/raid1/www/Hosts/bankrupt/TCR_Public/090428.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 28, 2009, Vol. 13, No. 116
Headlines
200 PIER AVENUE: Case Summary & 20 Largest Unsecured Creditors
ANTHRACITE CAPITAL: Lenders Extend Waiver Period to April 30
ASYST TECHNOLOGIES: Section 341(a) Meeting Scheduled for May 18
AZER PROPERTY: Section 341(a) Meeting Schedules for May 21
BAKERS FOOTWEAR: Ernst & Young Raises Going Concern Doubt
BANK OF AMERICA: Lied About Merrill Bonuses & Losses, Says Thain
BARZEL INDUSTRIES: Difficult Market Cues S&P to Junk Rating
BOGAR INC: Case Summary & 20 Largest Unsecured Creditors
BRADFORD BANK: TheStreet.com Assigns "Very Weak" E- Rating
BRODER BROS: Expects $34.7MM Net Loss for Fiscal Year 2009
BRODER BROS: Sees at Least $25MM in Bankruptcy-Related Costs
BROWNSBURG GOLF: Files for Chapter 7 Bankruptcy Protection
CAPMARK FINANCIAL: Obtains Covenant Waivers, Warns of Bankruptcy
CAPMARK FINANCIAL: S&P Downgrades Corporate Credit Rating to 'B-'
CCI FUNDING: Case Summary & 19 Largest Unsecured Creditors
CHESAPEAKE CORP: Has Until July 27 to File Chapter 11 Plan
CHRYSLER FINANCIAL: Moody's Cuts Rating on 2006-A Notes to B2
CHRYSLER LLC: Union OKs Labor Pact Change, Fiat Merger to Proceed
CHRYSLER LLC: Obama Adviser Won't Predict Effect of Bankruptcy
CHRYSLER LLC: Canadian Unit May be Spared From Bankruptcy
CHRYSLER LLC: Auto Dealers Brace for Bankruptcy Filing
CHRYSLER LLC: Daimler to Cede Stake, Write Off $1.5BB Loan
CHRYSLER LLC: Jeffrey Schlerf, Esq., Says SDNY Bad Venue Choice
CIT GROUP: Liquidity Pressures Cue Fitch's Rating Cut to 'BB+'
CIT GROUP: Moody's Downgrades Senior Unsecured Rating to 'Ba2'
COUNTRYWIDE FINANCIAL: Bank of America Abandons Countrywide Brand
CORUS BANK: 2009 Shareholders Meeting Scheduled for May 5
CORUS BANK: Robert Glickman Steps Down as President and CEO
CRABTREE RV: Case Summary & 20 Largest Unsecured Creditors
CROCS INC: Brand Name May Disappear By 2010, 24/7 Wall St. Says
DANIEL FLYNN: Case Summary & 18 Largest Unsecured Creditors
DELPHI CORP: Supplements Accommodation Pact, To File Plan By May 4
DELPHI CORP: Equity Committee Says Disbandment Unfair
DELPHI CORP: Amends Suit Against Appaloosa, Other Plan Investors
DELPHI CORP: Keeps Mum on Ongoing Negotiations With GM
DENAR LLC: Case Summary & 6 Largest Unsecured Creditors
ELLISON PLAZA: U.S. Trustee Sets Sec. 341 Meeting for May 19
ENDURANCE BUSINESS: Moody's Cuts Corp. Credit Rating to 'Caa3'
EUROFRESH INC: U.S. Trustee Sets Sec. 341 Meeting for May 26
FAIR DEAL INC.: Case Summary & 8 Largest Unsecured Creditors
FAMCO ENTERPRISES: Case Summary & 15 Largest Unsecured Creditors
FASSETT HOUSE: Voluntary Chapter 11 Case Summary
FGIC CORP: In Default Under JPMorgan Facility; Mum on Lender Talks
FLYING J: Separate Claims Bar Date Set for Big West, Longhorn
FREDDIE MAC: Names David Moffet as Consultant to Interim CEO
GENERAL GROWTH: U.S. Trustee Names 9 Members to Creditors Panel
GENERAL GROWTH: Has Go-Signal to Pay Pre-bankruptcy Obligations
GENERAL MOTORS: Revised Viability Plan Calls for Leaner Company
GENERAL MOTORS: Offers to Swap $27BB in Unsec. Notes for Equity
GENERAL MOTORS: Expects to Borrow Another $9 Billion After June 1
GENERAL MOTORS: Bondholders Find Debt Swap Offer Unreasonable
GENERAL MOTORS: To Convene April 27 Noteholders Meeting in London
GENERAL MOTORS: Auto Dealers Brace for Bankruptcy Filing
GENERAL MOTORS: Jeffrey Schlerf, Esq., Says SDNY Bad Venue Choice
GENTEK INC: S&P Changes Outlook to Negative; Affirms 'BB-' Rating
GI JOE'S: Files Schedules of Assets and Liabilities
GI JOE'S: Court Sets May 31 as General Claims Bar Date
GILBERTO APONTE: Case Summary & 18 Largest Unsecured Creditors
G.M. BERGERON: Case Summary & 20 Largest Unsecured Creditors
HANNON B LLC: Case Summary & 1 Largest Unsecured Creditor
HAPPY VACATIONS: Closes Shop, Files for Bankruptcy Protection
HEALTHSPORT INC: Creason & Associates Raises Going Concern Doubt
HOST HOTELS: $6.60 Share Price Won't Affect S&P's 'BB-' Rating
HUMAN TOUCH: Event of Default Cues Moody's Rating Cut to 'D'
HUMBOLDT CREAMERY: Meeting of Creditors Scheduled for June 2
JEFFREY J. KRAJEWSKI: Voluntary Chapter 11 Case Summary
KARL LEE VANBECELAERE: Case Summary & 10 Largest Unsec. Creditors
KAY BEE KAY: Case Summary & 20 Largest Unsecured Creditors
KRIEGER-RAGSDALE: Closes, Bankruptcy Case Ongoing
LENNAR CORP: Fitch Assigns 'BB+' Rating on $400 Mil. Notes
LENNAR CORP: Moody's Assigns 'B3' Rating on $400 Mil. Notes
LENNAR CORP: S&P Assigns 'BB-' Rating on $400 Mil. Senior Notes
LEON EARL EZZELL: Case Summary & 20 Largest Unsecured Creditors
LOUIS CHARLES: Case Summary & 1 Largest Unsecured Creditor
LEXINGTON PRECISION: DIP Loan Maturity Date Extended to Dec. 31
LIGHTHOUSE LODGE: Can Access Orix's Collateral on Interim Basis
LIGHTHOUSE LODGE: Taps Klein DeNatale as Bankruptcy Counsel
LOW CAMPGROUND: Voluntary Chapter 11 Case Summary
MASTRO'S RESTAURANT: S&P Junks Corporate Credit Rating From 'B-'
MCCLATCHY COMPANY: High Leverage Cues Moody's to Junk Ratings
MERUELO MADDUX: U.S. Trustee Forms Five-Member Creditor Committee
MIDWAY GAMES: Time Warner Will Bid for Company
MRH OF LAKELAND: Case Summary & 20 Largest Unsecured Creditors
NEW CENTURY ENERGY: Gets Final Nod to Use Laurus' Cash Collateral
NEW YORK TIMES: Moody's Downgrades Corporate Family Rating to 'B1'
NEWS-JOURNAL: Judge, Executive See No Need for Bankruptcy Filing
OOBLIO ENTERPRISES: Case Summary & 7 Largest Unsecured Creditors
OWENS-ILLINOIS: S&P Gives Positive Outlook; Keeps 'BB' Rating
PAPER INTERNATIONAL: Files Ch. 11 Plan and Disclosure Statement
PAPER INTERNATIONAL: To Seek September Extension of Exclusivity
PATRICK HACKETT: Creditors Agree to Drop Chapter 7 Petition
PHILADELPHIA NEWSPAPERS: Details Spending Before Bankruptcy Filing
POLAROID CORP: Court Extends Plan Filing Period to May 18
POLAROID CORP: Petters Group May Transfer "Polaroid" Domain Names
PREVENTION LABORATORIES: Section 341(a) Meeting Set for June 9
RAZZ ELECTRICAL: Case Summary & 20 Largest Unsecured Creditors
RED TOP: U.S. Trustee Schedules Meeting of Creditors for May 29
REDFIELD PROPERTY: Voluntary Chapter 11 Case Summary
REICHHOLD INDUSTRIES: S&P Downgrades Corp. Credit Rating to 'B-'
RICHARD DEAN KENDLE: Case Summary & 20 Largest Unsecured Creditors
SANTEE VILLAGE: U.S. Trustee Sets Meeting of Creditors for May 21
SERVICEMASTER CO: S&P Gives Stable Outlook; Affirms 'B' Rating
SHELDON GOOD: Files for Chapter 11 Bankruptcy Protection
SHELDON GOOD: Case Summary & 3 Largest Unsecured Creditors
SHORE CHRISTIAN: Case Summary & 5 Largest Unsecured Creditors
SIDNEY KIMMEL: U.S. Trustee Sets Meeting of Creditors for May 19
SILICON GRAPHICS: Files Schedules of Assets and Liabilities
SILVERHAWK COMMONS: Section 341(a) Meeting Scheduled for May 29
SOUTHAVEN CHRYSLER-JEEP: Chrysler Lawsuit Threat Leads to Collapse
STAR TRIBUNE: Union Accepts 33% Wage Reduction
STEEL DYNAMICS: S&P Puts 'BB+' Rating on CreditWatch Negative
STERIGENICS INTERNATIONAL: S&P Downgrades Corp. Rating to 'B'
SYNOVUS FINANCIAL: Credit Stress Cues Fitch's 'Ba1' Stock Rating
T. THOMAS CHEVROLET: Files for Chapter 11 Bankruptcy Protection
T. THOMAS CHEVROLET: Case Summary & 20 Largest Unsecured Creditors
TELEPLUS WORLD: May Use Cash Collateral of Yorkville Advisors
TEMESCAL CANYON: U.S. Trustee Sets Meeting of Creditors for May 28
TRONOX INC: Seeks September 15 Extension of Plan Filing Period
TRONOX INC: Seeks August 10 Extension of Lease Decision Period
TRONOX INC: To Sell Knoxville Property to K-VA-T for $900,000
TRONOX INC: Panel Taps Kasowitz Benson as Conflicts Counsel
TRONOX INC: Agrees to Shelf Lawsuit Against Gov't. and NJDEP
UCBH HOLDINGS: Poor Credit Quality Cues Fitch's Rating Cut to 'BB'
ULTRA STORES: Seeks Bieri & Ames as Legal Counsel
ULTRA STORES: Wants Kurtzman Carson as Notice and Claims Agent
ULTRA STORES: Wants Lease Decision Period Extended Until August 6
VALLEY HEALTH: S&P Gives Developing Outlook; Affirms 'C' Rating
VANBECO LLC: Case Summary & 9 Largest Unsecured Creditors
VERGE LIVING: Case Summary & 20 Largest Unsecured Creditors
VML COMPANY: Case Summary & 20 Largest Unsecured Creditors
WILMINGTON TRUST: Moody's Cuts Bank Financial Rating to 'C-'
WINDSTREAM CORP: S&P Gives Negative Outlook; Affirms 'BB+' Rating
YRC WORLDWIDE: S&P Changes CreditWatch on 'CCC' Rating to Negative
ZOUNDS INC: Panel Asks Court to Deny Approval of $1MM DIP Loan
ZOUNDS INC: U.S. Trustee Appoints Five-Member Creditors Panel
* Federal Officials Urge Large Banks to Boost Capital Reserves
* Large Companies With Insolvent Balance Sheets
*********
200 PIER AVENUE: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: 200 Pier Avenue, LP
200 Pier Avenue, Suite 421
Hermosa Beach, CA 90254
Bankruptcy Case No.: 09-19494
Chapter 11 Petition Date: April 23, 2009
Court: United States Bankruptcy Court
Central District of California (Los Angeles)
Judge: Alan M. Ahart
Debtor's Counsel: Peter T. Steinberg, Esq.
mr.aloha@sbcglobal.net
Steinberg, Nutter and Brent
23801 Calabasas Rd., Ste. 2031
Calabasas, CA 91302
Tel: (818) 876-8535
Fax: (818) 876-8536
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Schaar Homes Bank loan $193,261
200 Pier Avenue, Suite 421
Hermosa Beach, CA 90254
Tel: (310) 937-5161
Vineyard Bank Bank loan $174,749
8105 Irvine Center Drive
Suite 600
Irvine, CA 92618
Tel: (949) 271-5100
Whittlesey Wallboard Bank loan $86,127
PO Box 3305
Redondo Beach, CA 90277
Tel: (310) 534-5253
T.H. Construction Bank loan $51,584
Anvil Steel Corp. $49,143
Crystal Clear Glass $47,617
DDS Plumbing $45,617
Leone Electric $40,800
Gonzalez Ornamental Iron Works $39,384
General Sheet Metal $37,432
Modern Air $34,499
Pacific Coast Construction $27,135
G&M Plastering $23,050
Allied Nationwide Security $19,379
Inc.
Interior Technology $15,297
Westcon Elevator Bank loan $13,061
California Reflections $11,710
Fire Safe Systems $11,500
Srour & Assoc. Bank loan $10,554
Group 22, Inc. $9,436
The petition was signed by Gary Nicholas Schaar, Jr., the Debtor's
president.
ANTHRACITE CAPITAL: Lenders Extend Waiver Period to April 30
------------------------------------------------------------
Anthracite Capital, Inc. said it continues to have discussions
with its secured credit facility lenders and that the lenders have
agreed to further extend covenant waivers to April 30, 2009.
On April 2, Anthracite Capital said that in connection with the
discussions with its secured credit facility lenders, the Company
did not make interest payments due on March 30, 2009, on its
junior subordinated notes due 2036 related to Anthracite Capital
Trust III and 7.20% senior notes due 2016. Under the indentures
governing these notes, the failure to make an interest payment is
subject to a 30-day cure period before constituting an event of
default.
About Anthracite
Anthracite Capital, Inc. is a specialty finance company focused on
investments in high yield commercial real estate loans and related
securities. Anthracite is externally managed by BlackRock
Financial Management, Inc., which is a subsidiary of BlackRock,
Inc., one of the largest publicly traded investment management
firms in the United States with roughly $1.307 trillion in global
assets under management at December 31, 2008. BlackRock Realty
Advisors, Inc., another subsidiary of BlackRock, provides real
estate equity and other real estate-related products and services
in a variety of strategies to meet the needs of institutional
investors.
Going Concern Doubt
The Company's independent registered public accounting firm has
issued an opinion on the Company's consolidated financial
statements that states the consolidated financial statements have
been prepared assuming the Company will continue as a going
concern and further states that the Company's liquidity position,
current market conditions and the uncertainty relating to the
outcome of the Company's ongoing negotiations with its lenders
have raised substantial doubt about the Company's ability to
continue as a going concern. The Company obtained agreements from
its secured credit facility lenders on March 17, 2009, that the
going concern reference in the independent registered public
accounting firm's opinion to the consolidated financial statements
is waived.
ASYST TECHNOLOGIES: Section 341(a) Meeting Scheduled for May 18
--------------------------------------------------------------
The U.S. Trustee for Region 17 will convene a meeting of creditors
in Asyst Technologies, Inc.'s Chapter 11 case on May 18, 2009, at
11:30 a.m. The meeting will be held at the U.S. Trustee Office,
1301 Clay St No. 690N, in Oakland, 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.
Headquartered in Fremont, California, Asyst Technologies, Inc. --
http://www.asyst.com/-- makes, sell and support integrated
hardware and software systems primarily for semiconductor and flat
panel display manufacturing industries.
The Company filed for Chapter 11 on April 20, 2009 (Bankr. N.D.
Calif. Case No. 09-43246). Ali M.M. Mojdehi, Esq., at the Law
Offices of Baker and McKenzie, represents the Debtor in its
restructuring efforts. As of December 31, 2008, the Debtor had
total assets of $295,782,000 and total debts of $315,364,000.
AZER PROPERTY: Section 341(a) Meeting Schedules for May 21
----------------------------------------------------------
The U.S. Trustee for Region 16 will convene a meeting of creditors
in Azer Property Partnership's Chapter 11 case on May 21, 2009, at
3:00 p.m., at 725 S Figueroa Street, Room 2610, Los Angeles,
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.
Los Angeles, California-based Azer Property Partnership filed
for Chapter 11 on April 15, 2009 (Bankr. C.D. Calif. Case No.
09-18845). William H. Brownstein, Esq., at William H. Brownstein
& Associates, P.C., represents the Debtor in its restructuring
efforts. The Debtor said its total assets and total debts both
range from $10 million to $50 million.
BAKERS FOOTWEAR: Ernst & Young Raises Going Concern Doubt
---------------------------------------------------------
Ernst & Young LLP in St. Louis, Missouri, has expressed
substantial doubt on the ability of Bakers Footwear Group, Inc.,
to continue as a going concern. The Company's independent
registered public accounting firm cited the Company's substantial
losses from operations in recent years. In addition, the Company
is dependent on its various debt agreements to fund its working
capital needs. E&Y said the debt agreements contain certain
financial covenants with which the Company must comply, and
compliance cannot be assured.
Bakers Footwear Group incurred net losses of $15.0 million and
$17.7 in fiscal years 2008 and 2007, but made significant progress
during 2008 in refocusing inventory lines and maintaining cost
control. Since June 2008, Bakers Footwear Group has achieved
positive comparable store sales each month through March 2009.
For fiscal year 2008, Bakers Footwear Group increased gross margin
by 200 basis points and reduced selling, general and
administrative expenses by 220 basis points as a percentage of
sales despite being negatively impacted by the sharp economic
slowdown during the year, especially as it dramatically impacted
customer demand and competitive pricing pressures beginning in
mid-December and continuing through year end. As a consequence,
Bakers Footwear Group's fourth quarter sales and gross profit were
each over $3 million below what it had anticipated at the end of
the third quarter.
Bakers Footwear Group said it took aggressive promotional actions
to maintain control of inventory levels at year end, which
resulted in disappointing fourth quarter results, but placed the
Company in a good inventory position to start the first quarter of
fiscal year 2009.
Bakers Footwear Group said its losses in fiscal years 2008 and
2007 had a significant negative impact on its financial position
and liquidity. As of January 31, 2009, it had negative working
capital of $14.8 million, unused borrowing capacity under its
revolving credit facility of $700,000, and its shareholders'
equity had declined to $10.4 million.
In fiscal year 2008, Bakers Footwear Group obtained net proceeds
of $6.7 million from the entry into a $7.5 million three-year
subordinated secured term loan and the issuance of 350,000 shares
of common stock. On May 9, 2008, Bakers Footwear Group amended
the subordinated secured term loan to reduce the financial
covenant for minimum adjusted EBITDA for the first quarter of
fiscal year 2008 to maintain compliance as of May 2, 2008 and to
defer principal payments until September 1, 2008. As
consideration for the amendment, it issued an additional 50,000
shares of common stock.
On April 9, 2009, subsequent to year end, Bakers Footwear Group
again amended the subordinated secured term loan to reduce the
financial covenant for minimum adjusted EBITDA for the fourth
quarter of fiscal year 2008 to maintain compliance at January 31,
2009. As consideration for the amendment, it paid a $250,000 fee
and issued an additional 250,000 shares of common stock. The
amendment also tightened the minimum adjusted EBITDA covenants and
tangible net worth covenants and reduced the capital expenditure
covenants for fiscal years 2009 and 2010.
In addition, on April 9, Bakers Footwear Group amended its
revolving credit agreement, extending the expiration date to
January 2011 from August 2010, and obtaining the senior lender's
consent to the amendment of the subordinated secured term loan.
The amendment also increased the Company's interest rate from the
bank's prime rate to prime plus 2.5%, increased its unused line
fee from 0.25% to 0.5%, reduced the overall facility from $40
million to $30 million, eliminated the grace period for failing to
maintain minimum availability levels, and reduced the advance rate
during the fourth quarter. In connection with this amendment,
Bakers Footwear Group paid $125,000 in fees. As of April 11, the
balance on its revolving line of credit was $14.8 million and its
unused borrowing capacity was $2.3 million.
2009 Business Plan
Bakers Footwear Group said its business plan for fiscal year 2009
is based on a continuation of the mid-single digit increases in
comparable store sales, which began in the second quarter of
fiscal year 2008, through the remainder of the year. Fiscal year
2009 comparable store sales through April 11, 2009, are up 7.5%
consistent with the business plan, under which it expects to
maintain adequate levels of liquidity for the remainder of fiscal
year 2009. The business plan also reflects continued focus on
inventory management and on timely promotional activity.
Bakers Footwear Group believes this focus on inventory should
improve its overall gross margin performance compared to fiscal
year 2008. The plan includes continued control over selling,
general and administrative expenses which are expected to continue
to benefit from cost reductions initiated in 2007.
Bakers Footwear Group is also working with landlords and vendors
to arrange payment terms that are reflective of its seasonal cash
flow patterns to manage its availability. The Company said its
business plan for fiscal year 2009 reflects a significant
improvement in cash flow, but does not indicate a return to
profitability. However, there is no assurance that it will
achieve the sales margin or cash flow contemplated in the business
plan.
"We continue to face considerable liquidity constraints. Although
we believe our business plan is achievable, should we fail to
achieve the sales or gross margin levels we anticipate, or if we
were to incur significant unplanned cash outlays, it would become
necessary for us to obtain additional sources of liquidity or make
further cost cuts to fund our operations. However, there is no
assurance that we would be able to obtain such financing on
favorable terms, if at all, or to successfully further reduce
costs in such a way that would continue to allow us to operate our
business," Bakers Footwear Group said.
Bakers Footwear Group added that if its current positive sales
trends are not maintained, it could fail to maintain a liquidity
position adequate to support its ongoing operations.
Bakers Footwear Group also noted, "Our subordinated secured term
loan includes certain financial covenants which require us to
maintain specified levels of adjusted EBITDA and tangible net
worth each fiscal quarter and provides for annual limits on
capital expenditures (all as calculated in accordance with the
loan agreement). Based on our business plan for the remainder of
the year and our other actions, we believe that we will be able to
comply with our financial covenants. However, given the inherent
volatility in our sales performance, there is no assurance that we
will be able to do so.
"Furthermore, in light of our historical sales volatility and the
current state of the economy, we believe that there is a
reasonable possibility that we may not be able to comply with our
minimum adjusted EBITDA covenant. Failure to comply would be a
default under the terms of our term loan and could result in the
acceleration of our term loan, and possibly all of our debt
obligations. If we are unable to comply with our financial
covenants, we will be required to seek one or more amendments or
waivers from our lenders. We believe that we would be able to
obtain any required amendments or waivers, but can give no
assurance that we would be able to do so on favorable terms, if at
all. If we are unable to obtain any required amendments or
waivers, our lenders would have the right to exercise remedies
specified in the loan agreements, including accelerating the
repayment of our debt obligations and taking collection actions
against us. If such acceleration occurred, we currently have
insufficient cash to pay the amounts owed and would be forced to
obtain alternative financing. As a result of these uncertainties,
our long-term debt obligations have been classified as current
liabilities."
About Bakers Footwear Group
Bakers Footwear Group, Inc., is a national, mall-based, specialty
retailer of distinctive footwear and accessories targeting young
women who demand quality fashion products. The Company features
private label and national brand dress, casual and sport shoes,
boots, sandals and accessories. As of January 31, 2009, the
Company operated 239 stores, including the 21 store Wild Pair
chain that targets men and women between the ages of 17 and 29 who
desire edgier, fashion forward footwear. As of April 11, 2009, it
operated 240 stores, including 21 Wild Pair stores.
BANK OF AMERICA: Lied About Merrill Bonuses & Losses, Says Thain
----------------------------------------------------------------
Susanne Craig at The Wall Street Journal relates that former
Merrill Lynch chief John Thain claimed that Bank of America Corp.
lied about its role in the big bonuses and losses at Merrill Lynch
& Co.
According to WSJ, BofA has stated publicly that Mr. Thain alone
decided to pay bonuses to Merrill workers in December 2008 rather
than in January 2009 -- when they usually go out. Mr. Thain left
Merrill in January 2009 after being asked by BofA CEO Kenneth
Lewis to resign.
WSJ quoted Mr. Thain as saying, "The suggestion Bank of America
was not heavily involved in this process, and that I alone made
these decisions, is simply not true." Mr. Thain, WSJ relates,
said that he and Mr. Lewis agreed in writing that the bonuses
could be paid before BofA's acquisition of Merrill closed.
Mr. Lewis lost confidence in Mr. Thain when Mr. Lewis learned of
the losses from the transition team, WSJ states, citing some BofA
executives. According to WSJ, Mr. Lewis flew informed federal
regulators in December 2008 that he was considering abandoning the
takeover. In January 2009, BofA disclosed the massive fourth-
quarter loss at Merrill and said that the government had backed
the Merrill deal with $20 billion in additional aid and protection
against losses on $118 billion in troubled assets, WSJ relates.
BofA, according to the report, said that the deterioration of
Merrill's assets was much larger than it expected.
Mr. Thain said that he was stunned by a Financial Times article
that reported Merrill had "accelerated" bonus payments to pay them
before the takeover was completed, WSJ relates. According to the
Financial Times article, a BofA spokesperson said that Mr. Thain
had decided to speed up the payments and that BofA "was informed
of his decision." Mr. Thain claimed that he wasn't given a chance
to review BofA's statement and would have strongly objected to it,
WSJ reports.
BofA spokesperson Robert Stickler, WSJ states, said that the bank
"stands by statements it has made. These issues have been
previously extensively reported by the news media. We believe it
is time to move on. We wish Mr. Thain well in his future
endeavors."
WSJ relates that Mr. Lewis said last week that he felt pressured
by government officials to complete the deal and to remain silent
about his concerns about the mounting losses at Merrill.
SEC Excluded From Merrill Deal Talks, Troubles Chief
Alistair Barr at WSJ reports that the U.S. Securities and Exchange
Commission Chairperson Mary Schapiro said that it was "troubling"
that the Treasury Department and the Federal Reserve excluded the
SEC from discussions between the government and BofA about the
acquisition of Merrill. According to WSJ, New York Attorney
General Andrew Cuomo said in a letter to regulators and
legislators that the SEC wasn't included in deliberations between
the Treasury, the Federal Reserve and BofA about the deal. Citing
Ms. Schapiro, WSJ states that the decision to disclose such
information, or not disclose it, doesn't rest with the Treasury or
the Federal Reserve, "so I don't know why the information wasn't
shared" with the SEC.
BofA Drops Countrywide Name
Nick Timiraos at WSJ states that BofA is letting go of the
Countrywide name and rebranding the home mortgage lender as Bank
of America Home Loans.
WSJ relates that Countrywide had been blamed for aggressive
lending practices that helped, in part, to fuel the housing boom.
WSJ says that Countrywide faces a federal probe and several
lawsuits concerning its business practices.
WSJ reports that BofA, in launching the new Bank of America Home
Loans brand, said that it would offer clients a one-page loan
summary in "straightforward language" that would explain
information on an individual's loans, including closing costs,
interest rates, monthly payments and payment terms.
Bank of America
Based in Charlotte, North Carolina, Bank of America --
http://www.bankofamerica.com/-- is one of the world's largest
financial institutions, serving individual consumers, small and
middle market businesses and large corporations with a full range
of banking, investing, asset management and other financial and
risk-management products and services. The company serves more
than 59 million consumer and small business relationships with
more than 6,100 retail banking offices, nearly 18,700 ATMs and
online banking with nearly 29 million active users. Following the
acquisition of Merrill Lynch on January 1, 2009, Bank of America
is among the world's leading wealth management companies and is a
global leader in corporate and investment banking and trading
across a broad range of asset classes serving corporations,
governments, institutions and individuals around the world. Bank
of America offers support to more than 4 million small business
owners. The company serves clients in more than 150 countries.
Bank of America Corporation stock is a component of the Dow Jones
Industrial Average and is listed on the New York Stock Exchange.
The bank needed the government's financial help in completing its
acquisition of Merrill Lynch.
Merrill Lynch & Co. Inc. -- http://www.ml.com/-- is a wealth
management, capital markets and advisory companies with offices in
40 countries and territories. As an investment bank, it is a
leading global trader and underwriter of securities and
derivatives across a broad range of asset classes and serves as a
strategic advisor to corporations, governments, institutions and
individuals worldwide. Merrill Lynch owns approximately half of
BlackRock, one of the world's largest publicly traded investment
management companies with more than $1 trillion in assets under
management. Merrill Lynch's operations are organized into two
business segments: Global Markets and Investment Banking (GMI) and
Global Wealth Management (GWM).
As reported by the Troubled Company Reporter on March 27, 2009,
Moody's Investors Service lowered the senior debt rating of Bank
of America Corporation to A2 from A1, the senior subordinated debt
rating to A3 from A2, and the junior subordinated debt rating to
Baa3 from A2. The preferred stock rating was downgraded to B3
from Baa1. The holding company's short-term rating was affirmed
at Prime-1.
BARZEL INDUSTRIES: Difficult Market Cues S&P to Junk Rating
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term corporate
credit rating on Norwood, Massachusetts-based Barzel Industries
Inc. two notches to 'CCC+' from 'B'. At the same time, S&P
lowered the issue level rating on Barzel's US$315 million senior
secured notes to 'CCC' (one notch below the corporate credit
rating) from 'B-'. The recovery rating on the debt is unchanged
at '5', indicating S&P's opinion of an expectation of a modest
(10%-30%) recovery in the event of a payment default. The ratings
remain on CreditWatch with negative implications, where they were
placed March 5, 2009.
"The downgrade reflects our opinion that difficult steel market
conditions will continue to constrain Barzel's liquidity,
particularly considering that a US$18.1 million interest payment
on its US$315 million senior secured notes is due May 15, 2009,"
said Standard & Poor's credit analyst Donald Marleau.
S&P believes the combination of sharply falling steel prices and
low volumes will result in weak profitability and cash flow
generation. As such, S&P does not expect that the company's
EBITDA to cover interest and modest capital expenditures in 2009,
while the recent liquidation of working capital leaves means it
must rely on cash on hand and limited availability on its asset-
backed loan to fund operations. Barzel's countercyclical cash
flows typically enable the company to generate cash from working
capital in periods of declining demand, although this also reduces
the borrowing base of its ABL revolver, thereby shrinking
available liquidity. Moreover, the precipitous drop in steel
prices has caused the company to generate negative operating
earnings, as unit revenues drop faster than the value of purchased
steel inventories.
"Our ratings reflect what view as the significant volatility
associated with Barzel's markets and cash flows, thin margins, and
what S&P consider a highly leveraged financial risk profile,"
added Mr. Marleau. The ratings reflect (albeit to a lesser extent
in this period of significant weakness) the company's variable
cost structure and its ability to generate cash from working
capital through soft end markets.
Barzel has a small share of the fragmented North American steel
service center market, offering a suite of general processing
services along with some niche value-added processing,
distribution, and manufacturing.
Standard & Poor's will resolve the CreditWatch as Barzel addresses
near-term liquidity concerns. The ratings would be under further
pressure if the company risks losing access to its revolver, which
could either constrain the company's ability to fund its
operations or jeopardize the US$18.1 million interest payment on
its US$315 million senior secured notes. In addition, the ratings
would likely be lowered to 'D' if interest payments are
rescheduled.
BOGAR INC: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Bogar, Inc.
dba Happy Vacations
314 Westridge Drive
Watsonville, CA 95076
Bankruptcy Case No.: 09-53046
Chapter 11 Petition Date: April 23, 2009
Court: United States Bankruptcy Court
Northern District of California (San Jose)
Judge: Roger L. Efremsky
Debtor's Counsel: Henry B. Niles, III, Esq.
Law Offices of Henry B. Niles III
340 Soquel Ave. #105
Santa Cruz, CA 95062
Tel: (831) 457-4545
Fax: (831) 457-4555
Email: ecf-niles@hbniles.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/canb09-53046.pdf
The petition was signed by David Marshall, president of the
Company.
BRADFORD BANK: TheStreet.com Assigns "Very Weak" E- Rating
----------------------------------------------------------
TheStreet.com (fka Weiss Ratings) has assigned its E- rating to
Baltimore, Md.-based Bradford Bank. TheStreet.com says that the
institution currently demonstrates what it considers to be
significant weaknesses and has also failed some of the basic tests
the rating agency uses to identify fiscal stability. "Even in a
favorable economic environment," TheStreet.com says, "it is our
opinion that depositors or creditors could incur significant
risks."
Bradford Bank is chartered as a Savings Association, primarily
regulated by the Office of Thrift Supervision. The institution
was established on Jan. 1, 1903, and deposits have been insured by
the Federal Deposit Insurance Corporation since Sept. 6, 1935.
Bradford Bank maintains a Web site at http://www.bradfordbank.net/
and has nine branches in Anne Arundel, Baltimore and Howard
counties.
At June 30, 2008, Bradford Bank disclosed $418 million in deposits
in its regulatory filings.
BRODER BROS: Expects $34.7MM Net Loss for Fiscal Year 2009
----------------------------------------------------------
Broder Bros., Co., distributed on April 23, 2009, presentation
materials to holders of its outstanding 11-1/4% Senior Notes due
October 15, 2010, relating to the exchange offer for the Existing
Notes.
The presentation materials disclose the Company's preliminary
unaudited financial results for the first quarter of 2009 and its
preliminary forecasted financial results for fiscal year 2009:
First Fiscal
Quarter 2009 Year 2009
------------ ---------
Revenue $151,700,000 $742,500,000
Percentage change from
previous period (22.9)% (19.8)%
Gross profit $25,100,000 $116,200,000
Gross margin 16.5% 15.6%
Adjusted operating expenses $26,100,000 $99,700,000
Percentage of revenue 17.2% 13.4%
Net loss ($14,500,000) ($34,700,000)
Adjusted EBITDA ($1,000,000) $16,500,000
Gross margin (0.7)% 2.2%
Broder Bros. has not been able to file its Annual Report on Form
10-K for the fiscal year ended December 27, 2008. The Company had
said it is devoting substantial resources in addressing its
liquidity needs in light of recent and ongoing adverse economic
and industry conditions.
Broder Bros. said on April 15 that its board had reached an
agreement in principal on the terms of an exchange offer with an
Ad Hoc Committee of the holders of its 11-1/4% Senior Notes due
October 15, 2010. The exchange offer is supported by the Ad Hoc
Committee comprised of holders of roughly 30% of the Existing
Notes. The ad hoc committee has been advised by Broadpoint
Capital on financial issues and by Quinn Emanuel Urquhart Oliver &
Hedges, LLP on legal issues.
Broder Bros. formally announced the exchange offer on April 20.
Note holders who participate in the exchange will receive the
Company's newly issued 12%/15% Senior Payment-in-Kind Toggle Notes
due 2013 and a pro-rata share of the Company's newly issued common
stock.
This change in the Company's capital structure is intended to
reduce its leverage, extend the maturity of its senior debt,
decrease its cash interest expense, and enhance the Company's
near-term liquidity.
For each $1,000 in Old Notes, Participating Note Holders will
receive $444.44 of New Exchange Notes and their pro rata share of
no less than 95% of the New Common Stock. The New Common Stock to
be issued to the Participating Note Holders is subject to dilution
upon the exercise of warrants to be issued to the existing
stockholders and the exercise of stock options to be issued as
part of a new management equity incentive plan.
Participating Note Holders will also, by tendering their Old
Notes, become obligors under and beneficiaries of a mutual release
under which the parties including the Participating Note Holders,
the Company and the existing equityholders of the Company will
agree to release the other parties to the mutual release and their
related parties from all claims that the parties and their related
parties have, had or may have directly or indirectly related to
the Company, subject to limited exceptions set forth in the
release.
Participating Note Holders will also be required to deliver
consents to amend the indenture governing the Old Notes to waive
any and all existing defaults and events of default that have
arisen or may arise under the Old Notes, eliminate substantially
all of the covenants in the indenture relating to the Old Notes
that govern the company's actions, other than the covenants to pay
principal of and interest on the existing notes when due, and
eliminate or modify the related events of default.
Consummation of the Exchange Offer is subject to a number of
conditions, including the absence of certain adverse legal and
market developments and the valid tender of at least $220,500,000
aggregate principal amount of the Old Notes prior to the
expiration of the Exchange Offer.
Holders who tender their Old Notes on or before the earlier of
April 30, 2009 and the date on which the minimum tender condition
is satisfied will receive a consent payment in cash equal to
$10.00 per $1,000 principal amount of Old Notes tendered and
additional exchange notes in a principal amount equal to $10.00
per $1,000 principal amount of Old Notes tendered.
The Exchange Offer will expire at 5:00 pm, New York City time, on
May 14, 2009, unless extended or terminated by the Company.
Tenders of Old Notes may be withdrawn at any time prior to the
earlier of (i) 5:00 p.m., New York City time, on May 14, 2009 (the
"Consent Time") and (ii) the date on which at least $220,500,000
in aggregate principal amount of the Old Notes have been tendered
and the other closing conditions have been met, subject to
extension.
About Broder Bros., Co.
Headquartered in Trevose, Pennsylvania, Broder Bros., Co. --
http://www.broderbrosco.com,http://www.broderbros.com,
http://www.alphashirt.comand http://www.nesclothing.com/-- owns
and operates three brands in the imprintable sportswear industry:
"Broder," "Alpha" and "NES." The company supplies imprintable
apparel and accessories to screenprinters, embroiderers,
promotional products distributors, athletic dealers, and other
businesses.
* * *
As reported by the Troubled Company Reporter on April 20, 2009,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Broder Bros. Co. to 'SD' from 'CC'. S&P also lowered
the ratings on the company's $225 million 11.25% senior notes due
2010 to 'D' from 'C'. The recovery rating on these notes remains
at '6', indicating expectations for negligible (0%-10%) recovery
in the event of payment default. As of December 31, 2008, S&P
estimates Broder had about $375 million in reported debt
outstanding.
The TCR said March 6, 2009, that Moody's Investors Service
downgraded Broder Bros., Co.'s Probability of Default and
Corporate Family Ratings to Ca from Caa3. Moody's also lowered
the rating on the company's senior unsecured notes to C from Ca.
The rating outlook remains negative.
BRODER BROS: Sees at Least $25MM in Bankruptcy-Related Costs
------------------------------------------------------------
Broder Bros., Co., had said that if it fails to secure the
participation of at least 98% of the 11-1/4% Senior Notes due
October 15, 2010, or does not consummate its planned exchange
offer for any reason, it intends to initiate a restructuring
through the filing of a voluntary petition under Chapter 11 of the
U.S. Bankruptcy Code.
The Company projects that it will incur roughly $25.0 million in
fees, expenses and borrowing costs in connection with an in-court
restructuring. This projection does not include liquidity
constraints associated with a reduction in sales and collections,
the acceleration of vendor payments as a result of a contraction
of trade terms, fees associated with new money investments or
general business degradation.
The Company has opted not to make the interest payment on the
Existing Notes due April 15. The Company has until May 15, 2009,
to make the payment within the grace period in the Existing Notes'
indenture. Following the recent amendment to the Company's
revolving credit facility, this failure to pay interest is not a
default, and will not adversely affect the Company's ability to
borrow, under that credit facility.
Early this month, Broder Bros. entered into an amendment, waiver
and consent of its existing revolving loan credit agreement with
Bank of America, N.A. as Administrative Agent and the other
lenders party thereto. Pursuant to the terms of the First
Amendment, the commitment under the Revised Credit Agreement was
reduced to $200 million, and the borrowing base was amended to
provide for a seasonal stretch tranche of up to $13.5 million
through April 30, 2009, and up to $10.0 million through May 31,
2009. No seasonal stretch is provided for after June 1, 2009.
The Revised Credit Agreement provides for interest based upon a
fixed spread over the administrative agent's LIBOR lending rate.
The Revised Credit Agreement contains a LIBOR floor of 1.50% and a
base rate floor equal to the greater of (a) the LIBOR Rate for a
30 day interest period plus 1.00% or (b) the Federal Funds
effective rate plus 0.50%. The Revised Credit Agreement requires
that the Company pay interest at a rate equal to (i) prime rate
plus 3.00% for base rate borrowings and (ii) Adjusted LIBOR plus
4.00% (or, after May 31, 2009, 3.75% depending upon the Company's
average excess availability) for Eurodollar borrowings. The
Revised Credit Agreement will continue to be secured by first
priority interest in substantially all the assets of the Company.
The Revised Credit Agreement imposes significant covenants on the
Company. The Revised Credit Agreement contains both affirmative
and negative covenants which, among other things, requires the
Company to meet these financial covenants:
* A minimum fixed charge coverage ratio equal to 1.22 to 1.00
as of the end of the first quarter 2009, 1.14 to 1.00 as of
the end of the second quarter 2009, 1.10 to 1.00 as of the
end of the third quarter 2009, and 1.00 to 1.00 as of the end
of the fourth quarter 2009.
* For fiscal year 2010 and 2011, the minimum fixed charge
coverage ratio will be released if the Company has equal to
or greater than 20% excess availability under the Revised
Revolver Facility for ten consecutive days, but if there is
less than 20% excess availability, a minimum fixed charge
coverage ratio of 1.00 to 1.00 will apply at all times.
The First Amendment, among other things:
(i) provides lender consent to the general terms of an exchange
offer with respect to the Company's senior notes;
(ii) contains a waiver by the lender of any default arising from
the delay in delivering the Company's 2008 audited
financial statements until May 15, 2009, and a default
should the Company not pay interest due April 15, 2009 on
the Company's senior notes until May 15, 2009;
(iii) permits a change of control which may arise in connection
with the exchange offer;
(iv) increases the unused line fee to 0.75%;
(v) institutes an availability block on the amount that can be
borrowed under the Revised Credit Agreement in the amount
of:
(A) from June 28, 2009 through August 1, 2009, $2,000,000,
(B) from August 2, 2009 through August 29, 2009,
$3,000,000,
(C) from August 30, 2009 through September 26, 2009,
$4,000,000, and
(D) thereafter, $5,000,000;
provided that on and after December 26, 2009, the
availability block shall cease to be in effect if and when
certain availability requirements are met and the minimum
fixed charge coverage ratio is not less than 1.25:1.00 for
two consecutive fiscal quarters;
(vi) restricts the Company's ability to pay:
(x) dividends unless certain excess availability
requirements are met and the minimum fixed charge
coverage ratio is equal to or greater than 1.10:1.00
after giving effect to such dividend or such amounts
are funded with proceeds of an equity issuance,
(y) principal payments under its existing notes unless
certain excess availability requirements are satisfied
or such amounts are funded with proceeds of an equity
issuance, and
(z) principal, interest (other than payment in kind) or
cash consent fees (following consummation of the
exchange offer) under the Exchange Notes unless certain
excess availability requirements are met or such
amounts are funded with proceeds of an equity issuance;
and
(vii) provides the lenders with full cash dominion for six
months after the effective date of the amendment, with a
return to springing cash dominion after such six months if
certain availability requirements are met.
About Broder Bros., Co.
Headquartered in Trevose, Pennsylvania, Broder Bros., Co. --
http://www.broderbrosco.com,http://www.broderbros.com,
http://www.alphashirt.comand http://www.nesclothing.com/-- owns
and operates three brands in the imprintable sportswear industry:
"Broder," "Alpha" and "NES." The company supplies imprintable
apparel and accessories to screenprinters, embroiderers,
promotional products distributors, athletic dealers, and other
businesses.
* * *
As reported by the Troubled Company Reporter on April 20, 2009,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Broder Bros. Co. to 'SD' from 'CC'. S&P also lowered
the ratings on the company's $225 million 11.25% senior notes due
2010 to 'D' from 'C'. The recovery rating on these notes remains
at '6', indicating expectations for negligible (0%-10%) recovery
in the event of payment default. As of December 31, 2008, S&P
estimates Broder had about $375 million in reported debt
outstanding.
The TCR said March 6, 2009, that Moody's Investors Service
downgraded Broder Bros., Co.'s Probability of Default and
Corporate Family Ratings to Ca from Caa3. Moody's also lowered
the rating on the company's senior unsecured notes to C from Ca.
The rating outlook remains negative.
BROWNSBURG GOLF: Files for Chapter 7 Bankruptcy Protection
----------------------------------------------------------
Tampa Bay Business Journal reports that Brownsburg Golf Course
Inc. has filed for Chapter 7 bankruptcy protection in the U.S.
