/raid1/www/Hosts/bankrupt/TCR_Public/090414.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, April 14, 2009, Vol. 13, No. 102
Headlines
ADVANTAGE RENT-A-CAR: Hertz Closes $33 Million Acquisition
ALBERT LINDLEY: State to Provide $17.8 Million in Grant Funds
AMERICAN INT'L: Financial Unit's Wind-Down May Be Costly for Govt.
ASARCO LLC: District Court Bars Parent from Voting SPCC Shares
ASARCO LLC: Asbestos Panel, AMC Balk at Scaled Down Sterlite Deal
ASARCO LLC: Grupo Mexico to Offer $1.3 Billion for Unit
ASSET ACCEPTANCE: Moody's Affirms 'B1' Corporate Family Rating
BALLANTYNE RE: S&P Assigns 'CC' Rating on Class A-1 Notes
BCBG MAX: Moody's Changes Default Probability Rating to 'Caa3/LD'
BERMUDA BAY: Section 341 Meeting Slated for May 8 in Virginia
BERNARD L. MADOFF: Sent to Chapter 7 Liquidation by Former Clients
BERNARD L. MADOFF: Involuntary Chapter 7 Case Summary
BEXAR COUNTY: Moody's Affirms 'Ba2' Rating on Revenue Bonds
BEXAR COUNTY: Moody's Junks Rating on 2001A Bonds from 'B1'
BOMBARDIER RECREATIONAL: Moody's Junks Default Probability Ratings
BOSTON GENERATING: Moody's Reviews 'B3' Senior Secured Rating
CANWEST GLOBAL: Deadline for $30.4MM Interest Payment Today
CANWEST MEDIA: Would Miss Today's Interest Payment, Says Moody's
CHARTER COMMUNICATIONS: 3 Banks Named to Creditors Committee
CHARTER COMMUNICATIONS: Files Schedules and Statements
CHARTER COMMUNICATIONS: Taps AlixPartners as Restructuring Advisor
CHARTER COMMUNICATIONS: Asks Court to Approve Lazard Engagement
CHARTER COMMUNICATIONS: Noteholders Group Taps Paul Weiss
CHRYSLER LLC: S&P Downgrades Rating on First-Lien Loan to 'CC'
CHRYSLER LLC: Bankruptcy May Damage Daimler's Finances
CHRYSLER LLC: Creditors to Make Counteroffer to Treasury This Week
CITADEL BROADCASTING: Waiver Won't Affect Moody's 'Caa2' Rating
COGECO CABLE: S&P Changes Outlook to Stable; Affirms 'BB' Rating
COMPTON PETROLEUM: Moody's Junks Corporate Family Rating from 'B2'
CONGOLEUM CORP: 2009 Stockholders' Meeting Slated for May 12
CONSTAR INTERNATIONAL: Posts $57.8 Million Net Loss for 2008
CONTINENTALAFA: Unsec. Creditors Resolve Dispute With Harbinger
CU FLEET: Files for Chapter 11 Bankruptcy Protection
DAVID'S AUTO: Files for Chapter 11 Bankruptcy Protection
EMPIRE RESORTS: In Talks With Noteholders, Taps Eric Reehl as CRO
FANNIE MAE: CEO May Leave Firm to Run Gov't Bailout Efforts
FATBURGER RESTAURANTS: File for Chapter 11 Bankruptcy Protection
FOOTHILLS RESOURCES: No Timetable for Filing of 2008 Annual Report
FREDDIE MAC: Hasn't Found New CEO, Gov't May Seek Permanent Chief
FULTON HOMES: Sold 424 Homes in 2008; East Valley Key to Success
GENERAL GROWTH: Bondholders Ask BNY to File Lawsuit
GENERAL MOTORS: Told by Treasury to Brace for Bankruptcy by June 1
GENERAL MOTORS: Faces Lawsuit by Canadian Unsecured Bondholders
GENERAL MOTORS: Opel May Get Funds from European Investment Bank
GENERAL MOTORS: S&P Downgrades Rating on $4.5 Bil. Loan to 'CCC-'
GOTTSCHALKS INC: Daniel Warzenski Leaves Firm as CFO
HANCOCK FABRICS: Narrowed Net Loss to $12.4 Million in 2008
HAMPSHIRE GROUP: Seeks Covenant Waiver; Going Concern Doubt Issued
HERTZ CORP: Completes Acquisition of Advantage Rent-A-Car
HOUGHTON MIFFLIN: Moody's Cuts Corporate Family Rating to 'Caa3'
IMAGEPOINT INC: Files for Chapter 11 Bankruptcy Protection
INFOLOGIX INC: In Talks With Lenders for Loan Amendments
INTERMET CORP: Court Okays Protocol for Sale of De Minimis Assets
ISTAR FINANCIAL: S&P Puts 'BB' Senior Rating on Negative Watch
JOHN BAYLESS: U.S. Trustee Schedules Creditors' Meeting on May 15
KNIGHT-CELOTEX: Court Grants Access to Cash Collateral
LEARNING CARE: Moody's Downgrades Corporate Family Rating to 'B3'
LEHMAN BROTHERS: Weil Gotshal Bills $55MM Fees for First 4.5 Mos.
LEXINGTON PRECISION: No Timetable for Filing of Annual Report
LINDA CATRON: Section 341 Meeting Slated for May 12 in California
LUMINENT MORTGAGE: Reviews Options; Fails to File Annual Report
MACDERMID INCORPORATED: Moody's Cuts Corporate Rating to 'B3'
MEGA BRANDS: Obtains Covenant Relief from Lenders
MGM MIRAGE: To Fund 100% of CityCenter; Confirms Bank Support
MIDWAY GAMES: Court Lets Creditors Probe & Sue Owner
MIDWAY GAMES: CEO, et al., Report Disposition of Shares
MIDWAY GAMES: Reports $190.9 Million Net Loss for 2008
MILACRON INC: Won't File Annual Report Due to Bankruptcy
MOOG INC: S&P Puts 'BB+' Corp. Credit Rating on Negative Watch
MOVIE GALLERY: Settles Blackstone Dispute for $2.3 Million
MOVIE GALLERY: Balks at Landlords' Bid to Recover Legal Costs
NEXPAK CORP: Files for Chapter 11 Bankruptcy Protection
NEXTMEDIA OPERATING: Moody's Pares Default Rating to 'Caa3/LD'
NORTEL NETWORKS: Can Hire Mercer as Compensation Consultant
NORTEL NETWORKS: Inks Cross-Border Protocol with Creditors' Panel
NORTEL NETWORKS: Court Permits Payment of Up to $4 Mil. in Taxes
NORTEL NETWORKS: Ontario Court OKs Amendments to Intercompany Loan
NORTEL NETWORKS: Laid Off Workers Seek Bankruptcy Counsel
OWENS CORNING: Garlock Sealing Sues Asbestos Trust
OWENS CORNING: Officers Disclose Equity Stake
PEAK FITNESS: Files for Chapter 11 Bankruptcy Protection
PETRO RESOURCES: Lenders Agree to Waive Covenant Defaults
PLAZA LLC: Files for Chapter 11 Bankruptcy Protection
PRA INTERNATIONAL: Moody's Gives Neg. Outlook; Keeps 'B2' Rating
PRIMUS TELECOM: Expects to File 2008 Annual Report This Week
QTC MANAGEMENT: Moody's Confirms 'B2' Corporate Family Rating
REUNION INDUSTRIES: Court Confirms 2nd Amended Chapter 11 Plan
RICETTA'S INC: Bad Timing for Expansion Blamed for Ch. 11 Filing
SBARRO INC: S&P Raises Rating on $183 Mil. Loan to 'CCC+'
SCO GROUP: Court Denies Bid to Extend Solicitation Period
SCO GROUP: 10th Cir. to Hear Oral Arguments on Novell Suit in May
SILICON GRAPHICS: Can Hire Donlin Recano as Claims, Noticing Agent
SOLUTIA INC: To Hold Annual Shareholders Meeting on April 22
SOLUTIA INC: Tort Claimants Awarded Fees for Contribution in Case
SOLUTIA INC: Wellington Management Reports 1.59% Equity Stake
STEINWAY MUSICAL: Q4 Results Prompt Moody's Rating Downgrades
STONERIDGE INC: Moody's Downgrades Corporate Family Rating to 'B2'
TANGER FACTORY: Launches Exchange Offer for 3.75% Notes Due 2026
TARRAGON CORP: No Timetable for Filing of 2008 Annual Report
TBS INTERNATIONAL: Obtains Covenant Waivers from Lenders
TELEPLUS WORLD: In Talks with Creditors on Possible Sale, Merger
TERRA NOSTRA: Deadline for Filing Proofs of Claim on May 8
TERRA NOSTRA: Trustee Files Proposed Chapter 11 Plan
TLC VISION: Secures Limited Waiver Under $110MM Credit Facility
ULTRA STORIES: Weak Economy Leads to Firm's 2nd Chapter 11 Filing
WABASH NATIONAL: Annual Report Delay Cues BofA Default Notice
WABASH NATIONAL: NYSE Trading Symbol to Carry "Late Filer" Tag
WASHINGTON MUTUAL: May 20 Pre-trial Conference on JPMorgan Suit
WASHINGTON MUTUAL: Taps Quinn Emanuel as Counsel in JPMorgan Suit
WASHINGTON MUTUAL: District Court Halts N.Y. Fraud Class Suit
WHITEHALL JEWELERS: Can Use Lenders' Cash Collateral 'til June 30
YOUNG BROADCASTING: Expects to File 2008 Annual Report This Week
Z GALLERIE: Files for Chapter 11 Bankruptcy Protection
ZYNEX INC: Financial Restatement Prompts Securities Class Action
* Canadians Split on Letting Car Companies Go Bankrupt
* New Hope Launches Bankruptcy2009 for Virtual Bankruptcy Aides
* Large Companies With Insolvent Balance Sheets
*********
ADVANTAGE RENT-A-CAR: Hertz Closes $33 Million Acquisition
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Hertz Global Holdings, Inc., has completed its $33 million
acquisition of Advantage Rent A Car's assets.
Advantage generated full year 2008 revenues of about $146 million.
Hertz will operate 20 Advantage locations, initially, and the
Company acquired the rights to the Advantage brand name (including
trademarks, copyrights, etc.), Web site, and other assets. Hertz
says the acquisition will be instrumental in its long-term growth
strategy and meets several strategic objectives, which include:
-- Leveraging Advantage's presence in all of the top leisure
states: Florida, California, Hawaii, Arizona and Colorado
and in six of the Top 10 leisure markets: Orlando, Denver,
Phoenix, Los Angeles, San Diego and Honolulu;
-- Further expansion into the price-oriented travel demographic
through higher penetration of 3rd party online bookings.
Advantage had more than 17% market share on Expedia,
Travelocity, Orbitz, Cheap Tickets, Priceline retail and
Hotwire retail. Advantage's 3rd party online market share
In several key leisure markets ranges from 10% in Orlando to
28% in Denver and 34% in Salt Lake City;
-- A means for Hertz to further penetrate online booking
engines without negatively affecting Hertz's core business;
-- Providing Hertz a second brand to sell to corporate accounts
and to market with key travel partners;
-- Extending the useful life of vehicles in Hertz's rental
fleet for Advantage's fleet needs.
Mark P. Frissora, Hertz's chairman and chief executive officer,
commenting on the acquisition, said, "Hertz realized significant
value for the Advantage assets we have acquired. By combining our
operations excellence and expense discipline with Advantage's
leisure market focus, we forecast generating double-digit EBITDA
margins within the next two years, translating to a 2x EBITDA
multiple, which is favorable compared with other car rental
acquisitions. The upside growth potential for the price-oriented
leisure market and our ability to leverage Advantage with
corporate accounts and travel partners make this acquisition both
financially and strategically advantageous for Hertz."
On March 31, Hertz prevailed against another bidder in a U.S.
bankruptcy court auction for the assets of Advantage Rent a Car.
Advantage operated primarily from rental locations at key tourist
travel destinations in the U.S.
The Bankruptcy Court formally approved Hertz's bid April 6, 2009.
As reported by the Troubled Company Reporter on April 2, 2009,
Hertz won the right to purchase the assets of Advantage Rent A
Car. The purchase agreement provides Hertz with the rights to
purchase certain rights, trademarks and copyrights to use the
Advantage brand name, Web site and phone numbers. In addition,
the agreement provides Hertz with the option to have assigned to
the Company certain leases, fixed assets, airport concession
agreements and other agreements associated with roughly 20
locations that Advantage is or previously was operating.
Hertz said it will continue operating the Advantage business at
certain rental locations, and it will assess expansion
opportunities. Specifically, Hertz will operate the Advantage
brand in Salt Lake City, Phoenix, Denver, Tucson, Colorado
Springs, San Antonio, Los Angeles, Seattle, Maui, Honolulu, San
Diego, Reno, Burbank, Palm Springs, Orlando, Ft Meyers (4 Hotels,
1 additional location).
As reported by the TCR on March 5, 2009, Enterprise Rent-A-Car
inked a deal to purchase certain assets of Advantage Rent-A-Car on
Enterprise for $19 million. Enterprise Rent-A-Car later decided
not to pursue its bid.
About the Enterprise Family of Companies
Headquartered in St. Louis, the Enterprise family of companies
operates Enterprise Rent-A-Car, National Car Rental, and Alamo
Rent A Car at more than 8,000 rental locations in neighborhoods
and at airports worldwide. Enterprise Rent-A-Car has more than
6,900 offices. Enterprise Rent-A-Car Company --
http://www.enterprise.com/car_rental/home.do-- is a privately
held company serving customers in the U.S., Canada, Germany,
Ireland, Puerto Rico, and the U.K. They are also the owners of
the Vanguard Automotive Group, operator of National Car Rental and
Alamo Rent A Car in North America.
About Hertz Corp.
The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc.
(NYSE: HTZ), based in Park Ridge, New Jersey, is the world's
largest general use car rental brand, operating from approximately
8,000 locations in 147 countries worldwide. Hertz also operates
one of the world's largest equipment rental businesses, Hertz
Equipment Rental Corporation, through more than 375 branches in
the United States, Canada, France, Spain and China.
About Advantage Rent A Car
Advantage Rent A Car -- http://www.advantage.com-- is a car
rental company with 50 locations in the U.S. and 130 international
affiliate locations. It is privately held by Denny Hecker Family
Ventures, with headquarter operations in Minneapolis. Advantage
serves travel and leisure, lifestyle, business, government and
insurance replacement rentals. The Hecker group of companies
include automobile dealerships, leasing, daily automobile and
motorcycle rental, commercial, and residential real estate
development, aviation, hospitality, and technology.
As reported by the Troubled Company Reporter on Dec. 10, 2008,
Advantage Rent A Car filed for Chapter 11 protection in the U.S.
Bankruptcy Court for the District of Minnesota.
ALBERT LINDLEY: State to Provide $17.8 Million in Grant Funds
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Fulton's health commissioner Dr. Richard F. Daines said that the
state of New York will provide $17.8 million in grant funds to
preserve The Albert Lindley Lee Memorial Hospital's health care
services, North Country Gazette reports.
According to North Country Gazette, the $17.8 million from the
state will let Oswego Health to take over the facility at The
Albert Lindley Lee Memorial and make the necessary changes to turn
the facility into an Urgent Care Center for non-emergency
conditions that require immediate attention. Services at the
facility, says North Country Gazette, include urgent care,
radiology, laboratory work, and occupational therapy services
initially, with the intention of expanding services over time.
Fulton, New York-based The Albert Lindley Lee Memorial Hospital,
a.k.a. A.L. Lee Memorial Hospital, filed for Chapter 11 bankruptcy
protection on April 3, 2009 (Bankr. N.D. N.Y. Case No. 09-30845).
Stephen A. Donato, Esq., at Bond, Schoeneck & King, PLLC, assists
the Company in its restructuring effort. The Company listed
$17,167,501 in assets and $12,281,735 in debts.
AMERICAN INT'L: Financial Unit's Wind-Down May Be Costly for Govt.
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AIG Financial Products chief Gerry Pasciucco said that the wind-
down of American International Group Inc.'s financial-products
unit may be costly for the government, Liam Pleven and Randall
Smith at The Wall Street Journal report.
According to WSJ, Mr. Pasciucco said that AIG Financial is on
track to wind down by year-end, but the controversy over bonuses
led to the loss of some key people in the Company. About 20 of
AIG Financial's 370 workers quit amid the controversy, in which
taxpayers and members of Congress decried retention payments to
workers at the unit that helped topple the big insurer, WSJ
states, citing Mr. Pasciucco. The report says that this may have
made the wind-down process more costly for the government.
WSJ relates that the financial-products staff still needs
certainty about compensation, Mr. Pasciucco said. The controversy
"hurt morale" and "stunned people such that our wind-down has
slowed down. Taxpayers probably have been damaged," WSJ quoted
Mr. Pasciucco as saying. AIG Financial's trading partners were
also worried about being drawn into the controversy and the unit's
work was set back by weeks, WSJ states, citing Mr. Pasciucco.
Based in New York, American International Group, Inc. (AIG), is
the leading international insurance organization with operation in
more than 130 countries and jurisdictions. AIG companies serve
commercial, institutional and individual customers through the
most extensive worldwide property-casualty and life insurance
networks of any insurer. In addition, AIG companies are leading
providers of retirement services, financial services and asset
management around the world. AIG's common stock is listed on the
New York Stock Exchange, as well as the stock exchanges in Ireland
and Tokyo.
During the third quarter of 2008, requirements to post collateral
in connection with AIG Financial Products Corp.'s credit default
swap portfolio and other AIGFP transactions and to fund returns of
securities lending collateral placed stress on AIG's liquidity.
AIG's stock price declined from $22.76 on September 8, 2008, to
$4.76 on September 15, 2008. On that date, AIG's long-term debt
ratings were downgraded by Standard & Poor's, a division of The
McGraw-Hill Companies, Inc., Moody's Investors Service and Fitch
Ratings, which triggered additional requirements for liquidity.
These and other events severely limited AIG's access to debt and
equity markets.
On September 22, 2008, AIG entered into an $85 billion revolving
credit agreement with the Federal Reserve Bank of New York and,
pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000
shares of Series C Perpetual, Convertible, Participating Preferred
Stock to a trust for the benefit of the United States Treasury.
At September 30, 2008, amounts owed under the facility created
pursuant to the Fed Credit Agreement totaled $63 billion,
including accrued fees and interest.
Since September 30, AIG has borrowed additional amounts under the
Fed Facility and has announced plans to sell assets and businesses
to repay amounts owed in connection with the Fed Credit Agreement.
In addition, subsequent to September 30, 2008, certain of AIG's
domestic life insurance subsidiaries entered into an agreement
with the NY Fed pursuant to which the NY Fed has borrowed, in
return for cash collateral, investment grade fixed maturity
securities from the insurance subsidiaries.
On November 10, 2008, the U.S. Treasury agreed to purchase,
through its Troubled Asset Relief Program, $40 billion of newly
issued AIG perpetual preferred shares and warrants to purchase a
number of shares of common stock of AIG equal to 2% of the issued
and outstanding shares as of the purchase date. All of the
proceeds will be used to pay down a portion of the Federal Reserve
Bank of New York credit facility. The perpetual preferred shares
will carry a 10% coupon with cumulative dividends.
AIG and the Fed also agreed to revise the existing FRBNY credit
facility. The loan terms were extended from two to five years to
give AIG time to complete its planned asset sales in an orderly
manner. The equity interest that taxpayers will hold in AIG,
coupled with the warrants, will total 79.9%.
At September 30, 2008, AIG had $1.022 trillion in total
consolidated assets and $950.9 billion in total debts.
Shareholders' equity was $71.18 billion, including the addition of
$23 billion of consideration received for preferred stock not yet
issued.
The Troubled Company Reporter reported on March 4, 2009, that
Moody's Investors Service confirmed the A3 senior unsecured debt
and Prime-1 short-term debt ratings of American International
Group, Inc. AIG's subordinated debt rating has been downgraded to
Ba2 from Baa1. The rating outlook for AIG is negative. This
rating action follows AIG's announcement of net losses of
$62 billion for the fourth quarter and $99 billion for the full
year of 2008, along with a revised restructuring plan supported by
the US Treasury and the Federal Reserve. This concludes a review
for possible downgrade that was initiated on September 15, 2008.
ASARCO LLC: District Court Bars Parent from Voting SPCC Shares
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At the behest of ASARCO LLC, Judge Andrew S. Hanen of the U.S.
District Court for the Southern District of Texas issued a
temporary restraining order effective April 7, 2009, enjoining on
Americas Mining Corporation and its officers, agents, employees,
attorneys and those persons in active concert or participation
with them from voting any of AMC's shares of Southern Copper
Corporation, without notice to ASARCO and Court approval.
Judge Hanen will commence a hearing on April 17, 2009, to
consider ASARCO's request for a preliminary injunction.
ASARCO LLC asked the District Court for TRO and and preliminary
injunction restraining AMC from voting its shares of SCC, without
notice to ASARCO LLC and approval of the Court, in a manner that
would (i) hinder, delay, or negate ASARCO's ability to recover the
SCC Stock, (ii) dilute the ownership interest in SCC represented
by the SCC Stock, (iii) remove any of the SCC Stock from the
United States, or (iv) otherwise be detrimental to or diminish the
value of the SCC Stock.
Judge Hanen had found AMC liable for actual fraudulent transfer,
and ordered the return to ASARCO LLC of 54.18% of outstanding
shares of Southern Peru Copper Company, as of March 30, 2003, plus
damages and interests. ASARCO LLC said in a statement that the
award is currently valued at $6.04 billion.
ASARCO LLC and Southern Peru Holdings, LLC, commenced an adversary
proceeding to recover from AMC stock representing 54.18% of SPCC
outstanding shares, and damages resulting from having been wrongly
deprived of the SPCC stock ownership. In August 2008, Judge Hanen
issued a 190-page opinion holding that AMC perpetrated a
fraudulent transfer to itself of ASARCO LLC's controlling interest
in SPCC.
In his 40-page memorandum opinion and order dated April 1, 2009,
Judge Hanen held that AMC committed tortious acts and that it
conspired with directors of ASARCO LLC to breach its fiduciary
duties. A full-text copy of Judge Hanen's 40-page Memorandum and
Order is available for free at:
http://bankrupt.com/misc/ASARCO_Memo_Hanen_040109.pdf
G. Irvin Terrell, Esq., at Baker Botts, L.L.P., in Houston,
Texas, relates that one effect of Judge Hanen's recent ruling
would be to divest AMC of majority control of Southern Copper
Corporation, formerly known as SPCC, were it not for ongoing
purchases of SCC stock by AMC and repurchases of stock by SCC.
Based on publicly available information, ASARCO LLC believes that
AMC and SCC have been acting in concert to acquire SCC shares on
the open market with the goal of providing AMC, and indirectly
Grupo Mexico, with a continuing numerical majority of SCC's
outstanding common shares in anticipation of the Court's final
judgment in the adversary case.
Unless the District Court restricts AMC from voting its shares,
AMC, as a majority shareholder, can cause SCC to engage in a
number of corporate transactions, without prior notice and
without a vote of the remaining stockholders of SCC that would
dilute and impair the value of the SCC Stock, Mr. Terrell told
Judge Hanen. He contends that if AMC is permitted to exercise
its majority control of SCC in a manner that erodes ASARCO's
ability to recover the SCC Stock or diminishes the value of that
stock before the entry of a final judgment on April 15, 2009, the
ASARCO LLC bankruptcy estate will lose an irreplaceable asset,
causing irreparable harm to the estate.
Mr. Terrell avers that "the risk of an erroneous injunction is
nonexistent in light of the Court's decision on the merits." He
asserts that restricting AMC's exercise of its voting rights will
serve the public interest by facilitating ASARCO's ability to
reorganize successfully.
Meanwhile, ASARCO's counsel, Jack L. Kinzie, Esq., at Baker Botts
L.L.P., in Dallas, Texas, has told Bankruptcy Judge Richard
Schmidt at a hearing that expected initial cash distribution to
the Debtors' creditors ranges from 70% to 75%, Bloomberg News
reports. The $6.04 billion judgment against AMC is an additional
distribution that could end up paying unsecured creditors in full
and with interest, according to Bill Rochelle of Bloomberg News.
Grupo Mexico S.A. de C.V., AMC's parent, has indicated it would
appeal Judge Hanen's "incorrect" ruling.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
ASARCO LLC filed for Chapter 11 protection on Aug. 9, 2005 (Bankr.
S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L.
Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P.,
and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and
Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C.,
represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When ASARCO LLC filed for protection from its creditors, it listed
US$600 million in total assets and US$1 billion in total debts.
ASARCO LLC has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for US$2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO.
Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by ASARCO LLC and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: Asbestos Panel, AMC Balk at Scaled Down Sterlite Deal
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Various entities object to ASARCO LLC's plan to sell its operating
assets to Sterlite (USA), Inc., for $1.7 billion.
(a) Asbestos Committee
The Official Committee of Asbestos Claimants tells Bankruptcy
Judge Richard Schmidt that it has not yet decided whether to
support or oppose the sale of ASARCO LLC's assets to Sterlite
(USA), Inc. However, in reviewing the "Settlement and Release and
Revised Bid Protections Contained in the New Purchase and Sale
Agreement Between ASARCO LLC and Certain of Its Subsidiaries and
Sterlite (USA), Inc.," the Asbestos Committee says it found
several aspects of the current proposal objectionable. Among
others, the Asbestos Committee argues that the proposed release of
Sterlite's multibillion dollar liability to ASARCO for breach of
the Original Sterlite PSA is improper, unless Sterlite actually
acquires ASARCO's assets and pays the required consideration.
The Asbestos Committee also contends that the price paid by
Sterlite for the assets is not separated from the price paid by
Sterlite for the sought releases; therefore, the disclosure of
the consideration being paid by Sterlite for the releases
provided for in the New Sterlite PSA and the Settlement Motion is
inadequate. The Asbestos Committee thus suggests that ASARCO and
Sterlite make their proposal less unpalatable with "some
relatively simple adjustments," including the disclosure of the
price of the release and the price of the purchase of the assets.
(b) Parent
ASARCO Incorporated and Americas Mining Corporation ask Judge
Schmidt to deny the Sterlite Settlement Motion because it
improperly seeks approval of a deal between the Debtors and
Sterlite as a compromise under Rule 9019 of the Federal Rules of
Bankruptcy Procedure, even though a key component of the relief
sought is the approval of bidding protections for the benefit of
Sterlite. The Parent argues that the consideration provided by
Sterlite is valued by the Debtors at $1.277 billion, but nowhere
does the Settlement Motion allocate the value between the asset
purchase and the release of the $2.6 billion breach of contract
claim against Sterlite.
The Parent argues that, among other things, the Settlement Motion
represents a truly astonishing attempt to conflate two entirely
distinct types of relief, approval of bid protections and approval
of the settlement of a valuable litigation claim owned by ASARCO's
bankruptcy estate, without satisfying Rule 9019 Federal Rules of
Bankruptcy Procedure or Section 363 of the Bankruptcy Code.
(c) FCR
Robert C. Pate, the Future Claims Representative, tells the
Bankruptcy Court that while the Original PSA and the plan
treatment for asbestos claims and demands are acceptable to him,
he is concerned whether any plan based on the New PSA will be
adequate to gain his support. He contends that agreements reached
among creditor constituents that formed the basis of the Debtors'
former plan of reorganization based on the Original PSA appear to
have been eliminated under the current plan, and potential
distributions to the Asbestos Trust under the New PSA are
significantly reduced.
Mr. Pate says that the Debtors also appear to have sacrificed
value on numerous fronts and locked the estates and the creditors
into a path to confirmation that radically limits options, and
grants Sterlite unprecedented power and control to secure its
position as the winning bidder or, in the alternative, to walk
away from the New PSA with a significant asset of the estate --
release from liability for its breach of the Original PSA.
(d) The Deens and MRI
Ron and Linda Deen, and Montana Resources, Inc., asserted
separate objections to the Settlement Motion. The Deens oppose
the request to the extent any relief requested would impair their
interests or rights in the Pinal County, Arizona property, which
ASARCO claimed to own. MRI also objects to the Settlement Motion
because it seeks the approval of a settlement and release that is
effectively a break-up fee of indeterminate, but potentially
huge, value that will chill competing bids for the Debtors'
assets at a time when the value of the estate appears, once
again, to be on the rise. MRI contends that the bid protection
is unwarranted, and should not be approved.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
ASARCO LLC filed for Chapter 11 protection on Aug. 9, 2005 (Bankr.
S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L.
Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P.,
and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and
Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C.,
represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When ASARCO LLC filed for protection from its creditors, it listed
US$600 million in total assets and US$1 billion in total debts.
ASARCO LLC has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
ASARCO LLC filed a plan of reorganization on July 31, 2008,
premised on the sale of the Debtors' assets to Sterlite USA for
$2.6 billion. By October 2008, ASARCO LLC informed the Court that
Sterlite refused to close the proposed sale and thus, the Original
Plan could not be confirmed. The parties has since renewed their
purchase and sale agreement and on March 11, 2009, ASARCO LLC
sought Court approval of a settlement and release contained in the
new PSA for the sale of the ASARCO assets for $1.7 billion.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO.
Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by ASARCO LLC and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: Grupo Mexico to Offer $1.3 Billion for Unit
-------------------------------------------------------
The Wall Street Journal's David McLaughlin reports that Grupo
Mexico SAB is offering $1.3 billion in cash to take ASARCO LLC out
of bankruptcy.
According to the Journal, Robert Moore, counsel to Grupo Mexico,
said at a court hearing on Monday that ASARCO LLC's asbestos
creditors have agreed to support Grupo Mexico's offer. Those
asbestos committee has opposed ASARCO LLC's plan to sell its
operating assets to Sterlite (USA), Inc., for $1.7 billion, citing
the liability release Sterlite could receive. Sterlite is a unit
of London-based Vedanta Resources PLC.
ASARCO LLC filed a plan of reorganization on July 31, 2008,
premised on the sale of the Debtors' assets to Sterlite USA for
$2.6 billion. By October 2008, ASARCO LLC informed the Court that
Sterlite refused to close the proposed sale and thus, the Original
Plan could not be confirmed. The parties has since renewed their
purchase and sale agreement and on March 11, 2009, ASARCO LLC
sought Court approval of a settlement and release contained in the
new PSA for the sale of the ASARCO assets for $1.7 billion.
The Journal reports that ASARCO LLC asked Judge Richard Schmidt on
Monday to allow it to move forward with its sale to Sterlite and
to approve a settlement that could release Sterlite from liability
for terminating an earlier agreement to buy ASARCO for $2.6
billion.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
ASARCO LLC filed for Chapter 11 protection on Aug. 9, 2005 (Bankr.
S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L.
Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P.,
and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and
Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C.,
represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When ASARCO LLC filed for protection from its creditors, it listed
US$600 million in total assets and US$1 billion in total debts.
ASARCO LLC has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
ASARCO LLC filed a plan of reorganization on July 31, 2008,
premised on the sale of the Debtors' assets to Sterlite USA for
$2.6 billion. By October 2008, ASARCO LLC informed the Court that
Sterlite refused to close the proposed sale and thus, the Original
Plan could not be confirmed. The parties has since renewed their
purchase and sale agreement and on March 11, 2009, ASARCO LLC
sought Court approval of a settlement and release contained in the
new PSA for the sale of the ASARCO assets for $1.7 billion.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO.
Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by ASARCO LLC and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
ASSET ACCEPTANCE: Moody's Affirms 'B1' Corporate Family Rating
--------------------------------------------------------------
Moody's Investors Service affirmed Asset Acceptance Capital
Corp.'s ratings (Corporate Family Rating B1, senior secured debt
B1) but revised the firm's rating outlook to negative from stable.
The change in outlook reflects a more challenging collections
environment brought about by the severe economic recession in the
U.S., as evidenced by the sharp downturn in the U.S. housing
market, the ongoing credit crunch, and the resulting negative
impacts on the financial health of the U.S. consumer. These
forces have contributed to increased pressure on collectability of
receivables for AACC, adversely affecting the company's
profitability. Higher interest expense stemming from the
company's 2007 leveraged recapitalization has also affected
profitability.
Balancing these challenges are the company's significant market
position in the charged off consumer debt acquisition and
management business, as well as a more favorable pricing
environment brought about by an increased supply of charged off
receivables for sale as the U.S. economy and consumer credit
quality have deteriorated.
In order to change the outlook to stable from negative, Moody's
would need to gain comfort that recent enhancements implemented by
the company will result in improved collections productivity, as
well as improved accuracy and performance in portfolio forecasting
and pricing (as evidenced by a decline in frequency and magnitude
of impairment charges). On the other hand, material increases in
impairment expense and performance that reduces AACC's covenant
compliance cushion could lead Moody's to put the ratings on
review.
AACC's current ratings are:
-- Corporate Family Rating B1
-- Senior Secured Bank Credit Facility B1
Moody's last rating action on AACC was on May 2, 2007, when the
initial ratings were assigned.
Headquartered in Warren, Michigan, AACC purchases charged-off
consumer debt from credit issuers, and then uses proprietary
methods to collect on these receivables. As of December 31, 2008,
AACC reported total assets of $408 million.
BALLANTYNE RE: S&P Assigns 'CC' Rating on Class A-1 Notes
---------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its 'CC'
rating to Ballantyne Re plc's Class A-1 notes and its 'C' rating
to the company's Class B notes.
S&P had revised these ratings to 'D' on Jan. 5, 2009. "We are
assigning new ratings to the notes because the company will pay
the Class A-1 noteholders delinquent interest, including
additional interest on the previously unpaid interest," explained
Standard & Poor's credit analyst Gary Martucci. "In addition,
Ballantyne Re made all scheduled payments previously paid by the
financial guarantors on each other series of notes."
On Feb. 9, 2009, (with an effective date of Dec. 31, 2008),
Security Life of Denver Insurance Co. recaptured an additional
11.4% of the ceded business from Ballantyne, bringing the total
amount recaptured to 62.9%. This decreases the amount of XXX
(excess) reserves Ballantyne is required to hold and lowered the
minimum balance requirement in the surplus account. (The minimum
balance requirement is what triggered the nonpayment back in
January.)
Although S&P expects that Ballantyne should be able to make
scheduled payments for a quarter or two, a decline in the market
value of the assets or unfavorable insurance experience (such as
higher-than-expected mortality resulting in greater benefit
payments from Ballantyne) could result in another nonpayment. On
the business that Security Life of Denver has not recaptured, the
XXX reserve requirement will continue to increase, putting
additional strain on Ballantyne's ability to make scheduled
interest payments over time.
Although Ballantyne can defer interest on the Class B notes, it
has not made each scheduled interest payment since from September
2008. A 'C' rating indicates that the notes are highly vulnerable
to nonpayment and may be assigned to subordinated debt, the cash
payments of which have been suspended in accordance with the
instrument's terms.
BCBG MAX: Moody's Changes Default Probability Rating to 'Caa3/LD'
-----------------------------------------------------------------
Moody's Investors Service changed BCBG Max Azria Group, Inc.'s
probability of default rating to Caa3/LD from Caa3, and downgraded
the rating on the company's first lien, senior secured term loan
to Ca from Caa3. The rating outlook is stable.
BCBG's Caa3/LD probability of default rating reflects Moody's view
that the recent amendment to the company's first lien secured term
loan allowing the March 31, 2009 amortization payment to be
stretched over the remaining ten months of 2009, when coupled with
its offer to purchase first lien term loan debt at a substantial
discount via Dutch Auctions using proceeds from a second lien term
loan increase, both constitute a distressed exchange default.
BCBG also improved its cash balance and covenant headroom as part
of the amendment.
The Ca (LGD4, 60%) rating on the company's first lien, senior
secured term loan reflects the substantial losses being realized
in Dutch Auctions. The company plans to hold another auction over
the very near term.
The stable outlook reflects the improvement in liquidity following
the recent amendment, stemming from improved covenant headroom and
cash provided by the second lien term loan add-on. To be
upgraded, the company must demonstrate that it has reversed losses
and cash flow burn at its Max Rave subsidiary through closing
underperforming stores and the addition of new business with a
sizable well known retailer, and that it will maintain adequate
liquidity and covenant headroom. A downgrade could stem from an
increased probability of default through continued weak operating
performance, or if liquidity erodes through continued cash flow
drain or new covenant concerns.
These rating actions have been taken:
-- Corporate family rating - affirmed at Caa3;
-- Probability of default rating - changed to Caa3/LD from
Caa3;
-- Senior secured term loan to Ca (LGD4, 60%) from Caa3 (LGD4,
55%).
The "/LD" probability of default designation will likely be
removed following the completion of the debt repurchases. At that
time, the senior secured term loan rating will likely be raised
back to the Caa3 level, depending on the capital structure
following completion of the debt repurchases.
The last rating action on BCBG was on October 20, 2008 when
Moody's downgraded the company's corporate family rating and
probability of default ratings to Caa3.
BCBG Max Azria Group, Inc., headquartered in Vernon, California is
an apparel retailer and wholesaler. Revenues for the twelve
months ended October 31, 2008 were approximately $930 million.
BERMUDA BAY: Section 341 Meeting Slated for May 8 in Virginia
-------------------------------------------------------------
The U.S. Trustee for Region 4 will convene a meeting of creditors
in Bermuda Bay, L.L.C.'s Chapter 11 case on May 8, 2009, at
10:00 a.m., at the Office of the U.S. Trustee, 701 East Broad St.,
Suite 4300, Richmond, Virginia.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Midlothian, Virginia-based Bermuda Bay, L.L.C. filed for Chapter
11 protection on April 3, 2009, (Bankr. E. D. Va. Case No.: 09-
32133). Paula S. Beran, Esq. at Tavenner & Beran, PLC represents
the Debtor in its restructuring efforts. The Debtor said its
assets and debts range $10 million to $50 million.
BERNARD L. MADOFF: Sent to Chapter 7 Liquidation by Former Clients
------------------------------------------------------------------
Jacqueline Palank at The Wall Street Journal reports that former
Bernard L. Madoff Investment Securities LLC clients have filed a
Chapter 7 bankruptcy petition against Bernard Madoff in the U.S.
Bankruptcy Court for the Southern District of New York.
According to WSJ, creditors who filed the bankruptcy petition
include:
-- Blumenthal & Associates Florida General Partnership,
-- Martin Rappaport Charitable Remainder Unitrust,
-- Martin Rappaport,
-- Marc Cherno, and
-- Steven Morganstern.
As reported by the Troubled Company Reporter on April 13, 2009, a
federal judge ruled that Mr. Madoff may be forced into personal
bankruptcy to ensure that all his assets are used to pay the
investors he stole from. On April 11, U.S. District Judge Louis
Stanton in New York turned aside objections from the U.S.
Securities and Exchange Commission and the Justice Department,
granting a request by victims of Madoff's Ponzi scheme. Judge
Stanton reversed his December 18 ruling that prevented the
investors from filing a request to force Mr. Madoff into
bankruptcy.
The creditors, WSJ relates, said that their $64 million in claims
against Mr. Madoff are based on the balances contained in the last
statements they got from Bernard L. Madoff Investment. Citing the
creditors, WSJ states that the claims are based on breach of
contract, conversion, and fraud. The creditors said in court
documents that their claims aren't disputed in light of Mr.
Madoff's guilty plea to operating a Ponzi scheme.
Mr. Madoff has 20 days to respond to the filing, WSJ says.
According to WSJ, the Hon. Burton R. Lifland, who's overseeing the
liquidation of Bernard L. Madoff Investment, handles the
bankruptcy case.
Tom Lauricella at The Wall Street Journal earlier reported the
federal judge said that he would lift the injunction that kept
clients from filing the involuntary petition against Mr. Madoff.
WSJ relates that federal authorities opposed the lifting of the
injunction, saying that they could state "unequivocally" that any
assets they recovered from Mr. Madoff would be distributed to
investors. The judge, WSJ states, said that the best way to
recover assets is through the bankruptcy court.
WSJ notes that companies that funneled investors' money to
Mr. Madoff might have taken at least $790 million in fees over the
years. WSJ relates that Banco Santander SA had about $3 billion
with Mr. Madoff through its hedge-fund group Optimal Investment
Services SA. Banco Santander said in its 2007 annual report that
it earned about $52.7 million in 2007 and some $43.3 million in
"investment manager's fees" in 2006 from its Madoff-run Strategic
U.S. Equity Series.
Stuart Singer, a partner at Boies, Schiller & Flexner that filed a
lawsuit against Mr. Madoff's largest feeder fund Fairfield
Greenwich Group, said that returning feeder-fund fees could be a
"substantial recovery" for defrauded investors and that "the
biggest challenge ultimately is collecting," depending on what
firms and managers have in assets, WSJ states.
WSJ relates that Tremont Group Holdings Inc., another feeder-fund
operator, charged through unit Rye Select Broad Market Fund LP a
1% management fee and a 0.5% administration fee. According to
WSJ, Tremont Group said that the fund held about $2.3 billion on
September 30, 2008. WSJ estimates the yearly fees Rye Select
collected at $34 million. Tremont Group, WSJ states, said that it
offered the Rye Select Broad Market Portfolio Ltd, which charged
total fees of 1.95% of assets and held $1.2 billion on
September 30, 2008. WSJ says that Rye Select Broad Market's
yearly fees would have been $23.5 million. Tremont Group,
according to the report, is facing several suits.
WSJ notes that Fairfield Greenwich Group ran the biggest feeder
fund. Fairfield Greenwich, WSJ relates, first placed money with
Mr. Madoff in 1989. The Fairfield Sentry fund, Fairfield
Greenwich's main Madoff conduit, took as a management fee 20% of
profits earned by investors for many years and in October 2004, it
started collecting a 1% fee on assets under management, WSJ
states. Fairfield Greenwich might have earned at least $400
million from 2005 to 2008, WSJ says, citing Massachusetts
securities regulators. WSJ says that Massachusetts is seeking
disgorgement of fees. According to WSJ, a Fairfield spokesperson
said that some money collected was used to pay out non-Fairfield
employees or firms who placed investors in Sentry.
WSJ reports that New York attorney general Andrew Cuomo's lawsuit
against J. Ezra Merkin, whose Ascot funds handed money off to Mr.
Madoff, could also result in the disgorgement of fees by Mr.
Merkin. Mr. Cuomo filed civil fraud charges against Mr. Merkin --
whose Ascot funds handed money off to Mr. Madoff -- and claimed
that Mr. Merkin earned more than $169 million in management fees
through Ascot for 1995 to 2007, according to WSJ.
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC was a market maker in
U.S. 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 Mr. Madoff and his
investment firm 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 allegedly at least
50 billion.
Also on Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S.
istrict 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.
Mr. Madoff, if found guilty of all counts, would be imprisoned for
150 years, but legal experts expect the actual sentence to be much
lower and would still be an effective life sentence for the 70-
year-old defendant, WSJ notes. Mr. Madoff, WSJ relates, would
also face millions of dollars in possible criminal fines. The
report says that Mr. Madoff has been free on bail since his arrest
on December 11, 2008. There was no plea agreement with Mr. Madoff
in which leniency in sentencing might be recommended, the report
states, citing prosecutors.
BERNARD L. MADOFF: Involuntary Chapter 7 Case Summary
-----------------------------------------------------
Alleged Debtor: Bernard L. Madoff
133 East 64th Street
Apt. 12A
New York, NY 10065
Case Number: 09-11893
Related Information: Bernard L. Madoff pled guilty to all of the
counts with which he was charged, and he
filed with the court a plea allocution
describing some of the details of his fraud
on March 12, 2009. Mr. Madoff has admitted
to taking his customers' money and using it
for his own purposes, the Petitioners' claims
are neither disputed nor contingent. Plea
Allocution of Bernard L. Madoff, No. 09-213
(S.D.N.Y)
Involuntary Petition Date: April 13, 2009
Court: Southern District of New York (Manhattan)
Judge: Burton R. Lifland
Petitioner's Counsel: Jonathan M. Landers, Esq.
jlanders@milberg.com
Milberg LLP
One Pennsylvania Plaza
New York, NY 10119
Tel: (212) 594-5300
Fax: (212) 8681229
Petitioners Claim Amount
----------- ------------
Martin Rappaport Charitable $8,279,471
Remainder Unitrust
c/o Jay Pastermack, P.A.
1066 Clifton Avenue
Clifton, NJ 07013
Martin Rappaport $20,838,043
174 Delawanna Avenue
Clifton, NJ 07014
Blumenthal & Associates $30,209,413
3193 NW 61st Street
Boca Raton, FL 33496
March Cherno $1,166,563
10 West 66th Street
Apt. 32C
New York, NY 10023
Steven Morganstern, M.D. $63,981,910
3820 Howell Mill Road
Atlanta, GA 30327
The Petitioners' claims are based on the balances contained in
their last statements received from Bernard L. Madoff Investment
Securities LLC. However, even if the Petitioners' claims were
determined based on a net equity calculation of principal less
withdrawals, purported interest, and dividends, each of the
Petitioners hold claims well in excess of the statutory amount
set forth in Section 303(b)(1).
BEXAR COUNTY: Moody's Affirms 'Ba2' Rating on Revenue Bonds
-----------------------------------------------------------
Moody's Investors Service has affirmed the Ba2 rating on Bexar
County Housing Finance Corporation Multifamily Revenue Refunding
Bonds (American Opportunity for Housing - Cinnamon Creek
Apartments) 2002 A and downgraded the rating on 2002 B to B1 from
Ba3. The rating affirmation is based upon the financial cushion
debt service coverage provides for 2002 A. The rating downgrade
for 2002B reflects a very thin coverage for 2002B. The outlook
remains negative due to recent occupancy declines at the project
and market research which projects occupancy weak occupancy and
rent growth project's submarket.
The 278 unit garden style complex was built in 1974 and is
composed of 58, one and two-story buildings located approximately
twelve miles northwest of downtown San Antonio. The property is
located near major employer such as South Texas Medical Center,
University of Texas at San Antonio and USAA World Headquarters.
Recent Developments
Occupancy at the project in 2008 was weak at 90.6% (monthly
average), which is below the 92.8% average in the Northwest San
Antonio submarket as reported by Torto Wheaton Research. TWR
forecasts submarket occupancy will remain at or near 92.8% in 2009
and that rents will decline by an average of 0.5%.
Debt service coverage ratios for 2007 were very weak at 0.86x for
2002A and 0.77x for 2002B. However, the shortfall was offset by
an advance of $319,317 from the American Agape Foundation, an
affiliate of the owner, American Opportunity for Housing. Debt
service coverage ratios calculated from audited 2008 statements
improved to 1.16x for 2002A and 1.04 for 2002B. The affirmation
of the Ba2 rating on the 2002A bonds reflects the minimal
financial cushion provided by the 1.16x debt service coverage.
The B1 rating on the 2002B bonds reflects and extremely thin
cushion.
The last rating action was on January 29, 2008 when Series 2002A
was downgraded to Ba2 and 2002B was downgraded to Ba3. The
principal methodology used in rating the bonds was "Affordable
Housing Methodology ", which can be found at www.moodys.com in the
Credit Policy & Methodologies directory, in the Ratings
Methodologies subdirectory. Other methodologies and factors that
may have been considered in the rating process can also be found
in the Credit Policy & Methodologies directory.
Outlook
The outlook on the bonds remains negative. This reflects
project's minimal financial cushion and Torto Wheaton market
research that indicates weak growth in the submarket.
BEXAR COUNTY: Moody's Junks Rating on 2001A Bonds from 'B1'
-----------------------------------------------------------
Moody's Investors Service has downgraded, from B1 to Caa1, the
rating on the Bexar County Housing Finance Corporation (The Waters
at Northern Hills) Multifamily Housing Revenue Bonds Series 2001A
and has also downgraded the B3 on Series 2001C to Ca. The rating
downgrade is based upon debt service reserve taps on tranches,
poor operating performance and a $1.2 million tax settlement with
Bexar County. The outlook remains negative.
Legal Security: The bonds are limited obligations payable solely
from the revenues, receipts and security pledged in the Trust
Indenture.
Recent Developments/Results:
On February 1, 2009, the $7,057.19 was drawn from the Series A
debt service reserve fund and $4,720.8 was drawn from the Series C
debt service reserve fund in order to make a scheduled interest
payment. The project's poor performance is evidenced by audited
2007 financial statements which produce debt service coverage
ratios below 1.0x for both Series A and C and audited 2008
financial statments which produce debt service coverage ratios of
1.0x for Series A and 0.99x for Series C. Occupancy is weak with
an average monthly rate of 87% in 2008 and 88% in February, 2009.
On December 8, 2008, the project owner signed an agreement for an
installment plan to repay $1,200,953 of back property taxes. The
agreement required a down payment of $145,000 and a monthly
payment of $13,500 beginning on February 15, 2009. The payments
are scheduled until February 15, 2010. The agreement states that
the taxpayer must renew the agreement prior to February 15, 2010
and that any amounts outstanding are due in full if the property
is sold or conveyed. The Caa1 rating on Series A reflects Moody's
expectation that debt service reserves will continue to be eroded
and ultimately depleted. The Ca rating on Series C reflects not
only the likelihood of debt service reserve depletion but also the
poor prospects for recovery.
The last rating action was on April 3, 2008 when B1 and B3 ratings
were affirmed.
Outlook
The outlook for the bonds is negative due to the expectation that
debt service reserves will be ultimately be depleted.
BOMBARDIER RECREATIONAL: Moody's Junks Default Probability Ratings
------------------------------------------------------------------
Moody's Investors Service lowered the Corporate Family and
Probability of Default ratings of Bombardier Recreational Products
Inc. to Caa1 from B3 and lowered its instrument ratings by a
notch. The outlook is negative.
The rating action is driven by Moody's concern that the continued
sharp downturn in consumer spending is likely to reduce BRP's near
term earnings below the agency's prior expectations.
Consequently, Moody's expects that BRP's adjusted leverage may now
remain above 6x through much of the next year (excluding any
consideration for the company's plans to buy back a portion of its
debt). Despite the potential that the company may generate a
modest amount of free cash flow, BRP's elevated leverage combined
with a continuing lack of visibility for the sector is likely to
remain representative of a Caa1 risk profile through much of the
12 -18 month ratings horizon, in Moody's opinion.
Downgrades:
Issuer: Bombardier Rec Products, Inc.
