the position since the office opened in 2001. Baker Hostetler's New York office includes diverse practice areas, with particular depth in business, intellectual property, litigation, corporate governance and monitorships. Based in part on this strength, Irving H. Picard, Court-appointed trustee in the liquidation of Bernard L. Madoff Investment Securities LLC, recently joined Baker Hostetler in New York. "In these troubling economic times, now more than ever, our clients take great comfort knowing our deep-bench of experienced attorneys is here to successfully and efficiently represent their interests," said Mr. Stamboulidis who will manage the operations of the 66-attorney office. "Clients can rely on Baker Hostetler's track record of integrity and results," he said. "George Mr. Stamboulidis is ideally suited to head our rapidly growing office in New York," said Steven Kestner, Executive Partner of the firm. "He understands the workings as well as the culture of both the city and our firm, and he is a proven leader. I am confident that the office will continue to flourish under George as it has under Paul Eyre." Eyre led the New York office during a period of remarkable growth. "We have grown the New York office by assembling a diverse team of high caliber attorneys and by maintaining our culture of integrity and client focus," says Eyre, who will remain active in the New York office and on the firm's Policy Committee. About George Mr. Stamboulidis George Mr. Stamboulidis joined the firm with the opening of the New York office after an illustrious 13-year career as a federal prosecutor in New York and New Jersey. He has been selected as an independent monitor on five separate occasions, more than any other attorney. In addition to having served as the corporate monitor for Merrill Lynch, The Bank of New York, Mellon Bank, and others, Mr. Stamboulidis and the firm's white collar team have conducted monitoring work and internal investigations for leading corporations. While with the U.S. Attorneys' Office in the Eastern District of NY, Mr. Stamboulidis served in a variety of supervisory positions, including Chief of the Long Island Division. In that capacity, he investigated and prosecuted cases involving complex business, bank, health care, accounting, securities and bankruptcy fraud, tax, public and labor corruption, extortion, racketeering, environmental and money laundering offenses. Mr. Stamboulidis successfully prosecuted Mafia boss Vincent "Chin" Gigante, the boss of the Genovese crime family. After a nationwide search, former U.S. Attorney General Janet Reno selected Mr. Stamboulidis to take over and successfully resolve the Wen Ho Lee nuclear weapons secrets prosecution. Reno three times presented Mr. Stamboulidis with the Department of Justice's Director's Award. Over the last seven years at Baker, Mr. Stamboulidis has served as Litigation Coordinator for the office, is a current member of the firm's Policy Committee and Operating Group and heads the firm's White Collar Defense and Corporate Investigations Practice -- which has become one of the preeminent such practices in the country. About Baker Hostetler's New York Office With 66 attorneys and growing, Baker Hostetler has established a stronghold in New York. Last year, the firm moved to new offices, occupying several floors at 45 Rockefeller Plaza. In addition to Mr. Stamboulidis, New York office management includes John Siegal, who succeeds Mr. Stamboulidis as head of the Litigation Practice in New York, Laurence S. Markowitz, the newly appointed head of the Business Practice in New York, Gerald J. Ferguson, head of the Intellectual Property Practice in New York and Elizabeth A. Smith, head of the Tax Practice in New York. All are long-time New York lawyers. Mr. Siegal, a 20-year New York business litigator and former Mayoral aide, represents clients in the financial services, media and real estate industries. Mr. Markowitz has practiced corporate and securities law for over 30 years, with a particular focus on hedge and private equity funds. Mr. Ferguson has extensive experience in intellectual property and has assisted a wide variety of businesses in developing intellectual property protection programs. Ms. Smith focuses her practice in the areas of tax advice and planning and tax controversy, and represents hedge funds, energy companies, and public and private corporations. About Baker Hostetler Founded over 90 years ago in 1916, Baker Hostetler is among the nation's 100 largest law firms with 620 attorneys coast to coast. The firm has 10 offices nationwide: New York, Cincinnati, Cleveland, Columbus, Costa Mesa, Denver, Houston, Los Angeles, Orlando and Washington, D.C. Its five primary practice groups are Business, Employment, Intellectual Property, Litigation and Tax. On the Net: http://www.bakerlaw.com/ * BOOK REVIEW: Voluntary Assignments for the Benefit of Creditors ----------------------------------------------------------------- Publisher: Beard Books Softcover: 788 pages for both volumes Price: $34.95 each volume; $49.95 set Review by Henry Berry http://www.amazon.com/exec/obidos/ASIN/189312228X/internetbankrupt http://www.amazon.com/exec/obidos/ASIN/1893122298/internetbankrupt Voluntary Assignments for the Benefit of Creditors is a 1999 update of the classic nineteenth-century work on the important financial and business instrument known as "voluntary assignments." The author of the original edition was Alexander M. Burrill, a noted legal scholar who also wrote a law dictionary and several other texts. Voluntary Assignments for the Benefit of Creditors is now in its sixth edition, with Avery-Webb authoring the update. As defined by the authors, voluntary assignments for the benefit of creditors are "transfers, without compulsion of law, by debtors, of some or all of their property to an assignee or assignees, in trust to apply the same, or the proceeds thereof, to the payment of some or all of their debts, and to return the surplus, if any, to the owner." Voluntary assignments offer businesspersons from small business owners to corporate executives great flexibility in raising capital. Considering the many ways that businesses can enter into voluntary assignments, the different ways of valuing properties "assigned," and the changing value of these properties over time, the law governing voluntary assignment is complex. The authors tackle the subject of voluntary assignments in all its breadth and depth. During the 1800s, when Burrill's work first came out, there were innumerable cases dealing with voluntary assignments. The case law of the 1800s remains authoritative, informative, and instructive today. To render it comprehensible, the authors break down the subject matter into its many facets, thereby allowing lawyers and others to quickly reference areas of interest. These cases are listed alphabetically, and comprise more than fifty pages in a front section titled "Table of Cases." Cases are also referred to in the text proper and in copious footnotes. The format of the text, including the footnotes, is the standard followed by many legal texts and handbooks, notably the multi-volume American Jurisprudence. The sections are numbered consecutively in forty- five chapters. There are 458 sections in all. The sections are relatively short, even though the subject of voluntary assignments is complex and there is bountiful case law. Readers can peruse general topics such as execution of the assignment, construction of assignments, sale of the assigned property, and the rights, duties, and powers of the assignee. More specific, detailed topics can be accessed using the index. There are two appendices. The first contains synopses of the statutes of every state and territory on voluntary assignments. The second appendix contains nearly thirty standard forms that can be used for various aspects of assignments. Although voluminous and rigorous in its commentary and legal citations, the two-volume Voluntary Assignments for the Benefit of Creditors is neither dense nor ungainly. Like a good lawyer breaking down a case so it can be comprehended by a jury of average persons, so does Burrill and Avery-Webb deal with the topic of voluntary assignments. Born in 1868 in Tennessee, James Avery-Webb (d. 1953) had a career as a prominent attorney in New York City. ********* 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 ***