Bankruptcy Court for the Middle District of Florida.
Brownsburg Golf listed $4.5 million in assets -- the estimated
value of the 27-hole course -- and $6.7 million in liabilities,
according to court documents. Business Journal relates that
Brownsburg Golf owes Suncoast Ventures Inc. about $5.86 million,
which is secured by the course at 1552 Palm View Road.
Business Journal states that Suncoast Ventures filed a foreclosure
lawsuit against Brownsburg Golf in 2008.
According to Business Journal, David Swartz and Sherry Swartz --
the controlling principals of Brownsburg Golf -- sought personal
bankruptcy protection under Chapter 7 of the U.S. Bankruptcy Code.
Country club Brownsburg Golf Course Inc. owns the Oak Ford Golf
Course in Sarasota.
CAPMARK FINANCIAL: Obtains Covenant Waivers, Warns of Bankruptcy
----------------------------------------------------------------
Capmark Financial Group Inc. disclosed that throughout 2008, it
incurred operating losses due principally to fair value
adjustments on its loans held for sale, real estate and investment
portfolios and an increase in the provision for loan losses on the
portfolio of loans held for investment. Capmark said the
combination of pre-tax operating losses and valuation allowances
on Capmark's deferred tax assets recognized in the fourth quarter
of 2008 have contributed to a significant decline in its
stockholders' equity. As a result, Capmark was not in compliance
with the leverage ratio covenant in the senior credit facility and
bridge loan agreement as of the quarter ended December 31, 2008.
However, according to Capmark, the required lenders under the
senior credit facility and the bridge loan agreement have agreed
to waive Capmark's compliance with the leverage ratio covenant as
of the quarters ended December 31, 2008 and March 31, 2009, and
the requirement to deliver its annual audited financial statements
within 110 days after year end. These waivers are effective
through May 8, 2009.
In light of adverse market conditions and Capmark's operating
results as well as the negative effect on its liquidity from the
near-term maturity of the bridge loan, Capmark entered into
discussions with the lenders under its senior credit facility and
bridge loan agreement. The discussions have included negotiating
modifications to certain terms of the senior credit facility and
bridge loan agreement, including the waivers. Additionally, as of
April 20, 2009, lenders representing approximately 94% of the
outstanding loans under the bridge loan agreement have agreed to
extend the maturity date of the bridge loan to May 8, 2009.
"Unless the lenders under the senior credit facility and bridge
loan agreement continue to waive or eliminate the leverage ratio
covenant beyond May 8, 2009, further extend the maturity of the
bridge loan agreement and otherwise restructure the senior credit
facility and bridge loan agreement, upon expiration of the waivers
Capmark will be in default under these agreements and the majority
lenders under such agreements can immediately declare all loans
due and payable," the Company said.
"Any such acceleration of the maturity of the debt obligations
would permit Capmark's senior noteholders and certain other
lenders and contractual counterparties to terminate and/or
accelerate the maturity of obligations due under other financing
instruments and agreements, including the senior notes. If the
lenders, noteholders, and/or other counterparties demand immediate
repayment of all of the obligations, Capmark would likely be
unable to pay all such obligations," the Company explained. "If
Capmark has not otherwise been able to recapitalize, refinance, or
raise additional liquidity by selling some or all of its assets or
through some other form of restructuring, it will have to seek to
reorganize under Chapter 11 of the United States Bankruptcy Code.
Due to these conditions and events, Capmark said, substantial
doubt exists about its ability to continue as a going concern.
Capmark's management believes that access to capital markets is
extremely limited in the current economic environment and it is
unlikely that it will be able to access new capital if it is
unable to complete the restructuring of the senior credit facility
and bridge loan agreement.
Capmark plans to continue to negotiate with its lenders in an
effort to complete a restructuring of the senior credit facility
and bridge loan agreement. There is no assurance that Capmark
will be able to restructure its borrowing arrangements on
acceptable terms, if any, or obtain further waivers to or
elimination of the leverage ratio covenant to adequately reduce
the risk of default in the near future. Capmark continues to
actively manage its assets and intends to reduce its overall debt
while seeking to maintain adequate liquidity to support its
operations. Further, Capmark's management is focused on
maintaining appropriate regulatory capital at Capmark Bank, a Utah
industrial bank.
$1.4 Billion Net Loss for 2008
On April 24, Capmark reported a net loss of $1.1 billion for the
quarter ended December 31, 2008, compared to a net loss of $11.2
million for the quarter ended December 31, 2007. The operating
results for the fourth quarter of 2008 were adversely affected by
continued disruptions in the capital and financial markets and the
deterioration of the global economy. These conditions contributed
to pre-tax valuation losses on loans, investments and real estate
of $741.3 million in the fourth quarter of 2008 compared to pre-
tax valuation losses of $100.4 million in the fourth quarter of
2007.
On February 25, 2009, Capmark reported a preliminary pre-tax loss
of approximately $800 million for the fourth quarter of 2008,
pending additional review of certain accounts, including deferred
tax assets, intangibles, and certain investments, for
recoverability or impairment. The review resulted in an increase
in pre-tax losses of approximately $73.8 million, for a total pre-
tax loss for the fourth quarter of $873.8 million. The additional
$73.8 million pre-tax loss was due to additional impairments on
investment securities and tax credit equity investments totaling
$71.2 million and additional valuation charges on mortgage loans
of $2.6 million. Additionally, Capmark increased its after-tax
valuation allowance on its deferred tax assets by approximately
$276 million due to the uncertainty that related net operating
losses and tax credits would be realized in the future, for a
total valuation allowance on its federal and foreign deferred tax
assets of $389.7 million as of December 31, 2008.
For the year ended December 31, 2008, Capmark reported a net loss
of $1.4 billion compared to net income of $280.3 million for the
year ended December 31, 2007. The 2008 loss was primarily
attributable to increased net losses on loans, investments and
real estate, including net losses on loans of $1.0 billion in 2008
compared to net losses on loans of $128.4 million in 2007, and the
$389.7 million valuation allowance on its federal and foreign
deferred tax assets as of December 31, 2008.
Liquidity
As of December 31, 2008, Capmark had readily available cash and
U.S. Treasury securities classified as trading (excluding
restricted cash and cash held by Capmark Bank) of approximately
$1.7 billion.
During the year ended December 31, 2008, net cash provided by
operating activities totaled $1.2 billion. The European loan sale
in April 2008 generated approximately $1.8 billion in cash, the
proceeds of which were primarily used to repay indebtedness.
Capmark used net cash of $1.3 billion in investing activities for
the year ended December 31, 2008, primarily for the origination of
loans held for investment totaling $2.9 billion, which was offset
in part by the receipt of approximately $1.5 billion from the
repayment of loans held for investment. For the year ended
December 31, 2008, Capmark used approximately $376.9 million of
net cash in its financing activities, in large part due to a net
decrease of $398.1 million in short-term borrowings.
In the fourth quarter of 2008, Capmark continued to take actions
to maintain liquidity to support its business operations, such as
focusing its efforts on originating loans for government-sponsored
programs and third parties of $2.0 billion in the fourth quarter
and $8.3 billion for the year ended December 31, 2008. In
addition, Capmark has materially reduced its proprietary
originations, other than funding of previously committed loans,
and substantially all 2008 originations were funded by Capmark
Bank.
A full-text copy of the Company's Annual Report on Form 10-K is
available at no charge at http://ResearchArchives.com/t/s?3c06
A full-text copy of Amendment No. 6 to the Bridge Loan Agreement,
dated as of April 20, 2009, among the Company, the financial
institutions and other institutional lenders party thereto, and
Citicorp North America, Inc., as administrative agent, is
available at no charge at http://ResearchArchives.com/t/s?3c07
A full-text copy of the Waiver to the Credit Agreement, dated as
of April 20, 2009, among the Company, certain subsidiaries of the
Company, the financial institutions and other institutional
lenders party thereto, and Citibank N.A., as administrative agent,
is available at no charge at http://ResearchArchives.com/t/s?3c08
About Capmark Financial
Capmark Financial Group Inc. is a diversified company that
provides a broad range of financial services to investors in
commercial real estate-related assets. Capmark has three core
businesses: lending and mortgage banking, investments and funds
management, and servicing. Capmark operates in North America,
Europe and Asia.
As of December 31, 2008, the Company had $9.68 billion in total
assets and $8.46 billion in total liabilities.
CAPMARK FINANCIAL: S&P Downgrades Corporate Credit Rating to 'B-'
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
ratings on Capmark Financial Group Inc., including lowering the
local currency corporate credit rating on the company to 'B-' from
'B+'.
At the same time, S&P revised the CreditWatch listing of the
ratings to developing from negative implications, where S&P placed
them on March 2, 2009. All of S&P's ratings on Capmark-related
commercial mortgage servicer rankings are unchanged and remain on
CreditWatch with negative implications, where S&P placed them on
March 5, 2009.
"The downgrade results from funding pressures that have
intensified because of the firm's announcement of a large loss for
fourth-quarter 2008," said Standard & Poor's credit analyst
Jeffrey Zaun. "In addition, the firm's 2008 financial statements
contain language questioning its ability to continue as a going
concern."
Write-downs, provisioning, and impairment charges caused quarterly
losses totaling $1.1 billion. Also, the continued need for
extensions on its bridge loan has intensified S&P's concern as to
whether Capmark can negotiate a longer term extension of its
bridge loan and modifications to the terms of both the bridge loan
loan and its senior credit facility.
The CreditWatch with developing implications indicates that S&P
could raise, lower, or affirm the ratings, depending on the
results of Capmark's negotiations with lenders.
CCI FUNDING: Case Summary & 19 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: CCI Funding I, LLC
8101 E Prentice Ave Ste M202
Greenwood Village, CO 80111-2930
Bankruptcy Case No.: 09-17437
Debtor-affiliates filing subject to Chapter 11 petitions on
April 22, 2009:
Entity Case No.
------ --------
Commercial Capital, Inc. 09-17238
Type of Business: The Debtors are commercial real estate lenders
and investment partners engaging in short-
term commercial mortgage.
See http://www.commercialcapitalinc.com/
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
District of Colorado (Denver)
Judge: Elizabeth E. Brown
Debtor's Counsel: Jeffrey Weinman, Esq.
jweinman@epitrustee.com
Weinman & Associates, P.C.
730 17th St., Ste. 240
Denver, CO 80202
Tel: (303) 572-1010
Estimated Assets: $100 million to $500 million
Estimated Debts: $100 million to $500 million
The Debtor's Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Red River Hotels I, LLC $4,191,886
6841 S. Yosemite St., Ste. 110
Aurora, CO 80012
17200 W Colfax, LLC $3,276,829
P.O. Box 542
Wheat Ridge, CO 80034-0542
Gateway Village, LLC $3,020,838
6841 S. Yosemite St., Ste. 110
Centennial, CO 80112-1410
Hotel Gold Crown Centennial LLC $2,497,879
6460 S. Quebec St.
Centennial, CO 80111-4628
VLC Acquisition Group, LLC $2,139,835
7703 N. Lamar Blvd., Ste. 510
Austin, TX 78752-1055
Linda Vista of Lakeway, LLC $2,078,667
9211 Waterford Centre Blvd., Ste. 200
Austin, TX 78758-7667
DT Land Development, LLC $1,585,843
4509 Alameda Blvd., NE Ste. B
Albuquerque, NM 87113-1705
220 Casteel Ridge, LLC $1,476,012
P.O. Box 1371
Vail, CO 81658-1371
Foundations Enterprise Group, LLC $1,470,800
1701 W Thomas Rd Ste 201
Phoenix, AZ 85015
Morgan Oliveros Parks, LLC $1,443,051
2210 Malahini Dr.
Lake Havasu City, AZ 86404-1904
RM LLC $1,242,727
6460 S. Quebec St.
Centennial, CO 80111-4628
G&G/Peninsula LP $1,181,625
3101 Welton Cliff Dr.
Cedar Park, TX 78613-4345
Natomas Urban Development, LLC $1,034,223
1300 National Dr., Ste. 150
Sacramento, CA 95834-1991
BM LLC $943,366
6460 S. Quebec St.
Centennial, CO 80111-4628
Upper Blue River Developments, LLC $701,760
6116 McKinley Ave
Des Moines, IA 50321-1655
Blake J. Allen $515,393
15 Geneva Trl
Manitou Springs, CO 80829-1723
Upper Blue River Developments, LLC $495,862
The Shores, LLC $478,537
Elk Run Plaza, LLC $460,306
The petition was signed by Matthew Witt, president of Commercial
Capital, Inc.
CHESAPEAKE CORP: Has Until July 27 to File Chapter 11 Plan
----------------------------------------------------------
The Hon. Douglas O. Tice, Jr., of the United States Bankruptcy
Court for the Eastern District of Virginia extended the exclusive
periods of Chesapeake Corporation and its debtor-affiliates to:
a) file a Chapter 11 plan of reorganization until July 27,
2009, and
b) solicit acceptances of that plan until Sept. 25, 2009.
The Debtors' initial deadline to file a plan is April 28, 2009.
According to the Troubled Company Reporter on April 15, 2009,
extension of the Exclusive Periods is needed to allow the Debtors
more time to close their asset sale. The Court approved the sale
of the Debtors' operating businesses to a group of investors,
including affiliates of Irving Place Capital Management, L.P., and
Oaktree Capital Management, L.P. Chesapeake received no other
qualifying bids for the assets. The Company expects the
transaction to close by mid-April 2009, TCR noted.
The Debtors' unsecured creditors are seeking an investigation on
the sale, saying they had reservations as to whether the sale
negotiations were conducted in good faith. The official committee
of unsecured creditors said Chesapeake's requests for court
approval of its bankruptcy financing and sale procedures may have
been commenced for the benefit of Chesapeake, the lead group
bidding on its assets, and Wachovia, at the expense of the
unsecured creditors. The committee wants to make sure Chesapeake
had not been improperly "coaxed" into selling all of its assets.
Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE:
CSK) -- http://www.cskcorp.com-- supplies specialty paperboard
packaging products in Europe and an international supplier of
plastic packaging products to niche end-use markets. The Debtors
have 44 locations in Europe, North America, Africa and Asia and
employs approximately 5,400 people worldwide. The company
directly owns 100% of each of the other Debtors.
The Company owns, directly or indirectly, 100% of each of the non-
debtor subsidiaries except: (i) Chesapeake Plastics Kft, a
Hungarian joint venture which is 49% owned by Chemark Kft; and
(ii) Rotam Boxmore Packaging Co. Ltd., a British Virgin Islands
company which is 50% owned by Canada Rotam International Co. Ltd.
The Company's certificate of authorization authorizes the issuance
of 60,000,000 shares of common stock. About 20,559,115 shares of
common stock are issued and outstanding with par value of $1.00
per share as of December 26, 2008. Moreover, the company's
certificate allows the issuance of 500,000 shares of preferred
stock, and no shares are outstanding.
As of December 31, 2007, Dimensional Fund Advisors LLP owns 7.98%
of the Company; T. Rowe Price Associates Inc., 8.4%; and Wells
Fargo & Company, 14.71%. Edelmann GmbH & Co. KG and Joachim W.
Dziallas owns 13.5% of the company as of September 19, 2008.
New York Stock Exchange suspended the listing of the company's
common stock effective Oct. 8, 2008, due to its inability to meet
the global market capitalization requirements for continued
listing on the exchange. Subsequently, the company's stock began
to be quoted on the over-the-counter bulletin board under the
trading symbol "CSKE.PK."
Chesapeake Corporation, and 18 affiliates filed Chapter 11
petitions (Bankr. E.D. Virginia, Lead Case No. 08-336642) on
December 29, 2008. Chesapeake has tapped Alvarez and Marsal North
America LLC and Goldman Sachs & Co. as financial advisors. The
Company's legal advisor in the U.S. is Hunton & Williams LLP. It
also brought along Tavenner & Beran PLC as conflicts counsel and
Hammonds LLP as special counsel. Its claims agent is Kurtzman
Carson Consultants LLC. The United States Trustee for Region 4
appointed seven creditors to serve on an Official Committee of
Unsecured Creditors for the Debtors' Chapter 11 cases.
As of September 30, 2008, Chesapeake's consolidated balance sheets
showed $936.4 million in total assets, including $340.7 million in
current assets; and $937.1 million in total liabilities, including
$469.2 million in current liabilities, resulting in $500,000 in
stockholders' deficit.
CHRYSLER FINANCIAL: Moody's Cuts Rating on 2006-A Notes to B2
-------------------------------------------------------------
Moody's Investors Service has taken these ratings actions on
dealer floorplan asset-backed notes issued by Chrysler Financial
Services Americas LLC:
Master Chrysler Financial Owner Trust 2006-A (formerly known as
DaimlerChrysler Master Owner Trust 2006-A)
-- Class A Notes, Downgraded from Baa3 to B2 and remain under
review for further possible downgrade; previously on
January 14, 2009, downgraded from A3 to Baa3 under review for
further possible downgrade
Master Chrysler Financial Owner Trust 2008-B (formerly known as
DaimlerChrysler Master Owner Trust 2008-B)
-- Class A Notes, Downgraded from A1 to Baa3 and remain under
review for further possible downgrade; previously on
January 14, 2009, downgraded from Aaa to A1 under review for
further possible downgrade
Both transactions are issued out of a single master trust whose
assets consist of a revolving pool of receivables payable by
dealers and secured primarily by the dealers' related inventory,
which consists primarily of cars and light trucks manufactured by
Chrysler LLC. The dealers' accounts were originated and are
serviced by Chrysler Financial. The 2006-A Class A Notes will
begin their accumulation phase in June.
Rationale
On April 21, Moody's downgraded the Corporate Family Ratings for
Chrysler to C. The downgrade of the corporate rating was driven
by the impact that the unprecedented erosion in the North American
auto markets is having on Chrysler's ongoing viability, and on the
value of its tangible assets and its various brands. The actions
on the Chrysler floor plan securitizations also reflect the
significant negative effect that a possible bankruptcy could have
on key performance factors in the floorplan transactions. A
potential Chrysler bankruptcy (reorganization or liquidation)
could lead to high dealer default rates, depressed collateral
recovery values, and could severely constrain the servicer's
ability to monitor dealers and secure collateral if numerous
dealers default in a short period of time. Since Moody's last
rating actions on the floor plan transactions on January 14, 2009,
the probability of a Chrysler bankruptcy has increased. The
rating actions reflect the current bankruptcy probability and the
significant event risk facing Chrysler's outstanding floorplan
transactions caused by the near term uncertainty surrounding
Chrysler's future.
The notes remain on review for further possible downgrade due to
significant uncertainty surrounding Chrysler in 2009. On
March 31, the Obama administration rejected the restructuring
plans submitted by Chrysler. The administration also affirmed its
willingness to rely on the bankruptcy process to restructure the
company unless it can formulate a new plan that the administration
determines will be effective in restoring its competitiveness.
Chrysler faces a significant burden in demonstrating its viability
due to a narrow window for submitting a revised plan (by April 30,
2009) and therefore has a high risk of filing for bankruptcy, in
Moody's view. The ratings are now consistent with Moody's
expectation that a Chapter 11 filing is quite likely but that an
immediate Chapter 7 filing is not likely. Moody's will continue
to monitor developments and will further assess the potential
impact on their rated outstanding floorplan transactions as
necessary. The uncertainty related to potential developments,
particularly the potential for a Chapter 7 filing by Chrysler
later this year, underlies the continued review process for the
transactions.
Rating Methodology
Moody's floorplan analysis is based on a joint-default probability
analysis of both the manufacturer and dealers with loss given
default determined by collateral at risk net of recoveries. The
total collateral at risk with a joint-default is the remaining
unpaid floorplan loan calculated based on the monthly payment rate
prior to dealer default.
The analysis is implemented through a simulation model, which
simulates losses during a two year amortization period following
an event of default based on a set of key modeled assumptions:
* Manufacturer bankruptcy scenarios
* Dealer default rates
* Recovery rates
* Payment rates
In addition, Moody's includes other modeled assumptions in the
simulation model such as linkage of default probability between
manufacturer and dealer to macroeconomic activity, linkage between
manufacturer and dealer default probability, and sold-out-of-trust
assumptions.
Modeled assumptions form the basis of the quantitative analysis
executed through a simulation model. Manufacturer default is
simulated, which is further specified into Chapter 11 and Chapter
7 bankruptcies. Manufacturer default probability is modeled based
on committee assessment, often with reference to the manufacturer
rating. Next, the simulation model simulates dealer default,
which takes place randomly throughout the two year amortization
period. The final step in simulation is to calculate total
principal collections. For non-defaulting dealers, outstanding
floorplan balances are assumed to be paid in full at the end of
the two year amortization period and losses will be zero. For
defaulted dealers, the model calculates total collateral at risk
determined by payment rate prior to dealer default and then
applies a recovery rate under different circumstances where the
manufacturer is either in a non-bankrupt status, a Chapter 11
bankruptcy or a Chapter 7 bankruptcy.
Each simulation run simulates a total loss and corresponding
internal rate of return reduction for each bond. This IRR helps
form the quantitative basis of Moody's rating assessment. Moody's
also evaluates qualitative factors such as the quality of provided
information, servicer strength, and dealership profile. Combining
the qualitative and quantitative analysis, a final rating level is
determined.
Servicer
Chrysler Financial is a wholly-owned indirect subsidiary of
Chrysler Holding LLC and engages in providing consumer and dealer
automotive financing for the products of Chrysler LLC and other
manufacturers, including retail and lease financing for vehicles,
dealer inventory and other financing needs. Chrysler Holding owns
both Chrysler Financial and Chrysler. Long-term senior unsecured
debt ratings for Chrysler Financial and Chrysler are Ca and C,
respectively. The rating outlook for Chrysler Financial is
negative.
CHRYSLER LLC: Union OKs Labor Pact Change, Fiat Merger to Proceed
-----------------------------------------------------------------
John D. Stoll and Jeff Bennett at The Wall Street Journal report
that the United Auto Workers have agreed to amend its labor
contract with Chrysler LLC and reduce health-care obligations owed
to retirees.
Alex P. Kellogg at WSJ states that the union would eventually own
55% of the stock in a restructured Chrysler, as agreed by the two
parties. WSJ says Chrysler agreed to pay a $4.587 billion note
into the trust fund, or VEBA, that the union will manage and use
to take over the cost of providing health care for retired
workers. Chrysler, according to the report, will pay $300 million
in cash into VEBA in 2010 and 2011, and increase the amounts up to
$823 million in the years 2019 to 2023. The report states that
VEBA will also:
-- own a "significant" amount of Chrysler stock,
-- be able to appoint a representative to Chrysler's board, and
-- be allowed to sell the stock to other parties.
WSJ relates that the union agreed to a suspension of cost-of-
living-adjustments, or COLAs, and new limits on overtime pay.
WSJ states that workers will be paid for overtime after they have
worked at least 40 hours in a week. They will also lose their
Easter Monday holiday in 2010 and 2011, WSJ says.
Chrysler, WSJ states, will provide the UAW with quarterly
"updates" and the contributions by company "executives, CEOs,
dealers, suppliers, and other constituents."
Chrysler's chief bargainer, Al Iacobelli, said in a statement, "As
a result [of the deal], Chrysler LLC can continue to pursue a
partnership with Fiat. The provisional agreement provides the
framework needed to ensure manufacturing competitiveness and helps
to meet the guidelines set forth by the U.S. Treasury Department."
WSJ relates that Fiat had demanded that Chrysler reach an
agreement with the UAW before it would agree to a merger deal.
The report says that the Treasury Department also demanded union
givebacks.
According to WSJ, the union said that the deal is a "concessionary
agreement" that was painful, but meets the government's demands.
"We recognize this has been a long ordeal for active and retired
auto workers, and a time of great uncertainty. The patience,
resolve and determination of UAW members in these difficult times
is extraordinary, and has made it possible for us to reach the
agreement we will present to our membership," UAW President Ron
Gettelfinger said in a statement.
The UAW said that the agreement, which would alter the terms of
its 2007 labor contract with Chrysler, has received the Treasury's
approval, WSJ reports. According to WSJ, the union hopes to have
the changes approved by Chrysler's UAW workforce by April 29. WSJ
notes that the UAW will likely get cash and equity in Chrysler.
Chrysler, WSJ states, also cemented a separate cost-cutting deal
with the Canadian Auto Workers union. WSJ says that CAW members
ratified the agreement -- which would save Chrysler about C$240
million per year -- on Sunday. According to the report, the
hourly labor cost of Chrysler's 8,000 unionized Canadian workers
will be reduced by C$19 per hour. The agreement, says the report,
includes:
-- the elimination of the C$1,700 Christmas bonus,
-- a reduction in health-care benefits, and
-- flexibility in work rules that will let temporary people
and suppliers to work in Canadian assembly plants.
WSJ reports that Chrysler and CAW will also work to create a trust
fund that will cover retiree health care. WSJ states that there
will be no cut in CAW base pay, but the Company will lay off its
third-shift at the Windsor, Ontario, minivan plant later this year
due to declining sales.
Retirees May Get Benefits Through Tax Credit
John D. McKinnon at The Wall Street Journal reports that GM and
Chrysler retirees might get their benefits through the health-
coverage tax credit created by Congress in 2002.
According to WSJ, labor leaders and U.S. officials are seeking a
way to pay for the retiree benefit programs of Chrysler and GM.
WSJ notes that the health-coverage tax credit could be an
important source of aid, a federal subsidy covering certain
retiree health-care costs. The report states that under the
health-coverage tax credit provision, the federal government can
pay health-insurance premium costs for early retirees of between
55 and 65 years old if their former employer runs into financial
problems and can't pay promised benefits. WSJ says that some
early retirees from the troubled U.S. steel industry have used the
tax credit in recent years.
The health-coverage tax credit, WSJ states, has been little known
and the procedure for securing it is complex. WSJ notes that a
fraction of the people eligible for the health-coverage subsidy
has been able to take advantage of the health-coverage tax credit.
According to the report, the recent stimulus legislation that the
Congress passed expanded the subsidy and streamlined the process,
so now it increased its coverage to 80% from 65% of eligible
retirees' health-care premiums.
WSJ relates that for the retirees to take advantage of the health-
coverage tax credit, their former employer must have terminated
its pension plan and turned it over to the Pension Benefit
Guaranty Corp. According to WSJ, GM, Chrysler, and Ford Motor Co.
workers don't want the firms to terminate their pension plans.
The United Auto Workers union reported that the basic annual
benefits for an early retiree from GM, Chrysler, and Ford totaled
$32,760 as of 2003. Citing officials, WSJ says that the PBGC pays
maximum annual benefits of $18,900 for a 50-year-old retiree.
According to the report, many experts say that the pension plans
of Chrysler and GM are in decent shape and might survive even if
the two companies file for bankruptcy.
Lenders May Cut $6.9BB in Secured Debt to $3.75BB
Jeffrey McCracken, Kate Linebaugh, and Stacy Meichtry at WSJ
relate that Chrysler lenders said Friday that they would cut their
$6.9 billion in secured debt to $3.75 billion, from a $4.5 billion
offer made earlier last week. People familiar with the matter
told WSJ the creditors abandoned their request for $1 billion of
preferred stock in Chrysler and another request that Fiat put $1
billion of cash into Chrysler.
Sources told WSJ that the lenders still want to keep 40% of the
equity in a restructured Chrysler. WSJ says that the government
wants the lenders to keep $1.5 billion of the debt and 5% of
equity of a revamped Chrysler.
According to WSJ, under the agreement once Chrysler is
reorganized, Fiat SpA will "eventually" own 35% of Chrysler and
the U.S. government and the Company's secured lenders together
will end up owning 10% of the Company.
WSJ relates that the U.S. government has agreed to forgive the
$4 billion it lent Chrysler and to inject another $6 billion into
the auto maker to finance its possible bankruptcy and operations.
According to WSJ, lenders have demanded senior management
appointees, governance provisions, and technology transfers that
are acceptable to them. WSJ states that the lenders are pushing
for a board seat and rights to supervise how Fiat governs
Chrysler. WSJ reports that several lenders are worried that Fiat
will overcharge Chrysler for new technologies or parts,
effectively stripping money out of Chrysler over time through
technology-transfer agreements. The report says that Fiat could
make in-kind equity contributions over time to build up its equity
stake.
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
A report by The Wall Street Journal in March 2009 said Cerberus is
set to shed its stake in Chrysler as part of the conditions
surrounding the company's bailout arrangement with the U.S.
government. An anonymous source within the Obama administration
told WSJ Cerberus' equity stake no longer holds value. The source
told WSJ Cerberus will still hold on to a controlling stake in
Chrysler Financial, but its stake in the automaker itself will
likely be eviscerated.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
GM faces a June 1 deadline to complete restructuring plans that
satisfy the government's auto task force. So far, GM has received
$13.4 billion in federal loans.
The Office of the Special Inspector General for the Troubled Asset
Relief Program has said GM may receive up to $5 billion and
Chrysler up to $500 million in additional working capital. The
additional loans are part of the modification to the existing loan
program.
GM and Chrysler admitted in their viability plans submitted in
February 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
* * *
As reported by the Troubled Company Reporter on April 14, 2009,
Standard & Poor's Ratings Services lowered its issue-level ratings
on Chrysler'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.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
CHRYSLER LLC: Obama Adviser Won't Predict Effect of Bankruptcy
--------------------------------------------------------------
According to The Associated Press, White House economic adviser
Larry Summers would not predict whether Chrysler LLC would have to
file bankruptcy or how damaging it would be to the economy if the
automaker did. Mr. Summers said Sunday the Obama administration
is holding out hope that Chrysler can stay out of bankruptcy
court, AP relates.
"We will certainly do our part to support a successful
negotiation, but on the other hand, the president has made clear
-- and I think most Americans would share this view -- that you've
got to have responsibility, you've got to have accountability and
you can't have a situation where companies precede on permanent
basis relying only on cash from the government," Mr. Summers said,
according to AP.
"That's why [President Obama] made clear that there needed to be a
new structure which Chrysler could operate, which would make long-
term liability possible."
Mr. Summers appeared on "Fox News Sunday," AP says.
"We're hopeful that the negotiations, which have preceding with
great energy, are going to conclude successfully," AP quotes Mr.
Summers as saying. "You never know -- with any negotiation --
until the very end. There are some issues that have been worked
out. There are some issues that remain to be worked out, but it's
in everybody's interest to see these negotiations succeed and
we're hopeful that they will."
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
A report by The Wall Street Journal in March 2009 said Cerberus is
set to shed its stake in Chrysler as part of the conditions
surrounding the company's bailout arrangement with the U.S.
government. An anonymous source within the Obama administration
told WSJ Cerberus' equity stake no longer holds value. The source
told WSJ Cerberus will still hold on to a controlling stake in
Chrysler Financial, but its stake in the automaker itself will
likely be eviscerated.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
GM faces a June 1 deadline to complete restructuring plans that
satisfy the government's auto task force. So far, GM has received
$13.4 billion in federal loans.
The Office of the Special Inspector General for the Troubled Asset
Relief Program has said GM may receive up to $5 billion and
Chrysler up to $500 million in additional working capital. The
additional loans are part of the modification to the existing loan
program.
GM and Chrysler admitted in their viability plans submitted in
February 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
* * *
As reported by the Troubled Company Reporter on April 14, 2009,
Standard & Poor's Ratings Services lowered its issue-level ratings
on Chrysler'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.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
CHRYSLER LLC: Canadian Unit May be Spared From Bankruptcy
---------------------------------------------------------
Chrysler Canada may not have to seek creditor protection, even
though its parent, Chrysler LLC, files for bankruptcy, Dow Jones
Newswires reports, citing Canadian Finance Minister Jim Flaherty.
According to Dow Jones, Minister Flaherty said in a conference
call from Washington that the unit may not have to file for
bankruptcy "because of the differing legal regimes."
Dow Jones relates that Chrysler Canada, like its U.S. parent, has
until April 30 to present a restructuring plan that would make it
qualify for government aid. The report states that the U.S. and
Canadian governments have required the Chrysler companies to
strike a merger deal with Fiat SpA for a bailout package.
The cost-cutting agreement Chrysler Canada reached with the
Canadian Auto Workers on Friday was a "fundamental change. . . .
I think the important point is that the company will go through a
transformation, that they have been able to reach an agreement
with the CAW, that Fiat is also part of the agreement. It's
important for the viability of what the transformed company will
be," Dow Jones quoted Minister Flaherty as saying.
According to The Globe and Mail, the Canadian and Ontario
governments are in talks with the U.S. Treasury Department and
automotive executives to provide as much as $6 billion in
bankruptcy financing to General Motors Corp. and Chrysler LLC.
The Globe, citing sources, relates that Canada would provide as
much as 15% of a $40 billion fund that would help the automakers
through the initial phases of protection from creditors.
An OfficialWire report on April 8 states that under the Canadian
Warranty Commitment Program, the Canadian government is putting up
about $185.3 million to back warranties of new Chrysler and GM
vehicles in case the firms go bankrupt. Citing Industry Minister
Tony Clement, Sun Media says that the fund would back vehicles
sold and would last throughout the troubled firms' restructuring
period.
Up to $700 million was also allocated to an insurance program for
about 650 auto parts suppliers to protect them if either GM or
Chrysler files for bankruptcy, The Globe says, citing Minister
Clement. According to the report, the suppliers can choose to pay
a premium of 0.75% of the value of sales to GM and Chrysler.
Minister Clement, the report states, said that the government
would then pay the full value owed to the supplier if one of the
two automakers folds.
Canada May Provide $6BB Financing for Bankruptcy
The Canadian and Ontario governments are in talks with the U.S.
Treasury Department and automotive executives to provide as much
as $6 billion in bankruptcy financing to General Motors Corp. and
Chrysler LLC, The Globe and Mail reports.
The Globe, citing sources, relates that Canada would provide as
much as 15% of a $40 billion fund that would help the automakers
through the initial phases of protection from creditors.
An OfficialWire report on April 8 states that under the Canadian
Warranty Commitment Program, the Canadian government is putting up
about $185.3 million to back warranties of new Chrysler and GM
vehicles in case the firms go bankrupt. Citing Industry Minister
Tony Clement, Sun Media says that the fund would back vehicles
sold and would last throughout the troubled firms' restructuring
period.
Up to $700 million was also allocated to an insurance program for
about 650 auto parts suppliers to protect them if either GM or
Chrysler files for bankruptcy, The Globe says, citing Minister
Clement. According to the report, the suppliers can choose to pay
a premium of 0.75% of the value of sales to GM and Chrysler.
Minister Clement, the report states, said that the government
would then pay the full value owed to the supplier if one of the
two automakers folds.
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
A report by The Wall Street Journal in March 2009 said Cerberus is
set to shed its stake in Chrysler as part of the conditions
surrounding the company's bailout arrangement with the U.S.
government. An anonymous source within the Obama administration
told WSJ Cerberus' equity stake no longer holds value. The source
told WSJ Cerberus will still hold on to a controlling stake in
Chrysler Financial, but its stake in the automaker itself will
likely be eviscerated.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
GM faces a June 1 deadline to complete restructuring plans that
satisfy the government's auto task force. So far, GM has received
$13.4 billion in federal loans.
The Office of the Special Inspector General for the Troubled Asset
Relief Program has said GM may receive up to $5 billion and
Chrysler up to $500 million in additional working capital. The
additional loans are part of the modification to the existing loan
program.
GM and Chrysler admitted in their viability plans submitted in
February 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
* * *
As reported by the Troubled Company Reporter on April 14, 2009,
Standard & Poor's Ratings Services lowered its issue-level ratings
on Chrysler'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.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
CHRYSLER LLC: Auto Dealers Brace for Bankruptcy Filing
------------------------------------------------------
John D. Stoll at The Wall Street Journal reports that dealers of
Chrysler LLC and General Motors Corp. are bracing for possible
bankruptcy filings by the companies, which could trigger repayment
of inventory loans.
According to WSJ, GM and Chrysler have 10,000 dealers in the U.S.,
with most of them carrying considerable debt, mainly from the
money they borrow to purchase cars. WSJ notes that the banks
extending that credit -- called "wholesale" loans or "floorplan"
financing that are credit for inventory -- could immediately start
calling dealer loans to demand a good portion of the money back if
Chrysler or GM were to file for bankruptcy. The report says that
the banks would refuse to extend any more inventory financing.
The loans, according to the reprot, are primarily given by GMAC
LLC and Chrysler Financial to dealers so they can purchase
vehicles to stock their showrooms. The report states that the
vehicles being sold by the dealers serve as collateral for the
loans, which are paid back using proceeds from the sale of
vehicles.
WSJ relates that Chrysler Financial and GMAC have "clawback"
provisions that let the finance companies to demand at least
partial payment of the loans in case the of a bankruptcy filing,
because the value of the vehicles being used as collateral would
drop when the companies collapse.
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
A report by The Wall Street Journal in March 2009 said Cerberus is
set to shed its stake in Chrysler as part of the conditions
surrounding the company's bailout arrangement with the U.S.
government. An anonymous source within the Obama administration
told WSJ Cerberus' equity stake no longer holds value. The source
told WSJ Cerberus will still hold on to a controlling stake in
Chrysler Financial, but its stake in the automaker itself will
likely be eviscerated.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
GM faces a June 1 deadline to complete restructuring plans that
satisfy the government's auto task force. So far, GM has received
$13.4 billion in federal loans.
The Office of the Special Inspector General for the Troubled Asset
Relief Program has said GM may receive up to $5 billion and
Chrysler up to $500 million in additional working capital. The
additional loans are part of the modification to the existing loan
program.
GM and Chrysler admitted in their viability plans submitted in
February 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
* * *
As reported by the Troubled Company Reporter on April 14, 2009,
Standard & Poor's Ratings Services lowered its issue-level ratings
on Chrysler'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.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
CHRYSLER LLC: Daimler to Cede Stake, Write Off $1.5BB Loan
----------------------------------------------------------
Mike Ramsey and Ben Livesey at Bloomberg report that Daimler AG
agreed to cede its remaining 19.9% stake in Chrysler to Cerberus
Capital Management and write off a $1.5 billion loan.
According to Messrs. Ramsey and Livesey, Han Tjan, a spokesman for
Daimler, said Daimler reached an agreement with Chrysler and the
U.S. Pension Benefit Guaranty Corp. to pay $600 million into
Chrysler's pension plans during the next three years.
Chrysler LLC Chief Executive Officer Robert Nardelli said
yesterday that Daimler AG is working with Cerberus to divest its
19.9% stake in the Company, according to various reports. In a
memo to Chrysler staff, Mr. Nardelli said the top priority was to
preserve Chrysler and the livelihood of its 54,000 employees. He
said the entire leadership team was focused on completing the
requirements to qualify for additional U.S. government aid.
Chrysler was working "diligently to finalize our alliance with
Fiat and restructure our business by the government's April 30
deadline," he said in the memo.
Chrysler faces an April 30 deadline to reach agreements for an
alliance with Fiat SpA, a reduction in secured debt and resolution
of labor issues with its unions. Bloomberg notes that the
ownership transfer clears another hurdle for Chrysler.
"As a practical matter, if they go into bankruptcy, their stock
was worthless and their debt would have been worthless," Bloomberg
quotes Maryann Keller, an auto analyst and president of Maryann
Keller & Associates in Stamford, Connecticut, as saying.
Daimler and Chrysler will proceed with existing supplier
relationships, and Cerberus and Chrysler will waive claims they
may have had against Daimler, according to Bloomberg.
A spokesman for Cerberus, Peter Duda, confirmed the details in the
Daimler statement without elaborating, Bloomberg says.
According to Bloomberg, Daimler said it will recognize an expense
of as much as $700 million against its earnings before interest
and taxes in the second quarter as a result of the transaction.
Daimler had already written down to zero the value of its Chrysler
stake, and its loan in the fourth quarter of 2008, according to
company regulatory filings.
The United Auto Workers have agreed to amend its labor contract
with Chrysler LLC and reduce health-care obligations owed to
retirees. The agreement, says The Wall Street Journal, is
believed to include a 50% reduction in the amount of cash Chrysler
owes a health-care fund that was set up in 2007. According to the
report, Chrysler is also expected to have won at least hundreds of
dollars in per-car labor savings from the UAW.
Chrysler also agreed to a deal with the Canadian Auto Workers
union. CAW members have ratified the agreement -- which would
save Chrysler about C$240 million per year. WSJ said the hourly
labor cost of Chrysler's 8,000 unionized Canadian workers will be
reduced by C$19 per hour. WSJ also said Chrysler and CAW will
work to create a trust fund that will cover retiree health care.
WSJ said there will be no cut in CAW base pay, but the Company
will lay off its third-shift at the Windsor, Ontario, minivan
plant later this year due to declining sales.
On Friday, Chrysler lenders said they would cut their $6.9 billion
in secured debt to $3.75 billion. People familiar with the matter
told WSJ the creditors abandoned their request for $1 billion of
preferred stock in Chrysler and another request that Fiat put $1
billion of cash into Chrysler.
Sources told WSJ that the lenders still want to keep 40% of the
equity in a restructured Chrysler. WSJ says that the government
wants the lenders to keep $1.5 billion of the debt and 5% of
equity of a revamped Chrysler.
WSJ relates that the U.S. government has agreed to forgive the
$4 billion it lent Chrysler and to inject another $6 billion into
the auto maker to finance its possible bankruptcy and operations.
According to WSJ, lenders have demanded senior management
appointees, governance provisions, and technology transfers that
are acceptable to them. WSJ states that the lenders are pushing
for a board seat and rights to supervise how Fiat governs
Chrysler. WSJ reports that several lenders are worried that Fiat
will overcharge Chrysler for new technologies or parts,
effectively stripping money out of Chrysler over time through
technology-transfer agreements. The report says that Fiat could
make in-kind equity contributions over time to build up its equity
stake.
The Associated Press says Fiat CEO Sergio Marchionne was in the
U.S. as talks continued for Fiat to take a 20% stake in Chrysler
in exchange for its small-car technology. The additional $6
billion loan from the government is hinged on Chrysler completing
its restructuring and entering into the deal with Fiat.
According to AP, industry analysts said Fiat may build the small
cars at Chrysler factories in the U.S., but they wouldn't arrive
until late 2010 or early 2011.
In 2007, Cerberus acquired an 80.1% stake in Chrysler for $7.2
billion. Daimler AG kept a 19.9% stake. Late in 2008, Daimler
attempted to sell its remaining stake to Cerberus, but talks have
been stalled.
A report by WSJ in March 2009 said Cerberus is set to shed its
stake in Chrysler as part of the conditions surrounding the
company's bailout arrangement with the U.S. government. An
anonymous source within the Obama administration told WSJ
Cerberus' equity stake no longer holds value. The source told WSJ
Cerberus will still hold on to a controlling stake in Chrysler
Financial, but its stake in the automaker itself will likely be
eviscerated.
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
GM faces a June 1 deadline to complete restructuring plans that
satisfy the government's auto task force. So far, GM has received
$13.4 billion in federal loans.
The Office of the Special Inspector General for the Troubled Asset
Relief Program has said GM may receive up to $5 billion and
Chrysler up to $500 million in additional working capital. The
additional loans are part of the modification to the existing loan
program.
GM and Chrysler admitted in their viability plans submitted in
February 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
* * *
As reported by the Troubled Company Reporter on April 14, 2009,
Standard & Poor's Ratings Services lowered its issue-level ratings
on Chrysler'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.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
CHRYSLER LLC: Jeffrey Schlerf, Esq., Says SDNY Bad Venue Choice
---------------------------------------------------------------
Jeffrey M. Schlerf, Esq., a partner in Fox Rothschild LLP's
Financial Restructuring & Bankruptcy practice and the Wilmington,
Delaware, office's practice leader, says that the Southern
District of New York could be a bad choice of venue for Chrysler
LLC should it file for chapter 11 protection.
Defined benefit plans are one of many employee and retiree legacy
costs inherent in the automotive industry. The elimination of
this type of legacy cost would certainly be among the many options
pursued by these companies as they seek to streamline labor costs.
A bankruptcy filing by any of the Big Three in the coming weeks,
and the likelihood of a "quick" and successful reorganization,
could be significantly impacted by the prospect of such a large,
non-dischargeable claim triggered by a termination of a less
common form of pension plan in modern industry.