-- Probability of Default Rating, Downgraded to Caa1 from B3
-- Corporate Family Rating, Downgraded to Caa1 from B3
-- Senior Secured Bank Revolver, Downgraded to B2 (LGD2, 26%)
from B1(LGD 2, 25%)
-- Senior Secured Bank Term Loan, Downgraded to Caa1 (LGD 4,
52%) from B3 (LGD 4, 51%)
Outlook Actions:
Issuer: Bombardier Rec Products, Inc.
-- Outlook, Changed to Negative From Stable
The negative outlook highlights the potential that BRP is likely
to remain at risk of breaching its bank leverage covenant through
at least the first couple quarters of its fiscal 2010 (FYE January
31), in Moody's opinion. Despite this view, further downward
rating movement has been contained at this time as Moody's expects
BRP to receive voluntary, albeit necessary new equity from its
shareholders. The receipt of these funds, which may be applied
under an "equity cure" provision of its credit agreement, is
expected to be supplemented with funds from other sources.
In conjunction with the rating action, Moody's Analyst Darren Kirk
stated, "BRP's plan to buy back up to $250 million (face value) of
senior secured debt at a substantial discount to par would not
immediately give rise to the classification of a distressed
exchange". Kirk added, "despite the shortfall in BRP's earnings,
the expected cash infusions should support BRP's liquidity
position and capital structure within context of its Caa1 rating."
Moreover, any buy back of the debt would be facilitated solely
with the use of these funds and additional funds injected by
shareholders. Accordingly, Moody's currently considers this
potential event to be opportunistic rather than a plan to achieve
default avoidance. Nonetheless Moody's notes the company has
obtained a long window to pursue it debt buy back plans. Moody's
cautions that its view on whether the debt buy back would be
considered a distressed exchange could change should the company's
operating results deteriorate significantly beyond the agency's
current expectations such that BRP's capital structure appeared
unsustainable or its liquidity position inadequate. Conversely,
should the company execute towards Moody's current expectations,
the reduced indebtedness associated with any buy back could
provide support for the rating to be stabilized or warrant upwards
rating action, depending on the amount of the buy back.
The last rating action on BRP was taken on December 19, 2008, when
Moody's downgraded the company's Corporate Family Rating to B3
with a stable outlook from B1 with a stable outlook.
Headquartered in Valcourt, Quebec, Bombardier Recreational
Products Inc. is a leading designer, manufacturer, and distributor
of motorized recreational products worldwide.
BOSTON GENERATING: Moody's Reviews 'B3' Senior Secured Rating
-------------------------------------------------------------
Moody's Investors Service placed the B3 first lien senior secured
rating and the Caa2 second lien senior secured rating of Boston
Generating, LLC under review for possible downgrade.
The affected 1st lien facilities are an approximate $1.1 billion
senior secured term loan B due 2013, a $250 million senior secured
synthetic letter of credit due 2013, and a $70 million senior
secured revolving credit facility due 2013. The affected 2nd lien
facility is a $350 million senior secured term loan C due 2014.
The review for possible downgrade reflects the fact that the date
for a potential financial covenant violation (end of the second
quarter 2009) is rapidly approaching, and there is still no
acceptable restructuring plan for the project's capital structure.
The project's reduced levels of cash flow are not expected to be
able to support the existing level of leverage going forward. The
project is significantly over-levered relative to EBITDA. Moody's
has been monitoring the situation closely and had expected that a
financial restructuring plan would have been agreed upon by now,
along with an amendment or waiver of the financial covenant.
Therefore, there is the real possibility of a default if the
covenant is not waived and the lenders exercise their right to
accelerate.
Boston Gen through 12/31/2008 continues to have low compliance
EBITDA relative to its covenants due to a difficult operating
profile [leverage doesn't effect EBITDA, it impacts the debt to
EBITDA ratio]. The project has been able to meet its minimum
1.10x interest coverage ratio and maximum 11.0x senior debt to
EBITDA ratio tests through year-end 2008 due to contributions from
a restricted contingency cash reserve at the project level in the
first, second and third quarters of 2008. Based upon forecasts
provided to the lenders in December, this reserve may be fully
exhausted by the end of the second quarter of 2009 in an effort to
ensure compliance with the aforementioned leverage covenant. As a
result, the project is in danger of incurring a covenant default
by the end of the second quarter of 2009. Specifically, the
senior debt to EBITDA ratio has been projected to exceed the
covenanted maximum by the end of the second quarter, which has
stepped down to 10.0x (from 11.0x at December 31, 2008). In
addition, there is the possibility of an actual interest payment
default later in 2009, based upon the forecast provided to lenders
by management in December 2008.
The review could result in a multi-notch downgrade of Boston Gen.
Moody's does not yet have the specific information on any
potential restructuring plan to inform us as to the appropriate
ratings level. It is highly unlikely, however, that the current
ratings level would be maintained. Therefore, the review will
focus on the specific steps taken to restructure the project's
finances once they are known, as well as the progress towards
those changes. In addition, Moody's review will focus on the
availability of liquidity and the current and projected value of
installed capacity in the NEMA Boston market zone.
The last rating action was on December 19, 2008, when the ratings
of Boston Gen were downgraded to B3 from B1 and Caa2 from B3 for
the 1st Lien and 2nd Lien facilities respectively.
Boston Gen is a 2,970 MW natural gas-fired portfolio of assets
that sells power into the New England Power Pool. The assets are
located in close proximity to the Boston metro area. Boston Gen
is indirectly owned by US Power Generating Company.
CANWEST GLOBAL: Deadline for $30.4MM Interest Payment Today
-----------------------------------------------------------
Canwest Media Inc. has until today to make a US$30.4 million
interest payment relating to its outstanding 8% senior
subordinated notes. The interest payment was originally due
March 15, 2009.
Under the terms of the notes, failure to make this interest
payment on or before April 14, 2009, would permit the 8%
noteholders to demand payment of the roughly US$761 million
principal amount outstanding as well as the missed interest
payment and associated default interest.
Loan Commitments Reduced
As reported by the Troubled Company Reporter, Canwest Media and
its senior lenders have agreed to extend the waiver of certain
borrowing conditions until April 21, 2009. Canwest Media and the
senior lenders agreed to permanently reduce the senior lending
facility to C$112 million from C$300 million and the senior
lenders agreed to waive the events of default arising as a result
of the failure to comply with certain covenants under the senior
secured credit facility and the failure to make an interest
payment on the 8% senior subordinated notes until the earlier of
April 21, 2009, and the date the holders of the 8% senior
subordinated notes take any action to enforce their rights.
During this period Canwest Media Inc. will have limited access to
the available funds under the facility to allow it to meet its
operational requirements.
Based on current cash flow projections, Canwest Global
Communications Corp., the parent of Canwest Media, believes that
it will have sufficient liquidity to continue to operate normally
through the period.
Canwest Media is seeking a longer extension of the waiver from its
senior lenders to allow CMI to pursue a recapitalization
transaction.
Also last week, Canwest Global said its subsidiary, CW Media Inc.,
has received gross proceeds of approximately C$6.6 million as a
result of tendering its 16.6 million shares in an issuer bid by
Score Media Inc. On March 2, 2009 Canwest and CW Media sold
9.0 million Class A Shares at C$0.40 per share by way of private
placement with gross proceeds of C$1.6 million going to Canwest
and C$2.0 million to CW Media. CW Media intends to now convert
its outstanding 4,434 Special Voting Shares of SMI into Class A
Shares and sell them in the open market.
C$1.44 Bil. Quarterly Loss
On Thursday, Canwest Global reported for the three months ended
February 28, 2009, revenues of C$637 million compared to
C$701 million for the same period last year. Operating profit
before restructuring and impairment expenses was C$75 million for
the second quarter, a decline of 31% compared to C$109 million in
the second quarter of fiscal 2008.
For the first six months of fiscal 2009, Canwest Global said
revenues decreased 3% to C$1.52 billion and operating profit
before restructuring and impairment expenses declined by 22% to
C$295 million. For the three months ended February 28, 2009, the
Company reported a net loss of C$1.44 billion -- including a non-
cash C$1.19 billion write-down of goodwill, intangible assets and
property and equipment. Approximately 83% of the write-down
relates to Canwest's Publishing operations. For the six months
ended February 28, 2009, the Company reported a net loss of
C$1.47 billion.
As of February 28, 2009, Canwest Media had C$5.28 billion in total
assets and C$6.15 billion in total liabilities, resulting in
C$869.4 million in shareholders' deficit.
The nature of the write-downs are consistent with those of other
media organizations throughout North America and which reflect
lower future profit expectations as a result of the current
outlook for advertising in the operations, Canwest said. All are
non-cash charges to income that do not affect Canwest's liquidity,
cash flows from operating activities, debt covenants or have any
impact on future operations.
The Company anticipates that advertising revenues will continue to
be negatively impacted by persisting uncertain economic
conditions, with the exception of specialty channels and digital
sectors. Canwest said it remains focused on reducing operating
expenses and improving operational efficiencies while pursuing the
reorganization of its capital structure.
Going Concern Doubt
Canwest Media said there is significant doubt about its ability to
continue as a going concern, noting the material uncertainty
caused by the current market conditions including the Company's
declining advertising revenue, ability to realize cost reductions,
ability to divest of non-core assets, ability to restructure the
operations and the Company's current liquidity situation and its
noncompliance with the terms of its senior secured credit facility
and failure to make an interest payment on the Canwest Media 8%
senior subordinated notes. The media industry has recently
experienced declines in advertising revenue reflecting a weak
economic environment. The outlook for the advertising market
remains uncertain and the weakness in the advertising market is
likely to continue until the economy improves.
Management is continuing to assess other strategies to improve
operating results and cash flows, to adjust its capital structure
and to reduce its debt obligations, including the sale of assets,
and other operational changes. There is no assurance as to the
outcome or success of these strategies. Further, the Company's
results for 2009 and future periods are subject to numerous
uncertainties.
Wojtek Dabrowski at Reuters has said a big part of Canwest's debt
dates back to the deal which made Canwest the country's biggest
publisher of daily newspapers; its 2000 acquisition of a stable of
Canadian newspapers from Hollinger International for about
C$3.2 billion. Reuters had said if Canwest fails to pay the
interest by April 14, the noteholders can demand the repayment of
about $761 million in principal. This scenario could spell
serious trouble for Canwest, which has a debt-load of about
C$3.7 billion -- $2.98 billion -- according to the report.
Analysts, according to Reuters, have said that it is possible the
company may file for bankruptcy protection as the weak economy
wreaks havoc on advertising revenues at its television stations
and newspapers. Reuters had noted that Canwest is trying to slash
its operating and capital costs and is looking at divesting non-
core assets. However, no large-scale asset sale that would make a
significant dent in Canwest's debt-load has materialized.
A full-text copy of Canwest Media's Unaudited Interim Consolidated
Financial Statements for the Three and Six Months Ended
February 28, 2009, and February 29, 2008, is available at no
charge at http://ResearchArchives.com/t/s?3b62
A full-text copy of Canwest Media's Interim Management's
Discussion and Analysis for the Three And Six Months Ended
February 28, 2009 and February 29, 2008, is available at no charge
at http://ResearchArchives.com/t/s?3b63
About Canwest Global
Canwest Global Communications Corp. -- http://www.canwest.com/--
(TSX: CGS and CGS.A,) an international media company, is Canada's
largest media company. In addition to owning the Global
Television Network, Canwest is Canada's largest publisher of
English language daily newspapers and owns, operates and/or holds
substantial interests in conventional television, out-of-home
advertising, specialty cable channels, web sites and radio
stations and networks in Canada, New Zealand, Australia, Turkey,
Indonesia, Singapore, the United Kingdom and the United States.
* * *
As reported in the Troubled Company Reporter on January 16, 2009,
Canwest Global Communications Corp. warned that based on current
revenue and expense projections, it may not be able to comply with
its existing quarterly total financial leverage ratio covenants in
fiscal 2009. Continuation of negative conditions may affect the
Company's ability to meet certain financial covenants in its
credit facilities. The company is reviewing and implementing
strategies to ensure compliance with its covenants, including
strategies intended to improve profitability and reduce debt.
The TCR reported on January 19, 2009, that Standard & Poor's
Ratings Services lowered its long-term corporate credit rating on
Winnipeg, Manitoba-based Canwest Media Inc. to 'CCC+' from 'B'.
At the same time, S&P lowered the senior secured debt rating on
wholly owned subsidiary Canwest Limited Partnership to 'B-' from
'BB-'. In addition, S&P lowered the senior subordinated debt
ratings on Canwest Media and Canwest LP to 'CCC-' from 'CCC+'.
S&P removed all ratings from CreditWatch with negative
implications, where they were placed Oct. 31, 2008. The outlook
is negative.
CANWEST MEDIA: Would Miss Today's Interest Payment, Says Moody's
----------------------------------------------------------------
Moody's Investors Service downgraded Canwest Media Inc.'s
probability of default rating (PDR) and corporate family rating
(CFR) to Ca from Caa3 as it appears inevitable that the company
will not pay approximately $30.4 million of interest prior to the
expiration of the applicable 30 day cure period. The payment was
due on March 15th. Bill Wolfe, Vice President and Senior Credit
Officer noted that "Even should a forbearance agreement be agreed-
to, per standard practice, Moody's will view the payment missed at
the end of the original cure period as constituting a default."
To date, as per standard practice, Moody's has treated Canwest,
Canwest LP and CW Media as comprising a single corporate family.
However, while it appears likely that the corporate family will be
financially and legally restructured, the manner in which events
have transpired suggests that creditor prospects may not be
entirely linked. In particular, the pending default and related
activities at Canwest may not have direct ratings' implications at
Canwest Limited Partnership (Canwest LP) and CW Media Holdings
Inc. (CW Media). Should this be the case, it can be concluded that
the PDR's are not 100% correlated, and, in turn, the expected loss
(i.e. the Moody's ratings) may have to be de-linked. Consequently,
ratings of Canwest LP and CW Media have been placed on review. To
initiate the review and the parallel process of determining
whether the applicable ratings should be permanently de-linked
from those of Canwest, each company was assigned a CFR and PDR.
Both ratings for both companies were assigned as Caa2, rating
levels that are implied by the existing ratings of their
outstanding debt instruments. Instrument ratings for both
companies' debts are unchanged at this juncture, however, with
each debt now calibrated against a unique waterfall of
liabilities, loss given default point estimates have been revised
accordingly.
The end of the cure period at Canwest will allow the matter of a
single versus multiple CFR's to be assessed. Wolfe noted that
"Should, for example, Canwest default or voluntarily file for
creditor protection while Canwest LP and CW Media continue to
operate without interruption, then it will be clear that separate
(although related) ratings will be required. Alternatively, again
for example purposes, should two or more of the companies be
involved in the same creditor protection filing, their ratings
will remain linked."
As it appears unlikely that CW Media could be involved in such a
circumstance and as CW Media's intrinsic credit quality is likely
superior to the starting point of its Caa2 CFR and PDR, its
ratings have been placed on review for possible upgrade. While not
likely, since Canwest LP is a wholly-owned subsidiary, there is
nonetheless the potential of it being included in voluntary
restructuring actions initiated by Canwest, and its rating could
therefore be downgraded. The company is also facing deteriorating
cushions relative to financial covenant compliance thresholds that
could also adversely impact its ratings. Consequently, while
Canwest LP's intrinsic credit quality may be superior to the
initial Caa2 CFR, the direction of the outcome of the ratings
review is uncertain.
In addition to the matter of assessing whether unique CFR's are
appropriate, Moody's will conduct a comprehensive reassessment of
each company's prospects and liquidity in order to determine the
applicable ratings' level. With common ownership, management, and
various inter-company contractual relationships, the three
companies' PDR's are likely to have some positive correlation,
suggesting that the difference between CFR's at any of the
companies will potentially be capped. In turn, there may be an
implicit cap on the difference among instrument ratings within the
group of companies. Moody's expects to conclude the ratings review
within 30 to 45 days of the expiry of the ongoing interest payment
cure period. At the conclusion of the review, individual
speculative grade liquidity ratings will also be assigned.
Rating, outlook and loss given default assessment actions:
Issuer: Canwest Media Inc.:
Outlook: Unchanged as Negative
Corporate Family Rating: Downgraded to Ca from Caa3
Probability of Default Rating: Downgraded to Ca from Caa3
Speculative Grade Liquidity Rating: Unchanged as SGL-4
....Senior Subordinated Regular Bond/Debenture, Unchanged at Ca
with the Loss Given Default Assessment revised to (LGD4, 62%) from
(LGD6, 91%)
Issuer: Canwest Limited Partnership:
Outlook assigned as: On Review, Direction Uncertain
Corporate Family Rating: Assigned as Caa2
Probability of Default Rating: Assigned as Caa2
....Senior Secured Bank Credit Facility, Unchanged at B3 with the
Loss Given Default Assessment revised to (LGD3, 30%) from (LGD2,
18%)
....Senior Subordinated Regular Bond/Debenture, Unchanged at Ca
with the Loss Given Default Assessment revised to (LGD5, 88%) from
(LGD4, 67%)
Issuer: CW Media Holdings Inc.:
Outlook assigned as: On Review for Possible Upgrade
Corporate Family Rating: Assigned as Caa2
Probability of Default Rating: Assigned as Caa2
....Senior Secured Bank Credit Facility, Unchanged at B3 with the
Loss Given Default Assessment revised to (LGD2, 25%) from (LGD2,
18%)
....Senior Subordinated Regular Bond/Debenture, Unchanged at Ca
with the Loss Given Default Assessment revised to (LGD5, 88%) from
(LGD4, 67%)
For additional commentary, please refer to the associated Credit
Opinion (available on Moodys.com shortly after the date of this
press release). A loss given default assessment detailing the
company's consolidated waterfall of liabilities will also be
posted to Moodys.com.
Moody's most recent rating action concerning Canwest was taken on
February 23, 2009 at which time the company's CFR and PDR were
downgraded to Caa3.
Canwest's ratings were assigned by evaluating factors Moody's
believes are relevant to the credit profile of the issuer, such as
i) the business risk and competitive position of the company
versus others within its industry, ii) the capital structure and
financial risk of the company, iii) the projected performance of
the company over the near to intermediate term, and iv)
management's track record and tolerance for risk. These attributes
were compared against other issuers both within and outside of
Canwest's core industries and Canwest's ratings are believed to be
comparable to those of other issuers of similar credit risk. Other
methodologies and factors that may have been considered in the
process of rating these issuers can also be found in the Credit
Policy & Methodologies directory.
Canwest Media Inc. (Canwest) is wholly-owned by Winnipeg,
Manitoba, Canada-based Canwest Global Communications Corp., a
publicly traded international media company with interests in
broadcast television, newspaper publication (held through Canwest
Limited Partnership), radio, specialty television channels (held
through CW Media Holdings, Inc., a joint venture), out-of-home
advertising and interactive operations in Canada, Australia,
Malaysia, Singapore, Indonesia, Turkey, the United Kingdom and the
United States. Substantially all of the publicly traded parent
company's operations are held though Canwest.
CHARTER COMMUNICATIONS: 3 Banks Named to Creditors Committee
------------------------------------------------------------
Diana G. Adams, United States Trustee for Region 2, appoints three
members to the Official Committee of Unsecured Creditors in
Charter Communications, Inc., and its subsidiaries' Chapter 11
cases:
(1) UMB Bank, NA, as Indenture Trustee
1010 Grand Avenue, 4th Floor
Kansas City, Missouri 64106
Attn: Mark Flannagan
Tel.: (816) 860-3009
(2) The Bank of NY Mellon Trust Company, N.A.
c/o The Bank of NY Mellon
101 Barclay Street - 8 West
New York, New York 10286
Attn: Gary Bush
Tel.: (212) 815-2747
(3) Bank of Oklahoma
One Williams Center, 10SW
Tulsa, Oklahoma 74103
Attn: Marrien Neilson
Tel.: (918) 588-6728
About Charter Communications
Based in St. Louis, Missouri, Charter Communications, Inc.
(NASDAQ: CHTR) -- http://www.charter.com/-- is a broadband
communications company and the fourth-largest cable operator in
the United States. Charter provides a full range of advanced
broadband services, including advanced Charter Digital Cable(R)
video entertainment programming, Charter High-Speed(R) Internet
access, and Charter Telephone(R). Charter Business(TM) similarly
provides scalable, tailored, and cost-effective broadband
communications solutions to business organizations, such as
business-to-business Internet access, data networking, video and
music entertainment services, and business telephone. Charter's
advertising sales and production services are sold under the
Charter Media(R) brand.
On March 16, 2009, Charter Communications filed its annual report
on Form 10-K, which contained a going concern modification to the
audit opinion from its independent registered public accounting
firm.
Charter Communications and more than a hundred affiliates filed
voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y.
Case No. 09-11435). The Hon. James M. Peck presides over the
cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen
E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as
counsel to the Debtors, excluding Charter Investment Inc. Albert
Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as
Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet-
Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts
counsel.
Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the
Debtors' independent auditors. The Debtors' valuation consultants
are Duff & Phelps LLC; the Debtors' financial advisors are Lazard
Freres & Co. LLC; and the Debtors' restructuring consultants are
AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright
Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims
agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008,
the Debtors had total assets of $13,881,617,723, and total
liabilities of $24,185,668,550.
Bankruptcy Creditors' Service, Inc., publishes Charter
Communications Bankruptcy News. The newsletter tracks the Chapter
11 proceedings undertaken by Charter Communications and more than
100 of its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
CHARTER COMMUNICATIONS: Files Schedules and Statements
------------------------------------------------------
Charter Communications, Inc., filed with the U.S. Bankruptcy Court
for the Southern District of New York its schedules of assets and
liabilities, disclosing:
A. Real Property
Cable TV Easement Undetermined
B. Personal Property
B.1 Cash on Hand 0
B.2 Bank Accounts $4,584
B.3 Security Deposits 0
B.4 Household goods 0
B.5 Book, artwork and collectibles 0
B.6 Wearing apparel 0
B.7 Furs and jewelry 0
B.8 Firearms and other equipment 0
B.9 Insurance Policies 0
B.10 Annuities 0
B.11 Interests in an education IRA 0
B.12 Interests in pension plans 401(k) Plan 0
B.13 Stock and Interests Undetermined
B.14 Interests in partnerships/joint ventures Undetermined
B.15 Government and corporate bonds 0
B.16 Accounts Receivable 0
B.17 Alimony 0
B.18 Other Liquidated Debts Owing Debtor 0
B.19 Equitable or future interests 0
B.20 Interests in estate death benefit plan 0
B.21 Other Contingent and Unliquidated Claims
Georgia Department of Revenue 14,006
Ohio Department of Commerce 268
Mississippi Treasury Department 700
Wilmington Trust Undetermined
B.22 Patents, copyrights, and others 0
B.23 Licenses, franchises & other intangibles 0
B.24 Customer lists or other compilations 0
B.25 Vehicles 0
B.26 Boats, motors and accessories 0
B.27 Aircraft and accessories 0
B.28 Office Equipment, furnishings & supplies 0
B.29 Equipment and Supplies for Business 0
B.30 Inventory 0
B.31 Animals 0
B.32 Crops 0
B.33 Farming equipment and implements 0
B.34 Farm supplies, chemicals, and feed 0
B.35 Other Personal Property
CCHC 6.500% Mirror Notes 494,308,378
CCHC 5.875% Mirror Notes 3,181,086
TOTAL SCHEDULED ASSETS $497,509,022
==========================================================
C. Property Claimed None
D. Creditors Holding Secured Claims None
E. Creditors Holding Unsecured Priority Claims None
F. Creditors Holding Unsecured Nonpriority Claims
BNY-6.50% Convertible Sr. Notes due 2012 $494,308,378
BNY-5.875% Convertible Sr. Notes due 2009 3,181,086
Trade Payables 20,250
Litigation Unliquidated
Others 1,019,318
TOTAL SCHEDULED LIABILITIES $498,529,032
==========================================================
Charter Communications also filed its statement of financial
affairs. Charter Communications disclosed that within two years
immediately preceding the commencement of the Chapter 11 cases, it
did not generate income from business operations. However, it
received income from other sources:
YTD - As of
Type of Income 2007 2008 02/28/2009
-------------- ---- ---- -----------
Interest Income $25,444 $1,547 --
Mirror Notes 33,287,290 32,054,186 $5,221,488
Irell Settlement -- -- 59,750,000
Other Income -- 7,954,962 --
Eloise Schmitz, Charter's executive vice president and chief
financial officer, relates that within 90 days prior to the
Petition Date, Charter paid or transferred certain property
aggregating $2,342,262 for debts, which are not primarily consumer
debts. Among the largest payments are:
Creditor Amount Paid
-------- -----------
Michigan Dept. of Treasury $1,748,000
NC Department of Revenue 175,000
Wendel Advisors LLC 52,850
Merritt, David 44,491
May, Robert P. 39,500
Allen, Paul G. 38,000
Charter also paid, within a year prior to the Petition Date,
$22,362,727 to certain creditors, who were or are insiders,
including:
Creditor Date Paid Amount Paid
-------- --------- -----------
Smit, Neil 01/14/2009 $4,020,985
Allen, Paul G. 02/11/2009 3,180,430
Lovett, Michael J. 01/14/2009 2,277,445
Smit, Neil 09/30/2008 2,000,000
Fawaz, Marwan 01/14/2009 873,413
Raclin, Grier 01/14/2009 855,314
Schmitz, Eloise E. 01/14/2009 823,871
Fisher, Jeffrey T. 10/17/2008 504,349
Smit, Neil 03/18/2009 416,958
Schremp, Ted W. 01/14/2009 399,220
Fawaz, Marwan 01/02/2009 320,678
A complete list of the creditors to whom Charter previously made
payments to is available for free at:
http://bankrupt.com/misc/CCI_SOFA_Attachment-3b&3c.pdf
Ms. Schmitz also reveals that Charter is a party to numerous
lawsuits and administrative proceedings. A complete list of
lawsuits, the parties involved and the current status is available
at no charge at:
http://bankrupt.com/misc/CCI_SOFA_Attachment-Lawsuits.pdf
On August 31, 2008, shares of Charter's common stock amounting to
$4,934,987 were transferred to HPC Puckett & Co., Ms. Schmitz
tells Judge Peck. She also reveals that separate bank accounts at
Firstar and U.S. Bank were closed or transferred within one year
before the Petition Date. She adds that Charter has safe deposit
and other depository, a complete list of which is available for
free at:
http://bankrupt.com/misc/CCI_SOFA_Attachment-Depositories.pdf
Within two years before filing for bankruptcy protection, these
individuals kept or supervised the keeping of Charter's books of
accounts and records:
Supervisor Title Time Period Covered
---------- ----- -------------------
Eloise Schmitz CFO 04/04/2008 - Present
Jeffrey T. Fisher CFO 02/06/06 - 04/04/2008
Kevin Howard Controller/ 04/2007 - Present
Chief Acctg.
Officer
KPMG LLP has audited Charter's books of account and records and
prepared Charter's financial statement in the last couple of
years. These individuals and firms were in possession of
Charter's books and records during the commencement of the
bankruptcy cases:
* Kevin Howard, Controller and CAO;
* Eloise Schmitz, CFO;
* PricewaterhouseCoopers;
* Swink, Fiehler & Company, P.C.; and
* Ernst & Young
A list of Charter's current officers, directors, and stockholders
holding 5% or more of its voting or equity securities, as well as
its former officers and directors is available for free at:
http://bankrupt.com/misc/CCI_SOFA_List_D&O_Stockholders.pdf
About Charter Communications
Based in St. Louis, Missouri, Charter Communications, Inc.
(NASDAQ: CHTR) -- http://www.charter.com/-- is a broadband
communications company and the fourth-largest cable operator in
the United States. Charter provides a full range of advanced
broadband services, including advanced Charter Digital Cable(R)
video entertainment programming, Charter High-Speed(R) Internet
access, and Charter Telephone(R). Charter Business(TM) similarly
provides scalable, tailored, and cost-effective broadband
communications solutions to business organizations, such as
business-to-business Internet access, data networking, video and
music entertainment services, and business telephone. Charter's
advertising sales and production services are sold under the
Charter Media(R) brand.
On March 16, 2009, Charter Communications filed its annual report
on Form 10-K, which contained a going concern modification to the
audit opinion from its independent registered public accounting
firm.
Charter Communications and more than a hundred affiliates filed
voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y.
Case No. 09-11435). The Hon. James M. Peck presides over the
cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen
E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as
counsel to the Debtors, excluding Charter Investment Inc. Albert
Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as
Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet-
Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts
counsel.
Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the
Debtors' independent auditors. The Debtors' valuation consultants
are Duff & Phelps LLC; the Debtors' financial advisors are Lazard
Freres & Co. LLC; and the Debtors' restructuring consultants are
AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright
Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims
agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008,
the Debtors had total assets of $13,881,617,723, and total
liabilities of $24,185,668,550.
Bankruptcy Creditors' Service, Inc., publishes Charter
Communications Bankruptcy News. The newsletter tracks the Chapter
11 proceedings undertaken by Charter Communications and more than
100 of its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
CHARTER COMMUNICATIONS: Taps AlixPartners as Restructuring Advisor
------------------------------------------------------------------
Charter Communications Inc. and its affiliates are seeking
approval of its engagement of AlixPartners, LLP, as their
restructuring advisor, nunc pro tunc to March 27, 2009.
AlixPartners' professionals have provided strategic advice to
debtors, creditors, bondholders, investors, and other entities in
numerous Chapter 11 cases of similar size and complexity with
respect to the Debtors' bankruptcy cases, including Bally Total
Fitness of Greater New York, SemGroup, L.P., and Tropicana Casinos
& Resorts, according to Gregory L. Doody, the Debtors' chief
restructuring officer and senior counsel.
Moreover, as a result of the firm's prepetition work performed on
behalf of the Debtors, AlixPartners has acquired significant
knowledge of the Debtors' business operations, financial affairs,
debt structure, restructuring efforts, and other related matters,
Mr. Doody adds.
As restructuring advisor, AlixPartners will:
(a) Advise and assist senior management, as needed, in the
negotiation and implementation of restructuring
initiatives and evaluation of strategic alternatives;
(b) Advise and assist the Debtors and their advisors in the
development and implementation of contingency plans and
financial alternatives in the event an out-of-court
transaction cannot be achieved;
(c) Assist the Debtors and their advisors in managing a
potential bankruptcy process, including any tasks to be
completed in connection with confirmation and consummation
of a plan of reorganization; and
(d) Assist with other matters as may be requested by
management and fall within the firm's expertise,
experience, and capabilities, and that are mutually
agreeable.
Mr. Doody states that if AlixPartners finds it desirable to
augment its professional staff with independent contractors in the
Debtors' Chapter 11 cases:
(i) AlixPartners will file, and require the Independent
Contractor to file, declarations indicating that the
Independent Contractor has reviewed the list of interested
parties in the Debtors' bankruptcy cases, disclosing the
Independent Contractor's relationship, if any, with the
interested parties, and indicating that the Independent
Contractor is disinterested;
(ii) the Independent Contractor will remain disinterested
during the time that AlixPartners is involved in providing
services on behalf of the Debtors; and
(iii) the Independent Contractor will represent that he will not
work for the Debtors or other parties-in-interest in the
Chapter 11 cases during the time AlixPartners is involved
in providing services to the Debtors.
The Debtors will pay AlixPartners for an Independent Contractor's
services at the rate charged to the firm by the Independent
Contractor.
The Debtors and AlixPartners have agreed in an engagement letter,
as amended, to this fee structure:
Managing directors $685 - $995
Directors $510 - $685
Vice presidents $350 - $500
Associates $260 - $360
Analysts $235 - $260
Paraprofessionals $180 - $210
The firm will also be reimbursed for reasonable and necessary
expenses incurred in connection with the Chapter 11 cases.
While the current engagement does not contemplate a success fee,
in the event AlixPartners is asked to undertake more of a
leadership role in restructuring, the Debtors have agreed that a
success fee may be appropriated. AlixPartners and the Debtors
have agreed to review and develop appropriate success criteria and
a success at that time, Mr. Doody says.
Mr. Doody discloses that during the 90 days before the Petition
Date, the firm invoiced the Debtors $1,927,964 for professional
services performed and expenses incurred for the period March 1 to
March 25, 2009. Of the invoiced amounts, AlixPartners received
payments totaling $1,577,607 and applied $350,357 of a retainer in
the original amount of $750,000. AlixPartners continues to hold a
retainer of $399,642.
Subsequent to the Petition Date, the firm will true-up the fees
and expenses for the prepetition period and apply the retainer to
any additional fees and expenses, he says. AlixPartners will hold
the balance of the Retainer to any additional fees and expenses
incurred during the bankruptcy proceeding. He adds that the
Engagement Letter also contains standard indemnification language
with respect to AlixPartners' services.
Ted Stenger, managing director of AlixPartners, says the firm, to
the best of its knowledge, knows of no fact or situation that
would represent a conflict of interest for AlixPartners with
regard to the Debtors. However, Mr. Stenger discloses that the
firm may have a direct or indirect relationship with certain
potential parties-in-interest with respect to matters unrelated to
the Debtors' Chapter 11 cases, including:
* H&F Astro LLC, and Hellman & Friedman Capital Associates
V, LLC;
* Ace American;
* AIG American International Specialty, AIG Express, and AIG
Lexington;
* American Home Assurance;
* Bank of America;
* Bank of New York Mellon; and
* Calpine Corporation.
As part of its diverse practice, AlixPartners appears in numerous
cases, proceedings, and transactions involving many different
professionals, some of whom may represent claimants and parties-
in-interests in the Debtors' Chapter 11 cases. Moreover,
AlixPartners has in the past, and may in the future, be
represented by several attorneys and law firms, some of whom may
be involved in the Debtors' bankruptcy cases, Mr. Stenger says.
In addition, AlixPartners has been in the past, and likely will be
in the future, engaged in matters unrelated to the Debtors or the
Chapter 11 cases, in which it works with or against other
professionals involved in the Debtors' cases. The firm will not
provide professional services to entities relating to, or have any
direct connection with, the Debtors or their bankruptcy cases, Mr.
Stenger says.
AlixPartners do not have an interest materially adverse to the
interests of the Debtors' estates or any class of creditors or
equity security holders. The firm is a disinterested person as
the term is defined in Section 101(14) of the Bankruptcy Code, Mr.
Stenger attests.
About Charter Communications
Based in St. Louis, Missouri, Charter Communications, Inc.
(NASDAQ: CHTR) -- http://www.charter.com/-- is a broadband
communications company and the fourth-largest cable operator in
the United States. Charter provides a full range of advanced
broadband services, including advanced Charter Digital Cable(R)
video entertainment programming, Charter High-Speed(R) Internet
access, and Charter Telephone(R). Charter Business(TM) similarly
provides scalable, tailored, and cost-effective broadband
communications solutions to business organizations, such as
business-to-business Internet access, data networking, video and
music entertainment services, and business telephone. Charter's
advertising sales and production services are sold under the
Charter Media(R) brand.
On March 16, 2009, Charter Communications filed its annual report
on Form 10-K, which contained a going concern modification to the
audit opinion from its independent registered public accounting
firm.
Charter Communications and more than a hundred affiliates filed
voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y.
Case No. 09-11435). The Hon. James M. Peck presides over the
cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen
E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as
counsel to the Debtors, excluding Charter Investment Inc. Albert
Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as
Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet-
Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts
counsel.
Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the
Debtors' independent auditors. The Debtors' valuation consultants
are Duff & Phelps LLC; the Debtors' financial advisors are Lazard
Freres & Co. LLC; and the Debtors' restructuring consultants are
AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright
Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims
agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008,
the Debtors had total assets of $13,881,617,723, and total
liabilities of $24,185,668,550.
Bankruptcy Creditors' Service, Inc., publishes Charter
Communications Bankruptcy News. The newsletter tracks the Chapter
11 proceedings undertaken by Charter Communications and more than
100 of its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
CHARTER COMMUNICATIONS: Asks Court to Approve Lazard Engagement
---------------------------------------------------------------
Charter Communications and its affiliates are asking the U.S.
Bankruptcy Court for the Southern District of New York to approve
their engagement of Lazard Freres & Co. LLC as their financial
advisor and investment banker, nunc pro tunc to the Petition Date,
and in accordance with the terms and conditions set forth in an
engagement letter and letter regarding indemnification, both dated
December 11, 2008, between the Debtors and Lazard.
Prior to the Petition Date, the Debtors engaged Lazard to provide
general investment banking and financial advice in connection with
the Debtors' attempts to complete a strategic restructuring,
reorganization, and recapitalization of all or a significant
portion of their outstanding indebtedness, and to prepare for the
commencement of the Chapter 11 cases. Lazard has also previously
provided other investment banking services to the Debtors in
connection with a variety of financial matters, including certain
exchange offers and related transactions announced between 2003
and 2007.
In rendering prepetition services, Lazard has worked closely with
the Debtors' management and other retained professionals, and has
become well-acquainted with the Debtors' business operations and
capital structure. Accordingly, Lazard has developed significant
expertise regarding the Debtors that will assist it in providing
effective and efficient services during the Chapter 11 Cases,
Gregory L. Doody, chief restructuring officer and senior counsel
for the Debtors, informs the Court. He asserts that the
resources, capabilities, and experience of Lazard in advising the
Debtors are crucial to the Debtors' successful restructuring.
As financial advisor, Lazard will, among other services:
(a) review and analyze the Debtors' business, operations, and
financial projections;
(b) evaluate the Debtors' potential debt capacity, liquidity,
funding shortfalls, and financial alternatives, in light
of their projected cash flows;
(c) assist in the determination of an appropriate capital
structure for the Debtors, and of a range of values for
the Debtors on a going concern basis;
(d) advise the Debtors on potential restructuring plans and
tactics and strategies for negotiating with their
stakeholders; and
(e) render financial advice to the Debtors and participate in
meetings or negotiations with stakeholders and rating
agencies or other appropriate parties in connection with
any restructuring, reorganization, or recapitalization of
balance sheet indebtedness, trade claims, leases,
litigation-related claims and obligations, unfunded
pension and retiree medical liabilities, or other
liabilities that is achieved through a solicitation of
waivers and consents from the holders of those existing
obligations.
Lazard will be paid according to a fee structure set forth in the
Engagement Letter. Mr. Doody asserts that because the Debtors are
seeking approval of the Fee Structure under Section 328(a) of the
Bankruptcy Code, the Debtors believe that Lazard's compensation
should not be subject to any additional review under Section 330
of the Bankruptcy Code, and should not be deemed to constitute a
"bonus" or fee enhancement under applicable law.
The Fee Structure provides that Lazard will be paid a monthly fee
of $250,000, and a fee equal to $16,000,000, payable upon the
consummation of a restructuring transaction. All Monthly Fees
paid in respect of any months following the sixth month of
Lazard's engagement will be credited, without duplication, against
any Restructuring Fee payable, provided that the credit will only
apply to the extent that the fees are approved in entirety by the
Court.
The Debtors will also promptly reimburse Lazard for all reasonable
document production charges and reasonable out-of-pocket expenses.
As part of the compensation payable to Lazard, the Debtors agree
to the indemnification, contribution, and related provisions of
the Indemnification Agreement.
Mr. Doody says that the Debtors do not owe Lazard any fees for
services performed or expenses incurred under the Engagement
Letter prior to the Petition Date. He discloses that according to
Lazard's books and records, during the 90 days prior to the
Petition Date, Lazard received $9,035,295 for professional
services performed and expenses incurred.
James Millstein, a managing director at Lazard, assures Judge Peck
that Lazard is a "disinterested person" within the meaning of
Section 101(14) of the Bankruptcy Code, and does not hold or
represent any interest adverse to the Debtors' bankruptcy estates.
About Charter Communications
Based in St. Louis, Missouri, Charter Communications, Inc.
(NASDAQ: CHTR) -- http://www.charter.com/-- is a broadband
communications company and the fourth-largest cable operator in
the United States. Charter provides a full range of advanced
broadband services, including advanced Charter Digital Cable(R)
video entertainment programming, Charter High-Speed(R) Internet
access, and Charter Telephone(R). Charter Business(TM) similarly
provides scalable, tailored, and cost-effective broadband
communications solutions to business organizations, such as
business-to-business Internet access, data networking, video and
music entertainment services, and business telephone. Charter's
advertising sales and production services are sold under the
Charter Media(R) brand.
On March 16, 2009, Charter Communications filed its annual report
on Form 10-K, which contained a going concern modification to the
audit opinion from its independent registered public accounting
firm.
Charter Communications and more than a hundred affiliates filed
voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y.
Case No. 09-11435). The Hon. James M. Peck presides over the
cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen
E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as
counsel to the Debtors, excluding Charter Investment Inc. Albert
Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as
Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet-
Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts
counsel.
Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the
Debtors' independent auditors. The Debtors' valuation consultants
are Duff & Phelps LLC; the Debtors' financial advisors are Lazard
Freres & Co. LLC; and the Debtors' restructuring consultants are
AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright
Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims
agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008,
the Debtors had total assets of $13,881,617,723, and total
liabilities of $24,185,668,550.
Bankruptcy Creditors' Service, Inc., publishes Charter
Communications Bankruptcy News. The newsletter tracks the Chapter
11 proceedings undertaken by Charter Communications and more than
100 of its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
CHARTER COMMUNICATIONS: Noteholders Group Taps Paul Weiss
---------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy
Procedure, Alan W. Kornberg, Esq., Paul, Weiss, Rifkind, Wharton &
Garrison LLP, in New York, discloses that his firm has been
employed to represent the members of an unofficial committee of
noteholders consisting of certain holders, or as managers of or
advisors to holders, of (i) the 11% Senior Secured Notes due 2015
of CCH I, LLC, and CCH I Capital Corporation, and (ii) the 10.25%
Senior Notes due 2010 and 10.25% Senior Notes due 2013 of CCH II,
LLC, and CCH II Capital Corporation.
The members of the Unofficial Committee of Noteholders are:
(a) AIG Global Investment Corp.
175 Water Street, 24th Floor
New York, NY 10038;
(b) Apollo Management Holdings, L.P.
9 West 57th Street
New York, NY 10022;
(c) Capital Research & Management Company
11100 Santa Monica Boulevard, 15th Floor
Los Angeles, CA 90025;
(d) Contrarian Capital Management LLC
411 West Putnam Avenue
Greenwich, CT 06830;
(e) Crestview Partners, L.P.
667 Madison Avenue, 10th Floor
New York, NY 10065;
(f) Fidelity Management & Research Company
82 Devonshire Street
Boston, MA 02109;
(g) Franklin Advisers, Inc.
One Franklin Parkway
San Mateo, CA 94403;
(h) Lord, Abbett & Co. LLC
90 Hudson Street
Jersey City, NJ 07302;
(i) MFC Global Investment Management (U.S.), LLC
101 Huntington Avenue
Boston, MA 02199;
(j) Oaktree Capital Management, L.P.
333 South Grand Avenue, 28th Floor
Los Angeles, CA 90071; and
(k) Western Asset Management Company
385 East Colorado Boulevard
Pasadena, CA 91101.
The nature of the claims held by Committee members against certain
Debtors includes claims arising under:
-- the 11% Notes, which are guaranteed on a senior unsecured
basis by Charter Communications Holdings, LLC, and are
secured (i) by a pledge of 100% of the equity interests in
CCH II, (ii) by a pledge of CCH I of certain preferred
interests issued by CC VIII, LLC, and (iii) the proceeds;
and
-- the 10.25% Notes, which are unsecured. In addition, the
10.25% Notes due 2013 are guaranteed on a senior unsecured
basis by Charter Holdings.
In the aggregate, Mr. Kornberg reveals, the Committee members are
the beneficial owners or the holders of investment authority with
respect to (i) approximately $2.9 billion of the outstanding
principal amount of the 11% Notes, and (ii) approximately $1.29
billion of the outstanding principal amount of the 10.25% Notes.
Mr. Kornberg also discloses that the Unofficial Committee of
Noteholders was formed prior to the commencement of the Chapter 11
cases, and the Committee members have retained Paul Weiss as
counsel to represent their interests as holders of the 11% Notes
and the 10.25% Notes.
Mr. Kornberg assures the U.S. Bankruptcy Court for the Southern
District of New York that his Firm does not hold any claims
against or interests in the Debtors.
Meanwhile, Edward S. Weisfelner, Esq., at Brown Rudnick LLP, in
New York, discloses that his firm represents Wells Fargo Bank,
N.A.'s interests in the Charter bankruptcy cases.
Wells Fargo is located at Corporate Trust, 625 Marquette Avenue,
MAC N9311-110, in Minneapolis, Minnesota.
Mr. Weisfelner notes that his firm represents Wells Fargo solely
in its capacities as
(i) successor Administrative Agent under that certain third
lien Credit Agreement, dated as of March 6, 2007, among
CCO Holdings, LLC, as Borrower, Bank of America, N.A., as
original Administrative Agent, the Lenders, and the other
parties, and
(ii) successor Collateral Agent under that certain Pledge
Agreement, dated as of March 6, 2007, among CCO Holdings,
LLC, as Grantor, and Bank of America, N.A., as original
Collateral Agent.
Brown Rudnick also represents an ad hoc consortium of certain
lenders under the Third Lien Credit Agreement:
(1) APG Asset Management
666 Third Avenue, 2nd Floor
New York, NY 10017;
(2) Caspian Capital Management
745 Fifth Avenue, 28th Floor
New York, NY 10151-2899;
(3) King Street Capital Management, L.P.
65 East 55th Street 30th Floor
New York, NY 10022;
(4) Latigo Partners, L.P.
590 Madison Avenue, 9th Floor
New York, NY 10022; and
(5) Scoggin Capital Management L.P.
660 Madison Avenue
New York, NY 10021-8405.
As of April 1, 2009, Mr. Weisfelner says, Wells Fargo did not hold
any of the loans under the Third Lien Credit Agreement, but held
claims against the Debtors for fees, expenses and liabilities
incurred as Third Lien Agent. He adds that as of April 1, certain
affiliates of Wells Fargo collectively held $9,750,000 of the
loans under the Third Lien Credit Agreement.
Mr. Weisfelner discloses that as of April 1, the members of the
Third Lien Consortium hold, or manage funds or accounts that hold,
in the aggregate $98,084,250, or 28% of the loans under the Third
Lien Credit Agreement.
The Third Lien Consortium initially retained Brown Rudnick as
counsel on January 13, 2009, and the Third Lien Agent retained the
firm as counsel on February 23.
Under the Third Lien Credit Agreement, CCO Holdings, LLC, has
agreed to reimburse the Third Lien Agent and the Lenders,
including the members of the Third Lien Consortium, for certain
fees and expenses, which reimbursements are expected to compensate
Brown Rudnick for its representation of the Third Lien Agent and
the Third Lien Consortium.
Brown Rudnick holds no claims against or interests in the Debtors,
Mr. Weisfelner assures the Court.
About Charter Communications
Based in St. Louis, Missouri, Charter Communications, Inc.
(NASDAQ: CHTR) -- http://www.charter.com/-- is a broadband
communications company and the fourth-largest cable operator in
the United States. Charter provides a full range of advanced
broadband services, including advanced Charter Digital Cable(R)
video entertainment programming, Charter High-Speed(R) Internet
access, and Charter Telephone(R). Charter Business(TM) similarly
provides scalable, tailored, and cost-effective broadband
communications solutions to business organizations, such as
business-to-business Internet access, data networking, video and
music entertainment services, and business telephone. Charter's
advertising sales and production services are sold under the
Charter Media(R) brand.
On March 16, 2009, Charter Communications filed its annual report
on Form 10-K, which contained a going concern modification to the
audit opinion from its independent registered public accounting
firm.
Charter Communications and more than a hundred affiliates filed
voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y.
Case No. 09-11435). The Hon. James M. Peck presides over the
cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen
E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as
counsel to the Debtors, excluding Charter Investment Inc. Albert
Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as
Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet-
Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts
counsel.
Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the
Debtors' independent auditors. The Debtors' valuation consultants
are Duff & Phelps LLC; the Debtors' financial advisors are Lazard
Freres & Co. LLC; and the Debtors' restructuring consultants are
AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright
Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims
agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008,
the Debtors had total assets of $13,881,617,723, and total
liabilities of $24,185,668,550.
Bankruptcy Creditors' Service, Inc., publishes Charter
Communications Bankruptcy News. The newsletter tracks the Chapter
11 proceedings undertaken by Charter Communications and more than
100 of its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
CHRYSLER LLC: S&P Downgrades Rating on First-Lien Loan to 'CC'
--------------------------------------------------------------
Standard & Poor's Ratings Services said it has lowered its issue-
level ratings on Chrysler LLC's senior secured first-lien term
loan due 2013 to 'CC' (the same as the 'CC' corporate credit
rating on Chrysler) from 'CCC'. The recovery rating was revised
to '4' from '1', indicating S&P's view that lenders can expect
average (30% to 50%) recovery in the event of a payment default.
The corporate credit rating is unchanged, at 'CC', which reflects
S&P's view of the likelihood of default -- from either a
bankruptcy or a distressed debt exchange.
At the same time, S&P also lowered the issue rating on Chrysler's
senior secured second-lien term loan due 2014 to 'C' (below the
corporate credit rating) from 'CC', and the recovery rating on
this debt was revised to '6' from '4', indicating S&P's view that
lenders can expect negligible (0 to 10%) recovery in the event of
a payment default.
"The lowering of our issue ratings reflects lower recovery
estimates, given our current view that Chrysler would be unlikely
to emerge from bankruptcy as one reorganized entity," said
Standard & Poor's recovery analyst Greg Maddock. "We believe that
if the company filed for Chapter 11 bankruptcy protection, many of
its assets and operations would be sold in discrete transactions
over time, while other segments may be closed," he continued.
S&P expects a bankruptcy filing to occur around the end of April
or soon thereafter if the company is not successful in reaching an
agreement on a partnership with Fiat SpA and concessions with its
main labor union and secured lenders, or otherwise satisfying the
U.S. Treasury that it has an acceptable viability plan.
S&P's recovery ratings do not reflect any debtor-in-possession
financing that could supersede the liens of existing secured
lenders and result in a lower recovery value. S&P did not assume
any further government funding in S&P's analysis on either a pre-
or post-petition basis. Additional pre-petition funding does not
change the analysis because the senior lenders are secured by
essentially all assets. S&P believes post-petition lending in the
form of DIP financing would be more problematic for recoveries
because the company has no available assets to secure a DIP
facility. In S&P's view, this suggests that the existing lenders
could be superseded in a bankruptcy proceeding and, given the
expectation of a liquidation, implies that recovery values would
be further impaired as the estate is wound down. For example, S&P
estimate that recoveries on the $7 billion of secured debt could
be 40% (the midpoint of the 30% to 50% range), but a $3 billion
superseding DIP could cause the recovery on secured pre-petition
debt to be negligible.