The Second Circuit Court of Appeals recently issued an opinion
which could have a significant impact on a bankruptcy filing by
any of the Big Three automakers. In a contested matter involving
the Pension Benefit Guaranty Corporation (PBGC) and Oneida Ltd. --
a manufacturer of flatware which reorganized in a chapter 11 case
in the Southern District of New York -- the Second Circuit issued
an opinion reversing the Bankruptcy Judge in that case. The
Second Circuit held that a so-called "termination premium" in an
amount as high as $ 56.23 million arising from Oneida's post-
bankruptcy filing termination of its under-funded defined benefit
pension plan was a non-dischargeable claim against Oneida which
was entitled to administrative claim status (in other words, it
was an obligation the reorganized company had to pay in full post-
emergence). A full-text copy of the Second Curcuit's decision is
posted at http://tinyurl.com/cq3btq
The triggering of a termination penalty is a product of
legislation passed by Congress in 2006 following the trend
beginning years ago among employers to move away from defined
benefit plans, where an employee vests in a specific retirement
obligation of his or her employer, towards employee contribution
oriented plans such as 401(k) plans. The intent of the
legislation passed by Congress, in the words of the Second
Circuit, was to "prevent employers from evading the Termination
Premium while seeking reorganization in bankruptcy."
The Second Circuit decision would be unfavorable to an automotive
company trying to reorganize in that Circuit, which includes
Manhattan. The three options for GM filing are there, DE and
Detroit. Jeffrey would like to discuss this decision and the
possible implications for a filing by any of the Big Three.
Fox Rothschild LLP -- http://www.foxrothschild.com/-- is a full-
service law firm built to serve business leaders. Over the past
100 years, the firm has grown to more than 450 lawyers in 15
offices coast to coast. "Our clients come to us because we
understand their issues, their priorities, and the way they
think," the firm says in its promotional literature. "We help
clients manage risk and make better decisions by offering
practical, innovative advice."
Mr. Schlerf has over 20 years of professional experience relating
to the financial industry, first as an economist and then as an
attorney. During his legal career, he's represented the interests
of all types of parties in many of the larger bankruptcy cases in
the United States beginning in the early 1990's through this
decade. Recent engagements include the representation of a
billion-dollar home builder and developer currently in chapter 11,
a large debtor in the power generation industry, a permanent
trustee in liquidation of companies in the mortgage industry, a
creditors' committee in the bankruptcy of a vehicle manufacturer,
and several trustees prosecuting various types of litigation. Mr.
Schlerf has been recognized for several years by Chambers USA as a
leader in the field of bankruptcy and restructuring. He has also
been recognized as a Delaware "Super Lawyer."
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
A report by The Wall Street Journal in March 2009 said Cerberus is
set to shed its stake in Chrysler as part of the conditions
surrounding the company's bailout arrangement with the U.S.
government. An anonymous source within the Obama administration
told WSJ Cerberus' equity stake no longer holds value. The source
told WSJ Cerberus will still hold on to a controlling stake in
Chrysler Financial, but its stake in the automaker itself will
likely be eviscerated.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
GM faces a June 1 deadline to complete restructuring plans that
satisfy the government's auto task force. So far, GM has received
$13.4 billion in federal loans.
The Office of the Special Inspector General for the Troubled Asset
Relief Program has said GM may receive up to $5 billion and
Chrysler up to $500 million in additional working capital. The
additional loans are part of the modification to the existing loan
program.
GM and Chrysler admitted in their viability plans submitted in
February 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
* * *
As reported by the Troubled Company Reporter on April 14, 2009,
Standard & Poor's Ratings Services lowered its issue-level ratings
on Chrysler'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.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
CIT GROUP: Liquidity Pressures Cue Fitch's Rating Cut to 'BB+'
--------------------------------------------------------------
Pressure on asset quality and liquidity have reduced CIT's
financial flexibility, according to Fitch Ratings, which has
downgraded CIT's long-term Issuer Default Rating to 'BB+' from
'BBB'. The Rating Outlook for CIT remains Negative.
CIT's level of profitability will likely be strained in subsequent
quarters which raises concern with the companies ability to retain
acceptable levels of capital from a regulatory perspective as well
as maintaining sufficient buffers to support current rating
levels.
Fitch recognizes that CIT has been actively pursuing alternatives
to address identified liquidity concerns. Primary components of
CIT's action plan have focused on government related programs
following CIT's approval as a bank holding company. Specifically,
CIT is seeking funding under the Federal Deposit Insurance
Corporation's Temporary Liquidity Guarantee Program and
flexibility under section 23A of the Bank Holding Company Act that
governs transfers of assets between bank holding companies and the
banks that the holding company owns.
Fitch notes that progress is being made on both fronts. Fitch's
rating downgrade incorporates an expectation that CIT will be able
to gain much of what it is seeking under these government
programs, although the timing and precise levels can not yet be
determined. CIT's continued level of high reliance on government
programs does establish a level of financial flexibility and
control that is inconsistent with investment grade ratings.
While subsequent quarters are expected to bring clarity to a
number of key rating factors, the development of CIT's liquidity
profile needs to go beyond execution of getting access to
government programs in order to remove liquidity concerns related
to the ratings. Evidence that CIT is moving in a direction of
establishing access to a variety of funding sources, both secured
and unsecured, are viewed as critical to its ability to operate
soundly in the long-term. The change in status to a bank holding
company and more active focus on developing the bank as a primary
operating subsidiary, provide a foundation for CIT to achieve such
goals.
If amounts requested under TLGP and 23A transfers are not approved
or significantly less than anticipated, near-term pressure on the
holding company's liquidity is likely. Should CIT's liquidity
position deteriorate to a point where it must significantly reduce
new loan originations or retain cash from portfolio payments to
meet maturing debt obligations, such an outcome may not be
supportive of a viable, long-term business model and may prompt
Fitch to downgrade CIT's ratings further into speculative grade
territory.
The Negative Outlook reflects Fitch's expectation that near-term
liquidity will remain under pressure until the outcome of the
company's request for TLGP and 23A is identified. Importantly,
the outlook also highlights that CIT's core business activities
will be challenged in the current operating environment. First
quarter results reflect such challenges. Fitch expects such
challenges to remain for the intermediate term. The transfers of
key asset classes to the bank may reduce liquidity and funding
pressures, but asset quality performance will remain a challenge
and will continue to strain profitability and capital. A leveling
off of asset quality deterioration is possible later in 2009 or
early 2010, but Fitch believes it is premature to incorporate such
developments into its rating at this time.
Fitch has taken these rating actions on CIT and subsidiaries:
CIT Group Inc.:
-- Long-term IDR downgraded to 'BB+ from 'BBB';
-- Short-term IDR downgraded to 'B' from 'F2'
-- Individual downgraded to 'D' from 'C';
-- Senior debt downgraded to 'BB+ from 'BBB';
-- Subordinated debt downgraded to 'BB-'' from 'BBB-';
-- Preferred stock downgraded at 'B from BB+';
-- Short-term downgraded to 'B' from 'F2';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
CIT Bank:
-- Long-term IDR downgraded to 'BB+' from 'BBB';
-- Individual downgraded to 'C/D from 'C';
-- Long-term deposits downgraded to 'BBB-' from 'BBB+'.
-- Short-term IDR downgraded to 'F3' from 'F2';
-- Short-term deposits downgraded to 'F3' from 'F2';
-- Support affirmed at '4';
-- Support Floor affirmed at 'B'.
CIT Funding Group of Canada, Inc.:
-- Long-term IDR downgraded to 'BB+' from 'BBB';
-- Senior debt downgraded to 'BB+' from 'BBB'.
-- Short-term IDR downgraded to 'B' from 'F2'.
CIT Group (Australia) Inc.
-- Long-term IDR downgraded to 'BB+' from 'BBB';
-- Senior debt downgraded to 'BB+' from 'BBB';
-- Short-term IDR downgraded to 'B' from 'F2';
-- Short-term downgraded to 'B' from 'F2'.
The Rating Outlook remains Negative.
CIT GROUP: Moody's Downgrades Senior Unsecured Rating to 'Ba2'
--------------------------------------------------------------
Moody's Investors Service downgraded the senior unsecured rating
of CIT Group, Inc. to Ba2 from Baa2 and the firm's short-term
rating to Not-Prime from Prime-2. Also downgraded were CIT's
senior secured rating (to Ba1 from Baa1), its senior subordinated
rating (to Ba3 from Baa3), its junior subordinated rating (to B2
from Ba1), and its preferred stock rating (to Caa1 from Ba1). The
outlook on all ratings is negative.
This concludes Moody's review of CIT's ratings initiated on
January 22, 2009.
Moody's said the rating downgrade reflects the continued rapid
deterioration of CIT's asset quality trends, which contributed to
a $430 million pre-tax loss for the first quarter. Moody's
believes that pressures from further declines in asset quality and
higher average borrowing spreads will likely result in CIT
reporting additional operating losses through at least 2009.
Moody's is concerned that the magnitude of net losses could
jeopardize CIT's compliance with regulatory capital requirements.
Another aspect of the downgrade, accounting for one-notch, is the
anticipated structural subordination of CIT's holding company
creditors associated with an expected transition of many of CIT's
businesses into its bank subsidiary, CIT Bank.
The decline in CIT's core commercial finance asset quality and
operating results accelerated during the first quarter, surpassing
Moody's expectations. Commercial net charge-offs reached 278
basis points for the quarter, versus 142 basis points in the prior
quarter and 63 basis points in the year-ago quarter. Non-
performing assets in CIT's corporate finance segment increased to
$1.2 billion in the first quarter, or 5.86% of finance
receivables, nearly triple the prior year level of $433 million,
or 2.04%. Credit provisions of $535 million in the first quarter
included additions to reserves of $222 million, but reserve
coverage of non-performing assets remained little changed from
year-end 2008 at 77.8%, indicating that further reserve building
will be required if non-performing assets continue to climb.
"Moody's currently estimates that the global default rate for
speculative-grade corporates, which includes the middle market
companies that CIT serves, will increase this year to nearly 15%
from a first quarter level of about 7%," said Moody's senior
credit officer Mark Wasden. "This suggests a degree of
uncertainty regarding CIT's performance in the current
environment," Mr. Wasden added.
Moody's said asset quality performance is of particular concern in
CIT's communications, media and entertainment business and other
leveraged cash-flow loan portfolios, and in its commercial real
estate business, reflecting not only higher defaults but also
pressure on recoveries, due to weaker asset prices.
Moody's also expects that higher average credit spreads will
continue in the near-term to overwhelm marginal improvements in
the pricing of new finance and lease assets. Net finance margin
declined to 1.13% in the first quarter, versus 1.38% last quarter
and 2.28% one year ago, whereas it has more typically ranged
between 2.5% and 3.25% historically. Borrowing costs could ease
if CIT grows and sustains a base of low-cost deposits or if it
obtains approval to issue guaranteed debt under the FDIC's
Temporary Liquidity Guarantee Program. Currently, CIT's deposits
are comprised of brokered CD's covering a range of maturities, but
the firm has no meaningful core deposit balances. The status of
the firm's approval for participation in the TLGP is uncertain.
Moody's believes that net losses CIT could report over the next
several quarters could lead to a meaningful reduction in the
firm's capital levels. During 2008, CIT successfully generated
about $5.8 billion of capital, including $1.3 billion of new
common share issuance, $2.3 billion of TARP capital in the form of
preferred interest and warrants, $.6 billion from issuance of
convertible preferred stock, and $1.6 billion through the exchange
of equity units and senior notes. CIT was granted approval to
convert to a bank holding company in December and now must
maintain a 13% total capital ratio at the parent level and a 15%
Tier 1 ratio at CIT Bank. At the end of the first quarter, CIT's
preliminary total capital ratio measured just 13.0%. Moody's
believes CIT's net losses are likely to be large enough to
threaten its compliance with the total capital ratio requirement.
To maintain compliance, CIT could find it necessary to reduce new
business activity levels or raise new capital under uncertain
conditions. CIT's assets reduced over $4 billion during the first
quarter.
In Moody's view, CIT's liquidity profile includes sufficient
resources to meet the company's near-term obligations. The
company ended the first quarter with $6 billion of restricted and
unrestricted cash, and recently executed a $500 million
securitization of equipment receivables. The firm also received
approval from the Federal Reserve to transfer $5.7 billion of
student loans and $3.5 billion of related debt into CIT Bank, to
take advantage of deposit funding raised by the bank. CIT is
seeking regulatory approval to transition additional business
platforms and assets into the Bank. If approved, these transfers
would improve the diversification and cost of CIT's funding.
However, Moody's considers the brokered CD's raised by the bank a
form of wholesale funding, with less of the stability associated
with core deposits.
CIT's application to issue FDIC guaranteed debt under the TLGP
could, if granted, provide the firm with additional resources to
aid in its funding transition. CIT could also issue equipment
finance securities that qualify under the Fed's Term Asset-Backed
Lending Facility as an addition funding source. However, Moody's
believes the combination of risks relating to CIT's continuing
reliance on wholesale funding sources and its operating strategy
transitions are a key constraint on the firm's ratings.
Moody's also believes that as CIT's organizational and funding
structure evolves under its new regulatory regime it will likely
lead over time to increased structural subordination for holding
company creditors relative to bank-level depositors and
counterparties. This risk accounted for one notch of the
downgrade to the company's ratings.
CIT's ratings continue to reflect its strong presence in multiple
commercial finance businesses, including leading positions in SBA
lending, factoring, asset-based lending, equipment finance,
railcar leasing and commercial aircraft leasing. The ratings also
recognize the multiple achievements of company management during
the past several quarters to build capital, generate new liquidity
sources, streamline business lines and rationalize operating
costs.
The negative outlook assigned to CIT's ratings is based upon the
continued operating challenges associated with the current credit
cycle that are pressuring the firm's asset quality, earnings and
potentially capital levels, as well as the uncertainty of the
firm's liquidity profile. Though CIT has responded ably to its
funding and operational challenges to date, Moody's believes the
firm continues to face significant internal and external risks in
the intermediate term.
Moody's downgrade of CIT's junior subordinated debt to B2 from Ba1
increases the rating notches from the senior unsecured debt to
three from two. The B2 rating incorporates Moody's expectation
that it is less likely that the violation of the fixed-charge
coverage trigger associated with the debt will be cured in the
near term. CIT has used proceeds from the issuance of new common
shares to settle the interest payments on the notes under the
terms of the Alternative Coupon Settlement Mechanism. However,
Moody's believes there is an increased risk that issuing common
shares to settle interest owed on the notes may not be possible,
which would result in interest payment deferral and accumulation.
To the extent that interest deferral continues for an extended
period of time, there is greater risk that accumulated interest
will not be paid.
Moody's downgrade of CIT's preferred stock to Caa1 from Ba1
increases the rating notches from the senior unsecured debt to
five from two. The Caa1 rating reflects Moody's view that the
dividends on CIT's A, B and C series preferred stock have a higher
risk of payment omission and loss because dividends are non-
cumulative. Series A and B are in breach of a fixed charge
coverage trigger and CIT has, to date, chosen to declare and
settle dividends with proceeds from new common share issuance.
However, if CIT either was not able or decided not to common share
settle, the dividends would be entirely lost. In addition,
Moody's believes that CIT's preferred stock is potentially at risk
for an exchange to common equity should CIT need to bolster its
capital position.
These ratings were downgraded:
CIT Group, Inc.:
* Issuer rating -- to Ba2 from Baa2
* Senior Unsecured -- to Ba2 from Baa2
* Senior Secured -- to Ba1 from Baa1
* Senior Subordinated -- to Ba3 from Baa3
* Junior Subordinated -- to B2 from Ba1
* Preferred Stock -- to Caa1 from Ba1
* Short-term -- to Not-Prime from Prime-2
CIT Group (Australia) Limited:
* Backed Senior Unsecured -- to Ba2 from Baa2
* Short-term -- to Not-Prime from Prime-2
CIT Group Funding Company of Canada:
* Backed Senior Unsecured -- to Ba2 from Baa2
* Short-term -- to Not-Prime from Prime-2
The last rating action was on January 22, 2009, when CIT's ratings
were downgraded placed on review for further possible downgrade.
CIT Group, Inc., is a global commercial finance company located in
New York City and Livingston, New Jersey.
COUNTRYWIDE FINANCIAL: Bank of America Abandons Countrywide Brand
-----------------------------------------------------------------
Nick Timiraos at The Wall Street Journal states that Bank of
America is letting go of the Countrywide name and rebranding the
home mortgage lender as Bank of America Home Loans.
WSJ relates that Countrywide had been blamed for aggressive
lending practices that helped, in part, to fuel the housing boom.
WSJ says that Countrywide faces a federal probe and several
lawsuits concerning its business practices.
WSJ reports that BofA, in launching the new Bank of America Home
Loans brand, said that it would offer clients a one-page loan
summary in "straightforward language" that would explain
information on an individual's loans, including closing costs,
interest rates, monthly payments and payment terms.
About Countrywide Financial
Based in Calabasas, California, Countrywide Financial Corporation
(NYSE: CFC) -- http://www.countrywide.com/-- is a diversified
financial services provider and a member of the S&P 500, Forbes
2000 and Fortune 500. Through its family of companies,
Countrywide originates, purchases, securitizes, sells, and
services residential and commercial loans; provides loan closing
services such as credit reports, appraisals and flood
determinations; offers banking services which include depository
and home loan products; conducts fixed income securities
underwriting and trading activities; provides property, life and
casualty insurance; and manages a captive mortgage reinsurance
company.
As reported by the Troubled Company Reporter, Bank of America
closed its purchase of Countrywide Financial for $2.5 billion on
July 1, 2008. The mortgage lender was originally priced at
$4 billion, but the purchase price eventually was whittled down to
$2.5 billion based on BofA's stock prices that fell over 40% since
the time it agreed to buy the ailing lender.
CORUS BANK: 2009 Shareholders Meeting Scheduled for May 5
---------------------------------------------------------
Corus Bankshares, Inc., will hold its 2009 Annual Meeting of
Shareholders on May 5, 2009 at 10:00 a.m. at the Doubletree Hotel
& Conference Center, 9599 Skokie Boulevard, in Skokie, Illinois.
The primary purpose of the Annual Meeting will be to elect seven
directors, to ratify the appointment of Ernst & Young LLP as
Corus' independent public accountants for 2009, and to approve an
amendment to the Corus Bankshares, Inc. Equity Award and Incentive
Plan. Management will also be sharing information about the
Company's 2008 performance.
Based in Chicago, Illinois, Corus Bankshares, Inc. (NASDAQ: CORS)
is a bank holding company. Corus conducts its banking operations
through its wholly-owned banking subsidiary Corus Bank, N.A.
Corus Bankshares' audited financial statements for the fiscal year
ended December 31, 2008, included in the Company's Annual Report
on Form 10-K, filed on April 7, 2009, contained a going concern
qualification from Ernst & Young, LLP, its independent registered
accounting firm.
On April 1, the Company received a letter from Nasdaq indicating
that the Company failed to comply with the continued listing
requirements set forth in Marketplace Rule 4310(c)(14). The
Notice arises as a result of the Company's failure to timely file
its Annual Report on Form 10-K for the fiscal year ended
December 31, 2008, on or before March 31, 2009.
On April 7, the Company filed its Annual Report on Form 10-K for
the fiscal year ended December 31, 2008. As a result of the
filing, the Company received a letter from Nasdaq saying that it
is now in compliance with Marketplace Rule 4310(c)(14).
As of December 31, 2008, the Company had $8.35 billion in total
assets and $8.07 billion in total liabilities. The Company posted
$456.4 million in net loss for year 2008.
CORUS BANK: Robert Glickman Steps Down as President and CEO
-----------------------------------------------------------
Corus Bankshares, Inc., said Robert J. Glickman resigned as
President and Chief Executive Officer and a Director of the
Company and of its subsidiary Corus Bank, N.A., for personal
reasons effective immediately.
Joseph C. Glickman also resigned as a Director and Chairman of the
Board of the Company for personal reasons effective immediately.
Chicago Tribune says the family owns about 45% of the Chicago-
based condominium lender, which is struggling with bad debts.
The Company said in a statement that neither resignation was the
result of a disagreement with the Company, the Bank or other
members of the Board of Directors of either the Company or the
Bank.
Randy P. Curtis, currently Executive Vice President of the Company
and Executive Vice President - Retail Banking of the Bank, will
serve as interim President and Chief Executive Officer, subject to
approval of the appropriate regulatory authorities, while the
Board of Directors seeks a permanent successor.
Corus Bankshares' audited financial statements for the fiscal year
ended December 31, 2008, included in the Company's Annual Report
on Form 10-K, filed on April 7, 2009, contained a going concern
qualification from Ernst & Young, LLP, its independent registered
accounting firm.
On April 1, the Company received a letter from Nasdaq indicating
that the Company failed to comply with the continued listing
requirements set forth in Marketplace Rule 4310(c)(14). The
Notice arises as a result of the Company's failure to timely file
its Annual Report on Form 10-K for the fiscal year ended
December 31, 2008, on or before March 31, 2009.
On April 7, the Company filed its Annual Report on Form 10-K for
the fiscal year ended December 31, 2008. As a result of the
filing, the Company received a letter from Nasdaq saying that it
is now in compliance with Marketplace Rule 4310(c)(14).
As of December 31, 2008, the Company had $8.35 billion in total
assets and $8.07 billion in total liabilities. The Company posted
$456.4 million in net loss for year 2008.
Based in Chicago, Illinois, Corus Bankshares, Inc. (NASDAQ: CORS)
is a bank holding company. Corus conducts its banking operations
through its wholly-owned banking subsidiary Corus Bank, N.A.
CRABTREE RV: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Crabtree RV Center, Inc.
400 Heather Ln
Alma, AR 72921
Bankruptcy Case No.: 09-72023
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
Western District of Arkansas (Fort Smith)
Judge: Ben T. Barry
Debtor's Counsel: Stanley V. Bond, Esq.
Attorney at Law
P.O. Box 1893
Fayetteville, AR 72701-1893
Tel: (479) 444-0255
Fax: (479) 444-7141
Email: attybond@me.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/arwb09-72023.pdf
The petition was signed by James "Bert" Adams.
CROCS INC: Brand Name May Disappear By 2010, 24/7 Wall St. Says
---------------------------------------------------------------
24/7 Wall St. predicts Crocs Inc. as among 12 brand names that are
likely to disappear by the end of 2010.
24/7 Wall St. cited that Crocs was the fastest growing footwear in
America at one point. Company shares once traded at more than $72
in late 2007. Crocs shares traded at $2.29 as of the close of
business on April 24.
Other brand names in 24/7 Wall St.'s list are Avis/Budget, Borders
Group, GM's Saturn brand, Esquire Magazine, The Gap and its Old
Navy and Banana Republic brands, Architectural Digest Magazine,
Chrysler, Eddie Bauer, Palm, AIG, and United Airlines.
On March 31, 2009, Crocs entered into a tenth amendment of its May
2007 Revolving Credit Facility with Union Bank of California, N.A.
Pursuant to the Amendment, the amount of the Committed Loan will
be reduced:
Amount of Committed Loan
------------------------
03/31/09 $19,800,000
04/30/09 $18,800,000
06/01/09 $17,800,000
07/01/09 $14,800,000
07/31/09 $11,800,000
08/31/09 $7,800,000
Upon execution of the Amendment, the Company paid roughly $1.6
million, to be applied against the principal balance of the
Revolving Credit Facility. The Amendment extends the maturity
date of the Revolving Credit Facility from April 2, 2009, to
September 30, 2009.
The Amendment provides that the Company will pay accrued and
unpaid interest on the first day of each month and make monthly
principal payments through August 31, 2009, ranging from $1
million to $4 million. All principal amounts outstanding under
the Revolving Credit Facility will bear interest at rates based on
a premium over the Bank's reference rate tied to the then-
outstanding principal balance. At the inception of the Amendment,
this constitutes a decrease in interest rates from the previous
agreement between the parties. At maturity, all remaining
principal and interest is due and payable to the Bank. The
Amendment continues to require the Company to periodically provide
certain financial information to the Bank. The current outstanding
balance of the Revolving Credit Facility, after the effect of the
Amendment, is $19.8 million. The Company has no additional
borrowings available under the Revolving Credit Facility.
A full-text copy of the Tenth Amendment is available at no charge
at http://ResearchArchives.com/t/s?3c04
Crocs has commenced an offer to purchase stock options for cash
from eligible employees. The stock options that are eligible for
tender in the Offer are those that:
-- were granted on or prior to February 28, 2009, under Croc's
2005 Equity Incentive Plan or the 2007 Equity Incentive
Plan;
-- have exercise prices that equal or exceed $10.50 per share,
And
-- are outstanding on April 2, 2009, and will continue to be
outstanding as of the expiration date of the offer.
The Offer expires at 11:59 p.m., Mountain Time, on April 30, 2009,
unless extended.
Participation in the Offer is voluntary. Individuals eligible to
participate in the Offer are those employees of the Company or its
subsidiaries as of April 2, 2009, including officers and non-
employee directors, who continue to be employees or directors
immediately prior to the Expiration Date.
Crocs offers to pay between $0.02 and $0.10 for each Eligible
Option that is tendered.
A full-text copy of the Tender Offer Statement is available at no
charge at http://ResearchArchives.com/t/s?3c05
Going Concern Doubt
Deloitte & Touche LLP, in Denver, Colorado, Crocs' registered
independent public accounting firm, has raised substantial doubt
about the Company's ability to continue as a going concern. Crocs
incurred losses of $185.1 million in the year ended December 31,
2008, and experienced a decline in revenues from $847.4 million
for the year ended December 31, 2007, to $721.6 million for the
year ended December 31, 2008. Continued operations are dependent
on Crocs' ability to secure adequate financing and maintain a
reasonable level of liquidity such that it can timely pay
obligations when due. As of December 31, 2008, Crocs had $22.4
million in borrowings under its loan agreement with the Union Bank
of California, and the Company had $51.6 million in cash and cash
equivalents. As of December 31, 2008, Crocs had $455.9 million in
total assets and $168.8 in total liabilities.
Crocs said it is currently in discussions with lending
institutions to secure an asset backed borrowing arrangement to
replace its Revolving Credit Facility. The time period required
to procure a new asset backed credit facility may extend beyond
the maturity date of the current Revolving Credit Facility
requiring Crocs to seek an extension of that maturity date with
current lenders.
About Crocs Inc.
Based in Niwot, Colorado, Crocs Inc. (NASDAQ: CROX) is a designer,
manufacturer, distributor, worldwide marketer and brand manager of
footwear for men, women, and children. Crocs designs and sells a
broad offering of footwear, apparel, gear and accessories that
utilize proprietary closed cell-resin, called Croslite. Croslite
is a unique material that enables us to produce an innovative,
soft, lightweight, non-marking, slip and odor-resistant shoe.
Shoes made with Croslite have been certified by US Ergonomics to
reduce peak pressure on the foot, reduce muscular fatigue while
standing and walking and to relieve the musculoskeletal system.
The Company currently sells Crocs-branded products throughout the
U.S. and in 128 countries, through domestic and international
retailers and distributors and directly to end-user consumers
through its webstores, Company-operated retail stores, outlets and
kiosks.
DANIEL FLYNN: Case Summary & 18 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Daniel F. Flynn
313 Gull Road
Ocean City, NJ 08226
Bankruptcy Case No.: 09-20417
Chapter 11 Petition Date: April 26, 2009
Court: United States Bankruptcy Court
District of New Jersey (Camden)
Debtor's Counsel: Maureen P. Steady, Esq.
msteady@mac.com
12000 Lincoln Drive West, Suite 208
Marlton, NJ 08053
Tel: (856) 396-0540
Fax: (609) 482-8011
Estimated Assets: $10 million to $50 million
Estimated Debts: $1 million to $10 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Burger King $360,000
5505 Blue Lagoon Drive
Miami, FL 3312
Fox Rothschild, LLP $51,994
1301 Atlantic Avenue
Midtown Building, Suite 400
Atlantic City, NJ 08401-7212
Miller Gallagher & Grimley, $25,295
Attorneys at
26 South Pennsylvania Avenue
Atlantic City, NJ 08401
Bank of America $24,000
Chase $22,000
USAA Federal Savings Bank $20,000
Barclays Bank Delaware $17,000
American Express $14,000
HSBC Card Services $10,000
Chase Card Services $9,000
FIA Card Services $9,000
Discover Card $7,000
Citi Cards $2,000
City of Pleasantville Guaranty of Unknown
mortgage
David Wintrode Guaranty of Real Unknown
Property Lease
First National Bank of Guaranty of Real Unknown
Absecon Property Lease +
$50,000 unsecured
loan
GE Money Bank Guaranty of Real Unknown
Property Lease
Jerry Hionis Possible Guaranty Unknown
of Real Property
Lease
DELPHI CORP: Supplements Accommodation Pact, To File Plan By May 4
------------------------------------------------------------------
On behalf of Delphi Corp. and its affiliates, John Wm. Butler, Jr.
Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago,
Illinois, delivered to the U.S. Bankruptcy Court for the Southern
District of New York on April 22, 2009, a copy of the "second
supplement" to the DIP Accommodation Second Amendment among
Delphi, JP Morgan Chase Bank, N.A., and certain lenders under the
$4.35 billion DIP Credit Facilities.
The Debtors sought approval from the Court on April 1, 2009, of a
Second Amendment to the DIP Accommodation Agreement. The Second
Amendment modified milestones the Debtors were required to satisfy
under the DIP Accommodation Agreement and preserved certain of the
Debtors' benefits under the DIP Accommodation Agreement.
Subsequently, to facilitate discussions among the key constituents
with respect to a comprehensive resolution of the Chapter 11
cases, the Debtors reached an agreement with the Participant DIP
Lenders on further modifications to the DIP Accommodation
Amendment prior to the April 2, 2009 interim hearing of the DIP
Accommodation Second Amendment Motion.
The DIP Second Amendment Supplement dated April 2, 2009, removed
certain of the Debtors' obligations under the DIP Accommodation
Second Amendment and required the Debtors to deliver by April 17,
2009, to the DIP Agent a detailed term sheet agreed to by both
General Motors Corporation and the Treasury Department setting
forth the global resolution of matters relating to GM's
contribution to the resolution of the Debtors' Chapter 11 cases.
Judge Robert D. Drain entered on April 3, 2009, an interim
approval of the DIP Second Amendment Supplement, pending a final
hearing scheduled for April 23.
Mr. Butler disclosed that an agreed Term Sheet with GM and the
Treasury Department remains under discussion.
The Debtors reiterate that they and the requisite Participant DIP
Lenders have agreed to certain modifications to the DIP Second
Amendment Supplement. The salient terms of DIP Second Amendment
Second Supplement include these dates:
May 4, 2009 Deadline by which the Debtors are obligated to
deliver a Term Sheet related to their plan
modifications to the DIP Agent.
May 5, 2009 The Debtors would be required to apply the
Incremental Borrowing Base Cash Collateral by
this date to the repayment of Tranche A and B
DIP Loans if they do not deliver a Term Sheet
to the DIP Agent by May 4, 2009.
May 8, 2009 The date by which the DIP Lenders are expected
to notify the Debtors if the Term Sheet that
is submitted is satisfactory to them.
May 9, 2009 The DIP Accommodation Period would terminate
by this date if the requisite DIP Lenders do
not notify the Debtors that the Term Sheet is
satisfactory.
In line with the modified Plan process-related dates, the Court
has also adjourned the Preliminary Plan Modification Hearing to
May 21, 2009.
The DIP Second Amendment Second Supplement also:
-- modifies the DIP Accommodation Agreement covenant relating
to the Debtors' Minimum Borrowing Base Cash Collateral
Account Balance;
-- requires the Debtors to apply future interest payments due
to the Tranche C DIP Lenders to repay the Tranche A and B
DIP Loans until they are paid in full;
-- requires the Debtors to use $25 million of Incremental
Borrowing Base Cash Collateral to repay the Tranche A and B
DIP Loans;
-- adds the Pension Benefit Guaranty Company as a party to
which the DIP Agent is required to provide a five-day
notice before taking enforcement actions against
collateral; and
-- provides for the payment of additional fees and expenses to
the Participant DIP Lenders.
A full-text copy of the DIP Second Amendment Second Supplement is
available for free at
http://bankrupt.com/misc/Delphi_DIP2ndAmndmnt2ndSupplmnt.pdf
Delphi Vice President and Chief Financial Officer John D. Sheehan
reported in a regulatory filing with the U.S. Securities and
Exchange Commission that as of April 23, 2009, about $261 million
under the Tranche A Facility, about $352 million under the Tranche
B Term Loan and about $2.75 billion under the Tranche C Term Loan
remain outstanding.
Final Approval of Amendments to
DIP Accommodation Agreement
Meanwhile, Judge Drain entered a final order on April 23, 2009,
approving the DIP Accommodation Second Amendment, and the First
and Second Supplements to the DIP Accommodation Second Amendment.
The Debtors are authorized and directed to pay in cash:
(i) a DIP Second Amendment Supplement Fee in an amount equal
to 25 basis points of the Tranche A Total Commitment
Usage, Tranche B Loans and Tranche C Loans of each
Amendment Participant Lender as of the Effective Date of
the DIP Accommodation Agreement, and
(ii) a DIP Second Amendment Supplement Fee in an amount equal
to 20 basis points of the Tranche A Total Commitment
Usage, Tranche B Loans and Tranche C Loans of each
Amendment Participant Lender as of the Effective Date.
The DIP Financing Order will be deemed supplemented by the April
23, 2009 Order, and will continue in full force and effect as
supplemented, by the DIP Financing Extension Order, the Second DIP
Financing Extension Order and the DIP Accommodation Agreement
Order.
In addition, Judge Drain will consider approval of the Debtors'
request to sell their steering business to General Motors
Corporation and to approve Amendment Nos. 4 and 5 to the GM
Liquidity Support Agreement at the hearing on May 7, 2009.
About Delphi Corp.
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional
headquarters in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000
in total assets and US$23,742,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their
proposal to provide US$2,550,000,000 in equity financing to
Delphi.
(Delphi Bankruptcy News, Issue No. 163; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
DELPHI CORP: Equity Committee Says Disbandment Unfair
-----------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved the request of Delphi Corporation to disband the Official
Committee of Equity Security Holders as a result of changed
circumstances in Delphi's chapter 11 reorganization cases.
At the time of disbandment, the Equity Committee is composed of
Luqman Yacub, James E. Bishop, Sr., James H. Kelly, and James N.
Koury, as trustee of the Koury Family Trust.
The Equity Panel attempted to block the Debtors' request. Bonnie
Steingart, Esq., at Jacobson LLP, in New York, told Judge Robert
D. Drain at the hearing on the request that throughout the
Official Committee of Equity Security Holders' involvement in
Delphi's cases, the panel has consistently sought to play, and has
played, a constructive role in the Debtors' reorganization and
emergence efforts,
Ms. Steingart pointed out that the Equity Committee and its
professionals have operated efficiently to ensure that the Equity
Committee has had information and advice necessary to fulfill its
statutory duties to its constituents. "It would thus be unfair to
equity holders to disband the Equity Committee at this critical
time and for the Debtors' cases to proceed without the interests
of equity holders being protected," she stressed.
She also noted that the Equity Committee's ongoing expenses will
be immaterial to the Debtors and thus, disbandment or suspension
is not necessary or justified.
The benefits of the continued existence and role of the Equity
Committee in representing the interests of the Debtors' equity
holders outweigh the costs of the Equity Committee to the Debtors'
estates, Ms. Steingart contended.
Luqman Yacub, chairman of the Equity Committee, also filed a
declaration to the Court, stating that the Debtors' Chapter 11
cases are at a critical juncture and that now more than ever, the
Equity Committee is duty bound to protect and be the voice of its
constituents. He maintained that any suspension of the efforts
and activities of the Equity Committee at this point would leave
existing equity holders without representation at precisely the
time when the Equity Committee's role is most vital to the best
interests of existing equity holders.
The Equity Committee asked the Court to deny the Debtors'
Disbandment Motion. In the alternative, should the Disbandment
Motion be granted, the Equity Committee asked the Court to require
the Debtors to give notice to all equity holders apprising them of
the disbandment of the Equity Committee.
Debtors Insist on Disbandment
On behalf of the Debtors, John Wm. Butler, Jr., Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, said the
principal reason the Debtors filed the Disbandment Motion is that
their administrative efforts and those of the Official Committee
of Unsecured Creditors to achieve a consensual suspension of the
Equity Committee did not conclude satisfactorily. Although they
recognize the performance of the Equity Committee and its
professionals of their duties in serving the interests of their
constituents admirably, the Debtors reiterated that the Equity
Committee should now be disbanded or suspended given the changed
current circumstances in their Chapter 11 cases.
Mr. Butler said even if the Court grants the Disbandment Motion,
the Debtors should not be required to give individualized notice
to each security holder. He explained that the Debtors' claims
and noticing agent, Kurtzman Carson Consultants, LLC, has advised
the Debtors that sending a mere one-page notice via U.S. mail to
the Debtors' 275,000 registered equity security holders and
166,000 equity security holders whose securities are held through
brokers would cost the Debtors $405,000 and even a notice of
postcard would cost $200,000. Thus, he argued, the Debtors'
estates should not be required to bear those costs and that an
appropriate notice on www.delphidocket.com should suffice to
notify security holders of whatever relief the Court grants.
Creditors Committee Supports Delphi's Position
The Creditors Committee agreed with the Debtors that the facts and
circumstances that led the Court to order the appointment of the
Equity Committee in March 2006 no longer apply, and that the
Debtors' fortunes in the more than three years since that
Appointment Order was entered have taken a dramatic turn for the
worse. As stated in its February 26, 2009 letter to U.S. Trustee
for Region 2 Diana G. Adams, the Creditors Committee stressed that
not only are the Debtors hopelessly insolvent but general
unsecured creditors most likely will not receive a very
significant recovery from the Debtors' estates. As a result,
there is no conceivable scenario in which current equity holders
would receive any recoveries under the absolute priority rule, the
Creditors Committee contends.
On the contrary, the Creditors Committee asserted, the continued
existence of the Equity Committee would only serve to increase the
Debtors' administrative expenses to the great detriment of general
unsecured creditors. "These cases are saddled with an Equity
Committee that no longer has an economic reason for being yet
incurs substantial professional fees and will undoubtedly foster
litigation," according to the Creditors Committee.
For reasons stated in open court, Judge Drain granted the Debtors'
request in its entirety and directed the U.S. Trustee to disband
the Equity Committee as of April 23, 2009.
The Equity Committee will be relieved of its obligations to
undertake or continue any efforts or perform any activities on
behalf of equity security holders in the Debtors' Chapter 11
cases, and the Equity Committee's role and responsibilities will
cease. Similarly, professionals retained by the Equity Committee
will be relieved of their obligations to undertake or continue any
efforts or perform any activities on behalf of the Equity
Committee in the Debtors' Chapter 11 cases. The Disbandment Order
is without prejudice to the rights of the Equity Committee's
professionals to seek reimbursement for their fees and expenses
incurred.
Judge Drain also ruled that the Debtors will not be required to
provide individualized notice of the Disbandment Order to interest
holders, provided that they will promptly issue a press release
regarding entry of the same Order.
About Delphi Corp.
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional
headquarters in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000
in total assets and US$23,742,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their
proposal to provide US$2,550,000,000 in equity financing to
Delphi.
(Delphi Bankruptcy News, Issue No. 163; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
DELPHI CORP: Amends Suit Against Appaloosa, Other Plan Investors
----------------------------------------------------------------
Judge Robert D. Drain of the U.S. Bankruptcy Court for the
Southern District of New York authorized Delphi Corp. and its
affiliates to amend their original complaint and file and serve an
Amended Complaint against Appaloosa Management L.P. and other
investors pursuant to an Equity Purchase and Commitment Agreement.
Subsequently, the Debtors filed with the Court the Amended
Complaint. The material change in the Amended Complaint is the
deletion of the paragraph containing allegations that (i) certain
of the Debtors' committed equity investors are engaged in a
conduct of persuading exit financing lenders to withdraw their
commitments, in an effort to render the Debtors unable to satisfy
the financing condition under the EPCA; and (ii) misconduct
includes short-selling of the Debtors securities to depress the
value of the Debtors and making it only more difficult for them to
obtain the exit financing needed for consummation of the Plan.
Moreover, the Debtors assert claims against:
-- the Plan Investors for breach of the EPCA;
-- A-D Acquisition Holdings, LLC, Harbinger Del-Auto
Investment Company, Ltd; and Pardus DPH Holding LLC as
parties to Commitment Letter Agreements with the Debtors
for breach of those agreements;
-- all Appaloosa Defendants for non-performance of obligations
necessary to consummate the EPCA;
-- AMLP for fraud; and
-- all Appaloosa Defendants for equitable subordination and
disallowance.
By the Amended Complaint, the Debtors ask the Court to:
(1) direct the Plan Investors to fully comply with their
obligations under the EPCA and the Confirmed Plan,
including their obligation to invest up to $2.383 billion
in Reorganized Delphi;
(2) direct the Commitment Parties to fully comply with their
obligations under Commitment Letter Agreements and the
Confirmed Plan, including their obligation to provide the
funds necessary for the Investors to make the investments
committed under the EPCA;
(3) in the alternative, order the Plan Investors and the
Commitment Letter Parties to pay damages in an amount to
be determined at trial;
(4) equitably subordinate or disallow the Appaloosa
Defendants' claims and interests in respect of the
Debtors' estates;
(5) award them punitive damages as against AMLP, in an amount
to be determined at trial; and
(6) award them costs and attorneys' fees.
Parties File Summary Judgment Motions
A. ADAH and AMLP
J. Christopher Shore, Esq., at White & Case LLP, in New York,
notified the Court on April 21, 2009 that ADAH and AMLP have filed
motions for partial summary judgment, seeking dismissal of the
Debtors' claims against ADAH and AMLP.
ADAH and AMLP do not believe testimony and documents cited in
their memorandum of law, a statement of uncontested facts in
support of their Summary Judgment Motion under Rule 7056-1 of the
Federal Rules of Bankruptcy Procedure, the declaration of Douglas
P. Baumstein, Esq., and the exhibits filed in support of the
Summary Judgment Motion are confidential or highly confidential
pursuant to the Court-approved Stipulated Protective Order or that
the information is entitled to protection under Section
107(b) of the Bankruptcy Code as confidential commercial
information. ADAH and AMLP nevertheless seek the Court's
authority to file the Summary Judgment Papers in redacted form and
under seal to comply with the Stipulated Protective Order.
Mr. Baumstein of White and Case LLP is ADAH and AMLP's counsel in
these Adversary Proceedings.
Moreover, ADAH and AMLP tell the Court that they are currently
contacting the designated parties to seek authority to file the
Summary Judgment Papers in unredacted form or with minimal
reductions. Upon receipt of the responses from the designated
parties, ADAH and AMLP say they intend to submit any proposed
redactions to the Court. They also reserve the right to seek
permission from the Court to unseal the Summary Judgment Papers.
In the meantime, ADAH and AMLP will serve the unredacted materials
to the Court, the Debtors, and other parties.
B. Harbinger Entities
Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Del-
Auto Investment Company Ltd., Pardus DPH Holding LLC and Pardus
Special Opportunities Master Fund L.P., Merrill Lynch, Pierce,
Fenner & Smith Inc., and UBS Securities LLC notified the Court of
their motions for summary judgment, seeking dismissal of the
Amended Complaint of the Debtors against the Appaloosa Parties.
Moreover, the Investors jointly seek the Court's authority to file
under seal (i) a memoranda of law in and accompanying Appaloosa's
Bankruptcy Rule 7056-1 Statement, and (ii) certain exhibits
attached to an April 21, 2009 declaration of Angela R.
Vicari, Esq., of Kaye Scholer LLP in support of the Summary
Judgment Motions. Ms. Vicari serves as Harbinger's counsel.
The Investors relate that in the Motion Papers, they may have
reference testimony and documents that may have been designated
Confidential or Highly Confidential pursuant to the Stipulated
Protective Order. Accordingly, the Investors seek approval of
their Motion to Seal to comply with the Stipulated Protective
Order. They also reserve the right to seek permission from the
Court to unseal the Motion Papers.
Summary Judgment Motion Schedule
Parties to the Delphi-Appaloosa adversary proceedings agree to
this schedule with respect to summary judgment motions:
April 21, 2009 Deadline for the Appaloosa Defendants other
than Goldman Sachs & Co. to serve and file
any summary judgment motion.
April 28, 2009 Deadline for Goldman Sachs to file a summary
Judgment motion.
May 15, 2009 Deadline for the Debtors to file their
opposition to the summary judgment motions of
the Appaloosa Defendants.
May 22, 2009 Deadline for the Debtors to file their
opposition to Goldman Sach's summary judgment
motion.
May 29, 2009 Deadline for the Appaloosa Defendants to file
surreplies.
June 5, 2009 Deadline for Goldman Sachs to serve reply
papers.
June 5, 2009 Hearing on the Appaloosa Defendants' summary
judgment motions.
June 8, 2009 Hearing on Goldman Sachs' summary judgment
motion.
The Appaloosa Defendants intend to coordinate with each other with
respect to any summary judgment motion to avoid duplicative
papers.
Judge Drain approved the parties' agreed schedule on the Summary
Judgment Motions.
About Delphi Corp.
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional
headquarters in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000
in total assets and US$23,742,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their
proposal to provide US$2,550,000,000 in equity financing to
Delphi.
(Delphi Bankruptcy News, Issue No. 163; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
DELPHI CORP: Keeps Mum on Ongoing Negotiations With GM
------------------------------------------------------
In a public statement dated April 23, 2009, General Motors
Corporation related that due to certain business developments, it
is scheduling multiple down weeks at 13 assembly operations in
North America. GM said that the plant down weeks are staggered
and vary in duration, based on current inventory levels and
expected demand for the products. Corresponding down weeks are
also scheduled at GM's stamping and powertrain facilities.
Moreover, GM mentioned in the public statement that it has
proposed a potential solution that would allow for the successful
and rapid resolution of Delphi's bankruptcy case, but Delphi's
lenders have rejected that proposal. Without the successful
resolution of this dispute, GM said that Delphi or its lenders
could force it into an uncontrolled shutdown, with severe negative
consequences for the U.S. automotive industry.
In response to GM's statement, Delphi Corp. noted in a press
release also on April 23, 2009, that it values all of its
customers and has provided them, including General Motors
Corporation, with uninterrupted supply throughout its Chapter 11
cases. Delphi continued to state that:
"We believe that continuity of supply to GM will be best
assured by resolving the issues that will allow Delphi to
emerge successfully from Chapter 11.
"Each of the parties has provided proposals for a potential
solution that each believed would allow for the successful
and rapid resolution of Delphi's Chapter 11 cases. We
remain confident that continuing to aggressively work with
all of the stakeholders will result in a satisfactory
resolution of these issues.
"Delphi believes that it is counter-productive to publicly
discuss GM's or Delphi's restructuring efforts."
About Delphi Corp.
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional
headquarters in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000
in total assets and US$23,742,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their
proposal to provide US$2,550,000,000 in equity financing to
Delphi.
(Delphi Bankruptcy News, Issue No. 163; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
DENAR LLC: Case Summary & 6 Largest Unsecured Creditors
-------------------------------------------------------
Debtor: Denar, LLC
3318 Forest Lane
Suite 200
Dallas, TX 75234
Bankruptcy Case No.: 09-42389
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
Northern District of Texas (Ft. Worth)
Judge: Russell F. Nelms
Debtor's Counsel: Davor Rukavina, Esq.
Munsch, Hardt, Kopf & Harr
500 N. Akard Street, Ste 3800
Dallas, TX 75201-6659
Tel: (214) 855-7587
Fax: (214) 978-5359
Email: drukavina@munsch.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Company's 6 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/txnb09-42389.pdf
The petition was signed by Richard J. Dobbyn, vice president of
the Company.
ELLISON PLAZA: U.S. Trustee Sets Sec. 341 Meeting for May 19
------------------------------------------------------------
The U.S. Trustee for Region 15 will convene a meeting of creditors
in Ellison Plaza LLC's Chapter 11 case on May 19, 2009, at
9:30 a.m., at Office of the U.S. Trustee, 402 W. Broadway, C St.
entrance, Suite 630, San Diego, 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.
San Diego, California-based Ellison Plaza LLC filed for Chapter 11
on April 20, 2009 (Bankr. S. D. Calif. Case No. 09-05147). Andrew
H. Griffin, III, Esq., represents the Debtor its restructuring
efforts. The Debtor listed total assets of $17,148,000 and total
debts of $6,700,500.
ENDURANCE BUSINESS: Moody's Cuts Corp. Credit Rating to 'Caa3'
--------------------------------------------------------------
Moody's Investors Service downgraded all the credit ratings of
Endurance Business Media, Inc., and changed the outlook to
negative. The Corporate Family Rating and Probability of Default
Rating were lowered to Caa3 from Caa1, the first lien senior
secured credit facility rating was lowered to Caa2 from B3 and the
second lien senior secured term loan rating was lowered to Ca from
Caa3. These rating actions conclude the review for possible
downgrade initiated on November 19, 2008. Subsequent to the
actions, the ratings will be withdrawn.
The ratings and negative outlook reflect Endurance's weak
liquidity profile and increasing likelihood of default. It is
Moody's understanding that the forbearance agreement obtained
subsequent to the September 30, 2008 covenant violation has
expired and the company no longer has access to its revolving
credit facility. Endurance's existing cash balance is modest and
Moody's expects free cash flow to be negative in 2009 due to the
ongoing weakness in the U.S. housing market that has reduced
broker demand for advertising pages.
Moody's downgraded these ratings:
-- $20 million first lien revolving credit facility due 2012, to
Caa2 / LGD3 (36%) from B3 / LGD3 (38%)
-- $107 million first lien term loan due 2013, to Caa2 / LGD3
(36%) from B3 / LGD3 (38%)
-- $40 million second lien term loan due 2014, to Ca / LGD5
(89%) from Caa3 / LGD5(89%)
-- Corporate Family Rating, to Caa3 from Caa1
-- Probability of Default Rating, to Caa3 from Caa1
All ratings will be withdrawn for business reasons. Refer to
Moody's Guidelines for the Withdrawal of Ratings on moodys.com.
Endurance'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 Endurance's core industry and Endurance's ratings are
believed to be comparable to those of other issuers of similar
credit risk. The last rating action on Endurance occurred on
November 19, 2008, when Moody's downgraded the CFR to Caa1 and
placed all ratings on review for possible further downgrade.
Endurance Business Media, Inc., headquartered in Tallahassee,
Florida, is a leading publisher of free circulation real estate
guides, including its flagship 'Homes&Land' brand, and a provider
of commercial printing services. For the twelve months ended
September 30, 2008, revenues were $78 million.
EUROFRESH INC: U.S. Trustee Sets Sec. 341 Meeting for May 26
------------------------------------------------------------
The U.S. Trustee for Region 14 will convene a meeting of creditors
in Eurofresh, Inc., and its debtor-affiliate's Chapter 11 cases on
May 26, 2009, at 11:00 a.m., at US Trustee Meeting Room, 230 N.
First Avenue, Suite 102, Phoenix, Arizona.
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.
Headquartered in Snowflake, Arizona, Eurofresh, Inc. --
http://www.eurofresh.com/-- produces and sells tomatoes. The
company and Eurofresh Produce Ltd., its affiliate filed for
Chapter 11 on April 21, 2009 (Bankruptcy D. Ariz. Lead Case No.
09-07970). Craig D. Hansen, Esq., at Squire, Sanders & Dempsey
L.L.P. represents the Debtors in their restructuring effort. The
Debtors listed $50 million to $100 million in assets and
$100 million to $500 million in debts.
FAIR DEAL INC.: Case Summary & 8 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Fair Deal Inc.
adba Tony Marsen's The Club Casion
620 SE Everett Mall Way
Suite 777
Everett, WA 98208
Bankruptcy Case No.: 09-13965
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
Western District of Washington (Seattle)
Judge: Karen A. Overstreet
Debtor's Counsel: Alan F. Hall, Esq.
420 Bell St
Edmonds, WA 98020
Tel: (425) 774-9566
Fax: (425) 712-8996
Email: pilawyerusa@hotmail.com
Estimated Assets: $500,001 to $1,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of 8
largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/wawb09-13965.pdf
The petition was signed by Anthony Marsen, president of the
Company.
FAMCO ENTERPRISES: Case Summary & 15 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: FAMCO Enterprises, LP
dba McAlister's Deli
PO Box 9938
The Woodlands, TX 77387
Bankruptcy Case No.: 09-32786
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
Southern District of Texas (Houston)
Judge: Jeff Bohm
Debtor's Counsel: Donald L. Wyatt, Esq.
Wyatt Legal Services, PLLC
10655 Six Pines Drive
Suite 200
The Woodlands, TX 77380
Tel: (281) 419-8733
Fax: (281) 419-8703
Email: don.wyatt@wyattpllc.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
15 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/txsb09-32786.pdf
The petition was signed by Jason C. Langnes, president of the
Company.
FASSETT HOUSE: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Fassett House, LLC
P.O. Box 10250
Portland, ME 04104
Bankruptcy Case No.: 09-20572
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
Maine (Portland)
Judge: James B. Haines Jr.
Debtor's Counsel: D. Sam Anderson, Esq.
Bernstein Shur Sawyer & Nelson
100 Middle St., West Tower
Portland, ME 04101
Tel: (207) 774-1200
Fax: (207) 774-1127
Email: sanderson@bernsteinshur.com
-- and --
Robert J. Keach, Esq.
Bernstein, Shur, Sawyer & Nelson
100 Middle Street, 6th Floor
P.O. Box 9729
Portland, ME 04104-5029
Tel: (207) 774-1200
Email: rkeach@bernsteinshur.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtors did not file a list of 20 largest unsecured creditors
when they filed their petition.
The petition was signed by William P. Simpson, member and manager
of the Company.
FGIC CORP: In Default Under JPMorgan Facility; Mum on Lender Talks
------------------------------------------------------------------
FGIC Corp. is silent about its talks with lenders regarding a
technical default in its credit facility.
Under the terms of the Revolving Credit Agreement dated as of
December 12, 2005, among FGIC Corp., the lenders party thereto,
and JPMorgan Chase Bank, N.A., as administrative agent, an
issuance of a modified unqualified "going concern" audit opinion
in connection with FGIC's financial statements will result in a
default under the terms of the Credit Agreement.
Ernst & Young LLP, in its March 27, 2009 report, said there is a
substantial doubt regarding FGIC Corp.'s ability to continue as a
going concern. The auditor explained that sustained deterioration
in the U.S. housing and mortgage markets and the global credit
markets has continued to adversely impact the business, results of
operations and financial condition of the Company's sole operating
subsidiary, Financial Guaranty Insurance Company. Continued
adverse development could cause the subsidiary's statutory
policyholders' surplus to fall below the minimum required under
New York State insurance law, the auditor said.
FGIC had said it is seeking to work with the administrative agent
for the lenders to obtain a waiver of the default, but there can
be no assurance that the Company will be able to obtain such a
waiver. This default would become an Event of Default under the
Credit Agreement 30 days after written notice of such default will
have been given to the Company by the administrative agent or any
lender, unless waived or cured. Upon the occurrence of an Event
of Default, the lenders may, among other things, accelerate
repayment of all outstanding borrowings.
FGIC Corp. is the obligor on the $46,000,000 of outstanding
borrowings under the Credit Agreement; FGIC has not borrowed any
amounts under the Credit Agreement.
If the Credit Agreement were to be accelerated, FGIC Corp. would
not have adequate liquidity to repay its outstanding borrowings
under the Credit Agreement in full on an accelerated basis.
In March, FGIC reported a $1.17 billion net loss for the year
ended December 31, 2008. FGIC had $5.02 billion in total assets
and $5.37 billion in total liabilities, resulting in $644.7
million in stockholders' deficit, as of December 31, 2008.
About FGIC Corp.
FGIC Corporation -- http://www.fgic.com/-- is an insurance
holding company incorporated in the State of Delaware whose wholly
owned subsidiary, Financial Guaranty Insurance Company, a New York
stock insurance corporation, has been engaged in the business of
providing financial guaranty insurance and other forms of credit
enhancement for public finance and structured finance obligations.
In addition, FGIC UK Limited, a wholly owned United Kingdom
insurance subsidiary of FGIC, has been engaged in the business of
writing financial guaranties in the United Kingdom and in other
European Union member countries.
The Company has an established foreign branch and three
subsidiaries in the United Kingdom, a subsidiary in Australia and
insured exposure from a former branch in France.
The PMI Group, Inc., is the largest stockholder of FGIC Corp.,
owning approximately 42% of its common stock at December 31, 2008.
Affiliates of the Blackstone Group L.P., own roughly 23%; the
Cypress Group L.L.C., owns roughly 23%; and CIVC Partners L.P.
roughly 7%, of FGIC Corp.'s common stock at December 31, 2008.
As of December 31, 2008, an affiliate of General Electric Capital
Corp. owned 2,346 shares, or 100%, of FGIC Corp.'s senior
participating mandatorily convertible modified preferred stock,
with an aggregate liquidation preference of $322,679,000, and
roughly 5% of FGIC Corp.'s outstanding common stock.
* * *
As of March 31, 2009, the financial strength of FGIC and FGIC UK
Ltd. was rated Caa3 with a negative outlook by Moody's Investor
Services Inc. and CCC with a negative outlook by Standard & Poor's
Rating Services. The Company's ratings contracts with Moody's and
S&P have expired or been terminated, which could result in the
withdrawal of these ratings. On March 24, 2009, Moody's announced
that it will withdraw its ratings for the Company for business
reasons. In November 2008, Fitch Inc. withdrew its financial
strength and credit ratings for the Company.
FLYING J: Separate Claims Bar Date Set for Big West, Longhorn
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has
established:
-- June 30, 2009 at 4:00 p.m. (prevailing Eastern Time) as the
general bar date for filing proofs of claim in Flying J
Inc., Big West of California, LLC, and Big West
Transportation, LLC's Chapter 11 cases.
-- June 1, 2009, at 4:00 p.m. (prevailing Eastern Time) as the
general bar date for filing proofs of claim in Longhorn
Partners Pipeline, L.P., Longhorn Pipeline Holdings, LLC,
and Longhorn Pipeline Inc.'s Chapter 11 cases.
The governmental bar date in all of the Debtors' Chapter 11 cases
is June 30, 2009, at 4:00 p.m. (prevailing Eastern Time).
All proofs of claim must be submitted in person, by courier
service, by hand delivery, or by mail so as to be received on or
before the applicable bar date, to:
a) If by first-class mail:
Flying J Inc. Claims Processing Center
c/o Epiq Bankruptcy Solutions, LLC
FDR Station, P.O. Box 5082
New York, NY 10150-5082
b) If by Hand Delivery or Overnight mail:
Flying J Inc. Claims Processing Center
c/o Epiq Bankruptcy Solutions, LLC
757 Third Avenue, 3rd Floor
New York, NY 10017
Copies of the proofs of claim must be delivered to:
Kirkland & Ellis LLP
Attn: Vincente Tennerelli
300 North LaSalle Street
Chicago
Illinois, 60654
Headquartered in Ogden, Utah, Flying J Inc. --
http://www.flyingj.com-- operates an oil company with operations
in the field of exploration and refining of petroleum products.
It also operates about 200 travel plazas in 41 states and six
Canadian provinces. The Company and six of its affiliates filed
for Chapter 11 protection on Dec. 22, 2008 (Bankr. D. Del. Lead
Case No. 08-13384). Attorneys at Kirkland & Ellis LLP represent
the Debtors as counsel. Young, Conaway, Stargatt & Taylor
LLP is the Debtors' Delaware Counsel. Blackstone Advisory
Services L.P. is the Debtors' investment banker and financial
advisor. Epiq Bankruptcy Solutions LLC is the Debtors' notice,
claims and balloting agent. In its formal schedules submitted to
the Bankruptcy Court, Flying J listed assets of $1,433,724,226 and
debts of $640,958,656.
An official committee of unsecured creditors has been appointed in
the case. Pachulski Stang Ziehl & Jones LLP has been tapped as
counsel for the creditors' panel.
FREDDIE MAC: Names David Moffet as Consultant to Interim CEO
------------------------------------------------------------
David Moffett, Freddie Mac's former CEO, will temporarily return
to the Company as a consultant to Interim CEO John Koskinen. In
his role as a consultant, Mr. Moffett will provide advice and
assistance to the interim CEO in directing the finance division
and overseeing the issuance of accurate and timely financial
statements.
On Wednesday, Freddie Mac's interim CFO, David Kellermann, was
found dead in the basement of his house on what was thought to be
a suicide.
Mr. Koskinen said, "I am grateful to David for offering to assist
us during this challenging time. David is well positioned to
advise me in my oversight of the finance function. He knows the
company well from his time as chief executive, and has built an
impressive career in finance and accounting leadership as an
executive with other leading public companies."
Freddie Mac will continue its search for a permanent chief
financial officer to lead the finance division.
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.
GENERAL GROWTH: U.S. Trustee Names 9 Members to Creditors Panel
---------------------------------------------------------------
Pursuant to Section 1102 of the Bankruptcy Code, Diana G. Adams,
United States Trustee for Region 2, appointed on April 24, 2009,
nine creditors to serve as members of the Official Committee of
Unsecured Creditors in General Growth Properties, Inc., and its
387 debtor-affiliates' Chapter 11 cases:
(1) Eurohypo AG, New York Branch
Attn: Daniel Vinson
1114 Avenue of the Americas
New York, New York 10036
Tel. No. (212) 479-2518
(2) Calyon New York Branch
Attn: Mark Koneval
1301 Avenue of the Americas
13th Floor
New York, New York 10019
Tel. No. (212) 261-7867
(3) The Bank of New York Mellon Trust Co.
Attn: Robert Major
6525 West Campus Oval
New Albany, Ohio 43054
Tel. No. (614) 775-5278
(4) American High-Income Trust
Attn: Ellen Carr
333 S. Hope Street, 55th Floor
Los Angeles, California 90071
Tel. No. (310) 996-6342
(5) Fidelity Fixed Income Trust
Fidelity Strategic Real Return Fund
Fidelity Investments
Attn: Andrew Boyd
82 Devonshire Street, V13H
Boston, Massachusetts 02109
(6) Wilmington Trust
Attn: Patrick Healy
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-1600
Tel. No. (302) 636-6391
(7) Capital Ventures International
Attn: David Pollard
Suite 220
401 City Avenue
Bala Cynwyd, Pennsylvania 19004
Tel. No. (610) 617-3013
(8) Taberna Capital Management, LLC
Attn: Rafael Licht
450 Park Avenue
New York, New York 10022
Tel. No. (212) 300-6901
(9) Macy's Inc.
Attn: Carl L. Goetemoeller
7 West Seventh Street
Cincinnati, Ohio 45202
Tel. No. (513) 579-7666
Eurohypo AG is listed as the Debtors' largest unsecured creditor
asserting claims for (i) $1,987,500,000 arising from a 2006
facility senior term and (ii) $601,515,545 from a 2006 facility
revolver. EuroHypo AG is also listed as the Debtors' largest
secured creditor asserting a claim for $875,000,000 pursuant to a
2008 Loan Agreement.
Wilmington Trust is listed as the Debtors' second largest
unsecured creditor asserting claims totaling (i) $1,550,000,000 in
GGPLP Notes 3.98% due April 15, 2012, and (ii) $798,454,857 in
Rouse Bonds 6.75% due May 1, 2013.
The Bank of New Mellon Trust Co. is also listed as one of the
Debtors' largest unsecured creditors with claims from (i) Rouse
bonds 5.375% due November 26, 2013, for $450,000,000, (ii) Rouse
bonds 3.625% due March 15, 2009, for $450,000,000, and (iii) Rouse
Bonds 7.20% due September 1, 2012, for $400,000,000.
Macy's has a trade claim for $491,871 against the Debtors.
About General Growth
Based in Chicago, Illinois, General Growth Properties, Inc.
(NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S.
mall owner, 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 Properties Inc. and its affiliates filed for
Chapter 11 on April 16, 2009 (Bankr. S.D. N.Y., Case No. 09-
11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P.
Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal &
Manges LLP, have been tapped as bankruptcy counsel. Kirkland &
Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been
engaged as claims agent. The Company also hired AlixPartners LLP
as financial advisor and Miller Buckfire Co. LLC, as investment
bankers. The Debtors disclosed $29,557,330,000 in assets and
$27,293,734,000 in debts as of Dec. 31, 2008.
Bankruptcy Creditors' Service, Inc., publishes General Growth
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by General Growth Properties Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
GENERAL GROWTH: Has Go-Signal to Pay Pre-bankruptcy Obligations
---------------------------------------------------------------
Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern
District of New York authorizes General Growth Properties and its
affiliates, in the interim, to pay $851,094 of prepetition tenant
obligations through either (i) cash payment, or (ii) renegotiated,
modified and amended lease terms providing for, among others, a
reduced rental rate.
Judge Gropper will convene a hearing to consider final approval of
the Motion on May 8, 2009.
Judge Gropper also authorizes the Debtors, on an interim basis, to
pay insurance obligations that became due and payable between the
Petition Date and entry of a final order to the Motion. Judge
Gropper will convene a hearing on May 8, 2009, to consider final
approval of the Motion.
The Debtors, on an interim basis, may also pay pay:
-- $11,669,070 in prepetition Property Taxes,
-- $767,005 in prepetition Sales and Use Taxes, and
-- $1,064,752 in prepetition Excise Taxes due and owing to
certain taxing authorities, on or before the final hearing
on May 8, 2009.
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 Properties Inc. and its affiliates filed for
Chapter 11 on April 16, 2009 (Bankr. S.D. N.Y., Case No. 09-
11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P.
Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal &
Manges LLP, have been tapped as bankruptcy counsel. Kirkland &
Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been
engaged as claims agent. The Company also hired AlixPartners LLP
as financial advisor and Miller Buckfire Co. LLC, as investment
bankers. The Debtors disclosed $29,557,330,000 in assets and
$27,293,734,000 in debts as of Dec. 31, 2008.
Bankruptcy Creditors' Service, Inc., publishes General Growth
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by General Growth Properties Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
GENERAL MOTORS: Revised Viability Plan Calls for Leaner Company
---------------------------------------------------------------
General Motors Corp. yesterday presented the United States
Department of Treasury with an updated plan that "boldly responds
to the weaker global auto market conditions and details the
company's long term viability." The plan, which provides a
comprehensive review of key aspects of GM's restructuring, is the
first of two status reports required by the loan agreement signed
by GM and the U.S. Treasury on December 31, 2008.
The plan addresses the key restructuring targets required by the
loan agreement, including a number of the critical elements of the
turnaround plan that was submitted to the U.S. government on
December 2, 2008. Among these are: U.S. market competitiveness;
fuel economy and emissions; competitive labor cost; and
restructuring of the company's unsecured debt. It also includes a
timeline for repayment of the Federal loans, and an analysis of
the company's positive net present value.
The plan also details the future reduction of GM's vehicle brands
and nameplates in the U.S., further consolidation in its workforce
and dealer network, accelerated capacity actions and enhanced
manufacturing competitiveness, while maintaining GM's strong
commitment to high-quality, fuel-efficient vehicles and advanced
propulsion technologies.
GM said the updated Viability Plan will speed the reinvention of
its U.S. operations into a leaner, more customer-focused and more
cost-competitive automaker.
The Viability Plan is included in an exchange offer whereby GM is
offering certain bondholders shares of GM common stock and accrued
interest in exchange for certain outstanding notes. The Viability
Plan builds on the February 17 Viability Plan submitted to the
U.S. Treasury.
Significant changes include:
* A focus on four core brands in the U.S. -- Chevrolet,
Cadillac, Buick and GMC -- with fewer nameplates and a more
competitive level of marketing support per brand.
* A more aggressive restructuring of GM's U.S. dealer
organization to better focus dealer resources for improved
sales and customer service.
* Improved U.S. capacity utilization through accelerated
idling and closures of powertrain, stamping, and assembly
plants.
* Lower structural costs, which GM North America (GMNA)
projects will enable it to breakeven (on an adjusted EBIT
basis) at a U.S. total industry volume of approximately 10
million vehicles, based on the pricing and share assumptions
in the plan. This rate is substantially below the 15 to 17
million annual vehicle sales rates recorded from 1995
through 2007.
"We are taking tough but necessary actions that are critical to
GM's long-term viability," said Fritz Henderson, GM president and
CEO. "Our responsibility is clear - to secure GM's future - and we
intend to succeed. At the same time, we also understand the impact
these actions will have on our employees, dealers, unions,
suppliers, shareholders, bondholders, and communities, and we will
do whatever we can to mitigate the effects on the extended GM
team."
Fewer U.S. Brands, Nameplates, and Dealers
As part of the revised Viability Plan and the need to move faster
and further, GM in the U.S. will focus its resources on four core
brands, Chevrolet, Cadillac, Buick and GMC. The Pontiac brand
will be phased out by the end of 2010. GM will offer a total of
34 nameplates in 2010, a reduction of 29% from 48 nameplates in
2008, reflecting both the reduction in brands and continued
emphasis on fewer and stronger entries. This four-brand strategy
will enable GM to better focus its new product development
programs and provide more competitive levels of market support.
The revised plan moves up the resolution of Saab, Saturn, and
Hummer to the end of 2009, at the latest. Updates on these brands
will be provided as these initiatives progress.
Working with its dealers, GM anticipates reducing its U.S. dealer
count from 6,246 in 2008 to 3,605 by the end of 2010, a reduction
of 42%. This is a further reduction of 500 dealers, and four
years sooner, than in the February 17 Plan. GM said the goal is
to accomplish the reduction in an orderly, cost-effective, and
customer-focused way. The reduction in U.S. dealers will allow
for a more competitive dealer network and higher sales
effectiveness in all markets. More details on these initiatives
will be provided in May.
Sales Volume and Market Share Projections
The Viability Plan anticipates improved financial results despite
more conservative U.S. sales volume expectations going forward.
The lower volume expectations are the result of managing the
business with fewer nameplates and dealers, leaner inventories,
and reduced market share. To address the inventory issue, GM on
April 23 announced U.S. production schedule reductions of
approximately 190,000 vehicles during the second and early third
quarters of 2009.
The Viability Plan also reduces GM's market share projections to
adjust for the impact of the brand and dealer consolidation, as
well as for the short-term impact of speculation regarding a GM
bankruptcy. The plan assumes a 19.5% share in 2009, with share
stabilizing in the 18.4 to 18.9% range in subsequent years.
"We have strong new product coming for our four core brands: the
Chevrolet Camaro, Equinox, Cruze and Volt; Buick LaCrosse; GMC
Terrain; and Cadillac SRX and CTS Sport Wagon and Coupe," said Mr.
Henderson. "A tighter focus by GM and its dealers will help give
these products the capital investment, marketing and advertising
support they need to be truly successful."
Lower Structural Costs, Lower Breakeven Point
The Viability Plan also lowers GMNA's breakeven volume to a U.S.
annual industry volume of 10 million total vehicles, based on the
pricing and share assumptions in the plan. This lower breakeven
point (at an adjusted EBIT level) better positions GM to generate
positive cash flow and earn an adequate return on capital over the
course of a normal business cycle, a requirement set forth by the
U.S. Treasury in its March 30 viability plan assessment.
GM will lower its breakeven point by cutting its structural costs
faster and deeper than had previously been planned:
* Manufacturing: Consistent with the mandate to accelerate
restructuring, GM plans to reduce the total number of
assembly, powertrain, and stamping plants in the U.S. from
47 in 2008 to 34 by the end of 2010, a reduction of 28%, and
to 31 by 2012. This would reflect the acceleration of six
plant idling/closures from the February 17 plan, and one
additional plant idling. Throughout this transition, GM will
continue to implement its flexible global manufacturing
strategy (GMS), which allows multiple body styles and
architectures to be built in one plant. This enables GM to
use its capital more efficiently, increase capacity
utilization, and respond more quickly to market shifts.
* Employment: U.S. hourly employment levels are projected to
be reduced from about 61,000 in 2008 to 40,000 in 2010, a
34% reduction, and level off at about 38,000 starting in
2011. This further planned reduction of an additional 7,000
to 8,000 employees from the February 17 Plan is primarily
the result of the previously discussed operational
efficiencies, nameplate reductions, and plant closings. GM
also anticipates a further decline in salaried and executive
employment as it continues to assess its structure and
execute the Viability Plan. More details will be announced
as soon as they are finalized with the various stakeholders.
* Labor costs: The Viability Plan assumes a reduction of U.S.
hourly labor costs from $7.6 billion in 2008 to $5 billion
in 2010, a 34% reduction. GM will continue to work with its
UAW partners to accomplish this through a reduction in total
U.S. hourly employment as well as through modifications in
the collective bargaining agreement.
As a result of these and other actions, GMNA's structural costs
are projected to decline 25%, from $30.8 billion in 2008 to $23.2
billion in 2010, a further decline of $1.8 billion by 2010 versus
the February 17 Plan.
Strengthening GM's Balance Sheet
Another key element of GM's restructuring will be taking the
necessary actions to strengthen its balance sheet. GM said it has
taken an important step in improving its balance sheet by
launching a bond exchange offer for approximately $27 billion of
its unsecured public debt. If successful, the bond exchange would
result in the conversion of a large majority of this debt to
equity.
"A stronger balance sheet would free the company to invest in the
products and technologies of the future," Mr. Henderson said. "It
will also help provide stability and security to our customers,
our dealers, our employees, and our suppliers."
Another important part of improving the balance sheet will be the
ongoing discussions with the UAW to modify the terms of the
Voluntary Employee Benefit Association, and with the U.S. Treasury
regarding possible conversion of its debt to equity. The current
bond exchange offer is conditioned on the converting to equity of
at least 50% of GM's outstanding U.S. Treasury debt at June 1,
2009, and at least 50% of GM's future financial obligations to the
new VEBA. GM expects a debt reduction of at least $20 billion
between the two actions.
In total, the U.S. Treasury debt conversion, VEBA modification and
bond exchange could result in at least $44 billion in debt
reduction.
Throughout the Plan, GM will continue to make significant
investment in future products and new technologies, with an
investment of $5.4 billion in 2009, and investments ranging from
$5.3 to $6.7 billion from 2010 to 2014. Very importantly,
development and testing of the Chevy Volt extended-range electric
car remains on track for start of production by the end of 2010
and arrival in Chevrolet dealer showrooms soon thereafter.
"The Viability Plan reflects the direction of President Obama and
the U.S. Treasury that GM should go further and faster on our
restructuring," Mr. Henderson said. "We appreciate their support
and direction. This stronger, leaner business model will enable GM
to keep doing what it does best -- provide great new cars, trucks
and crossovers to our customers, and continue to develop new
advanced propulsion technologies that are vital for our country's
economy and environment."
A full-text copy of GM's February 2009 Viability Plan is available
at http://researcharchives.com/t/s?39a4
A full-text copy of GM's Registration Statement on Form S-4,
including its revised Viability Plan, filed with the Securities
and Exchange Commission is available at no charge at
http://ResearchArchives.com/t/s?3c09
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.
For the 2008 calendar year, GM reported an adjusted net loss,
excluding special items, of $16.8 billion. This compares to an
adjusted net loss of $279 million. Including special items, the
company reported a loss of $30.9 billion, compared to a reported
loss of $43.3 billion in 2007, which included a non-cash special
charge of $38.3 billion in the third quarter related to the
valuation allowance against deferred tax assets.
As of December 31, 2008, GM reported $91,047,000,000 in total
assets, $176,387,000,000 in total liabilities, and $86,154,000,000
in stockholders' deficit.
GM 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.
Going Concern Doubt
Deloitte & Touche LLP, has said there is substantial doubt about
GM's ability to continue as a going concern after reviewing GM's
2008 financial report. Deloitte cited the Company's recurring
losses from operations, stockholders' deficit and failure to
generate sufficient cash flow to meet the Company's obligations
and sustain the its operations. It said GM's future is dependent
on the Company's ability to execute the Company's Viability Plan
successfully or otherwise address these matters. If the Company
fails to do so for any reason, the Company would not be able to
continue as a going concern and could potentially be forced to
seek relief through a filing under the U.S. Bankruptcy Code.
Standard & Poor's Ratings Services on April 10 lowered its issue-
level rating on GM's $4.5 billion senior secured revolving credit
facility to 'CCC-' (one notch above the 'CC' corporate credit
rating on the company) from 'CCC'. It 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 its view of the likelihood that GM will
default -- through either a bankruptcy or a distressed debt
exchange.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
GENERAL MOTORS: Offers to Swap $27BB in Unsec. Notes for Equity
---------------------------------------------------------------
General Motors Corporation is commencing public exchange offers
for $27 billion of its unsecured public notes. GM said the
exchange offers are a vital component of its overall restructuring
plan to achieve and sustain long-term viability and the successful
consummation of the exchange offers will allow GM to restructure
out of bankruptcy court.
____________________________
GM is offering to exchange 225 |
shares of GM common stock for |EXCHANGE OFFER
each 1,000 US dollar equivalent |IN A NUTSHELL:
of principal amount -- or |
accreted value as of the |* Common stock plus accrued
settlement date, if applicable | interest in cash offered
-- of outstanding notes of each | for $27 billion of
series and is offering to pay, | outstanding public debt
in cash, accrued interest on |
the GM notes from the most |* Successful exchange to
recent interest payment date to | Result in at least
the settlement date. In respect | $44 billion reduction in
of the exchange offers for the | total liabilities from
GM Nova Scotia notes, General | bondholders, Treasury
Motors Nova Scotia Finance | and VEBA
Company is jointly making the |
exchange offers with GM. |* Bondholders to own 10%
| of GM after successful
GM believes its restructuring | exchange offer
plan and the successful |
consummation of the exchange |* Exchange contingent on
offers will provide the best | VEBA modifications and
path for the future success of | Treasury debt conversion
the company while enabling it to | conditions resulting in
continue operating its business | at least $20 billion
without the negative impacts of | reduction in liabilities
a bankruptcy and reducing the |
risk of a potentially |* To seek bankruptcy relief
precipitous decline in revenues | if the exchange offers
in a bankruptcy. | are not consummated
|____________________________
In the event GM does not receive
prior to June 1, 2009 enough tenders of notes to consummate the
exchange offers, GM currently expects to seek relief under the
U.S. Bankruptcy Code. GM is considering its alternatives in
seeking bankruptcy relief.
Concurrently with the exchange offers, GM is soliciting consents
from noteholders to amend the terms of the debt instruments that
govern each series of notes and insert a call option to redeem the
non-USD notes.
Each of the exchange offers and consent solicitations will expire
at 11:59 p.m. New York City time on Tuesday, May 26, 2009, unless
extended. Tendered notes may be validly withdrawn at any time
prior to 11:59 p.m. New York City time on Tuesday, May 26, 2009,
subject to certain circumstances where we may extend or reinstate
withdrawal rights.
Consummation of the exchange offers is conditioned upon the
satisfaction or waiver of several conditions including:
* U.S. Treasury Condition: the results of the exchange offers
shall be satisfactory to the U.S. Treasury, including in respect
of the overall level of participation by noteholders in the
exchange offers and in respect of the level of participation by
holders of the Series D notes in the exchange offers. GM believes
that at least 90 percent of the aggregate principal amount of
outstanding notes, including at least 90 percent of the aggregate
principal amount of the outstanding Series D notes due June 1,
2009, will need to be tendered in the exchange offers or called
for redemption pursuant to the call option (in the case of non-USD
notes) in order to satisfy the U.S. Treasury condition. Whether
this level of participation in the exchange offers will be
required (or sufficient) to satisfy the U.S. Treasury condition
will ultimately be determined by the U.S. Treasury.
* Completion of the U.S. Treasury Debt Conversion: the U.S.
Treasury (or its designee) shall have been issued at least 50
percent of the pro forma common stock of GM in exchange for (a)
the full satisfaction and cancellation of at least 50 percent of
GM's outstanding U.S. Treasury debt at June 1, 2009 (such 50
percent currently estimated to be approximately $10.0 billion) and
(b) full satisfaction and cancellation of GM's obligations under
the warrant issued to the U.S. Treasury as part of one of the U.S.
Treasury loan agreements.
* Evidence of the U.S. Treasury Financing Commitment: the U.S.
Treasury having provided commercially reasonable evidence of its
commitment to provide GM an additional $11.6 billion of funding
that GM currently forecasts it will require after May 1, 2009.
* Binding agreements in respect of the VEBA Modifications and
U.S. Treasury approval thereof: GM is engaged in ongoing
negotiations regarding modifications required by the terms of one
of the U.S. Treasury loan agreements to a new voluntary employee
benefit association (the new VEBA) established as part of a
settlement with The International Union, United Automobile,
Aerospace and Agricultural Implement Workers of America (the UAW)
and the class of UAW GM retirees. A condition to the consummation
of the exchange offers is that (a) at least 50 percent (or
approximately $10 billion) of GM's future financial obligations to
the new VEBA will be extinguished in exchange for GM common stock
and (b) cash installments will be paid over a period of time
toward the remaining amount of GM's financial obligations to the
new VEBA. It is also a condition to the exchange offers that the
terms of the VEBA modifications shall be satisfactory to the U.S.
Treasury.
* The aggregate number of shares of GM common stock issued or
agreed to be issued pursuant to the U.S. Treasury Debt Conversion
and the VEBA Modifications shall not exceed 89% of the pro forma
outstanding GM common stock (assuming full participation by
holders of old notes in the exchange offers).
* Binding agreements regarding labor modifications required
under one of GM's U.S. Treasury loan agreements, on such terms as
shall be satisfactory to the U.S. Treasury.
GM will use its best efforts to enter into the agreements,
however, GM has not reached any agreements with respect to any of
the conditions to the exchange offers, and there is no assurance
that any agreements will be reached on the terms described above
or at all. GM will disclose the terms of any agreement reached
with respect to either the U.S. Treasury debt conversion or the
VEBA modifications and currently expects to be able to do so prior
to the withdrawal deadline of the exchange offers.
The aggregate amount of GM common stock to be issued to the U.S.
Treasury (or its designee) pursuant to the U.S. Treasury debt
conversion and to the new VEBA pursuant to the VEBA modifications
would represent approximately 89 percent of the pro forma GM
common stock (assuming full participation in the exchange offers),
with the final allocation between the U.S. Treasury (or its
designee) and the new VEBA to be determined in the future. Of the
remaining pro forma outstanding GM common stock, noteholders would
represent approximately 10 percent, and existing GM common
stockholders would represent approximately 1 percent. GM
determined the GM common stock allocations following discussions
with the U.S. Treasury where the U.S. Treasury indicated that it
would not be supportive of higher allocations to the holders of
notes or to existing GM common stockholders.
The exchange offers have not commenced outside the United States
and will not commence until the requisite approvals are obtained
from the appropriate jurisdictions.
Morgan Stanley & Co. Incorporated and Banc of America Securities
LLC are serving as global coordinators in connection with the
exchange offers.
A full-text copy of GM's February 2009 Viability Plan is available
at http://researcharchives.com/t/s?39a4
A full-text copy of GM's Registration Statement on Form S-4,
including its revised Viability Plan, filed with the Securities
and Exchange Commission is available at no charge at
http://ResearchArchives.com/t/s?3c09
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.
For the 2008 calendar year, GM reported an adjusted net loss,
excluding special items, of $16.8 billion. This compares to an
adjusted net loss of $279 million. Including special items, the
company reported a loss of $30.9 billion, compared to a reported
loss of $43.3 billion in 2007, which included a non-cash special
charge of $38.3 billion in the third quarter related to the
valuation allowance against deferred tax assets.
As of December 31, 2008, GM reported $91,047,000,000 in total
assets, $176,387,000,000 in total liabilities, and $86,154,000,000
in stockholders' deficit.
GM 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.
Going Concern Doubt
Deloitte & Touche LLP, has said there is substantial doubt about
GM's ability to continue as a going concern after reviewing GM's
2008 financial report. Deloitte cited the Company's recurring
losses from operations, stockholders' deficit and failure to
generate sufficient cash flow to meet the Company's obligations
and sustain the its operations. It said GM's future is dependent
on the Company's ability to execute the Company's Viability Plan
successfully or otherwise address these matters. If the Company
fails to do so for any reason, the Company would not be able to
continue as a going concern and could potentially be forced to
seek relief through a filing under the U.S. Bankruptcy Code.
Standard & Poor's Ratings Services on April 10 lowered its issue-
level rating on GM's $4.5 billion senior secured revolving credit
facility to 'CCC-' (one notch above the 'CC' corporate credit
rating on the company) from 'CCC'. It 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 its view of the likelihood that GM will
default -- through either a bankruptcy or a distressed debt
exchange.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
GENERAL MOTORS: Expects to Borrow Another $9 Billion After June 1
-----------------------------------------------------------------
In its revised Viability Plan, General Motors Corp. currently
forecasts that, after June 1, 2009, it will require an additional
$9.0 billion of U.S. Treasury funding.
GM borrowed $2.0 billion on April 24 and expects to need an
additional $2.6 billion of working capital loans prior to June 1.
As part of the compensation for the $2.0 billion loan, GM issued
to the U.S. Treasury a promissory note in an aggregate principal
amount of $133.4 million. If GM were to receive the additional
$2.6 billion, it expects to issue to the U.S. Treasury a
promissory note in an aggregate principal amount of $173.4 million
as part of the compensation for these loans. Moreover, GM expects
that if it were to receive additional funding after June 1, it
would be required to issue to the U.S. Treasury promissory notes
in an aggregate principal amount of $600.3 million as part of the
compensation for this funding.
If GM receives the additional $2.6 billion and issue the
additional $173.4 million promissory note, as of June 1, 2009, GM
would have received loans from the U.S. Treasury of $18.0 billion
-- excluding the $884.0 million it borrowed to purchase additional
membership interests in GMAC -- and issued promissory notes in an
aggregate principal amount of $1.1 billion as part of the
compensation to the U.S. Treasury for the loans, and as a result,
the total outstanding U.S. Treasury Debt would be $20.0 billion.
Under the terms of the U.S. Treasury Debt Conversion, at least 50%
of the U.S. Treasury Debt outstanding at June 1, 2009 -- including
the $884.0 million borrowed to purchase additional membership
interests in GMAC and the other promissory notes GM issued to the
U.S. Treasury as part of the compensation for the loans provided
-- would be exchanged for new shares of GM common stock.
GM has proposed that the U.S. Treasury commit to provide the
additional $9.0 billion funding, together with the additional
$2.6 billion under, or on terms similar to those under, the
existing U.S. Treasury Loan Agreements. GM cannot assure that the
U.S. Treasury will provide the additional $2.6 billion and $9.0
billion of funding. The receipt of the U.S. Treasury Financing
Commitment on commercially reasonable terms is a condition to the
exchange offers. Assuming the exchange of 50% of GM's outstanding
U.S. Treasury Debt at June 1, 2009 -- such 50% currently estimated
to be approximately $10 billion -- and GM's receipt of the
additional $9.0 billion, its total outstanding U.S. Treasury Debt
would be $19.6 billion.
On Friday, GM said the additional $2 billion in U.S. Treasury
loans will help maintain adequate liquidity as the company
undergoes an aggressive restructuring. The new loan brings the
total U.S. Treasury funding received to date to $15.4 billion.
"We will continue to work closely with members of the President's
Auto Task Force throughout our reinvention and together we will
continue to monitor our liquidity needs during this period," GM
said.
Canada May Provide $6BB Financing for Bankruptcy
The Canadian and Ontario governments are in talks with the U.S.
Treasury Department and automotive executives to provide as much
as $6 billion in bankruptcy financing to General Motors Corp. and
Chrysler LLC, The Globe and Mail has reported.
The Globe, citing sources, said Canada would provide as much as
15% of a $40 billion fund that would help the automakers through
the initial phases of protection from creditors.
An OfficialWire report on April 8 stated that under the Canadian
Warranty Commitment Program, the Canadian government is putting up
about $185.3 million to back warranties of new Chrysler and GM
vehicles in case the firms go bankrupt. Citing Industry Minister
Tony Clement, Sun Media has said the fund would back vehicles sold
and would last throughout the troubled firms' restructuring
period.
Up to $700 million was also allocated to an insurance program for
about 650 auto parts suppliers to protect them if either GM or
Chrysler files for bankruptcy, The Globe said, citing Minister
Clement. According to the report, the suppliers can choose to pay
a premium of 0.75% of the value of sales to GM and Chrysler.
Minister Clement, according to the report, said the government
would then pay the full value owed to the supplier if one of the
two automakers folds.