The corporate credit rating reflects the prospects for a
distressed debt exchange (which S&P would consider tantamount to a
default under S&P's criteria) or a bankruptcy filing. The U.S.
Treasury recently extended the deadline for these two possible
outcomes until April 30, 2009, while Chrysler and interested
parties negotiate.
Ratings List
Chrysler LLC
Corporate credit rating CC/Negative/--
Downgraded
To From
-- ----
Senior Secured (1 issue) C CC
Recovery Rating 6 4
Senior Secured (1 issue) CC CCC
Recovery Rating 4 1
CHRYSLER LLC: Bankruptcy May Damage Daimler's Finances
------------------------------------------------------
Automotive News reports that Daimler CEO Dieter Zetsche said that
a Chrysler LLC bankruptcy could damage the firm's finances.
Automotive News relates that while Daimler sold its majority stake
in Chrysler in 2007, it still holds a 20% interest in that firm.
According to the report, Daimler chief financial officer Bodo
Uebber valued the Chrysler shares at zero, but warned of a due
$1 billion pension guarantee if that firm goes bankrupt. Daimler,
says Automotive News, faces tough financial difficulties, as
global sales of Mercedes-Benz cars drop 23% and trucks decline
39%. The report states that Daimler sold a 9.1% stake to Abu
Dhabi in March to raise cash.
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.
Liquidity Crunch
Chrysler has been trying to keep itself afloat. As reported by
the Troubled Company Reporter on March 20, 2009, its Chief
Financial Officer Ron Kolka, has said even if Chrysler gets
additional government loans, it could face another cash shortage
in July when revenue dries up as the company shuts down its
factories for two weeks to change from one model year to the next.
The Company's CFO has said Chrysler planned for the $4 billion
federal government bailout it received Jan. 2 to last through
March 31. The Company is talking with the Obama administration's
autos task force about getting another $5 billion, and faces a
March 31 deadline to complete its plan to show how it can become
viable and repay the loans.
General Motors Corp. and Chrysler admitted in their viability
plans submitted to the U.S. Treasury on February 17 that they
considered bankruptcy scenarios, but ruled out the idea, citing
that a Chapter 11 filing would result to plummeting sales, more
loans required from the U.S. government, and the collapse of
dealers and suppliers.
A copy of the Chrysler viability plan is available at:
http://ResearchArchives.com/t/s?39a3
A copy of GM's viability plan is available at:
http://researcharchives.com/t/s?39a4
* * *
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.
CHRYSLER LLC: Creditors to Make Counteroffer to Treasury This Week
------------------------------------------------------------------
Jeffrey McCracken and Kate Linebaugh at The Wall Street Journal
report that Chrysler LLC's creditors will make a counteroffer this
week to the U.S. Treasury, which had asked lenders owed about
$6.9 billion to give up 85% of the debt in exchange for $1
billion.
According to WSJ, the lenders' steering committee includes:
-- J.P. Morgan Chase & Co.,
-- Citigroup Inc.,
-- Goldman Sachs Group Inc.,
-- Morgan Stanley,
-- Oppenheimer & Co.,
-- Stairway Capital Management, and
-- Perella Weinberg Partners.
Citing people familiar with the matter, WSJ relates that in
exchange for concessions, the lenders are considering asking for
equity in a firm that would be formed by a Chrysler-Fiat SpA
merger. According to the report, the government's current
proposal doesn't include any equity. The report says that the
government demanded that a deal be completed by April 30.
According to WSJ, one of the secured-debt holders said that the
creditors had been waiting for information about the liquidation
value of some Chrysler assets and the structure of the Company's
partnership with Fiat before providing Treasury with a
counteroffer
Automotive News reports that Fiat CEO Sergio Marchionne may take
the top job at Chrysler under possible scenarios being discussed
by the two firms.
Citing people familiar with the matter, Automotive News relates
that the auto task force might take seats on Chrysler's board.
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.
Liquidity Crunch
Chrysler has been trying to keep itself afloat. As reported by
the Troubled Company Reporter on March 20, 2009, its Chief
Financial Officer Ron Kolka, has said even if Chrysler gets
additional government loans, it could face another cash shortage
in July when revenue dries up as the company shuts down its
factories for two weeks to change from one model year to the next.
The Company's CFO has said Chrysler planned for the $4 billion
federal government bailout it received Jan. 2 to last through
March 31. The Company is talking with the Obama administration's
autos task force about getting another $5 billion, and faces a
March 31 deadline to complete its plan to show how it can become
viable and repay the loans.
General Motors Corp. and Chrysler admitted in their viability
plans submitted to the U.S. Treasury on February 17 that they
considered bankruptcy scenarios, but ruled out the idea, citing
that a Chapter 11 filing would result to plummeting sales, more
loans required from the U.S. government, and the collapse of
dealers and suppliers.
A copy of the Chrysler viability plan is available at:
http://ResearchArchives.com/t/s?39a3
A copy of GM's viability plan is available at:
http://researcharchives.com/t/s?39a4
* * *
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.
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.
GM Europe is based in Zurich, Switzerland, while General Motors
Latin America, Africa and Middle East is headquartered in
Miramar, Florida.
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.
General Motors Corp. admitted in its viability plan submitted to
the U.S. Treasury on February 17 that it considered bankruptcy
scenarios, but ruled out the idea, citing that a Chapter 11 filing
would result to plummeting sales, more loans required from the
U.S. government, and the collapse of dealers and suppliers.
A copy of GM's viability plan is available at:
http://researcharchives.com/t/s?39a4
The U.S. Treasury and U.S. President Barack Obama's automotive
task force are currently reviewing the Plan, which requires an
additional $16.6 billion on top of $13.4 billion already loaned by
the government to GM.
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,
Dominion Bond Rating Service 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.
CITADEL BROADCASTING: Waiver Won't Affect Moody's 'Caa2' Rating
---------------------------------------------------------------
Moody's Investors Service said Citadel Broadcasting Corporation's
recent amendment and waiver to its credit agreement will not
impact the company's Caa2 Corporate Family Rating, Caa3
Probability of Default Rating, its SGL-4 rating or its rating
outlook which is negative.
The last rating action on Citadel was on February 13, 2009 when
Moody's downgraded the company's CFR to Caa2 from B3 and PDR to
Caa3 from Caa1.
Citadel Broadcasting Corporation, headquartered in Las Vegas,
Nevada, is a radio broadcaster comprised of 165 FM and 58 AM
stations in more than 50 markets. The company's 2008 revenues
were approximately $863 million.
COGECO CABLE: S&P Changes Outlook to Stable; Affirms 'BB' Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services said it revised its outlook on
Montreal-based cable TV service provider Cogeco Cable Inc. to
stable from positive. At the same time, S&P affirmed the ratings,
including the 'BB' long-term corporate credit rating on the
company. At Feb. 28, 2009, Cogeco Cable had $1.2 billion of debt
outstanding.
"The outlook revision follows weak second-quarter fiscal 2009
results at the company's Portuguese cable operations Cabovisao-
Televisao por Cabo S.A.," said Standard & Poor's credit analyst
Madhav Hari.
The outlook also reflects S&P's concerns that subscriber growth
and cash flows at this subsidiary, which accounts for about 20% of
total revenue, could deteriorate in the next several quarters
owing to heightened competition from well-capitalized incumbents
such as Portugal Telecom SGPS S.A. (BBB-/Stable/A-3) and ZON
Multimedia (not rated). Nevertheless, the strength of the
company's Canadian cable and telecom operations, which account for
80% of total revenue, combined with the company's relatively
healthy credit metrics (adjusted debt leverage of 2.6x), support
the ratings.
Cogeco Cable is the second-largest cable operator in Ontario and
Quebec, as well as in Portugal, in terms of basic cable
subscribers. The company provides analog and digital cable TV,
high-speed Internet, and digital telephony services to more than
2.4 million combined households, typically located in midsize
urban communities.
S&P bases its ratings on Cogeco Cable on the consolidated risk
profile of the company's 100%-owned Canadian and Portuguese cable
subsidiaries. In Standard & Poor's opinion, the ratings underpin
the solid business risk profile of the company's Canadian
operations, partially offset by Cabovisao's weak business risk
profile. The ratings are also supported by Cogeco Cable's
relatively conservative debt leverage and improving credit
metrics.
"The ratings are tempered, in our view, by an aggressive financial
policy, given management's desire to pursue additional debt-
financed acquisitions, potentially in new geographic markets; high
capital expenditures; and weak, albeit improving, cash flow
protection measures," Mr. Hari added.
The stable outlook reflects Standard & Poor's expectation that the
strength of the company's Canadian operations will offset declines
at the Portuguese operations. As such, S&P expects Cogeco Cable
to be able to maintain healthy credit metrics with adjusted debt
leverage at the mid-2x level in the next 12-18 months, barring
additional debt-financed acquisitions. S&P would revise the
outlook to positive on Cogeco Cable should performance of its
Portuguese cable operations improve, and the Canadian operations
continue to grow. S&P could also consider an upgrade should the
company demonstrate a commitment to a conservative financial
policy. Alternatively, should growth in the Canadian operations
fail to sufficiently offset weakness at Cabovisao, S&P could
revise the outlook to negative. The potential for, and magnitude
of, any debt-financed international acquisitions will remain an
important factor in S&P's consideration for any revision to the
outlook.
COMPTON PETROLEUM: Moody's Junks Corporate Family Rating from 'B2'
------------------------------------------------------------------
Moody's Investors Service lowered Compton Petroleum Corporation's
Corporate Family Rating to Caa1 from B2 and its senior unsecured
rating to Caa2 (LGD5, 70%) from B3. The outlook remains negative.
The downgrade was prompted by Compton's deteriorating operating
performance, ongoing challenges to maintain a steady state
production profile without generating negative free cash flow,
significantly reduced production guidance for 2009, high operating
costs, high level of debt relative to current production, and
weakened liquidity. The negative outlook reflects the risks
surrounding Compton's strategic direction and restructuring
process, eventual make-up of its capital structure, and the
renewal of its borrowing base revolver in a capital constrained
environment.
Compton's production has been on a declining path since 2006
despite aggressive drilling efforts and $760 million of capital
expenditures. Based on reduced production volume of 21 thousand
barrels of oil equivalent per day (Mboe/d, gross), production this
year could be down approximately 12% since 2006 (net of asset
sales) and 33% inclusive of asset sales. While soft demand and
weak prices have played key roles in this year's drastic cuts, the
fundamental challenges that Compton faces are its high operating
cost base and elevated capex requirements. Unconventional natural
gas drilling is capital intensive. Horizontal drilling and
multistage fracturing require a higher degree of reliance on
engineering, drilling, and completion expertise to achieve
expected results, and thus, are inherently higher cost. The high
3-year average finding and development costs (US$24.07 at Dec 31,
2008) for proved reserves, weak leveraged full cycle ratio (0.9x),
and the possibility of continued negative free cash flow are
indicative of Compton's unfavorable cost profile, which over time
has drifted towards levels more consistent with the Caa1 rating
category. Without significant sustained improvement in its cost
structure, stabilization of production and free cash flow
generation are unlikely over the near term.
While Compton achieved some debt relief in 2008 through asset
sales, financial leverage has shown a rising trend over the past
few years and the debt burden remains high relative to its current
production base (~US$38,000 per boe/d). The debt level will
continue to rise given the company's current business model that
has routinely generated negative free cash flow. The company's
recent plan to reduce capital expenditures may help preserve cash
flow over the near term, but if the downturn is protracted,
reduced drilling activity will lead to higher decline rates and
ultimately reduced production and cash flows. Cash flow will come
under additional pressures going forward as interest expense
associated with Compton's revolver borrowings increases
significantly when the facility is renewed in July, 2009.
Compton also faces significant near term liquidity challenges.
The company's $500 million 364-day borrowing base revolver matures
on July 1, 2009. Three banks in the current syndicate
representing $90 million will not return for renewal. As a
result, the line could be reduced to $410 million if other banks
do not increase their participation or Compton is unable to find
new syndicate participants. When the facility is renewed, it is
likely that total commitment will be reduced and interest rates
and fees will be set at significantly higher levels. In addition
to the risk of a reduced revolving line, an existing covenant in
Compton's Senior Notes Indenture limits secured debt to an amount
not to exceed Compton's Adjusted Consolidated Net Tangible Asset
Value, which was $375 million at December 31, 2008. Consequently,
Compton's drawings could be effectively limited to $375 million
even if the revolver borrowing base is set at a higher level.
Based on $290 million of drawings at year end, Compton may
therefore, have access to only $85 million. If the downturn in
gas markets is protracted, liquidity could become a serious issue
over the next 12 to 18 months. Prudent liquidity management
therefore, will be of paramount importance for Compton's ratings
over the next several quarters.
There is considerable amount of uncertainty regarding Compton
strategic direction, restructuring efforts and the ultimate shape
of its capital structure. The negative outlook reflects Moody's
belief that Compton will be challenged to execute its plans given
current weak macro-economic conditions, unfavorable price outlook
for natural gas, and dysfunctional capital markets. Moody's will
continue to monitor Compton's progress towards capital efficiency,
cost improvements, debt reduction and attainment of a less
burdensome capital structure. While the current downturn in
natural gas drilling markets may provide some near term cost
support, meaningful sustained cost improvements will likely
materialize over time with fundamental changes to Compton's
drilling methods. Also, although the company has indicated that
it is willing to monetize assets and raise equity, any asset sales
or equity issue in the present environment may prove challenging.
Debt reduction therefore, may not happen in the immediate future.
Compton currently maps to a B3 rating under Moody's Global
Independent Exploration and Production Industry Rating
Methodology, based on 3-year historical performance ending
December 31, 2008. However, Moody's actual ratings consider the
recent past as well as Moody's forward outlook. Moody's expect
Compton's overall performance over the next 2 years to track to a
Caa rating.
Downgrades:
Issuer: Compton Petroleum Corporation
-- Probability of Default Rating, Downgraded to Caa1 from B2
-- Corporate Family Rating, Downgraded to Caa1 from B2
Issuer: Compton Petroleum Finance Corporation
-- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2
from B3
Upgrades:
Issuer: Compton Petroleum Finance Corporation
-- Senior Unsecured Regular Bond/Debenture, Upgraded to LGD5,
70% from LGD5, 73%
Moody's last rating action on Compton was to downgrade its CFR to
B2 (from B1) on November 21, 2008 following fundamental
deterioration in performance.
Headquartered in Calgary, Alberta, Compton Petroleum Corporation
had revenues of C$490 million in 2008.
CONGOLEUM CORP: 2009 Stockholders' Meeting Slated for May 12
------------------------------------------------------------
The Annual Meeting of the Stockholders of Congoleum Corporation
will be held at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP, Four Times Square, 38th Floor, in New York, on May 12,
2009 at 1:00 p.m. local time.
The agenda are:
-- Election of three Class A directors who will hold office
until the Meeting in 2012 and until their successors are
duly elected and qualified; and
-- Other matters as may be put forth at the meeting.
The Nominees are:
-- William M. Marcus, 71, Director, Executive Vice President
and Treasurer of American Biltrite Inc. (since 1966).
American Biltrite Inc. is the controlling shareholder of the
Company and owns and operates other businesses selling
adhesive coated pressure sensitive tape and film, flooring,
rubber products and costume jewelry. Director of Aqua
Bounty Technologies. Director of the Company since 1993.
-- C. Barnwell Straut, 83, Managing Director of Hillside
Capital Incorporated, an investment firm (since 1976).
Director of the Company since 1986.
-- Jeffrey H. Coats, 51, President, CEO and Director of
Autobytel Inc., an Internet automotive marketing services
company (since December 2008). Partner, Southgate
Alternative Investments, LLC, an investment firm (since
2007). Executive Chairman and Director of Mikronite
Technologies Group Inc., an industrial technology company
(since 2002). Managing Director of Maverick Associates LLC,
a financial consulting and investment company (since 2001).
From July 1999 to July 2001, Founder and Managing Director
of TH Lee Global Internet Managers, L.P., an equity
investment fund. Director of Autobytel Inc.(since 1996).
Director of the Company since 2005.
The Board of Directors of Congoleum Corporation recommends voting
for the proposals.
As reported by the Troubled Company Reporter on April 1, 2009,
Congoleum posted net loss for the quarter ended December 31, 2008,
of $6.4 million, compared with a net loss of $2.4 million in the
fourth quarter of 2007. The net loss for the year ended
December 31, 2008, was $14.6 million, versus a net loss of
$0.7 million in 2007. The net loss for 2008 includes an $11.5
million charge taken during the third quarter of 2008 to increase
reserves for estimated legal and related expenses in connection
with the reorganization proceedings.
As of December 31, 2008, Congoleum had $171.8 million in total
assets and $261.4 million in total liabilities, resulting in
$89.5 million in stockholders' deficit.
Congoleum, together with its bondholders, filed a revised plan of
reorganization on November 20, 2008. In January 2009, First State
Insurance Company and Twin City Fire Insurance Company filed a
motion for summary judgment seeking denial of confirmation of the
Amended Joint Plan on several discrete issues and a hearing was
held on February 5, 2009. On February 26, the Bankruptcy Court
rendered an opinion denying confirmation of the Amended Joint
Plan. Pursuant to the opinion, the Bankruptcy Court entered an
order dismissing Congoleum's bankruptcy case. On February 27,
Congoleum and the Official Committee of Bondholders appealed the
Order of Dismissal and the summary judgment ruling denying Plan
confirmation to the U.S. District Court for the District of New
Jersey. On March 3, an order was entered by the Bankruptcy Court
granting a stay of the Order of Dismissal pending entry of a final
non-appealable decision affirming the Order of Dismissal.
Congoleum anticipates that its debtor-in-possession financing
facility together with cash from operations will provide it with
sufficient liquidity to operate during 2009 while under Chapter 11
protection, although there can be no assurances of such in light
of current business conditions. The existing financing facility
expires June 30, 2009. There can also be no assurances that the
Company will continue to be in compliance with the required
covenants under this facility or that the DIP facility will be
renewed prior to its expiration if a plan of reorganization is not
confirmed before that time. Congoleum was not in compliance with
the minimum EBITDA covenant under its credit facility for the
period ended December 31, 2008, and obtained a waiver of that
covenant as well as an amendment of the covenant levels for the
remaining term of the facility to make them less restrictive. For
a plan of reorganization to be confirmed, the Company will need to
obtain and demonstrate the sufficiency of exit financing. The
Company cannot presently determine the terms of such financing,
nor can there be any assurances of its success obtaining it.
About Congoleum
Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM)
-- http://www.congoleum.com/-- manufactures and sells resilient
sheet and tile floor covering products with a wide variety of
product features, designs and colors. The company filed for
chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No.
03-51524) as a means to resolve claims asserted against it related
to the use of asbestos in its products decades ago.
Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A.
Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP, and Paul S.
Hollander, Esq., and James L. DeLuca, Esq., at Okin, Hollander &
DeLuca, LLP, represent the Debtors.
The Asbestos Claimants' Committee is represented by Peter Van N.
Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drysdale,
Chtd. The Bondholders' Committee is represented by Michael S.
Stamer, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer
& Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC,
represents the Official Committee of Unsecured Creditors.
R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker,
LLC, the Court-appointed Futures Claimants Representative, is
represented by Roger Frankel, Esq., Richard Wyron, Esq., and
Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and
Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC.
American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum,
is represented by Matthew Ward, Esq., Mark S. Chehi, Esq.,
Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden
Arps Slate Meagher & Flom.
CONSTAR INTERNATIONAL: Posts $57.8 Million Net Loss for 2008
------------------------------------------------------------
Constar International Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K for the year ended
December 31, 2008.
Net loss in 2008 was $57.8 million compared to a net loss of
$26.3 million in 2007. As of December 31, 2008, the Company had
$418.2 million in total assets and $579.3 million in total
liabilities, resulting in $161.1 million in stockholders' deficit.
Constar estimates that the funding requirements under its pension
plans for 2009 and 2010 will be roughly $3.7 million and
$8.3 million, respectively.
A full-text copy of Constar's Annual Report is available at no
charge at http://ResearchArchives.com/t/s?3b61
$19 Mil. in Trade Receivables
The U.S. Bankruptcy Court for the District of Delaware scheduled
March 30, 2009, as the deadline for general creditors to file
proofs of claim, and June 29, 2009, as deadline for governmental
units to file proofs of claim. As of March 25, 2009, the Debtors
have identified roughly $19 million of prepetition claims,
substantially all of which are related to normal trade invoices.
As reported by the Troubled Company Reporter, a confirmation
hearing with the U.S. Bankruptcy Court has been set for April 28,
2009, to consider approval of the Company's Plan of
Reorganization.
Bankruptcy Plan
Constar said there can be no assurance that the Company's Plan of
Reorganization will be confirmed on April 28.
On January 23, 2009, the Company filed a Disclosure Statement and
Plan of Reorganization with the Bankruptcy Court. The overall
purpose of the Plan of Reorganization is to provide for the
restructuring of the Company's liabilities in a manner designed to
maximize recovery to all stakeholders and to enhance the financial
viability of the newly reorganized Company after it emerges from
Chapter 11 by de-leveraging the Company and providing additional
liquidity. The Plan of Reorganization will result in a reduction
of $186.2 million of total debt from prepetition amounts. The
terms of the Plan of Reorganization include:
* Holders of Allowed Administrative Claims, Priority Tax
Claims, Other Priority Claims, and Other Secured Claims will
receive full payment in cash;
* Holders of claims under the DIP Credit Facility will paid in
full in cash if that facility is not converted into the
Company's exit facility;
* Holders of Allowed Senior Secured Floating Rate Note Claims
will receive full payment in cash when the notes become due;
* Holders of Allowed Senior Subordinated Note Claims will
receive 100% of the new common stock of the reorganized
Company (except for stock reserved for incentive plans),
provided that the class of such Claims votes to accept the
Plan of Reorganization;
* Holders of Allowed General Unsecured Claims will receive full
payment in cash;
* Holders of Section 510(b) Claims will not receive any
distribution and their claims will be extinguished; and
* Holders of existing Common Stock will not receive any
distribution under the Plan and their shares will be
cancelled on the effective date of the Plan.
Headquartered in Philadelphia, Pennsylvania, 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 affiliates filed for
Chapter 11 protection on December 30, 2008 (Bankr. D. Del. Lead
Case No. 08-13432). Bayard, P.A., represents the Debtors as
counsel. Wilmer Cutler Pickering Hale and Dorr LLP represents the
Debtors as co-counsel. Goodwin Procter LLP, and Young, Conaway,
Stargatt & Taylor, LLP, serve as the Official Committee of
Unsecured Creditors' counsel.
CONTINENTALAFA: Unsec. Creditors Resolve Dispute With Harbinger
---------------------------------------------------------------
The official committee of unsecured creditors of ContinentalAFA
Dispensing Company and its affiliates ask the U.S. Bankruptcy
Court for the Eastern District of Missouri to approve its
settlement agreement and release with Harbinger Capital Partners
Master Fund I, Ltd. and Harbinger Capital Partners Special
Situations Fund, L.P.
Harbinger is the Debtors' largest remaining secured creditor and
the largest unsecured creditor. At the Chapter 11 petition date,
Harbinger held approximately $20 million in principal face amount
of secured debt. Harbinger also owns 100% of the equity interests
in ContinentalAFA, which in turn, owns 100% of the equity
interests in the other Debtors.
The Committee tells the Court that the Settlement Agreement
resolves the Adversary Proceeding that it filed on November 7,
2008, halts Harbinger's motion to convert the Debtors' bankruptcy
cases to Chapter 7, and resolves Harbinger's objections to the
disclosure statement attached to the Committee's proposed Plan of
Liquidation for the Debtors.
Harbinger had threatened to block approval of the Disclosure
Statement and prevent confirmation of the Plan. As previously
reported, pursuant to the Plan's terms, the Debtor will be
dissolved and cease to exist on the Plan's Effective Date. A
liquidation trustee, to be appointed by Committee, will be
authorized to sell or dispose of all property of the Estate and
will exercise all the rights, powers and duties of a Chapter 11
trustee.
The Committee relates that the Settlement Agreement was arrived at
after extensive arm's-length negotiations among the parties. The
Committee tells the Court that the Settlement Agreement will
materially reduce the burdens in the Debtors' estates and will
avoid the expense, delay, uncertainty and risk inherent in
litigation. The Settlement Agreement also provides the base for a
consensual and confirmable Chapter 11 plan, and preserves value
for the Debtors' estates.
Settlement Agreement
The principal terms of the Settlement Agreement provide that
Harbinger assign and transfer a portion of the proceeds of its
Collateral to or for the benefit of general non-priority unsecured
creditors as consideration for the dismissal of the Adversary
Proceeding. The Settlement Agreement also details the terms of a
consensual plan that is reasonably acceptable to Harbinger.
A full-text copy of the Settlement Agreement and Release, dated
April 2, 2009, is available for free at:
http://bankrupt.com/misc/CAFA.SettlementAgreement.pdf
Committee Adversary Proceeding
Under the orders entered by the Court authorizing the Debtors
permission to obtain post-petition financing from Wachovia Capital
Finance Corp., the Committee was granted a 90-day period to
challenge the liens of Wachovia and Harbinger. Wachovia's claim
has been paid in full, leaving Harbinger a first priority lien in
all of the remaining assets of the Debtors other than the
avoidance actions.
On November 7, 2008, the Creditors Committee filed against
Harbinger the adversary proceeding seeking, inter alia, to
recharacterize the Harbinger Debt to an equity contribution, and
alternatively, to find that a lien on a portion of the Collateral
is invalid as a preference due to a purported delay in the
recordation of a mortgage on the Debtors' facility in Forest City,
North Carolina. Harbinger disputed all liability alleged in the
Adversary Proceeding in its entirety and said it had valid and
complete defenses to the Committee's actions.
About ContinentalAFA Dispensing
Headquartered in St. Peters, Missouri, ContinentalAFA Dispensing
Company, fka Indesco International, Inc. --
http://www.continentalafa.com/-- designs, manufactures and
supplies high quality plastic trigger sprayers and other liquid
dispensing technologies and systems for major consumer product
companies and industrial markets. The Debtors currently have no
business operations.
Continental AFA and its wholly owned subsidiaries, Continental
Sprayers International, Inc. and AFA Products, Inc., filed
separate voluntary Chapter 11 petition in the Eastern District of
Missouri United States Bankruptcy Court on Aug. 7, 2008 (Case No.
08-45921). Judge Kathy A. Surratt-States oversees the case.
John J. Hall, Esq., Lawrence E. Parres, Esq., and Robert Scott
Moore, Esq., at Lewis, Rice & Fingersh, L.C., represent the Debtor
as counsel. Daniel D. Doyle, Esq., and David Michael Brown, Esq.,
at Spencer Fane Britt & Browne LLP, represent the official
unsecured creditors' committee as counsel. When the Debtor filed
for bankruptcy, it listed assets of $100,000,000 to $500,000,000,
and debts of $10,000,000 to $50,000,000.
CU FLEET: Files for Chapter 11 Bankruptcy Protection
----------------------------------------------------
Rich Kirchen at The Business Journal of Milwaukee reports that CU
Fleet has filed for Chapter 11 bankruptcy in the U.S. Bankruptcy
Court Eastern District of Wisconsin.
Court documents say that CU Fleet remains open at 2222 S. 114th
Street.
The Business Journal relates that CU Fleet said its assets and
debts range $1 million to $10 million. According to the report,
CU Fleet's secured creditors are:
-- Landmark Credit Union of New Berlin, which is owed about
$2 million;
-- Prime Financial Credit Union of Cudahy and Guardian Credit
Union of West Milwaukee, which are owed a combined
$800,000; and
-- Green Bay-based Associated Bank, which is owed about
$850,000.
The Business Journal states that attorneys for the credit unions
have sought to block CU Fleet from using cash collateral that they
had provided, but the Hon. Pamela Pepper let CU Fleet use the
collateral until another hearing scheduled for April 16.
According to The Business Journal, CU Fleet must prove by April 16
that it could keep lenders' cash to run the business. The
Company, The Business Journal says, must submit reports on the
amount of cash it has on hand and the portion of the cash that is
collateral from the credit unions and Associated Bank.
CU Fleet is a West Allis automotive leasing dealership co-owned by
former Central States Mortgage CEO Richard Jungen. The dealership
leases new and late-model vehicles. CSMC had acquired CU Fleet in
October 2004. The auto leasing firm originally leased vehicles to
members of credit unions in Wisconsin that had invested in the
company.
DAVID'S AUTO: Files for Chapter 11 Bankruptcy Protection
--------------------------------------------------------
Recycling Today Magazine reports that David's Auto Shredding has
filed for Chapter 11 bankruptcy protection, but will continue to
operate its facilities.
According to Recycling Today, David's Auto President David Hickman
said that the difficult environment for the recycling industry has
made it difficult for the Company to operate, as well as the slack
demand. The auto industry, the report says, has seen a sharp
decline in new auto sales. The report states that steel plants
are currently operating at perhaps less than 40% of capacity,
which is reducing the demand for raw material to feed the mills.
David's Auto has cut its expenses to $168,000 per month, from
around $340,000 a month, Recycling Today relates, citing
Mr. Hickman.
Court documents say that David's Auto listed less than $10,000 in
assets and more than $1 million in debts.
David's Auto Shredding operates four scrap metal recycling
facilities. In addition to its main location in Mobile, Alabama,
the Company operates scrap metal facilities in Biloxi, Pascagoula,
Beaumont, and Carriere, Mississippi.
EMPIRE RESORTS: In Talks With Noteholders, Taps Eric Reehl as CRO
-----------------------------------------------------------------
Empire Resorts, Inc. appointed Eric Reehl as Chief Restructuring
Officer. Mr. Reehl's primary function will be to negotiate a
restructuring of the Company's outstanding secured debt
obligations with representatives of the Company's note holders,
who hold $65 million in convertible notes, and Bank of Scotland,
which holds approximately $7.5 million in a revolving first
mortgage credit facility.
Following his appointment by the Board of Directors, Mr. Reehl
said, "I am pleased to join the Company and lead restructuring
negotiations with creditors. I believe it is in the best interest
of all parties to come to a quick settlement and that we shall be
successful in this endeavor. The Company has a solid asset base
and significant growth potential given its existing cash flow from
VGM and racing operations at the Monticello Casino and Raceway,
future anticipated revenues from the Concord Hotel & Resort, the
possibility of a St. Regis Mohawk Tribe class III gaming project,
and possible future legalization of commercial gaming in Sullivan
County. There is also the potential of developing the 230-acre
raceway site along with the expansion of gaming in the Catskills.
I am glad to be able to share Empire's long term vision and look
forward to working closely with the Company's board, management
and creditors to make the collective vision a reality for all
concerned."
Mr. Reehl recently served as one of three Managing Directors in
Corporate Finance and Asset Backed Lending at Plainfield Asset
Management LLC. At Plainfield, Mr. Reehl was involved in lending
and investing opportunities, including a number of corporate
acquisitions in bankruptcy proceedings. Previously, he served as
Senior Bankruptcy and Restructuring Advisor with Ernst & Young's
Corporate Finance Restructuring Group in New York, and as Head of
the New York Direct Lending Group at CGS Investments, Inc., an
affiliate of Beal Bank. Mr. Reehl concurrently serves as Acting
CFO for Park Avenue Bank in New York. He holds a BBA in Finance
and an MBA from the University of Texas at Austin.
About Empire Resorts
Based in Monticello, New York, Empire Resorts, Inc. --
http://www.empireresorts.com/-- operates the Monticello Gaming &
Raceway and is involved in the development of another gaming
resort project in the Catskills.
Going Concern Doubt
In its 2008 annual report filed in March 2009, the Company said
its ability to continue as a going concern is dependent upon its
ability to negotiate a renewal or extension of the maturity dates
or to arrange financing to repay its credit facility with the Bank
of Scotland when it matures on May 29, 2009, and the holders of
the Senior Convertible Notes if they demand repayment of the notes
on July 31, 2009.
"Because of the right of the holders of the Senior Convertible
Notes to demand repayment of the notes on July 31, 2009, it is
unlikely that we will be able to extend or replace our credit
facility," the Company said.
The Company said there is no assurance that it will be successful
in obtaining a result that will avoid a default on its obligations
under its credit facility or the terms of the Senior Convertible
Notes.
"These factors, as well as continuing net losses and negative cash
flows from operating activities, raise substantial doubt about our
ability to continue as a going concern," the Company said.
Friedman LLP in New York, the Company's independent registered
public accounting firm, included an explanatory paragraph in their
report dated March 13, 2009, regarding their concerns about our
ability to continue as a going concern.
The Company entered into a credit facility with Bank of Scotland
on January 11, 2005. The credit facility provides for a
$10 million senior secured revolving loan.
The Company issued July 26, 2004, $65 million of 5.5% senior
convertible notes presently convertible into approximately
5.2 million shares of common stock, subject to adjustment upon the
occurrence or non-occurrence of certain events. The notes were
issued with a maturity date of July 31, 2014, and the holders have
the right to demand that we repurchase the notes at par plus
accrued interest on July 31, 2009. Interest is payable semi-
annually on January 31 and July 31.
The Bank of Scotland has entered into an Inter-creditor Agreement
with The Bank of New York so that Bank of Scotland will be
entitled to a first priority position notwithstanding the
Indenture and security documents entered into on July 26, 2004, in
connection with the issuance of $65 million of senior convertible
notes.
As of December 31, 2009, the Company had $49.0 million in total
assets and $81.4 million in total liabilities, resulting in
$32.3 million in stockholders' deficit. The Company posted
$10.6 million in net loss for the year on $67.2 million in net
revenues. A full-text copy of the Company's Annual Report is
available at no charge at http://ResearchArchives.com/t/s?3b5e
FANNIE MAE: CEO May Leave Firm to Run Gov't Bailout Efforts
-----------------------------------------------------------
President Barack Obama is expected this week to appoint Fannie Mae
CEO Herb Allison to lead the government's $700 billion financial-
rescue program, the Troubled Asset Relief Program, Deborah Solomon
at The Wall Street Journal reports, citing people familiar with
the matter.
According to WSJ, Mr. Allison would hold the assistant secretary
for the Office of Financial Stability post, replacing Neel
Kashkari, who was from the Bush administration and who was asked
by Treasury Secretary Timothy Geithner to stay on until a
replacement was found. He is an investment company TIAA-CREF
former chairperson and was a Merrill Lynch & Co. executive for
years, WSJ relates. Mr. Allison, says WSJ, agreed in September
2008 to run Fannie Mae after the U.S. took over the Company and
Freddie Mac. James R. Hagerty at WSJ relates that Mr. Allison has
been working without any salary or bonus since he took the job at
Fannie Mae.
WSJ notes that the government might have to look for permanent
leaders of Fannie Mae and Freddie Mac. WSJ states that Freddie
Mac CEO David Moffett disclosed his resignation in March.
According to the report, the government has had difficulty finding
executives willing to serve as directors and executives of bailed-
out firms, partly due to intense scrutiny. The report says that
with the companies under government control, any CEO will have
little autonomy, less scope for devising a long-term strategy, and
compensation is likely to be meager by CEO standards. The report
states that any pay package totaling as much as $1 million per
year would likely draw fire from the public and Congress.
Fannie Mae COO Michael J. Williams would temporarily take the CEO
position at the Company, WSJ reports.
About Fannie Mae
The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) --
commonly known as Fannie Mae, is a shareholder-owned U.S.
government-sponsored enterprise. Fannie Mae has a federal charter
and operates in America's secondary mortgage market, providing
mortgage bankers and other lenders funds to lend to home buyers at
low rates.
Fannie Mae was created in 1938, under President Franklin D.
Roosevelt, at a time when millions of families could not become
homeowners, or risked losing their homes, for lack of a consistent
supply of mortgage funds across America. The government
established Fannie Mae to expand the flow of mortgage funds in all
communities, at all times, under all economic conditions, and to
help lower the costs to buy a home.
In 1968, Fannie Mae was re-chartered by the U.S. Congress as a
shareholder-owned company, funded solely with private capital
raised from investors on Wall Street and around the world.
Fannie Mae is the U.S. largest mortgage buyer, according to The
New York Times.
Conservatorship
As reported by the Troubled Company Reporter, the U.S. government
took direct responsibility for Fannie Mae and Freddie Mac, placing
the government sponsored enterprises under conservatorship on
September 7, 2008. James B. Lockhart, director of Federal Housing
Finance Agency, said that Fannie Mae and Freddie Mac share the
critical mission of providing stability and liquidity to the
housing market. Between them, the Enterprises have $5.4 trillion
of guaranteed mortgage-backed securities (MBS) and debt
outstanding, which is equal to the publicly held debt of the
United States. Among the key components of the conservatorship,
the FHFA, as conservator, assumed the power of the Board and
management.
FATBURGER RESTAURANTS: File for Chapter 11 Bankruptcy Protection
----------------------------------------------------------------
Fox5vegas.com reports that Fatburger Restaurants of Nevada and
Fatburger Restaurants of California have filed for Chapter 11
bankruptcy protection.
Fox5vegas.com states that Fatburger Restaurant's chief lender, GE
Capital Solutions Franchise Finance, recently declared the
restaurants were in default of $3.85 million worth of loans.
According to Fox5vegas.com relates that 32 restaurants exist
between the bankrupt Fatburger Restaurants. Fog Cutter Capital
Group, says Fox5vegas.com, controls the chain. The report states
that restaurants will remain open.
Founded by Lovie Yancey in Los Angeles, California in 1952, the
Fatburger Restaurant chain -- http://www.fatburger.com/home/--
has more than 75 restaurants serving big, fresh, lean beef burgers
cooked to order on open grills in Arizona, California, Colorado,
Florida, Georgia, Louisiana, Nevada, New Jersey, New York,
Pennsylvania, Texas, Virginia, Washington, and Canada. Based in
Santa Monica, California, the Company is actively seeking new
franchisees for available territories across the nation.
FOOTHILLS RESOURCES: No Timetable for Filing of 2008 Annual Report
------------------------------------------------------------------
Foothills Resources, Inc., failed to file its Annual Report on
Form 10-K for the fiscal year ended December 31, 2008, with the
Securities and Exchange Commission within the March 31, 2009
deadline. Foothills Resources explained its bankruptcy filing
occurred at a time during which year-end audit procedures would
normally be conducted. The Company said its available management
resources have been particularly strained following the
commencement of the Chapter 11 Cases as the Company's management
and its external advisors have devoted substantial attention to
the Company's reorganization efforts. As a result of the
increased burdens placed upon the Company's financial, accounting
and administrative staff, the Company and its auditors have not
yet been able to prepare the audited financial statements for the
year 2008 that are required to be included in the Form 10-K.
The inability to file the Form 10-K could not have been eliminated
by the Company without unreasonable effort or expense, Foothills
Resources said. While the Company intends to file the Form 10-K
as soon as practicably possible, it is not clear when the
Company's audited financials will be available and as a result the
Company may not be in a position to file the Form 10-K by the 15th
calendar day following the March 31 filing date, as prescribed in
Rule 12b-25 of the Securities Exchange Act of 1934. The Company
cannot make any assurances as to when it will complete and file
the Form 10-K.
About Foothills Resources
Foothills Resources, Inc., is an oil and gas exploration company
engaged in the acquisition, exploration and development of oil and
natural gas properties. The company's operations are primarily
through its wholly owned subsidiaries, Foothills California, Inc.,
Foothills Texas, Inc., and Foothills Oklahoma, Inc.
On February 11, 2009, Foothills Resources, Inc., and its wholly
owned subsidiaries, Foothills California, Inc., Foothills
Oklahoma, Inc., and Foothills Texas, Inc., filed voluntary
petitions for reorganization relief under Chapter 11 (Bankr. D.
Del. Case No. 09-10453). Judge Christopher S. Sontchi handles
the Chapter 11 cases. The Debtors tapped Akin Gump Strauss
Hauer & Feld LLP as lead bankruptcy counsel. The Garden City
Group Inc. is the Company's claims agent. In its bankruptcy
petition, Foothills estimated assets and debts of between
$50 million and to $100 million each.
FREDDIE MAC: Hasn't Found New CEO, Gov't May Seek Permanent Chief
-----------------------------------------------------------------
Deborah Solomon at The Wall Street Journal reports Freddie Mac
hasn't found a replacement for CEO David Moffett, who disclosed
his resignation in March.
WSJ notes that the government might have to look for permanent
leaders of Freddie Mac and Fannie Mae. WSJ says that Fannie Mae
CEO Herb Allison is expected to leave the firm to lead the
Troubled Asset Relief Program. According to the report, the
government has had difficulty finding executives willing to serve
as directors and executives of bailed-out firms, partly due to
intense scrutiny. The report says that with the companies under
government control, any CEO will have little autonomy, less scope
for devising a long-term strategy, and compensation is likely to
be meager by CEO standards. The report states that any pay
package totaling as much as $1 million per year would likely draw
fire from the public and Congress.
About Freddie Mac
The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE --
commonly known as Freddie Mac, is a stockholder-owned government-
sponsored enterprise authorized to make loans and loan guarantees.
Freddie Mac was created in 1970 to provide a continuous and low
cost source of credit to finance America's housing.
Freddie Mac conducts its business primarily by buying mortgages
from lenders, packaging the mortgages into securities and selling
the securities -- guaranteed by Freddie Mac -- to investors.
Mortgage lenders use the proceeds from selling loans to Freddie
Mac to fund new mortgages, constantly replenishing the pool of
funds available for lending to homebuyers and apartment owners.
At December 31, 2008, the company's balance sheet showed total
assets of $850.9 billion and total liabilities of $881.6 billion,
resulting in a stockholders' deficit of $30.7 billion.
Conservatorship
As reported by the Troubled Company Reporter, the U.S. government
took direct responsibility for Fannie Mae and Freddie Mac, placing
the government sponsored enterprises under conservatorship on
September 7, 2008. James B. Lockhart, director of Federal Housing
Finance Agency, said that Fannie Mae and Freddie Mac share the
critical mission of providing stability and liquidity to the
housing market. Between them, the Enterprises have $5.4 trillion
of guaranteed mortgage-backed securities (MBS) and debt
outstanding, which is equal to the publicly held debt of the
United States. Among the key components of the conservatorship,
the FHFA, as conservator, assumed the power of the Board and
management.
Being under Conservatorship, Freddie Mac said it is dependent upon
the continued support of Treasury and FHFA to continue operating
its business.
FULTON HOMES: Sold 424 Homes in 2008; East Valley Key to Success
----------------------------------------------------------------
Edward Gately at Eastvalleytribune.com reports that Fulton Homes
Corporation's vice president of operations, Dennis Webb, said that
the Company has sold 424 homes in 2008, compared to 2,200 homes in
2005, and sees the south East Valley as the key to its future
prosperity.
According to Eastvalleytribune.com, the height of the housing boom
was in 2005. The recession has had a "tremendous" effect on
Fulton Homes, Eastvalleytribune.com states, citing Mr. Webb. Mr.
Webb said that sales have picked up in recent weeks and "inventory
is getting down as we're selling quite a few inventory homes. We
had a fair amount of inventory, probably more than most builders,
but we've been selling. About 85% to 90% of our sales have come
from inventory homes," Eastvalleytribune.com relates.
Mr. Webb, Eastvalleytribune.com states, said that Fulton Homes has
had to cut prices, particularly in areas like Maricopa and Casa
Grande, to compete with foreclosures. Citing Mr. Webb,
Eastvallleytribune.com relates that Fulton Homes has built for the
past 15 years at least a third of its homes as inventory or
speculative without having a contracted buyer and that hasn't
changed despite the recession. Mr. Webb, according to the report,
said that the Company has about 200 speculative homes built or
under construction in the East Valley.
Eastvalleytribune.com, citing Mr. Webb, relates that speculative
homes compete with foreclosure homes better than contracted ones
as buyers can take advantage of current low-interest rates. The
report quoted Mr. Webb as saying, "Say you buy a speculative home
and you're 30 to 60 days out from closing, you can lock in your
interest rate. You can't lock in your interest rate on a new
build if you're going to be out there for five months, from
contract to close. That's important to a lot of people, to be
able to lock in an interest rate." Mr. Webb said that there's
higher risk associated with depending so much on speculative
homes, but "it's worth it" because 80% of Fulton Homes' sales are
speculative homes, according to the report.
About Fulton Homes
Fulton Homes Corporation -- http://www.fultonhomes.com-- is a
Tempe, Arizona-based homebuilder. The Company filed for Chapter
11 protection on January 27, 2009 (Bankr. D. Ariz. Case No.: 09-
01298). Mark W. Roth, Esq., at Shughart Thomson & Kilroy PC,
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed assets
and debt between $100 million and $500 million each.
GENERAL GROWTH: Bondholders Ask BNY to File Lawsuit
---------------------------------------------------
Kris Hudson at The Wall Street Journal reports that a group of
bondholders have asked their trustee, Bank of New York Mellon, to
file a lawsuit against General Growth Properties, Inc., for
payment of past-due bonds.
Citing people familiar with the matter, WSJ relates that law firm
Wilmer Cutler Pickering Hale and Dorr LLP represents holders of
25% of General Growth's $395 million in bonds that were due on
March 16 and that weren't paid. WSJ says that bondholders must
collectively represent at least 25% of a given bond issue to
compel a trustee to act on their behalf.
WSJ notes that a trial on the bondholders' lawsuit would likely
take months to play out. WSJ relates that General Growth had
pledged to work with its unsecured lenders to craft an out-of-
court restructuring of its balance sheet by the end of June. The
trial might not be needed if General Growth meets that commitment,
WSJ states.
Based in Chicago, Illinois, General Growth Properties, Inc.
(NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S.
mall owner, having ownership interest in, or management
responsibility for, more than 200 regional shopping malls in 44
states, as well as ownership in master planned community
developments and commercial office buildings. The Company's
portfolio totals roughly 200 million square feet of retail space
and includes more than 24,000 retail stores nationwide. General
Growth is a self-administered and self-managed real estate
investment trust.
General Growth said in a regulatory filing Sept. 30 that its
potential inability to address its 2008 or 2009 debt maturities in
a satisfactory fashion raises substantial doubts as to its ability
to continue as a going concern.
* * *
As reported by the Troubled Company Reporter on Dec. 11, 2008,
Fitch Ratings, has downgraded the Issuer Default Ratings and
outstanding debt ratings of General Growth Properties to 'C'
from 'B'.
Moody's Investors Service on March 24, 2009, downgraded the
ratings on General Growth, certain of its subsidiaries and The
Rouse Company LP to C from Ca senior secured bank debt; to C from
Ca senior unsecured debt. This concludes Moody's review.
GENERAL MOTORS: Told by Treasury to Brace for Bankruptcy by June 1
------------------------------------------------------------------
Shawn Langlois at MarketWatch reports that the U.S. Treasury has
instructed General Motors Corp. to lay the groundwork for a
bankruptcy filing by June 1.
According to The New York Times, the auto task force is holding
meetings and conference calls with GM officials and their advisers
in Detroit and Washington, with the goal to prepare for a fast
"surgical" bankruptcy. MarketWatch relates that the preparations
are aimed at assuring a GM bankruptcy filing is ready if the
Company fails to reach a deal with bondholders to exchange about
$28 billion in debt into equity in the Company and to get needed
concessions from the United Automobile Workers union.
The NY Times notes that GM could create a new firm that would
purchase the Company's "good" assets almost immediately after the
bankruptcy filing. MarketWatch states that GM's less desirable
assets, including unwanted brands, factories and health-care
obligations, would be left in the old firm, which could be
liquidated over several years. The "good GM", says The NY Times,
enters and exits bankruptcy protection in as little as two weeks,
using $5 billion to $7 billion in federal financing. MarketWatch
notes that the rest of GM may require $70 billion in government
financing and possibly more to resolve the Company's health-care
obligations and the liquidation of the factories.
GM, which is working hard to meet a June 1 deadline to present an
accelerated restructuring plan, needs to "restructure this company
either inside, without a bankruptcy, or with a bankruptcy,"
Reuters relates, citing Buick, Pontiac and GMC vice president
Susan Docherty. "It isn't that we didn't have a viable plan, it's
that they wanted the plan to be realized in a shorter time....
They don't want to run our company. They want us to be viable,"
the report quoted Ms. Doherty as saying.
John D. Stoll, Jeffrey McCracken, and Sharon Terlep at The Wall
Street Journal reports that GM, being pressed by the Obama
administration, is preparing a new deal for its unsecured
bondholders that is much tougher than one it offered just a few
weeks ago. According to WSJ, GM is considering offering company
shares to investors who turn in their bonds under its
reorganization plan.
WSJ says that the first offer included cash, new GM debt
securities, and 90% of the Company's stock. Citing people
familiar with the matter, WSJ relates that the Treasury believed
that the original plan was too generous to bondholders.
The Pension Benefit Guaranty Corp. said that GM retirees are
bracing for what may be $16 billion in pension losses if the
agency has to take over the plans, Holly Rosenkrantz at Bloomberg
reports. According to Bloomberg, a source said that as many as
half of GM's 670,000 pension-plan participants might see their
benefits reduced.
ICIS News states that GM's bankruptcy could hurt U.S. plastics
suppliers. ICIS News, citing American Chemistry Council chief
economist Kevin Swift, relates that GM said it was able to pay its
bills to parts makers this month without the help of federal
funds, but under a bankruptcy, some suppliers would be paid
pennies on the dollar, which could affect chemical demand. "If
[automotive] production in North America were less, it would
definitely impact the demand for chemistry," the report quoted him
as saying.
Sumant Banerji at Hindustan Times states that GM's unit in India
suffered a sharp drop in sales. GM India's sales declined 25.3%
in the November 2008 to March 2009 period, compared to a 6.7%
growth during the April 2008 to October 2008 period. According to
Hindustan Times, GM India has denied the bankruptcy correlation.
Hindustan Times quoted GM India senior vice president of corporate
communications, P. Balendran, as saying, "Investments and
expansions have been made and our plans are on track. Whatever
decline in sales we have suffered is due to the global recession
that has impacted everybody. I don't think there is any negative
perception in the market about our future as we are growing
sequentially."
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.
GM Europe is based in Zurich, Switzerland, while General Motors
Latin America, Africa and Middle East is headquartered in
Miramar, Florida.