Retirees May Get Benefits Through Tax Credit
John D. McKinnon at The Wall Street Journal reports that GM and
Chrysler retirees might get their benefits through the health-
coverage tax credit created by Congress in 2002.
According to WSJ, labor leaders and U.S. officials are seeking a
way to pay for the retiree benefit programs of Chrysler and GM.
WSJ notes that the health-coverage tax credit could be an
important source of aid, a federal subsidy covering certain
retiree health-care costs. The report states that under the
health-coverage tax credit provision, the federal government can
pay health-insurance premium costs for early retirees of between
55 and 65 years old if their former employer runs into financial
problems and can't pay promised benefits. WSJ says that some
early retirees from the troubled U.S. steel industry have used the
tax credit in recent years.
The health-coverage tax credit, WSJ states, has been little known
and the procedure for securing it is complex. WSJ notes that a
fraction of the people eligible for the health-coverage subsidy
has been able to take advantage of the health-coverage tax credit.
According to the report, the recent stimulus legislation that the
Congress passed expanded the subsidy and streamlined the process,
so now it increased its coverage to 80% from 65% of eligible
retirees' health-care premiums.
WSJ relates that for the retirees to take advantage of the health-
coverage tax credit, their former employer must have terminated
its pension plan and turned it over to the Pension Benefit
Guaranty Corp. According to WSJ, GM, Chrysler, and Ford Motor Co.
workers don't want the firms to terminate their pension plans.
The United Auto Workers union reported that the basic annual
benefits for an early retiree from GM, Chrysler, and Ford totaled
$32,760 as of 2003. Citing officials, WSJ says that the PBGC pays
maximum annual benefits of $18,900 for a 50-year-old retiree.
According to the report, many experts say that the pension plans
of Chrysler and GM are in decent shape and might survive even if
the two companies file for bankruptcy.
GM Intensifying Focus on China
John D. Stoll at WSJ relates that GM is intensifying its focus on
China, where it has remained a relative powerhouse through its
partnerships: a joint venture with Shanghai Automotive Industry
Corp. and a minority interest in microminivan maker Liuzhou Wuling
Motors Co.
Wuling will eventually start developing its own brand of
inexpensive passenger cars, WSJ reports, citing GM Chief Financial
Officer Ray Young. According to WSJ, Mr. Young said that Wuling's
sales have increased tenfold in recent years and now represent
more than a half-million sales annually, or more than all of GM's
other brands combined in China. WSJ states that Wuling also has a
contract to build small Chevrolet vehicles for the Chinese market.
Wuling is seeking to expand its GM China operations to the entire
Asian-Pacific region, WSJ says, citing Mr. Young.
WSJ quoted Mr. Young as saying, "To win globally, we must win in
China." WSJ relates that China is expected to surpass Japan as
the world's No. 1 vehicle producer this year.
Shares of GM Common Stock Sold
On April 24, GM communicated to its employees who participate in
the Savings-Stock Purchase Program or the Personal Savings Plan
that all shares of GM common stock held in the General Motors $1-
2/3 Par Value Common Stock Fund were sold via a selling program
conducted by State Street Bank and Trust Company, the investment
manager and independent fiduciary of the Fund. The Trustee made
the determination to sell the GM stock in its capacity as
independent fiduciary for reasons set forth in the communication.
The selling program began on March 31, 2009, and was completed on
April 24, 2009.
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.
For the 2008 calendar year, GM reported an adjusted net loss,
excluding special items, of $16.8 billion. This compares to an
adjusted net loss of $279 million. Including special items, the
company reported a loss of $30.9 billion, compared to a reported
loss of $43.3 billion in 2007, which included a non-cash special
charge of $38.3 billion in the third quarter related to the
valuation allowance against deferred tax assets.
As of December 31, 2008, GM reported $91,047,000,000 in total
assets, $176,387,000,000 in total liabilities, and $86,154,000,000
in stockholders' deficit.
GM 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.
Going Concern Doubt
Deloitte & Touche LLP, has said there is substantial doubt about
GM's ability to continue as a going concern after reviewing GM's
2008 financial report. Deloitte cited the Company's recurring
losses from operations, stockholders' deficit and failure to
generate sufficient cash flow to meet the Company's obligations
and sustain the its operations. It said GM's future is dependent
on the Company's ability to execute the Company's Viability Plan
successfully or otherwise address these matters. If the Company
fails to do so for any reason, the Company would not be able to
continue as a going concern and could potentially be forced to
seek relief through a filing under the U.S. Bankruptcy Code.
Standard & Poor's Ratings Services on April 10 lowered its issue-
level rating on GM's $4.5 billion senior secured revolving credit
facility to 'CCC-' (one notch above the 'CC' corporate credit
rating on the company) from 'CCC'. It 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 its view of the likelihood that GM will
default -- through either a bankruptcy or a distressed debt
exchange.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
GENERAL MOTORS: Bondholders Find Debt Swap Offer Unreasonable
-------------------------------------------------------------
Caroline Salas at Bloomberg News reports that General Motors Corp.
bondholders find the Company's offer to exchange their $27 billion
in debt for equity unreasonable.
Under GM's revised Viability Plan delivered to the U.S. Department
of the Treasury on Monday, bondholders are being asked to exchange
their claims for 10% of the equity in the reorganized GM. The
offer is dependent on cutting at least half of GM's $20.4 billion
of obligations to the United Auto Workers retiree-medical fund,
Voluntary Employee Beneficiary Association, through a debt-for-
equity exchange that would give the VEBA as much as 39% of common
stock in the Company.
GM said in a statement that at least 90% in principal amount of
the notes must be exchanged by June 1 to satisfy the U.S.
Treasury. Sufficient acceptance of the offer is far from certain
and a Chapter 11 filing is now "more likely," Andrew Edwards at
The Wall Street Journal states, citing GM CEO Fritz Henderson.
The bondholders said that they should be treated more equitably
with labor unions, Bloomberg relates. The ad hoc committee of GM
bondholders said in a statement, "We believe the offer to be a
blatant disregard of fairness for the bondholders who have funded
this company and amounts to using taxpayer money to show political
favoritism of one creditor over another."
Bloomberg quoted KDP Investment Advisors analyst Kip Penniman as
saying, "This is an offer that's designed to fail. To get 90% of
them to agree to such a deal where there's no cash, no other debt
and pure equity while leaving the union VEBA arrangement unchanged
from previous considerations is absurd."
Citing a person familiar with the matter, Bloomberg relates that
the bondholder committee -- which includes Franklin Resources Inc.
and Loomis Sayles & Co. -- has been in contact with about 100
institutions representing about $12 billion of GM bonds. The
source said that the committee wants to negotiate a better offer,
Bloomberg states. Without an agreement, bondholders face the
uncertainty of bankruptcy, Bloomberg quoted GM Chief Financial
Officer Ray Young as saying. According to Bloomberg, Gimme Credit
LLC analyst Shelly Lombard said that the bondholders may fare
worse in bankruptcy.
Jim Fouts, mayor of Warren, Michigan, will bring together many of
GM's small bondholders who stand to be financially hurt the most
by the Company's impending bankruptcy at a City Hall press
conference on Wednesday. "About a quarter of all GM bondholders
are average American citizens, like individual investors,
retirees, senior citizens that invested in a once viable company
to setup their future financial plans. These plans included
settling into retirement, medical expenses, small businesses, and
providing for their children's college fund," Mr. Fouts said.
"GM is now on the brink of going bankrupt and The Administration
won't give the Main Street bondholders a seat at the negotiation
table to chime in on a decision that will truly affect the rest of
their lives. These small bondholders have nothing to do with the
mismanagement decisions on Wall Street and are among the many
stakeholders who will lose if GM collapses, along with their
small, but significant bonds," Mr. Fouts said.
Bloomberg, citing Mr. Young, relates that GM has limited options
to alter terms of the debt exchange -- like expanding their stake
beyond 10% of the proposed 60 billion in GM shares -- and to
consider the proposal as a "take it or leave it" offer wouldn't be
"too strong."
WSJ states that based on Friday's stock close of $1.69, the
exchange offer would be worth 38 cents on the dollar which,
according to online trading platform MarketAxess, is significantly
higher than the 8.5 cents to 12 cents GM bonds fetched in the
secondary market.
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.
For the 2008 calendar year, GM reported an adjusted net loss,
excluding special items, of $16.8 billion. This compares to an
adjusted net loss of $279 million. Including special items, the
company reported a loss of $30.9 billion, compared to a reported
loss of $43.3 billion in 2007, which included a non-cash special
charge of $38.3 billion in the third quarter related to the
valuation allowance against deferred tax assets.
As of December 31, 2008, GM reported $91,047,000,000 in total
assets, $176,387,000,000 in total liabilities, and $86,154,000,000
in stockholders' deficit.
GM 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.
Going Concern Doubt
Deloitte & Touche LLP, has said there is substantial doubt about
GM's ability to continue as a going concern after reviewing GM's
2008 financial report. Deloitte cited the Company's recurring
losses from operations, stockholders' deficit and failure to
generate sufficient cash flow to meet the Company's obligations
and sustain the its operations. It said GM's future is dependent
on the Company's ability to execute the Company's Viability Plan
successfully or otherwise address these matters. If the Company
fails to do so for any reason, the Company would not be able to
continue as a going concern and could potentially be forced to
seek relief through a filing under the U.S. Bankruptcy Code.
Standard & Poor's Ratings Services on April 10 lowered its issue-
level rating on GM's $4.5 billion senior secured revolving credit
facility to 'CCC-' (one notch above the 'CC' corporate credit
rating on the company) from 'CCC'. It 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 its view of the likelihood that GM will
default -- through either a bankruptcy or a distressed debt
exchange.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
GENERAL MOTORS: To Convene April 27 Noteholders Meeting in London
-----------------------------------------------------------------
General Motors Corp. will convene a meeting of holders of its Euro
Notes and holders of General Motors Nova Scotia Finance Company's
Sterling Notes at 1:00 p.m. (London time) on May 27, 2009, at the
offices of Weil Gotshal & Manges at One South Place London EC2M
2WG.
The Euro Notes refer to General Motors Corp.'s issue of:
-- EUR1,000,000,000 7.25 per cent. Notes due 2013
-- EUR1,500,000,000 8.375 per cent. Notes due 2033
The Sterling Notes refer to General Motors Nova Scotia Finance
Company's issue of:
-- LB350,000,000 8.375 per cent. Notes due 2015
-- LB250,000,000 8.875 per cent. Notes due 2023
The Sterling Notes and the Euro Notes are collectively referred to
by GM as the Non-USD Old Notes.
Upon the terms and subject to the conditions set forth in the
prospectus dated April 27, 2009, and the electronic instruction
notice (as defined in the Prospectus), General Motors Corp. is
offering to exchange 225 shares of GM common stock) for each 1,000
U.S. dollar equivalent of principal amount of Non-USD Old Notes.
In respect of the exchange offers for the Sterling Notes, General
Motors Nova Scotia Finance Company, a wholly-owned subsidiary of
General Motors Corp., is jointly making the exchange offers with
GM.
Noteholders may, at any time during normal business hours on any
weekday (Saturdays, Sundays and bank and other public holidays
excepted) prior to the meeting:
(a) obtain an electronic copy of the Prospectus through the
Exchange Agent, provided that such holder is permitted by
applicable law to receive it and provides an e-mail
certification to the effect to the Company, the
Tabulation Agent and the Dealer Managers or inspect a
copy of the Prospectus at the specified office of the
Tabulation Agent or the registered office of the Company;
and/or
(b) inspect copies of the following documents at the
specified office of the [Euro] [Sterling] Note Fiscal
Agent, as applicable, and at the specified
office of the [Euro] [Sterling] Note Paying Agent in
Luxembourg being:
(i) in respect of the 2013 and 2033 Notes:
-- the Euro Note Fiscal and Paying Agency
Agreement;
-- the Offering Circular dated July 1, 2003,
relating to the issue of the 2013 and 2033
Notes;
(ii) in respect of the 2015 and 2023 Notes:
-- the Sterling Note Fiscal and Paying Agency
Agreement;
-- the Offering Circular dated July 9, 2003,
relating to the issue of the 2015 and 2025 Notes;
A copy of the Notice of Meeting is available for free at:
http://bankrupt.com/misc/GM.NoticeofMeeting.pdf
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.
For the 2008 calendar year, GM reported an adjusted net loss,
excluding special items, of $16.8 billion. This compares to an
adjusted net loss of $279 million. Including special items, the
company reported a loss of $30.9 billion, compared to a reported
loss of $43.3 billion in 2007, which included a non-cash special
charge of $38.3 billion in the third quarter related to the
valuation allowance against deferred tax assets.
As of December 31, 2008, GM reported $91,047,000,000 in total
assets, $176,387,000,000 in total liabilities, and $86,154,000,000
in stockholders' deficit.
GM 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.
Going Concern Doubt
Deloitte & Touche LLP, has said there is substantial doubt about
GM's ability to continue as a going concern after reviewing GM's
2008 financial report. Deloitte cited the Company's recurring
losses from operations, stockholders' deficit and failure to
generate sufficient cash flow to meet the Company's obligations
and sustain the its operations. It said GM's future is dependent
on the Company's ability to execute the Company's Viability Plan
successfully or otherwise address these matters. If the Company
fails to do so for any reason, the Company would not be able to
continue as a going concern and could potentially be forced to
seek relief through a filing under the U.S. Bankruptcy Code.
Standard & Poor's Ratings Services on April 10 lowered its issue-
level rating on GM's $4.5 billion senior secured revolving credit
facility to 'CCC-' (one notch above the 'CC' corporate credit
rating on the company) from 'CCC'. It 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 its view of the likelihood that GM will
default -- through either a bankruptcy or a distressed debt
exchange.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
GENERAL MOTORS: Auto Dealers Brace for Bankruptcy Filing
--------------------------------------------------------
John D. Stoll at The Wall Street Journal reports that dealers of
Chrysler LLC and General Motors Corp. are bracing for possible
bankruptcy filings by the companies, which could trigger repayment
of inventory loans.
According to WSJ, GM and Chrysler have 10,000 dealers in the U.S.,
with most of them carrying considerable debt, mainly from the
money they borrow to purchase cars. WSJ notes that the banks
extending that credit -- called "wholesale" loans or "floorplan"
financing that are credit for inventory -- could immediately start
calling dealer loans to demand a good portion of the money back if
Chrysler or GM were to file for bankruptcy. The report says that
the banks would refuse to extend any more inventory financing.
The loans, according to the reprot, are primarily given by GMAC
LLC and Chrysler Financial to dealers so they can purchase
vehicles to stock their showrooms. The report states that the
vehicles being sold by the dealers serve as collateral for the
loans, which are paid back using proceeds from the sale of
vehicles.
WSJ relates that Chrysler Financial and GMAC have "clawback"
provisions that let the finance companies to demand at least
partial payment of the loans in case the of a bankruptcy filing,
because the value of the vehicles being used as collateral would
drop when the companies collapse.
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.
For the 2008 calendar year, GM reported an adjusted net loss,
excluding special items, of $16.8 billion. This compares to an
adjusted net loss of $279 million. Including special items, the
company reported a loss of $30.9 billion, compared to a reported
loss of $43.3 billion in 2007, which included a non-cash special
charge of $38.3 billion in the third quarter related to the
valuation allowance against deferred tax assets.
As of December 31, 2008, GM reported $91,047,000,000 in total
assets, $176,387,000,000 in total liabilities, and $86,154,000,000
in stockholders' deficit.
GM 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.
Going Concern Doubt
Deloitte & Touche LLP, has said there is substantial doubt about
GM's ability to continue as a going concern after reviewing GM's
2008 financial report. Deloitte cited the Company's recurring
losses from operations, stockholders' deficit and failure to
generate sufficient cash flow to meet the Company's obligations
and sustain the its operations. It said GM's future is dependent
on the Company's ability to execute the Company's Viability Plan
successfully or otherwise address these matters. If the Company
fails to do so for any reason, the Company would not be able to
continue as a going concern and could potentially be forced to
seek relief through a filing under the U.S. Bankruptcy Code.
Standard & Poor's Ratings Services on April 10 lowered its issue-
level rating on GM's $4.5 billion senior secured revolving credit
facility to 'CCC-' (one notch above the 'CC' corporate credit
rating on the company) from 'CCC'. It 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 its view of the likelihood that GM will
default -- through either a bankruptcy or a distressed debt
exchange.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
GENERAL MOTORS: Jeffrey Schlerf, Esq., Says SDNY Bad Venue Choice
-----------------------------------------------------------------
Jeffrey M. Schlerf, Esq., a partner in Fox Rothschild LLP's
Financial Restructuring & Bankruptcy practice and the Wilmington,
Delaware, office's practice leader, says that the Southern
District of New York could be a bad choice of venue for General
Motors Corporation should it file for chapter 11 protection.
Defined benefit plans are one of many employee and retiree legacy
costs inherent in the automotive industry. The elimination of
this type of legacy cost would certainly be among the many options
pursued by these companies as they seek to streamline labor costs.
A bankruptcy filing by any of the Big Three in the coming weeks,
and the likelihood of a "quick" and successful reorganization,
could be significantly impacted by the prospect of such a large,
non-dischargeable claim triggered by a termination of a less
common form of pension plan in modern industry.
The Second Circuit Court of Appeals recently issued an opinion
which could have a significant impact on a bankruptcy filing by
any of the Big Three automakers. In a contested matter involving
the Pension Benefit Guaranty Corporation (PBGC) and Oneida Ltd. --
a manufacturer of flatware which reorganized in a chapter 11 case
in the Southern District of New York -- the Second Circuit issued
an opinion reversing the Bankruptcy Judge in that case. The
Second Circuit held that a so-called "termination premium" in an
amount as high as $ 56.23 million arising from Oneida's post-
bankruptcy filing termination of its under-funded defined benefit
pension plan was a non-dischargeable claim against Oneida which
was entitled to administrative claim status (in other words, it
was an obligation the reorganized company had to pay in full post-
emergence). A full-text copy of the Second Curcuit's decision is
posted at http://tinyurl.com/cq3btq
The triggering of a termination penalty is a product of
legislation passed by Congress in 2006 following the trend
beginning years ago among employers to move away from defined
benefit plans, where an employee vests in a specific retirement
obligation of his or her employer, towards employee contribution
oriented plans such as 401(k) plans. The intent of the
legislation passed by Congress, in the words of the Second
Circuit, was to "prevent employers from evading the Termination
Premium while seeking reorganization in bankruptcy."
The Second Circuit decision would be unfavorable to an automotive
company trying to reorganize in that Circuit, which includes
Manhattan. The three options for GM filing are there, DE and
Detroit. Jeffrey would like to discuss this decision and the
possible implications for a filing by any of the Big Three.
Fox Rothschild LLP -- http://www.foxrothschild.com/-- is a full-
service law firm built to serve business leaders. Over the past
100 years, the firm has grown to more than 450 lawyers in 15
offices coast to coast. "Our clients come to us because we
understand their issues, their priorities, and the way they
think," the firm says in its promotional literature. "We help
clients manage risk and make better decisions by offering
practical, innovative advice."
Mr. Schlerf has over 20 years of professional experience relating
to the financial industry, first as an economist and then as an
attorney. During his legal career, he's represented the interests
of all types of parties in many of the larger bankruptcy cases in
the United States beginning in the early 1990's through this
decade. Recent engagements include the representation of a
billion-dollar home builder and developer currently in chapter 11,
a large debtor in the power generation industry, a permanent
trustee in liquidation of companies in the mortgage industry, a
creditors' committee in the bankruptcy of a vehicle manufacturer,
and several trustees prosecuting various types of litigation. Mr.
Schlerf has been recognized for several years by Chambers USA as a
leader in the field of bankruptcy and restructuring. He has also
been recognized as a Delaware "Super Lawyer."
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.
For the 2008 calendar year, GM reported an adjusted net loss,
excluding special items, of $16.8 billion. This compares to an
adjusted net loss of $279 million. Including special items, the
company reported a loss of $30.9 billion, compared to a reported
loss of $43.3 billion in 2007, which included a non-cash special
charge of $38.3 billion in the third quarter related to the
valuation allowance against deferred tax assets.
As of December 31, 2008, GM reported $91,047,000,000 in total
assets, $176,387,000,000 in total liabilities, and $86,154,000,000
in stockholders' deficit.
GM 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.
Going Concern Doubt
Deloitte & Touche LLP, has said there is substantial doubt about
GM's ability to continue as a going concern after reviewing GM's
2008 financial report. Deloitte cited the Company's recurring
losses from operations, stockholders' deficit and failure to
generate sufficient cash flow to meet the Company's obligations
and sustain the its operations. It said GM's future is dependent
on the Company's ability to execute the Company's Viability Plan
successfully or otherwise address these matters. If the Company
fails to do so for any reason, the Company would not be able to
continue as a going concern and could potentially be forced to
seek relief through a filing under the U.S. Bankruptcy Code.
Standard & Poor's Ratings Services on April 10 lowered its issue-
level rating on GM's $4.5 billion senior secured revolving credit
facility to 'CCC-' (one notch above the 'CC' corporate credit
rating on the company) from 'CCC'. It 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 its view of the likelihood that GM will
default -- through either a bankruptcy or a distressed debt
exchange.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
GENTEK INC: S&P Changes Outlook to Negative; Affirms 'BB-' Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised its
outlook on GenTek Inc. to negative from stable. S&P affirmed the
'B+' corporate credit rating on GenTek Inc. The 'BB-' issue-level
rating and the '2' recovery rating remains unchanged on the
$60 million revolving credit facility and $285 million term loan.
"The negative outlook reflects the increased concern over the debt
maturities on its $60 million revolving credit facility due in
Feb. 2010 and the accelerated principal amortization of its term
loan beginning in June 2010. Moreover, in view of the difficult
credit market conditions, S&P expects amending or refinancing its
current facility may meaningfully increase the company's borrowing
cost, said Standard & Poor's credit analyst Henry Fukuchi. This
could ultimately translate to decreased profitability and weaker
credit metrics, although key measures of credit quality are still
robust for the ratings.
While S&P expects GenTek to generate moderate cash flow and
maintain stable operating results in 2009, refinancing risk
remains a critical factor in S&P's ratings as the company
approaches its maturities. More importantly, S&P considers these
maturities a key concern for GenTek as S&P expects that future
cash balances and cash flow generation this year will not be
sufficient to cover the aggregate maturities due in 2010.
GI JOE'S: Files Schedules of Assets and Liabilities
---------------------------------------------------
G.I. Joe's Holding Corp. and G.I. Joe's Inc. filed with the U.S.
Bankruptcy Court for the District of their schedules of assets and
liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ------------ -----------
A. Real Property
B. Personal Property $121,014,643
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $82,395,460
E. Creditors Holding
Unsecured Priority
Claims $3,165,792
F. Creditors Holding
Unsecured Non-priority
Claims $35,786,263
------------ ------------
TOTAL $121,014,643 $121,347,515
A copy of the schedules of assets and liabilities is available at
http://ResearchArchives.com/t/s?3be7
Headquartered Wilmington, Delaware, G.I. Joe's Holding Corporation
-- http://www.joessports.com-- owns and operates retail stores
selling sports apparel, and camping equipment and accessories.
G.I Joe has more than 30 locations in Idaho, Oregon, and
Washington. The G.I. Joe's Holding Corporation and G.I. Joe's
Inc. filed for Chapter 11 protection on March 4, 2009 (Bankr. D.
Del. Case Nos. 09-10713 and 09-10714). The Debtors proposed
Steven M. Yoder, Esq., at Potter Anderson & Corroon LLP, as their
Delaware counsel and Patrick J. O'Malley, at Development
Specialist Inc., chief restructuring officer. When the Debtors
filed for protection from their creditors, they listed assets and
debts between $100 million and $500 million.
GI JOE'S: Court Sets May 31 as General Claims Bar Date
------------------------------------------------------
The Hon. Kevin Gross of the United States Bankruptcy Court for the
District of Delaware set May 31, 2009, at 4:00 p.m. (prevailing
Eastern Time as deadline for creditors of G.I. Joe's Holding Corp.
and G.I. Joe's Inc. to file proofs of claim.
Governmental units have until August 31, 2009, at 4:00 p.m., to
file their proofs of claim.
All proofs of claim must be delivered to:
G.I. Joe's Holding Corporation Claims Processing
c/o BMC Group
P.O. Box 2011
Chanhassen, MN 55317-2011
Headquartered Wilmington, Delaware, G.I. Joe's Holding Corporation
-- http://www.joessports.com-- owns and operates retail stores
selling sports apparel, and camping equipment and accessories.
G.I Joe has more than 30 locations in Idaho, Oregon, and
Washington. The G.I. Joe's Holding Corporation and G.I. Joe's
Inc. filed for Chapter 11 protection on March 4, 2009 (Bankr. D.
Del. Case Nos. 09-10713 and 09-10714). The Debtors proposed
Steven M. Yoder, Esq., at Potter Anderson & Corroon LLP, as their
Delaware counsel and Patrick J. O'Malley, at Development
Specialist Inc., chief restructuring officer. When the Debtors
filed for protection from their creditors, they listed assets and
debts between $100 million and $500 million.
GILBERTO APONTE: Case Summary & 18 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Gilberto Aponte Machin
aka DR Gilberto Aponte Machin
P.O. Box 11601
San Juan, PR 00922
Bankruptcy Case No.: 09-03214
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
District of Puerto Rico (Old San Juan)
Debtor's Counsel: Victor Gratacos Diaz, Esq.
P.O. Box 7571
Caguas, PR 00726
Tel: (787) 746-4772
Email: vgratacd@coqui.net
Total Assets: $2,712,070
Total Liabilities: $1,740,370
A full-text copy of Mr. Machin's petition, including a list of his
18 largest unsecured creditors and his schedules of assets and
liabilities, is available for free at:
http://bankrupt.com/misc/prb09-03214.pdf
The petition was signed by Mr. Machin.
G.M. BERGERON: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: G.M. Bergeron, Inc.
770 West Boylston Street
Worcester, MA 01606
Bankruptcy Case No.: 09-41541
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
District of Massachusetts (Worcester)
Judge: Joel B. Rosenthal
Debtor's Counsel: George W. Tetler, III, Esq.
Bowditch & Dewey
311 Main Street
P.O. Box 15156
Worcester, MA 01615
Tel: (508) 791-3511
Fax: (508) 756-7636
Email: gtetler@bowditch.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Company's 20 largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/mab09-41541.pdf
The petition was signed by Mr. Bergeron, president and treasurer
of the Company.
HANNON B LLC: Case Summary & 1 Largest Unsecured Creditor
---------------------------------------------------------
Debtor: Hannon B, LLC
P. O. Box 5481
Phoenix, Az 85010
Bankruptcy Case No.: 09-08430
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
District of Arizona (Phoenix)
Judge: Redfield T. Baum Sr., Chief Judge
Debtor's Counsel: Charles L. Firestein, Esq.
1300 E. Missouri Ave STE D-200
Phoenix, AZ 85014
Tel: (602) 235-9000
Fax: (602) 235-9040
Email: charles@firesteinpc.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor disclosed that Bayberry LLC, in Tempe, Arizona, is its
single largest unsecured creditor, owed $80,000 in claims.
The petition was signed by Dennis Hannon, manager of the Company.
HAPPY VACATIONS: Closes Shop, Files for Bankruptcy Protection
-------------------------------------------------------------
appy Vacations has closed and filed for Chapter 11 bankruptcy
protection in the U.S. Bankruptcy Court for the Northern District
of California.
For ticketed United Airlines bookings, the airline will honor all
tickets issued by Happy Vacations. No special reconfirmation is
necessary. PNR questions should be directed United Reservations
at 1-800-521-0810.
Since United Airlines isn't responsible for the non-air components
of any Happy Vacation package, travel agents are instructed to
contact another tour operator for assistance with all other
arrangements.
For unticketed United bookings, United Airlines is unable to honor
any reservations that have not been ticketed regardless of deposit
paid. The airline will allow transfer of unticketed PNR to a new
tour operator/wholesaler of the travel agent's or customer's
choice.
Travel agents and customers should contact another tour operator
to secure assistance with package arrangements, including the air
portion.
United Airlines has provided each tour operator with instructions
for transferring the existing Happy Vacations PNR to20the new tour
operator.
No changes will be allowed to the original itinerary or booking
class.
United Airlines does not assume responsibility for any non-air
portion of the travel package.
Happy Vacations said that effective immediately, unticketed
reservations for Alaska Airlines have been released and may be
acquired by another tour operator for ticketing. Alaska Airlines
will protect the original class of service.
Pleasant Holidays has offered their services for Happy Vacations
clients and will be able to help accommodate their future
reservations by contacting the company at (877)287-2835.
Travel Impressions will provide additional assistance in re-
accommodating Happy Vacations travelers. The TI special services
phone number is (866)906-1361.
Goway Travel is also offering to provide advice and guidance to
Happy Vacations clients traveling to the South Pacific. "As a
gesture of goodwill, we are providing all travelers who booked
with Happy Vacations access to information and advice to help
direct them through this difficult and complex situation. Those
travelers who have already booked their vacation should contact us
immediately to protect their reservations," said Goway Travel
President Bruce Hodge.
Assistance offered by Goway includes:
-- reconfirmation of all travel arrangements,
-- waiver of deposit if already paid to Happy Vacations, and
-- assistance with recovery of funds paid to Happy Vacations
Goway is fully bonded and licensed in the USA, and is an active
member of USTOA. USTOA's $1 Million Travelers Assistance Program
requires each USTOA Active Member company to post $1 million in
security in the form of a bond or letter of credit, and provides
security for travelers booking with USTOA members. Affected
travelers should call toll free 800-918-8927.
On April 20, 2009, Happy Vacations said that it secured limited
financing as an interim step towards a recapitalization. The
Company had been in discussions with a number of interested
parties to add more capital and to potentially buy all or part of
the Company. Happy Vacations, however, had yet to obtain the
needed funds and has no choice, at least in the interim, but to
cease current operations.
"The Company has some viable components that are less affected by
these very difficult economic times, and we will build on these to
emerge from reorganization as a stronger company. After 40 years
in the business we at Happy Vacations are heart-broken about the
turn of events and our difficult decision to disrupt our current
operations. We truly appreciate the support and concern from our
Travel Agency and vendor partners. We apologize for any
disruption, inconvenience or losses," said Happy Vacations
President David Marshall.
Happy Vacations is working with other travel providers to protect
as many travelers as possible and will distribute this information
throughout the week. Travel Agents are advised to take immediate
action to ensure that your clients' trips are not disrupted.
Happy Vacations is a California tour company that specializes in
Hawaii. Other destinations for Happy Vacations include the
Caribbean, Costa Rica, Mexico and the South Pacific. The Company
has been in business since 1969.
HEALTHSPORT INC: Creason & Associates Raises Going Concern Doubt
----------------------------------------------------------------
Creason & Associates, P.L.L.C., in Tulsa, Oklahoma,has expressed
substantial doubt on the ability of HealthSport Inc. as a going
concern.
At December 31, 2008 and 2007, the Company had current assets of
$1,799,604 and $2,411,410; current liabilities of $4,527,706 and
$2,066,125; and a working capital deficit of $2,728,102 and
working capital of $345,285, respectively. The Company incurred a
loss of $8,953,121 during 2008, which included depreciation and
amortization of $1,366,451 and amortization of non-cash stock
compensation of $2,823,530.
In 2007, the Company projected sales to be as high as $10 million,
based on forecasts for SPORTSTRIPS, PediaStrips and FIX STRIPS.
HealthSport said the alleged tortious interference by Gatorade in
HealthSport's agreement with the Buffalo Bills, other NFL teams
and NFL players substantially hindered its ability to market and
sell SPORTSTRIPS product, which was its first product to market.
FIX STRIPS sales did not commence until the fourth quarter and
were substantially below initial forecasts from consultants. At
the end of the fourth quarter of 2007, the Company changed its
sales direction and reduced staff with the goal of selling product
through distributors rather than making all sales directly to
customers.
On March 11, 2008, HealthSport entered into a five-year
distribution agreement with Unico. Unico markets its products
through numerous sales channels, including large retail
merchandisers, drug store chains, grocery stores and
pharmaceutical distributors. Unico's customers include most of
the largest retailers and distributors in the U.S. in each of
these sales channels. The agreement calls for a minimum of $22
million of product purchases over a five-year term for Unico to
maintain its exclusive distribution right. The Unico distribution
agreement is initially for PEDIASTRIPS and commenced during the
third quarter of 2008.
"We are attempting to establish similar arrangements for our
SPORTSTRIPS and other products. The Company has established other
film strip products for a number of products which were previously
only delivered in a different manner, such as liquids and pills.
The Company expects this to develop into a large part of its
business in the future," HealthSport said.
On September 11, 2008, the Company entered into an exclusive
distributor agreement with T. Lynn Mitchell Companies, LLC.
Pursuant to the agreement, T Lynn, for a period of 10 years, was
granted the exclusive worldwide rights for the four initial
products which use the Company's patent pending bi-layered strip
technology. In addition, the agreement contemplates that the
Company can formulate other bi-layered products which T Lynn may
market in the future, subject to pricing or other constraints.
The Company began sales of Energy Strips, Antioxidant Strips,
Electrolytes Plus and Melatonin & Theanine Strips during the
fourth quarter of 2008 and has several other products which are
expected to begin shipping in 2009.
The Company will continue to require substantial working capital
until sales develop to the level required to support operations.
The current level of overhead is approximately $175,000 per month
and manufacturing costs total approximately $240,000 per month.
The Company is continually analyzing its current costs and is
attempting to make additional cost reductions where possible.
Sales amounted to approximately $1,600,000 during the first
quarter of 2009. This sales level represents a substantial
improvement from prior periods but will require additional
increases to support the current level of operations.
"We estimate that sales will develop to the level necessary to be
at or near cash flow break-even by the beginning of the third
quarter of 2009," HealthSport said.
Based on this time-frame, the Company would need from $500,000 to
$1,500,000 to meet its minimum requirements, including operating
cash short-falls and completing a globally compliant manufacturing
plant. The Company expects to continue to make private placements
of its common stock or to borrow additional funds as needed.
As of December 31, 2008, HealthSport had $31,816,568 in total
assets and $5,079,883 in total liabilities.
Based in Charlotte, North Carolina, HealthSport Inc. is focused
exclusively on the development, manufacturing, distribution and
marketing of edible film strip technology. This technology system
provides rapid dissolution and release of active ingredients when
the strip comes in contact with saliva in the mouth. HealthSport
is publicly traded on the bulletin board market under the ticker
symbol "HSPO.OB."
HOST HOTELS: $6.60 Share Price Won't Affect S&P's 'BB-' Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services said that its 'BB-' corporate
credit rating and negative outlook on Host Hotels & Resorts Inc.
would not be affected by the company's announcement this morning
that it has priced 66 million common shares at $6.60. The company
expects the common stock offering to generate more than
$400 million in proceeds that it has stated it will use for debt
repayment.
In addition, Host released its first-quarter 2009 earnings
statement yesterday and lowered its view of 2009 revenue per
available room to a decline of 18% to 20% (from a decline of 12%
to 16%) and its 2009 adjusted EBITDA expectation to $800 million
to $850 million (from $850 million to $930 million). The
company's lowered 2009 adjusted EBITDA guidance translates into a
year-over-year decline of about 40% from a previously expected
decline of about 35%.
S&P's affirmation of Host's 'BB-' rating on March 27, 2009 (after
lowering the rating to this level on Feb. 19) reflected S&P's
expectation that 2009 EBITDA would likely decline in the 35% area,
resulting in adjusted net debt to EBITDA rising to the 7x area at
the end of 2009. Although the company's expectation for 2009
RevPAR and EBITDA has worsened, S&P believes the announced common
equity offering will help Host maintain credit measures in
alignment with S&P's current expectations. In addition, S&P
believes the equity offering will enable the company to maintain
an adequate cushion relative to its 7.25x net leverage covenant in
its credit facility (which is currently its tightest financial
covenant), notwithstanding the downward guidance for EBITDA.
S&P expects that Host will maintain an adequate liquidity
position, with $653 million in cash balances at March 2009 before
the completion of the equity offering. S&P believes that more
than half of this balance is excess and available for debt
repayment. Also, S&P expects the company to maintain an adequate
cushion relative to covenants in its credit facility and bond
indentures over the intermediate term, and it is S&P's view that
near-term maturities are manageable. The negative rating outlook
reflects the difficult operating environment and credit measures
that S&P expects to be weak for the current rating over the
intermediate term.
HUMAN TOUCH: Event of Default Cues Moody's Rating Cut to 'D'
------------------------------------------------------------
Moody's Investors Service downgraded Human Touch LLC's probability
of default rating to D from Ca and its corporate family rating to
C from Ca. The C rating on the company's 7-1/4% senior notes and
SGL-4 speculative grade liquidity rating were unchanged.
The downgrades reflect Moody's view that the recent extension of
the scheduled mandatory redemption payment via supplemental
indenture constitutes an event of default under Moody's
definition, and that recovery could be very low in a default
scenario.
Subsequent to the actions, all ratings will be withdrawn because
Moody's believes it lacks adequate information to maintain a
rating. Refer to Moody's Withdrawal Policy on moodys.com.
These ratings were downgraded:
-- Corporate Family Rating to C from Ca;
-- Probability of Default Rating to D from Ca.
These ratings will be withdrawn:
-- Corporate Family Rating at C;
-- Probability of Default Rating at D;
-- 7¬% senior notes due 2011 at C (LGD5, 82%);
-- The SGL-4 Speculative Grade Liquidity Rating
The previous rating action for Human Touch LLC was on February 12,
2009, when Moody's downgraded the company's corporate family and
probability of default ratings to Ca with a negative outlook.
Human Touch LLC, (operating subsidiary of Interactive Health,
Inc.) located in Long Beach, California, is a producer and
marketer of robotic massage chairs, zero-gravity chairs and
massage products. Sales for the year ended December 31, 2008 were
about $63 million.
HUMBOLDT CREAMERY: Meeting of Creditors Scheduled for June 2
------------------------------------------------------------
The U.S. Trustee for Region 17 will convene a meeting of creditors
in Humboldt Creamery, LLC's Chapter 11 case on June 2, 2009, at
1:00 p.m., at June 2, 2009, at U.S. Bankruptcy Court (Eureka),
P.O. Bldg. 205, 5th and H. St., Eureka, 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.
Headquartered in Fortuna, California, Humboldt Creamery, LLC --
http://www.humboldtcreamery.com/-- makes ice cream and milk
products.
The Company filed for Chapter 11 on April 21, 2009 (Bankr. N.D.
Calif. Case No. 09-11078). Ori Katz, Esq., at Sheppard, Mullin,
Richter and Hampton, represents the Debtor in its restructuring
efforts. The Debtor disclosed total assets and debts from $50
million to $100 million.
JEFFREY J. KRAJEWSKI: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Joint Debtors: Jeffrey J. Krajewski
Cynthia J. Krajewski
2147 E. Caroline Lane
Tempe, AZ 85284
Bankruptcy Case No.: 09-08416
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
District of Arizona (Phoenix)
Judge: Sarah Sharer Curley
Debtors' Counsel: D. Lamar Hawkins, Esq.
Aiken Schenk Hawkins & Ricciardi PC
4742 North 24TH Street, Suite 100
Phoenix, AZ 85016
Tel: (602) 248-8203
Fax: (602) 248-8840
Email: dlh@ashrlaw.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $100,000,001 to $500,000,000
The Debtors did not file a list of 20 largest unsecured creditors
when they filed their petition.
The petition was signed by the joint debtors.
KARL LEE VANBECELAERE: Case Summary & 10 Largest Unsec. Creditors
-----------------------------------------------------------------
Joint Debtors: Karl Lee Vanbecelaere
Linda Lou Vanbecelaere
141 Carnavon PKWY
Nashville, TN 37205
Bankruptcy Case No.: 09-04691
Chapter 11 Petition Date: April 25, 2009
Court: United States Bankruptcy Court
Middle District of Tennessee (Nashville)
Debtors' Counsel: Steven L. Lefkovitz, Esq.
Law Offices Lefkovitz & Lefkovitz
618 Church St., Ste. 410
Nashville, TN 37219
Tel: (615) 256-8300
Fax: (615) 250-4926
Email: Stevelefkovitz@aol.com
Total Assets: $1,765,273.68
Total Liabilities: $4,263,408.41
A full-text copy of the Debtors' petition, including a list of
their 10 largest unsecured creditors, and their schedules of
assets and liabilities, is available for free at:
http://bankrupt.com/misc/tnmb09-04691.pdf
The petition was signed by the joint debtors.
KAY BEE KAY: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Kay Bee Kay Properties, LLC
1487 Hubbard
Detroit, MI 48209
Bankruptcy Case No.: 09-52889
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
Eastern District of Michigan (Detroit)
Judge: Thomas J. Tucker
Debtor's Counsel: Mark H. Shapiro, Esq.
24901 Northwestern Highway
Suite 611
Southfield, MI 48075
Tel: (248) 352-4700
Email: shapiro@steinbergshapiro.com
Total Assets: $1,868,638.23
Total Liabilities: $2,329,634.11
A list of the Company's 20 largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/mieb09-52889.pdf
The petition was signed by Keith B. Kramer, manager of the
Company.
KRIEGER-RAGSDALE: Closes, Bankruptcy Case Ongoing
-------------------------------------------------
Krieger-Ragsdale & Co., Inc., has stopped its operations and
closed, ASICentral reports, citing an official at the Chamber of
Commerce in Evansville, Indiana.
According to ASICentral, the Evansville Chamber of Commerce has
been flooded since Friday with inquiries from businesses that deal
with Krieger-Ragsdale and which haven't been able to contact
Krieger-Ragsdale in several days.
A bankruptcy clerk said that Krieger-Ragsdale's Chapter 11
bankruptcy case is still active, ASICentral relates.
Evansville, Indiana-based Krieger-Ragsdale & Co., Inc., has
supplied products like notepads, calendars, diaries, signs, and
hand fans. It has 38 employees and had been in business since
1906. The Company filed for Chapter 11 bankruptcy protection on
October 15, 2008 (Bankr. S.D. Ind. Case No. 08-71436). R. Stephen
LaPlante, Esq., at Keating & LaPlante, assists the Company in its
restructuring efforts. The Company listed $2,739,448 in assets
and $2,738,988 in debts.
LENNAR CORP: Fitch Assigns 'BB+' Rating on $400 Mil. Notes
----------------------------------------------------------
Fitch Ratings has assigned a 'BB+' rating to Lennar Corp.'s
$400 million, 12.25% senior notes due June 1, 2017. The Rating
Outlook is Negative.
The debt issue will be ranked on a pari passu basis with all other
senior unsecured debt, including Lennar's $1.1 billion unsecured
bank credit facility. Proceeds from the new debt issue will be
used for general corporate purposes, which may include the
repayment or repurchase of Lennar's near-term debt maturities or
of debt of joint ventures which Lennar has guaranteed. This debt
issue has similar investment grade covenants to those of its other
senior notes, with the exception of a change of control provision
that is included in this new issuance.
In addition to the debt issue, Lennar recently entered into a
distribution agreement with several agents under which the company
may sell from time to time shares of its class A common stock for
an aggregate of up to $275 million. Proceeds from the equity
offering will be used for working capital and general corporate
purposes, which may include repayment of debt and acquisitions.
Lennar has also submitted a non-binding proposal to purchase an
interest in LandSource Communities Development, LLC and some of
its assets.
Lennar's liquidity remains healthy and provides flexibility. As
of Feb. 28, 2009, the company had $1.1 billion of cash and
$185 million of borrowing availability under its $1.1 billion
unsecured revolving credit facility. The new debt issue
strengthens the company's liquidity position as it extends its
debt maturity schedule. As of Feb. 28, 2009, the company had
$831 million of senior notes that are scheduled to mature over the
next three years, including $281 million of senior notes that were
paid in March 2009. This debt issuance highlights Lennar's access
to the capital markets at a time when the homebuilding industry
remains very challenging, albeit at higher interest rates compared
to previous note offerings.
Fitch lowered Lennar's Issuer Default Rating and senior unsecured
rating in mid-December 2008 from 'BBB-' to 'BB+'. The short-term
and commercial paper ratings were also lowered from 'F3' to 'B'.