As reported in the Troubled Company Reporter on November 10,
2008, General Motors Corporation's balance sheet at September 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.
General Motors Corp. admitted in its viability plan submitted to
the U.S. Treasury on February 17 that it considered bankruptcy
scenarios, but ruled out the idea, citing that a Chapter 11 filing
would result to plummeting sales, more loans required from the
U.S. government, and the collapse of dealers and suppliers.
A copy of GM's viability plan is available at:
http://researcharchives.com/t/s?39a4
The U.S. Treasury and U.S. President Barack Obama's automotive
task force are currently reviewing the Plan, which requires an
additional US$16.6 billion on top of US$13.4 billion already
loaned by the government to GM.
As reported in the Troubled Company Reporter on November 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
November 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: Faces Lawsuit by Canadian Unsecured Bondholders
---------------------------------------------------------------
John D. Stoll at The Wall Street Journal reports that Canadian
unsecured bondholders have filed a lawsuit against General Motors
Corp., claiming that the Company wrongfully pulled $600 million
from the Nova Scotia Finance Co. subsidiary in 2008 to address an
increasing liquidity problem in the U.S.
According to WSJ, investment funds including Aurelius Capital
Partners LP, Drawbridge DSO Securities LLC, and Appaloosa
Investment Ltd. filed the complaint in Halifax, Nova Scotia,
seeking repayment to the subsidiary. WSJ relates that the funds
claimed that they own more than 60% of about $1 billion in notes
that were issued in 2003 out of Nova Scotia Finance. WSJ says
that at issue are dividends that GM paid from Nova Scotia Finance
in May 2008 to its flagging U.S. operation. According to the
report, the payments were made as GM Chief Financial Officer Ray
Young started to publicly acknowledge a potential need to raise
cash.
GM's move to tap Nova Scotia Financial for a dividend potentially
broke Canadian law because company officials should have known the
U.S. operations were "either insolvent or on the brink of
insolvency," WSJ relates, citing the funds. According to WSJ, the
funds alleged that GM illegally placed Nova Scotia Finance's debt
holders at a heightened risk of never being repaid.
WSJ reports that the bondholders also complained about GM's move
to refinance a $4.5 billion revolving credit line in 2006 and use
Canadian assets, including Nova Scotia Finance Company, as
collateral for the loans. WSJ states that GM drew on the
revolving loan in 2008 as its liquidity concerns were mounting.
The bondholders alleged that GM's moves subordinated them to the
banks extending the revolving credit line and made repayment of
the loans less likely, according to the report.
WSJ states that GM denied the allegations, saying that the
complainants are sophisticated investors who knew there would be
risk related to purchasing bonds. GM, WSJ relates, said that it
acted within its rights when it paid itself the dividends. The
Company also said that it had the right to offer the property as
collateral for loans, WSJ states.
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.
GM Europe is based in Zurich, Switzerland, while General Motors
Latin America, Africa and Middle East is headquartered in
Miramar, Florida.
As reported in the Troubled Company Reporter on November 10,
2008, General Motors Corporation's balance sheet at September 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.
General Motors Corp. admitted in its viability plan submitted to
the U.S. Treasury on February 17 that it considered bankruptcy
scenarios, but ruled out the idea, citing that a Chapter 11 filing
would result to plummeting sales, more loans required from the
U.S. government, and the collapse of dealers and suppliers.
A copy of GM's viability plan is available at:
http://researcharchives.com/t/s?39a4
The U.S. Treasury and U.S. President Barack Obama's automotive
task force are currently reviewing the Plan, which requires an
additional US$16.6 billion on top of US$13.4 billion already
loaned by the government to GM.
As reported in the Troubled Company Reporter on November 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
November 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: Opel May Get Funds from European Investment Bank
----------------------------------------------------------------
European Investment Bank Vice President Matthias Kollatz-Ahnen
said General Motors Corp.'s Adam Opel GmbH unit may get
EUR400 million (US$530 million) in loans from the bank, Andreas
Cremer at Bloomberg News reports citing newspaper Handelsblatt.
Bloomberg News relates according to the newspaper, a precondition
for the loan is that the carmaker uses the funds to develop new
models with fuel-efficient engines instead of strengthening its
capital base.
Separately, Chris Reiter at Bloomberg News reports GM said its
Opel unit has enough money to last through June as car-scrapping
programs help regional sales.
Orders in Europe for GM's regional and U.S. brands rose 42% in
March as demand doubled in Germany, in part because of the state
incentives, Brent Dewar, GM's European sales chief, said in a
statement e-mailed to Bloomberg. Car sales in the country dropped
14 percent in January.
According to the report, governments in 11 European countries are
offering rebates to consumers to trade in old cars. In Germany,
drivers can receive EUR2,500 for junking cars more than 9 years
old when buying new models, the report says.
Bloomberg News relates Opel is seeking EUR3.3 billion
(US$4.38 billion) in aid from European governments. Bloomberg
News recalls the U.S. automaker said in late February that it's
prepared to part with 50 percent of Opel to secure the future of
the brand.
As reported in the Troubled Company Reporter on Apr. 6, 2009, GM
said in a filing with the U.S. Treasury Department that it is
prepared to file for bankruptcy protection if it fails to
restructure out of court.
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.
GM Europe is based in Zurich, Switzerland, while General Motors
Latin America, Africa and Middle East is headquartered in
Miramar, Florida.
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: S&P Downgrades Rating on $4.5 Bil. Loan to 'CCC-'
-----------------------------------------------------------------
Standard & Poor's Ratings Services said it has lowered its issue-
level rating on General Motors Corp.'s $4.5 billion senior secured
revolving credit facility to 'CCC-' (one notch above the 'CC'
corporate credit rating on the company) from 'CCC'. S&P revised
the recovery rating on this facility to '2' from '1', indicating
its view that lenders can expect substantial (70% to 90%) recovery
in the event of a payment default. The corporate credit rating
remains unchanged, at 'CC', reflecting S&P's view of the
likelihood that GM will default -- through either a bankruptcy or
a distressed debt exchange.
The issue rating on GM's $1.5 billion senior secured term loan was
left unchanged, at 'CCC' (two notches above the corporate credit
rating); the recovery rating on this debt remains at '1',
indicating S&P's view that lenders can expect very high (90% to
100%) recovery in the event of a payment default. In addition,
the issue rating on GM's unsecured debt was left unchanged, at 'C'
(below the corporate credit rating); the recovery rating on these
tranches remains at '6', indicating S&P's view that lenders can
expect negligible (0-10%) recovery in the event of a payment
default.
"The lowering of the rating on the revolving credit facility
reflects S&P's view of persistently weaker demand for light
vehicles in North America, as well as declining pools of assets
securing the revolving credit facility," said Standard & Poor's
recovery analyst Greg Maddock. The facility is available to GM
and General Motors of Canada Ltd.
The corporate credit rating reflects S&P's view of the prospects
for a distressed debt exchange (which S&P would consider
tantamount to a default under S&P's criteria) or a bankruptcy
filing.
S&P's recovery ratings do not reflect any debtor-in-possession
financing that could prime (supersede) the liens of existing
secured lenders and result in a lower recovery value. S&P did not
assume any further government funding in S&P's analysis on either
a pre- or post-petition basis and are rating based on a
reorganization scenario. Additional pre-petition funding does not
change the analysis because the senior lenders are secured by
essentially all assets. S&P believes additional post-petition
lending in the form of DIP financing would be more problematic for
recoveries because GM has no available assets to secure a DIP
facility. In S&P's view, this suggests that the existing lenders
(including the government) could be primed in a bankruptcy
proceeding, which would result in lower recovery values, either in
a reorganization or in the event of a possible liquidation as the
estate is wound down. For example, S&P estimate recovery would be
70% to 90%, but a priming DIP could cause the recovery to be far
lower (depending on the size of the DIP facility and the use of
proceeds).
Ratings List
General Motors Corp.
Corporate credit rating CC/Negative/--
Downgraded
General Motors Corp.
To From
-- ----
Senior Secured CCC- CCC
Recovery Rating 2 1
General Motors of Canada Ltd.
To From
-- ----
Senior Secured CCC- CCC
Recovery Rating 2 1
GOTTSCHALKS INC: Daniel Warzenski Leaves Firm as CFO
----------------------------------------------------
Gottschalks Inc. said that Daniel T. Warzenski, the Company's Vice
President, Chief Financial Officer and Secretary since 2007, has
stepped down from those positions and left the Company effective
April 3, 2009.
Effective upon Mr. Warzenski's departure from Gottschalks, J.
Gregory Ambro -- Executive Vice President and the Company's Chief
Operating Officer -- started acting as the Company's principal
financial officer. Mr. Ambro joined the Company in 2003 as Senior
Vice President and Chief Administrative and Financial Officer of
the Company and was later promoted to Executive Vice President and
Chief Operating Officer of the Company. He has served as
Executive Vice President and Chief Operating Officer since 2007
and will remain in those positions.
Also on April 3, 2009, each of Scott G. Manson, Senior Vice
President and General Merchandise Manager of the Company since
2004, and Michael J. Schmidt, Senior Vice President and the
Company's Director of Stores since 1985, stepped down from those
respective positions and left the Company effective that same day.
Following a Bankruptcy Court-supervised auction on March 30, 2009,
for certain of the Company's assets, and in consultation with the
agent for its senior secured lenders and the unsecured creditors'
committee, the Company entered into an Agency Agreement with a
joint venture comprised of SB Capital Group, LLC, Tiger Capital
Group, LLC, Great American Group WF, LLC and Hudson Capital
Partners, LLC (the Agent), pursuant to which the Company appointed
the Agent to conduct the sale of merchandise located at the
Company's retail stores and distribution center and to dispose of
certain of the Company's furnishings, trade fixtures and
equipment. The determination to enter into the Agency Agreement
resulted from the Company's decision to take the necessary steps
to liquidate the assets of the Company as part of its Chapter 11
proceedings. The Bankruptcy Court granted, among other matters,
final approval of the Agency Agreement.
Under the Agency Agreement, which is effective as of March 31,
2009, the Company appointed the Agent to conduct the sale of
merchandise located at 58 retail stores and the Company's
distribution center and to dispose of certain furnishings, trade
fixtures and equipment with respect to the Stores and the
Company's corporate headquarters. The Agency Agreement sets forth
the terms and conditions of the Sale at the Stores and the
corresponding rights and obligations of the Agent and the Company.
The Agency Agreement provides that the Sale, which began on
April 2, 2009, will be completed on or before July 15, 2009. The
Sale Termination Date may be extended by mutual agreement of the
Agent, the Company, and the agent for the Company's senior secured
lenders.
Pursuant to the Agency Agreement, the Company is guaranteed to
receive, irrespective of actual Sale proceeds, 98% of the
aggregate cost value of the merchandise to be sold, plus an amount
sufficient to cover certain Company expenses during the term of
the Sale (the "Guaranteed Amount"). To the extent that the total
proceeds from the Sale exceed the Guaranteed Amount, the Agent
will be entitled to retain the balance of the Sale proceeds, up to
four percent of the aggregate cost value of the merchandise (the
"Agent's Fee"). Any remaining Sale proceeds in excess of the
Guaranteed Amount and the Agent's Fee will be shared 50% to the
Company and 50% to the Agent. All unsold merchandise remaining,
if any, in the Stores at the conclusion of the Sale shall become
the property of the Agent, free and clear of all liens, subject to
the Company's right to the payment of any and all amounts owing to
it under the Agency Agreement and provided that the Agent uses
reasonable best efforts to sell all merchandise during the Sale.
The Agency Agreement contains customary representations,
warranties, covenants and indemnities by the Company and the
Agent. Under the Agency Agreement, and on the basis of the Order,
the Company granted to the Agent a security interest in the
merchandise included in the Sale, the furnishings, trade fixtures
and equipment located in the Stores and the Company's corporate
headquarters, and all proceeds from the Sale of such merchandise,
furnishings, fixtures and equipment. The Agent's security
interest is junior to the security interests of the Company's
senior secured lenders under its post-petition senior secured,
super-priority debtor-in-possession credit facility.
About Gottschalks Inc.
Headquartered in Fresno, California, Gottschalks Inc. (Pink
Sheets: GOTTQ.PK) -- http://www.gottschalks.com-- is a regional
department store chain, operating 58 department stores and three
specialty apparel stores in six western states. Gottschalks
offers better to moderate brand-name fashion apparel, cosmetics,
shoes, accessories and home merchandise.
The Company filed for Chapter 11 protection on January 14, 2009
(Bankr. D. Del. Case No. 09-10157). O'Melveny & Myers LLP
represents the Debtor in its Chapter 11 case. Lee E. Kaufman,
Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger,
P.A., will serve as the Debtors' co-counsel. The Debtor selected
Kurtzman Carson Consultants LLC as its claims agent. The U.S.
Trustee for Region 3 appointed seven creditors to serve on an
Official Committee of Unsecured Creditors. When the Debtor filed
for protection from its creditors, it listed $288,438,000 in total
assets and $197,072,000 in total debts as of January 3, 2009.
HANCOCK FABRICS: Narrowed Net Loss to $12.4 Million in 2008
-----------------------------------------------------------
Hancock Fabrics, Inc. (OTC symbol: HKFI) filed its 2008 Form
10-K and reported sales and earnings for the fiscal year ended
January 31, 2009 (fiscal 2008).
Financial highlights for the year include:
-- Net sales for fiscal 2008 were $276.4 million compared with
$276.3 million in fiscal 2007, and comparable sales
increased 2.1% compared with a 0.5% increase in the previous
year.
-- Operating income increased to $3.1 million, an increase of
$7.1 million from fiscal 2007.
-- Net loss narrowed to $12.4 million, or $0.65 per share, in
2008 from $33.3 million, or $1.76 per share in 2007. The
$12.4 million loss for the year included $8.2 million of
reorganization expenses and $2.2 million of interest expense
related to bankruptcy claims.
-- EBITDA for the year was $9.7 million, a $6.6 million
increase over the 2007 result of $3.1 million.
-- Inventories reduced by over $10.1 million, the majority of
this reduction occurring in continuing stores.
-- Cash totaling $24.4 million was generated from operations
before reorganization activities including an $8.1 million
federal tax refund from previous operating losses.
-- Since emergence from bankruptcy through fiscal year end, the
Company has reduced gross debt including bankruptcy
liabilities by approximately $25.8 million.
-- At fiscal year end, the Company had outstanding borrowings
under its Revolver of $32.6 million and outstanding letters
of credit of $6.5 million. The Note balance was
$20.9 million and the warrant discount on the Notes was
$10.5 million. Additional amounts available to borrow at
that time were $35.0 million and this borrowing capacity has
been maintained into fiscal 2009.
As of January 31, 2009, the Company had $164.6 million in total
assets and $117.3 million in total liabilities.
Jane Aggers, President and Chief Executive Officer, noted, "We
have made significant progress during 2008 in our effort to
position Hancock for the future. The results of these efforts are
demonstrated by our positive sales growth, significant increase in
EBITDA, and considerable reduction in borrowings since we emerged
-- all of which have continued in 2009. We are optimistic that we
can continue to improve our operating results, despite the
challenging economic environment."
Operating Results
Gross margin for fiscal 2008 of 43.3% was a 70 basis point
improvement over the 42.6% of the prior year. This increase
reflects a 160 basis point reduction in merchandise cost offset by
reduced supply chain leverage as store count and inventory levels
have diminished from prior years.
Selling, general and administrative expenses for the year
decreased to $112.1 million (40.6% of sales) from $117.8 million
(42.6% of sales) in the prior year. This reduction in expense was
driven primarily by a $6.2 million curtailment gain provided by
the changes made to our retirement programs in 2008.
In fiscal 2008, net cash inflows provided by operating activities
before reorganization activities decreased by $27.6 million
compared to fiscal 2007. This decrease was mainly the result of
the significant inventory liquidations in 2007. Excluding the
impact of inventory reductions, net cash provided by operating
activities before reorganization activities increased by
$16.8 million principally due to a reduced net loss, increased
vendor payable support and a significant income tax refund.
Capital expenditures during 2008 consisted mostly of store
remodels and relocations. These activities totaled approximately
$7.0 million for the year. The remaining amounts were utilized
for additional information technology enhancements and general
replacements in our distribution center and corporate office.
Management expects 2009 capital expenditures to range from
$5 million to $10 million. This capital spending will be directed
at initiatives which support the Company's current strategy.
Cash used in financing activities for 2008 included net borrowings
of $29.0 million which was utilized along with cash provided by
operations to pay $37.5 million of pre-petition liabilities and
exit financing loan costs.
Store Openings, Closings and Remodels
During 2008, the Company opened 1 store, closed 7 stores and
relocated 4 stores, thereby ending the fiscal year with 263
stores. The Company also remodeled 63 locations to its new
prototype format. The 2009 activities will relate primarily to
the relocation of certain stores.
Annual Shareholders' Meeting on June 9
The date of the Annual Meeting of Shareholders of the Company has
been set by the Board of Directors and will be held on Tuesday,
June 9, 2009 at 9:00 a.m. CDT at the corporate office located at
One Fashion Way in Baldwyn, Mississippi. All shareholders are
invited to attend the meeting and those shareholders of record at
the close of business on April 15, 2009 will be entitled to vote.
A full-text copy of Hancock Fabrics' Annual Report is available at
no charge at http://ResearchArchives.com/t/s?3b5c
About Hancock Fabrics
Headquartered in Baldwyn, Mississippi, Hancock Fabrics Inc.
(OTC: HKFIQ) -- http://www.hancockfabrics.com/-- is a specialty
retailer of a wide selection of fashion and home decorating
textiles, sewing accessories, needlecraft supplies and sewing
machines. Hancock Fabrics is one of the largest fabric retailers
in the United States. As of January 31, 2009, the Company
operated 263 stores in 37 states. The company and six of its
debtor-affiliates filed for chapter 11 protection on March 21,
2007 (Bankr. D. Del. Lead Case No. 07-10353). Robert J. Dehney,
Esq., at Morris, Nichols, Arsht & Tunnell, represented the
Debtors. The U.S. Trustee for Region 3 appointed five creditors
to serve on an Official Committee of Unsecured Creditors.
The Court confirmed the Debtors' joint consolidated plan of
reorganization on July 22, 2008. The Plan provides for payment in
full in cash plus interest, as applicable, or reinstatement of
equity interest in the Company. Therefore, there were no impaired
classes of creditors or stockholders. On the Effective Date, the
Company closed a $100.0 million senior revolving line of credit
facility, as well as issued $20.0 million of floating rate secured
notes and warrants to purchase 9,500,000 shares of the common
stock of the Company.
HAMPSHIRE GROUP: Seeks Covenant Waiver; Going Concern Doubt Issued
------------------------------------------------------------------
Hampshire Group, Limited, said it notified the six participating
commercial banks who are parties to its revolving credit facility
that the Company was not in compliance with the credit facility's
consolidated fixed charge coverage ratio covenant for the
quarterly period ended December 31, 2008. The Company said it has
entered into a letter agreement dated April 2, 2009, with HSBC
Bank USA National Association -- as agent and letter of credit
issuing bank under the credit facility -- pursuant to which the
lenders may, but are not obligated to, issue letters of credit to
the Company's suppliers on a cash collateralized basis.
The Company is in discussions with its lenders regarding a waiver
of the fixed charge coverage ratio covenant for the fourth quarter
of 2008 and an amendment to the credit facility to waive or
otherwise replace the fixed charge covenant requirement for 2009.
The Credit Facility has a term of roughly five years and expires
April 30, 2013. The Credit Facility provides up to $125.0 million
for revolving credit loans and trade letters of credit with a
$10.0 million sub-limit for standby letters of credit.
There is no assurance that a waiver will be granted or other terms
in the credit facility will be amended, including but not limited
to, the term of the credit facility, the size of the credit
facility, the borrowing rates, or the introduction of more
restrictive covenants.
The Company said in a regulatory filing with the Securities and
Exchange Commission that, absent a waiver or amendment waiving the
non-compliance, or alternate financing, the Company may not be
able to collateralize its obligations under existing or future
production orders, as required, and would not be permitted to
borrow under the credit facility, which would prevent the Company
from operating its business.
In addition to amounts borrowed under the credit facility, the
Company relies on cash flows from operations to pay its
obligations as they come due. In the event that the Company is
unable to secure adequate borrowing ability under the credit
facility or an alternate financing source, the Company's cash
balance and cash flows from operations will be inadequate to meet
the Company's obligations.
"Even if we are able to secure a waiver or execute an amendment
waiving such non-compliance, or obtain alternate financing, there
can be no assurance that we will be able to maintain compliance
with the applicable covenants with our lenders. If we are unable
to maintain compliance with our lending facility, we may not be
able to issue letters of credit to our suppliers and obtain
inventory to meet our customer demands and may not be able to
borrow, which may have a material adverse effect on our
operations," the Company said.
"The uncertainties described . . . raise substantial doubt about
our ability to continue as a going concern," the Company said.
The Company's independent public accounting firm Deloitte & Touche
LLP has issued an opinion on its consolidated financial statements
that states that the consolidated financial statements were
prepared assuming the Company will continue as a going concern.
This opinion further states that the Company's non-compliance with
the fixed charge ratio covenant under the credit facility raises
uncertainty regarding the Company's ability to fulfill its
financial commitments as they become due during 2009, which raises
substantial doubt about its ability to continue as a going
concern.
On Thursday, Hampshire Group announced results for the fiscal year
ended December 31, 2008. The Company said net sales from
continuing operations for the year ended December 31, 2008
decreased 6.3% to $240.9 million from $257.0 million for the prior
year. The Company posted net loss of $29.8 million for year 2008
compared to net loss of $4 million the previous year. The
decrease was directly attributable to the global economic downturn
and bankruptcy filings of several of its retail customers.
The Company had $98.7 million in total assets and $33.9 million in
total liabilities at December 31, 2008. In addition, at
December 31, 2008, cash and cash equivalents totaled $35.1 million
compared with $48.4 million at December 31, 2007. The Company's
working capital related to continuing operations was $61.6 million
at December 31, 2008, compared with $81.5 million at December 31,
2007. At April 7 2009, the Company had no outstanding borrowings
from its credit facility and had $38.1 million in cash including
$5.7 million of cash collateralizing letters of credit.
The Company is currently party to a merger agreement with NAF
Holdings II, LLC, and NAF Acquisition Corp. Subject to the terms
and conditions of the merger agreement, NAF Acquisition Corp. has
commenced a cash tender offer to purchase all of the outstanding
shares of common stock of the Company at $5.55 per share, net to
the holders thereof and without interest, in cash. This tender
offer is scheduled to expire at 5:00 P.M., New York City time, on
April 17, 2009, unless the offer is extended. Following the
consummation of the tender offer and subject to the satisfaction
or waiver of the conditions set forth in the merger agreement, NAF
Acquisition Corp. would merge with and into the Company, with the
Company continuing as the surviving corporation.
A full-text copy of the Company's Annual Report is available at no
charge at http://ResearchArchives.com/t/s?3b5d
About Hampshire Group
Based in New York, Hampshire Group, Limited is a leading U.S.
provider of women's and men's sweaters, wovens and knits, and a
designer and marketer of branded apparel. Its customers include
leading retailers such as Macy's, Kohl's, JC Penney, Dillard's,
Bloomingdale's and Nordstrom, for whom it provides trend-right,
branded apparel. Hampshire's owned brands include
Spring+Mercer(R), its newly-launched "better" apparel line,
Designers Originals(R), Hampshire's first brand and still a top-
seller in department stores, as well as Mercer Street Studio(R),
Requirements(R), and RQT(R). Hampshire also licenses the Geoffrey
Beene(R) and Dockers(R) labels for men's sweaters, both of which
are market leaders in their categories, and recently acquired
licenses for classification labels of the Joseph Abboud(R) and
Alexander Julian(R) brands for men's tops and bottoms.
HERTZ CORP: Completes Acquisition of Advantage Rent-A-Car
---------------------------------------------------------
Hertz Global Holdings, Inc., has completed the acquisition of
Advantage Rent A Car assets for approximately $33 million.
Advantage generated full year 2008 revenues of about $146 million.
Hertz will operate 20 Advantage locations, initially, and the
Company acquired the rights to the Advantage brand name (including
trademarks, copyrights, etc.), Web site, and other assets. The
acquisition will be instrumental in Hertz's long-term growth
strategy, and meets several strategic objectives, which include:
-- Leveraging Advantage's presence in all of the top leisure
states: Florida, California, Hawaii, Arizona and Colorado
and in six of the Top 10 leisure markets: Orlando, Denver,
Phoenix, Los Angeles, San Diego and Honolulu;
-- Further expansion into the price-oriented travel demographic
through higher penetration of 3rd party online bookings.
Advantage had more than 17% market share on Expedia,
Travelocity, Orbitz, Cheap Tickets, Priceline retail and
Hotwire retail. Advantage's 3rd party online market share
In several key leisure markets ranges from 10% in Orlando to
28% in Denver and 34% in Salt Lake City;
-- A means for Hertz to further penetrate online booking
engines without negatively affecting Hertz's core business;
-- Providing Hertz a second brand to sell to corporate accounts
and to market with key travel partners;
-- Extending the useful life of vehicles in Hertz's rental
fleet for Advantage's fleet needs.
Mark P. Frissora, Hertz's Chairman and Chief Executive Officer,
commenting on the acquisition, said, "Hertz realized significant
value for the Advantage assets we have acquired. By combining our
operations excellence and expense discipline with Advantage's
leisure market focus, we forecast generating double-digit EBITDA
margins within the next two years, translating to a 2x EBITDA
multiple, which is favorable compared with other car rental
acquisitions. The upside growth potential for the price-oriented
leisure market and our ability to leverage Advantage with
corporate accounts and travel partners make this acquisition both
financially and strategically advantageous for Hertz."
On March 31, Hertz prevailed against another bidder in a U.S.
bankruptcy court auction for the assets of Advantage Rent a Car.
Advantage operated primarily from rental locations at key tourist
travel destinations in the U.S.
The Bankruptcy Court formally approved Hertz's bid April 6, 2009.
As reported by the Troubled Company Reporter on April 2, 2009,
Hertz won the right to purchase the assets of Advantage Rent A
Car. The purchase agreement provides Hertz with the rights to
purchase certain rights, trademarks and copyrights to use the
Advantage brand name, Web site and phone numbers. In addition,
the agreement provides Hertz with the option to have assigned to
the Company certain leases, fixed assets, airport concession
agreements and other agreements associated with roughly 20
locations that Advantage is or previously was operating.
Hertz said it will continue operating the Advantage business at
certain rental locations, and it will assess expansion
opportunities. Specifically, Hertz will operate the Advantage
brand in Salt Lake City, Phoenix, Denver, Tucson, Colorado
Springs, San Antonio, Los Angeles, Seattle, Maui, Honolulu, San
Diego, Reno, Burbank, Palm Springs, Orlando, Ft Meyers (4 Hotels,
1 additional location).
As reported by the TCR on March 5, 2009, Enterprise Rent-A-Car
inked a deal to purchase certain assets of Advantage Rent-A-Car on
Enterprise for $19 million. Enterprise Rent-A-Car later decided
not to pursue its bid.
About the Enterprise Family of Companies
Headquartered in St. Louis, the Enterprise family of companies
operates Enterprise Rent-A-Car, National Car Rental, and Alamo
Rent A Car at more than 8,000 rental locations in neighborhoods
and at airports worldwide. Enterprise Rent-A-Car has more than
6,900 offices. Enterprise Rent-A-Car Company --
http://www.enterprise.com/car_rental/home.do-- is a privately
held company serving customers in the U.S., Canada, Germany,
Ireland, Puerto Rico, and the U.K. They are also the owners of
the Vanguard Automotive Group, operator of National Car Rental and
Alamo Rent A Car in North America.
About Hertz Corp.
The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc.
(NYSE: HTZ), based in Park Ridge, New Jersey, is the world's
largest general use car rental brand, operating from approximately
8,000 locations in 147 countries worldwide. Hertz also operates
one of the world's largest equipment rental businesses, Hertz
Equipment Rental Corporation, through more than 375 branches in
the United States, Canada, France, Spain and China.
About Advantage Rent A Car
Advantage Rent A Car -- http://www.advantage.com-- is a car
rental company with 50 locations in the U.S. and 130 international
affiliate locations. It is privately held by Denny Hecker Family
Ventures, with headquarter operations in Minneapolis. Advantage
serves travel and leisure, lifestyle, business, government and
insurance replacement rentals. The Hecker group of companies
include automobile dealerships, leasing, daily automobile and
motorcycle rental, commercial, and residential real estate
development, aviation, hospitality, and technology.
As reported by the Troubled Company Reporter on Dec. 10, 2008,
Advantage Rent A Car filed for Chapter 11 protection in the U.S.
Bankruptcy Court for the District of Minnesota.
HOUGHTON MIFFLIN: Moody's Cuts Corporate Family Rating to 'Caa3'
----------------------------------------------------------------
Moody's Investors Service has downgraded Houghton Mifflin Harcourt
Publishing Company's Corporate Family rating and Probability-of-
Default rating each to Caa3 from Caa1, reflecting Moody's concerns
that the company may determine that a fundamental debt
restructuring represents the best alternative to addressing its
currently challenged capital structure.
Details of the rating action are:
Ratings downgraded:
* Corporate Family rating -- to Caa3 from Caa1
* Probability of Default rating -- to Caa3 from Caa1
* Senior secured first lien revolving credit facility due 2013 --
to Caa2 (LGD 3, 30%) from B2 (LGD 2, 28%)
* Senior secured first lien term loan B due 2014 - to Caa2 (LGD 3,
30%) from B2 (LGD 2, 28%)
* Senior secured second lien term loan due 2014 -- to Ca (LGD 5,
79%) from Caa2 (LGD 5, 76%)
The rating outlook is negative
This concludes the review which was initiated on December 22,
2008.
The downgrade of the PDR to Caa3 reflects Moody's concerns that
the company may determine that a fundamental debt restructuring
represents the best alternative to addressing its currently
challenged capital structure.
HMH's previous Caa1 CFR was based on Moody's fundamental
assessment that it would be possible for the company to continue
its operations as a going concern, however, the downgrade of the
CFR to Caa3 reflects Moody's view that management's cost-cutting
initiatives may be insufficient to offset the impact of declining
top line, and that a more comprehensive balance sheet overhaul may
be required to address HMH's unsustainable capital structure.
The Caa3 Corporate Family rating incorporates HMH's high leverage,
its vulnerability to state and local spending on basal and
supplemental K-12 educational publications ( a category which
posted a 22.8% decline in sales in January 2009, according to the
Association of American Publishers), the likelihood of further
contraction or deferral of state adoption budgets and the strong
competition which HMH faces from large, diversified, educational
publishing rivals (including Pearson and McGraw Hill). The
ratings are supported by the long-established reputation of HMH's
imprints, its strong market position, the barriers which the
capital-intensive basal publishing sector presents to new
entrants, and the importance associated with providing school
students with high quality instructional materials.
The last rating action occurred on December 22, 2008, when Moody's
downgraded HMH's CFR and PDR each to Caa1 and placed ratings under
review for possible further downgrade.
HMH's ratings were assigned by evaluating factors Moody's believe
are relevant to the credit profile of the issuer, such as i) the
business risk and competitive position of the company versus
others within its industry, ii) the capital structure and
financial risk of the company, iii) the projected financial and
operating performance of the company over the near-to-intermediate
term, and iv) management's track record and tolerance for risk.
These attributes were compared against other issuers both within
and outside of HMH's core industry and HMH's ratings are believed
to be comparable to those of other issuers of similar credit risk.
Headquartered in Boston, Massachusetts, Houghton Mifflin Harcourt
Publishing Company is one of the largest U.S. educational
publishers with revenues of approximately $2.1 billion.
IMAGEPOINT INC: Files for Chapter 11 Bankruptcy Protection
----------------------------------------------------------
Ed Marcum at Knoxville News Sentinel reports that ImagePoint,
Inc., has filed for Chapter 11 bankruptcy protection in the U.S.
Bankruptcy Court for the Eastern District of Tennessee.
According to Knoxville News, ImagePoint met a Friday deadline to
either file voluntarily for bankruptcy or face having the Court
place it under involuntary Chapter 7 proceedings as part of an
agreement with creditors pursuing an involuntary bankruptcy
petition against the Company. Knoxville News relates that
ImagePoint's creditors include:
-- CMH Homes Inc.,
-- Knoxville Canvas Crafters Inc.,
-- McDonald's Corp. and McDonald's USA,
-- Bridgestone Corp.,
-- American Honda Motor Co. Inc., and
-- Deere & Co.
Knoxville News states that ImagePoint stopped operating on
January 9, 2009, laying off about 450 employees. Robert M.
Bailey, the attorney for ImagePoint, said that the Company still
has a few business activities ongoing and Chapter 11 protection
will let those to continue, according to the report.
Mr. Bailey, Knoxville News relates, said that ImagePoint has a few
employees who are working with clients and vendors, "mainly trying
to collect on accounts that are owed" to the Company. ImagePoint
has 13 people working out of its Gay Street office who are helping
wrap up loose ends on projects that were ongoing when the Company
shut down and are working with former customers and new sign firms
trying to fill the gap left by the Company, Knoxville News states,
citing a person familiar with the matter. According to the
report, there are employees at ImagePoint facilities in Columbia,
S.C., and Florence, Kentucky, getting the properties ready to be
sold. The report says that Stopol Auction LLC held an auction for
ImagePoint on April 8, 2009, liquidating most of the items and
equipment of the Florence plant. At least 400 people and about
200 online bidders bought all but a handful of the 1,700 items,
the report states, citing Scott Mihalic, the auctioneer.
Knoxville, Tennessee-based ImagePoint, Inc. --
http://www.imagepoint.com/-- provides fully integrated branding
solutions for businesses. Its services include concept design to
delivering a broad spectrum of facility branding solutions;
project management expertise to provide complete turnkey services
to navigate through local permitting and surveying, on through to
installation with a network of pre-qualified installers; and a
nationwide preventive and on-call maintenance service program to
keep brand image consistently clean and bright.
INFOLOGIX INC: In Talks With Lenders for Loan Amendments
--------------------------------------------------------
InfoLogix, Inc., is in negotiations with its lender concerning a
possible amendment to the Company's existing credit facility.
InfoLogix was unable to file its Annual Report on Form 10-K for
the year ended December 31, 2008, within the prescribed time
period on or before March 31, 2009, without unreasonable effort or
expense. The Company requires the additional time to complete the
preparation of its consolidated financial statements that will be
included in the Form 10-K and for the Company's independent
accountants to complete their review of the same. The Company
said it will not be able to finalize its consolidated financial
statements until the negotiations are concluded.
InfoLogix expects to report a net loss of $13.2 million for the
year ended December 31, 2008, as compared to a net loss of
$3.2 million for the year ended December 31, 2007. The
$10.0 million increase in net loss is primarily attributable to
nonrecurring expenses related to the Company's acquisitions;
hiring and training costs associated with the transition of the
Company's business plan; write-offs of certain equipment and
intangible assets; an increase in interest expense arising from
higher interest rates on the Company's senior debt facilities,
increased borrowing related to the Company's recent acquisitions,
and a non-recurring charge related to an amendment to the loan
agreement with its lender; and the recording of a full valuation
allowance against the Company's deferred tax assets due the
Company's determination that it is unlikely to be able to use its
deferred tax assets to reduce future tax liabilities.
Net revenues for the year ended December 31, 2008, were
$100.7 million, compared to $78.8 million in 2007, an increase of
$21.9 million or 28%. Gross profit for the year ended December
31, 2008, was $26.5 million, or 26.4% of net revenues, compared to
$20.7 million or 26.3% of net revenues in 2007.
Net revenues for the quarter ended December 31, 2008, were
$26.8 million, compared to $23.3 million for the same period of
2007, an increase of $3.5 million, or 15.0%. Gross profit for the
quarter ended December 31, 2008, was $6.8 million, or 25.6% of net
revenues, compared to $6.3 million or 26.9% of net revenues for
the same period of 2007. InfoLogix reported a net loss of
$9.1 million for the three months ended December 30, 2008,
compared with a net loss of $1.3 million for the same period of
2007.
Event of Default
On March 25, 2009, the Company received a letter from Hercules
Technology Growth Capital, Inc., relating to a Loan and Security
Agreement dated May 1, 2008, as amended November 19, 2008, by and
among the Company, InfoLogix Systems Corporation, Embedded
Technologies, LLC, Opt Acquisition LLC, and InfoLogix-DDMS, Inc.,
as Borrowers; and the Lender.
The Letter asserts the existence of an Event of Default under the
Loan Agreement for the Borrowers' failure to comply with the
minimum adjusted EBITDA financial covenant contained in the Loan
Agreement for the three-month period ending January 31, 2009.
The Lender informed the Borrowers that it had elected to increase
the interest rate under the Loan Agreement to the Default Rate for
the period commencing February 1, 2009. The Default Rate is equal
to the applicable regular interest rate plus 3.0%, or 16.25% on
the term loan portion and 14.25% on the revolver portion of the
Borrowers' indebtedness to the Lender. The Lender also
acknowledged that it had already charged and received from the
Borrowers an amount equal to the Default Rate interest and late
fees from February 26, 2009, through and including March 11, 2009,
for a total of $44,536.65.
Pursuant to the Letter, the Lender has demanded payment of the
Default Rate from February 1, 2009, through and including
February 25, 2009, and from March 12, 2009 through and including
March 31, 2009, for a total of $78,191.40 due and payable by
April 1, 2009.
For periods after March 31, 2009, the Default Rate interest will
payable monthly on the same date as regular interest unless the
Lender makes demand therefor.
As of March 30, 2009, the aggregate amount owed by the Borrowers
to the Lender under the Loan Agreement is $21,897,000.
Going Concern Doubt
InfoLogix expects its independent registered public accounting
firm to include an explanatory paragraph with respect to the
Company's ability to continue as a going concern in its report on
the Company's consolidated financial statements for the year ended
December 31, 2008.
The company has an accumulated deficit of $18.3 million as of
December 31, 2008, from recurring net losses, including net losses
of $13.2 million for the year ended December 31, 2008. In
addition, its near term liquidity requirements include the
repayment of a revolving line of credit due on November 1, 2009,
and earn out payments for prior acquisitions. The company does
not expect to generate sufficient cash flow from operations to
fund those 2009 obligations.
About InfoLogix
Based in Hatboro, Pennsylvania, InfoLogix Inc. --
http://www.infologix.com/-- provides enterprise mobility
solutions for the healthcare and commercial industries. With 19
issued patents, InfoLogix provides mobile managed solutions, on-
demand software applications, mobile infrastructure products, and
strategic consulting services to more than 2,000 clients in North
America including Kraft Foods, Merck and Company, General
Electric, Kaiser Permanente, MultiCare Health System and Stanford
School of Medicine.
INTERMET CORP: Court Okays Protocol for Sale of De Minimis Assets
-----------------------------------------------------------------
Intermet Corp. won approval from the U.S. Bankruptcy Court for the
District of Delaware of procedures for disposing of "de minimis"
assets. Under the Court-approved procedures, Intermet may,
without the need to obtain further Court approval, (i) sell
certain property free and clear of liens and encumbrances and (ii)
abandon certain personal property that is of inconsequential value
to the Debtors estates.
The procedures only cover sale of assets whose sales price is less
than or equal to $500,000. If the sale price is more than
$500,000, the Debtors will be required to file a motion with the
Court requesting approval of the sale pursuant to Sec. 363 of the
Bankruptcy Code.
Pursuant to the Court's order, on or before the 20th day of each
month, Intermet will be required to file a detailed monthly report
on all assets sold during the immediately preceding calendar
month.
Intermet will also be required to file quarterly reports of all
property of inconsequential value that are abandoned by Intermet
during each immediately preceding quarter.
A full-text copy of the Court's order is available at:
http://bankrupt.com/misc/Intermet.SaleProcedures.pdf
About Intermet Corp.
Based in Fort Worth, Texas, Intermet Corp. designs and
manufactures machine precision iron and aluminum castings for the
automotive and industrial markets. The company and its debtor-
affiliates filed for Chapter 11 protection on Aug. 12, 2008
(D. Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878).
Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Michael E.
Comerford, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New
York, serve as the Debtors' counsel. James E. O'Neill, Esq.,
Laura Davis Jones, Esq. and Timothy P. Cairns, Esq., at Pachulski
Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the
Debtors' co-counsel. Kurtzman Carson Consultants LLC serves as
the Debtors' claims, notice and balloting agent. An Official
Committee of Unsecured Creditors has been formed in this case.
When the Debtors filed for protection from their creditors, they
listed assets of between $50 million and $100 million and debts of
between $100 million and $500 million.
This is the Debtors' second bankruptcy filing. Intermet Corp.,
along with its debtor-affiliates, filed for Chapter 11 protection
on September 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597
through 04-67614). Salvatore A. Barbatano, Esq., at Foley &
Lardner LLP, represents the Debtors. In their previous bankruptcy
filing, they listed $735,821,000 in total assets and $592,816,000
in total debts. Intermet Corporation emerged from this first
bankruptcy filing in November 2005.
ISTAR FINANCIAL: S&P Puts 'BB' Senior Rating on Negative Watch
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it placed its 'BB'
senior unsecured debt rating on iStar Financial Inc. on
CreditWatch with negative implications. At the same time, S&P
affirmed its 'BB' long-term counterparty credit rating and 'B-'
preferred stock rating on iStar. The outlook remains negative.
"The CreditWatch placement follows management's announcement that
iStar will offer to exchange a portion of its existing senior
unsecured notes for up to $1.0 billion of new, second-lien senior
secured notes. The amount of assets pledged as security for the
new notes will depend on participation in the exchange, but it is
likely to be significant. S&P believes the additional claims on
iStar's assets may effectively place the firm's unsecured claims
in a subordinated position to those of senior secured creditors,"
said Standard & Poor's credit analyst Jeffrey Zaun.
S&P has affirmed the counterparty credit rating because S&P view
the exchange as opportunistic rather than distressed, under S&P's
criteria.
Although the firm is tendering for its debt at a steep discount to
par, and in some cases extending maturities of its obligations,
iStar's liquidity position should allow it to meet its obligations
through 2010 regardless of whether the offer is successful.
S&P's negative outlook on iStar incorporates S&P's belief that the
amount of troubled assets could increase to $6 billion and that
recoveries on troubled assets will deteriorate considerably. S&P
could downgrade the firm if losses are greater than S&P now
expects and begins to re-exert pressure on the firm's funding or
capital levels. S&P could revise the outlook to stable if the
firm maintains stable capital and improves asset-quality metrics
while sustaining adequate recovery values for its troubled assets.
JOHN BAYLESS: U.S. Trustee Schedules Creditors' Meeting on May 15
-----------------------------------------------------------------
The U.S. Trustee for Region 13 will convene a meeting of creditors
in John Owen Bayless, Jr.'s Chapter 11 case on May 15, 2009, at
9:00 a.m., at the Bankruptcy Courtroom, 222 N. John Q. Hammons
Pkwy, Springfield, Missouri.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Springfield, Missoui-based John Owen Bayless, Jr., and Lisa Anne
Bayless dba Bayless Tire & Wheel, Bayless Auto Salvage, Inc.,
Bayless & Watt Land Development, LLC, Bayless Motor Co., Inc. and
Design Build-Lease, LLC filed for Chapter 11 protection on April
2, 2009 (Bankr. W. D. Mo. Case No. 09-60657). Raymond I. Plaster,
Esq., represents the Debtor in its restructuring efforts. The
Debtor listed total assets of $11,214,955 and total debts of
$7,654,399.
KNIGHT-CELOTEX: Court Grants Access to Cash Collateral
------------------------------------------------------
Amanda O'Rourke at The Daily Item reports that the U.S. Bankruptcy
Court for the Northern District of Illinois has granted Knight-
Celotex's motion for access to cash collateral.
Knight-Celotex will be able to access accounts frozen by Bank of
America, The Daily Item states, citing company spokesperson Laura
Peet. The report quoted Ms. Peet as saying, "We do have the
ability to get our customers back in line and to pay our
employees." Two weeks ago, Bank of America didn't renew Knight-
Celotex's credit facilities and froze the Company's accounts, the
report states.
Citing Ms. Peet, The Daily Item relates that throughout 2008,
Knight-Celotex took steps to ensure the viability of its
operations. Knight-Celotex maintained a positive cash flow and
paid all principal and interest on time, according to The Daily
Item.
Headquartered in Northfield, Illinois, Knight-Celotex is the
largest fiberboard manufacturer in the world and the only U.S.
fiberboard manufacturer that both manufactures and ships products
nationally within the United States. Knight-Celotex is privately
owned by Knight Industries, LLC, and has operations in Lisbon
Falls, Maine; Sunbury, Pennsylvania; and Danville, Virginia.
The Company filed for Chapter 11 on April 6 (Bankr. N.D. Illin.,
Case No. 09-12200).
LEARNING CARE: Moody's Downgrades Corporate Family Rating to 'B3'
-----------------------------------------------------------------
Moody's Investors Service downgraded Learning Care Group's
Corporate Family Rating to B3 from B2 and changed the outlook to
negative. The downgrade is driven by weaker than anticipated
performance in the quarter ended December 31, 2008 and Moody's
expectations of continuing weakness in enrollments throughout
2009. The negative outlook reflects Moody's concerns that high,
and rising, unemployment could negatively impact capacity
utilization at LCG's day care centers and give rise to liquidity
constraints.
Moody's believes that the economic downturn, combined with the
fragmented and highly competitive nature of the child care
industry, could limit LCG's flexibility and ability to respond to
adverse developments. There has been a relatively short operating
history under the LCG umbrella of a significant number of centers
(particularly La Petite Academy), and the effect of financial
leverage is exacerbated by the presence of operating lease
obligations that are long-term in nature and inextricably linked
to the company's child-care operations.
Nonetheless, the Corporate Family Rating of B3 is supported by
LCG's brand diversity along with a record of operational and
margin improvements over the last five years, as well as
investments in underperforming assets. Although profitability and
cash flow generation are adversely affected by the economic cycle
and employment levels in particular, the effect of a downturn is
partially mitigated by the company's geographic diversification in
the United States. The ratings are also supported by the
$236 million cash equity by Morgan Stanley Private Equity, which
together with an additional $177 million of A.B.C. rollover equity
and a further $50 million in earnouts, constitute about 60% of the
company's capital base.
Stabilization of the outlook will depend on emerging profitability
and internal cash flow generation in relation to capital
expenditures over the third and fourth quarter of fiscal 2009, as
well as considerations of flexibility under bank covenants.
Moody's took these rating actions:
-- Downgraded the Corporate Family Rating to B3 from B2;
-- Downgraded the Probability of Default Rating to B3 from B2;
-- Affirmed the Ba3 (LGD2, 23%) rating on the $40 million senior
secured revolving credit facility due 2013;
-- Affirmed the Ba3 (LGD2, 23%) rating on the $175 million
senior secured term loan B due 2015;
The outlook for the ratings is negative.
The previous rating action was on May 29, 2008 when Moody's
assigned a B2 Corporate Family Rating.
Learning Care Group, Inc., based in Novi, Michigan, is the second
largest provider of for-profit child care and early education
services in the United States, including outside school hours
care. LCG reported revenues of approximately $822 million in the
fiscal year ended June 30, 2008.
LEHMAN BROTHERS: Weil Gotshal Bills $55MM Fees for First 4.5 Mos.
-----------------------------------------------------------------
Weil, Gotshal & Manges LLP, the lead bankruptcy counsel of Lehman
Brothers Holdings Inc., is seeking approval of $55,140,791 in fees
for services rendered for the first four-and-a-half months of
Lehman's Chapter 11 case.
According to the fee application, WGM's Harvey R. Miller, who
charges $950 per hour, rendered work for 794.80 hours, for the
period September 15, 2009 until January 31, 2009. WGM's partners
and counsel expended a total of 29,398 hours of work ($24,241,279
in fees), associates spent 58,403 hours ($28,348,726 in fees), and
paraprofessionals 12,495 hours ($2,551,786 in fees).
Jones Day, special counsel to Lehman, is seeking $1,258,056 in
fees and reimbursement of $10,426 in expenses for services
rendered through January 31. The firm said that its attorneys and
paralegals expended a total of 3,218 hours of work, specifically
in assisting LBHI in relation to issues arising principally in the
Asia Pacific region, Hong Kong, the Philippines, Taiwan, Japan and
Australia as a consequence of the Debtors' Chapter 11 cases in the
United States, including anticipated litigation, securities,
insolvency, commercial, real estate and any and all other related
issues. In addition, Jones Day professionals represented LBHI in
litigation to recover money damages which has been pending in the
U.S. Bankruptcy Court in San Francisco since 2003, involving
Chapter 11 debtors Central European Industrial Development Company
and The Kontrabecki Group LP, and their former principal, John
Kontrabecki.
Anton R. Vlaukas, the Court-appointed examiner, and his counsel
Jenner & Block LLP, is seeking $613,650 in fees and $13,515 in
expenses for worked performed from the 12 day-period ending
January 31, 2009. The Examiner and Jenner & Block performed a
wide variety of tasks in connection with the investigation of
various transfers and transactions by the Debtors and their
affiliates, claims that certain Debtors may have against LBHI, and
the events that immediately preceded the commencement of the LBHI
chapter 11 case.
Other firms that have filed fee applications include:
Applicant Period Fees Expenses
--------- ------ ---- --------
Reilly Pozner LLP 9/15/08- $464,631 $33,888
(Special counsel to 1/31/09
prosecute loss recovery
litigation/negotiations
against sellers of
mortgage loans in
secondary market)
Lazard Freres & Co LLC 9/15/08- $6,600,000 $33,468
(Primary negotiator in 3/31/09
in sale of LBHI's
N.A. investment banking
Operations to Barclays
Bank)
Ernst & Young LLP 9/15/08- $552,700 $0
(Auditor and tax 1/31/09
services provider)
Bornstein Legal LLC 12/15/08- $441,443 $0
(Ccounsel for estate 1/31/09
vendor contract review
and vendor contract
structuring, drafting
and negotiating)
The U.S. Bankruptcy Court for the Southern District of New York
will convene a hearing to consider approval of the fee
applications on May 13. Objections are due May 6.
Weil Gotshal's Work
WGM said that the $55 million in fees, along with $12,336,881 in
out-of-pocket expenses, is "reasonable".