The downgrade reflected the current very difficult housing
environment and Fitch expectations that housing activity will be
even more challenging than previously anticipated throughout
calendar 2009. The recessionary economy and impaired mortgage
markets are, of course, contributing to the housing shortfall.
The ratings changes also reflected further deterioration in
Lennar's credit metrics (especially interest coverage and
debt/EBITDA ratios) and erosion in tangible net worth from non-
cash real estate charges. Fitch notes there is potential for
lower cash flow from operations this year relative to fiscal 2008.
Future ratings and Outlooks will be influenced by broad housing
market trends as well as company specific activity, such as land
and development spending, general inventory levels, speculative
inventory activity (including the impact of high cancellation
rates on such activity), gross and net new order activity, debt
levels and free cash flow trends and uses.
Lennar's ratings reflect the company's strong track record over
many decades and through many past homebuilding cycles,
management's sound operating and financial policies, the company's
well positioned, low-basis land holdings in attractive growth
markets, and its capacity to withstand a meaningful housing
downturn.
The ratings also consider the off-balance sheet financing of
Lennar's longer-dated land supply and the concentration of
deliveries in Florida, Texas and California (the three largest
state markets in the country). Fitch views Lennar's partnerships
and joint ventures to be strategically and financially material to
the company's operations. However, the manageable leverage levels
and the extensive supply of lots in long-term land-constrained
markets held in the partnerships mitigate this risk to some
extent. Furthermore, Lennar has reduced its recourse
unconsolidated JV debt from $1.8 billion at the end of its 2006
fiscal year to $474 million at Feb. 28, 2009. Lennar has also
committed (through quarterly reductions)to further reduce exposure
to recourse debt related to JVs to $275 million through the
maturity of its revolving credit facility in July 2011 and is, so
far, ahead of schedule.
Lennar controls roughly a 7.6-year supply of land based on latest
12 months home deliveries, 68.4% of which are owned, 9.9% are
controlled through options, and 21.7% are controlled through JVs.
(The options share of total lots controlled is down sharply over
the past two years as the company has written off substantial
numbers of options.)
LENNAR CORP: Moody's Assigns 'B3' Rating on $400 Mil. Notes
-----------------------------------------------------------
Moody's Investors Service assigned a B3 rating to the new
$400 million senior unsecured note offering of Lennar Corporation,
proceeds of which will be used for general corporate purposes,
which may include the repayment or repurchase of its near-term
debt maturities or of debt of its joint ventures that it has
guaranteed. At the same time, Moody's affirmed the company's
existing ratings, including its corporate family rating at B2, the
ratings on its various issues of senior unsecured notes at B3, and
its speculative grade liquidity rating at SGL-2. The ratings
outlook is changed to stable from negative.
The change to a stable outlook takes into consideration that most
of the imbalance over the next three years between Lennar's
upcoming debt maturities and its cash available to pay these
obligations has been eliminated by this offering. While the
piecing out of Class A shares into the market under the company's
equity dribble program could ultimately help the balance sheet and
further augment liquidity, Moody's notes that the program still
has a long way to go before reaching the $275 million limit and
could be derailed by a large stock market sell off. In addition,
any early proceeds from this program are more likely to be used to
finance land acquisitions such as LandSource rather than debt
repayment.
The B2 corporate family rating reflects Moody's expectation that
covenant compliance -- specifically, the tangible net worth test -
- will be very challenging, as impairment charges on the company's
greater than industry average land position continue taking their
toll. In addition, debt leverage -- adjusted for operating
leases, recourse joint venture payment guarantees, and financial
letters of credit, but not for recourse remargining or completion
guarantees or for non-recourse debt whose underlying assets may
appear sufficiently attractive for the company to step up and make
payment -- was 55% at fiscal year-end November 30, 2008. Moody's
believes that this ratio is likely to edge higher if impairments
continue at an appreciable rate, pushing this metric further into
the single-B category. Finally, Moody's notes that the 12.25%
coupon on this new offering exceeds the coupons on the debt to be
retired, thus adding further to the company's interest burden and
perhaps prolonging the period before profitability returns.
At the same time, Lennar's ratings are supported by the company's
positive steps towards handling its upcoming debt maturities, its
early recognition that the homebuilding industry's long-time
business model needs fixing, its attempts to operate more as a
manufacturer and less as a large land acquirer, its aggressiveness
in booking impairment charges, and its success to date in
extricating itself from its formerly outsized joint venture
investments and debt guarantees.
The speculative grade liquidity rating assignment looks ahead 12-
18 months as contrasted with the longer-term horizon used to
derive the corporate family rating, and is much more volatile as a
result. The SGL-2 rating reflects Moody's expectation that
Lennar's internal liquidity (defined as unrestricted cash plus
cash flow) and external liquidity (defined as committed revolver
availability) offset the company's challenging covenant compliance
environment and somewhat limited opportunities to monetize excess
assets quickly.
Going forward, the ratings and/or outlook could benefit if the
company were to resume growing its free cash flow; reduce costs
sufficiently to restore homebuilding profitability before charges;
make it through upcoming quarters without substantial additional
charges to net worth, thereby restoring adjusted debt leverage to
acceptable levels; remain comfortably in compliance with its
financial covenants; improve its inventory performance and
materially reduce its lot supply; and continue to substantially
reduce its joint venture exposure.
The ratings could be lowered again if quarterly losses before
impairments begin to widen substantially; impairments were to
continue at the same or near-same rate as they have to date,
thereby imperiling covenant performance and/or causing debt
leverage to rise to unacceptable levels; or if the company were to
experience even sharper-than-expected reductions in its trailing
twelve-month cash flow generation.
These rating actions were taken:
-- B3 (LGD4, 58%) assigned to the new $400 million senior
unsecured notes due June 1, 2017
-- Corporate family rating affirmed at B2
-- Probability of default rating affirmed at B2
-- Senior unsecured notes affirmed at B3 (LGD4, 58%)
-- Speculative grade liquidity rating affirmed at SGL-2
The rating on the senior unsecured notes, including the new issue
of $400 million due 2017, has been notched below that of the
corporate family rating because of the presence in the capital
structure both of secured on-balance sheet recourse debt and
secured off-balance sheet recourse debt. If the proceeds of the
new notes are in fact used to retire a significant amount of this
secured debt, the rating on the senior unsecured notes could
return to parity with the corporate family rating.
Moody's last rating action for Lennar Corporation occurred on
April 13, 2009, at which time Moody's lowered the company's
corporate family rating to B2 from Ba3.
Founded in 1954 and headquartered in Miami, Florida, Lennar is one
of the country's largest homebuilders. Total revenues and net
income for the 2008 fiscal year that ended November 30, 2008, were
$4.6 billion and ($1.1) billion, respectively.
LENNAR CORP: S&P Assigns 'BB-' Rating on $400 Mil. Senior Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating to
Lennar Corp.'s $400 million 12.25% senior unsecured note issue,
due 2017. Concurrently, Standard & Poor's determined that the
debt offering and other recently disclosed events would not
immediately affect its corporate credit rating on Lennar.
Lennar plans to use proceeds for general corporate purposes,
including repayment or repurchase of its near-term debt maturities
or recourse debt within its joint ventures. In S&P's opinion,
this expensive capital will improve Lennar's liquidity profile,
particularly if it is supplemented by a sizeable equity offering.
To that point, Lennar recently entered into an agreement to issue
up to $275 million of common stock from time to time under a
registration statement that expires in 2011. Maintenance of
adequate liquidity is a critical credit factor; particularly given
Lennar's intermediate-term debt maturities (including a
$300 million unsecured note that comes due in October 2010) and
other potential uses of cash. For example, Lennar has proposed to
purchase an interest in LandSource Communities Development LLC and
some of its assets. Court documents indicate that Lennar's
initial investment in LandSource could approximate $140 million.
Miami-based Lennar is one of the nation's largest homebuilders,
having delivered 14,281 homes during the 12 months ended Feb. 28,
2009, at an average price of roughly $264,000. S&P's ratings on
the company acknowledge moderate adjusted debt levels and the
company's substantial operating cash flow in recent quarters.
However, S&P believes that Lennar may have more difficulty
generating cash flow from operations over the next year given
S&P's expectation that conditions will remain challenging in the
company's core Sunbelt housing markets. Therefore, there is
little flexibility at the current ratings for discretionary
investment activity that increases leverage or reduces liquidity.
LEON EARL EZZELL: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Joint Debtors: Leon Earl Ezzell, Jr.
Sherri Taylor Ezzell
2601 St. John Circle
Kinston, NC 28504
Bankruptcy Case No.: 09-03374
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
Eastern District of North Carolina (Wilson)
Judge: Randy D. Doub
Debtors' Counsel: John C. Bircher, III, Esq.
White & Allen, PA
1319 Commerce Drive
PO Drawer U
New Bern, NC 28563
Tel: (252) 638-5792
Fax: (252) 637-7548
Email: jbircher@whiteandallen.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtors' petition, including a list of
their 20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nceb09-03374.pdf
The petition was signed by the joint debtors.
LOUIS CHARLES: Case Summary & 1 Largest Unsecured Creditor
----------------------------------------------------------
Debtor: Louis Charles Sudheimer
686 East 6th Street
Saint Paul, MN 55106
Bankruptcy Case No.: 09-32774
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
District of Minnesota (St Paul)
Judge: Nancy C. Dreher, Chief Judge
Debtors' Counsel: Shannon D. Cox, Esq.
350 Saint Peter Street, Suite 224
St. Paul, MN 55102
Tel: (651) 756-8915
Email: shannondcox@gmail.com
Total Assets: $1,029,400.00
Total Liabilities: $626,487.57
The Debtor disclosed owing $85,000 to Platinum Bank, in Oakdale,
Minnesota, on account of mortgage obligations.
A full-text copy of Mr. Sudheimer's petition, including his
schedules of assets and liabilities, is available for free at:
http://bankrupt.com/misc/mnb09-32774.pdf
The petition was signed by Mr. Sudheimer.
LEXINGTON PRECISION: DIP Loan Maturity Date Extended to Dec. 31
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved the extension of Lexington Precision Corp. and its
wholly-owned subsidiary, Lexington Rubber Group, Inc.'s existing
debtor-in-possession financing facility to the earliest of:
i) December 31, 2009,
ii) the date upon which the Debtors' use of cash collateral,
terminates,
iii) the effective date of a confirmed Chapter 11 plan of
reorganization in these Chapter 11 cases,
iv) the conversion of any of these Chapter 11 cases to cases
under Chapter 7 of the Bankruptcy Code,
v) the appointment of a Chapter 11 trustee in any of these
Chapter 11 cases or the appointment of an examiner with
expanded powers to operate or manage the financial affairs,
the business or the reorganization of any Debtor, and
vi) the date of acceleration by the DIP Lenders pursuant to
certain Events of Default of the Existing DIP Note.
On April 17, 2008, the Court approved the use of Cash Collateral
and authorized the Debtors to obtain post-petition financing in
the amount of $4 million from the DIP Lenders. On April 21, 2008,
the Debtors issued a note in the amount of $4 million to the DIP
Lenders. The Existing DIP Note matured on April 1, 2009.
As reported in the Troubled Company Reporter on March 18, 2009,
the Bankruptcy Court granted the Debtors permission to use Cash
Collateral of the Prepetition Senior Lenders through the earlier
of either May 22, 2009, or until the occurrence of a Termination
Event.
Summary of DIP Loan Extension Terms
Borrowers : Lexington Precision and Lexington Rubber Group.
Lenders : Lubin Partners, LLC, William B. Conner, and ORA
Associates LLC. Lubin Partners, LLC and William
B. Conner are either insiders of the Debtors or
affiliated with insiders.
Loan Amount : $4,000,000. This amount remains outstanding
under the DIP Loan.
Interest Rate : LIBOR plus 7% p.a. with a LIBOR floor of 3% p.a.,
payable monthly in arrears; provided that any
principal amount not paid when due, and to the
extent permitted by applicable law, any interest
not paid when due, will bear interest payable
upon demand at the rate that is 2% p.a. in excess
of the rate of interest otherwise payable upon
the Note.
Super-priority
Claim Status : All obligations under the DIP Loans will
continue to be unsecured but entitled to super-
priority claim status pursuant to section
364(c)(1) of the Bankruptcy Code, subject to a
Carve-Out for payment of Court fees, U.S. Trustee
fees, and unpaid professional fees and expenses.
Events of
Default : The terms of the DIP Loan Extension will be
subject to customary events of default as
previously provided in the First Cash
Collateral/DIP Order, dated April 17, 2008.
Use of
Proceeds : to fund working cpital requirements and general
corporate purposes relating to the Debtors'
post-petition operations and for other
expenditures as authorized by in the Second Cash
Collateral Order or the DIP Extension Order or
as otherwise authorized by the Court.
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.
LIGHTHOUSE LODGE: Can Access Orix's Collateral on Interim Basis
---------------------------------------------------------------
The Hon. Roger L. Efremsky of the United States Bankruptcy Court
for Northern District of California authorized Lighthouse Lodge
LLC dba Lighthouse Lodge & Suites to use, on an interim basis,
cash collateral of Orix Capital Markets LLC to pay postpetition
expenses -- including employee wages and obligations owing to
vendors -- of the Debtor's hotel operating in accordance to the
budget.
Judge Efremsky allowed the Debtor to use cash collateral until
July 4, 2009.
Orix Capital holds an interest on the Debtor's hotel know as the
Lighthouse Lodge & Suites located at 1150 Lighthouse Avenue in
Pacific Grove, California. The Debtor owe about $8.7 million to
Orix Capital, which is secured by a senior deed of trust against
the hotel, including an assignment of rents and other security
interest related to the property.
As adequate protection, the secured lender will receive
$71,542 per month beginning May 10, 2009, and replacement
liens encumbering all revenues generated by the Debtor's hotel
operations after its bankruptcy filing.
Brian Bobb, Esq., at Jeffer Mangels Butler & Marmaro, represents
Orix Capital.
A full-text copy of the Debtor's cash collateral budget is
available for free at http://ResearchArchives.com/t/s?3be6
Headquartered in Pacific Grove, California, Lighthouse Lodge, LLC
-- http://www.lhls.com/-- dba Lighthouse Lodge & Suites, offers
cabin and motel accommodation. The Debtor filed for Chapter 11
protection on April 9, 2009 (Bankr. N. D. Calif. Case No. 09-
52610). Hagop T. Bedoyan, Esq., at Klein, DeNatale, Goldner, et
al. represents the Debtor in its restructuring efforts. In its
summary of schedules, the Debtor listed $18,933,327 in assets and
$14,773,201 in liabilities.
LIGHTHOUSE LODGE: Taps Klein DeNatale as Bankruptcy Counsel
-----------------------------------------------------------
Lighthouse Lodge LLC asks the United States Bankruptcy Court for
the Northern District of California for permission to employ
Klein, DeNatale, Goldner, Cooper, Rosenlieb & Kimball, LLP, as its
bankruptcy counsel.
The firm will:
a) consult with the Debtor concerning its present financial
situation, its realistically achievable goals, and the
efficacy of various forms of bankruptcy as a means to
achieve its goals;
b) prepare the documents necessary to commence the bankruptcy
case;
c) advise the Debtor concerning its duties as a debtor and
debtor-in-possession in a Chapter 11 case;
d) if it appears that it can propose a viable plan, help in the
formulation of the Chapter 11 plan, drafting the plan and
disclosure statement, and prosecuting legal proceedings
to seek confirmation of the plan; and
e) if necessary, preparing and prosecuting such pleadings as
complaints to avoid preferential transfers or transfers
deemed fraudulent as to creditors, motions for authority to
borrow money, use cash collateral, sell property, or
compromise claims, and objections to claim.
The Debtor says the firm's ultimate fees will be at least $80,000.
To the best of the Debtor's knowledge, the firm is a
"disinterested person" as defined in Section (101)14 of the
Bankruptcy Code.
Headquartered in Pacific Grove, California, Lighthouse Lodge, LLC
-- http://www.lhls.com/-- dba Lighthouse Lodge & Suites, offers
cabin and motel accommodation. The Debtor filed for Chapter 11
protection on April 9, 2009 (Bankr. N. D. Calif. Case No. 09-
52610). Hagop T. Bedoyan, Esq., at Klein, DeNatale, Goldner, et
al. represents the Debtor in its restructuring efforts. In its
summary of schedules, the Debtor listed $18,933,327 in assets and
$14,773,201 in liabilities.
LOW CAMPGROUND: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: LOW Campground
2769 28th St NW
Baudette, MN 56623
Bankruptcy Case No.: 09-60428
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
District of Minnesota (Fergus Falls)
Judge: Dennis D. O'Brien
Debtor's Counsel: Rolf H. Nycklemoe, Esq.
Nycklemoe, Ellig and Nycklemoe
106 East Washington Avenue
Fergus Falls, MN 56537
Tel: (218) 736-5673
Fax: (218) 736-5466
Email: rhnnyk@prtel.com
Total Assets $1,370,000.00
Total Liabilities: $1,370,000.00
The Company says it does not have unsecured creditors who are non
insiders when they filed their petition.
The petition was signed by Earl H. Peters, owner and manager of
the Company.
MASTRO'S RESTAURANT: S&P Junks Corporate Credit Rating From 'B-'
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
corporate credit rating on Mastro's Restaurants LLC to 'CCC' from
'B-'. S&P also lowered the rating on the company's $100 million
second-lien notes to 'CCC' from 'B-'. The '4' recovery rating was
left unchanged, and indicates the expectation for average (30%-
50%) recovery of principal in the event of default. The outlook
is negative.
The downgrade reflects S&P's belief that Mastro's operating
performance will continue to face challenges throughout 2009,
leading to a further deterioration of credit metrics and weakening
of its liquidity position.
Negative sales trends accelerated toward the end of fiscal 2008
and Mastro's reported a 16.1% decline in same store sales during
its fourth quarter ended Dec. 24, 2008. These trends were
particularly exacerbated because all of Mastro's restaurants are
in California and Arizona, which suffered due to the housing
downturn.
"Moreover, Mastro's heavy dependence on corporate events also
negatively affected top-line results, as other companies
significantly cut corporate spending during 2008," said Standard &
Poor's credit analyst Mariola Borysiak. "As such, S&P believes
that the difficult operating environment will likely continue
throughout 2009 and will further hurt Mastro's operations," she
continued.
Standard & Poor's expects Mastro's liquidity position to
deteriorate in the next few quarters as a result of continuously
poor operating performance. S&P could lower the ratings if S&P
believes that Mastro's may miss interest payments on its debt
instruments or otherwise default. A ratings upgrade is currently
unlikely, due to the continuously deteriorating operating
performance.
MCCLATCHY COMPANY: High Leverage Cues Moody's to Junk Ratings
-------------------------------------------------------------
Moody's Investors Service downgraded The McClatchy Company's
Corporate Family Rating and Probability of Default ratings to Caa1
from B2, the company's senior secured bank credit facility to B1
from Ba2 and senior unsecured notes to Caa2 from Caa1. The rating
outlook is negative. Loss given default assessments were updated
to reflect the current liability structure including the increase
in the underfunded pension position.
The downgrade reflects Moody's concern that McClatchy's high and
increasing leverage is becoming unsustainable and that there is
heightened risk that continued revenue pressure could lead to a
covenant violation or restructuring over the next 12-24 months.
Moody's expects EBITDA to decline by approximately 30% in 2009,
sustaining debt-to-EBITDA leverage (approximately 9x for the last
12 months ended March 2009 incorporating Moody's standard
adjustments and after severance costs) at a high very level.
Downgrades:
Issuer: McClatchy Company (The)
-- Corporate Family Rating, Downgraded to Caa1 from B2
-- Probability of Default Rating, Downgraded to Caa1 from B2
-- Senior Secured Bank Credit Facility, Downgraded to B1, LGD 2
- 16% from Ba2, LGD 2 - 20%
-- Senior Unsecured Notes, Downgraded to Caa2, LGD5 - 75% from
Caa1, LGD 5 - 80%
McClatchy's covenant EBITDA was slightly above Moody's expectation
for the first quarter and the company's significant cost
reductions and elimination of the dividend will likely maintain
positive free cash flow generation in 2009. Moody's nevertheless
views the risk of a covenant violation or restructuring has
increased due to effect that the depth and duration of the
advertising downturn is having on McClatchy's leverage.
Renegotiating the credit facility covenants, if necessary, may
require impairment of a meaningful portion of junior capital. The
negative rating outlook reflects Moody's concern that the risk of
a restructuring could escalate absent a meaningful improvement in
the advertising environment.
The last rating action on McClatchy was on September 29, 2008 when
Moody's confirmed the company's Ba2 credit facility rating in
conjunction with the closing of the September 26, 2008 amendment
to the facility, concluding the review for downgrade of the credit
facility initiated on September 17, 2008.
McClatchy, headquartered in Sacramento, California, is the third-
largest newspaper company in the U.S., with 30 daily newspapers
and approximately 50 non-dailies. McClatchy also owns McClatchy
Interactive and holds equity investments in CareerBuilder,
Classified Ventures, and other newspaper and online properties.
Annual revenue approximates $1.9 billion.
MERUELO MADDUX: U.S. Trustee Forms Five-Member Creditor Committee
-----------------------------------------------------------------
Peter C. Anderson, the United States Trustee for Region 16,
appointed five creditors to serve on the Official Committee of
Unsecured Creditors of Meruelo Maddux Properties Inc. and its
debtor-affiliates.
The members of the Committee are:
1) EDI Architecture, Inc.
2800 Post Oak Blvd., #3800
Houston, TX 77056
Attn: Darcy Garneau
Tel: (713) 375-2130
2) EDI Architecture, Inc.
2800 Post Oak Blvd., #3800
Houston, TX 77056
Attn: Darcy Garneau
Tel: (713) 375-2130
3) Kirman Plumbing Company
794 Merchant Street
Los Angeles, CA 90021
Attn: Sam J. DeFelice
Tel: (213) 627-5456
4) Complete Terminal Services, Inc.
11105 Knott Ave., Suite E
Cypress, CA 90630
Attn: William L. Clements
Tel: (714) 891-2265
5) L.P. Carreras & Associates, Inc.
9550 Firestone Blvd., Suite 204
Downey, CA 90241
Attn: Luis P. Carreras
Tel: (562) 622-3733
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtor's
expense. They may investigate the Debtor's business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
About Meruelo Maddux Properties
Meruelo Maddux Properties is a self-managed, full-service real
estate company that develops, redevelops and owns commercial and
residential properties in downtown Los Angeles and other densely
populated urban areas in California that are undergoing
demographic or economic changes. Meruelo Maddux Properties is
committed to socially responsible investment. Through its
predecessor business, Meruelo Maddux Properties has been investing
in urban real estate since 1972.
Meruelo Maddux Properties, Inc. and 52 affiliates filed for
Chapter 11 protection on March 27, 2009 (Bankr. C.D. Calif. Lead
Case No. 09-13356). Meruelo Maddux Properties - 12385 San
Fernando Road LLC filed its Chapter 11 petition on March 26, 2009.
Judge Kathleen Thompson oversees the cases. John J. Bingham, Jr.,
Esq., at Danning, Gill, Diamond & Kollitz, LLP, Los Angeles,
serves as the Debtors' bankruptcy counsel. As of December 31,
2008, the Debtors had $681,769,000 in total assets and
$342,022,000 in total debts.
MIDWAY GAMES: Time Warner Will Bid for Company
-----------------------------------------------
Time Warner Inc.'s Warner Bros. is preparing a bid for Midway
Games Inc., Bloomberg News reports, citing people familiar with
the matter.
Bloomberg relates that Time Warner would add Midway Games' "Mortal
Kombat" franchise, which has inspired two movies from Time Warner.
According to Bloomberg, a source said that fewer than five bids
for Midway Games are expected. Bloomberg states that Vivendi SA,
Viacom Inc., and Walt Disney Co. are also considering acquiring
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. The
Debtors' financial condition as of September 30, 2008, showed
$167,523,000 in total assets and $281,033,000 in total debts.
MRH OF LAKELAND: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: MRH of Lakeland, Inc.
fdba Michael Holley Suzuki
fdba Michael Holley Kia
fdba Michael Holley Suzuki-Kia
fdba Michael Holley's New Car Alternative
P.O. Box 1787
Lakeland, FL 33802
Bankruptcy Case No.: 09-08090
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
Middle District of Florida (Tampa)
Judge: K. Rodney May
Debtor's Counsel: Edward J. Peterson, III, Esq.
Stichter, Riedel, Blain & Prosser, PA
110 East Madison Street, Suite 200
Tampa, FL 33602
Tel: (813) 229- 0144
Fax: (813) 229-1811
Email: epeterson.ecf@srbp.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Company's 20 largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/flmb09-08090.pdf
The petition was signed by Michael R. Holley, president of the
Company.
NEW CENTURY ENERGY: Gets Final Nod to Use Laurus' Cash Collateral
-----------------------------------------------------------------
At a final hearing on April 13, 2009, the U.S. Bankruptcy Court
for the Southern District of Texas authorized Gulf Coast Oil
Corp., Century Resources, Inc., and New Century Energy Corp. to
continue to use Cash Collateral of Laurus Master Fund, Ltd., until
May 15, 2009. All other provisions of a stipulated final order
dated as of September 29, 2008, among the parties, authorizing the
use of cash collateral, remain in effect.
A full-text copy of the Court's April 13 order, including a copy
of the approved consolidated budget for the 9-week period ended
May 22, 2009, is available at:
http://bankrupt.com/misc/NewCentury.CCOrder.pdf
Based in Houston, Gulf Coast Oil Corp., Century Resources, Inc.,
and New Century Energy Corp. are engaged in independent oil and
gas exploration and production. The Debtors' major areas of
operations are located onshore United States, primarily in
McMullen, Matagorda, Wharton, Goliad and Jim Hogg Counties in
Texas.
All of the Debtors oil and gas properties are operated by Century
Resources, a wholly owned operating subsidiary of New Century.
Title ownership of the various oil and gas properties are held in
three entities -- Gulf Coast Oil, another wholly owned
subsidiary of New Century; New Century and Century Resources, with
all field operations conducted under the name of Century
Resources. The working interest ownership of the various
operated properties range from 80% in the Sargent South Field in
Matagorda County, Texas, to 100% in the San Miguel Creek Field
(McMullen County, Texas), Mustang Creek Field (McMullen and
Atascosa Counties, Texas), Prado Field (Jim Hogg County, Texas),
Soleberg Wilcox Field (Goliad County, Texas), and Tenna Field
(Wharton County, Texas). Additionally, the Debtors own a 15.20%
non-operated working interest with a 12.214% net revenue interest
in the Wishbone Field in McMullen County, Texas.
The Debtors filed separate petitions for Chapter 11 relief on
July 28, 2008 (Bankr. S.D. Tex. Lead Case No. 08-50213). Chasless
L. Yancy, Esq., and David A. Zdunkewicz, Esq., at Andrews & Kurth
LLP represent the Debtors as counsel. As of March 31, 2008, Gulf
Coast had total assets of $51,901,717 and total debts of
$75,326,678.
NEW YORK TIMES: Moody's Downgrades Corporate Family Rating to 'B1'
-----------------------------------------------------------------
Moody's Investors Service downgraded The New York Times Company's
Corporate Family Rating and Probability of Default ratings to B1
from Ba3 and ratings on the senior unsecured notes to B1 from Ba3.
The company's speculative grade liquidity rating remains SGL-3 and
the rating outlook is negative.
Downgrades:
Issuer: New York Times Company (The)
-- Corporate Family Rating, Downgraded to B1 from Ba3
-- Probability of Default Rating, Downgraded to B1 from Ba3
-- Senior Unsecured Notes and MTNs, Downgraded to B1 from Ba3
(no change in LGD4 - 57% assessment)
-- Senior Unsecured Medium-Term Note Program, Downgraded to B1
from Ba3
-- Senior Unsecured Shelf, Downgraded to (P)B1 from (P)Ba3
The downgrades reflect Moody's expectation that the severity and
duration of ongoing deterioration in newspaper advertising will
continue to pressure the company's revenue and operating cash flow
and sustain debt-to-EBITDA leverage above the 5.0x and lower level
expected at its former Ba3 CFR. Debt-to-EBITDA was approximately
6.6x for the 12 months ended March 2009 (incorporating Moody's
standard adjustments and excluding the City & Suburban operations
closed at the beginning of January). Moody's anticipates that
EBITDA after buyouts will decline by 35-37% in 2009, despite the
avoidance of City & Suburban losses, with only modest improvement
in 2010 and this will place debt-to-EBITDA in a 7-8x range over
the next several years.
The negative rating outlook reflects uncertainty regarding the
company's ability to reduce debt-to-EBITDA to a 6x or lower range
anticipated for the B1 CFR absent a meaningful improvement in the
advertising environment or reduction in the underfunded pension
position. However, NY Times' improved liquidity position provides
near-term flexibility and is an important factor limiting the
downgrade to one notch. The rating outlook could return to stable
if NY Times continues to maintain an adequate liquidity position,
revenue pressure begins to ease, and debt reduction creates a
strong likelihood of debt-to-EBITDA returning to a 6x or lower
level.
The SGL-3 rating reflects NY Times' adequate liquidity to cover
expected cash needs over the next twelve months. Moody's believes
balance sheet cash of $34 million at the end of March
(incorporating the April 9th redemption of the 2010 notes),
projected operating cash flow and approximately $115 million of
unused revolver capacity (after letters of credit and excluding
the $400 million credit facility due in May 2009) are sufficient
to fund the remaining $45 million of MTNs due 11/18/09, capital
spending and severance costs. Moody's also believes the company
has ample cushion under the minimum shareholders' equity covenant
to absorb any further operating losses. Net proceeds from the
$225 million headquarters sale lease-back transaction,
$250 million note offering placed with affiliates of Carlos Slim
Helu in January 2009 and cash savings from the dividend suspension
have improved NY Times' liquidity position and more solidly
position it within the SGL-3 rating category. Notably, NY Times'
next maturity hurdle is the June 2011 expiration of its remaining
$400 million revolver. The liquidity position provides NY Times a
near term cushion to get through a very difficult 2009 and this is
an important bridge to what Moody's expects will be a somewhat
more favorable advertising environment in 2010 and additional time
to assess the extent to which cyclical factors are influencing the
current newspaper advertising downturn.
Moody's last rating action on NY Times was on January 23, 2009,
when Moody's downgraded the company's senior unsecured rating to
Ba3 from Baa3, the commercial paper rating to Not Prime from
Prime-3, and assigned a Ba3 CFR, Ba3 PDR and SGL-3 speculative-
grade liquidity rating.
NY Times is a New York-based media company with operations in
newspaper publishing and information services. The company
operates The New York Times, the International Herald Tribune, The
Boston Globe, 15 other daily newspapers, and more than 50 Web
sites including NYTimes.com and About.com. Annual revenue
approximates $2.8 billion.
NEWS-JOURNAL: Judge, Executive See No Need for Bankruptcy Filing
----------------------------------------------------------------
Eileen Zaffiro at News-journalonline.com reports that U.S.
District Judge John Antoon II and The News-Journal Corp. Chief
Executive Manager, James Hopson, don't think that the Company
needs to file for bankruptcy protection.
As reported by the Troubled Company Reporter on April 20, 2009,
The News-Journal hired Bruce A. Hanna as bankruptcy counsel to
explore reorganizing the Company's debt as a way to sever ties
with Cox Enterprises and keep the newspaper operating.
News-juornalonline.com relates that Judge Antoon ruled on Friday
that The News-Journal's board of directors has a history of acting
in its own best interests first, so he was going to leave the
bankruptcy decision to Mr. Hopson, whom the judge has gave most of
the board's powers. The report states that Mr. Hopson also sees
no "business reason" why bankruptcy should be pursued, saying that
"the company is financially sound, profitable and operating well."
According News-journalonline.com, minority shareholder Cox
Enterprises said that The News-Journal President, CEO, and
publisher Georgia M. Kaney ordered the Company's accounting
personnel to transfer $100,000 of its money to a Tampa bankruptcy
attorney representing the Company as a retainer. The report
quoted Ms. Kaney as saying, "This did not violate the order. (Cox
attorney John) DeVault knowingly lied to the court."
Cox Enterprises, says News-journalonline.com, accused members of
the board of directors of "now pushing the bankruptcy card to
escape personal liability for their misdeeds against the Company"
and that the Company is attempting a legal coup against Mr. Hopson
and are trying to re-litigate the judge's decision to give the
chief executive manager most of the board's powers by appointing
him receiver.
News-journalonline.com states that The News-Journal mulls filing
for bankruptcy because as of April 21, 2009, the Company's
liabilities will surpass its assets -- valued at between
$25 million to $30 million by a Cox Enterprises expert. The
report says that if the Company doesn't file for bankruptcy, it
would have to begin making payments on the $129 million it owes
Cox Enterprises for its 47.5% ownership share, or seek dissolution
that would lead to a court-supervised sale.
The Daytona Beach News-Journal is a Florida daily newspaper
serving Volusia and Flagler counties. It grew from the Halifax
Journal which was started in 1883. The Davidson family purchased
the newspaper in 1928 and retain control to the present. In 1986,
The Morning Journal and Evening News merged into one morning
newspaper. The newspaper began its on-line services in 1994. In
circulation, the newspaper is currently among the Top 100
Newspapers in the United States.
OOBLIO ENTERPRISES: Case Summary & 7 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Ooblio Enterprises LP (A California Limited Partnership)
dba Ooblio Associates, Inc.
814 Myrtle Street
San Jose, CA 95126
Bankruptcy Case No.: 09-53036
Chapter 11 Petition Date: April 23, 2009
Court: United States Bankruptcy Court
Northern District of California (San Jose)
Judge: Arthur S. Weissbrodt
Debtor's Counsel: Scott J. Sagaria, Esq.
Law Offices of Scott J. Sagaria
333 W San Carlos St. #1625
San Jose, CA 95110
Tel: (408) 279-2288
Email: sjsagaria@sagarialaw.com
Total Assets: $8,717,000.00
Total Liabilities: $8,652,791.15
A full-text copy of the Debtor's petition, including a list of its
seven largest unsecured creditors and schedules of assets and
liabilities, is available for free at:
http://bankrupt.com/misc/canb09-53036.pdf
The petition was signed by Allan E. Mueller, general partner of
the Company.
OWENS-ILLINOIS: S&P Gives Positive Outlook; Keeps 'BB' Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised its
outlook on Owens-Illinois Inc. to positive from stable. S&P
affirmed the 'BB' corporate credit rating on the company, which
had total adjusted debt of about $5 billion on Dec. 31, 2008.
At the same time, S&P affirmed all the issue ratings on the debt
of Owens-Illinois and its subsidiaries. However, S&P revised the
recovery rating on the senior unsecured notes issued by subsidiary
Owens-Brockway Glass Container Inc. to '4' from '3' to address
S&P's reassessment of recovery prospects for these noteholders in
the event of a payment default.
"The outlook revision reflects the company's satisfactory business
risk profile as the world's largest manufacturer of glass
containers, its improving cost position, and financial policies
that could support a one-notch upgrade during the next several
quarters," said Standard & Poor's credit analyst
Cynthia Werneth. "Offsetting these positives is currently slack
demand, which S&P believes is temporary but will likely result in
somewhat weaker credit statistics in the near term."
The change in the recovery rating on the Brockway notes reflects a
reassessment of their relative position in the capital structure.
S&P believes that this debt is structurally subordinated to the
Eur300 million of notes issued by OI European Group B.V. As a
result, while the issue rating on the Brockway notes remains
unchanged at 'BB', the recovery rating worsens to '4', denoting
S&P's expectation of average (30% to 50%) recovery, from '3',
which indicated meaningful (50% to 70%) recovery.
The company has a competitive cost position with attractive EBITDA
margins in the upper-teens percentage area. However, the pullback
in consumer spending and resultant slowdown in demand for beer and
other beverages in glass packaging, as well as unfavorable
exchange rate movements, will negatively affect earnings in 2009.
On the positive side, S&P expects the company to successfully
increase pricing to recover past cost increases for energy and raw
materials (primarily soda ash), to increase the frequency at which
contractual selling prices are reset, and to benefit from
productivity initiatives. Key to preserving profitability in the
next few years is the company's ability to further reduce costs
through procurement and lean manufacturing initiatives such as
standardization across regions and capacity rationalization.
Solid business prospects, relatively stable earnings and cash
flows, and management's focus on ongoing productivity improvements
and cost reduction should lead to continued long-term
strengthening of the financial profile. Although expected to
weaken somewhat in the short term, credit measures should remain
satisfactory for the current ratings.
S&P could raise the ratings by one notch within the next year if
the company is able to maintain FFO as a percentage of adjusted
debt in the 20% to 25% range. While not expected at this time,
S&P could revise the outlook to stable or negative if large
acquisitions or other strategic actions result in a deterioration
of the financial profile such that FFO to total adjusted debt
declines below 15%.
PAPER INTERNATIONAL: Files Ch. 11 Plan and Disclosure Statement
---------------------------------------------------------------
Corporacion Durango S.A.B. de C.V., Paper International, Inc., and
Fiber Management of Texas, Inc. filed with the U.S. Bankruptcy
Court for the Southern District of New York on April 27, 2009, a
Joint Chapter 11 Plan of Reorganization and disclosure statement
in support of their Chapter 11 Plan.
The Debtors anticipate that the hearing to consider approval of
the Disclosure Statement will be held May 15, and a hearing to
consider confirmation of the Plan will be held June 8. Plan votes
as well as confirmation objections are due June 1.
Pursuant to the Joint Chapter 11 Plan, the Debtors' businesses
will continue to be operated in substantially their current form,
with Paper International continuing to own its equity in Durango
McKinley Paper Company and FMT, and FMT continuing the wind down
of its fiber procurement business, which began when FMT ceased its
operations in August 2008.
On the Plan's Effective Date, each Reorganized Debtor will deliver
a joint and several guaranty of the New Senior Notes which shall
provide for the performance by said Reorganized Debtors of each of
the obligations of Corporacion Durango and the payment of all
amounts in respect of the New Senior Notes when due. The New
Senior Notes refers to the new senior unsecured notes to be issued
pursuant to the Mexican Reorganization Plan by Durango in the
amount of $250 million.
As proposed under the Plan, if Noteholder Claims under Class 3
vote to accept the Plan, on the Plan's Effective Date,
administrative claims and intercompany claims (other than FMT
Intercompany Claims) between and among the Debtors and their
affiliates will, at the election of the Plan Proponents, either be
waived, discharged, released and enjoined or unimpaired as a
result of the Noteholder Settlement under Section 8.1 of the Plan.
The Noteholder Settlement is more fully described in the
Noteholder Term Sheet attached as "Exhibit B" to the Plan.
All of the legal, equitable and contractual rights of holders of
Allowed Priority Claims and Allowed General Unsecured Claims
against such holders will be fully reinstated and retained, and
the holders of said claims will be paid in full in accordance with
such reinstated rights, as and when such payment is due, provided
that payment may be made by the Reorganized Debtors.
Holders of Allowed Noteholder Claims will receive on the Effective
Date the New Senior Notes, the New Senior Notes
Guarantees, and the Durango New Equity in accordance with the
Noteholder Settlement under the Mexican Reorganization Plan.
On the Effective Date, holders of Equity Interests in the Debtors
will retain 100% of their legal and equitable ownership rights in
such Equity Interests.
Classification of Claims
Class Description Estimated Recovery
----- ----------- ------------------
1 Priority Claim 100%
2 General Unsecured Claims 100%
3 Noteholder Claims Not Disclosed
4 Equity Interests 100%
Other than Noteholder Claims under Class 3, all other classes are
unimpaired under the Plan and are, therefore, deemed to have
accepted the Plan. Holders of Noteholder Claims inder Class 3,
being impaired, are entitled to vote to accept or reject the Plan.
As reported in the Troubled Company Reporter on April 24, 2009,
Corporacion Durango said April 22 that it has signed a term sheet
with a majority of its creditors, setting forth the terms and
conditions of its potential financial restructuring in connection
with its ongoing concurso mercantil proceeding in Mexico and its
related Chapter 15 case in the United States.
A full-text copy of the Plan Proponents' Joint Chapter 11 Plan of
Reorganization, dated as of April 27, 2009, is available for free
at http://bankrupt.com/misc/PaperInt'l.Ch11Plan.pdf
A full-text copy of the disclosure statement, dated April 27,
2009, explaining the Plan Proponents Joint Chapter 11 Plan, is
available for free at http://bankrupt.com/misc/PaperInt'l.DS.pdf
About Corporacion Durango
Durango, Mexico-based Corporacion Durango S.A.B. de C.V. produces
brown paper and packaging products. Its packaging division,
Empresas Titan, manufactures corrugated packaging in Mexico. It
also produces newsprint through Grupo Pipsamex.
After The First Federal District Court in Durango approved its
plan of reorganization and declared the termination of its
"Concurso Mercantil" proceeding, the company filed for Chapter 15
bankruptcy (Bankr. S.D. N.Y. Case No. 08-13911) on October 6,
2008. Two affiliates filed for Chapter 11 bankruptcy protection
separately on the same day.
John K. Cunningham, Esq., at White & Case, LLP, represents the
Debtors in their restructuring efforts. In its filing, the Lead
Debtor listed estimated assets of more than US$1 billion and
estimated debts of more than US$1 billion.
About Paper International
Headquartered in Prewitt, New Mexico, Paper International, Inc.
-- http://www.internationalpaper.com/-- is the wholly-owned
direct subsidiary of Corporacion Durango, S.A.B. de C.V., a
corporation organized under the laws of Mexico, which maintains
its principal place of business in Durango, Mexico. The Debtor
currently owns 100% of the equity shares in Fiber Management of
Texas, Inc., a corporation organized under the laws of Texas, as
well as 100% of the equity shares in non-debtor Durango McKinley
Paper Company, a New Mexico company. Paper International is a
holding company which has no employees, no operations, and whose
primary assets are its ownership interests in Durango McKinley and
Fiber Management.
Before August 2008, Fiber Management's primary business was the
procurement of paper materials to manufacture recycled paper
products for use by Durango McKinley and other paper manufacturing
affiliates of Corporacion Durango located in Mexico. In August
2008, Fiber Management ceased procuring fiber and began winding up
all of its business operations.
The company and Fiber Management filed for Chapter 11 protection
on October 6, 2008 (Bankr. S.D. N.Y. Lead Case No.08-13917).
Larren M. Nashelsky, Esq., and Lorenzo Marinuzzi, Esq., at
Morrison & Foerster LLP, represent the Debtors as counsel. Eric
Kate Mautner, Esq., at Bingham McCutchen LLP, represents the
Official Committee of Unsecured Creditors as counsel. APS
Services, LLC, serves as the Debtors' crisis managers. The
Debtors designated Meade Monger, a managing director of
AlixPartners, LLP, an affiliate of AP Services, as its chief
restructuring officer. The Court appointed Kurtzman Carson
Consultants, LLC, as claims agent in the Debtors' bankruptcy case.
PAPER INTERNATIONAL: To Seek September Extension of Exclusivity
---------------------------------------------------------------
Paper International, Inc., and Fiber Management of Texas, Inc.,
anticipate seeking another extension of the period within which
they have the exclusive right to file and solicit acceptances of a
bankruptcy plan.
Out of an abundance of caution, the Debtors intend to ask the
Court to further extend the Plan Filing Period to September 30,
2009, and the Solicitation Period to November 30, 2009.
On January 29, 2009, the U.S. Bankruptcy Court for the Southern
District of New York entered an order extending the Plan Filing
Period through June 3, 2009, and the Solicitation Period through
August 2, 2009.
Corporacion Durango S.A.B. de C.V., Paper International, Inc., and
Fiber Management of Texas, Inc. filed with the U.S. Bankruptcy
Court for the Southern District of New York on April 27, 2009, a
Joint Chapter 11 Plan of Reorganization and disclosure statement
in support of their Chapter 11 Plan.
The Debtors anticipate that the hearing to consider approval of
the Disclosure Statement will be held May 15, and a hearing to
consider confirmation of the Plan will be held June 8. Plan votes
as well as confirmation objections are due June 1.
About Corporacion Durango
Durango, Mexico-based Corporacion Durango S.A.B. de C.V. produces
brown paper and packaging products. Its packaging division,
Empresas Titan, manufactures corrugated packaging in Mexico. It
also produces newsprint through Grupo Pipsamex.