WGM said it played a major role in the most significant effort in
history to preserve the value of a vast enterprise that was
compelled to initiate a bankruptcy case with virtually no previous
preparation or planning. "As Lehman's employees rushed out of
Lehman's offices with boxes and suitcases filled with their
belongings, WGM attorneys rushed in. Literally overnight, WGM
marshaled its resources the world over, which included over 490
attorneys around the world. WGM had to create a large, effective
team and devote a large portion of its production capacity to
serve the needs of Lehman, while simultaneously fulfilling its
professional responsibilities to preexisting clients," the firm
said.
WGM notes that the size, complexity and pace of the Debtors'
chapter 11 cases are unprecedented. WGM's professional services
were required to be, and were, on a 24-hour-aday, seven-day-a-week
basis, consuming vast amounts of time. The circumstances that led
up to the Debtors' chapter 11 case only further complicated the
dynamics of cases. The firm explained that because the Debtors
did not have the typical pre-filing planning period, the Debtors
were compelled to spend a considerable amount of time and
resources in the first days and months of their cases to stabilize
the administration of the legacy assets and businesses that formed
the global Lehman enterprise while, at the same time, responding
to the many exigencies and issues that emerged as a result of the
commencement of their chapter 11 cases. As each new day dawned,
new issues arose which required WGM's immediate and diligent
attention.
WGM coordinated its efforts with those of the Debtors' shrinking
workforce and newly-retained chief restructuring officer, Bryan
Marsal, and the personnel provided by Alvarez & Marsal North
America, LLC, as financial advisors and restructuring experts.
WGM responded, as requested and as necessary, with attorneys from
many of its practice areas from offices across three continents to
preserve and protect the value of the Debtors' assets.
In addition to advising the Debtors on the issues typically faced
by debtors at the outset of chapter 11 cases, in the initial weeks
of the Debtors' Chapter 11 cases, WGM personnel worked around-the-
clock to formulate and effectuate the record-paced sale of
Lehman's North American capital markets and investment banking
businesses as part of the effort to preserve and enhance value for
the Debtors, protect the Debtors' customers, limit turmoil in the
financial markets and benefit Lehman's stakeholders and, very
importantly, Lehman's employees. To consummate the sale within
one week of the Debtors' chapter 11 cases, as required by Barclays
Capital Inc., the purchaser, WGM negotiated and drafted definitive
agreements, and obtained Court approval of sales procedures and
authorization for the sale transaction, each over the objections
of many parties. WGM, as a critical and necessary part of the
proposed sale pursuant to section 363(b) of the Bankruptcy Code,
coordinated the commencement of a proceeding under the Securities
Investor Protection Act of 1970 with respect to LBHI's broker-
dealer affiliate, Lehman Brothers Inc., with the Securities
Investment Protection Corporation, the Securities and Exchange
Commission, and the Federal Reserve Bank of New York.
Concurrently, WGM assisted the Debtors in the negotiation of the
sale of Lehman's investment management division. In furtherance
thereof, WGM negotiated with multiple third-parties, drafted
definitive documentation with a stalking-horse purchaser and,
after obtaining Court approval for bidding procedures and
conducting a diligence and auction process, obtained Court
approval for an alternative transaction with a topping bidder.
During the Compensation Period, WGM teams advised the Debtors in
negotiating and consummating other complex sale transactions,
including those pursuant to section 363 of the Bankruptcy Code,
such as the sale of the Debtors' interests in Eagle Energy
Partners I L.P. and R3 Capital Management, LLC, and others
involving non-Debtor entities, such as sales related to Lehman's
private equity, venture capital, merchant banking and real estate
funds.
In addition, WGM said it addressed the countless issues arising
out of Lehman's vast, global real estate and loan portfolios
around the world. Each transaction was designed to protect assets
and values for the benefit of economic stakeholders in the Chapter
11 cases. WGM said it worked diligently with the Debtors'
management and the statutory committee of general unsecured
creditors and its professionals, as well as the Office of the
United States Trustee for the Southern District of New York.
Throughout the Compensation Period, 16 adversary proceedings were
commenced against the Debtors, seeking a range of relief.
Eighteen motions for relief from the automatic stay, including
motions seeking to exercise asserted rights of setoff, were
initiated.
Eleven parties filed joinders to seven motions seeking examination
of the Debtors pursuant to Bankruptcy Rule 2004. Ten proceedings
were commenced to compel the Debtors to assume or reject executory
contracts and to provide adequate protection. Six motions were
filed seeking the appointment of additional committees, trustees,
and examiners in these cases. The Pension Benefit Guaranty
Corporation commenced an action in the United States District
Court for the Southern District of New York to terminate the
Debtor-sponsored defined benefit plan. And three appeals from
decisions of this Court were prosecuted. WGM had to respond to
each of these actions.
During the Compensation Period, WGM was required to prepare or
review and respond to the more than 2,700 motions, notices,
applications, objections, briefs and orders filed in the Debtors'
chapter 11 cases, adversary proceedings and appeals - a dizzying
average of 20 pleadings each and every day, seven days a week.
WGM also devoted significant time and resources to preserving the
Debtors' global interests. Since September 15, 2008, seventy-six
foreign insolvency proceedings have been commenced in over fifteen
foreign jurisdictions. In most of those proceedings, LBHI
is the largest creditor. As a result, WGM contacted and attended
meetings with foreign administrators, prepared and filed proofs of
claim, participated in the appointment of Debtors' representatives
to creditors' committees in those cases, as necessary, and
appeared in such insolvency proceedings, as appropriate. WGM
actively participated in the protection of the Debtors' interests
in the administration proceedings under the insolvency laws of the
United Kingdom of Lehman Brothers International (Europe), the
Debtors' primary foreign subsidiary, itself a major insolvency
case. In the effort to bring order out of the chaos, WGM performed
substantial services in the negotiation and drafting of a proposal
for a cross-border protocol to facilitate the administration of
the Debtors' cases and the foreign insolvency proceedings.
Following the consummation of the major asset sales and the
commencement of foreign insolvency proceedings, WGM negotiated and
coordinated with the various purchasers of the Debtors' assets and
with the Lehman affiliates over which LBHI no longer exercised
control to assist the Debtors in recovering, stabilizing, and
marshaling an unprecedented volume of information and data needed
to administer the Debtors' chapter 11 cases. The project was
exacerbated by the transfer of almost 10,000 Lehman employees to
Barclays pursuant to the Barclays sale. The loss of those
employees left Lehman legacy shorthanded and required A&M to
employ substantial manpower to the administration of the
chapter 11 case. To overcome the projected result of the employee
transfers, WGM assisted the Debtors in the negotiation and
implementation of transition services agreements with
Barclays, LBIE, Nomura Holdings Inc. and others. The TSAs were
essential for the Debtors to maximize the value of their assets
while preserving their ability to administer their estates.
Regular and open communication with creditors is a fundamental
goal of the Debtors, Weil Gotshal notes. Throughout the
Compensation Period, WGM has represented the Debtors in their
formal and informal meetings and conferences with the U.S.
Trustee, the Committee and their respective professionals and in
numerous meetings with individual claimants and parties in
interest. The Debtors and WGM have made every effort to keep such
entities informed of developments on a real-time basis through
their published Web sites, http://www.lehmanbrothersestate.com/
and http://www.lehman-docket.com/ In addition, together with Mr.
Marsal and A&M professionals, WGM has responded to countless
direct inquiries. WGM established a hotline for Lehman-related
inquiries which can be accessed by calling (212) 310- 8040 or by
emailing LehmanTeam@Weil.com.
WGM contends that its efforts to advise and represent the Debtors
in all facets of these huge cases and the affairs of the entire
Lehman enterprise during the Compensation Period were necessary
and of substantial benefit to the administration of the chapter 11
estates. The professional services performed and expenses
incurred were actual and necessary to and preserve and protect the
value of the Debtors' assets. In the perspective of the
complexity and scale of these cases, WGM's charges for
professional services performed and expenses incurred are
reasonable under the applicable standards.
Lehman Brothers' Collapse
Founded in 1850, Lehman Brothers Holdings Inc. --
http://www.lehman.com-- was the fourth largest investment bank in
the United States, offering a full array of financial services in
equity and fixed income sales, trading and research, investment
banking, asset management, private investment management and
private equity. Its worldwide headquarters in New York and
regional headquarters in London and Tokyo are complemented by a
network of offices in North America, Europe, the Middle East,
Latin America and the Asia Pacific region.
Lehman filed for chapter 11 on Sept. 15, 2008 (Bankr. S.D.N.Y.
Case No. 08-13555) after Barclays PLC and Bank of America Corp.
backed out of a deal to acquire the company, and the U.S. Treasury
refused to provide financial support that would have eased out a
sale. Lehman's bankruptcy petition listed $639 billion in assets
and $613 billion in debts, effectively making the firm's
bankruptcy filing the largest in U.S. history. Several affiliates
filed bankruptcy petitions thereafter.
On Sept. 19, 2008, Lehman Brothers, Inc., was placed in
liquidation pursuant to the provisions of the Securities Investor
Protection Act (Case No. 08-CIV-8119). James W. Giddens was
appointed trustee for the SIPA liquidation of the business of LBI.
Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed
a petition under Chapter 15 of the U.S. Bankruptcy Code on
February 10, 2009. Lehman Brothers Finance, a subsidiary of
Lehman Brothers Inc., estimated both its assets and liabilities at
more than $1 billion.
LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, has been placed into administration,
together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to wind down the business of LBI
(Europe) on Sept. 15, 2008.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on Sept. 16. The
two units have combined liabilities of JPY4 trillion -- US$38
billion. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited suspended
operations upon the bankruptcy filing of their U.S. counterparts.
Asset Sales
Barclays Bank Plc has acquired Lehman's North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only US$2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
LEXINGTON PRECISION: No Timetable for Filing of Annual Report
-------------------------------------------------------------
Lexington Precision Corporation failed to file its Annual Report
on Form 10-K for the period ended December 31, 2008, within the
March 31, 2009 deadline. Lexington said it is not able to file
the Annual Report with the prescribed period without unreasonable
effort and expense due to the additional demands placed on the
Company's top executives and financial staff resulting from the
Company's bankruptcy filing. The Form 10-K is expected to be
filed as soon as reasonably practicable, the Company said.
The Company anticipates that income from operations for 2008 will
decline by approximately 30% compared to 2007, and that net sales
for 2008 will decline by approximately 17% compared to 2007. The
decline in income from operations and net sales resulted primarily
from a decrease in the sale of automotive components used by
original equipment manufacturers.
About Lexington Precision
Headquartered in New York, Lexington Precision Corp.
-- http://www.lexingtonprecision.com/-- manufactures tight-
tolerance rubber and metal components for use in medical,
automotive, and industrial applications. As of Feb. 29, 2008, the
Company employed about 651 regular and 22 temporary personnel.
The Company and its affiliate, Lexington Rubber Group Inc., filed
for Chapter 11 protection on April 1, 2008 (Bankr. S.D.N.Y. Lead
Case No.08-11153). Christopher J. Marcus, Esq., and Victoria
Vron, Esq., at Weil, Gotshal & Manges, represent the Debtors in
their restructuring efforts. The Debtors selected Epiq Systems -
Bankruptcy Solutions LLC as claims agent. The U.S. Trustee for
Region 2 appointed six creditors to serve on an Official Committee
of Unsecured Creditors. Paul N. Silverstein, Esq., and Jonathan
Levine, Esq., at Andrews Kurth LLP, represent the Committee as
counsel.
At December 31, 2008, the Debtors had total assets of $53,354,000,
total liabilities of $100,061,000, and a stockholders' deficit of
$46,707,000.
LINDA CATRON: Section 341 Meeting Slated for May 12 in California
-----------------------------------------------------------------
The U.S. Trustee for Region 17 will convene a meeting of creditors
in Linda Sue Catron's Chapter 11 case on May 12, 2009, at
10:00 a.m., at the Office of the U.S. Trustee, 235 Pine Street,
Suite 850, San Francisco, California.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Creditors have until August 10, 2009, to file proofs of claim.
San Francisco, California-based Linda Sue Catron filed for Chapter
11 protection on April 2, 2009 (Bankr. N. D. Calif. Case No. 09-
30827). Peter N. Hadiaris, Esq., represents the Debtor in its
restructuring efforts. The Debtor said its assets and debts range
$50 million to $100 million.
LUMINENT MORTGAGE: Reviews Options; Fails to File Annual Report
---------------------------------------------------------------
Luminent Mortgage Capital Inc. said it is currently considering
various strategic alternatives available to facilitate its
restructuring and is operating with a reduced accounting and
finance staff. Because of the significant efforts required by the
remaining accounting and finance staff to prepare such analysis
and documentation related to analyzing those potential
alternatives, preparing required periodic reports to the
Bankruptcy Court, and considering the potential impact of the
various options to its financial condition and its ability to
continue as a going concern, Luminent said it is not able to file
its Form 10-K for the period ended December 31, 2008, within the
prescribed time period.
Luminent expects that its Form 10-K for the year ended December
31, 2008, will report a significant change from its report as of
December 31, 2007, due to its sales and transfers of assets to
repay debt since December 31, 2007. Since December 31, 2007, the
Company has sold securities and transferred securities to
repurchase agreement lenders to repay short-term debt and it
entered into several term-note agreements for balances due on
repurchase agreement debt. Subsequent to entering into those
term-note agreements, Luminent's remaining repurchase agreement
lender declared an event of default to have occurred on the
Company's repurchase agreement with them due to the Company's
inability to deliver additional securities or cash necessary to
fulfill its obligations under the terms of the agreement.
As a result of the event of default, the repurchase agreement
lender took possession of all remaining mortgage-backed securities
of value, including securities that were retained from Luminent's
whole loan securitizations. These transfers of securities
resulted in the derecognition of all of the Company's remaining
mortgage-backed securities from its balance sheet and the
deconsolidation of all of its securitization trusts because it no
longer has the rights to receive principal and interest cash
payments from the securities. As of the date the repurchase
agreement lender took possession of Luminent's remaining
securities, the Company's operations effectively ceased while it
considers strategic alternatives.
Luminent is unable to provide a reasonable estimate of the changes
from the prior year report until the preparation of the key
elements of the financial statements is completed.
Luminent has not filed its quarterly reports for the period ended
June 30, 2008, and September 30, 2008.
About Luminent Mortgage
Luminent Mortgage Capital, Inc. (OTCBB: LUMCE), is a real estate
investment trust, or REIT, which, together with its subsidiaries,
has historically invested in two core mortgage investment
strategies. Under its Residential Mortgage Credit strategy, the
company invests in mortgage loans purchased from selected high-
quality providers within certain established criteria as well as
subordinated mortgage-backed securities and other asset-backed
securities that have credit ratings below AAA. Under its Spread
strategy, the company invests primarily in U.S. agency and other
highly-rated single-family, adjustable-rate and hybrid adjustable-
rate mortgage-backed securities.
Luminent and nine subsidiaries filed on Sept. 5, 2008, for relief
under Chapter 11 of the U.S Bankruptcy Code in the United States
Bankruptcy Court for the District of Maryland, Baltimore Division
(Lead Case No. 08-21389). Immediately prior to the filing, the
Debtor executed a Plan Support and Forbearance Agreement with
secured creditor Arco Capital Corp., Ltd., WAMU Capital Corp. and
convertible noteholders representing 100% of the outstanding
principal amount of its convertible notes.
Joel I. Sher, Esq., at Shapiro Sher Guinot & Sandler, represents
the Debtors as counsel. The U.S. Trustee for Region 4 appointed
creditors to serve on an Official Committee of Unsecured
Creditors. Jeffrey Neil Rothleder, Esq., at Arent Fox LLP,
represents the Creditors Committee as counsel.
In its operating report for the month of September 2008, Luminent
Mortgage Capital, Inc. reported $1,960,516 in total assets and
$374,868,632 in total liabilities, resulting in a $372,908,116
stockholders' deficit. Full-text copies of the Debtors' operating
report for September 2008 are available for free at:
http://researcharchives.com/t/s?345b
At March 31, 2008, Luminent Mortgage Capital, Inc.'s consolidated
balance sheet showed $3,757,205,000 in total assets,
$3,980,417,000 in total liabilities, and $223,212,000 in
stockholders' deficit.
Luminent and its debtor-subsidiaries continue to operate their
business as debtors-in-possession under the jurisdiction of the
Bankruptcy Court and in accordance with the applicable provisions
of the Bankruptcy Code and orders of the Bankruptcy Court.
MACDERMID INCORPORATED: Moody's Cuts Corporate Rating to 'B3'
-------------------------------------------------------------
Moody's Investors Service lowered MacDermid Incorporated's
Corporate Family Rating to B3 from B2, ratings on the revolving
credit facility and term loan to B2 from B1 and rating on the
subordinated notes to Caa2 from Caa1. The change in ratings
follows weak operating performance, concerns that continued
weakness in its end markets could result in the company under
performing its 2009 budget and an expected decline in liquidity.
The outlook is negative. These summarizes the ratings.
MacDermid, Incorporated
Ratings downgraded:
* Corporate Family Rating -- B3 from B2
* Probability of Default Rating -- B3 from B2
* $50mm Gtd sr sec revolving credit facility due 2013 -- B2 (LGD3,
32%) from B1 (LGD3, 34%)
* $360mm Gtd sr sec term loan due 2014 -- B2 (LGD3, 32%) from B1
(LGD3, 34% )
* Euro Gtd sr sec term loan due 2014 -- B2 (LGD3, 32%) from B1
(LGD3, 34%)
* $350mm Gtd sr subordinated notes due 2017 -- Caa2 (LGD5, 85%)
from Caa1 (LGD5, 87%)
* Outlook: Negative
The B3 CFR reflects MacDermid's significant debt and interest
expense burden and uncertainty regarding future operating
performance. There remains limited visibility for MacDermid's end
market demand in 2009, particularly for those businesses that
service the automotive and consumer electronics end markets, and
Moody's are concerned that the company may not meet its revenue,
profit and cash flow targets set forth in its 2009 budget, despite
management's proactive cost cutting measures taken in 2008 and
further savings opportunities identified in 2009.
Such a cash flow shortfall could result in MacDermid not meeting
the financial covenants in its $50 million revolving credit
facility that are tested if borrowings under the facility exceed
$10 million for ten or more days in a quarter, thereby reducing
available liquidity. While MacDermid's liquidity is supported by
its large cash balance ($93 million as of December 31, 2008), the
firm is expected to use around $40 million of cash to satisfy the
excess cash flow sweep requirement under its credit facility (paid
in March) and requirement to reduce debt with the net proceeds of
its Offset Blankets business divestiture not reinvested.
MacDermid's CFR will be under negative pressure if its 2009 sales
and EBITDA results do not meet the budget levels, it fails to
generate meaningful free cash flow, or if liquidity declines,
either due to negative free cash flow or the inability to comply
with applicable financial covenants.
Moody's most recent announcement concerning the ratings for
MacDermid was on February 13, 2009. At that time, Moody's
commented on MacDermid's Q4 2008 results, credit ratings and
liquidity.
MacDermid is a global manufacturer of a variety of chemicals and
technical services for a range of applications and markets
including; metal and plastic finishing, electronics, graphic arts,
and offshore drilling. In April 2007, MacDermid was taken private
through a management led buy-out and is currently owned by
investment funds managed by Court Square Capital Partners and
Weston Presidio, and by MacDermid management, including Daniel
Leever, its Chairman & CEO. The company maintains its
headquarters in Denver, Colorado and operates facilities
worldwide. Revenues for the twelve months ended December 31,
2008, were $744 million.
MEGA BRANDS: Obtains Covenant Relief from Lenders
-------------------------------------------------
MEGA Brands Inc. said that on April 1, 2009, it executed a waiver
and amendment agreement to its credit agreement providing for
certain changes to the terms of its credit facilities maturing in
2012. These include:
-- a waiver of the minimum cumulative EBITDA covenant for the
quarters ended December 31, 2008 and March 31, 2009; and
-- relaxing the minimum cumulative EBITDA covenant to:
* $4.0 million for the quarter ended June 30, 2009;
* $24.0 million for the nine-month period ending
September 30, 2009; and
* $37.0 million for the 12-month period ending
December 31, 2009.
For the periods ending March 31, 2010 and June 30, 2010, MEGA
Brands must have a minimum rolling 12-month EBITDA of
$40.0 million. Effective July 1, 2010, the more restrictive
financial covenants in the existing Credit Agreement will come
back into force.
The Seventh Amendment also provides for an event of default in
relation to any adverse deviation in month-end cash and short-term
investment balances in any month in excess of $9.0 million
compared to the Corporation's forecast and introduces certain
other restrictions and compliance requirements on the Corporation,
including a limitation on certain asset sales. The Amendment and
Waiver also reduce the Corporation's revolving facility from
$100.0 million to the actual amount presently outstanding
thereunder, being $96.9 million.
The Amendment provides for increased fees and interest payable in
respect of the Credit Facilities and for other fees payable in
certain circumstances and imposes certain ongoing reporting
obligations on the Corporation.
On April 6, 2009, MEGA Brands announced its financial results for
the fourth quarter and full year ended December 31, 2008. For
2008, the Corporation reported sales of $447.7 million, down 14.6%
compared to $524.5 million in 2007. Net loss was $458.7 million
or $12.53 per diluted share, compared to a net loss of
$97.1 million or $2.82 per share in the previous year.
As of December 31, 2008, the Corporation had $333.1 million in
total assets, and $553.6 million in total liabilities, resulting
in shareholders' deficit of $220.4 million.
For the fourth quarter of 2008, net sales declined 21.6% to
$101.0 million compared to $128.8 million in the same period in
2007. Net loss was $323.3 million or $8.83 per diluted share,
compared to a net loss of $66.2 million or $1.81 per share in the
fourth quarter of the prior year.
"Consumer products companies were affected by the dramatic decline
in the global economy during the fourth quarter of last year and
MEGA Brands was no exception," said Mac Bertrand, President and
Chief Executive Officer. "We experienced lower than expected sales
and took additional charges resulting from the extremely weak
retail environment, including restructuring charges and write-offs
of bad debt."
The Corporation ended 2008 with cash and cash equivalents of
$49.4 million compared to $8.5 million at the end of 2007. As at
March 31, 2009, cash and cash equivalents were substantially at
the same level as at the end of 2008.
"For 2009, we are planning for an even more challenging retail
environment than last year," added Bertrand. "One of our first
priorities this year is to preserve cash and increase liquidity.
We are continuing to take additional measures under our Value
Enhancement Plan to reduce costs and working capital requirements
while benefiting from a decline in resin prices and a lower
Canadian dollar."
"On the product side, our focus is on basics, lower price points
and working closely with our customers to deliver winning programs
at retail. With great innovation and exciting new licenses, our
product lines are in tune with the times, offering the best value
for consumers and retailers in an uncertain economy."
About MEGA Brands
Based in Montreal, Canada, MEGA Brands Inc. (CA:MB) --
http://www.megabrands.com/-- is a trusted family of leading
global brands in construction toys, games & puzzles, arts & crafts
and stationery.
MGM MIRAGE: To Fund 100% of CityCenter; Confirms Bank Support
-------------------------------------------------------------
MGM MIRAGE confirmed Monday that it has received the support of
its banks and has entered into an amendment of its senior credit
facility.
Under the newly obtained amendment, MGM MIRAGE's senior lenders
have provided the company with the ability to pay the full amount
of current construction costs for CityCenter totaling $70 million
due no later than April 17, 2009. This amendment allows MGM
MIRAGE to fund Dubai World's $35 million share, should Dubai World
not do so.
MGM MIRAGE remains committed to finding a long-term solution to
the financing of CityCenter to ensure the completion of this
important project.
As reported by the Troubled Company Reporter, MGM MIRAGE said
March 27, 2009, that it was -- with the authorization of its
senior lenders -- providing $200 million of funding to CityCenter
to satisfy the required sponsor equity contributions due on or
about March 24. The funding includes $100 million which should
have been funded by Dubai World. This allows construction to
continue while MGM MIRAGE seeks additional funding for CityCenter,
the Company had said.
MGM MIRAGE had said it intends to work with Dubai World, its
lenders and others to find a long-term solution for the financing
of CityCenter's completion. It noted that the remaining combined
equity contributions necessary to access the CityCenter credit
facility are approximately $800 million.
"MGM MIRAGE believes that CityCenter is of vital importance to Las
Vegas and the state of Nevada," said Jim Murren, Chairman and CEO
of MGM MIRAGE in March. "We are doing our utmost to see that this
project continues, keeping thousands of Nevadans employed. We
will continue to make every effort to see that CityCenter is
completed and becomes an even greater economic driver for the
region. We appreciate the support of our senior lenders and the
CityCenter lending group. We continue to review with our partners
all possible options to keep CityCenter fully funded and on a path
to completion."
About MGM Mirage
Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) --
http://www.mgmmirage.com/-- is a hotel and gaming company. It
owns and operates 17 properties located in Nevada, Mississippi
and Michigan, and has investments in three other properties in
Nevada, New Jersey and Illinois.
MGM MIRAGE reported a net loss of $1.14 billion on revenues of
$1.62 billion for the three months ended December 31, 2008. MGM
MIRAGE reported a net loss of $855.2 million on revenues of
$7.20 billion for year 2008. MGM MIRAGE had $23.2 billion in
total assets, including $1.53 billion in total current assets;
$3.0 billion in total current liabilities; and $12.4 billion in
long-term debt. A full-text copy of the Annual Report on Form
10-K is available at no charge at:
http://researcharchives.com/t/s?3ae0
The Company does not expect to be in compliance with the financial
covenants under its senior credit facility at March 31, 2009. On
March 17, Company obtained an amendment to the senior credit
facility, which included a waiver of the requirement to comply
with the financial covenants through May 15, 2009. Following
expiration of the waiver on May 15, 2009, the Company will be
subject to an event of default related to the expected
noncompliance with financial covenants under the senior credit
facility at March 31, 2009.
The report of Deloitte & Touche, LLP, MGM MIRAGE's independent
registered public accounting firm on the Company's consolidated
financial statements for the year ended December 31, 2008,
contains an explanatory paragraph with respect to the Company's
ability to continue as a going concern.
* * *
As reported by the Troubled Company Reporter on March 23, 2009,
Moody's Investors Service downgraded MGM MIRAGE's Probability of
Default Rating to Caa3 from Caa2 and its Corporate Family Rating
to Caa2 from Caa1.
According to the TCR on March 23, 2009, Standard & Poor's Ratings
Services lowered its corporate credit and issue-level ratings on
Las Vegas-based MGM MIRAGE and its subsidiaries by two notches;
the corporate credit rating was lowered to 'CCC' from 'B-'. These
ratings were removed from CreditWatch, where they were initially
placed with negative implications on Jan. 30, 2009. S&P said that
the rating outlook is negative.
The TCR reported on March 25, 2009, that Fitch Ratings took these
rating actions for MGM MIRAGE following the lawsuit filed against
MGM by City Center JV partner Dubai World, and the two-month
covenant waiver obtained from its bank lenders:
-- Issuer Default Rating downgraded to 'C' from 'CCC';
-- Senior secured notes downgraded to 'CCC/RR2' from 'B/RR2';
-- Senior unsecured credit facility downgraded to 'CC/RR3' from
'B-/RR3';
-- Senior unsecured notes downgraded to 'CC/RR3' from 'B-/RR3';
-- Senior subordinated notes affirmed at 'C/RR6'.
MIDWAY GAMES: Court Lets Creditors Probe & Sue Owner
----------------------------------------------------
Wailin Wong at Chicago Tribune reports that the U.S. Bankruptcy
Court for the District of Delaware has allowed Midway Games Inc.'s
creditors to investigate and pursue litigation against company
owner Mark Thomas and former majority shareholder Sumner Redstone.
According to Chicago Tribune, the creditor committee has voiced
suspicions over how Mr. Thomas acquired Mr. Redstone's 87%
controlling stake in Midway Games and over transactions that took
place before the Thomas-Redstone deal in November 2008. Chicago
Tribune says that the committee's investigation can involve anyone
related to the deal, including Mr. Redstone and Midway Games'
board of directors.
Chicago Tribune states that Mr. Thomas paid $100,000 for Mr.
Redstone's Midway Games' stake and took over about $70 million in
debt that the Company owed National Amusements. According to the
report, the debt consisted of a $30 million secured claim and a
$40 million unsecured claim.
Mr. Thomas, says Chicago Tribune, said that he learned of the
opportunity to purchase Midway Games on November 14, 2008, from
two lawyers he knew at Shearman & Sterling LLP, which represents
Mr. Redstone. Mr. Thomas said in court documents that he asked
another company to join him in the Midway Games deal, but that
firm refused. Chicago Tribune relates that Mr. Thomas decided to
go solo and offered Mr. Redstone $1 million for his Midway Games
stake on November 20, 2008, but he lowered that offer to $100,000
four days later. According to court documents, Mr. Thomas
couldn't "engage in a full due diligence process" before the deal
closed on November 28 due to time constraints.
Mr. Thomas' investment vehicle said in a statement in March that
Midway Games could run out of cash by June and will need to
liquidate. Midway Games' cash position is in good shape, the
report states, citing company spokesperson Geoffrey Mogilner.
"According to our latest court-filed forecast, we have ample cash
to take us to August, and we believe beyond that as well," the
report quoted Mr. Mogilner as saying.
Chicago Tribune relates that the court also allows Midway Games to
continue tapping cash reserves over the objections of the
committee of unsecured creditors.
Headquartered in Chicago, Illinois, Midway Games Inc. --
http://www.midway.com-- develops video games and sell them
primarily in North America, Europe, Asia and Australia. The
company and nine of its affiliates filed for Chapter 11 protection
on Feb. 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David
W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and
Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the
Debtors in their restructuring efforts. The Debtors proposed
Lazard as their investment banker, Dewey & LeBoeuf LLP as special
counsel, and Epiq Bankruptcy Solutions LLC as claims agent. The
Debtors' financial condition as of Sept. 30, 2008, showed
$167,523,000 in total assets and $281,033,000 in total debts.
MIDWAY GAMES: CEO, et al., Report Disposition of Shares
-------------------------------------------------------
Matthew V. Booty, CEO and President of Midway Games, Inc.,
disclosed in a regulatory filing with the Securities and Exchange
Commission that he disposed of 50,000 Midway shares on April 6.
Mr. Booty explained the disposition was a result of forfeiture of
Restricted Stock due to failure of vesting conditions pursuant to
the terms of his Restricted Stock Agreement. Mr. Booty said he no
longer holds Midway shares following the transaction.
Martin Spiess, EVP-International Midway Games Ltd., said he
disposed of 35,000 Midway shares on April 6. Mr. Spiess said the
disposition was a result of forfeiture of Restricted Stock due to
failure of vesting conditions pursuant to the terms of his
Restricted Stock Agreement. Mr. Spiess said he no longer holds
any Company shares following the transaction.
Deborah Fulton, senior VP, secretary and general counsel, disposed
of 25,000 Midway shares on April 6. Ms. Fulton also said the
disposition was a result of forfeiture of Restricted Stock due to
failure of vesting conditions pursuant to the terms of her
Restricted Stock Agreement. Ms. Fulton said she holds 1,170
Company shares following the transaction.
Ryan G. O'Desky, SVP-Finance, CFO and treasurer, disposed of
15,000 Midway shares on April 6. Mr. O'Desky said the disposition
was a result of forfeiture of Restricted Stock due to failure of
vesting conditions pursuant to the terms of his Restricted Stock
Agreement. He no longer holds Company shares following the
transaction.
Miguel Iribarren, SVP-Publishing, disposed of 35,000 Midway shares
on April 6. Mr. Iribarren said the disposition was a result of
forfeiture of Restricted Stock due to failure of vesting
conditions pursuant to the terms of his Restricted Stock
Agreement. He said he no longer holds any Company shares
following the transaction.
The aggregate market value of the 11,222,001 shares of Common
Stock held by non-affiliates of the Company on June 30, 2008, was
$24,688,402. On March 24, 2009, the number of shares of Common
Stock outstanding, excluding 1,285,430 treasury shares, was
92,254,925 shares.
About Midway Games
Headquartered in Chicago, Illinois, Midway Games Inc. --
http://www.midway.com-- develops video games and sell them
primarily in North America, Europe, Asia and Australia. The
company and nine of its affiliates filed for Chapter 11 protection
on February 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465).
David W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and
Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the
Debtors in their restructuring efforts. The Debtors proposed
Lazard as their investment banker, Dewey & LeBoeuf LLP as special
counsel, and Epiq Bankruptcy Solutions LLC as claims agent. Linda
Dakin-Grim, Esq., at Milbank, Tweed, Hadley & McCloy LLP in New
York; Gregory A. Bray, Esq., and David B. Zolkin, Esq., at Milbank
Tweed in Los Angeles; and Mark D. Collins, Esq., and Marcos A.
Ramos, Esq., at Richards, Layton & Finger, P.A., in Wilmington,
Delaware, serve as counsel to the Official Committee of Unsecured
Creditors. The Debtors' financial condition as of Sept. 30, 2008,
showed $167,523,000 in total assets and $281,033,000 in total
debts.
MIDWAY GAMES: Reports $190.9 Million Net Loss for 2008
------------------------------------------------------
Midway Games, Inc., delivered to the Securities and Exchange
Commission its Annual Report on Form 10-K for the period ended
December 31, 2008.
The Company reported net loss of $190.9 million on net revenues of
$219.5 million for year 2008, compared to net loss of
$99.5 million on net revenues of $157.1 million for 2007. As of
December 31, 2008, the Company had $181.2 million in total assets;
$327.6 million in total current liabilities, $12.0 million in
deferred income taxes, and $541,000 in other noncurrent
liabilities; resulting in $158.9 million in stockholders' deficit.
Midway filed its Annual Report days after the original deadline
expired. Midway cited its bankruptcy filing in its failure to
file the report on time. Midway had said prior to and since the
Petition Date, management, as well as outside financial advisors
and legal counsel, have been focused on pre-petition and post-
petition related matters and on securing the Company's emergence
from bankruptcy. The Company has also experienced attrition of
personnel within its accounting organization, including, in
particular, the resignations of certain personnel in the SEC
reporting functions.
A full-text copy of the Annual Report is available at no charge
at:
http://ResearchArchives.com/t/s?3b60
Midway said it has been dismissed from certain securities class
actions commenced against the Company and others. Beginning on
July 6, 2007, a number of putative securities class actions were
filed against Midway, Steven M. Allison, James R. Boyle, Miguel
Iribarren, Thomas E. Powell and David F. Zucker in the United
States District Court for the Northern District of Illinois. The
lawsuits are essentially identical and purport to bring suit on
behalf of those who purchased the Company's publicly traded
securities between August 4, 2005, and May 24, 2006. The
Plaintiffs allege that the defendants made a series of
misrepresentations and omissions about Midway's financial well-
being and prospects concerning its financial performance,
including decisions regarding reductions in force, the Company's
need to seek additional capital, and decisions by controlling
shareholder Sumner Redstone and his related parties with respect
to their ownership or trading of Midway common stock, that had the
effect of artificially inflating the market price of the Company's
securities during the Class Period. The Plaintiffs also claim
that the defendants lacked a reasonable basis for Midway earnings
projections, which the Plaintiffs alleged were materially false
and misleading. The Plaintiffs seek to recover damages on behalf
of all purchasers of Midway common stock during the Class Period.
The actions have all been consolidated, and on October 16, 2007,
the Court appointed lead plaintiffs and lead counsel. The Lead
plaintiffs filed a Consolidated Amended Complaint on December 17,
2007, making the same allegations and asserting the same claims.
Midway and the individual defendants filed motions to dismiss the
Consolidated Amended Complaint in its entirety on February 15,
2008. The Plaintiffs' filed a response to the motions on March
20, 2008, and the defendants filed replies on April 8, 2008.
Midway then filed a suggestion of bankruptcy, informing the Court
of Midway's February 12, 2009, bankruptcy petition in the
Bankruptcy Court. In response, the Plaintiffs filed a notice on
March 3, 2009 voluntarily dismissing Midway from the action,
without prejudice. The Court dismissed Midway from the case on
March 11, 2009, terminating the action as to Midway. The action
remains pending against the remaining defendants.
About Midway Games
Headquartered in Chicago, Illinois, Midway Games Inc. --
http://www.midway.com-- develops video games and sell them
primarily in North America, Europe, Asia and Australia. The
company and nine of its affiliates filed for Chapter 11 protection
on Feb. 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David
W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and
Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the
Debtors in their restructuring efforts. The Debtors proposed
Lazard as their investment banker, Dewey & LeBoeuf LLP as special
counsel, and Epiq Bankruptcy Solutions LLC as claims agent. Linda
Dakin-Grim, Esq., at Milbank, Tweed, Hadley & McCloy LLP in New
York; Gregory A. Bray, Esq., and David B. Zolkin, Esq., at Milbank
Tweed in Los Angeles; and Mark D. Collins, Esq., and Marcos A.
Ramos, Esq., at Richards, Layton & Finger, P.A., in Wilmington,
Delaware, serve as counsel to the Official Committee of Unsecured
Creditors. The Debtors' financial condition as of Sept. 30, 2008,
showed $167,523,000 in total assets and $281,033,000 in total
debts.
MILACRON INC: Won't File Annual Report Due to Bankruptcy
--------------------------------------------------------
Milacron Inc. has said it is not in a position to file its Annual
Report on Form 10-K for the year ended December 31, 2008.
Milacron cited its bankruptcy filing on March 10, 2009. The
Company explained that during its chapter 11 proceeding, it will
not have financial or human resources to prepare a Form 10-K, as
they will be needed to meet administrative and operating expenses
and to provide substantial information to the Court and others.
During the pendency of the chapter 11 proceeding, the Company
intends to file copies of each of the monthly financial reports it
files with the Bankruptcy Court.
About Milacron Inc.
Headquartered in Batavia, Ohio, Milacron Inc. supplies plastics-
processing technologies and industrial fluids, with major
manufacturing facilities in North America, Europe and Asia.
First incorporated in 1884, Milacron is also manufactures
synthetic water-based industrial fluids used in metalworking
applications.
The company and six of its affiliates filed for protection on
March 10, 2009 (Bankr. S.D. Ohio Lead Case No. 09-11235). On the
same day, the Company filed an ancillary proceeding for
reorganization of its Canadian subsidiary under the Companies'
Creditors Arrangement Act in the Ontario Superior Court of Justice
in Canada. The Petitions include the Company and its U.S. and
Canadian subsidiaries and its non-operating Dutch holding company
subsidiary only, and do not include any of the Company's operating
subsidiaries outside the U.S. and Canada.
Kim Martin Lewis, Esq., and Patrick Burns, Esq., at Dinsmore &
Shohl LLP, represent the Debtors in their restructuring efforts.
The Debtors proposed Torys LLP as counsel to the CCAA proceeding;
Conway Del Genio Gries & Co. LLC as restructuring and financial
advisor; Rothschild Inc. as banker and financial advisor; Kurtzman
Carson Consultants LLC as claims agent; and RSM Richter Inc. as
CCAA monitor. Paul, Hastings, Janofsky & Walker LLP, represents
DIP Lender General Electric Capital Corp.
Daniel M. McDermott, United States Trustee for Region 9, has
appointed five creditors to serve on an official committee of
unsecured creditors of the Debtors.
When the Debtors filed for protection from their creditors, they
listed assets and debts between $500 million to $1 billion.
MOOG INC: S&P Puts 'BB+' Corp. Credit Rating on Negative Watch
--------------------------------------------------------------
Standard & Poor's Ratings Services said it has placed its ratings
on Moog Inc., including the 'BB+' corporate credit rating, on
CreditWatch with negative implications.
"The CreditWatch placement follows Moog's announcement that it is
reducing its earnings guidance for this year, largely because of
much lower demand in industrial markets and in commercial
aerospace," said Standard & Poor's credit analyst Christopher
DeNicolo. The company said it is lowering its fiscal 2009 (ending
Sept. 30, 2009) earnings guidance to $2.20 a share from $2.85 a
share and will likely take a further $0.25 a share in
restructuring charges in the second half of the year to better
align costs with the lower volumes. In addition, the company said
revenues are now likely to be $1.85 billion, down from their
previous expectations of approximately $2 billion.
Demand in most industrial markets has deteriorated significantly
in recent months because of the global economic weakness; orders
for components for plastics machinery, Moog's largest industrial
product line, are down 77%. In addition, sales expectations for
the commercial aerospace market were reduced because of a slower
production ramp-up on Boeing Co.'s new 787 jetliner and expected
lower production of other Boeing and Airbus SAS jetliners and
business jets.
Debt has increased in recent years as a result of a series of
small- to midsize acquisitions. The reduced earnings expectations
and higher debt are likely to result in a deterioration of credit
protection measures in 2009; S&P believes adjusted debt to EBITDA
will likely increase to 3.5x to 4x from about 3x now. At Dec. 27,
2008, liquidity was adequate, supported by $118 million in cash
and approximately $450 million in availability under the revolving
credit facility, although acquisitions totaling approximately
$140 million were announced subsequently. Moog currently has
sufficient cushion under the leverage covenant (2.24x actual
versus a maximum of 3.5x as of Dec. 27, 2008) in its credit
facility, but this will likely tighten by the end of the year.
The credit facility uses different definitions of debt and EBITDA
from what Standard & Poor's uses for calculating covenant
compliance.
In resolving the CreditWatch listing, S&P will meet with
management to discuss its operational and financial plans to
address the weakness in key markets and to reduce costs, as well
as its plans regarding additional acquisitions. S&P expects any
downgrade to likely be minimal.
MOVIE GALLERY: Settles Blackstone Dispute for $2.3 Million
----------------------------------------------------------
Reorganized Movie Gallery Inc. and Blackstone Advisory Services LP
have won approval of a stipulation from the U.S. Bankruptcy Court
for the Eastern District of Virginia.
Blackstone had asked the Court to compel the Reorganized Debtors
to pay $2,894,958 in fees and expenses -- the amounts Blackstone
incurred as financial advisor to Wells Fargo Bank, N.A., in
connection with the Debtors' reorganization.
In resolution of the dispute, the Reorganized Debtors and
Blackstone entered into a stipulation. The Stipulation provides
that:
(a) The Reorganized Debtors will pay Blackstone $2,300,000 in
full satisfaction of (i) Blackstone's claims for Fees
totaling $2,894,958 (ii) the Reorganized Debtors'
obligation under the Plan to pay Blackstone's fees and
expenses as financial advisor to Wells Fargo Bank, N.A.
Blackstone will have an allowed administrative expense
claim against the Reorganized Debtors' estate and payable
pursuant to the Plan. The Settlement Amount will be paid
to Blackstone in two payments: an initial payment of
$1,000,000 and a final payment of $1,300,000.
(b) Effective upon Blackstone's receipt of the Final Payment,
each of the Parties agrees to irrevocably release and
discharge the other party from any claims and obligations
arising out of the issues raised in Blackstone's Motion
to Compel.
(c) Upon receipt of the Final Payment, Blackstone will
consent to Wells Fargo's dismissal, with prejudice, of
Wells Fargo's Conditional Request for payment of super-
priority administrative expense filed in the Reorganized
Debtors' Cases.
(d) The Debtors agree to reimburse Blackstone for its
reasonable costs and expenses, including reasonable
attorneys' fees if Blackstone is compelled to seek relief
to enforce the stipulation or payment of the Final
Payment.
As part of the negotiated settlement and due to the commercial
nature of the terms of settlement, the parties initially asked
the Court that certain settlement terms and an exhibit A be
placed under seal.
Consequently, however, the parties informed the Court that they
have withdrawn their request to seal citing no apparent reason
for their withdrawal.
About Movie Gallery
Headquartered in Dothan, Alabama, Movie Gallery Inc. --
http://www.moviegallery.com/-- is the second largest North
American video rental company with approximately 3,300 stores
located in all 50 U.S. states and Canada operating under the
brands Movie Gallery, Hollywood Video and Game Crazy. Since MGI's
initial public offering in August 1994, the Company has grown from
97 stores to its present size through acquisitions and new store
openings.
The Company and its affiliates filed for Chapter 11 protection on
Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853).
Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M. Cieri,
Esq., at Kirkland & Ellis LLP, represented the Debtors. Michael A.
Condyles, Esq., and Peter J. Barrett, Esq., at Kutak Rock LLP,
were the Debtors' local counsel. The Debtors' claims & balloting
agent was Kurtzman Carson Consultants LLC. When the Debtors filed
for protection from their creditors, they listed total assets of
US$891,993,000 and total liabilities of US$1,419,215,000.
The Official Committee of Unsecured Creditors has selected
Robert J. Feinstein, Esq., James I. Stang, Esq., Robert B.
Orgel, Esq., and Brad Godshall, Esq., at Pachulski Stang Ziehl &
Jones LLP, as its lead counsel, and Brian F. Kenney, Esq., at
Miles & Stockbridge PC, as its local counsel.
The U.S. Bankruptcy Court for the Eastern District of Virginia
confirmed the Debtors' Second Amended Chapter 11 Plan of
Reorganization on April 9, 2008. The Debtors emerged from
bankruptcy on May 20, 2008. William Kaye was appointed Plan
Administrator and Litigation Trustee of the Movie Gallery
Litigation Trust. (Movie Gallery Bankruptcy News, Issue No. 39;
Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/
or 215/945-7000)
MOVIE GALLERY: Balks at Landlords' Bid to Recover Legal Costs
-------------------------------------------------------------
Reorganized Movie Gallery Inc. and its affiliates ask the U.S.
Bankruptcy Court for the Eastern District of Virginia to reject 56
claims filed by certain landlords asserting requests for payment
of attorneys' fees for which the landlords, as claimants, have
failed to provide sufficient information to demonstrate that they
are entitled to recover the fees.
A list of the Unsupported Attorneys Fees Claims is available for
free at:
http://bankrupt.com/misc/MG_28thOO_UnsupportedAttysFeesClaims.pdf
Landlords React
In response, 18 landlords noted that all documentations with
respect to their Claims have previously been supplied to the
Debtors:
* Realty Income Corporation
* Realty Income Texas Properties, LP
* Bladensboro Properties, LLC
* Hollywood Anniston, LLC
* Starbright, Inc.
* Tabor City Properties, LLC
* Foundation Retail Cleveland, LLC
* Foundation Retail Fulton, LLC
* Foundation Retail West Point, LLC
* Edward-Peters LLC
* Sanford Properties, LLC
* The Square at Lillington, LLC
* WS/AC, LLC,
* Whiteville Properties
* BBS Associates
* Parkland Hills, Inc.
* Lynnwood Tower, LLC
* Madison Lake Forest LLC
The billing materials, statements showing fees and expenses of
the Landlords' counsel and the leases with respect to the
Landlords have been provided at least once to the Debtors,
Augustus C. Epps, Esq., at Christian & Barton, L.L.P., in
Richmond, Virginia, tells the Court.
As to the legal bases to establish the Claims, Mr. Epps directs
the Debtors to (i) Three Sisters Partners, L.L.C. v. Harden (In
re Shangra-La,Incorporated, 167 F.3d 843 (4th Cir. 1999), (ii) In
re Trak Auto Corporation, 277 B.R. 655 (Bankr. E.D. Va. 2002),
and (iii) In re Geonex Corp., 258 B.R. 336 (D. Md. 2001).
The Landlords maintain that their Claims are valid. Accordingly,
they ask the Court to overrule the Debtors' objection to their
Claims.
About Movie Gallery
Headquartered in Dothan, Alabama, Movie Gallery Inc. --
http://www.moviegallery.com/-- is the second largest North
American video rental company with approximately 3,300 stores
located in all 50 U.S. states and Canada operating under the
brands Movie Gallery, Hollywood Video and Game Crazy. Since MGI's
initial public offering in August 1994, the Company has grown from
97 stores to its present size through acquisitions and new store
openings.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to
07-33853). Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M.
Cieri, Esq., at Kirkland & Ellis LLP, represented the Debtors.
Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak
Rock LLP, were the Debtors' local counsel. The Debtors' claims &
balloting agent was Kurtzman Carson Consultants LLC. When the
Debtors filed for protection from their creditors, they listed
total assets of US$891,993,000 and total liabilities of
US$1,419,215,000.
The Official Committee of Unsecured Creditors has selected
Robert J. Feinstein, Esq., James I. Stang, Esq., Robert B.
Orgel, Esq., and Brad Godshall, Esq., at Pachulski Stang Ziehl &
Jones LLP, as its lead counsel, and Brian F. Kenney, Esq., at
Miles & Stockbridge PC, as its local counsel.
The U.S. Bankruptcy Court for the Eastern District of Virginia
confirmed the Debtors' Second Amended Chapter 11 Plan of
Reorganization on April 9, 2008. The Debtors emerged from
bankruptcy on May 20, 2008. William Kaye was appointed Plan
Administrator and Litigation Trustee of the Movie Gallery
Litigation Trust. (Movie Gallery Bankruptcy News, Issue No. 39;
Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/
or 215/945-7000)
NEXPAK CORP: Files for Chapter 11 Bankruptcy Protection
-------------------------------------------------------
Reuters reports that Nexpak Corp. has filed for Chapter 11
bankruptcy protection in the U.S. Bankruptcy Court for the
District of Delaware for the second time.
Court documents say that Nexpak listed $1 million to $10 million
in assets, and $100 million to $500 million in debts.
As reported by the Troubled Company Reporter on July 22, 2004,
NexPak filed for chapter 11 protection on July 18, 2004 (Bankr.
N.D. Ohio Case No. 04-63816). Ryan Routh, Esq., and Shana F.
Klein, Esq., at Jones Day assisted the Debtor in its
restructuring efforts. The Company listed at that time about
$101 million in total assets and total debts approximating
$209 million.
Headquartered in Uniontown, Ohio, NexPak Corporation, --
http://www.nexpak.com/-- manufactures and supplies standard and
custom packaging for DVD, CD, video, audio, and professional media
formats.
NEXTMEDIA OPERATING: Moody's Pares Default Rating to 'Caa3/LD'
--------------------------------------------------------------
Moody's Investors Service downgraded the probability of default
rating of NextMedia Operating Inc. to Caa3 / LD from Caa2 because
the company failed to make the March 31 interest payment on its
second lien term loan within the grace period. Moody's considers
the missed interest payment a default, and the LD signifies a
limited default. NextMedia remains current on its first lien
interest payments. Moody's expects to remove the LD in
approximately 3 days.