After The First Federal District Court in Durango approved its
plan of reorganization and declared the termination of its
"Concurso Mercantil" proceeding, the company filed for Chapter 15
bankruptcy (Bankr. S.D. N.Y. Case No. 08-13911) on October 6,
2008. Two affiliates filed for Chapter 11 bankruptcy protection
separately on the same day.
John K. Cunningham, Esq., at White & Case, LLP, represents the
Debtors in their restructuring efforts. In its filing, the Lead
Debtor listed estimated assets of more than US$1 billion and
estimated debts of more than US$1 billion.
About Paper International
Headquartered in Prewitt, New Mexico, Paper International, Inc.
-- http://www.internationalpaper.com/-- is the wholly-owned
direct subsidiary of Corporacion Durango, S.A.B. de C.V., a
corporation organized under the laws of Mexico, which maintains
its principal place of business in Durango, Mexico. The Debtor
currently owns 100% of the equity shares in Fiber Management of
Texas, Inc., a corporation organized under the laws of Texas, as
well as 100% of the equity shares in non-debtor Durango McKinley
Paper Company, a New Mexico company. Paper International is a
holding company which has no employees, no operations, and whose
primary assets are its ownership interests in Durango McKinley and
Fiber Management.
Before August 2008, Fiber Management's primary business was the
procurement of paper materials to manufacture recycled paper
products for use by Durango McKinley and other paper manufacturing
affiliates of Corporacion Durango located in Mexico. In August
2008, Fiber Management ceased procuring fiber and began winding up
all of its business operations.
The company and Fiber Management filed for Chapter 11 protection
on October 6, 2008 (Bankr. S.D. N.Y. Lead Case No.08-13917).
Larren M. Nashelsky, Esq., and Lorenzo Marinuzzi, Esq., at
Morrison & Foerster LLP, represent the Debtors as counsel. Eric
Kate Mautner, Esq., at Bingham McCutchen LLP, represents the
Official Committee of Unsecured Creditors as counsel. APS
Services, LLC, serves as the Debtors' crisis managers. The
Debtors designated Meade Monger, a managing director of
AlixPartners, LLP, an affiliate of AP Services, as its chief
restructuring officer. The Court appointed Kurtzman Carson
Consultants, LLC, as claims agent in the Debtors' bankruptcy case.
PATRICK HACKETT: Creditors Agree to Drop Chapter 7 Petition
-----------------------------------------------------------
Brian Kelly at Watertown Daily Times reports that six of Patrick
Hackett Hardware Co.'s creditors have agreed to drop an
involuntary Chapter 7 bankruptcy petition against the Company.
As reported by the Troubled Company Reporter on April 21, 2009,
creditors filed a petition seeking to put Patrick Hackett into the
Chapter 7 bankruptcy.
An agreement calling for the creditors to withdraw their petition
was reached the day after the action was filed, and it took until
Friday for all of the paperwork to be completed and filed with the
court, Watertown Daily relates, citing Thomas W. Scozzafava, CEO
of Seaway Valley Capital Corp., which purchased Patrick Hackett in
November 2007. Court documents say that the six creditors --
which hold 46% of Patrick Hackett's $3.2 million total debt --
have now agreed to possibly accept less than what they are owed
and to continue to do business with Patrick Hackett. The
creditors claim that they are owed a combined $1.6 million.
According to court documents, the creditors' decision to dismiss
the petition is tied to a commercial bank's willingness to
postpone action to collect on a line-of-credit agreement in which
Patrick Hackett is in default. Watertown Daily relates that
Seaway Valley Capital has a $5 million line of credit secured in
January 2008 through Wells Fargo Bank, which was granted a first
priority security interest on substantially all of Patrick
Hackett's assets. Watertown Daily says that Wells Fargo demanded
earlier this year the repayment of $5 million, of which Patrick
Hackett paid back about $3 million, which significantly reduced
the Company's cash flow.
Court documents say that Patrick Hackett has been negotiating with
Wells Fargo on a forbearance agreement, in which the bank would
agree not to take legal action to recover the owed money and in
which certain terms of the line-of-credit agreement would be
amended. Watertown Daily states that Wells Fargo wouldn't enter
into the forbearance agreement if Patrick Hackett is in
bankruptcy. Watertown Daily relates that several prospective
lenders and investors also told Patrick Hackett that they won't
provide financing to the Company if it is in bankruptcy.
As agreed with the six creditors, Patrick Hackett will grant North
American Credit Services LLC, as trustee, a lien on substantially
all of its assets for the benefit of all creditors, Watertown
Daily states. According to Watertown Daily, the creditors' lien
will be subordinate to Wells Fargo's liens and security interests
and the petitioning creditors will form an ad hoc committee.
Parick Hackett wants to pay off its Wells Fargo obligations by
June 28 and then secure a replacement financing through an
alternative lender or investor, court documents say.
According to Watertown Daily, Patrick Hackett's creditors include
Columbia Sportswear USA, Woolrich Inc., and The North Face-VF
Outdoor Inc., which are reserving their right to refile the
bankruptcy petition should the Company fail to secure additional
financing or reorganize its debt. Patrick Hackett has hired
Fuselier Holdings 1 Inc. to negotiate repayment with creditors
using Seaway Valley's equity, says Watertown Daily.
The court will hold a hearing on the dismissal of the bankruptcy
petition on May 4, Watertown Daily states.
Patrick Hackett Hardware Co. is based in New York.
PHILADELPHIA NEWSPAPERS: Details Spending Before Bankruptcy Filing
------------------------------------------------------------------
Steve Tawa at KYW Newsradio reports that Philadelphia Newspapers
LLC's vice president of finance, Richard Thayer, has detailed
spending in the months before the Company's Chapter 11 bankruptcy
filing.
According to KYW Newsradio, the trustee asked Mr. Thayer to detail
bonuses to four top executives, including Philadelphia Newspapers
CEO Brian Tierney, and up to 45 others in the year before the
bankruptcy filing. Mr. Thayer said that Philadelphia Newspapers
paid CEO Brian Tierney's son almost $50,000 to run an Internet
consulting firm with an on-line shopping site, the report states.
The payouts, says the report, totaled more than $1.3 million and
came at the same time that the newspaper guild when represents
hundreds of reporters, editors, and advertising salespeople gave
up a $25 a week raise.
Philadelphia Newspapers spokesperson Jay Devine said that Mr.
Tierney's son generated good revenue, KYW Newsradio states. "He
was able to take a program called Zeppie, turn it around, and make
it one of the few bright spots," the report quoted him as saying.
Citing Mr. Thayer, KYW Newsradio relates that Mr. Tierney spent
almost $234,000 on his company credit card in March of 2008,
taking 70 people, including top executives, their wives, and
advertisers, on a six day trip to Rome.
Philadelphia Newspapers, LLC -- http://www.philly.com/-- owns and
operates numerous print and online publications in the
Philadelphia market, including the Philadelphia Inquirer, the
Philadelphia Daily News, several community newspapers, the
region's number one local Web site -- http://philly.com/-- and a
number of related online products. The Company's flagship
publications are the Inquirer, the third oldest newspaper in the
country and the winner of numerous Pulitzer Prizes and other
journalistic recognitions, and the Daily News.
Philadelphia Newspapers and its affiliates filed for Chapter 11
bankruptcy protection on February 22, 2008 (Bankr. E.D. Pa., Lead
Case No. 09-11204). Proskauer Rose LLP is the Debtors' bankruptcy
counsel while Lawrence G. McMichael, Esq., at Dilworth Paxson LLP
is the local counsel. The Debtors' financial advisor is Jefferies
& Company Inc. The Debtors listed assets and debts of
$100 million to $500 million.
POLAROID CORP: Court Extends Plan Filing Period to May 18
---------------------------------------------------------
The U.S. Bankruptcy Court for the District of Minnesota has
extended Polaroid Corp. and its affiliated debtors' exclusive
period to file a plan to May 18, 2009, and solicit acceptances of
that plan to July 16, 2009.
The sale of substantially all of the assets of Polaroid Corp.,
including the Polaroid brand, to a joint venture led by Gordon
Brands, LLC and Hildco Consumer Capital,, L.P., which includes
private equity fund Knight's Bridge Capital Partners and other
institutional investors, was approved on April 17.
As reported in the Troubled Company Reporter on April 24, 2009,
Patriach Partners LLC, the losing bidder at the auction for
Polaroid Corp., is taking an appeal from the Bankruptcy Court's
order approving the sale. Patriarch also asked the Bankruptcy
Court to hold up the sale pending an appeal.
The Hilco/Gordon joint venture won the auction with an $88 million
bid. Patriarch said its offer was better, Bloomberg said.
According to Karen Gullo and Erik Larson, Judge Gregory Kishel
refused to enter a temporary order staying the sale pending the
appeal. The report relates that Taylor Griffin, spokesman of
Patriach, said the joint venture's bid was $488,000 less than
Patriach's and the private-equity firm will file a new request to
stop the sale before the U.S. District Court for the District of
Minnesota.
About Polaroid Corporation
Polaroid Corporation -- http://www.polaroid.com-- makes and
sells films, cameras, and other imaging products. The Company and
20 of its affiliates first filed for bankruptcy protection on
October 12, 2001 (Bankr. D. Del. Lead Case No. 01-10864).
Skadden, Arps, Slate, Meagher & Flom LLP represented the Debtors
in their previous restructuring efforts. At that time, the
company blamed steep decline in its revenue and the resulting
impact on its liquidity.
On June 28, 2002, the U.S. Bankruptcy Court for the District of
Dealware approved the purchase of substantially all of Polaroid's
business by One Equity Partners. The bid provides for cash
consideration of $255 million plus a 35% interest in the new
company for unsecured creditors.
Polaroid Corp., together with 11 affiliates, filed its second
voluntary petition for Chapter 11 on December 18, 2008 (Bankr. D.
Minn., Lead Case No. 08-46617). Judge Gregory F. Kishel handles
the Chapter 22 case. George H. Singer, Esq., James A. Lodoen,
Esq., and Sandra S. Smalley-Fleming, Esq., at Lindquist & Vennum
P.L.L.P, represents the Debtors as counsel. Cass Weil, Esq.,
James A. Rubenstein, Esq., and Sarah E. Doerr, Esq., at Moss &
Barnett, represent the Debtors as special counsel. The law firms
of Baker & McKenzie and C&A Law represent the Debtors as special
foreign legal counsel.
According to the company, the financial structuring process and
the second bankruptcy filing are the result of events at Petters
Group Worldwide, which has owned Polaroid since 2005.
About Petters Group Worldwide
Based in Minnetonka, Minn., Petters Group Worldwide LLC is named
for founder and chairman Tom Petters. The group is a collection
of some 20 companies, most of which make and market consumer
products. It also works with existing brands through licensing
agreements to further extend those brands into new product lines
and markets. Holdings include Fingerhut (consumer products via
its catalog and Web site), SoniqCast (maker of portable, WiFi MP3
devices), leading instant film and camera company Polaroid
(purchased for $426 million in 2005), Sun Country Airlines
(acquired in 2006), and Enable Holdings (online marketplace and
auction for consumers and manufacturers' overstock inventory).
Petters formed the company in 1988.
Petters Company, Inc., is the financing and capital-raising unit
of Petters Group Worldwide, LLC. Petters Company, Inc., and
Petters Group Worldwide, LLC, filed separate petitions for
Chapter 11 relief on October 11, 2008 (Bankr. D. Minn. Case No.
08-45257 and 08-45258, respectively). James A. Lodoen, Esq., at
Lindquist & Vennum P.L.L.P., represents the Debtors as counsel.
In its petition, Petters Company, Inc., listed debts of between
$500 million and $1 billion, while its parent, Petters Group
Worldwide, LLC, listed debts of not more than $50,000.
As reported in the Troubled Company Reporter on October 7, 2008,
Petters Aviation, LLC, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline Holdings,
Inc., filed for Chapter 11 bankruptcy protection with the U.S.
Bankruptcy Court for the District of Minnesota on October 6, 2008
(Lead Case No. 08-45136). Petters Aviation, LLC, is a wholly
owned unit of Thomas Petters Inc. and owner of MN Airline
Holdings, Inc., Sun Country's parent company.
POLAROID CORP: Petters Group May Transfer "Polaroid" Domain Names
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Minnesota has
approved the transfer to Polaroid Corp. of Petters Group Worldwide
LLC's entire right, title and interest in and to the Polaroid
Internet domain names.
In its order, the Court said the Polaroid domain names have
questionable value to the PGW estate, and Polaroid Corp. asserts
that it possesses superior title to the Polaroid domain names.
Any valid, perfected, and unavoidable liens, claims, encumbrances
and other interests in the Polaroid names, if any, shall attach to
the net sale proceeds with the same priority as existed in the
assets prior to the sale.
As reported in the Troubled Company Reporter on April 20, 2009,
the Bankruptcy Court approved the acquisition by a joint venture
led by Gordon Brothers Brands, LLC and Hilco Consumer Capital,
L.P., which includes private equity fund Knight's Bridge Capital
Partners and other institutional investors, of substantially all
the assets of Polaroid Corp., including the Polaroid brand,
intellectual property, inventory and other assets.
Janet Whitman at Canwest News Service reported that the investor
group won the bidding with an $87.6 million offer, capping a
tumultuous three-week bankruptcy auction that was reopened twice.
The joint venture partners, who recently acquired The Sharper
Image(R), Linens 'N Things(R) and Bombay(R) brands, plan to
develop a full-scale global licensing and marketing strategy for
wholesale, direct-to-retail and e-commerce businesses to leverage
Polaroid's innovative and pioneering heritage.
Stephen Miller, Co-President, Gordon Brothers Retail Group stated,
"Polaroid is an iconic brand known globally for their technical
innovation and high-quality products that deliver on its
reputation of ease-of-use. As a Boston-based company, it's a
privilege to keep Polaroid's roots in America while expanding the
brand internationally."
"The Polaroid brand has immense global appeal that translates into
almost all categories," commented Jamie Salter, CEO of Hilco
Consumer Capital. "This is a terrific opportunity to unlock
Polaroid's brand value and transform its multi-channel platform of
diverse and unique consumer products using leading technologies
and trend-setting innovations."
As reported in the Troubled Company Reporter on April 17, 2009,
the official committee of unsecured creditors of Petters Company,
Inc., et al., objected to PGW's motion for approval of the
transfer of the Polaroid Internet domain name registrations to
Polaroid Corp., free and clear of all liens and encumbrances.
Polaroid is a subsidiary of PGW.
The Committee said that the request of PGW does not contain
sufficient information for the Committee to analyze the proposed
transaction. Specifically, the Committee wants to know the
circumstances of the transfer of the domain names from Polaroid to
PGW and if PGW paid any consideration for the domain names, and
the dates of those transfers.
Moreover, the Committee said the proposed order is not clear on
the procedure if PGW decides to forgo its rights to pursue
consideration. The Committee said PGW should give notice of that
decision to the Committee, and the Committee should have the right
to object.
About Polaroid Corporation
Polaroid Corporation -- http://www.polaroid.com-- makes and
sells films, cameras, and other imaging products. The Company and
20 of its affiliates first filed for bankruptcy protection on
October 12, 2001 (Bankr. D. Del. Lead Case No. 01-10864).
Skadden, Arps, Slate, Meagher & Flom LLP represented the Debtors
in their previous restructuring efforts. At that time, the
company blamed steep decline in its revenue and the resulting
impact on its liquidity.
On June 28, 2002, the U.S. Bankruptcy Court for the District of
Dealware approved the purchase of substantially all of Polaroid's
business by One Equity Partners. The bid provides for cash
consideration of $255 million plus a 35% interest in the new
company for unsecured creditors.
Polaroid Corp., together with 11 affiliates, filed its second
voluntary petition for Chapter 11 on December 18, 2008 (Bankr. D.
Minn., Lead Case No. 08-46617). Judge Gregory F. Kishel handles
the Chapter 22 case. George H. Singer, Esq., James A. Lodoen,
Esq., and Sandra S. Smalley-Fleming, Esq., at Lindquist & Vennum
P.L.L.P, represents the Debtors as counsel. Cass Weil, Esq.,
James A. Rubenstein, Esq., and Sarah E. Doerr, Esq., at Moss &
Barnett, represent the Debtors as special counsel. The law firms
of Baker & McKenzie and C&A Law represent the Debtors as special
foreign legal counsel.
According to the company, the financial structuring process and
the second bankruptcy filing are the result of events at Petters
Group Worldwide, which has owned Polaroid since 2005.
About Petters Group Worldwide
Based in Minnetonka, Minn., Petters Group Worldwide LLC is named
for founder and chairman Tom Petters. The group is a collection
of some 20 companies, most of which make and market consumer
products. It also works with existing brands through licensing
agreements to further extend those brands into new product lines
and markets. Holdings include Fingerhut (consumer products via
its catalog and Web site), SoniqCast (maker of portable, WiFi MP3
devices), leading instant film and camera company Polaroid
(purchased for $426 million in 2005), Sun Country Airlines
(acquired in 2006), and Enable Holdings (online marketplace and
auction for consumers and manufacturers' overstock inventory).
Petters formed the company in 1988.
Petters Company, Inc., is the financing and capital-raising unit
of Petters Group Worldwide, LLC. Petters Company, Inc., and
Petters Group Worldwide, LLC, filed separate petitions for
Chapter 11 relief on October 11, 2008 (Bankr. D. Minn. Case No.
08-45257 and 08-45258, respectively). James A. Lodoen, Esq., at
Lindquist & Vennum P.L.L.P., represents the Debtors as counsel.
In its petition, Petters Company, Inc., listed debts of between
$500 million and $1 billion, while its parent, Petters Group
Worldwide, LLC, listed debts of not more than $50,000.
As reported in the Troubled Company Reporter on October 7, 2008,
Petters Aviation, LLC, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline Holdings,
Inc., filed for Chapter 11 bankruptcy protection with the U.S.
Bankruptcy Court for the District of Minnesota on October 6, 2008
(Lead Case No. 08-45136). Petters Aviation, LLC, is a wholly
owned unit of Thomas Petters Inc. and owner of MN Airline
Holdings, Inc., Sun Country's parent company.
PREVENTION LABORATORIES: Section 341(a) Meeting Set for June 9
--------------------------------------------------------------
The U.S. Trustee for Region 10 will convene a meeting of creditors
in Prevention Laboratories, L.L.C.'s Chapter 11 case on June 9,
2009, at 10:30 a.m., at U.S. Trustee 341 Meeting Room, 302 W Main
Street, Room 1B, Benton, Illinois.
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.
Headquartered in Marion, Illinois, Prevention Laboratories, L.L.C.
-- http://www.preventionlabs.com/-- makes and sells hygiene
products. The Company filed for Chapter 11 on April 21, 2009
(Bankr. S. D. Ill. Case No. 09-40678). Douglas A. Antonik, Esq.,
represents the Debtor in its restructuring efforts. The Debtor
listed total assets of $38,275,349 and total debts of $6,430,386.
RAZZ ELECTRICAL: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Razz Electrical Services, LLC
84 H. Strange Road
Lecompte, LA 71346
Bankruptcy Case No.: 09-80493
Chapter 11 Petition Date: April 26, 2009
Court: United States Bankruptcy Court
Western District of Louisiana (Alexandria)
Debtor's Counsel: Thomas R. Willson, Esq.
P. O. Drawer 1630
Alexandria, LA 71309-1630
Tel: (318) 442-8658
Fax: (318) 442-9637
Email: rockywillson@bellsouth.net
Total Assets: $3,800,000.00
Total Liabilities: $22,389,412.05
A full-text copy of the Debtor's petition, including a list of its
20 largest unsecured creditors and its schedules of assets and
liabilities, is available for free at:
http://bankrupt.com/misc/lawb09-80493.pdf
The petition was signed by Frankie L. Rasberry, managing member of
the Company.
RED TOP: U.S. Trustee Schedules Meeting of Creditors for May 29
---------------------------------------------------------------
The U.S. Trustee for Region 10 will convene a meeting of creditors
in Red Top Rentals, Inc.'s Chapter 11 case on May 29, 2009, at
10:00 a.m., at Rm. 416A U.S. Courthouse, 46 E. Ohio Street,
Indianapolis, Indiana.
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.
Headquartered in Indianapolis, Indiana, Red Top Rentals, Inc. --
http://www.redtoprentals.com/-- rents construction equipment
including trucks, dozers, scrapers, excavators, graders, rubber-
tired loaders, crawler loaders, loader-backhoes, hydraulic
hammers, skid steer loaders, sheepsfoot rollers, smooth drum
rollers, draglines and other construction related items.
The Company filed for Chapter 11 on April 20, 2009 (Bankr. S. D.
Ind. Case No. 09-05229). Jeffrey M. Hester, Esq., at Tucker
Hester, LLC, represents the Debtor in its restructuring efforts.
The Debtor listed total assets of $23,249,558 and total debts of
$32,892,169.
REDFIELD PROPERTY: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: Redfield Property Development L.L.C.
10512 Old Highway 54
Eugene, MO 65032
Bankruptcy Case No.: 09-20860
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
Western District of Missouri (Jefferson City)
Judge: Dennis R. Dow
Debtor's Counsel: John C. Reed, Esq.
Pletz & Reed
P.O. Box 1048
Jefferson City, MO 65102
Tel: (573) 635-8500
Fax: (573) 634-3079
Email: jreedlaw@aol.com
Total Assets: $1,801,983.19
Total Liabilities: $3,875,710.77
The Company says it does not have unsecured creditors who are non-
insiders when they filed their petition.
The petition was signed by Raymond Bax.
REICHHOLD INDUSTRIES: S&P Downgrades Corp. Credit Rating to 'B-'
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
corporate credit rating on Reichhold Industries to 'B-' from 'B'.
The outlook is negative.
At the same time S&P lowered its rating on the company's
$195 million senior unsecured notes due 2014 to 'CCC+' from 'B-'.
The recovery rating is unchanged at '5', which indicates S&P's
expectation for modest (10% to 30%) recovery in the event of a
payment default.
"The downgrade reflects our expectation that continued softness in
both of the company's segments will result in lower volumes and
weaker operating results in 2009. The downgrade also incorporates
S&P's heightened concern over liquidity if business conditions
continue to deteriorate placing further pressure on operating
margins and cash flow generation in the near term," said Standard
and Poor's credit analyst Henry Fukuchi. "We do not expect that
the company will be able to materially improve its financial
profile this year, particularly because of the challenging
operating environment within the North American and European
building and construction end markets."
RICHARD DEAN KENDLE: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Richard Dean Kendle, II
aka Rick Kendle
aka Richard D Kendle
aka Richard Kendle, II
aka Richard Kendle
aka R Kendle, II
aka Richard D Kendle, II
575 Lakeview Dr.
Miami Beach, FL 33140-2629
Bankruptcy Case No.: 09-17611
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
Southern District of Florida (Miami)
Judge: A. Jay Cristol
Debtor's Counsel: David C. Profilet, Esq.
2924 Praire Ave
Miami Bch, Fl 33140
Tel: (305) 531-8741
Email: dprofilet@the-beach.net
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
Total Assets: $2,317,688.41
Total Liabilities: $3,860,117.62
A full-text copy of the Debtor's petition, including a list of 20
largest unsecured creditors and its schedules of assets and
liabilities, is available for free at:
http://bankrupt.com/misc/flsb09-17611.pdf
The petition was signed by Mr. Kendle, II.
SANTEE VILLAGE: U.S. Trustee Sets Meeting of Creditors for May 21
-----------------------------------------------------------------
The U.S. Trustee for Region 16 will convene a meeting of creditors
in Santee Village Partners, LLC's Chapter 11 case on May 21, 2009,
at 2:00 p.m., at 725 S Figueroa St., Room 2610, Los Angeles,
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.
Los Angeles, California-based Santee Village Partners, LLC filed
for Chapter 11 on April 14, 2009 (Bankr. C. D. Calif. Case No. 09-
18735). Michael S. Kogan, Esq., at Ervin Cohen & Jessup LLP
represents the Debtor in its restructuring efforts. The Debtor
has $10 million to $50 million in assets and $50 million to
$100 million in debts.
SERVICEMASTER CO: S&P Gives Stable Outlook; Affirms 'B' Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised its
outlook on Memphis, Tennessee-based The ServiceMaster Co. to
stable from negative. At the same time, S&P affirmed the
company's ratings, including its 'B' corporate credit rating.
ServiceMaster had about $4.27 billion of reported debt as of
Dec. 31, 2008.
The outlook revision reflects ServiceMaster's improved
profitability since its July 2007 leveraged buyout, and Standard &
Poor's expectation that the company will continue to maintain
adequate liquidity and margins at or above current levels. This
is despite S&P's expectation that sales will remain under some
pressure, resulting from a very challenging operating environment
and weaker consumer spending.
Although S&P expects the operating environment to remain
challenging and credit measures to remain weak in the near term,
the outlook reflects S&P's expectation that ServiceMaster will
maintain adequate liquidity by continuing to generate positive
free operating cash flow, and by a sustained improvement in its
operating margins.
"However, if weaker-than-expected operating performance causes
credit measures to weaken from current levels, including leverage
approaching 9x, S&P could revise the outlook back to negative,"
said Standard & Poor's credit analyst Mark Salierno. "An outlook
revision to positive is unlikely in the near term, given currently
unfavorable market conditions, in addition to the company's very
high leverage and thin cash flow protection measures," he
continued.
SHELDON GOOD: Files for Chapter 11 Bankruptcy Protection
--------------------------------------------------------
Sheldon Good & Company and certain affiliates have filed for
Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for
the Southern District of New York.
The Company is reorganizing to remedy the effects of improper
actions taken by its former chairperson, Steven Good. These
improprieties, which left the Company with a shortage of reserves
in the face of the current economic downturn, came to light
following his death in January 2009.
In the meantime, the Company and its affiliates continue to
operate as real estate auction and brokerage firm, with offices
throughout the United States. The Company has sufficient
financial resources to continue customary day-to-day operations
during this process.
Sheldon Good has sold over 45,000 properties in the United States,
Canada, and the Caribbean with total sales of over $10 billion.
Sheldon Good has extensive experience and expertise in conducting
large residential, industrial and commercial portfolio auction
sales for major financial institutions, Fortune 500 companies,
private investment groups, non-profit and religious organizations
and government agencies.
Sheldon Good President Alan R. Kravets said, "While operating
under Chapter 11 protection, Sheldon Good & Company will maintain
and honor all of its commitments to our customers without
interruption. Our management team, with over 200 years of
experience, remains committed to offering quality service, which
is what separates us from other auction companies. We believe
this filing will allow us to make necessary changes to our capital
structure in order to operate efficiently. We expect a quick
proceeding through the court system."
"We believe the outlook for our business, and therefore our
company, is strong. Our auction strategies have become a first
choice for many owners to sell fine properties. In addition, in
the emerging market climate, there is substantial growth in
distressed loan workouts, property foreclosures and real estate
portfolio auctions. This is creating an increased need for our
best-in-class services. We look forward to continuing to fulfill
that need," Mr. Kravets stated.
The Company intends to move through the Chapter 11 process as
quickly as possible.
About Sheldon Good & Company
Sheldon Good & Company, founded in 1965, has sold more than 45,000
U.S. and international properties in more than 100 different asset
classes and produced more than $10 billion in sales. The real
estate auction and marketing firm, with offices in Chicago, New
York, Phoenix, and Denver, has been ranked the number one real
estate auction firm in the U.S. by Forbes, Fortune, and the Wall
Street Journal.
SHELDON GOOD: Case Summary & 3 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Sheldon Good & Company Auctions, Northeast, LLC
18 E. 41st Street, Suite 1600
New York, NY 10017
Bankruptcy Case No.: 09-12535
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Sheldon Good & Company Auctions, Northeast, LLC 09-12535
Sheldon F. Good Realty, Inc. 09-12536
Sheldon Good & Company Auctions, LLC 09-12538
Sheldon Good & Company Brokerage, LLC 09-12540
Sheldon Good & Company Colorado, LLC 09-12541
Sheldon Good & Company International, LLC 09-12542
Sheldon Good & Company of California, Inc. 09-12543
Sheldon Good & Company Residential Sales, Inc. 09-12544
Sheldon Good & Company, Inc. 09-12545
Steven Good Partners International, LLC 09-12547
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
Southern District of New York (Manhattan)
Judge: Burton R. Lifland
Debtor's Counsel: Heidi J. Sorvino, Esq.
Smith, Gambrell & Russell, LLP
250 Park Ave, Suite 1900
New York, NY 10004
Tel: (212) 907-9700
Fax: (212) 907-9800
Email: hsorvino@sgrlaw.com
Estimated Assets: $0 to $50,000
Estimated Debts: $500,001 to $1,000,000
A full-text copy of the Debtor's petition, including its list of 3
largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nysb09-12535.pdf
The petition was signed by Alan R. Kravets, managing member of the
Company.
SHORE CHRISTIAN: Case Summary & 5 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Shore Christian Center Church
4041 Squankum Road
P.O. Box 515
Allenwood, NJ 08720
Bankruptcy Case No.: 09-12549
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtor's Counsel: Thomas A. Farinella. Esq.
Law Offices of Thomas A. Farinella
242-11 Braddock Avenue
Bellerose, NY 11426
Tel: (718) 470-0111
Fax: (646) 349-3209
Email: taf@lawtaf.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including a list of its
five largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nysb09-12549.pdf
The petition was signed by Dewey Friedel, senior pastor of the
Company.
SIDNEY KIMMEL: U.S. Trustee Sets Meeting of Creditors for May 19
----------------------------------------------------------------
The U.S. Trustee for Region 15 will convene a meeting of creditors
in Sidney Kimmel Cancer Center's Chapter 11 case on May 19, 2009,
at 3:00 p.m., at June 2, 2009, at 402 W. Broadway, Sixth Floor,
Suite 630 San Diego, 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.
Based in San Diego, California, Sidney Kimmel Cancer Center is a
research institute. The Company filed for Chapter 11 on April 17,
2009 (Bankr. S. D. Calif. Case No. 09-05065). Victor A.
Vilaplana, Esq., at Foley & Lardner represents the Debtor in its
restructuring effort. The Debtor has assets and debts both
ranging from $10 million to $50 million.
SILICON GRAPHICS: Files Schedules of Assets and Liabilities
-----------------------------------------------------------
Silicon Graphics Inc. and its debtor-affiliates filed with the
United States Bankruptcy Court for the Southern District of New
York their schedules of assets and liabilities, and statements of
financial affairs.
Company Name Assets Liabilities
------------ ------------ ------------
Silicon Graphics Inc. $156,629,726 $253,180,586
Silicon Graphics of Manhattan, Inc. Undetermined $0
Silicon Graphics Federal, Inc. $21,817,962 $169,065,176
Cray Research, LLC Undetermined Undetermined
Silicon Graphics Real Estate, Inc. Undetermined Undetermined
Silicon Graphics World Trade $4,563,130 $162,439,270
Corporation
Silicon Studio, Inc. Undetermined Undetermined
Cray Research America Latina Ltd. Undetermined $5,494
Cray Research Eastern Europe Ltd. Undetermined $21,886
Cray Research India Ltd. Undetermined Undetermined
Cray Research International, Inc. Undetermined Undetermined
Cray Financial Corporation Undetermined Undetermined
Cray Asia/Pacific, Inc. Undetermined Undetermined
ParaGraph International, Inc. Undetermined Undetermined
WTI-Developments, Inc. Undetermined Undetermined
A full-text copy of Silicon Graphics Inc.'s schedules of assets
and liabilities is available for free at:
http://ResearchArchives.com/t/s?3be8
A full-text copy of Silicon Graphics Inc.'s statements of
financial affairs is available for free at:
http://ResearchArchives.com/t/s?3be8
A full-text copy of Silicon Graphics of Manhattan, Inc.'s
schedules of assets and liabilities is available for free at:
http://ResearchArchives.com/t/s?3bf4
A full-text copy of Silicon Graphics of Manhattan, Inc.'s
statements of financial affairs is available for free at:
http://ResearchArchives.com/t/s?3bf5
A full-text copy of Silicon Graphics Federal, Inc.'s schedules of
assets and liabilities is available for free at:
http://ResearchArchives.com/t/s?3bf2
A full-text copy of Silicon Graphics Federal, Inc.'s statements of
financial affairs is available for free at:
http://ResearchArchives.com/t/s?3bf1
A full-text copy of Cray Research, LLC's schedules of assets and
liabilities is available for free at:
http://ResearchArchives.com/t/s?3bed
A full-text copy of Cray Research, LLC's statements of financial
affairs is available for free at:
http://ResearchArchives.com/t/s?3bee
A full-text copy of Silicon Graphics Real Estate, Inc.'s schedules
of assets and liabilities is available for free at:
http://ResearchArchives.com/t/s?3bf8
A full-text copy of Silicon Graphics Real Estate, Inc.'s
statements of financial affairs is available for free at:
http://ResearchArchives.com/t/s?3bf9
A full-text copy of Silicon Graphics World Trade Corporation's
schedules of assets and liabilities is available for free at:
http://ResearchArchives.com/t/s?3c00
A full-text copy of Silicon Graphics World Trade Corporation's
statements of financial affairs is available for free at:
http://ResearchArchives.com/t/s?3c01
A full-text copy of Silicon Studio, Inc.'s schedules of assets and
liabilities is available for free at:
http://ResearchArchives.com/t/s?3bfe
A full-text copy of Silicon Studio, Inc.'s statements of financial
affairs is available for free at:
http://ResearchArchives.com/t/s?3bff
A full-text copy of Cray Research America Latina Ltd.'s schedules
of assets and liabilities is available for free at:
http://ResearchArchives.com/t/s?3bea
A full-text copy of Cray Research America Latina Ltd.'s statements
of financial affairs is available for free at:
http://ResearchArchives.com/t/s?3bea
A full-text copy of Cray Research Eastern Europe Ltd.'s schedules
of assets and liabilities is available for free at:
http://ResearchArchives.com/t/s?3bef
A full-text copy of Cray Research Eastern Europe Ltd.s statements
of financial affairs is available for free at:
http://ResearchArchives.com/t/s?3bf0
A full-text copy of Cray Research India Ltd.'s schedules of assets
and liabilities is available for free at:
http://ResearchArchives.com/t/s?3bfa
A full-text copy of Cray Research India Ltd.'s statements of
financial affairs is available for free at:
http://ResearchArchives.com/t/s?3bfb
A full-text copy of Cray Research International, Inc.'s schedules
of assets and liabilities is available for free at:
http://ResearchArchives.com/t/s?3bfc
A full-text copy of Cray Research International, Inc.'s statements
of financial affairs is available for free at:
http://ResearchArchives.com/t/s?3bfd
A full-text copy of Cray Financial Corporation's schedules of
assets and liabilities is available for free at:
http://ResearchArchives.com/t/s?3bf2
A full-text copy of Cray Financial Corporation's statements of
financial affairs is available for free at:
http://ResearchArchives.com/t/s?3bf3
A full-text copy of Cray Asia/Pacific, Inc.'s schedules of assets
and liabilities is available for free at:
http://ResearchArchives.com/t/s?3beb
A full-text copy of Cray Asia/Pacific, Inc.'s statements of
financial affairs is available for free at:
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A full-text copy of ParaGraph International, Inc.'s schedules of
assets and liabilities is available for free at:
http://ResearchArchives.com/t/s?3bf6
A full-text copy of ParaGraph International, Inc.'s statements of
financial affairs is available for free at:
http://ResearchArchives.com/t/s?3bf7
A full-text copy of WTI-Developments, Inc.'s schedules of assets
and liabilities is available for free at:
http://ResearchArchives.com/t/s?3c02
A full-text copy of WTI-Developments, Inc.'s statements of
financial affairs is available for free at:
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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 September 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.
SILVERHAWK COMMONS: Section 341(a) Meeting Scheduled for May 29
---------------------------------------------------------------
The U.S. Trustee for Region 16 will convene a meeting of creditors
in Silverhawk Commons, LLC's Chapter 11 case on May 29, 2009, at
2:30 p.m., at 3420 Twelfth St., Room 100A, Riverside, 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.
Murrieta, California-based, Silverhawk Commons, LLC filed for
Chapter 11 on April 16, 2009 (Bankruptcy C. D. Calif. Case No. 09-
17562). Thomas J. Polis, Esq., at Polis & Associates, APLC,
represents the Debtor in its restructuring efforts. The Debtor
has assets and debts both ranging from $10 million to $50 million.
SOUTHAVEN CHRYSLER-JEEP: Chrysler Lawsuit Threat Leads to Collapse
------------------------------------------------------------------
The Associated Press reports that Southland Chrysler-Jeep filed
for Chapter 11 bankruptcy protection as Chrysler Financial
threatened legal action.
According to The AP, Chrysler Financial asked Southland Chrysler-
Jeep to surrender assets equal to what it owes the company, which
is almost $3.7 million, for vehicles loaned to the dealership.
The AP relates that Southland Chrysler-Jeep entered into an
agreement with Chrysler Financial for vehicles in 2001. The
report says that the two firms then amended the agreement three
years later to settle an unpaid balance and give Chrysler
Financial a security interest in the dealership's assets.
According to the report, Southland Chrysler-Jeep has since
defaulted on the agreement.
The AP states that Chrysler Financial is seeking to recover loaned
vehicles, and a hearing will be held on May 8.
Southland Chrysler-Jeep is an auto dealership in Southaven,
Mississippi. The Company filed for Chapter 11 bankruptcy
protection on March 23, 2009 (Bankr. N.D. Miss. Case No. 09-
11452). Russell W. Savory, Esq., at Gotten, Wilson, Savory &
Beard, PLLC, assists the Company in its restructuring efforts.
The Company listed $1,000,001 to $10,000,000 in assets and
$1,000,001 to $10,000,000 in debts.
STAR TRIBUNE: Union Accepts 33% Wage Reduction
----------------------------------------------
David Phelps at Star Tribune reports that The Star Tribune
Company and the Minnesota Newspaper Guild have reached a tentative
agreement to cut 3% in base wage scales and a 30% cut in pay above
those scales.
Mr. Phelps relates that the wage cuts, which is yet to be ratified
by the union's members, is believed to affect more than half of
the newsroom employees and would reduced newsroom costs in Star
Tribune's newsroom costs by almost $1.7 million in the first year.
According to Mr. Phelps, Star Tribune reserved the ability to
restore a portion of the above-scale pay at its discretion. The
report states that the contract proposal also:
-- freezes wages until the contract expires on July 31, 2011;
-- freezes the union's pension plan; and
-- requires staffers to take off two days without pay in each
of the next two years.
Mr. Phelps states that Star Tribune is seeking concessions
totaling $20 million from its union employees.
Star Tribune, says Mr. Phelps, still has to reach agreements on
another major union contract to resolve for its drivers, plus
contracts with five smaller unions. Star Tribune is trying to cut
expenses by $10 million among its smaller nonunion workforce, Mr.
Phelps relates.
Headquartered in Minneapolis, Minnesota, The Star Tribune Company
-- http://www.startribune.com-- operate the largest newspaper in
the U.S. state of Minnesota and published seven days each week in
an edition for the Minneapolis-Saint Paul metropolitan area. The
company and its affiliate, Star Tribune Holdings Corporation,
filed for Chapter 11 protection on January 15, 2009 (Bankr. S.D.
N.Y. Lead Case No. 09-10245). Marshall Scott Huebner, Esq., James
I. McClammy, Esq., and Lynn Poss, Esq., at Davis Polk & Wardwell,
represent the Debtors in their restructuring efforts. Blackstone
Advisory Services L.P. is the Debtors' financial advisor. Diana
G. Adams, the U.S. Trustee for Region 2, selected seven members to
the official committee of unsecured creditors in the Debtors'
Chapter 11 cases. Scott Cargill, Esq., and Sharon L. Levine,
Esq., at Lowenstein Sandler PC, represents the Committee as
counsel. When the Debtors filed for protection from their
creditors, they listed assets and debts between $100 million and
$500 million each.
STEEL DYNAMICS: S&P Puts 'BB+' Rating on CreditWatch Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it placed its
ratings, including its 'BB+' corporate credit rating, on Fort
Wayne, Indiana-based Steel Dynamics Inc. on CreditWatch with
negative implications.
"The CreditWatch listing reflects the company's weak operating
performance as a result of the steel industry's poor end-market
demand and low utilization rates, a trend S&P expects will
continue throughout 2009," said Standard & Poor's credit analyst
Marie Shmaruk. This is likely to cause SDI's credit measures to
deteriorate to a level that S&P would consider weak for the
current rating. Specifically, for the current rating, S&P would
expect the company's adjusted debt to EBITDA to not exceed 4x
through the cycle. S&P is also concerned that the company may
breach the leverage covenant governing its existing bank credit
facility, which requires SDI to maintain debt to EBITDA below 5x,
although S&P's current expectation is that the company will obtain
relief from its banks.
In resolving the CreditWatch listing, S&P will consider the
implications that the current difficult operating conditions will
have on the company's operations, leverage profile, and liquidity
position over the next several quarters.
STERIGENICS INTERNATIONAL: S&P Downgrades Corp. Rating to 'B'
-------------------------------------------------------------
Standard & Poor's Rating Services said that it lowered all of its
ratings on Chicago, Illinois-based Sterigenics International Inc.,
including its corporate credit rating, which was lowered to 'B'
from 'B+'. The outlook is negative. At the same time, S&P also
lowered the issue-level rating on the company's senior secured
debt to 'B+' from 'BB-'.
"The downgrade primarily reflects the company's very tight
leverage covenant cushion and the dimmed prospects for a permanent
increase in that cushion as a result of the next leverage covenant
step-down to 3.5x at Dec. 31, 2009, even after optional debt
repayments are made," said Standard & Poor's credit analyst
Michael Berrian.
The ratings on Sterigenics reflect the very tight leverage
covenant cushion, the company's single business focus in a
competitive industry and high debt leverage. They also reflect
the company's relatively small size that heightens its sensitivity
to significant customer and industry concentration, and near-term
contract renewals. Sterigenics is a sterilization and ionization
services provider to medical product companies.
Despite a well-established market position and a leading market
share of just under 33%, Sterigenics' relatively small size and
business and customer concentration make it vulnerable to any
downturn in demand for medical devices, particularly given its
relatively small revenue base. Approximately one-half of the
company's revenues come from the top 20 customers, the majority of
which are medical product companies, and 81% of total revenues
come from the processing of medical products. S&P believes the
health care industry will be able to withstand the current
economic pressures better than other industries, but S&P also does
not believe the industry will be completely immune from those
pressures, either. Customer concentration also exposes
Sterigenics to fluctuations in its customers' market shares,
especially when a customer loses business to a competitor that
does not use Sterigenics' processing services. Furthermore,
despite the significant growth opportunity as potential clients
realize the benefits of outsourcing (eliminating the need to
replace equipment and comply with tighter regulations), the
potential also exists for customers to in-source these services.
According to market data, roughly 40% of medical device
sterilization volumes is processed by device manufacturers' in-
house facilities.
Offsetting a portion of its business risk is Sterigenics benefit
from favorable industry demand trends and a stable customer base.
Contracts average between two and five years, and contract renewal
rates have been stable. This is most likely attributable to the
fact that Sterigenics is the only company with a global presence
that offers four primary technologies (ethylene oxide
sterilization, gamma irradiation, electron-beam, and X-ray
radiation).
Revenues for the first nine months of 2008 were slightly ahead of
plan and increased 10% over revenues in the first nine months of
2007; EBITDA (per S&P's adjustments) was 2.5% higher than prior
year and in line with projections. At Sept. 30, 2008, debt
leverage (adjusted for holding company preferred stock and
operating leases) was still high, at 5.2x. Cash flow protection
measures are adequate for the rating -- as of Sept. 30, 2008,
EBITDA coverage of interest was 2.6x, and funds from operations to
total debt was about 12%.
SYNOVUS FINANCIAL: Credit Stress Cues Fitch's 'Ba1' Stock Rating
----------------------------------------------------------------
Significant credit stress has led Fitch Ratings to downgrade the
long-term and short-term Issuer Default Ratings as well as the
Individual ratings of Synovus Financial Corporation and its
subsidiary banks. The Rating Outlook remains Negative.
The degree of credit problems at SNV continues to accelerate,
significantly impeding the company's earnings and causing net
charge-offs to increase to 3.53% for the first quarter- 2009
(1Q'09). Although management has remained focused on its
disposition strategy of problem assets through both the formation
of a special asset management group and the utilization of
auctions, Fitch believes prolonged credit stress will continue to
weigh heavily on SNV's financial condition, given the prevailing
market environment.