The downgrade of the PDR to Caa3 from Caa2 incorporates Moody's
opinion that an additional default event, such as an exchange
offer or restructuring of debt, is likely. Moody's also lowered
the corporate family rating to Caa3 from Caa2, the first lien term
loan rating to Caa2 from Caa1 and the second lien term loan rating
to Ca from Caa3, reflecting expectations of increased loss for
lenders throughout the capital structure.
The outlook remains negative, based on the potential for further
downgrades of all ratings as the terms of the likely restructuring
become clear. The negative outlook also continues to incorporate
Moody's concerns that NextMedia lacks the necessary liquidity to
manage through the economic downturn and the possibility that
advertising declines could continue unabated over the intermediate
term.
NextMedia derives the majority of its revenue from cyclical
advertising spending, and the Caa3 corporate family rating
reflects the resultant pressure on cash flow from this cyclicality
and the weak economic conditions, which has contributed to a
capital structure Moody's considers unsustainable. Absent a debt
restructuring, Moody's forecasts double digital debt-to-EBITDA and
negative free cash flow for NextMedia in 2009 and anticipates a
violation of existing bank financial covenants in the first half
of 2009.
A summary of the action follows.
NextMedia Operating, Inc.
-- Probability of Default Rating, Downgraded to Caa3/LD from
Caa2
-- Corporate Family Rating, Downgraded to Caa3 from Caa2
-- Senior Secured First Lien Credit Facility, Downgraded to
Caa2, LGD3, 33% from Caa1, LGD3, 33%
-- Senior Secured Second Lien Credit Facility, Downgraded to Ca,
LGD5, 86% from Caa3, LGD5, 86%
-- Outlook, Negative
Moody's most recent rating action concerning NextMedia occurred
February 27, 2009. At that time Moody's downgraded the corporate
family rating to Caa2 from B3.
NextMedia Operating, Inc. owns and operates radio stations in 7
mid-sized and suburban markets and outdoor displays in 6 markets.
NORTEL NETWORKS: Can Hire Mercer as Compensation Consultant
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware granted
Nortel Networks Inc. authority to employ Mercer (US) Inc., as the
Debtors' compensation specialist, nunc pro tunc to January 14,
2009.
Mercer provides plan administration services, and general human
resources and employee benefits consulting to the Debtors and
their affiliates. Mercer is currently under the Debtors' employ
as an ordinary course professional.
As a compensation specialist, Mercer will assist the Debtors in
developing a Key Employee Incentive Plan. Specifically, the firm
will be tasked to:
(1) analyze and review the Debtors' executive pay issues;
(2) analyze, review and assist in unwinding the Debtors' long-
term incentive plans;
(3) analyze and review the Debtors' compensation and benefit
plans;
(4) advise the Debtors about issues on salary and benefits,
and the design, management and administration of the
incentive plan;
(5) provide expert witness testimony regarding its analysis,
assessments and recommendation upon request of the
Debtors; and
(6) provide a summary report of its work, stating its
findings, conclusions and recommendations upon the
Debtors' request.
The Debtors propose to pay for Mercer's services based on these
hourly rates:
Analysts $225
Junior Associate $250 - $300
Senior Associate $350 - $450
Principal $667
Specialist Principal $725 - $870
The firm will also be reimbursed for reasonable and actual
expenses it incurs and will be indemnified for damages or losses
in connection with its employment.
John Dempsey, a principal at Mercer, has said his firm does not
hold interest materially adverse to the Debtors, their creditors
and shareholders. He said Mercer is a "disinterested person"
under Section 101(14) of the Bankruptcy Code.
About Nortel Networks
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next-
generation technologies, for both service provider and enterprise
networks, support multimedia and business-critical applications.
Nortel's technologies are designed to help eliminate today's
barriers to efficiency, speed and performance by simplifying
networks and connecting people to the information they need, when
they need it. Nortel does business in more than 150 countries
around the world. Nortel Networks Limited is the principal direct
operating subsidiary of Nortel Networks Corporation.
Nortel Networks Corp., Nortel Networks Inc. and other affiliated
corporations in Canada sought insolvency protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice (Commercial List). Ernst & Young has been appointed to
serve as monitor and foreign representative of the Canadian Nortel
Group. The Monitor also sought recognition of the CCAA
Proceedings in the Bankruptcy Court under Chapter 15 of the
Bankruptcy Code.
Nortel Networks Inc. and 14 affiliates filed separate Chapter 11
petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138).
Judge Kevin Gross presides over the case. James L. Bromley, Esq.,
at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary
Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll
& Rooney PC, in Wilmington, Delaware, serves as Chapter 15
petitioner's counsel.
Certain of Nortel's European subsidiaries have also made
consequential filings for creditor protection. The Nortel
Companies related in a press release that Nortel Networks UK
Limited and certain subsidiaries of the Nortel group incorporated
in the EMEA region have each obtained an administration order
from the English High Court of Justice under the Insolvency Act
1986. The applications were made by the EMEA Subsidiaries under
the provisions of the European Union's Council Regulation (EC)
No. 1346/2000 on Insolvency Proceedings and on the basis that
each EMEA Subsidiary's centre of main interests is in England.
Under the terms of the orders, representatives of Ernst & Young
LLP have been appointed as administrators of each of the EMEA
Companies and will continue to manage the EMEA Companies and
operate their businesses under the jurisdiction of the English
Court and in accordance with the applicable provisions of the
Insolvency Act.
Several entities, particularly, Nortel Government Solutions
Incorporated and Nortel Networks (CALA) Inc., have material
operations and are not part of the bankruptcy proceedings.
As of September 30, 2008, Nortel Networks Corp. reported
consolidated assets of $11.6 billion and consolidated liabilities
of $11.8 billion. The Nortel Companies' U.S. businesses are
primarily conducted through Nortel Networks Inc., which is the
parent of majority of the U.S. Nortel Companies. As of
September 30, 2008, NNI had assets of about $9 billion and
liabilities of $3.2 billion, which do not include NNI's guarantee
of some or all of the Nortel Companies' about $4.2 billion of
unsecured public debt.
Bankruptcy Creditors' Service, Inc., publishes Nortel Networks
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
and ancillary foreign proceedings undertaken by Nortel Networks
Corp. and its various affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
NORTEL NETWORKS: Inks Cross-Border Protocol with Creditors' Panel
-----------------------------------------------------------------
Nortel Networks Inc. and its affiliate debtors in the United
States and the Official Committee of Unsecured Creditors appointed
in the U.S. Debtors' bankruptcy cases obtained approval from the
U.S. Bankruptcy Court for the District of Delaware of a
stipulation dated March 27, 2009, for a set of protocol to govern
and facilitate the administration of cross border matters among
the U.S. Debtors and the Canadian Debtors.
The stipulation permits the Creditors Committee to file no later
than April 30, 2009, any motion for reconsideration of the Court's
order approving the cross-border court-to-court protocol. The
extension will allow the U.S. Debtors and the Creditors Committee
to continue their discussions regarding the protocol and possible
improvements.
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next-
generation technologies, for both service provider and enterprise
networks, support multimedia and business-critical applications.
Nortel's technologies are designed to help eliminate today's
barriers to efficiency, speed and performance by simplifying
networks and connecting people to the information they need, when
they need it. Nortel does business in more than 150 countries
around the world. Nortel Networks Limited is the principal direct
operating subsidiary of Nortel Networks Corporation.
Nortel Networks Corp., Nortel Networks Inc. and other affiliated
corporations in Canada sought insolvency protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice (Commercial List). Ernst & Young has been appointed to
serve as monitor and foreign representative of the Canadian Nortel
Group. The Monitor also sought recognition of the CCAA
Proceedings in the Bankruptcy Court under Chapter 15 of the
Bankruptcy Code.
Nortel Networks Inc. and 14 affiliates filed separate Chapter 11
petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138).
Judge Kevin Gross presides over the case. James L. Bromley, Esq.,
at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary
Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll
& Rooney PC, in Wilmington, Delaware, serves as Chapter 15
petitioner's counsel.
Certain of Nortel's European subsidiaries have also made
consequential filings for creditor protection. The Nortel
Companies related in a press release that Nortel Networks UK
Limited and certain subsidiaries of the Nortel group incorporated
in the EMEA region have each obtained an administration order
from the English High Court of Justice under the Insolvency Act
1986. The applications were made by the EMEA Subsidiaries under
the provisions of the European Union's Council Regulation (EC)
No. 1346/2000 on Insolvency Proceedings and on the basis that
each EMEA Subsidiary's centre of main interests is in England.
Under the terms of the orders, representatives of Ernst & Young
LLP have been appointed as administrators of each of the EMEA
Companies and will continue to manage the EMEA Companies and
operate their businesses under the jurisdiction of the English
Court and in accordance with the applicable provisions of the
Insolvency Act.
Several entities, particularly, Nortel Government Solutions
Incorporated and Nortel Networks (CALA) Inc., have material
operations and are not part of the bankruptcy proceedings.
As of September 30, 2008, Nortel Networks Corp. reported
consolidated assets of $11.6 billion and consolidated liabilities
of $11.8 billion. The Nortel Companies' U.S. businesses are
primarily conducted through Nortel Networks Inc., which is the
parent of majority of the U.S. Nortel Companies. As of
September 30, 2008, NNI had assets of about $9 billion and
liabilities of $3.2 billion, which do not include NNI's guarantee
of some or all of the Nortel Companies' about $4.2 billion of
unsecured public debt.
Bankruptcy Creditors' Service, Inc., publishes Nortel Networks
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
and ancillary foreign proceedings undertaken by Nortel Networks
Corp. and its various affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
NORTEL NETWORKS: Court Permits Payment of Up to $4 Mil. in Taxes
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorizes
Nortel Networks Inc. and its affiliate debtors in the U.S. to pay
up to $4 million for their income and franchise taxes, business
license fees, and business and occupation taxes for 2008 and 2009.
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next-
generation technologies, for both service provider and enterprise
networks, support multimedia and business-critical applications.
Nortel's technologies are designed to help eliminate today's
barriers to efficiency, speed and performance by simplifying
networks and connecting people to the information they need, when
they need it. Nortel does business in more than 150 countries
around the world. Nortel Networks Limited is the principal direct
operating subsidiary of Nortel Networks Corporation.
Nortel Networks Corp., Nortel Networks Inc. and other affiliated
corporations in Canada sought insolvency protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice (Commercial List). Ernst & Young has been appointed to
serve as monitor and foreign representative of the Canadian Nortel
Group. The Monitor also sought recognition of the CCAA
Proceedings in the Bankruptcy Court under Chapter 15 of the
Bankruptcy Code.
Nortel Networks Inc. and 14 affiliates filed separate Chapter 11
petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138).
Judge Kevin Gross presides over the case. James L. Bromley, Esq.,
at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary
Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll
& Rooney PC, in Wilmington, Delaware, serves as Chapter 15
petitioner's counsel.
Certain of Nortel's European subsidiaries have also made
consequential filings for creditor protection. The Nortel
Companies related in a press release that Nortel Networks UK
Limited and certain subsidiaries of the Nortel group incorporated
in the EMEA region have each obtained an administration order
from the English High Court of Justice under the Insolvency Act
1986. The applications were made by the EMEA Subsidiaries under
the provisions of the European Union's Council Regulation (EC)
No. 1346/2000 on Insolvency Proceedings and on the basis that
each EMEA Subsidiary's centre of main interests is in England.
Under the terms of the orders, representatives of Ernst & Young
LLP have been appointed as administrators of each of the EMEA
Companies and will continue to manage the EMEA Companies and
operate their businesses under the jurisdiction of the English
Court and in accordance with the applicable provisions of the
Insolvency Act.
Several entities, particularly, Nortel Government Solutions
Incorporated and Nortel Networks (CALA) Inc., have material
operations and are not part of the bankruptcy proceedings.
As of September 30, 2008, Nortel Networks Corp. reported
consolidated assets of $11.6 billion and consolidated liabilities
of $11.8 billion. The Nortel Companies' U.S. businesses are
primarily conducted through Nortel Networks Inc., which is the
parent of majority of the U.S. Nortel Companies. As of
September 30, 2008, NNI had assets of about $9 billion and
liabilities of $3.2 billion, which do not include NNI's guarantee
of some or all of the Nortel Companies' about $4.2 billion of
unsecured public debt.
Bankruptcy Creditors' Service, Inc., publishes Nortel Networks
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
and ancillary foreign proceedings undertaken by Nortel Networks
Corp. and its various affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
NORTEL NETWORKS: Ontario Court OKs Amendments to Intercompany Loan
------------------------------------------------------------------
Nortel Networks Corporation and four of its Canada-based
affiliates sought and obtained the Ontario Superior Court of
Justice's approval of certain amendments to the loan agreement
they entered into with their U.S.-based affiliate Nortel Networks
Inc.
The CCAA Applicants signed the loan agreement so that Nortel
Networks Limited could access advances of up to US$200 million
from NNI. The advances are secured by (i) second ranking charge
on NNL's and Nortel Networks Technology Corporation's respective
interests in a research and development facility located at 3100
Carling Avenue, Ottawa, Canada; and (ii) a junior charge on each
of their remaining assets under the "inter-company charge."
The Ontario Superior Court also held that all advances made by
NNL to NNTC on or after January 14, 2009, will be secured by the
"inter-company charge."
In a report to the Honorable Mr. Justice Morawetz of the Ontario
Superior Court of Justice, Ernst & Young, Inc., as monitor of the
proceedings commenced by Nortel Networks Corporation and its
affiliates under Canada's Companies' Creditors Arrangement Act,
said the Nortel companies signed the loan agreement so that NNL
could access as much as $200 million in advances from NNI. The
advances are secured by (i) second ranking charge on NNL's and
Nortel Networks Technology Corporation's respective interests in
a research and development facility located at 3100 Carling
Avenue, in Ottawa, Canada; and (ii) a junior charge on each of
their remaining assets under the "inter-company charge."
According to the Monitor, the amendments to the loan agreement
are:
(1) NNC, NNTC, Nortel Networks Global Corporation and Nortel
Networks International Corporation will serve as
guarantors of the obligations under the loan agreement.
NNL, the principal Canadian-operating unit, remains as the
borrower.
(2) In addition to the charges on NNL's and NNTC's interests
in the Carling facility, a new "loan charge" will be
created that ranks ahead of the "inter-company charge" but
after the "directors' charge" that will secure the
applicants' obligations under the loan agreement against
all of their assets.
(3) The loan charge will not be enforceable pending further
court order.
(4) NNI is not required to exhaust its remedies under the
charges on NNL's and NNTC's interests in the Carling
Facility prior to seeking recovery from the new loan
charge.
NNTC Advances
To allow the continued flow of products and funds among Nortel
companies, they are required to account for and settle their
intercompany trade balances, according to the Monitor. This
status quo is maintained by way of the "inter-company charge" for
post-filing advances made by NNI to NNL or by settlement of trade
intercompany amounts.
Ernst & Young said that the protection provided by the "inter-
company charge" should also be extended to include the post-
filing advances made by NNL to NNTC.
NNTC does not generate "third party" revenue and gets its funds
from NNL, the Monitor points out. Since the commencement of the
insolvency proceedings, NNL has made advances to NNTC,
aggregating $23 million. NNL has also disbursed about
C$81 million on behalf of NNTC for NNTC's payroll obligations.
Monitor's Recommendation
Ernst & Young recommended the approval of the proposed revisions
to the loan agreement and the broadening of the protection
provided by the intercompany charge, maintaining they do not
materially prejudice the creditors and would help NNC in
formulating a comprehensive restructuring plan.
About Nortel Networks
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next-
generation technologies, for both service provider and enterprise
networks, support multimedia and business-critical applications.
Nortel's technologies are designed to help eliminate today's
barriers to efficiency, speed and performance by simplifying
networks and connecting people to the information they need, when
they need it. Nortel does business in more than 150 countries
around the world. Nortel Networks Limited is the principal direct
operating subsidiary of Nortel Networks Corporation.
Nortel Networks Corp., Nortel Networks Inc. and other affiliated
corporations in Canada sought insolvency protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice (Commercial List). Ernst & Young has been appointed to
serve as monitor and foreign representative of the Canadian Nortel
Group. The Monitor also sought recognition of the CCAA
Proceedings in the Bankruptcy Court under Chapter 15 of the
Bankruptcy Code.
Nortel Networks Inc. and 14 affiliates filed separate Chapter 11
petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138).
Judge Kevin Gross presides over the case. James L. Bromley, Esq.,
at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary
Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll
& Rooney PC, in Wilmington, Delaware, serves as Chapter 15
petitioner's counsel.
Certain of Nortel's European subsidiaries have also made
consequential filings for creditor protection. The Nortel
Companies related in a press release that Nortel Networks UK
Limited and certain subsidiaries of the Nortel group incorporated
in the EMEA region have each obtained an administration order
from the English High Court of Justice under the Insolvency Act
1986. The applications were made by the EMEA Subsidiaries under
the provisions of the European Union's Council Regulation (EC)
No. 1346/2000 on Insolvency Proceedings and on the basis that
each EMEA Subsidiary's centre of main interests is in England.
Under the terms of the orders, representatives of Ernst & Young
LLP have been appointed as administrators of each of the EMEA
Companies and will continue to manage the EMEA Companies and
operate their businesses under the jurisdiction of the English
Court and in accordance with the applicable provisions of the
Insolvency Act.
Several entities, particularly, Nortel Government Solutions
Incorporated and Nortel Networks (CALA) Inc., have material
operations and are not part of the bankruptcy proceedings.
As of September 30, 2008, Nortel Networks Corp. reported
consolidated assets of $11.6 billion and consolidated liabilities
of $11.8 billion. The Nortel Companies' U.S. businesses are
primarily conducted through Nortel Networks Inc., which is the
parent of majority of the U.S. Nortel Companies. As of
September 30, 2008, NNI had assets of about $9 billion and
liabilities of $3.2 billion, which do not include NNI's guarantee
of some or all of the Nortel Companies' about $4.2 billion of
unsecured public debt.
Bankruptcy Creditors' Service, Inc., publishes Nortel Networks
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
and ancillary foreign proceedings undertaken by Nortel Networks
Corp. and its various affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
NORTEL NETWORKS: Laid Off Workers Seek Bankruptcy Counsel
---------------------------------------------------------
A private group of more than 300 former employees of Nortel
Networks Corporation and its Canadian affiliates asks the Ontario
Superior Court of Justice to appoint Nelligan O'Brien Payne LLP
and Shibley Righton LLP as its counsel.
The Former Employees refer to themselves as Recently Severed
Canadian Nortel Employees. They allege that they are still owed
severance or pay in lieu of notice. Most of RSCNE's members live
in Ottawa. RSCNE is run by a steering committee of nine members.
RSCNE inform the Canadian Court that they selected the firms
because of their experience in dealing with NNC and in
representing its former employees. "Nelligan has represented
many Nortel employees in the past, and is therefore familiar with
Nortel's employment and human resources practices. Nelligan has
significant experience with employment law generally as well as
experience with Nortel specifically," RSCNE said.
RSCNE propose that Nelligan and Shibley be paid of their fees by
the CCAA Applicants and that they be granted a charge on the
assets of the Applicants as security for their fees and
disbursements incurred. "The members of RSCNE are not in a
position to be able to pay for legal counsel to represent them --
they have lost their jobs, and will receive no money from Nortel
until a claims process under CCAA has been completed. This costs
award will permit individuals to pursue claims they might
otherwise be unable to," the group said.
RSCNE also asks the Canadian Court to appoint Joanne Read and
Paula Klein as representatives for the non-unionized employees.
Ms. Read was the director of the Strategic Initiatives & Black
Belt Enterprise Operations of NNC. Ms. Klein was the director of
Research and Development of Nortel Networks Limited.
In an affidavit submitted to the Court, Ms. Klein disclosed that
RSCNE propose a separate representation since most of its members
are not going to be part of Nortel's pension plan and could not
be affiliated with the volunteer group, Nortel Retiree and Former
Employee Protection Committee.
The NRPC, which was created to defend and protect the pensions
and retirement payments of former Nortel employees has also filed
a motion with the Ontario Superior Court, seeking the appointment
of Koskie Minsky LLP as its counsel.
Ms. Klein said that Koskie Minsky is not interested in
representing those employees who are not part of the benefit
pension plan. She also noted that NRPC is opposed to permitting
recently terminated employees to exercise their right to withdraw
from the Nortel pension plan, which is contrary to the interests
of the RSCNE members.
NRPC Responds
In a statement to the Court, NRPC Chair Donald Sproule dismissed
the allegation that NRPC is opposed to allowing recently fired
employees to exercise their right to withdraw from the pension
plan. "This is simply untrue. We have in fact advocated on
behalf of terminated employees because Nortel was refusing to
process their applications," he emphasized.
Mr. Sproule pointed out that they have already instructed their
counsel to contact Nortel and Ernst & Young Inc. about the delays
in processing pension and transfer applications from the pension
plan to other arrangements. He clarified that NRPC will also
pursue severance and termination claims.
"The position of the NRPC . . . has always been that we will
represent the interests of former employees in respect of
pension, retiree health benefit, transition retirement allowance
and other payments," Mr. Sproule maintained.
"We understand that there are former employees who are owed
health benefits, other benefits, and payments or allowances who
were not members of the defined benefit pension plan, and we
certainly seek to represent such persons," Mr. Sproule said.
About Nortel Networks
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next-
generation technologies, for both service provider and enterprise
networks, support multimedia and business-critical applications.
Nortel's technologies are designed to help eliminate today's
barriers to efficiency, speed and performance by simplifying
networks and connecting people to the information they need, when
they need it. Nortel does business in more than 150 countries
around the world. Nortel Networks Limited is the principal direct
operating subsidiary of Nortel Networks Corporation.
Nortel Networks Corp., Nortel Networks Inc. and other affiliated
corporations in Canada sought insolvency protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice (Commercial List). Ernst & Young has been appointed to
serve as monitor and foreign representative of the Canadian Nortel
Group. The Monitor also sought recognition of the CCAA
Proceedings in the Bankruptcy Court under Chapter 15 of the
Bankruptcy Code.
Nortel Networks Inc. and 14 affiliates filed separate Chapter 11
petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138).
Judge Kevin Gross presides over the case. James L. Bromley, Esq.,
at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary
Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll
& Rooney PC, in Wilmington, Delaware, serves as Chapter 15
petitioner's counsel.
Certain of Nortel's European subsidiaries have also made
consequential filings for creditor protection. The Nortel
Companies related in a press release that Nortel Networks UK
Limited and certain subsidiaries of the Nortel group incorporated
in the EMEA region have each obtained an administration order
from the English High Court of Justice under the Insolvency Act
1986. The applications were made by the EMEA Subsidiaries under
the provisions of the European Union's Council Regulation (EC)
No. 1346/2000 on Insolvency Proceedings and on the basis that
each EMEA Subsidiary's centre of main interests is in England.
Under the terms of the orders, representatives of Ernst & Young
LLP have been appointed as administrators of each of the EMEA
Companies and will continue to manage the EMEA Companies and
operate their businesses under the jurisdiction of the English
Court and in accordance with the applicable provisions of the
Insolvency Act.
Several entities, particularly, Nortel Government Solutions
Incorporated and Nortel Networks (CALA) Inc., have material
operations and are not part of the bankruptcy proceedings.
As of September 30, 2008, Nortel Networks Corp. reported
consolidated assets of $11.6 billion and consolidated liabilities
of $11.8 billion. The Nortel Companies' U.S. businesses are
primarily conducted through Nortel Networks Inc., which is the
parent of majority of the U.S. Nortel Companies. As of
September 30, 2008, NNI had assets of about $9 billion and
liabilities of $3.2 billion, which do not include NNI's guarantee
of some or all of the Nortel Companies' about $4.2 billion of
unsecured public debt.
Bankruptcy Creditors' Service, Inc., publishes Nortel Networks
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
and ancillary foreign proceedings undertaken by Nortel Networks
Corp. and its various affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
OWENS CORNING: Garlock Sealing Sues Asbestos Trust
--------------------------------------------------
Garlock Sealing Technologies, LLC, commenced an adversary
complaint against the Owens Corning/Fiberboard Asbestos Personal
Injury Trust and its trustees, Harry Huge, D. LeAnne Jackson and
Dean M. Trafelet before the U.S. Bankruptcy Court in Delaware.
Garlock Satisfied Verdict
in favor of Puller Plaintiffs
William R. Firth, III, Esq., at Gibbons P.C. in Wilmington,
Delaware, relates that Garlock is the judgment-debtor in three
judgments entered in the Circuit Court for the City of Baltimore,
Maryland, in favor in individuals named Reginald Puller, Paul
Wilson, and Gary Snyder, each of whom suffered asbestos-caused
bodily injury. The Puller Plaintiffs suffered from and died as a
result of mesothelioma alleged to have been caused by exposure to
the asbestos-containing products of a number of defendants,
including Garlock and one or more of the Debtors. By virtue of
the Debtors' bankruptcy cases, the Puller Plaintiffs did not
pursue claims against the Debtors in the tort system.
The jury, however, returned verdicts in favor of the Puller
Plaintiffs against Garlock. After giving Garlock credit for the
shares of co-defendants that paid settlements to Puller
Plaintiffs in the tort system, the trial courts entered judgments
in favor of the Puller Plaintiffs and against Garlock for
$3,883,495 in the Puller case; $1,863,870 in the Wilson case; and
$4,149,850 in the Snyder case.
According to Mr. Firth, Garlock paid the three judgments in full
and the Puller Plaintiffs have acknowledged satisfaction in full
of the judgments.
When Garlock satisfied the three judgments, it acquired rights
under Maryland law to obtain contribution from joint tort-
feasors, including asbestos personal injury trusts created under
Section 524(g) of the Bankruptcy Code that assumed liabilities of
companies that contributed to the Judgment-Plaintiffs' injuries.
Garlock's Indirect Claims
After Garlock paid the Puller Plaintiffs' judgments, Garlock
learned that (a) the Puller Plaintiffs claimed that exposure to
asbestos-containing products of several companies whose asbestos-
related liabilities had been assumed by Asbestos Trusts had
contributed to their injuries; (b) Direct Claims had been filed
on behalf of the Puller Plaintiffs against those Asbestos Trusts;
and (c) the Puller Plaintiffs may have obtained recovery from
some of those trusts, but has not given Garlock credit against
the amount of their judgments as required by Maryland law,
according to Mr. Firth. Moreover, he notes, the Puller
Plaintiffs filed "Direct Claims" against several Asbestos Trusts
after Garlock paid in full their judgments even though, upon
Garlock's satisfaction of the Puller Plaintiffs' judgments,
Garlock -- not the Puller Plaintiffs -- became entitled to
collect any Asbestos Trust payments due and owing on account of
the Puller Plaintiffs' injuries.
Thus, to protect its contribution rights, Garlock says that:
-- it filed three "Indirect Claims" against the Owens Asbestos
Trust on April 15, 2008;
-- in its submissions, provided exposure and other evidence
required by the Trust Distribution Procedures to establish
the Asbestos Trust's liability for the injuries of two of
the Puller Plaintiffs, Messrs. Puller and Snyder; and
-- it asked the Trust to incorporate into the Indirect Claims
any evidence and other materials submitted by the Puller
Plaintiffs in support of any Direct Claim the claimants may
have previously filed against the Trust.
However, according to Mr. Firth, Garlock has not received a
single communication from the Trust on the status of its Indirect
Claims. Moreover, when Garlock contacted the Trust to request
that it process Garlock's Indirect Claims, the Trust responded
that it had no obligation to do so. The Trust's counsel instead
justified the Trust's refusal by asserting that holders of
Indirect Claims are not entitled to have their claims processed
unless they have already established in an underlying state court
action a right to contribution against the Trust.
Mr. Firth argues that the Trust's position contradicts the
language of the Plan Documents, which include Owens Corning's
Confirmed Plan of Reorganization, the Asbestos PI Trust
Agreement, and Asbestos PI TDPs. He reminds the Court that the
Plan Documents provide that:
-- by virtue of the channeling injunction, Indirect Claimants
are enjoined from adjudicating claims against the Trust in
state court but are instead channeled to the Trust for
resolution of their Indirect Claims pursuant to the TDP;
-- the Trust must pay Indirect Claims that are valid under
applicable state law;
-- Indirect PI Trust Claims are subject to the same
categorization and payment provisions as to all other Owens
Corning and Fibreboard Claims; and
-- the Trust is liable for Direct and Indirect Claims
regardless of whether they are liquidated in the tort
system prior to being filed against the Trust.
Mr. Firth contends that the Trust's refusal to process Garlock's
Indirect Claims violates the Plan Documents and demonstrates the
Trustees' hostility to one class of Trust beneficiaries, holders
of Indirect Claims, that requires the intervention of the Court.
Also, Garlock complains that the Trust has obstructed its rights
under the TDPs by refusing discovery of the Puller Plaintiffs'
claim forms and supporting evidence which directly support
Garlock's Indirect Claims. Garlock says it has served a valid
subpoena on the Trust on February 13, 2009, seeking copies of
materials submitted by the Puller Plaintiffs in support of the
Direct Claims. The Trust, however, has refused to produce the
requested information based on attorney-client, work product and
trade secret privilege.
Garlock further complains that the Owens Asbestos Trustees have
breached their duties under the Plan Documents in that they have,
among others:
(a) failed and refused to develop and implement any
liquidation and payment procedures for holders of Indirect
Claims;
(b) failed and refused to process Garlock's Indirect Claims
and give Garlock fair and equal treatment as to other
holders of Asbestos PI Claims;
(c) agreed with representatives of the Puller Plaintiffs to
refuse to process Garlock's Indirect Claims and to resist
Garlock's requests for information;
(d) agreed with representatives of Direct Claimants, including
members of the Trust Advisory Committee, to process and
pay Direct Claims in secrecy from Indirect Claimants.
Accordingly, Garlock seeks a declaratory judgment, specific
performance and an injunction pursuant to federal and Delaware
law, compelling the Owens Asbestos Trust and the Asbestos
Trustees to honor its rights under the Plan Documents and
applicable trust law, including its right to prompt and impartial
review of the Garlock Claims and to be treated by the Trust
substantially similarly to all other holders of Asbestos Personal
Injury Claims.
Meanwhile, Owens Corning has tagged another 60 employees at its
Selkirk, Albany plant on temporary leave last March 24, 2009,
according to timesunion.com. The company's last move has brought
the number of furloughed Selkirk workers to 100 as of December
2008. Owens Corning spokesman Scott Dietz says the furloughs are
part of the company's plan to keep up with the depressed housing
demand.
About Owens Corning
Headquartered in Toledo, Ohio, Owens Corning fka Owens Corning
(Reorganized) Inc. (NYSE: OC) -- http://www.owenscorning.com/--
is a producer of residential and commercial building materials and
glass fiber reinforcements, and other similar materials for
composite systems. The company has operations in 26 countries.
The company filed for chapter 11 protection on Oct. 5, 2000
(Bankr. D. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at
Saul Ewing LLP, represented the Debtors. Elihu Inselbuch, Esq.,
at Caplin & Drysdale, Chartered, represented the Official
Committee of Asbestos Creditors. James J. McMonagle served as the
Legal Representative for Future Claimants until June 20, 2007.
Mr. McMonagle was replaced by Michael J. Crames. Mr. Crames
served as Mr. McMonagle's counsel until July 2005, when he retired
from the law firm Kaye Scholer LLP.
On Sept. 28, 2006, the Honorable John P. Fullam, Sr., of the U.S.
District Court for the Eastern District of Pennsylvania affirmed
the order of Honorable Judith Fitzgerald of the U.S. Bankruptcy
Court for the District of Delaware confirming Owens Corning's
Sixth Amended Plan of Reorganization. The Plan took effect on
Oct. 31, 2006, marking the company's emergence from Chapter 11.
Reorganized Owens sought on July 25, 2008, from the Delaware
Bankruptcy Court a final decree closing the Chapter 11 cases of 17
of its affiliates. Only the Chapter 11 case of Owens Corning
Sales, LLC, formerly known as Owens Corning, under Case No.
00-03837 will remain open.
(Owens Corning Bankruptcy News, Issue No. 182; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
OWENS CORNING: Officers Disclose Equity Stake
---------------------------------------------
In separate Form 4 filings with the Securities and Exchange
Commission, four directors and officers of Reorganized
Owens Corning disclosed that they acquired shares of Owens common
stock for the period from March 18 to 20, 2009:
Date of No. of Shares No. of Shares
Officer Acquisition Acquired Currently Owned
------- ----------- ------------- ---------------
Ann Iverson 03/18/09 3,000 19,861
Karel K. Czanderna 03/18/09 1,300 58,275
Duncan Palmer 03/20/09 6,000 129,069
In her SEC form 4 filing, Ann Iverson disclosed that she
indirectly owns 400 shares of Owens common stock by virtue of her
spouse' trust.
The price of the Owens shares Duncan Palmer acquired was $8.02.
In his SEC Form 4 filing dated March 20, 2009, Charles E. Dana,
Group President of Composite Solutions, disclosed that he
indirectly owns 4,000 Owens shares by virtue of the company's
401(k) plan. Mr. Dana also beneficially owns by direct ownership
125,979 shares of Owens Corning Common Stock.
About Owens Corning
Headquartered in Toledo, Ohio, Owens Corning fka Owens Corning
(Reorganized) Inc. (NYSE: OC) -- http://www.owenscorning.com/--
is a producer of residential and commercial building materials and
glass fiber reinforcements, and other similar materials for
composite systems. The company has operations in 26 countries.
The Company filed for chapter 11 protection on Oct. 5, 2000
(Bankr. D. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at
Saul Ewing LLP, represented the Debtors. Elihu Inselbuch, Esq.,
at Caplin & Drysdale, Chartered, represented the Official
Committee of Asbestos Creditors. James J. McMonagle served as the
Legal Representative for Future Claimants until June 20, 2007.
Mr. McMonagle was replaced by Michael J. Crames. Mr. Crames
served as Mr. McMonagle's counsel until July 2005, when he retired
from the law firm Kaye Scholer LLP.
On Sept. 28, 2006, the Honorable John P. Fullam, Sr., of the U.S.
District Court for the Eastern District of Pennsylvania affirmed
the order of Honorable Judith Fitzgerald of the U.S. Bankruptcy
Court for the District of Delaware confirming Owens Corning's
Sixth Amended Plan of Reorganization. The Plan took effect on
Oct. 31, 2006, marking the company's emergence from Chapter 11.
Reorganized Owens sought on July 25, 2008, from the Delaware
Bankruptcy Court a final decree closing the Chapter 11 cases of 17
of its affiliates. Only the Chapter 11 case of Owens Corning
Sales, LLC, formerly known as Owens Corning, under Case No.
00-03837 will remain open.
(Owens Corning Bankruptcy News, Issue No. 182; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
PEAK FITNESS: Files for Chapter 11 Bankruptcy Protection
--------------------------------------------------------
Kirsten Valle at The Charlotte Observer reports that Peak Capital
Holdings LLC has filed for Chapter 11 bankruptcy protection.
Peak Capital's vice president of operations, Laura Haid, said that
the Company has been a victim of the "challenging economy," The
Charlotte Observer relates. Officials "believe this restructuring
will help to relieve some of the pressures off our operations,"
Ms. Haid said in a statement.
According to court documents, Peak Capital listed less than
$50,000 in assets and said that it owed as many as 200 creditors
$500,000 to $1 million. Jim Henderson, Peak Capital's lawyer,
said that Peak Capital clubs had fallen behind on their lease
payments and the bankruptcy filing was meant to preserve those
lease agreements, The Charlotte Observer states. Peak Capital
will keep the clubs open, but if any are closed, their clients
will be offered memberships at other nearby clubs, The Charlotte
Observer says.
Additional bankruptcy filings are possible for Peak Capital's
clubs, The Charlotte Observer relates, citing Mr. Henderson.
Court documents say that some Peak Capital clubs in Mecklenburg
and the Raleigh area owe the IRS more than $110,000 in taxes.
Other claims, according to Te Charlotte Observer, involve contract
disputes and money owed to electric companies, developers, a pool
service company, and more. T
Peak Capital Holdings LLC, part of the Mecklenburg-based Peak
Fitness, is the parent company of four Triangle Peak Fitness
clubs.
PETRO RESOURCES: Lenders Agree to Waive Covenant Defaults
---------------------------------------------------------
Petro Resources Corporation (NYSE Amex: PRC) (NYSE Alternext US:
PRC) has amended its $50 million Credit Agreement and $15 million
Second Lien Term Loan Agreement with CIT Capital USA, Inc., as
administrative agent for the lenders, effective March 19, 2009.
The borrowing base under the Credit Agreement was reduced from
$17 million to $12 million. The Company has approximately
$5.5 million of availability under the amended borrowing base of
the Credit Agreement. The Company is permitted to use the
remaining borrowing base availability under the Credit Agreement
to finance its capital program and fund general corporate
purposes.
The Company has drawn a total of $21.5 million, of which
$15.0 million was fully drawn on the Term Loan Agreement and
$6.5 million was drawn on the Credit Agreement.
The Company had informed CIT Energy that it was unable to comply
with the interest and debt coverage covenants contained in the
Credit Agreement and the Term Loan Agreement for the fiscal
quarter ended December 31, 2008; and requested a waiver of the
defaults. The administrative agent and the lenders have agreed to
waive the defaults.
Pursuant to the Amendments to Credit Agreement, the Company must
have:
(A) a ratio of EBITDAX to Interest Expense of not less than:
* 2.0:1.0 for the first and second fiscal quarters of 2009,
* 2.25:1.0 for the third and fourth fiscal quarters of
2009, and
* 2.5:1.0 for each fiscal quarter thereafter;
(B) a ratio of Net Debt to EBITDAX of not more than:
* 6.5:1.0 for the fiscal quarters of 2009,
* 6.0:1.0 for the fiscal quarters of 2010, and
* 5.0:1 for each fiscal quarter thereafter;
(C) a ratio of consolidated current assets to consolidated
current liabilities of not less than 1.0:1.0 for each
fiscal quarter; and
(D) a ratio of Credit Agreement debt to EBITDAX of not more
than 2.75:1.0 for each fiscal quarter.
Borrowings under the Credit Agreement bear interest, at the
Company's option, at either a fluctuating base rate or a rate
equal to LIBOR -- with a LIBOR floor of 2.50% -- plus, in each
case, a margin determined based on the Company's utilization of
the borrowing base. The amendment includes an increase in the
margin of 50 basis points.
Under the Term Loan Amendments, the Company must have:
(A) a ratio of Total Reserve Value to Debt of not less than
1.75:1.0; and
(B) a ratio of Net Debt to EBITDAX of not more than:
* 6.5:1.0 for the fiscal quarters of 2009 and 2010; and
* 5.5:1 for the fiscal quarters of 2011 each fiscal quarter
ending thereafter.
Borrowings under the Term Loan Agreement bear interest, at the
Company's option, at either a fluctuating base rate plus 6.50% per
annum or a rate equal to LIBOR (with a LIBOR floor of 2.50%) plus
7.50% per annum.
About Petro Resources
Petro Resources Corporation and subsidiaries --
http://www.petroresourcescorp.com/-- are an independent
exploration and production company engaged in the acquisition of
exploratory leases and producing properties, secondary enhanced
oil recovery projects, exploratory drilling, and production of oil
and natural gas in the United States.
PLAZA LLC: Files for Chapter 11 Bankruptcy Protection
-----------------------------------------------------
Jerry W. Jackson at OrlandoSentinel.com reports that
The Plaza LLC has filed for bankruptcy protection in the U.S.
Bankruptcy Court for the Middle District of Florida.
According to OrlandoSentinel.com, The Plaza listed $1 million in
assets and $10 million in debts. OrlandoSentinel.com relates that
a creditors meeting will be held on May 11. The report states
that The Plaza's major creditors include:
-- First American Title Co., of Orlando, owed $5.05 million;
-- the Plaza Land Condominium Association Inc., owed
$450,000; and
-- the Plaza North and South Tower Commercial Condo
Association Inc., owed $450,000.
OrlandoSentinel.com relates that Elizabeth Green, The Plaza's
bankruptcy counsel, said that the Company owns 69,000 square feet
of commercial office space in the complex. The report quoted Ms.
Green as saying, "The idea is to put in replacement financing" to
pre-empt a foreclosure filing and let the unsold units to be
marketed again.
The Plaza LLC was founded by Orlando developer Cameron Kuhn five
years ago to launch his landmark downtown twin-tower Plaza
complex. Mr. Kuhn no longer has any operating control on the
Company. The Company has two office towers, ground-floor retail,
and a parking garage all connected by a still unfinished multiplex
theater in the center.
PRA INTERNATIONAL: Moody's Gives Neg. Outlook; Keeps 'B2' Rating
----------------------------------------------------------------
Moody's Investors Service changed the rating outlook for PRA
International, Inc. to negative from stable. At the same time,
Moody's affirmed the ratings, including the Corporate Family
Rating of B3 and the Probability of Default Rating of B2.
The change in the outlook to negative reflects Moody's
expectations for a difficult near-term operating environment as a
result of reduced biotech funding, disruption from pharmaceutical
consolidation and pricing pressure in the contract research
organization industry due to high levels of capacity.
PRA's Corporate Family Rating is B3, reflecting the contract
cancellation risk that is inherent in the CRO business, coupled
with the significant level of adjusted leverage, limited interest
coverage and negative free cash flow. Further, the CRO industry
is highly competitive and PRA's scale is modest versus several
much larger competitors. Supporting the ratings is the positive
long-term growth prospects for the CRO industry, PRA's flexible
cost structure which should allow it to respond quickly to changes
in demand and Moody's expectation for adequate near-term
liquidity.
Ratings affirmed/LGD assessments revised:
PRA International:
-- $30 million senior secured revolving credit facility due
2013; B1, LGD3, 36%
-- $70 million senior secured first-out term loan due 2014; B1,
LGD3, 36%
-- $85 million senior secured last-out term loan due 2014; B3,
LGD5, 73%
-- Corporate Family Rating; B3
-- Probability of Default Rating; B2
Pharmaceutical Research Associates Group, BV:
-- $10 million senior secured revolving credit facility due
2013; B1, LGD3, 36%
-- $100 million senior secured first-out term loan due 2014; B1,
LGD3, 36%
The outlook for the ratings is negative.
The last rating action was on October 2, 2007 when Moody's
assigned ratings to PRA in connection with its acquisition by
Genstar.
PRA International is an international CRO that assists
pharmaceutical and biotechnology companies in developing drug
compounds, biologics, and drug delivery devices and gaining
necessary regulatory approvals. The company generated net service
revenues of approximately $426 million for the twelve months ended
December 31, 2008.
PRIMUS TELECOM: Expects to File 2008 Annual Report This Week
------------------------------------------------------------
Primus Telecommunications Group, Incorporated, Primus
Telecommunications Holding, Inc., and Primus Telecommunications
IHC, Inc., has yet to file their Annual Report on Form 10-K for
the year ended December 31, 2008. They expect to do so within the
week.
Primus Telecom had said the Annual Report cannot be filed on or
prior to the March 31, 2009 due date without unreasonable effort
and expense. Primus Telecom cited the bankruptcy filing.
Primus Telecom said that, in connection with the proposed
Reorganization, (i) agreement has been reached with certain
noteholders on the terms of a proposed consensual restructuring,
(ii) an amendment to a subsidiary credit facility has been reached
waiving certain events of default related to the Reorganization
and other matters and (iii) advanced ongoing discussions are in
process with certain creditors concerning possible amendments to
existing indebtedness and waiving certain events of default
related to the Reorganization. As a result, Primus Telecom did
not have sufficient time to finalize its review and preparation of
its Annual Report on Form 10-K (including audited financial
statements) before the March 31, 2009 deadline.
On March 16, 2009, Primus Telecom reported (1) fourth quarter 2008
net revenue of $203 million, down from $221 million in the fourth
quarter 2007; (2) full-year 2008 net revenue of $896 million,
comparable to $896 million in 2007; (3) a net loss for fourth
quarter 2008 of ($35.3) million, compared to net income of
$1.5 million in the fourth quarter 2007, and basic and diluted
loss per common share of ($0.25) in the fourth quarter 2008, as
compared to basic and diluted net income per common share of $0.01
in the fourth quarter 2007; and (4) a full-year 2008 net loss of
($25.0) million as compared to net income of $15.7 million in
2007, and full-year 2008 basic and diluted loss per common share
of ($0.18), compared to basic and diluted net income per common
share of $0.12 and $0.09, respectively, in 2007.
About Primus Telecom
PRIMUS Telecommunications Group, Incorporated (OTCBB: PRTL) --
http://www.primustel.com-- is an integrated communications
services provider offering international and domestic voice,
voice-over-Internet protocol (VOIP), Internet, wireless, data and
hosting services to business and residential retail customers and
other carriers located primarily in the United States, Canada,
Australia, the United Kingdom and Western Europe. PRIMUS provides
services over its global network of owned and leased transmission
facilities, including approximately 500 points-of-presence (POPs)
throughout the world, ownership interests in undersea fiber optic
cable systems, 18 carrier-grade international gateway and domestic
switches, and a variety of operating relationships that allow it
to deliver traffic worldwide. Founded in 1994, PRIMUS is based in
McLean, Virginia.
The company and four its affiliates filed for Chapter 11
protection on March 16, 2009 (Bankr. D. Del. Lead Case No.
09-10867). George N. Panagakis, Esq., and T Kellan Grant, Esq.,
at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, are the
Debtors' proposed counsel. Davis L. Wright, Esq., Eric M. Davis,
Esq., and Anthony Clark, Esq., at Skadden, Arps, Slate, Meagher &
Flom LLP, in Wilmington, Delaware, are the Debtors' proposed local
counsel. The Debtor proposed CRT Investment Banking LLC as
financial adviser and investment banker. When the Debtors filed
for protection from their creditors, they listed assets between
$100 million and $500 million, and debts between $500 million and
$1 billion.
QTC MANAGEMENT: Moody's Confirms 'B2' Corporate Family Rating
-------------------------------------------------------------
Moody's Investors Service confirmed the ratings of QTC Management,
Inc, including the B2 Corporate Family Rating and the B3
Probability of Default Rating, concluding the review for downgrade
that was initiated on March 13, 2009. The outlook is stable.
The confirmation reflects the successful negotiation by QTC of an
amendment of its credit agreement in order to avoid a covenant
breach in the quarter ended March 2009. The amendment eases the
covenant step-downs significantly, and Moody's believes the
company will now have ample cushion under its covenants over the
next twelve months. The amendment contains no increase in pricing
on the credit facility.
The B2 Corporate Family Rating reflects QTC's small size,
significant revenue concentration with the Department of Veterans
Affairs, and the increasingly competitive environment. The
ratings are supported by the company's leading market position and
long-term relationships with government agencies. The ratings are
also supported by QTC's financial metrics and cash flow
generation, which are strong for the B2 rating category.
Ratings confirmed:
-- Corporate Family Rating, B2
-- Probability of Default Rating, B3
-- $134 million ($140 million face value) first lien term loan,
B2, LGD3, 33%
-- $15 million first lien revolver, B2, LGD3, 33%
The outlook is stable.
QTC, based in Diamond Bar, California, is the leading provider of
disability evaluations and medical evidence development services.
The company provides disability exams under contracts with the
Department of Veterans Affairs and other governmental agencies
through its national network of over 12,000 independent physicians
and 35 leased facilities in seven states. QTC was acquired by
Spectrum Equity Investors in 2005. The company reported
approximately $138 million in total revenues for the twelve months
ended December 31, 2008.
REUNION INDUSTRIES: Court Confirms 2nd Amended Chapter 11 Plan
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Connecticut has
confirmed the Second Amended Chapter 11 Plan filed by Reunion
Industries, Inc., et al., on March 24, 2009, effective March 25,
2009.
The Debtor is required to file a final report with an application
for final decree no later than June 30, 2009.
A copy of the Second Amended Chapter 11 Plan is available for free
at http://bankrupt.com/misc/Reunion.Ch11Plan.pdf
As reported in the Troubled Company Reporter on March 17, 2009,
pursuant to the Plan, existing shareholders will retain thier
interests and unsecured creditors will be paid 70% of their
allowed claim in cash in three installments by June 1.
Reunion sold its pressure-cylinder manufacturing business for
$66.5 million in April 2008 to Everest Kanto Cylinder Ltd.
According to Bloomberg's Bill Rochelle, although the senior
secured noteholders were paid $39.7 million when the cylinder
business was sold, the indenture trustee claims several million
more is owing. The indenture trustee, according to the report,
says funds aren't being held aside to assure full payment to the
noteholders after the Court decides how much more, if anything, is
owing.
Reunion has another division, Hanna Cylinders, making hydraulic
and pneumatic cylinders.
Reunion Industries filed for chapter 11 protection on November 26,
2007 (Bankr. D. Conn. Case No. 07-50727). Two Reunion Industries
stockholders, Charles E. Bradley, Sr. Family Limited Partnership,
and John Grier Poole Family Limited Partnership filed separate
Chapter 11 petitions on the same day (Bankr. D. Conn. Case Nos.
07-50725 and 07-50726). Carol A. Felicetta, Esq., David M. S.
Shaiken, Esq., Eric A. Henzy, Esq., at Reid and Riege, P.C.; and
Derek M. Johnson, Esq., at Ruben, Johnson and Morgan, represent
Reunion Industries as counsel.
As reported in the Troubled Company Reporter on April 11, 2009, as
of February 28, 2009, the Debtor had $21,930,000 in total
assets, $12,031,000 in total liabilities, and $9,899,000 in total
stockholders' equity.
RICETTA'S INC: Bad Timing for Expansion Blamed for Ch. 11 Filing
----------------------------------------------------------------
Ricetta's, Inc., has filed for Chapter 11 bankruptcy protection
due to the economy and expenses connected with opening up a third
restaurant in Kennebunk, Edward D. Murphy at The Portland Press
Herald/Maine Sunday Telegram reports, citing Jeffrey Piampiano,
the attorney for the restaurant's owner.
According to The Portland Press/Maine Sunday Telegram, Mr.
Piampiano said that Ricetta's decision to file for bankruptcy
protection in February 2009 will let the Company "streamline
things a little bit," the report states. According to the report,
the Kennebunk restaurant opened last year and closed about the
time of the bankruptcy filing. Citing Mr. Piampiano, the report
says that the restaurant was "a victim of inopportune timing," by
starting up as the economy was heading into a severe recession.
The restaurant was set up as a separate entity from the South
Portland and Falmouth restaurants, The Portland Press/Maine Sunday
relates. The parent company guaranteed some of its loans and
credit, according to the report.
Ricetta's will present its plan for emerging from Chapter 11 soon
and hopes to be out of bankruptcy court this year, The Portland
Press/Maine Sunday reports, citing Mr. Piampiano.
South Portland, Maine-based Ricetta's, Inc. --
http://www.ricettas.com/-- operates a restaurant specializing in
pizza and pasta. The Company filed for Chapter 11 bankruptcy
protection on February 12, 2009 (Bankr. D. Maine Case No. 09-
20166). Jeffrey T. Piampiano, Esq., at Drummond Woodsum &
MacMahon assists the Company in its restructuring effort. The
Company listed $100,001 to $500,000 in assets and $1,000,001 to
$10,000,000 in debts.
SBARRO INC: S&P Raises Rating on $183 Mil. Loan to 'CCC+'
---------------------------------------------------------
Standard & Poor's Ratings Services said it raised its ratings on
Melville, New York-based Sbarro Inc. to 'CCC+' from 'CC'. At the
same time, S&P raised the rating on Sbarro's amended $21.5 million
revolving facility and $183 million first-lien term loan to 'CCC+'
from 'CC'. The '4' recovery rating on these facilities remains
unchanged and indicates the expectation for average (30-50%)
recovery of principal in the event of a payment default. The
outlook is negative.
Concurrently, S&P raised the rating on the company's $150 million
senior unsecured notes to 'CCC-' from 'C' and kept the recovery
rating of '6' on this debt issue unchanged. The '6' recovery
rating indicates expectations of negligible (0%-10%) recovery of
principal in the event of default.
The upgrade reflects Sbarro's attainment of an amendment on its
credit facility that permanently replaces its total net leverage
and interest coverage covenants with minimum EBITDA and maximum
capital expenditures covenants. In addition, the company obtained
waivers for violation of its net leverage ratio covenant for the
fiscal quarter ended Dec. 28, 2008.
"Although the new covenants provide for more flexibility," said
Standard & Poor's credit analyst Mariola Borysiak, "we remain
concerned that weak operating trends will continue to erode the
company's liquidity position and S&P believes that Sbarro's
capital structure is unsustainable in the long run."
SCO GROUP: Court Denies Bid to Extend Solicitation Period
---------------------------------------------------------
Judge Kevin Gross of the U.S. Bankruptcy Court for the District of
Delaware has denied a request by The SCO Group for extension of
its exclusive periods to file a plan of reorganization and solicit
acceptances of that plan, according to a minute entry.
A hearing on the extension request -- SCO Group's fourth request
-- was held March 30, in Wilmington. SCO Group filed its request
December 30. The Debtors sought an extension of the Plan Filing
Deadline until January 16 and an extension of the period to seek
approval from impaired classes under the Plan until March 18.
The Court first held a hearing on the request on January 29, 2009.
At the hearing, the Debtors pushed for an extension of the
Exclusive Solicitation Period. The Debtors sought a two-pronged
relief -- in the event the Court approves the adequacy of their
disclosure statement, they would modify their request to expand
the solicitation period through the confirmation hearing on the
Debtors' bankruptcy plan; in the event the Court denies approval
of the disclosure statement, the Debtors would file another
Extension Motion.
Alan P. Petrofsky, an equity security holder of The SCO Group,
filed an objection to the request.
The Debtors first filed their joint Chapter 11 Plan of
Reorganization and Disclosure Statement in Connection with the
Plan in February 2008. The Debtors did not pursue approval of the
disclosure documents as they attempted to negotiate a new
Memorandum of Understanding with Stephen Norris Capital Partners,
LLC, for plan funding.
In January 2009, the Debtors filed an Amended Reorganization Plan
and Disclosure Statement. Under the proposed plan, the Debtors
intend to hold an open auction to sell certain assets of the
Company including its mobility business assets and its OpenServer
operating system assets and business. Through this sale, the
Debtors hope to obtain enough consideration to pay their creditors
and continue their operations as set forth in the plan. In the
event that the asset sale does not generate enough cash to meet
the objectives, the Company will scale back its operations and
costs, and initiate other strategies to implement the plan of
reorganization. In the event that certain SCO assets are not
sold, SCO will continue to sell and support its UNIX and mobility
businesses and will also focus on (a) an enhanced pricing and
discount strategy, (b) an updated "true-up" licensing program with
current customers, (c) reducing overall operating costs, (d)
delivering SCO UNIX Virtual product lines for VMware and Hyper-V
to allow SCO legacy applications to run on modern hardware, and
(e) shipping FCmobilelife and FCtasks for the iPhone with a new
pricing structure.
According to the minute entry, at the March 30 hearing, the Court
required the Debtors to submit an extension motion.
In its Quarterly Report on Form 10-Q for the three months ended
January 31, 2009, SCO Group said continuation of the Company as a
going concern is contingent upon, among other things, the Debtors'
ability (i) to construct and obtain confirmation of a plan of
reorganization under the Bankruptcy Code; (ii) to reduce payroll
and benefits costs and liabilities under the bankruptcy process;
(iii) to achieve profitability; (iv) to achieve sufficient cash
flows from operations; and (v) to obtain financing sources to meet
the Company's future liquidity needs. SCO Group noted that the
negative operating trends the Company is experiencing as well as
certain judgment in favor of Novell create substantial doubt as to
the Company's ability to continue as a going concern.
The Company incurred a net loss of $459,000 for the three months
ended January 31, 2009, and during that same period generated cash
of $337,000 from its operating activities. As of January 31, 2009,
the Company had a total of $1,836,000 in cash and $3,766,000 in
restricted cash, of which $1,500,000 is designated to pay for
experts, consultants and other expenses in connection with the
litigation between the Company and IBM, Novell and Red Hat,
$2,266,000 is payable to Novell for the post bankruptcy petition
retained binary royalty stream.
As of January 31, 2009, the Company had $8.78 million in total
assets and $13.2 million in total liabilities, resulting in
$4.51 million in stockholders' deficit.
About The SCO Group
Headquartered in Lindon, Utah, The SCO Group Inc. (Nasdaq:SCOX)
fka Caldera International Inc. -- http://www.sco.com/-- provides
software technology for distributed, embedded and network-based
systems, offering SCO OpenServer for small to medium business and
UnixWare for enterprise applications and digital network services.
The company has office locations in Australia, Austria, Argentina,
Brazil, China, Japan, Poland, Russia, the United Kingdom, among
others.
The company and its affiliate, SCO Operations Inc., filed for
Chapter 11 protection on September 14, 2007, (Bankr. D. Del. Lead
Case No. 07-11337). Paul Steven Singerman, Esq., and Arthur
Spector, Esq., at Berger Singerman P.A., represent the Debtors in
their restructuring efforts. James O'Neill, Esq., and Laura Davis
Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, are the
Debtors' Delaware and conflicts counsels. Epiq Bankruptcy
Solutions LLC, acts as the Debtors' claims and noticing agent.
The United States Trustee failed to form an Official Committee of
Unsecured Creditors in the Debtors' cases due to insufficient
response from creditors.
As of January 31, 2009, the Company had $8.78 million in total
assets and $13.2 million in total liabilities, resulting in
$4.51 million in stockholders' deficit.
SCO GROUP: 10th Cir. to Hear Oral Arguments on Novell Suit in May
-----------------------------------------------------------------
The United States Court of Appeals for the Tenth Circuit will hold
oral argument on May 6, 2009, on the appeal of The SCO Group from
a lower court ruling in its lawsuit against Novell, Inc.
"With the expedited appeal, and early hearing date, the Company is
hopeful a decision on the appeal could be forthcoming in the next
five to eight months, but it could be several months beyond that
time frame," SCO said in a regulatory filing with the Securities
and Exchange Commission.
The Company sued Novell in Utah state court in 2004 for slander of
title seeking relief for its alleged bad faith effort to interfere
with the Company's ownership of copyrights related to the
Company's UNIX source code and derivative works and the Company's
UnixWare product. The case proceeded in the United States
District Court for the District of Utah.
In August 2007, a federal judge ruled in favor of Novell on
several of the summary judgment motions that were before the Utah
District Court. The effect of these rulings was to significantly
reduce or to eliminate certain of the Company's claims in both the
Novell case and a case against International Business Machines
Corp., and possibly others. The Utah Court ruled that Novell was
the owner of the UNIX and UnixWare copyrights that existed at the
time of a 1995 Asset Purchase Agreement between Novell and The
Santa Cruz Operation -- which was later acquired by Sun
Microsystems -- and that Novell retained broad rights to waive the
Company's contract claims against IBM. In addition, the Court
determined that certain SCO-source licensing agreements that SCO
executed in fiscal year 2003 included older SVRx licenses and that
SCO was possibly required to remit some portion of the proceeds to
Novell.
Over the Company's objection, a bench trial was set to begin on
September 17, 2007, and the federal judge was to determine what
portion, if any, of the proceeds of the SCOsource agreements is
attributable to such SVRx licenses and should be remitted to
Novell, as well as whether SCO had authority to enter into such
SVRx licenses. Based on Novell's allegations, the potential
payment to Novell for those SVRx licenses ranged from a de minimis
amount to in excess of $30,000,000, the latter amount being the
amount claimed by Novell, plus interest.
The trial of the issues, however, was automatically stayed as a
result of the Company's bankruptcy filing in September 2007. In
November 2007, at Novell's behest, the U.S. Bankruptcy Court for
the District of Delaware modified the automatic stay to permit
Novell to pursue the trial scheduled in the Utah Court on the
allocation of proceeds from the SCOsource agreements and the
question of the Company's alleged lack of authority to enter into
them, but the Bankruptcy Court retained jurisdiction to determine
whether to impose a constructive trust on any amounts found to be
payable to Novell. The Bankruptcy Court also ruled that the
automatic stay applies to an arbitration involving Novell and SuSE
Linux, GmbH before the International Court of Arbitration in
Europe.
On July 16, 2008, the Utah Court ruled that (1) the SCOsource
agreements with Linux end-users were not SVRx licenses and
therefore Novell was not entitled to revenue from those agreements
and that SCO had the authority to enter into such agreements; (2)
the 2003 SCOsource agreement with Microsoft contained an SVRx
license that was incidental to the UnixWare license in the
agreement, and therefore the Company was authorized to enter into
that SVRx license and Novell was not entitled to revenue from the
agreement; and (3) the 2003 SCOsource agreement with Sun contained
an unauthorized amendment of a prior UNIX buy out agreement, and
Novell was entitled to $2,547,817 of the revenue from the Sun
agreement as attributable to that amendment.
The Utah Court directed Novell to file a brief identifying the
amount of prejudgment interest it sought based on this award. On
August 29, 2008, Novell filed an Unopposed Submission Regarding
Prejudgment Interest, informing the Court that the parties had
agreed that Novell was entitled to $918,122 in prejudgment
interest through that date, plus $489 per day until the entry of
final judgment, based on the Court's $2,547,817 award.
In its ruling of July 16, 2008, the Utah Court also directed
Novell to file a proposed Final Judgment consistent with the
Court's trial and summary judgment orders. In its proposed
submission to the Court in compliance with this order, Novell took
the position that final judgment could not be entered because
certain of SCO's claims are stayed pending arbitration and the
imposition of a constructive trust remained an open question in
the Bankruptcy Court.
Subsequently, to expedite the entry of final judgment, the Company
sought to resolve these issues with Novell and agreed to an
extension of Novell's deadline for filing its submission. Based
on the Company's tracing of Sun's payments under its 2003
SCOsource agreement, Novell agreed that only $625,487 of SCO's
current assets were traceable as trust funds. SCO also proposed
dismissing its stayed claims with prejudice on the basis of the
Court's ruling that Novell owns the pre-APA UNIX copyrights in the
Court's summary judgment order of August 10, 2007.
On August 29, 2008, in its Submission Regarding the Entry of Final
Judgment, Novell informed the Court of the parties' agreement as
to the trust amount, but Novell stood by its position that final
judgment could not be entered in light of the stayed claims. On
September 15, 2008, the Company filed papers arguing for the entry
of final judgment.
On November 20, 2008, after further negotiations between the
parties, the Utah Court entered a Final Judgment, incorporating
the material rulings from the August 10, 2007 and July 16, 2008
rulings. On November 25, 2008, the Company filed a notice of
appeal of that Final Judgment, including adverse rulings in the
Court's summary judgment order of August 10, 2007. On January 23,
2009, the Company filed an unopposed motion for an expedited
appeal with the Tenth Circuit, which was granted by the Tenth
Circuit on January 29. On March 4, the Company filed its brief
for its appeal with the Tenth Circuit.
On March 13, 2009, the Utah Court denied the Company's motion to
stay the taxation of costs relating to the trial and final
judgment. These costs total $127,432, and relate to such things
as transcription charges and deposition expenses. According to
the Court's order, these costs will be added to the issues that
are on appeal with the Tenth Circuit and resolved through that
appeal.
As a result of the Utah Court's judgment of July 16, 2008 against
the Company, as of January 31, 2009, the Company has accrued
$3,562,000 including the related interest. However, the Company
continues to contest this liability. The Company believes that
the Court erred and that there are strong grounds to have the
adverse rulings embodied in the Final Judgment reversed on appeal.
However, in the event that the Company's assets are further
depleted or encumbered, the Company may not be in a financial
position to see the appeal of those rulings through to a
conclusion or continue the litigation.
About The SCO Group
Headquartered in Lindon, Utah, The SCO Group Inc. (Nasdaq:SCOX)
fka Caldera International Inc. -- http://www.sco.com/-- provides
software technology for distributed, embedded and network-based
systems, offering SCO OpenServer for small to medium business and
UnixWare for enterprise applications and digital network services.
The company has office locations in Australia, Austria, Argentina,
Brazil, China, Japan, Poland, Russia, the United Kingdom, among
others.
The company and its affiliate, SCO Operations Inc., filed for
Chapter 11 protection on September 14, 2007, (Bankr. D. Del. Lead
Case No. 07-11337). Paul Steven Singerman, Esq., and Arthur
Spector, Esq., at Berger Singerman P.A., represent the Debtors in
their restructuring efforts. James O'Neill, Esq., and Laura Davis
Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, are the
Debtors' Delaware and conflicts counsels. Epiq Bankruptcy
Solutions LLC, acts as the Debtors' claims and noticing agent.
The United States Trustee failed to form an Official Committee of
Unsecured Creditors in the Debtors' cases due to insufficient
response from creditors.
As of January 31, 2009, the Company had $8.78 million in total
assets and $13.2 million in total liabilities, resulting in
$4.51 million in stockholders' deficit.
SILICON GRAPHICS: Can Hire Donlin Recano as Claims, Noticing Agent
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
granted Silicon Graphics Inc. and its debtor-affiliates authority
to employ Donlin, Recano & Company, Inc., as claims and noticing
agent.
Donlin Recano is expected to:
i) distribute required notices to parties-in-interest;
ii) receive, maintain, docket, and otherwise administer the
proofs of claim filed in the Debtors' Chapter 11 cases;
iii) assist in the solicitation process and tabulate acceptances
and rejections of the Debtors' plan of reorganization; and
iv) provide other administrative services that the Debtors may
require.
The Court also appointed Donlin Recano as custodian of court
records and, is designated as the authorized repository for all
proofs of claim filed in these Chapter 11 cases and is authorized
and directed to maintain official claims registers for each of the
Debtors and to provide the Clerk with a certified duplicate
thereof on a monthly basis unless otherwise directed by the Clerk.
Louis A. Recano, chief executive officer and co-founder of Donlin
Recano, tells the Court that the hourly rates of the firm's
professionals are:
Senior Case Manager/ Bankruptcy Consultant $175 - $250
Case Manager $180 - $200
Technology/Programming Consultant $115 - $195
Senior Analyst $115 - $175
Junior Analyst $70 - $110
Clerical $40 - $65
Mr. Recano adds that prior to the petition date, the Debtors paid
Donlin Recano a $35,000 retainer.
Mr. Recano assures the Court that the firm is a "disinterested
person" as that tem is defined in Section 101(14) of the
Bankruptcy Code.
About Silicon Graphics Inc.
Headquartered in Sunnyvale, California, Silicon Graphics Inc. --
http://www.sgi.com/-- delivers an array of server, visualization,
and storage software.
This is the second bankruptcy filing for Silicon Graphics. The
Debtors first filed for Chapter 11 on May 8, 2006 (Bankr. S.D.N.Y.
Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and
Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the
Debtors in their restructuring efforts. The Court confirmed
the Debtors' Plan of Reorganization on Sept. 19, 2006. When the
Debtors filed for protection from their creditors, they listed
total assets of $369,416,815 and total debts of $664,268,602.
The Company and 14 of its affiliates filed for protection for the
second time on April 1, 2009 (Bankr. S.D. N.Y. Lead Case No.
09-11701). Mark R. Somerstein, Esq., at Ropes & Gray LLP,
represents the Debtors in their restructuring efforts. The
Debtors proposed Davis Polk & Wardell as their corporate counsel;
AlixPartners LLC as restructuring advisor; Houlihan Lokey Howard &
Zukin Capital, Inc., as financial advisor; and Donlin, Recano &
Company, Inc., as claims and noticing agent. When the Debtors
filed for protection from their creditors, they listed
$390,462,000 in total assets and $526,548,000 in total debts as of
2008.
SOLUTIA INC: To Hold Annual Shareholders Meeting on April 22
------------------------------------------------------------
Solutia Inc. in a Schedule 14A proxy statement filed with the
Securities and Exchange Commission said the company will hold its
annual meeting of Solutia stockholders on April 22, 2009, at the
company's world headquarters at 575 Maryville Centre Drive, in
St. Louis, Missouri.
According to Jeffry N. Quinn, chairman of the board, president and
chief executive officer of Solutia Inc., at the annual meeting,
the stockholders will consider these proposals:
(a) to consider the election of two nominees for director --
Robert K. deVeer, Jr., and Gregory C. Smith;
(b) to ratify the appointment of Deloitte & Touche LLP, as
Solutia's independent public accounting firm; and
(c) to transact any other business properly introduced at the
meeting.
In the Proxy Statement, Solutia disclosed that as of February 24,
2009, there are 94,281,742 shares of Solutia common stock
outstanding.
The proxy statement also includes information on the total number
of stocks beneficially owned by each director and executive
officer as of February 28, 2009.
Beneficial Owners No. of Shares % of Class
----------------- ------------- ----------
Eugene I. Davis 25,770 Less than 1%
Robert K. deVeer, Jr. 8,770 Less than 1%
James P. Heffernan 10,770 Less than 1%
W. Thomas Jagodinski 12,770 Less than 1%
William T. Monahan 15,770 Less than 1%
J. Patrick Mulcahy 26,969 Less than 1%
Robert A. Peiser 9,616 Less than 1%
Jeffry N. Quinn 637,478 Less than 1%
Gregory C. Smith 5,770 Less than 1%
James M. Sullivan 213,766 Less than 1%
Luc De Temmerman 181,405 Less than 1%
James R. Voss 149,824 Less than 1%
Kent J. Davies 107,556 Less than 1%
Jonathan P. Wright 44,551 Less than 1%
Rosemary L. Klein 60,119 Less than 1%
All 18 executive officers and directors own an aggregate of
1,650,837 shares, which account for 1.7% of the class.
According to Mr. Quinn, these entities are beneficial owners of
more than 5% of Solutia's common stock as of December 31, 2008:
Beneficial Owners No. of Shares % of Class
----------------- ------------- ----------
Harbinger Capital Partners Master 21,568,177 22.80%
Fund I, Ltd.
Harbinger Capital Partners Special 10,672,543 11.30%
Situations Fund, L.P.
Wellington Management Company, LLP 8,669,600 9.19%
FMR LLC 13,974,579 14.81%
Guardian Life Insurance Company of 6,429,288 6.80%
America
A full-text copy of the proxy statement is available at no charge
at http://ResearchArchives.com/t/s?3b58
Solutia Inc. said in a separate filing that Luc De Temmerman, its
executive vice president for growth and development resigned from
the company effective March 31, 2009. Solutia says it has no
immediate plans to fill the vacated position.
About Solutia Inc.
Based in St. Louis, Missouri, Solutia Inc. (NYSE: SOA) --
http://www.solutia.com/-- and its subsidiaries, manufactures and
sells chemical-based materials, which are used in consumer and
industrial applications worldwide.
The company and 15 debtor-affiliates filed for chapter 11
protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03-
17949). When the Debtors filed for protection from their
creditors, they listed $2,854,000,000 in assets and $3,223,000,000
in debts.
On Feb. 14, 2006, the Debtors filed their Reorganization Plan &
Disclosure Statement. On May 15, 2007, they filed an Amended
Reorganization Plan and on July 9, 2007, filed a 2nd Amended
Reorganization Plan. The Bankruptcy Court approved the Debtors'
amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007,
the Debtor re-filed a Consensual Plan & Disclosure Statement and
on Nov. 29, 2007, the Court confirmed the Debtors' Consensual
Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008.
Solutia was represented by Richard M. Cieri, Esq., Jonathan S.
Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP,
in New York, as lead bankruptcy counsel, and David A. Warfield,
Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St.
Louis Missouri, as special counsel. Trumbull Group LLC was the
Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira
S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss
Hauer & Feld LLP represented the Official Committee of Unsecured
Creditors, and Derron S. Slonecker at Houlihan Lokey Howard &
Zukin Capital provided the Creditors' Committee with financial
advice. The Official Committee of Retirees of Solutia, Inc., et
al., was represented by Daniel D. Doyle, Esq., Nicholas A. Franke,
Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne,
LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E.
Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter
Young & Rediker, LLC, in Birmingham, Alabama.
Solutia's $2.05 billion exit financing facility was funded by
Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P.,
and Deutsche Bank Securities Inc. The exit financing is being
used to pay certain creditors, and for ongoing operations.
Bankruptcy Creditors' Service, Inc., publishes Solutia Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Solutia Inc. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported by the TCR on March 5, 2009, Standard & Poor's Ratings
Services said it lowered its corporate credit rating on Solutia
Inc. to 'B' from 'B+', and placed the ratings on CreditWatch with
negative implications. At the same time, Standard & Poor's
lowered its rating on the company's $1.2 billion senior secured
term loan facility to 'B' from 'B+', and revised its recovery
rating on the term loan to '4', indicating average recovery (30%-
50%) of principal in the event of a default, from '3'.
According to the TCR on April 6, S&P said its ratings and outlook
on Solutia (B/Watch Neg/--) remain unchanged following Solutia's
announcement that it has entered into a definitive agreement to
sell its nylon business to an affiliate of SK Capital Partners II
L.P., a New York-based private equity firm. The transaction is
expected to close in the second quarter of 2009.
SOLUTIA INC: Tort Claimants Awarded Fees for Contribution in Case
-----------------------------------------------------------------
Judge Prudence Carter Beatty of the U.S. Bankruptcy Court for the
Southern District of New York has granted the Nitro, West Virginia
Tort Claimants' application for payment of reasonable fees and
expenses. The Nitro Tort Claimants will have an allowed $267,745
administrative expense claim pursuant to Section 503(b)(4) of the
Bankruptcy Code.
In her memorandum decision, Judge Beatty found that the Nitro
Claimants did make a substantial contribution to these bankruptcy
cases within the meaning of Section 503(b) of the Bankruptcy Code
in connection with the drafting of the Disclosure Statement and
the Plan for which compensation should be allowed.
It was clear from the outset of the Chapter 11 filings that any
plan would have to deal with the Debtors' inherited liabilities
for environmental damage and personal injuries due to exposure to
various chemical products. The issues raised by the Nitro
Claimants were ones that affected the holders of all of the
thousands of tort claimants, Judge Beatty said.
The services rendered by the Nitro Claimants' attorneys were ones
that the Debtors' attorneys were unwilling to perform. They did
not necessarily enlarge the administrative expenses in these
cases. The clarifications to the Plan that resulted produced an
actual benefit to the Debtors, the creditors, and to
stockholders, Judge Beatty stated.
About Solutia Inc.
Based in St. Louis, Missouri, Solutia Inc. (NYSE: SOA) --
http://www.solutia.com/-- and its subsidiaries, manufactures and
sells chemical-based materials, which are used in consumer and
industrial applications worldwide.
The company and 15 debtor-affiliates filed for chapter 11
protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03-
17949). When the Debtors filed for protection from their
creditors, they listed $2,854,000,000 in assets and $3,223,000,000
in debts.
On Feb. 14, 2006, the Debtors filed their Reorganization Plan &
Disclosure Statement. On May 15, 2007, they filed an Amended
Reorganization Plan and on July 9, 2007, filed a 2nd Amended
Reorganization Plan. The Bankruptcy Court approved the Debtors'
amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007,
the Debtor re-filed a Consensual Plan & Disclosure Statement and
on Nov. 29, 2007, the Court confirmed the Debtors' Consensual
Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008.
Solutia was represented by Richard M. Cieri, Esq., Jonathan S.
Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP,
in New York, as lead bankruptcy counsel, and David A. Warfield,
Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St.
Louis Missouri, as special counsel. Trumbull Group LLC was the
Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira
S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss
Hauer & Feld LLP represented the Official Committee of Unsecured
Creditors, and Derron S. Slonecker at Houlihan Lokey Howard &
Zukin Capital provided the Creditors' Committee with financial
advice. The Official Committee of Retirees of Solutia, Inc., et
al., was represented by Daniel D. Doyle, Esq., Nicholas A. Franke,
Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne,
LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E.
Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter
Young & Rediker, LLC, in Birmingham, Alabama.
Solutia's $2.05 billion exit financing facility was funded by
Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P.,
and Deutsche Bank Securities Inc. The exit financing is being
used to pay certain creditors, and for ongoing operations.
Bankruptcy Creditors' Service, Inc., publishes Solutia Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Solutia Inc. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported by the TCR on March 5, 2009, Standard & Poor's Ratings
Services said it lowered its corporate credit rating on Solutia
Inc. to 'B' from 'B+', and placed the ratings on CreditWatch with
negative implications. At the same time, Standard & Poor's
lowered its rating on the company's $1.2 billion senior secured
term loan facility to 'B' from 'B+', and revised its recovery
rating on the term loan to '4', indicating average recovery (30%-
50%) of principal in the event of a default, from '3'.
According to the TCR on April 6, S&P said its ratings and outlook
on Solutia (B/Watch Neg/--) remain unchanged following Solutia's
announcement that it has entered into a definitive agreement to
sell its nylon business to an affiliate of SK Capital Partners II
L.P., a New York-based private equity firm. The transaction is
expected to close in the second quarter of 2009.
SOLUTIA INC: Wellington Management Reports 1.59% Equity Stake
-------------------------------------------------------------
Wellington Management Company, LLP, discloses in a Schedule 13G
filed with the U.S. Securities and Exchange Commission that it is
deemed to beneficially own 1,502,053 shares of Solutia Inc.
common stock, which represents 1.59% of the 94,281,742 common
stock shares outstanding as of February 24, 2009.
Wellington Management says it owns 1,233,463 shares of shared
voting power and 1,383,720 shares of shared dispostive power.
Wellington at one point disclosed an 11.67% stake in Solutia in
prior regulatory filings.
About Solutia Inc.
Based in St. Louis, Missouri, Solutia Inc. (NYSE: SOA) --
http://www.solutia.com/-- and its subsidiaries, manufactures and
sells chemical-based materials, which are used in consumer and
industrial applications worldwide.
The company and 15 debtor-affiliates filed for chapter 11
protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03-
17949). When the Debtors filed for protection from their
creditors, they listed $2,854,000,000 in assets and $3,223,000,000
in debts.
On Feb. 14, 2006, the Debtors filed their Reorganization Plan &
Disclosure Statement. On May 15, 2007, they filed an Amended
Reorganization Plan and on July 9, 2007, filed a 2nd Amended
Reorganization Plan. The Bankruptcy Court approved the Debtors'
amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007,
the Debtor re-filed a Consensual Plan & Disclosure Statement and
on Nov. 29, 2007, the Court confirmed the Debtors' Consensual
Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008.
Solutia was represented by Richard M. Cieri, Esq., Jonathan S.
Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP,
in New York, as lead bankruptcy counsel, and David A. Warfield,
Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St.
Louis Missouri, as special counsel. Trumbull Group LLC was the
Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira
S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss
Hauer & Feld LLP represented the Official Committee of Unsecured
Creditors, and Derron S. Slonecker at Houlihan Lokey Howard &
Zukin Capital provided the Creditors' Committee with financial
advice. The Official Committee of Retirees of Solutia, Inc., et
al., was represented by Daniel D. Doyle, Esq., Nicholas A. Franke,
Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne,
LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E.
Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter
Young & Rediker, LLC, in Birmingham, Alabama.
Solutia's $2.05 billion exit financing facility was funded by
Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P.,
and Deutsche Bank Securities Inc. The exit financing is being
used to pay certain creditors, and for ongoing operations.
Bankruptcy Creditors' Service, Inc., publishes Solutia Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Solutia Inc. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported by the TCR on March 5, 2009, Standard & Poor's Ratings
Services said it lowered its corporate credit rating on Solutia
Inc. to 'B' from 'B+', and placed the ratings on CreditWatch with
negative implications. At the same time, Standard & Poor's
lowered its rating on the company's $1.2 billion senior secured
term loan facility to 'B' from 'B+', and revised its recovery
rating on the term loan to '4', indicating average recovery (30%-
50%) of principal in the event of a default, from '3'.
According to the TCR on April 6, S&P said its ratings and outlook
on Solutia (B/Watch Neg/--) remain unchanged following Solutia's
announcement that it has entered into a definitive agreement to
sell its nylon business to an affiliate of SK Capital Partners II
L.P., a New York-based private equity firm. The transaction is
expected to close in the second quarter of 2009.
STEINWAY MUSICAL: Q4 Results Prompt Moody's Rating Downgrades
-------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Steinway
following the company's recent announcement of its fourth quarter
results and Moody's expectation of further deterioration in both
the top line and bottom line in 2009. Both the corporate family
rating and probability of default rating were downgraded to B2
from Ba3 and the senior unsecured notes were downgraded to B3 from
B1. At the same time, Moody's assigned a speculative grade
liquidity rating of SGL 3. The outlook remains negative.
The downgrade reflects Moody's belief that the company's revenue
and profitability in 2009 may be significantly lower than in
previous years and is likely to remain depressed in the near term.
The downgrade also reflects Moody's belief that adjusted leverage
will likely significantly increase in 2009 beyond its current 5x
and that operating margins and other credit metrics will also
substantially decrease.
The SGL 3 rating reflects Steinway's adequate overall liquidity
profile, which is principally driven by modest cash balances of
under $50 million as well as by its deteriorating annual operating
cash flow, which is expected to be under $25 million in 2009. The
SGL rating benefits from having a covenant lite $110 million
revolving credit facility that matures in September 2011, no
amortizing debt, no debt maturities until March 2014 and the
ability to monetize select real estate properties in desirable
locations.
"The negative outlook reflects Moody's view that Steinway's
ratings could be further pressured later in 2009 if discretionary
consumer spending does not start showing signs of improvement or
if it appears that demand in the second half of 2009 is decreasing
more than expected" said Kevin Cassidy, Senior Credit Officer at
Moody's Investors Service.
These ratings are downgraded/assessments revised:
-- Corporate family rating to B2 from Ba3;
-- Probability-of-default rating to B2 from Ba3;
-- $175 million senior unsecured note, due 2014, to B3 (LGD 4,
68%) from B1 (LGD 4 64%)
The last rating action was on December 8, 2008, where Moody's
affirmed Steinway's ratings, but revised the outlook to negative
from stable.
Steinway Musical Instruments, Inc., headquartered in Waltham,
Massachusetts, is one of the world's leading manufacturers of
musical instruments. The company's products include Selmer Paris
saxophones, Bach Stradivarius trumpets, C.G. Conn French horns,
King trombones, Ludwig snare drums, and Steinway & Sons, Boston
and Essex pianos. Revenues for the year ended December 31, 2008,
approximated $390 million.
STONERIDGE INC: Moody's Downgrades Corporate Family Rating to 'B2'
------------------------------------------------------------------
Moody's Investors Service lowered Warren, Ohio based Stoneridge,
Inc.'s Corporate Family Rating and Probability of Default Rating,
to B2 from B1. Concurrently, the rating of its $200 million
senior unsecured notes ($183 million currently outstanding after
repayment), was downgraded to B3 from B2 and the Speculative Grade
Liquidity rating of SGL-2 was affirmed. The rating outlook is
negative. This action concludes the review for possible downgrade
that was initiated on December 16, 2008.
The downgrade of CFR to B2 reflects the weak operating performance
and eroding credit metrics the company is expected to experience
over the near-to-intermediate term, mainly driven by the severe
deterioration in its end markets. The recessionary general
economic conditions would likely continue to suppress demand for
commercial vehicle parts that represents more than 50% of
Stoneridge's revenue base. The company's auto and light truck
segment (30% of its 2008 revenues) will also suffer from the
dramatic and sustained volume decline in vehicle production level
at original equipment manufacturers in North America especially at
the Detroit-3 automobile manufacturers. Moody's expects these
negative factors, would likely persist into 2009 and could result
in significant deterioration of Stoneridge's credit metrics going
forward. Moody's now expects the company's financial leverage
would likely rise above 5.0x in 2009 from around 3.2x at year end
2008, EBIT/Interest coverage fall below 1.0x.
"The biggest challenge for Stoneridge is how to manage down the
breakeven point in face of a dramatic volume decline," commented
Moody's analyst John Zhao. "We recognize the restructuring
implemented by the company in the past year and possible further
cost management initiatives. However these efforts might not be
enough to keep the company profitable in the near to medium term,
considering the pace and magnitude of the downturn."
The negative outlook encompasses the challenges Stoneridge will
face in stabilizing its margin and safeguarding its revenue base,
as well as the uncertainty on the timing of the potential recovery
in its end markets. The negative outlook also considers
Stoneridge's significant operating exposure (approximately 14% of
its total 2008 revenues) to the Detroit-3 auto makers, and
potential financial restructurings or bankruptcy filings by one or
more of those companies could create further operating disruptions
for the company. Moody's expects the next few quarters would be
very challenging for auto suppliers in North America in particular
those with material exposure to Detroit-3 such as Stoneridge, as
the pace of the deterioration could accelerate as OEM's are
reducing their production levels substantially from the same level
last year.
Despite the substantial downward pressure, the B2 CFR reflects the
company's operating flexibility afforded by its relatively solid
balance sheet and sound liquidity position. The affirmation of
SGL-2 anticipates Stoneridge's liquidity profile is likely to
remain good in the next twelve months, principally underpinned by
its sizeable cash position, and relatively light near-term debt
maturity.
"While some of its credit metrics could deteriorate into the Caa
rating category, Moody's expect the good liquidity would support
the rating and these ratios would recover back to the single B
range within the rating horizon." Added Zhao.
The rating actions are:
* Corporate Family Rating -- downgraded to B2 from B1
* Probability of Default Rating -- downgraded to B2 from B1
* $200 million ($183 million outstanding) senior unsecured notes
due 2012 -- downgraded to B3(LGD4, 68%) from B2(LGD4, 64%)
* Speculative Liquidity Rating -- affirmed at SGL-2
* Rating outlook: negative
Moody's last rating action on Stoneridge was on December 16, 2008
when all its ratings were placed under review for possible
downgrade while SGL rating was affirmed at SGL-2.
Headquartered in Warren, Ohio, Stoneridge is a designer and
manufacturer of highly engineered electrical and electronic
components, modules and systems for automotive, medium and heavy-
duty truck, agricultural and off-highway vehicle markets. For the
twelve months ended December 31, 2008, the company reported
revenues of $752 million.
TANGER FACTORY: Launches Exchange Offer for 3.75% Notes Due 2026
----------------------------------------------------------------
Tanger Factory Outlet Centers, Inc., said its Tanger Properties
Limited Partnership has commenced an offer to exchange common
shares of the Company for any and all of the outstanding 3.75%
Exchangeable Senior Notes due 2026 of the OP.
For each $1,000 principal amount of exchangeable notes validly
tendered, note holders will receive 27.7434 Company common shares,
which represents an exchange price of approximately $36.04 per
share, plus $215 paid in the form of additional Company common
shares (based on the volume weighted average price of the
Company's common shares over an eight trading day averaging period
beginning April 24, 2009 and ending May 5, 2009), subject to a
minimum and a maximum number of Company common shares. Holders
will also receive a cash payment for accrued and unpaid interest
on the exchangeable notes up to but not including the settlement
date.
The offer is scheduled to expire at 5:00 p.m., New York City time,
on May 7, 2009. As of April 8, 2009, there was $149,500,000
principal amount of exchangeable notes outstanding.
Copies of the preliminary prospectus relating to the exchange
offer may be obtained from the information agent, Global
Bondholder Services Corporation, 65 Broadway, Suite 723, New York,
NY 10006, telephone (866) 470-4300. Tanger has engaged Goldman,
Sachs & Co., telephone (800) 828-3182, to act as lead dealer
manager in connection with the exchange offer. Merrill Lynch &
Co. will be co-dealer manager in connection with the exchange
offer.
Greensboro, North Carolina-based Tanger Factory Outlet Centers,
Inc. -- http://www.tangeroutlet.com/-- a publicly traded REIT,
presently owns and operates 31 outlet shopping centers in 21
states coast-to-coast, totaling approximately 9.2 million square
feet, leased to over 1,900 stores that are operated by over 350
different store brands. Tanger also operates and owns partial
interests in two outlet shopping centers containing approximately
950,000 square feet.
TARRAGON CORP: No Timetable for Filing of 2008 Annual Report
------------------------------------------------------------
Tarragon Corporation won't be filing its Annual Report on Form
10-K for the year ended December 31, 2008, within the 15-day
extension prescribed in Rule 12b-25(b) of the Securities Exchange
Act of 1934.
Tarragon failed to file its Annual Report by the initial March 31,
2009 deadline. The Company has said it is not in a position to
file the 2008 Form 10-K.
Tarragon noted that its Chapter 11 proceedings created obligations
to file monthly operating reports with the Court, which
obligations have resulted in significant changes in the Company's
financial reporting and disclosure requirements. As a result of
having to address these additional obligations, Tarragon has not
been able to complete its consolidated financial statements and
other disclosures required for the 2008 Form 10-K.
Tarragon anticipates that its results of operations for the fiscal
year ended December 31, 2008, will be significantly different from
those for the 2007 fiscal year. It anticipates specifically that
the results will reflect a loss from continuing operations and a
net loss that, in each case, could be lower than the losses in the
prior year due to significant impairment charges recognized in the
prior year.
Because of the ongoing work associated with the Chapter 11
proceedings, Tarragon is currently unable to provide a reasonable
estimate of its results of operations for the fiscal year ended
December 31, 2008. Tarragon issued Quarterly Reports on Form 10-Q
on May 27, 2008, August 11, 2008, and November 10, 2008, for the
quarterly periods ended March 31, 2008, June 30, 2008, and
September 30, 2008, respectively.
On March 16, 2009, the Debtors filed their unaudited monthly
operating reports for the period January 12 through January 31,
2009, with the U.S. Bankruptcy Court for the District of New
Jersey.
At January 31, 2009, Tarragon's Consolidating Balance Sheet,
including non filing entities, showed total assets of
$806.0 million, total liabilities of $1.035 billion, minority
interest of $17.6 million, and shareholders' deficit of
$247.1 million.
Total company cash balance per consolidating balance sheet at
January 31, 2009, was $11.7 million. Cash balance at December 31,
2008, was $12.4 million.
The Debtors reported a consolidating net loss of $3.9 million for
period from January 12, 2009, to January 31, 2009. Total revenue
was $7.7 million during the period.
A full-text copy of the Debtors' monthly operating reports for the
period January 12, 2009, through January 31, 2009, is available at
http://researcharchives.com/t/s?3afc
Martha E. Stark stepped down as director of Tarragon effective
March 15. Carl B. Weisbrod resigned as director effective
March 17.
About Tarragon Corporation
Based in New York City, Tarragon Corporation (NasdaqGS:TARR) --
http://www.tarragoncorp.com/-- is a leading developer of
multifamily housing for rent and for sale. Tarragon's operations
are concentrated in the Northeast, Florida, Texas, and Tennessee.
Tarragon and its affiliates filed for Chapter 11 protection on
January 12, 2009 (Bankr. D. N.J. Case No. 09-10555). The Hon.
Donald H. Steckroth presides over the case.
Michael D. Sirota, Esq., Warren A. Usatine, Esq., and Felice R.
Yudkin, Esq., at Cole Schotz Meisel Forman & Leonard, P.A.,
represent the Debtor as bankruptcy counsel. Kurztman Carson
Consultants LLC serves as notice and claims agent. Daniel A.
Lowenthal, Esq., at Patterson Belknap Webb & Tyler, LLP, in New
York, represents the Official Committee of Unsecured Creditors
appointed in the case. Tarragon has said equity holders are out
of the money with regard to its bankruptcy case. As of
September 30, 2008, the Debtors had $840,688,000 in total assets
and $1,035,582,000 in total debts.
TBS INTERNATIONAL: Obtains Covenant Waivers from Lenders
--------------------------------------------------------
TBS International Limited has secured a waiver of certain
covenants with respect to its outstanding credit facilities with
its syndicate of lenders led by Bank of America, its syndicate of
lenders led by The Royal Bank of Scotland and its syndicate of
lenders led by DVB Group Merchant Bank, as well as its loan
agreements with AIG Commercial Equipment, Commerzbank AG,
Berenberg Bank and Credit Suisse.
As a result of current economic conditions and their impact on the
shipping industry, and specifically the market value of vessels,
TBS initiated discussions with the lenders for its credit
facilities to obtain waivers of the financial covenants, including
the collateral coverage covenants. The modifications, which
became effective March 27, 2009, waive the collateral coverage
covenants and other financial covenants through the fourth quarter
of 2009, provided TBS meets two additional covenants:
1. A minimum end of month cash balance of not less than
$40.0 million; and
2. A ratio of earnings before interest, depreciation and
amortization to interest expense of not less than:
* 1.10 to 1.00 at the end of the second quarter of 2009,
* 1.35 to 1.00 at the end of the third quarter of 2009, and
* 1.75 to 1.00 at the end of the fourth quarter of 2009.
If TBS fails to satisfy the new covenants during 2009, then the
waived covenants will again be effective.
TBS said the modifications to its credit facilities also amended
certain existing terms. The amount available under the revolving
credit portion of the Bank of America Facility was reduced from
$125.0 million to $85.0 million. The interest rate margins on the
Bank of America Facility, the RBS Facility, DVB Facility and AIG
Facility increased 1.75%. The interest rate margins on the Credit
Suisse Facility and Commerzbank Facility increased 1.70% and
1.50%, respectively. The interest rate margin on the Berenberg
Facility did not change. The repayment term of the loans made
under RBS Facility was reduced from 40 quarterly installments
after the drawdown for the delivery advance to 20 quarterly
installments. The quarterly installments of $400,000 due on each
of the RBS loans have not unchanged. The final payment due upon
termination of the RBS Facility increased from $8.3 million to
$16.6 million.
In connection with the loan modifications, TBS incurred financing
costs of $3.0 million.
If TBS remains in compliance with the new covenants, the lenders
have agreed to waive the existing financial covenants through
January 1, 2010.
TBS anticipates that it will meet the modified requirements.
Effective January 2, 2010, the original financial covenants will
be reinstated. A protracted global recession, including further
deterioration in general economic and business conditions, may
affect TBS' ability to meet those reinstated covenants. Failure
to comply with any of the covenants under the credit facilities
would result in a default. This could cause the lenders to
accelerate the timing of payments and exercise their lien on TBS'
assets, which would have a material adverse effect on its
business, operations, financial condition and liquidity. Based on
current internal projections, TBS anticipates that it will not
meet the covenant requirements in 2010. If TBS cannot satisfy the
covenants in 2010, it will need to obtain additional waivers,
modify the terms of the credit facilities or otherwise refinance
TBS debts. TBS believes that it has sufficient liquidity to meet
its needs over the next 12 months based on its cash balance at
December 31, 2008, of $131.2 million, measures management is
taking to manage the business during the global financial crisis
and operating cash flows.
The modifications and waivers are:
-- Amendment Number 1 and Waiver to Credit Agreement dated
March 27, 2009, by and among Albemarle Maritime Corp.,
Arden Maritime Corp., Avon Maritime Corp., Birnham
Maritime Corp., Bristol Maritime Corp., Chester Shipping
Corp., Cumberland Navigation Corp., Darby Navigation
Corp.,
Dover Maritime Corp., Elrod Shipping Corp., Exeter
Shipping Corp., Frankfort Maritime Corp., Glenwood
Maritime Corp., Hansen Shipping Corp., Hartley Navigation
Corp., Henley Maritime Corp., Hudson Maritime Corp.,
Jessup Maritime Corp., Montrose Maritime Corp., Oldcastle
Shipping Corp., Quentin Navigation Corp., Rector Shipping
Corp., Remsen Navigation Corp., Sheffield Maritime Corp.,
Sherman Maritime Corp., Sterling Shipping Corp., Stratford
Shipping Corp., Vedado Maritime Corp., Vernon Maritime
Corp. and Windsor Maritime Corp., TBS International
Limited, TBS Shipping Services Inc. Bank of America, N.A.,
Citibank, N.A., DVB Group Merchant Bank (Asia) Ltd., TD
Bank, N.A., Keybank, N.A., Capital One Leverage Finance
Corp., Guaranty Bank, Merrill Lynch Commercial Finance
Corp., Webster Bank National Association, Comerica Bank
and Tristate Capital Bank
See http://ResearchArchives.com/t/s?3b66
-- First Amendatory Agreement dated March 23, 2009, by and
among Bedford Maritime Corp., Brighton Maritime Corp.,
Hari Maritime Corp., Prospect Navigation Corp., Hancock
Navigation Corp., Columbus Maritime Corp. and Whitehall
Marine Transport Corp., TBS International Limited, DVB
Group Merchant Bank (Asia) Ltd., The Governor and Company
of the Bank of Ireland, DVB Bank SE, Natixis
See http://ResearchArchives.com/t/s?3b67
-- First Amendment to Loan Agreement dated March 27, 2009, by
and among Amoros Maritime Corp., Lancaster Maritime Corp.
and Chatham Maritime Corp., TBS International Limited,
Sherwood Shipping Corp., and AIG Commercial Equipment
Finance, Inc.
See http://ResearchArchives.com/t/s?3b68
-- Supplemental Letter to the Loan Agreement dated March 24,
2009, by and among Claremont Shipping Corp., Yorkshire
Shipping Corp., TBS International Ltd. and Credit Suisse
See http://ResearchArchives.com/t/s?3b69
-- Supplemental Letter to the Loan Agreement dated March 10,
2009, by and among Grainger Maritime Corp., TBS
International Limited and Joh. Berenberg, Gossler & Co. KG
See http://ResearchArchives.com/t/s?3b6a
-- Supplemental Letter to the Loan Agreement dated March 2,
2009, by and among Dyker Maritime Corp., TBS International
Limited and Commerzbank AG
See http://ResearchArchives.com/t/s?3b6b
-- Supplemental Agreement relating to the Term Loan Facility
dated March 27, 2009, each among Argyle Maritime Corp.,
Caton Maritime Corp., Dorchester Maritime Corp., Longwoods
Maritime Corp., McHenry Maritime Corp., Sunswyck Maritime
Corp., TBS International Limited and The Royal Bank of
Scotland plc., Citibank N.A., Landesbank Hessen-Thuringen
Girozentrale, Norddeutsche Landesbank Girozentrale,
Alliance & Leicester Commercial Finance plc, and Bank of
America, N.A.
See http://ResearchArchives.com/t/s?3b6c
-- Supplemental Agreement relating to the Guarantee Facility
Agreement dated March 27, 2009, each among Argyle Maritime
Corp., Caton Maritime Corp., Dorchester Maritime Corp.,
Longwoods Maritime Corp., McHenry Maritime Corp., Sunswyck
Maritime Corp., TBS International Limited and The Royal
Bank of Scotland plc.
See http://ResearchArchives.com/t/s?3b6d
-- First Amendatory Agreement dated March 26, 2009, amending
and supplementing the Bareboat Charter by and among
Adirondack Shipping LLC, TBS International Limited and
Fairfax Shipping Corp. dated as of January 24, 2007
See http://ResearchArchives.com/t/s?3b6e
-- First Amendatory Agreement dated March 26, 2009, amending
and supplementing the Bareboat Charter by and among
Rushmore Shipping LLC, TBS International Limited and
Beekman Shipping Corp. dated as of January 24, 2007
See http://ResearchArchives.com/t/s?3b6f
About TBS International Limited
TBS International Limited -- http://www.tbsship.com/-- is a
fully-integrated transportation service company that offers
customers the TBS Five Star Service consisting of: ocean
transportation, operations, logistics, port services, and
strategic planning. TBS offers liner, parcel, bulk, and
chartering services, supported by a fleet of multipurpose
tweendeckers and handysize and handymax bulk carriers, including
specialized heavy-lift vessels. TBS has developed its business
around key trade routes between Latin America and China, Japan and
South Korea, as well as select ports in North America, Africa, the
Caribbean and the Middle East.
TELEPLUS WORLD: In Talks with Creditors on Possible Sale, Merger
----------------------------------------------------------------
Teleplus World, Corp., said in regulatory filings with the
Securities and Exchange Commission that it has been working with
its largest creditors with the goal of either developing a plan
that will allow the Company to emerge from Chapter 11 or to sell
the Company or merge the Company with a strategic buyer.
Teleplus said that since the filing of its Chapter 11 petition, it
has been immersed in bankruptcy-related matters. Teleplus said
this has delayed the Company's completion of the information
needed to be included in the 2008 Form 10-K. Also for these
reasons, the Company has not yet completed the preparation of its
financial statements for the year ended December 31, 2008.
The Company said it will require additional time to update its
information including disclosures related to its bankruptcy
filing, to file the 2008 Form 10-K. The Company at this time is
unable to determine when it will file its 2008 Form 10-K.
Headquartered in Miami-Lakes, Florida, Teleplus World, Corp. --
http://www.teleplusworld.com/en/-- provides telecommunications
products and services including local lines, long distance, toll
free and high speed internet services to customers in 53 distinct
centrex serving areas.
The Debtor filed for Chapter 11 protection on March 5, 2009
(Bankr. S.D. Fla. Case No. 09-13799). Phillip M. Hudson III,
Esq., at Arnstein & Lehr LLP, represents the Debtor in its
restructuring efforts. In its schedules of assets and debts, the
Debtor disclosed $11,176,165 in total assets and $18,925,502 in
total debts.
TERRA NOSTRA: Deadline for Filing Proofs of Claim on May 8
----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
set May 8, 2009, at 5:00 p.m. (Eastern Time) as the deadline for
filing of proofs of claim and requests for payment of certain
administrative expense claims against Terra Nostra Resources Corp.
Attorneys (with full access accounts) and employees of
institutional creditors (with limited access accounts) should file
Claim and Expense Forms electronically on the Court's Case
management/Electronic Case File system.
Those without accounts to the CM/ECF system must file their Claim
and Expense Forms by hand or overnight courier to the Court at
this address:
United States Bankruptcy Court
Southern District of New York
One Bowling Green, Room 534
New York, New York 10004-1408
A proof of claim form may be obtained at:
http://www.uscourts.gov/bkforms/
Headquartered in Pasadena, California, Terra Nostra Resources
Corp. (OTCBB:TNRO) owns a 51% interestin two China Joint Ventures
companies in the strategic copper and stainless steel industries.
Creditors filed an involuntary Chapter 11 petition on Nov. 25,
2008 (Bankr. S.D. N.Y. Case No. 08-14708). Karen Ostad, Esq., at
Morrison & Foerster LLP, represents the petitioning creditors.
TERRA NOSTRA: Trustee Files Proposed Chapter 11 Plan
----------------------------------------------------
George M. Kelakos, as trustee in Terra Nostra Resources Corp.'s
involuntary Chapter 11 case, filed with the U.S. Bankruptcy Court
for the Southern District of New York on March 31, 2009, an
explanatory disclosure statement in support of his Chapter 11 Plan
of Reorganization.
The purpose of the disclosure statement is to enable creditors to
make an informed judgment as to whether to accept or reject the
Plan.
The Plan contemplates the consummation of one of three possible
reorganization transactions to be selected by holders of allowed
general unsecured claims in Class 4:
(A) a sale of the Debtor's interest in the Chinese JVs to Zhang
Ke, a natural citizen of the PRC, or his designees, for
$27,000,000 (part of which will be used to satisfy all priority
and secured claims and expenses), payable in installments
through December 2010, and the New Common Stock in the
Reorganized Debtor issued pro rata to holders of allowed
Class 4 claims;
(B) a combined sale and restructure consisting of transferring
the Debtor's interest in SQSS and dividing STJMC into two
facilities, one of which will be transferred to Zhang Ke or his
designees, and the other of which the Reorganized Debtor will
retain a 90% interest. The Reorganized Debtor will get
$16,470,000. The Shareholder Investor Group will contribute
$10,000,000 in exchange for New Common Stock in the Reorganized
Debtor, of which $7,210,000 will be used to fund operations of
the Reorganized Debtor. $17,790,000 will be paid to the Plan
Administrator, and holders of allowed Class 4 claims will
receive a pro rata distribution of the remaining amounts after
satisfaction of all priority and secured claims and expenses; or
(C) a debt-for-equity swap with the New Common Stock in the
Reorganized Debtor issued pro rata to holders of allowed Class 4
claims.
Irrespective of the transaction selected, the holders of allowed
general unsecured claims will receive a pro rata distribution of
the net proceeds of certain lawsuits to be pursued by the Plan
Administrator.
Holders of post-petition secured claims under Class 1 and priority
claims under Class 3 will receive 100% payment of their allowed
claims, with interest.
Holders of Interests will receive nothing under the Plan and their
interests will be cancelled.
The Plan places the various claims against and interests in the
Debtor into 5 classes:
Class Description Treatment
----- ----------- --------
1 Post-petition Secured Claims Unimpaired; Deemed to
Accept
2 Other Secured Claims Impaired; Entitled to
Vote
3 Priority Claims Unimpaired; Deemed to
Accept
4 General Unseucred Claims Impaired; Entitled to
Vote
5 Equity Impaired; Deemed to
Reject
The Trustee will request confirmation of the Plan notwithstanding
its rejection by the Class of Interests under the so-called
"cramdown" provisions of the Bankruptcy Code. Under said
provisions of the Bankruptcy Code, even if the Plan is not
accepted by all of the impaired Classes, but isaccepted by at
least one impaired Class of Claims, then the Plan may still be
confirmed.
A copy of the Disclosure Statement is available for free at:
http://bankrupt.com/misc/TerraNostra.DS.pdf
The hearing to consider the adequacy of Disclosure Statement has
been scheduled for May 21, 2009, at 10:00 a.m. at the Bankruptcy
Court. Objections and proposed modifications, if any, to the
disclosure statement must be filed with the Bankruptcy Court on or
before May 14, 2009, at 4:00 p.m.
Headquartered in Pasadena, California, Terra Nostra Resources
Corp. (OTCBB:TNRO) owns a 51% interestin two China Joint Ventures
companies in the strategic copper and stainless steel industries.
Creditors filed an involuntary Chapter 11 petition on Nov. 25,
2008 (Bankr. S.D. N.Y. Case No. 08-14708). Karen Ostad, Esq., at
Morrison & Foerster LLP, represents the petitioning creditors.
TLC VISION: Secures Limited Waiver Under $110MM Credit Facility
---------------------------------------------------------------
TLC Vision Corporation has secured a limited waiver with respect
to its credit facility.
The Amended and Restated Credit Agreement, dated as of June 21,
2007, is by and among TLC Vision (USA) Corporation, a Delaware
corporation, as Borrower; TLC Vision Corporation, an Ontario
corporation, the parent company, as Guarantor; additional
guarantor parties; CIT Capital Securities, LLC, as Sole Lead
Arranger and Sole Bookrunner; and CIT Healthcare LLC, as Issuing
Bank, Collateral Agent and Administrative Agent.
The credit facility -- which was first amended on February 28,
2008 -- consisted of an $85 million term loan and a $25 million
revolving credit line. As of December 31, 2008, the amount
outstanding of the credit facility was $82.7 million.
Amendment No. 2 to the Credit Facility, among other things,
provides a limited waiver for defaults through May 31, 2009, and
sets certain benchmarks and milestones.
The Events of Default are:
1. The Borrower's failure to comply with the mandatory
prepayment in the aggregate amount of $1,434,000 from Net
Cash Proceeds of a tax refund for the Fiscal Year ended
December 31, 2008.
2. The Borrower's failure to comply with the Total Leverage
Ratio and Fixed Charge Coverage Ratio in the Credit
Agreement for the Measurement Periods ended December 31,
2008 and March 31, 2009.
3. The Borrower's failure to pay interest due and payable on
April 1, 2009, under the Credit Agreement.
4. The Borrower receiving an audit opinion that contains a
going concern qualification.
5. The Borrower's filing its annual financial statements,
Reports and opinions for the Fiscal Year ended December 31,
2008, on April 1, 2009.
6. The Borrower's failure to take all steps required under the
Credit Agreement.
7. The Borrower's failure to give notice of any of the Events
of Default.
The Company is required to submit by April 15, 2009:
(A) projections of Consolidated balance sheets and statements
of operations of Parent and its Subsidiaries for the Fiscal
Year ended December 31, 2009;
(B) a business plan for the 13 weeks from and after March 23,
2009, and for the second and third quarters of 2009;
(C) a complete and accurate detailed list of all Debt and trade
debt of the Loan Parties and all entities in which any Loan
Party holds any Equity Interests as of February 28, 2009,
in a form satisfactory to the Required Lenders; and
(D) Consolidated balance sheets, statements of income and
statements of cash flows of Parent and its Subsidiaries (1)
for the months ended January 31, 2009 and February 28,
2009, respectively, and (2) for the period commencing at
the end of the previous Fiscal Year and ended January 31,
2009 and February 28, 2009 respectively.
The Company is required to submit by April 30, 2009:
(A) Consolidated monthly cash flow forecasts of Parent and its
Subsidiaries for the period October 1, 2009 to March 31,
2010;
(B) a detailed analysis of (a) the contribution margin of each
facility in which any Loan Party or any entity in which any
Loan Party holds any Equity Interests has any right, title,
or interest, (b) selling, general and administrative
expenses of Parent and its Subsidiaries, and (c) marketing
expenses by line of business of the Parent and its
Subsidiaries, for the 12 months prior to the Amendment
No. 2 Effective Date and projected for the balance of the
Fiscal Year ending December 31, 2009;
(C) a detailed operational and financial restructuring plan for
the Borrower and its Subsidiaries, in form and substance
satisfactory to the Required Lenders; and
(D) all Control Account Agreements; provided that the Loan
Parties shall use their best efforts to deliver to the
Agents and the Lender Parties all Control Account
Agreements by April 15, 2009.
The members of the lending consortium are:
* CIT HEALTHCARE LLC, as Administrative Agent, Collateral
Agent and Issuing Bank;
* FM LEVERAGED CAPITAL FUND II, by GSO Debt Funds Management
LLC as Subadviser to FriedbergMilstein LLC;
* GALE FORCE 1 CLO, LTD., GSO Debt Funds Management LLC, as
Collateral Manager;
* GALE FORCE 3 CLO, LTD., by GSO Debt Funds Management LLC
as Collateral Manager;
* MONUMENT PARK CDO LTD., by Blackstone Debt Advisors L.P. as
Collateral Manager;
* CIFC Funding 2007 - IV, Ltd.;
* Denali Capital LLC, managing member of DC Funding Partners
LLC, Collateral Manager for Merrill Lynch CLO 2007-1,
LTD., or an affiliate;
* Pangaea CLO 2007-1 LTD., by Pangaea Asset Management, LLC,
its Collateral Manager;
* Sargas CLO I LTD., by Sargas Asset Management, LLC, its
Collateral Manager;
* Garrison Funding 2008-1 Ltd.;
* Citibank, N.A.;
* Royal Bank of Canada;
* AMMC CLO III, Limited, by American Money Management, Corp.
as Collateral Manager;
* AMMC CLO IV, Limited, by American Money Management, Corp.
as Collateral Manager;
* AMMC VII, Limited, by American Money Management, Corp. as
as Collateral Manager;
* AMMC VIII, Limited, by American Money Management, Corp., as
Collateral Manager;
* APIDOS CAPITAL MANAGEMENT, LLC; and
* National City Bank
Jim Wachtman, President and Chief Executive Officer of TLCVision,
commented, "As we stated on our fourth quarter earnings call
earlier this week, we have been in discussions with our lenders
and we expected to finalize an agreement with our lender group
quickly. We have now reached agreement with our lender group on a
limited waiver, and we intend to continue to work constructively
with them in order to reach a permanent solution to our capital
structure. We will run a very lean organization in 2009 as we
position ourselves to capture the pent-up demand for LASIK that
will be unlocked with an economic recovery."
A full-text copy of Amendment No. 2 is available at no charge at:
http://ResearchArchives.com/t/s?3b64
Going Concern Doubt
The report of Ernst & Young LLP, the Company's independent
registered public accounting firm, issued in the Company's
December 31, 2008 Annual Report on Form 10-K included an
explanatory paragraph describing the existence of conditions that
raise substantial doubt about the Company's ability to continue as
a going concern, including significant losses, limited access to
additional liquidity and compliance with certain financial
covenants.
In its report to the SEC, the Company said it relies on these
sources of liquidity to continue to operate as a going concern:
(i) cash and cash equivalents on hand; (ii) cash generated from
operations; (iii) borrowings under the Company's revolving credit
facility; (iv) net proceeds from asset sales; and (v) access to
the capital markets. The Company said the changes in financial
markets in the late summer and fall of 2008 limited the ability of
companies such as TLCVision to access the capital markets. The
deepening recession in the fourth quarter of 2008 has had a
significant impact on the Company's operations, resulting in a
sharp decline in the financial performance. As a result, the
Company's liquidity became progressively constrained in the fourth
quarter of 2008.
The Company has incurred losses from continuing operations of
$98.3 million and $35.3 million for the years ended December 31,
2008 and 2007, respectively.
As of December 31, 2008, the Company had $136.9 million in total
assets, and $172.3 million in total liabilities, resulting in
$35.3 million in stockholders' deficit.
At December 31, 2008, the Company has a working capital deficiency
of approximately $99.5 million. Subsequent to December 31, 2008,
the Company borrowed an additional $17.4 million under the
revolving portion of its Credit Facility raising the total
outstanding debt under the Credit Facility to $100.1 million as of
February 28, 2009.
Beginning in early 2008, in response to the deteriorated economic
environment the Company implemented a series of initiatives to
balance its costs of operation with the new lower level of
refractive procedures. The Company said it continues to implement
cost reduction and cash generation initiatives, including
reductions in headcount, freezing or reducing salaries and
benefits, reductions in discretionary spending including direct to
consumer marketing, reductions in overhead costs, lower capital
spending, the sale of surplus assets and the closure of
underperforming refractive centers/mobile refractive routes.
The Company will likely continue to incur operating losses in 2009
and its liquidity remains constrained such that it may not be
sufficient to meet the Company's cash operating needs in this
period of economic uncertainty.
A full-text copy of the Company's Annual Report is available at no
charge at http://ResearchArchives.com/t/s?3b65
About TLCVision
Based in St. Louis, Missouri, TLC Vision Corporation --
http://www.tlcv.com/and http://www.tlcvision.com/-- is North
America's premier eye care services company, providing eye doctors
with the tools and technologies needed to deliver high-quality
patient care. TLCVision maintains leading positions in
Refractive, Cataract and Eye Care markets.
ULTRA STORIES: Weak Economy Leads to Firm's 2nd Chapter 11 Filing
-----------------------------------------------------------------
Reuters reports that Ultra Stores Inc. filed for Chapter 11
bankruptcy protection on Thursday, citing weak economic conditions
and loss of operating liquidity.
As reported by the Troubled Company Reporter on March 13, 2001,
Ultra Stores filed a voluntary chapter 11 bankruptcy petition in
the U.S. Bankruptcy Court for the Southern District of New York in
Manhattan, listing total assets of about $76 million and total
liabilities of a little more than $68 million as of February 4,
2001.
According to court documents, Ultra Stores listed $10 million to
$50 million in assets and $10 million to $50 million in debts.
Idexonline.com relates that Ultra Stores said that it had
defaulted on debt covenants on its credit arrangement, resulting
in a loss of operating liquidity of about $11 million. Ultra
Stores, according to Idexonline.com, said that it had secured a
$30 million debtor-in-possession financing and a commitment for an
exit facility from Bank of America Corp.
Ultra Stores, Inc. -- http://www.ultradiamonds.com/-- doing
business as Ultra Diamond And Gold, operates as a specialty
retailer of fine jewelry in the United States. It manufactures
and imports diamonds, gemstones, and gold jewelry. The Company
also offers platinum, silver, titanium, tungsten, cubic zirconia,
moissanite, and pearls. The Company was formerly known as Ultra
of Illinois, Inc., and changed its name to Ultra Stores, Inc., in
November 1997. Ultra Stores, Inc., was founded in 1991 and is
based in Chicago, Illinois.
WABASH NATIONAL: Annual Report Delay Cues BofA Default Notice
-------------------------------------------------------------
Wabash National Corporation has received written notice from Bank
of America, N.A., as administrative agent, relating to the
parties' Second Amended and Restated Loan and Security Agreement.
Because the Company has not delivered audited financial statements
to the lenders by March 31, 2009, an event of default has occurred
under the Revolving Credit Facility, which permits the lenders to
increase the interest on the outstanding principal by 2%, to cause
an acceleration of the maturity of borrowings, to restrict
advances, and to terminate the Revolving Credit Facility.
On March 16, 2009, the Company filed a notification of late filing
indicating that it was unable to complete and file the Form 10-K
by its original due date because it was continuing to assess its
financial position and liquidity requirements in light of recent
and ongoing economic conditions that have negatively impacted the
Company's operating results and caused instability in the capital
markets. Wabash said the process has required a substantial
commitment of the Company's resources and has impeded its ability
to finalize its financial statements and to prepare the
disclosures required in the Form 10-K. The Company anticipates
filing the delayed Form 10-K by April 15, 2009.
Dick Giromini, President and Chief Executive Officer, said on
March 31, "Our priority continues to be working diligently with
our lenders to renegotiate our Revolving Credit Facility and
improving our liquidity position. However, as stewards of the
Company we recognize our responsibility to act prudently, and
thus, we are exploring all of our options to maximize shareholder
value."
The notice provided by the Agent to the Company asserts the
existence of events of default under the Revolving Credit Facility
relating to the failure to deliver the required financial
statements, the failure to deliver notice of the change in name of
a Company subsidiary, and the requests for borrowings during the
pendency of an event of default.
In accordance with the terms of the Revolving Credit Facility, as
of April 1, 2009, the Agent has (i) increased the interest on the
outstanding principal under the Revolving Credit Facility by 2%
and (ii) implemented availability reserves that result in a
reduction of the Company's borrowing base under the Revolving
Credit Facility by $25 million. As of March 31, 2009, the Company
had $53.0 million in borrowings outstanding under the Revolving
Credit Facility.
The notice does not terminate the Revolving Credit Facility or
demand immediate repayment of any outstanding debt and the payment
of accrued interest thereunder, but reserves the rights of the
lenders to do any of the foregoing or seek any other available
remedies. Wabash said there can be no assurance that these
actions may not occur at any time. The Company is in discussions
with the lenders concerning the events of default and negotiation
of a forbearance agreement and one or more amendments to the
Revolving Credit Facility.
Sale, Merger Explored
Wabash said on March 31 its Board of Directors has authorized
management to pursue and evaluate a wide range of strategic
alternatives available to the Company. Strategic alternatives to
be considered may include but are not limited to, select business
divestitures, changes to the Company's capital structure, or a
possible sale, merger or other business combination involving the
Company. There can be no assurance that this review will result
in any specific transaction. The Company does not expect, and
undertakes no obligation, to disclose any further developments
with respect to the exploration of strategic alternatives unless,
and until after, the Board of Directors has approved a transaction
or other strategic alternative.
About Wabash National Corporation
Headquartered in Lafayette, Ind., Wabash National(R) Corporation
(WNC) is one of the leading manufacturers of semi trailers in
North America. Established in 1985, the Company specializes in
the design and production of dry freight vans, refrigerated vans,
flatbed trailers, drop deck trailers, dump trailers, truck bodies
and intermodal equipment. Its innovative core products are sold
under the DuraPlate(R), ArcticLite(R), FreightPro(TM) Eagle(R) and
Benson(TM) brand names. The Company operates two wholly-owned
subsidiaries: Transcraft(R) Corporation, a manufacturer of
flatbed, drop deck, dump trailers and truck bodies; and Wabash
National Trailer Centers, trailer service centers and retail
distributors of new and used trailers and aftermarket parts
throughout the U.S.
WABASH NATIONAL: NYSE Trading Symbol to Carry "Late Filer" Tag
--------------------------------------------------------------
Wabash National Corporation on April 1, 2009, received a letter
from the staff of NYSE Regulation, Inc. advising that, pursuant to
Section 802.01E of the New York Stock Exchange Listed Company
Manual, the Company has been identified as a possible late filer
as a result of its failure to file its Annual Report on Form 10-K
for the period ended December 31, 2008, on a timely basis in
compliance with Section 13 or 15(d) of the Securities Exchange Act
of 1934.
The letter notes that if the Company's Form 10-K is not filed by
2:30 p.m. Eastern Time on April 6, 2009, the Company will be
posted to the late filers list on the Listing Standards Filing
Status page on the New York Stock Exchange, Inc., Web site on
April 7, 2009, and an ".LF" indicator will be appended to the
Company's trading symbol listed on the NYSE's consolidated tape
provided to data vendors. The Web site posting and indicator will
remain in effect until the Company is current with all reporting
requirements with the Securities and Exchange Commission.
The Company anticipates filing the delayed Form 10-K by April 15,
2009.
About Wabash National Corporation
Headquartered in Lafayette, Ind., Wabash National(R) Corporation
(WNC) is one of the leading manufacturers of semi trailers in
North America. Established in 1985, the Company specializes in
the design and production of dry freight vans, refrigerated vans,
flatbed trailers, drop deck trailers, dump trailers, truck bodies
and intermodal equipment. Its innovative core products are sold
under the DuraPlate(R), ArcticLite(R), FreightPro(TM) Eagle(R) and
Benson(TM) brand names. The Company operates two wholly-owned
subsidiaries: Transcraft(R) Corporation, a manufacturer of
flatbed, drop deck, dump trailers and truck bodies; and Wabash
National Trailer Centers, trailer service centers and retail
distributors of new and used trailers and aftermarket parts
throughout the U.S.
Sale, Merger Explored
Wabash said on March 31 its Board of Directors has authorized
management to pursue and evaluate a wide range of strategic
alternatives available to the Company. Strategic alternatives to
be considered may include but are not limited to, select business
divestitures, changes to the Company's capital structure, or a
possible sale, merger or other business combination involving the
Company. There can be no assurance that this review will result
in any specific transaction. The Company does not expect, and
undertakes no obligation, to disclose any further developments
with respect to the exploration of strategic alternatives unless,
and until after, the Board of Directors has approved a transaction
or other strategic alternative.
WASHINGTON MUTUAL: May 20 Pre-trial Conference on JPMorgan Suit
---------------------------------------------------------------
A pretrial conference will be held on May 20, 2009, at 11:30
a.m., relating to the adversary complaint filed by JPMorgan Chase
& Co., National Association, acquirer of Washington Mutual Bank,
against Washington Mutual, Inc., and WMI Investment Corp., and
Federal Deposit Insurance Corporation.
JPMorgan filed its Complaint in the U.S. Bankruptcy Court for the
District of Delaware (i) to ensure that it is not divested of the
assets and interests purchased in good faith from the FDIC, as
receiver for WMB; and (ii) for indemnification and recovery
against the Debtors for certain liabilities that may be asserted
against JPMorgan, as successor by merger to WMB, pursuant to a
Purchase and Assumption Agreement dated September 25, 2008, with
the FDIC.
The summons related to the JPMorgan Complaint was served on the
Debtors and the FDIC in March 2009. The parties' failure to
respond to the Summons will be deemed as their consent to the
Court's judgment by default, Clerk Court David D. Bird noted.
Pursuant to Rule 7007.1 of the Federal Rules of Bankruptcy
Procedure, JPMorgan Chase Bank, National Association, certified
to the Court that pursuant to its records, JPMorgan Chase & Co.
"reflects any publicly held corporate parents, and listing of any
publicly held company that owns 10% or more of [JPMorgan & Chase,
N.A.'s] stock."
According to Adam G. Landis, Esq., at Landis Rath & Cobb LLP, in
Wilmington, Delaware, the Corporate Statement will "enable the
judges of [the] Court to evaluate possible disqualification or
recusal."
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its affiliate, WMI Investment
Corp., filed separate petitions for Chapter 11 relief (Bankr. D.
Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the
equity in WMI Investment. Weil Gotshal & Manges represents the
Debtors as counsel. When WaMu filed for protection from its
creditors, it listed assets of $32,896,605,516 and debts of
$8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Bankruptcy News, Issue No. 21; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
WASHINGTON MUTUAL: Taps Quinn Emanuel as Counsel in JPMorgan Suit
-----------------------------------------------------------------
Washington Mutual Inc. and WMI Investment Corp. seek authority
from the U.S. Bankruptcy Court for the District of Delaware for
authority to retain Quinn Emanuel Urquhart Oliver & Hedges, LLP,
as their special litigation and conflicts counsel, nunc pro tunc
to April 3, 2009.
The Debtors have determined it necessary to retain a special
counsel to represent them in connection with the certain actions
initiated by JPMorgan Chase Bank National Association, due to a
conflict that prevents Weil Gotshal & Manges LLP as lead counsel
from representing them in those actions. Weil Gotshal also
notified the Court and parties-in-interest of the need for the
Debtors to utilize a conflicts counsel in certain circumstances
involving JPMorgan Chase, including, but not limited to, lender
liabilities or avoidance actions.
The Debtors relate that they filed, in December 2008, a claim for
$13.6 billion against the Federal Deposit Insurance Corporation,
in its corporate capacity and in its capacity as the receiver of
Washington Mutual Bank. Specifically, the Claim asserts (i) $6.5
billion in capital contributions, (ii) $4 billion in preferred
securities, and (iii) $3 billion in tax refunds. Subsequently,
the FDIC disallowed the Claim as of January 2009, indicating that
it "[lacked] sufficient documentation or specificity . . .
fail[ed] to state the claims against the Receivership . . . [and]
appear to assert claims against a third party." To compel the
FDIC's payment of the Claim, the Debtors initiated a lawsuit on
March 20, 2009, in the U.S. District Court for the District of
Columbia.
By March 2009, JPMorgan, the acquirer of WMB, commenced an
adversary action against the Debtors and FDIC. Under the
Complaint, JPMorgan sought to intervene in the FDIC Action (i) to
ensure that it is "not divested of the assets and interests
purchased in good faith from the FDIC; and (ii) for
indemnification and recovery against the Debtors for certain
liabilities that may be asserted against JPMorgan, the successor
by merger to WMB.
In this regard, the Debtors seek the services of Quinn Emanuel as
their special counsel. The Debtors believe that Quinn Emanuel
possesses extensive knowledge, expertise and experience in
matters concerning complex bankruptcy and commercial litigation.
Specifically, attorneys who are involved in the engagement with
the Debtors are (i) Peter E, Calamari, (ii) Michael B. Carlinsky,
of the Litigation Department, and (iii) Susheel Kirpalani, a
partner in the firm's Bankruptcy and Restructuring group.
Essentially, the firm will be tasked to prosecute the JPMorgan
Actions and discharge the Debtors' responsibilities to their
estates and creditors.
Susheel Kirpalani, Esq., a member at Quinn Emanuel, affirms that
his firm will ensure that its services will not be duplicative of
the work performed by Weil Gotshal and other professionals in the
Debtors' cases.
The Debtors will pay Quinn Emanuel with these hourly rates:
Professional Hourly Rate
------------ -----------
Partners $970 to $730
Other attorneys $950 to $390
Legal assistants $295 to $265
The Debtors will also reimburse Quinn Emanuel for its necessary
out-of-pocket expenses.
Mr. Kirpalani notes that Quinn Emmanuel may in the future
represent entities that are claimants of, or interest holders in,
the Debtors' Chapter 11 cases. He nevertheless assures the Court
that his firm has not, does not, and will not represent any
entity in matters directly adverse to the Debtors' interests
during the pendency of the bankruptcy cases.
Mr. Kirpalani further verified a list of Quinn Emanuel's
connections with respect to its engagement with the Debtors, a
full-text copy of which is available for free at:
http://bankrupt.com/misc/Quinn_ClientMatchList.pdf
The Court will convene a hearing on May 20, 2009, to consider the
Debtors' application. Objections, if any, must be filed by
April 30.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its affiliate, WMI Investment
Corp., filed separate petitions for Chapter 11 relief (Bankr. D.
Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the
equity in WMI Investment. Weil Gotshal & Manges represents the
Debtors as counsel. When WaMu filed for protection from its
creditors, it listed assets of $32,896,605,516 and debts of
$8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Bankruptcy News, Issue No. 21; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
WASHINGTON MUTUAL: District Court Halts N.Y. Fraud Class Suit
-------------------------------------------------------------
Judge Arthur Spatt of the U.S. District Court in Brooklyn, New
York, has ordered for the proceedings in a consumer-class action
fraud lawsuit filed against Washington Mutual, Inc., to be put on
hold until mid-September 2009, Reuters reports. The District
Court opined that the Federal Deposit Insurance Corp., as the
appointed receiver for WaMu's banking operations may be the "more
appropriate" entity to handle claims against WaMu filed by
plaintiffs seeking recovery, according to the report.
The Lawsuit, styled Cassese v. Washington Mutual Inc., was filed
in the District Court for the Eastern District of New York,
Brooklyn in 2005, Case No. 05-2724, accusing WaMu of "assessing a
variety of small, but allegedly improper fees in connection with
mortgage loans, including charges for faxes, recording documents
and payoff statements," Reuters points out.
Judge Spatt directed the FDIC to retain all payoff statements in
the manner previously handled by WaMu.
Brost Seeks to Intervene
Hans Brost, an equity security holder in the Debtors' cases, said
he intends to intervene in the Debtors' cases, pursuant to
Section 1109(b) of the Bankruptcy Code. Mr. Brost noted that he
previously sought for service of pertinent documents with respect
to the Debtors' cases.
In separate notices filed with the Court, NCR Corporation, Derek
W. Loeser, the City and County of Denver also asked for service of
papers relating to the Debtors' bankruptcy proceedings.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its affiliate, WMI Investment
Corp., filed separate petitions for Chapter 11 relief (Bankr. D.
Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the
equity in WMI Investment. Weil Gotshal & Manges represents the
Debtors as counsel. When WaMu filed for protection from its
creditors, it listed assets of $32,896,605,516 and debts of
$8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Bankruptcy News, Issue No. 21; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
WHITEHALL JEWELERS: Can Use Lenders' Cash Collateral 'til June 30
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware granted
Whitehall Jewelers Holdings, Inc., et al. authority to continue
using their term lenders' cash collateral through and including
June 30, 2009, in accordance with a budget.
The Court also authorized the Debtors to make a distribution of
$5,500,000 to PWJ Lending II LLC, from cash on hand.
As reported in the Troubled Company Reporter on March 25, 2009,
the Debtors told the Court that they require the use of the Term
Lenders' cash collateral to continue the orderly liquidation of
their assets and wind-down efforts and to pay necessary
administrative expenses.
The Debtors related that the payment of the interim distribution
to PWJ will not prejudice the Debtors since up to $15 million of
PWJ's secured claims is entitled to priority in payment over
allowed unsecured claims in accordance with the Global Settlement
Agreement among the Debtors, the Debtors' pre- and post-petition
lenders, the Committee of Unsecured Creditors, and various
participating consignment vendors. The Global Settlement
Agreement resolved fully and finally all disputes concerning,
among other things, competing interests in the Debtors' consigned
merchandise, as well as certain other claims among the parties.
Headquartered in Chicago, Illinois, Whitehall Jewelers Holdings,
Inc. -- http://www.whitehalljewellers.com/-- through its
subsidiary, Whitehall Jewelers, Inc., operates as a specialty
retailer of fine jewelry in the United States. It offers a
selection of merchandise, including diamonds, gold, precious and
semi-precious jewelry, and watches. As of June 23, 2008, it
operated 373 stores in regional and super-regional shopping malls
under the names Whitehall and Lundstrom.
The Company and Whitehall Jewelers, Inc., filed for Chapter 11
relief on June 23, 2008 (Bankr. D. Del. Lead Case No. 08-11261).
Scott Rutsky, Esq., Peter Antoszyk, Esq., Adam T. Berkowitz, Esq.,
and Jesse I. Redlener, Esq., at Proskauer Rose LLP, represent the
Debtors as bankruptcy counsel. James E. O'Neill, Esq., and Laura
Davis Jones, Esq., at Pachulski, Stang Ziehl & Jones, LLP,
represent the Debtors as Delaware counsel. Epiq Bankruptcy
Solutions LLC is the claims, noticing and balloting agent.
In its schedules, Whitehall Jewelers, Inc., listed total assets of
$246,571,775 and total debts of $173,694,918.
YOUNG BROADCASTING: Expects to File 2008 Annual Report This Week
----------------------------------------------------------------
Young Broadcasting Inc. anticipates filing its Annual Report on
Form 10-K for the year ended December 31, 2008, within the week.
Young Broadcasting said that, prior to and since the bankruptcy
filing, it has been significantly involved in pre-bankruptcy and
bankruptcy-related matters. As a result, the Company could not
timely file its Annual Report without unreasonable effort or
expense.
As reported by the Troubled Company Reporter on April 7, 2009, the
U.S. Bankruptcy Court for the Southern District of New York
approved bidding procedures for either (a) a potential refinancing
or equity investment in Young Broadcasting Inc. in support of a
plan of reorganization or (b) the sale, as a going concern, of all
or part of the Debtors' businesses or assets.
Competing bids are due on June 17, 2009. In the event that
competing bids are received, an auction to determine the highest
and the best offer will be conducted on June 19, 2009, at 10:00
a.m. (Eastern) at the offices of Sonnenschein Nath & Rosenthal
LLP, 1221 Avenue of the Americas, New York, New York 10020.
The approval hearing will be held on June 25, 2009 at 10:00 a.m.
(Eastern).
Young Broadcasting, Inc. -- http://www.youngbroadcasting.com/--
owns 10 television stations and the national television
representation firm, Adam Young Inc. Five stations are affiliated
with the ABC Television Network (WKRN-TV - Nashville, TN, WTEN-TV
- Albany, NY, WRIC-TV - Richmond, VA, WATE-TV - Knoxville, TN, and
WBAY-TV -Green Bay, WI), three are affiliated with the CBS
Television Network (WLNS-TV - Lansing, MI, KLFY-TV - Lafayette, LA
and KELO- TV - Sioux Falls, SD), one is affiliated with the NBC
Television Network (KWQC-TV - Davenport, IA) and one is affiliated
with MyNetwork (KRON-TV - San Francisco, CA). In addition, KELO-
TV-Sioux Falls, SD is also the MyNetwork affiliate in that market
through the use of its digital channel capacity.
The Company and its affiliates filed for Chapter 11 protection on
February 13, 2009 (Bankr. S.D. N.Y. Lead Case No.:09-10645). Jo
Christine Reed, Esq., at Sonnenschein Nath & Rosenthal LLP,
represents the Debtors in their restructuring efforts. Andrew N.
Rosenberg, Esq., at Paul Weiss Rifkind Wharton & Harrison LLP,
represents the Official Committtee of Unsecured Creditors as
counsel. The Debtors selected UBS Securities LLC as consultant;
Ernst & Young LLP as accountant; Epiq Bankruptcy Solutions LLC as
claims agent; and David Pauker chief restructuring officer. The
Debtors listed total assets of $575,600,070 and total debts of
$980,425,190.
Z GALLERIE: Files for Chapter 11 Bankruptcy Protection
------------------------------------------------------
Maria Halkias at The Dallas Morning News reports that Z Gallerie
Inc. has filed for Chapter 11 bankruptcy protection, saying that
it needs to remove its liability from leases and to strengthen its
balance sheet.
Z Gallerie, according to The Dallas Morning News, closed a
distribution center in Atlanta and 21 stores in March. Citing a Z
Gallerie spokesperson, The Dallas Morning News states that the
Company won't close its seven Texas stores.
Z Gallerie Inc. is a Gardena, California-based home decor retailer
with two stores in Dallas. Z Gallerie operates 56 stores in 18
states.
ZYNEX INC: Financial Restatement Prompts Securities Class Action
----------------------------------------------------------------
A lawsuit was filed against Zynex, its President and Chief
Executive Officer and its Chief Financial Officer on April 6,
2009, in the United States District Court for the District of
Colorado (Marjorie and David Mishkin v. Zynex, Inc. et al.). The
lawsuit refers to the April 1, 2009, announcement of Zynex that it
will restate its unaudited financial statements for the first
three quarters of 2008.
The lawsuit purports to be a class action on behalf of purchasers
of Zynex securities between May 21, 2008 and March 31, 2009. The
lawsuit alleges, among other things, that the defendants violated
Section 10 and Rule 10b-5 of the Securities Exchange Act of 1934
by making intentionally or recklessly untrue statements of
material fact or failing to disclose material facts regarding the
financial results and operating conditions for the first three
quarters of 2008. The plaintiff asks for a determination of class
action status, unspecified damages and costs of the legal action.
Zynex believes that the allegations are without merit and will
vigorously defend itself in the lawsuit. Zynex has notified its
directors and officers liability insurer of the claim.
Zynex had said its Board of Directors and Audit Committee
concluded that the Company's unaudited financial statements for
the quarters ended March 31, 2008, June 30, 2008, and September
30, 2008, included in its quarterly reports, should be revised to
reflect adjustments to Zynex's allowance for provider discounts,
accounts receivable and net revenue for such periods. These
quarterly adjustments were determined after an evaluation of
adjustments identified in connection with the 2008 year-end
closing and the audit of the 2008 financial statements.
Zynex will restate its unaudited financial statements for the
first three quarters of 2008. Zynex will include restated
information regarding these quarters in its Annual Report on Form
10-K for the year ended December 31, 2008 or will amend its
Quarterly Reports on Form 10-Q for the first three quarters of
2008. Zynex believes that there will not be a restatement of 2007
financial statements.
Zynex intends to file its Annual Report on Form 10-K for the year
ended December 31, 2008, as soon as practicable.
The Company said the adjustments identified in connection with the
year-end closing and 2008 year-end audit result in a decrease in
net accounts receivable and related net revenues of approximately
$5.1 million as of and for the year ended December 31, 2008. A
substantial part of these adjustments applies to the first three
quarters of 2008. These adjustments are based on a re-evaluation
of the estimated allowance for provider discounts that management
believes should have been utilized in 2008. The change in the
provider discount rates is based on management's analysis of
business conditions, recent rates of collection and additional
methodologies that the Company applied in estimating these rates
at year end, which management believes are more accurate than
previously applied rates during the quarterly periods in 2008.
Zynex's allowance for provider discounts is recorded to account
for the risk of non-payment arising from reimbursements from
insurance providers that are less than amounts claimed, amounts
subject to patients' deductibles and benefit denials.
Zynex's management estimates that, after taking into account the
unaudited impact of the adjustments, the results for the year
ended December 31, 2008 will be approximately:
Net Rental and Sales Revenue $11,750,000
Income Before Taxes $330,000
Net Income $215,000
The unaudited amounts are subject to change until the 2008
financial statements are finalized.
Thomas Sandgaard, President and CEO of Zynex commented: "Zynex's
business continues as usual, and we are working on improvements to
our accounting estimates and our internal operations. Doctors and
patients continue to have a readiness to use our products, and our
rental and sales of products continue at favorable levels. The
adjustments to our financial statements are to better recognize
the current environment and collectability of accounts
receivables."
Because of the adjustments, the unaudited financial statements and
press releases previously issued on results for the first three
quarters of 2008 should not be relied upon. Zynex said its
management is developing new methodologies that it believes will
identify changes in collections of accounts receivable and
business conditions in order to make more accurate estimates of
the allowance for provider discounts on a more timely basis.
Pursuant to terms of the revolving credit facility with Marquette
Healthcare Finance, Zynex is to provide accurate financial
statements prepared in accordance with generally accepted
accounting principles to Marquette. Representations and financial
covenants on the subject may be breached by the proposed
restatement of unaudited financial statements for the first three
quarters of 2008. In addition, Zynex believes that it will be in
default in complying with one or more financial covenants,
including an EBITDA covenant, as of December 31, 2008 and would
also be in potential default under the covenants unless they are
revised for 2009.
The Company has obtained a waiver from Marquette under the
revolving credit facility regarding the defaults
About Zynex
Founded in 1996, Zynex, Inc. -- http://www.zynexmed.com/--
engineers, manufactures, markets, and sells its own design of
electrotherapy medical devices in two distinct markets: standard
digital electrotherapy products for pain relief and pain
management; and the NeuroMove(TM) for stroke and spinal cord
injury rehabilitation. Zynex's product lines are fully developed,
FDA-cleared, commercially sold, and have been developed to uphold
the Company's mission of improving the quality of life for
patients suffering from impaired mobility due to stroke, spinal
cord injury, or debilitating and chronic pain.
* Canadians Split on Letting Car Companies Go Bankrupt
------------------------------------------------------
Canadians are supportive of helping the ailing auto industry for
the time being, but if they can't get the industry back on track
Canadians believe enough is probably enough.
A new Ipsos Reid poll conducted on behalf of Canwest News Service
and Global Television reveals that when it comes to letting the
car companies go bankrupt, even though it could put thousands of
Canadians and Americans out of work where they lose their pension
money, Canadians split right smack down the middle 50/50.
But they are willing to support a temporary lifeline: (67%)
Canadians 'agree' that 'government should give the car companies
some bridge financing for the next month or two, and if they can't
find a remedy to restructure after that, regardless of job or
pension loss, taxpayer money should be taken off the table and the
companies decide on their own fate, which could be bankruptcy.
The Federal and Ontario governments have already agreed to provide
bridge financing ($3 billion to GM and $1 billion to Chrysler) to
help these auto companies finance their operations for the short
term. This action follows similar steps taken by American
President Barack Obama when he said on Monday that the car
companies' business plans 'don't go far enough' in revamping the
North-American industry in the face of higher fuel costs and
fierce foreign competition. To tide them over while they rework
their plans, GM is seeking an estimated $6 billion in loans from
Ottawa and Ontario and Chrysler is seeking $2.25 billion.
The Canadian and Ontario governments have set out conditions for
the loan, including mandatory plans for restructuring as a
condition to access any government cash, an interest rate of 5%
and Ottawa will receive an interest-bearing note in return, and
that loans are to be used exclusively to finance operations, and
cannot be used to pay back taxes or to finance bonus payments, pay
increases from last year or severance packages.
Not necessarily bankruptcy, but perhaps a necessary bankruptcy.
Canadians are split on whether the government should just let
troubled car companies go bankrupt, even though it could put
thousands of Canadians and Americans out of work and lose pension
money. Fully one half (50%) "agrees" (17% strongly/32% somewhat)
with this position, while the other half (50%) "disagrees" (17%
strongly/33% somewhat) with this idea.
Two in three (67%) Canadians "agree" (22% strongly/45% somewhat)
that "government should give the car companies some bridge
financing for the next month or two, and if they can't find a
remedy to restructure after that, regardless of job or pension
loss, taxpayer money should be taken off the table and the
companies decide eon their own fate, which could be bankruptcy."
Alternatively, one in three (33%) "disagrees" (12% strongly/21%
somewhat) with this position.
A full majority (85%) of Canadians "disagree" (49% strongly/36%
somewhat) that "Canadian governments are being too tough on car
companies," while 15% "agree" (3% strongly/12% somewhat) that this
is the case.
Comparatively, most (84%) "disagree" (48% strongly/36% somewhat)
that "the American government is being too tough on car
companies," while just 16% "agree" (3% strongly/13% somewhat).
Further, just one quarter (26%) "agrees" (9% strongly/18%
somewhat) that "governments shouldn't be telling the car companies
to restructure their industry and operations" compared to three
quarters (74%) who "disagree" (45% strongly/29% somewhat) that
government's shouldn't be telling the industry to restructure.
These are the findings of a poll conducted on behalf of Canwest
News Service and Global National from March 30 to April 6, 2009.
This online survey of 1024 Canadian adults was conducted via the
Ipsos I-Say Online Panel, Ipsos Reid's national online panel. The
results of these polls are based on a sample where quota sampling
and weighting are employed to balance demographics and ensure that
the sample's composition reflects that of the actual Canadian
population according to Census data. Quota samples with weighting
from the Ipsos online panel provide results that are intended to
approximate a probability sample. Statistical margins of error
are not applicable to online polls, however, an unweighted
probability sample of this size, with a 100% response rate, would
have an estimated margin of error of +/- 3.1 percentage points, 19
times out of 20, had the entire adult population of Canada been
polled.
About Ipsos Reid
Ipsos Reid provides public opinion research and research partner
for loyalty and forecasting and modelling insights in Canada.
With operations in eight cities, Ipsos Reid employs more than 600
research professionals and support staff in Canada. The company
has the biggest network of telephone call centres in the country,
as well as the largest pre-recruited household and online panels.
Ipsos Reid's marketing research and public affairs practices offer
the premier suite of research vehicles in Canada, all of which
provide clients with actionable and relevant information. Staffed
with seasoned research consultants with extensive industry-
specific backgrounds, Ipsos Reid offers syndicated information or
custom solutions across key sectors of the Canadian economy,
including consumer packaged goods, financial services, automotive,
retail, and technology & telecommunications. Ipsos Reid is an
Ipsos company, a global survey-based market research group.
* New Hope Launches Bankruptcy2009 for Virtual Bankruptcy Aides
---------------------------------------------------------------
New Hope Software, Inc., which provides bankruptcy software to
attorneys since 1991, has launched Virtual Bankruptcy Assistant
version of Bankruptcy2009. Bankruptcy2009, a user-friendly and
feature rich piece of bankruptcy software in the industry, will
immediately be available to all virtual bankruptcy assistants for
free.
With the costs of bankruptcy preparation skyrocketing after
Bankruptcy Reform in October, 2005, many attorneys sought to
compensate for the reduced number of filings and higher costs by
outsourcing bankruptcy preparation to independent contractors. As
a result a new profession was born overnight -- that of the
Virtual Bankruptcy Assistant (VBA).
The advantage of VBA's to the attorney is that he or she can have
the assistance of a highly trained bankruptcy paralegal, but only
pay for that service when needed. Since VBAs are independent
contractors there are no ongoing overhead costs -- attorneys only
pay for the services they receive and only when they have a "live"
client.
Working from home, a VBA can work for as many different attorneys.
Because of the Internet, and the ease with which Bankrupty2009
makes working off-site, a VBA can be located anywhere there is an
Internet connection thereby servicing attorneys anywhere in the
world. The VBA is no longer limited by the marketing abilities of
the "boss" or the area in which the attorney lives. VBAs can then
leverage expertise and earn true potential by working "virtually"
anywhere.
VBAs do not have to purchase their own license to Bankruptcy2009.
Any VBA is free to use Bankruptcy2009 provided their client, the
bankruptcy attorney, is a licensed user of Bankruptcy2009. No
additional costs for extra workstations or VBA's is necessary.
Bankruptcy2009 includes several features unique to the VBA
practice which allow VBAs to store multiple user profiles and
change settings with just a mouse-click.
A free demo download of Bankruptcy2009 is available on the
Company's Web site at http://www.bankruptcysoftware.com.
* Large Companies With Insolvent Balance Sheets
-----------------------------------------------
Total
Share- Total
Total holders' Working
Assets Equity Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------ -------- -------
ABSOLUTE SOFTWRE ABT CN 107 (7) 24
AFC ENTERPRISES AFCE US 132 (39) (4)
AMR CORP AMR US 25,175 (2,935) (3,439)
ARBITRON INC ARB US 200 (14) (29)
ARRAY BIOPHARMA ARRY US 136 (27) 54
AUTOZONE INC AZO US 5,235 (187) 112
BARE ESCENTUALS BARE US 300 (0) 146
BLOUNT INTL BLT US 500 (44) 128
BOEING CO BAB BB 53,779 (1,294) (4,961)
BOEING CO BA US 53,779 (1,294) (4,961)
BOEING CO-CED BA AR 53,779 (1,294) (4,961)
CABLEVISION SYS CVC US 9,383 (5,354) (438)
CENTENNIAL COMM CYCL US 1,414 (993) 148
CENVEO INC CVO US 1,552 (221) 190
CHENIERE ENERGY CQP US 1,979 (352) 139
CHENIERE ENERGY LNG US 2,922 (354) 350
CHOICE HOTELS CHH US 328 (138) (15)
CLOROX CO CLX US 4,398 (403) (389)
COCA-COLA ENTER CCE US 15,589 (31) (491)
CV THERAPEUTICS CVTX US 364 (222) 246
DELTEK INC PROJ US 193 (54) 35
DEXCOM DXCM US 44 (39) 17
DISH NETWORK-A DISH US 6,460 (1,949) (882)
DOMINO'S PIZZA DPZ US 464 (1,425) 105
DUN & BRADSTREET DNB US 1,586 (851) (213)
EMBARQ CORP EQ US 8,371 (608) (6)
ENERGY SAV INCOM SIF-U CN 552 (423) (162)
EXELIXIS INC EXEL US 402 (56) 82
EXTENDICARE REAL EXE-U CN 1,806 (40) 95
FORD MOTOR CO F US 222,977 (18,651) (13,313)
GARTNER INC IT US 1,093 (21) (238)
GENTEK INC GETI US 425 (22) 88
HEALTHSOUTH CORP HLS US 1,998 (700) (64)
IMAX CORP IMX CN 229 (97) 34
IMAX CORP IMAX US 229 (97) 34
IMS HEALTH INC RX US 2,087 (153) 231
INTERMUNE INC ITMN US 172 (125) 97
IPCS INC IPCS US 538 (48) 49
JOHN BEAN TECH JBT US 591 (9) 93
KNOLOGY INC KNOL US 643 (56) 26
LINEAR TECH CORP LLTC US 1,494 (310) 992
MEAD JOHNSON-A MJN US 1,361 (1,396) 64
MEDIACOM COMM-A MCCC US 3,719 (347) (274)
MOODY'S CORP MCO US 1,773 (994) (584)
NATIONAL CINEMED NCMI US 610 (526) 96
NAVISTAR INTL NAV US 9,623 (1,493) 1,367
NPS PHARM INC NPSP US 204 (215) 97
OCH-ZIFF CAPIT-A OZM US 2,003 (219) N.A.
OSIRIS THERAPEUT OSIR US 137 (5) 71
OVERSTOCK.COM OSTK US 172 (3) 40
PALM INC PALM US 656 (84) 31
PDL BIOPHARMA IN PDLI US 191 (353) 149
QWEST COMMUNICAT Q US 20,182 (1,449) (883)
REGAL ENTERTAI-A RGC US 2,600 (242) (93)
RENAISSANCE LEA RLRN US 57 (5) (15)
SALLY BEAUTY HOL SBH US 1,489 (720) 365
SONIC CORP SONC US 821 (43) 27
STAR SCIENTIFIC STSI US 12 (0) 6
SUCCESSFACTORS I SFSF US 170 (5) 3
SUN COMMUNITIES SUI US 1,207 (28) N.A.
TAUBMAN CENTERS TCO US 3,072 (163) N.A.
TEAL EXPLORATION TEL SJ 50 (72) (105)
THERAVANCE THRX US 236 (135) 166
UAL CORP UAUA US 19,461 (2,465) (2,420)
UNITED RENTALS URI US 4,191 (29) 276
US AIRWAYS GROUP LCC US 7,214 (505) (626)
VERIFONE HOLDING VF2 GR 840 (38) 308
VERIFONE HOLDING PAY US 840 (38) 308
VERIFONE HOLDING PAY IT 840 (38) 308
WARNER MUSIC GRO WMG US 4,465 (41) (412)
WEIGHT WATCHERS WTW US 1,107 (888) (270)
WESTERN UNION WU US 5,578 (8) 528
WR GRACE & CO GRA US 3,876 (354) 965
YUM! BRANDS INC YUM US 6,527 (108) (771)
*********
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. Ma. Theresa Amor J. Tan Singco, Ronald C. Sy, Joel Anthony
G. Lopez, Cecil R. Villacampa, 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 ***