The preponderance of credit concerns remains in SNV's residential
construction, development, and land loan portfolios; the majority
of which reside in the greater Atlanta area, as well as the west
coast and panhandle of Florida, which drove non-performing assets
to 6.25% at March 31, 2009. Given the ongoing uncertainty in
these regions and the size of SNV's exposure to them, Fitch has
maintained a Negative Outlook on the company's ratings. Should
credit deterioration become more pronounced than anticipated,
SNV's ratings could be downgraded further.
Partially mitigating Fitch's concerns are SNV's capital ratios,
which continue to be maintained at prudent levels and received a
significant boost from the $968 million Capital Purchase Program
issuance during 4Q'08. The company's sufficient liquidity, sound
funding base, and augmented reserve levels provide additional
ratings support.
Fitch has taken these rating actions on SNV and its subsidiaries
with a Negative Outlook:
Synovus Financial Corp.
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Subordinated Debt downgraded to 'BBB-' from 'BBB+';
-- Preferred Stock downgraded to 'BB+' from 'BBB+' ;
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Columbus Bank & Trust
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term Deposits downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Athens First Bank & Trust Co.
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Bank of Coweta
-- Long-term IDR downgraded to 'BBB' from 'A-' ;
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term Deposits downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Bank of Nashville
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Bank of North Georgia
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Bank of Pensacola
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Bank of Tuscaloosa
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
CB&T Bank of Middle Georgia
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Citizens Bank & Trust of West Georgia
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Citizens First Bank
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Coastal Bank of Georgia
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term Deposits downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Cohutta Banking Company
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term Deposits downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Commercial Bank
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term Deposits downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Commercial Bank & Trust Co.
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term Deposits downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Community Bank & Trust of Southeast Alabama
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
First Commercial Bank
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term Deposits downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
First Commercial Bank of Huntsville
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
First Community Bank of Tifton
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
First National Bank of Jasper
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term Deposits downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
First State Bank and Trust Company of Valdosta
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Georgia Bank & Trust
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
National Bank of South Carolina
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term Deposits downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
National Bank of Walton County
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Sea Island Bank
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term Deposits downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Security Bank & Trust Company of Albany
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Sterling Bank
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term Deposits downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Sumter Bank & Trust Company
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Synovus Bank of Tampa
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Tallahassee State Bank
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Trust One Bank
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Vanguard Bank & Trust Company
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Long-term Deposits downgraded to 'BBB+' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Individual downgraded to 'C' from 'B/C';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
T. THOMAS CHEVROLET: Files for Chapter 11 Bankruptcy Protection
---------------------------------------------------------------
Michael Hinman at Tampa Bay Business Journal reports that T.
Thomas Chevrolet -- dba Michael Holley Chevrolet, T. Thomas
Affordable Used Cars, Michael Holley's Pre-Owned Wholesale Outlet
and Michael Holley's Regional Discount Chevy Store -- has filed
for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court
for the Middle District of Florida.
According to Business Journal, T. Thomas listed up to $10 million
in assets and up to $50 million in liabilities. Court documents
say that T. Thomas' 20 largest unsecured creditors claimed that
they are owed $11.6 million, including:
-- $9.3 million to Fifth Third Bank,
-- $733,000 to World Omni Financial Corp., and
-- $347,000 to DeLage Landen Financial Services Inc..
T. Thomas, says Business Journal, also owes $165,000 to the
Florida Department of Revenue and $103,000 in taxes to Polk
County.
The Ledger relates that GMAC LLC, which financed T. Thomas'
inventory, conducted an intense audit of operations at the
dealership in October 2008. The State Attorney said two weeks
later that it was launching a probe on owner Michael Holley and
searched his $7 million dealership on U.S. 98 North, Business
Journal states. Mr. Holley was arrested in December 2008 on
charges of theft and unlawful subleasing of a motor vehicle,
Business Journal states. The report says that Mr. Holley faced
more charges in February 2009 that brings potential damages to
almost $600,000. The report states that Mr. Holley is free on
bail.
According to Business Journal, Mr. Holley's Chevrolet outlets has
been closed since the end of 2008, after clients complained that
liens on trade-ins weren't being paid. The reprot says that since
then, Mr. Holley has sought to sell the property and business, but
has yet to finalize a deal.
Business Journal relates that MRH of Lakeland Inc. -- another
Holley company and which formerly did business as Michael Holley
Suzuki, Michael Holley Kia, Michael Holley Suzuki-Kia and Michael
Holley's New Car Alternative -- also filed for Chapter 11
bankruptcy protection in a related case, listing up to $10 million
in assets and up to $10 million in debts. According to the
report, MRH listed more than $920,000 in unsecured claims,
including $733,000 owed to World Omni Financial on a contingent
basis and more than $30,000 to the Polk County Tax Collector.
T. Thomas Chevrolet is a Chevrolet dealership in Lakeland,
Florida. According to Cortera, the Company currently has
approximately 100 to 250 employees and annual sales of $75,000,000
to $199,999,999.
T. THOMAS CHEVROLET: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: T. Thomas Chevrolet, Inc.
fdba Michael Holley Chevrolet
fdba T Thomas Affordable Used Cars
fdba Michael Holley's Pre-Owned Wholesale Outlet
fdba Michael Holley's Regional Discount Chevy Store
P.O. Box 1787
Lakeland, FL 33802
Bankruptcy Case No.: 09-08092
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
Middle District of Florida (Tampa)
Judge: K. Rodney May
Debtor's Counsel: Edward J. Peterson, III, Esq.
Stichter, Riedel, Blain & Prosser, PA
110 East Madison Street, Suite 200
Tampa, FL 33602
Tel: (813) 229- 0144
Fax: (813) 229-1811
Email: epeterson.ecf@srbp.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $10,000,001 to $50,000,000
A list of the Company's 20 largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/flmb09-08092.pdf
The petition was signed by Michael R. Holley, president of the
Company.
TELEPLUS WORLD: May Use Cash Collateral of Yorkville Advisors
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida has
granted Teleplus World permission to use cash collateral securing
the Debtor's convertible debentures of approximately $14.0 million
to Yorkville Advisors, to fund ordinary and necessary post-
petition expenses, and if any, other costs and expenses of the
administration of the Chapter 11 case.
The Debtor is authorized to use cash collateral during the month
of April 2009, in accordance with a budget. The use of cash
collateral relative to the "Management Fee" line item and the
"Payroll" line item is limited to 75% of the amounts listed on the
budget.
As adequate protection to YA, the Debtor shall cause its wholly
owned subsidiary Teleplus Connect Corp. and Connect's subsidiaries
to upstream to the Debtor an amount equal to the actual
expenditures for the months of March and April on or before May 1,
2009. As additional adequate protection, YA is granted
replacement security interests and liens in all of the Debtor's
post-petition assets. The liens granted shall be supplemental to
the existing security interests held by YA.
A further hearing with respect to the entry of a subsequent
interim order, or a final order, as applicable, is scheduled for
May 5, 2009.
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.
TEMESCAL CANYON: U.S. Trustee Sets Meeting of Creditors for May 28
------------------------------------------------------------------
The U.S. Trustee for Region 16 will convene a meeting of creditors
in Temescal Canyon Properties-8, LLC, and its debtor-affiliates'
Chapter 11 cases on May 28, 2009, at 2:30 p.m., at 3420 Twelfth
St., Room 100A, Riverside, 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.
Temescal Canyon Properties-8, LLC, and its affiliates filed for
Chapter 11 on April 14, 2009 (Bankr. C. D. Calif. Lead Case No.
09-17404). Lewis R. Landau, Esq., represents the Debtors in their
restructuring efforts. The Debtors have $10 million to
$50 million in assets and $50 million to $100 million in debts.
TRONOX INC: Seeks September 15 Extension of Plan Filing Period
--------------------------------------------------------------
Tronox Incorporated and its debtor-affiliates ask Judge Allan L.
Gropper of the U.S. Bankruptcy Court for the Southern District of
New York to extend their exclusive plan filing period through
September 15, 2009, and their exclusive solicitation period
through November 15, 2009.
Section 1121(b) of the Bankruptcy Code provides for an initial
120-day period after the Petition Date during which the Debtors
have the exclusive right to file a Chapter 11 plan. Section
1121(c)(3) provides that, if a debtor proposes a plan within the
exclusive filing period, it has a period of 180 days after the
Petition Date to obtain acceptances of the plan.
Exclusive Periods are intended to afford Chapter 11 debtors a full
and fair opportunity to propose a consensual reorganization plan
and solicit acceptances of the plan without the deterioration and
disruption of their business that might be caused by the filing of
competing plans by non-debtor parties.
Section 1121(d) provides that a court may, for cause, extend or
reduce a debtor's exclusive plan period up to 18 months, and the
exclusive solicitation period up to 20 months, after the Petition
Date.
Colin M. Adams, Esq., at Kirkland & Ellis LLP, in New York,
relates that since the Petition Date, the Debtors have worked to
stabilize and streamline their business operations, improve
financial performance, and comply with all the requirements
mandated of them as Debtors. Specifically, the Debtors have:
(1) obtained certain "first day" relief from the Court to
continue their prepetition practices regarding employee
wages and benefits, customer programs, cash management,
insurance, taxes and the maintenance of their supply
chain;
(2) successfully negotiated and obtained final authorization
to enter into the debtor-in-possession facility to fund
the continued operation of their businesses and the
administration of their Chapter 11 Cases;
(3) worked with key suppliers, service providers and customers
to ensure that the day-to-day operations are not impacted
by the Chapter 11 cases;
(4) retained Gary Barton, a senior director at Alvarez &
Marsal North America, LLC, as Tronox's chief restructuring
officer, as required by the DIP Facility; and
(5) continued to pay their bills in the ordinary course of
business as they come due.
Mr. Adams adds that the Debtors undertook a comprehensive analysis
of their operations and asset portfolio to streamline their
business operations and maximize the value of underutilized or
unused assets. As a result, the Debtors (i) restricted capacity
at the titanium dioxide pigment production facility in Savannah,
Georgia, (ii) rejected their headquarters lease to consolidate
Oklahoma City operations and (iii) sold their property in Knox
County, Tennessee.
According to Mr. Adams, the Debtors' cases are large and complex,
which involve numerous creditor constituencies and more than
$1 billion in assets and liabilities. Moreover, since the
Petition Date, the Debtors have developed and implemented the
three-pronged strategy to maximize value for all stakeholders,
while also working to improve business operations and address all
the requirements and complexities in their Chapter 11 cases.
Mr. Adams specifies that the Debtors are engaged in a process to
sell substantially all of their operating assets, as required
within six months of the funding of their postpetition debtor-in-
possession financing. In this regard, the Debtors have made this
progress:
(a) As of March 2009, Tronox had contacted more than 200
potential buyers, both strategic and financial. Fifty-
eight parties expressed interest in the sale and, who
subsequently received a confidential information
memorandum and provided with access to a virtual data room
with information about all aspects of Tronox's businesses.
(b) In late March and early April 2009, Tronox received non-
binding indications of interest from 26 parties regarding
the purchase of all or a portion of its operating assets.
The Debtors have evaluated these indications and have
invited a subset of the parties to participate in further
discussions, with the intention that one of them will
serve as a stalking horse bidder at an auction of Tronox's
assets.
(c) Throughout April 2009, the Debtors have been in active
discussions with the interested parties, which met with
Tronox's management and have begun conducting site visits
at Tronox's facilities.
The amount and type of consideration available under a Chapter 11
plan will depend in large part on the outcome of the Sale Process,
Mr. Adams notes.
In addition, the Debtors are negotiating for global settlement
with departments in the federal and state governments regarding
the scope and treatment of their claims related to the
environmental liabilities since Tronox's spin-off from former
parent Kerr-McGee Corporation in 2006. Absent a resolution
regarding the environmental and other liabilities, Tronox will be
hard-pressed to develop or consummate a Chapter 11 plan that will
affect recoveries for stakeholders, Mr. Adams tells the Court.
Furthermore, the Debtors' Chapter 11 plan will be impacted greatly
by litigation regarding the spin-off from Kerr-McGee.
Hence, the Debtors and the Official Committee of Unsecured
Creditors have investigated and analyzed potential claims and
causes of action against Kerr-McGee and its successor-in-
interest, Anadarko Petroleum Corporation regarding the spinoff.
"[The] investigation is concluding, and Tronox intends to commence
an adversary proceeding in this Court against Kerr-McGee and
Anadarko regarding the spinoff as early as May 1, 2009," Mr.
Adams tells Judge Gropper.
The Debtors maintain that they need more time to capitalize on
their efforts in relation to the unresolved facets of their
strategy to maximize value for its stakeholders.
The Court will convene a hearing on May 6, 2009, to consider the
Debtors' request. Objections, if any, must be filed by May 1.
About Tronox Inc.
The company is the world's third largest maker of titanium dioxide
behind DuPont Co. and Saudi-owned National Titanium Dioxide Co.,
known a Cristal, according to Bloomberg.
Tronox has $1.6 billion in total assets, including $646.9 million
in current assets, as at September 30, 2008. The company has
$881.6 million in current debts and $355.9 million in total
noncurrent debts.
Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D.
N.Y. Case No. 09-10156). The case is before Hon. Allan L.
Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and
Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York,
represent the Debtors. The Debtors also tapped Togut, Segal &
Segal LLP as conflicts counsel; Rothschild Inc. as investment
bankers; Alvarez & Marsal North America LLC, as restructuring
consultants; and Kurtzman Carson Consultants serves as notice and
claims agent.
An official committee of unsecured creditors and an official
committee of equity security holders have been appointed in the
cases. The Creditors Committee has retained Paul, Weiss, Rifkind,
Wharton & Garrison LLP as counsel.
Until September 30, 2008, Tronox Inc. was publicly traded on the
New York Stock Exchange under the symbols TRX and TRX.B. Since
then, Tronox Inc. has traded on the Over the Counter Bulletin
Board under the symbols TROX.A.PK and TROX.B.PK. As of
December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares
of class A common stock and 22,889,431 outstanding shares of
class B common stock.
Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Tronox Inc. and its 14 affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
TRONOX INC: Seeks August 10 Extension of Lease Decision Period
--------------------------------------------------------------
Tronox Inc. and its affiliates ask the U.S. Bankruptcy Court for
the Southern District of New York to extend the time within which
they may assume or reject the unexpired leases through and
including August 10, 2009.
Section 365(d)(4)(A) of the Bankruptcy Code provides that if a
debtor does not assume or reject an unexpired lease or an
executory contract by the initial period of 120 days after the
Petition Date, the Court may extend the period prior to the
expiration of the 120-day period, for 90 days on the request of
the debtor for cause.
As required by the terms of their debtor-in-possession financing,
the Debtors are pursuing a potential sale of substantially all of
its operating assets pursuant to Section 363 of the Bankruptcy
Code, and are engaging in discussions with numerous potential
purchasers. In addition, the Debtors are also negotiating with
state and federal government agencies regarding a comprehensive
approach to their environmental liabilities.
Given the circumstances in their Chapter 11 cases, the Debtors
believe that they are not in a position to assume or reject
certain of their unexpired leases because:
-- a potential buyer in the Sale Process may want to assume
some of the Unexpired Leases; and
-- other Unexpired Leases may influence negotiations
with the government agencies.
A list of Tronox's Unexpired Leases is available for free at
http://bankrupt.com/misc/Tronox_UnexpiredLeases.pdf
Colin M. Adams, Esq., at Kirkland & Ellis LLP, in New York,
relates that as of March 2009, Tronox had contacted more than 200
potential buyers, and received 26 non-binding indications of
interest regarding all or a portion of Tronox's operating assets.
The Debtors are presently engaged in active discussions with
certain of these interested parties regarding the Sale of the
Debtors' operating assets.
Mr. Adams elaborates that as a result of its spin-off from Kerr-
McGee Corporation, Tronox became responsible for significant
liabilities arising from Kerr-McGee's discontinued chemical,
refining, coal, nuclear, offshore contract drilling and other
businesses -- many of which were unrelated to Tronox's operating
businesses.
According to Mr. Adams, the Environmental Liabilities were a
significant factor leading to the filing of the Chapter 11 cases,
and are an important and complex issue that must be resolved.
Specifically, the resolution of the government's claim related to
the Liabilities is critical to the successful outcome of the
Debtors' cases, he notes.
Absent an extension of the Lease Decision Period, the Unexpired
Leases will be deemed rejected under Section 365(d)(4) of the
Bankruptcy Code as of May 12, 2009. An improvident or premature
rejection of the Unexpired Leases may harm the Debtors' estates by
resulting in the loss of one or more of the Unexpired Leases that
may be important to its discussions with the government regarding
environmental remediation or to a potential buyer's valuation of
the businesses, Mr. Adams explains.
Likewise, he adds, the premature assumption of any of the
Unexpired Leases will require the Debtors to incur administrative
expense claims relating to cure obligations before an informed
decision can be made regarding the necessity of the Unexpired
Leases.
Mr. Adams assures the Court that lessors under the Unexpired
Leases will not be prejudiced by the Extension, because the
Debtors have performed, and will continue to perform in a timely
manner, its undisputed postpetition obligations under the
Unexpired Leases. Moreover, any lessor may request that the Court
fix an earlier date by which the Debtors must assume or reject its
Lease.
About Tronox Inc.
The company is the world's third largest maker of titanium dioxide
behind DuPont Co. and Saudi-owned National Titanium Dioxide Co.,
known a Cristal, according to Bloomberg.
Tronox has $1.6 billion in total assets, including $646.9 million
in current assets, as at September 30, 2008. The company has
$881.6 million in current debts and $355.9 million in total
noncurrent debts.
Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D.
N.Y. Case No. 09-10156). The case is before Hon. Allan L.
Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and
Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York,
represent the Debtors. The Debtors also tapped Togut, Segal &
Segal LLP as conflicts counsel; Rothschild Inc. as investment
bankers; Alvarez & Marsal North America LLC, as restructuring
consultants; and Kurtzman Carson Consultants serves as notice and
claims agent.
An official committee of unsecured creditors and an official
committee of equity security holders have been appointed in the
cases. The Creditors Committee has retained Paul, Weiss, Rifkind,
Wharton & Garrison LLP as counsel.
Until September 30, 2008, Tronox Inc. was publicly traded on the
New York Stock Exchange under the symbols TRX and TRX.B. Since
then, Tronox Inc. has traded on the Over the Counter Bulletin
Board under the symbols TROX.A.PK and TROX.B.PK. As of
December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares
of class A common stock and 22,889,431 outstanding shares of
class B common stock.
Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Tronox Inc. and its 14 affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
TRONOX INC: To Sell Knoxville Property to K-VA-T for $900,000
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Tronox Inc. and its affiliates seek authority from the U.S.
Bankruptcy Court for the Southern District of New York to sell
their 5.4-acre unimproved real property located in Knox County,
Tennessee, free and clear of all liens, claims and encumbrances,
to K-VA-T Food Stores, Inc., for $900,000 cash. K-VA-T intends to
improve the Knoxville Property for the construction of a storage
and distribution facility.
Colin M. Adams, Esq., at Kirkland & Ellis LLP, in New York,
relates that the Debtors are not currently utilizing, and do not
expect to use, the Knoxville Property. Given its location amid
petroleum and chemical tanks and distribution facilities, the
Knoxville Property is not marketable to a wide range of entities.
According to Mr. Adams, in August 2007, the Debtors retained
Property Service Group Southeast, Inc., of Knoxville, Tennessee,
which appraised the Knoxville Property in a valuation of $810,000.
The appraised value was based on several factors including (i) the
real estate market conditions and desirability,
(ii) the location, size, and utility, (iii) the highest and best
use, and (d) sales and asking prices of comparable sites with
respect to the Knoxville Property. The Debtors conducted property
maintenance and preparation, including the commission of a wetland
delineation report to prepare the Knoxville Property for sale. In
September 2007, the Debtors retained real estate broker Sperry Van
Ness/RM Moore, formerly known as RM Moore Real Estate Company,
which listed the Knoxville Property for a purchase price of
$945,000 and marketed the property to three potentially interested
parties.
Following an evaluation of other potential buyers, the Debtors
entered into an agreement in July 2008 to sell the Knoxville
Property to K-VA-T pursuant to a Purchase Agreement that was
subsequently amended on November 20, 2008, February 26, 2009, and
March 29, 2009.
Pursuant to the Purchase Agreement, K-VA-T provided on July 2008 a
$30,000 cash deposit being held in trust by Sperry Van Ness/R.M.
Moore. The purchase price of $900,000 will be payable in cash at
the closing of the Sale, which will take place on May 22, 2009.
At Closing, the Debtors will convey to Buyer good and indefeasible
title to the Knoxville Property. The Debtors will pay a one-time
fee to Sperry Van Ness/R.M. Moore, equal to 8% of the Purchase
Price at Closing in consideration for the services rendered by the
Broker.
Mr. Adams notes that Tronox has disclosed a report alleging past
releases of contaminants in the vicinity of the Knoxville
Property, of which Tronox has no actual knowledge. K-VA-T has had
the opportunity to inspect the Knoxville Property, and is
satisfied with the condition.
All improvements, fixtures and equipment forming part of the
Knoxville Property are being sold in an "as is", "where is"
condition. The implied warranties of merchantability and fitness
for a particular purpose are expressly disclaimed in the Purchase
Agreement, according to Mr. Adams.
K-VA-T has exercised its right to perform soil, water and other
tests on the Knoxville Property to determine suitability for THE
Buyer's intended use. From and after Closing, K-VA-T will be
responsible for all environmental contamination or pollution, in
violation of applicable law, resulting from the acts or omissions
of any person in the ownership, use or occupation of the.
Knoxville Property occurring after Closing.
Furthermore, K-VA-T agrees to indemnify the Debtors against
liability resulting from, or connected with, any pollutant,
contaminant or hazardous substance existing in or under the
Knoxville Property.
If K-VA-T fails to perform under the Purchase Agreement, the
Debtors may retain the Deposit as liquidated damages.
Mr. Adams notes that in accordance with the debtor-in-possession
facility dated January 13, 2009, between the Debtors and a
syndicate of lenders, the net cash proceeds received from the
Knoxville Property Sale will be used to prepay borrowings under
the DIP Facility.
The Sale will allow the Debtors to monetize the Knoxville
Property, otherwise Tronox will gain no operational benefits and
generate no revenue, Mr. Adams asserts.
Judge Gropper will convene a hearing to consider the Debtors'
request on May 6, 2009. Objections, if any, must be filed by
April 29.
About Tronox Inc.
The company is the world's third largest maker of titanium dioxide
behind DuPont Co. and Saudi-owned National Titanium Dioxide Co.,
known a Cristal, according to Bloomberg.
Tronox has $1.6 billion in total assets, including $646.9 million
in current assets, as at September 30, 2008. The company has
$881.6 million in current debts and $355.9 million in total
noncurrent debts.
Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D.
N.Y. Case No. 09-10156). The case is before Hon. Allan L.
Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and
Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York,
represent the Debtors. The Debtors also tapped Togut, Segal &
Segal LLP as conflicts counsel; Rothschild Inc. as investment
bankers; Alvarez & Marsal North America LLC, as restructuring
consultants; and Kurtzman Carson Consultants serves as notice and
claims agent.
An official committee of unsecured creditors and an official
committee of equity security holders have been appointed in the
cases. The Creditors Committee has retained Paul, Weiss, Rifkind,
Wharton & Garrison LLP as counsel.
Until September 30, 2008, Tronox Inc. was publicly traded on the
New York Stock Exchange under the symbols TRX and TRX.B. Since
then, Tronox Inc. has traded on the Over the Counter Bulletin
Board under the symbols TROX.A.PK and TROX.B.PK. As of
December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares
of class A common stock and 22,889,431 outstanding shares of
class B common stock.
Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Tronox Inc. and its 14 affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
TRONOX INC: Panel Taps Kasowitz Benson as Conflicts Counsel
-----------------------------------------------------------
The Official Committee of Unsecured Creditors in Tronox Inc.'s
cases seeks authority from the U.S. Bankruptcy Court for the
Southern District of New York to employ Kasowitz, Benson, Torres &
Friedman LLP, as its conflicts counsel, nunc pro tunc to April 1,
2009.
The Committee believes that Kasowitz is qualified to serve as its
conflicts counsel given the firm's extensive experience, expertise
and knowledge in the field of bankruptcy, insolvency litigations,
debtors' and creditors rights and business reorganizations. In
particular, KBT &F has extensive experience investigating claims
of the Debtors against prepetition lenders, according to the
Committee.
As conflicts counsel, Kasowitz will:
(a) assist and advise the Committee in connection with the
investigation of claims of the Debtors against the
prepetition agent or the prepetition lenders to a Credit
Agreement, dated November 28, 2005, with Tronox;
(b) commence, if necessary, and to prosecute adversary
proceedings against the Potential Defendants, which will
include all aspects of discovery;
(c) attend meetings and negotiate with the representatives of
the Debtors or any party that is the subject of
investigation by the Committee, or against which the
Committee may commence an adversary proceeding;
(d) take all necessary action to protect and to preserve the
interests of the Committee and the Debtors' estates
including, (i) the prosecution of actions on their behalf,
and (ii) negotiations concerning all litigation in which
the Debtors are involved;
(e) prepare, generally on behalf of the Committee, all
necessary adversary complaints and related motions,
applications, answers, orders, reports and other papers in
support of positions taken by the Committee in any
adversary proceeding; and
(f) appear, as appropriate, before any court and the United
States Trustee and to protect the interests of the
Committee.
Professionals at Kasowitz will be paid in accordance with these
hourly rates:
Partners $600 - $1,000
Special Counsel $525 - $750
Associates $275 - $675
Staff Attorneys $235 - $390
Specifically, these individuals will receive these fees:
Professional Designation Hourly Rate
------------ ----------- -----------
David M. Friedman, Esq. Partner $950
David J. Mark, Esq. Special Counsel 750
Ross Shank, Esq. Associate 550
Nii-Amar Amamoo, Esq. Associate 335
Kasowitz will also receive reimbursements for necessary out-of-
pocket expenses that it may incur. The Committee maintains that
there will there will be no duplication of services performed by
Kasowitz with those of other professionals retained by the
Committee.
David J. Mark, Esq., special counsel at Kasowitz, Benson, Torres &
Friedman LLP, in New York, tells the Court that being a large firm
with national and international presence, Kasowitz may represent
or may have represented certain of the Debtors'
creditors, equity holders, related parties or other parties-in-
interest in matters unrelated to the Debtors' bankruptcy cases.
Accordingly, Kasowitz is a "disinterested person" as that term is
defined under Section 101(14) of the Bankruptcy Code, Mr. Mark
assures Judge Gropper.
The Court will convene a hearing on May 6, 2009, to consider the
Debtors' request. Objections, if any, must be filed by May 1.
About Tronox Inc.
The company is the world's third largest maker of titanium dioxide
behind DuPont Co. and Saudi-owned National Titanium Dioxide Co.,
known a Cristal, according to Bloomberg.
Tronox has $1.6 billion in total assets, including $646.9 million
in current assets, as at September 30, 2008. The company has
$881.6 million in current debts and $355.9 million in total
noncurrent debts.
Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D.
N.Y. Case No. 09-10156). The case is before Hon. Allan L.
Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and
Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York,
represent the Debtors. The Debtors also tapped Togut, Segal &
Segal LLP as conflicts counsel; Rothschild Inc. as investment
bankers; Alvarez & Marsal North America LLC, as restructuring
consultants; and Kurtzman Carson Consultants serves as notice and
claims agent.
An official committee of unsecured creditors and an official
committee of equity security holders have been appointed in the
cases. The Creditors Committee has retained Paul, Weiss, Rifkind,
Wharton & Garrison LLP as counsel.
Until September 30, 2008, Tronox Inc. was publicly traded on the
New York Stock Exchange under the symbols TRX and TRX.B. Since
then, Tronox Inc. has traded on the Over the Counter Bulletin
Board under the symbols TROX.A.PK and TROX.B.PK. As of
December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares
of class A common stock and 22,889,431 outstanding shares of
class B common stock.
Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Tronox Inc. and its 14 affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
TRONOX INC: Agrees to Shelf Lawsuit Against Gov't. and NJDEP
------------------------------------------------------------
In the interests of judicial economy and the preservation of their
estates, Tronox Inc. and its affiliates, the United States
Government and the New Jersey Department of Environmental
Protection entered into a settlement to resolve their differences
before continuing the litigation of the adversary proceeding the
Debtors filed against the Government and the NJ EPA before the
United States District Court for the District of New Jersey.
The complaint is based on alleged environmental damages at the
Federal Creosoting Superfund Site at Borough of Manville, in
Somerset County, New Jersey. The Debtors, in the complaint, asked
the New Jersey Court to declare that the Debtors do not owe the
Government's asserted $280 million response cost expenses.
In the settlement, the parties agree that:
(1) Tronox's motions to stay and dismiss the New Jersey Action
are withdrawn without prejudice.
(2) The New Jersey Action and the Adversary Proceeding will be
stayed so that the parties may pursue a resolution of the
claims, provided, however, that the Government may file an
amended complaint in the New Jersey Action asserting
claims under the CERCLA against other non-Debtor entities.
(3) After May 15, 2009, any party may restore the New Jersey
Action upon two weeks' written notice. After the two-week
period, the stay of the New Jersey Action will dissolve
without the need for further application by the parties,
or order of the New Jersey Court. If Tronox chooses to
renew its request to impose the Stay to the New Jersey
Action, no discovery or other action will take place until
the New Jersey Court decides.
(4) Should Tronox choose to renew its Motion to Stay, the New
Jersey Court shall decide on the Motion. In addition,
each party may submit a supplemental memorandum of law to
be filed within seven business days of the date that
Tronox renews its Motion.
(5) The stay of the New Jersey Action and the Adversary
Proceeding will dissolve without the need for further
application by any party or order by the New Jersey Court
when (i) the two-week Notice Period expires without Tronox
renewing its Motion, or (ii) if the New Jersey Court
issues a final order denying the Renewed Motion.
Upon dissolution of the stay of the New Jersey Action,
Tronox will answer the complaints filed in Action within
ten business days. When the stay of the Adversary
Proceeding is dissolved, the Government will file answers
or otherwise respond to the Complaint within ten business
days.
(6) The Debtors will not take any action in the Bankruptcy
Court with respect to the Government's claims concerning
the Site during the period that the New Jersey Action and
the Adversary Proceeding are stayed.
Judge Freda L. Wolfson of the New Jersey District Court approved
the Stipulation on April 13, 2009. The Bankruptcy Court approved
the Stipulation on April 21.
About Tronox Inc.
The company is the world's third largest maker of titanium dioxide
behind DuPont Co. and Saudi-owned National Titanium Dioxide Co.,
known a Cristal, according to Bloomberg.
Tronox has $1.6 billion in total assets, including $646.9 million
in current assets, as at September 30, 2008. The company has
$881.6 million in current debts and $355.9 million in total
noncurrent debts.
Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D.
N.Y. Case No. 09-10156). The case is before Hon. Allan L.
Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and
Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York,
represent the Debtors. The Debtors also tapped Togut, Segal &
Segal LLP as conflicts counsel; Rothschild Inc. as investment
bankers; Alvarez & Marsal North America LLC, as restructuring
consultants; and Kurtzman Carson Consultants serves as notice and
claims agent.
An official committee of unsecured creditors and an official
committee of equity security holders have been appointed in the
cases. The Creditors Committee has retained Paul, Weiss, Rifkind,
Wharton & Garrison LLP as counsel.
Until September 30, 2008, Tronox Inc. was publicly traded on the
New York Stock Exchange under the symbols TRX and TRX.B. Since
then, Tronox Inc. has traded on the Over the Counter Bulletin
Board under the symbols TROX.A.PK and TROX.B.PK. As of
December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares
of class A common stock and 22,889,431 outstanding shares of
class B common stock.
Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Tronox Inc. and its 14 affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
UCBH HOLDINGS: Poor Credit Quality Cues Fitch's Rating Cut to 'BB'
------------------------------------------------------------------
Persistent and severe deterioration in credit quality, which
continues to affect results and weigh on capital, has led Fitch
Ratings to downgrade the long-term Issuer Default Ratings of UCBH
Holdings, Inc. and its bank subsidiary United Commercial Bank to
'BB' and 'BB+', respectively. The ratings have also been placed
on Rating Watch Negative.
The downgrade reflects the magnitude of credit deterioration in
UCBH's loan book. While Fitch expected asset quality to weaken
given the company's exposure to commercial real estate,
particularly its construction portfolio in the distressed real
estate markets of California and Nevada, the level of
deterioration has escalated quickly and exceeded expectations.
The rating action also considers UCBH's weak tangible common
equity position relative to its significant exposure to commercial
real estate. Regulatory capital ratios remain above well-
capitalized standards, although this is largely due to the
significant amount of preferred securities in the capital
structure.
The Negative Rating Watch considers the likelihood of further
credit deterioration given the composition and concentrations in
UCBH's loan book. If the in-flow of non-problem credits fails to
show signs of slowing and losses continue to escalate, a further
downgrade of the company's ratings is likely, possibly multiple
notches. In addition to the stabilization of credit quality,
Fitch would anticipate UCBH to augment its tangible capital base
in light of anticipated credit challenges. To that end, China
Minsheng Bank has been in discussions with UCBH for some time
regarding a third-stage investment in the company, which should
aid capital levels. Upon the completion of this investment, China
Minsheng Bank would hold a 20% stake in UCBH. Currently, China
Minsheng Bank is a 9.9% owner.
Fitch has taken these rating actions:
UCBH Holdings, Inc.
-- Long-term IDR to downgraded 'BB' from 'BBB'; Rating Watch
Negative
-- Short-term IDR to downgraded 'B' from 'F2'; Rating Watch
Negative;
-- Preferred Stock downgraded to 'B+' from 'BBB-'; Rating Watch
Negative;
-- Individual downgraded to 'C/D' from 'B/C'; Rating Watch
Negative;
-- Support affirmed at '5';
-- Floor affirms at 'NF'.
United Commercial Bank
-- Long-term IDR downgraded to 'BB+' from 'BBB'; Rating Watch
Negative;
-- Long-term Deposits downgraded to 'BBB-' from 'BBB+'; Rating
Watch Negative;
-- Short-term IDR downgraded to 'B' from 'F2'; Rating Watch
Negative;
-- Short-term Deposits downgraded to 'F3' from 'F2'; Rating
Watch Negative;
-- Individual downgraded to 'C/D' from 'B/C'; Rating Watch
Negative;
-- Support affirmed at '5';
-- Floor affirms at 'NF'.
UCBH Trust Co.
UCBH Capital Trust I
UCBH Capital Trust II
UCBH Capital Trust III
UCBH Capital Trust IV
UCBH Capital Trust V
UCBH Holdings Statutory Trust I
UCBH Holdings Statutory Trust II
-- Trust Preferred Securities downgraded to 'B+' from 'BBB-';
Rating Watch Negative;
ULTRA STORES: Seeks Bieri & Ames as Legal Counsel
-------------------------------------------------
Ultra Stores Inc. and its debtor-affiliates ask the United States
Bankruptcy Court for the Southern District of New York for
permission to employ Bieri & Ames as their legal counsel.
The firm will negotiate in lease and other related documents on
behalf of the Debtors.
The firm's attorneys bill between $250 and $325 per hour for while
paralegals charge at $115 per hour. In addition, the firm will
paid (i) $3,250 per negotiated lease for new lease forms between
the landlord and the Debtors, (ii) $2,750 for new leases which can
be conformed to existing lease deals, and (iii) up to a total of
$5,000, for any other types of leases.
To the best of the Debtor's knowledge, the firm is a
"disinterested person" as defined in Section 101(14) of the United
States Bankruptcy Code.
About Ultra Stores, Inc.
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. Ultra Stores and its affiliates filed
for Chapter 11 bankruptcy protection on April 9, 2009 (Bankr. S.D.
N.Y. Case No. 09-11854). Andrew C. Gold, Esq., and Frederick E.
Schmidt, Esq., at Herrick, Feinstein LLP assists the Debtors in
their restructuring efforts. Diana G. Adams, U.S. Trustee for
Region 2, appointed five members to the Official Committee of
Unsecured Creditors. The Debtors listed $10 million to
$50 million in assets and $10 million to $50 million in debts.
ULTRA STORES: Wants Kurtzman Carson as Notice and Claims Agent
--------------------------------------------------------------
Ultra Stores, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York for
permission to employ Kurtzman Carson Consultants LLC as notice and
claims agent.
KCC will, among other things:
a) notify all potential creditors of the filing of the
Chapter 11 cases and the initial meeting of creditors;
b) prepare and serve required notices in the Chapter 11 cases;
and
c. maintain an official copy of the Debtors' schedules of
assets and liabilities and statement of financial affairs,
listing the Debtors known creditors and amounts owed
thereto.
In addition, KCC will assist the Debtors with, among other things:
(a) maintaining and updating the master mailing list of creditors;
(b) to the extent necessary, gathering data in conjunction with t
he preparation of the Debtors' schedules of assets and
liabilities and statements of financial affairs; (c) tracking and
administration of claims; and (d) performing other administrative
tasks as may be requested by the Debtors or the Clerk's Office.
Michael A. Frisberg, president of corporate restructuring services
of KCC, tells the Court that prior to the petition date, KCC
received a $15,000 retainer.
Mr. Frisberg assures the Court that KCC is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About Ultra Stores, Inc.
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.
Ultra Stores and its affiliates filed for Chapter 11 bankruptcy
protection on April 9, 2009 (Bankr. S.D. N.Y. Case No. 09-11854).
Andrew C. Gold, Esq., and Frederick E. Schmidt, Esq., at Herrick,
Feinstein LLP assists the Debtors in their restructuring efforts.
The Debtors listed $10 million to $50 million in assets and
$10 million to $50 million in debts.
ULTRA STORES: Wants Lease Decision Period Extended Until August 6
-----------------------------------------------------------------
Ultra Stores, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York to extend
until August 6, 2009, the time by which they must assume or reject
certain unexpired leases of nonresidential real property.
The Debtors relate that they are at the beginning stages of their
Chapter 11 cases and are in the process of drafting a consensual
Plan of Reorganization. Given the current state of the Plan, it
would be premature to decide whether any or all of the Debtors'
leased properties must be assumed or rejected. Additionally, the
Debtors' DIP Facility requires that they obtain an order of the
Court extending their time to assume or reject their leases to a
date that is at least 210 days from the petition date.
The Debtors relate that the extension sought is without prejudice
to the rights of any of the lessors.
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.
Ultra Stores and its affiliates filed for Chapter 11 bankruptcy
protection on April 9, 2009 (Bankr. S.D. N.Y. Case No. 09-11854).
Andrew C. Gold, Esq., and Frederick E. Schmidt, Esq., at Herrick,
Feinstein LLP assists the Debtors in their restructuring efforts.
The Debtors listed $10 million to $50 million in assets and
$10 million to $50 million in debts.
VALLEY HEALTH: S&P Gives Developing Outlook; Affirms 'C' Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook to
developing from negative on Valley Health System, California's
1993 certificates of participation and series 1996A hospital
revenue bonds. At the same time, Standard & Poor's affirmed its
'C' rating on VHS's bonds and COPs.
The rating affirmation continues to reflect VHS's bankruptcy
effective December 2007. A rating of 'D' is not warranted as VHS
remains current on its bond payments. Standard & Poor's revised
its rating outlook to developing from negative to reflect what S&P
consider an improved financial profile and management's
expectation that VHS could emerge from bankruptcy over the next
year although no firm date has been articulated.
Since the bankruptcy filing, VHS has taken many actions to improve
its performance including the sale of Moreno Valley Community
Hospital, a reduction in outstanding debt, closure of a nursing
home, changes to various contracts as well as various revenue
cycle and cost-containment initiatives. S&P consider management's
actions to date as both significant and encouraging, leading to a
meaningful reduction in the losses VHS is experiencing. However,
in S&P's view, the overall profile remains weak with limited
liquidity, monthly operating losses, and historical difficulties
recruiting medical staff, although management has recruited a new
orthopedic group and, as a result, management expects an increase
in surgical cases in the near future.
A developing outlook reflects the possibility that Standard &
Poor's could raise or lower its rating over the next 12-24 months.
On the positive side, S&P will raise the rating if VHS emerges
from bankruptcy and audited statements confirm overall financial
improvement.
"The potential for an upgrade depends on S&P's view of the
emerging financial profile, significant capital needs, and the
resolution of medical staff issues; however, S&P expects the
rating to remain deeply speculative over the foreseeable future,"
said Standard & Poor's credit analyst Martin Arrick. "Over a
longer period, S&P will consider whether VHS has dedicated
significant resources to its facilities to address what S&P view
as a high average age of plant and broader seismic compliance
issues," said Mr. Arrick.
If VHS fails to emerge from bankruptcy and in S&P's view its
overall financial profile remains weak, default is a possibility.
VANBECO LLC: Case Summary & 9 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Vanbeco, LLC
141 Carnavon PKWY
Nashville, TN 37205
Bankruptcy Case No.: 09-04692
Chapter 11 Petition Date: April 25, 2009
Court: United States Bankruptcy Court
Middle District of Tennessee (Nashville)
Debtor's Counsel: Steven L. Lefkovitz, Esq.
Law Offices Lefkovitz & Lefkovitz
618 Church St STE 410
Nashville, TN 37219
Tel: (615) 256-8300
Fax: (615) 250-4926
Email: Stevelefkovitz@aol.com
Total Assets: $2,088,700.00
Total Liabilities: $3,145,071.21
A full-text copy of the Debtor's petition, including its list of 9
largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/tnmb09-04692.pdf
The petition was signed by Karl Van Becelaere, chief manager of
the Company.
VERGE LIVING: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Verge Living Corporation
fka The Aquitania Corporation
fdba A. O. Bonanza Holding, LLC
71 S. Los Carneros
Goleta, CA 93117
Bankruptcy Case No.: 09-16295
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
District of Nevada (Las Vegas)
Judge: Bruce A. Markell
Debtor's Counsel: Robert M. Yaspan, Esq.
ryaspan@yaspanlaw.com
21700 Oxnard St., #1750
Woodland Hills, CA 91367
Tel: (818) 905-7711
Fax: (818) 501-7711
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Euroweb RE, Inc. real estate debt $10,600,000
468 North Camden
Drive, Suite 244
Beverley Hills, CA 90210
Dennis Rusk trade debt $800,000
Dennis Rusk LLC
c/o Law Offices of Richard
Vilkin
1286 Crimson Sage Avenue
Henderson, NV 89012
LM Construction trade debt $134,948
6166 S. Sandhill Road
Suite A
Las Vegas, NV 89120
Balhard Spahr trade debt $125,556
Darren Dunckel $700,000
Logical Engineering trade debt $61,500
MMT EJL & Assoc. trade debt $35,784
Schirmer Engineering trade debt $31,266
Haggai Ravid trade debt $30,000
Power Plus trade debt $27,282
TWG Consultants trade debt $24,301
DuPont Engineering trade debt $18,107
Sage Construction trade debt $17,310
Geotek trade debt $16,400
Baughman & Turner trade debt $13,213
American Fence trade debt $7,714
American Arbitration trade debt $7,355
Terra Contracting trade debt $5,174
ADT trade debt $4,461
Terra Contracting trade debt $5,174
The petition was signed by Darren Dunckel, chief executive
officer.
VML COMPANY: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: VML Company, LLC, a Delaware Corporation
dba Valley Manufacturing and Logistics Company, LLC
P.O. Box 13308
Memphis, TN 38113
Bankruptcy Case No.: 09-24507
Chapter 11 Petition Date: April 24, 2009
Court: United States Bankruptcy Court
Western District of Tennessee (Memphis)
Judge: George W. Emerson Jr.
Debtor's Counsel: Toni Campbell Parker, Esq.
P.O. Box 240666
Memphis, TN 38124-0666
Tel: (901) 483-1020
Email: tparker001@bellsouth.net
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/tnwb09-24507.pdf
The petition was signed by Jeff Breazeale, chief manager of the
Company.
WILMINGTON TRUST: Moody's Cuts Bank Financial Rating to 'C-'
------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Wilmington
Trust Corporation (long-term issuer rating to Baa3 from Baa1) and
its operating bank subsidiary, Wilmington Trust Company (bank
financial strength rating to C- from C; long-term deposits to Baa2
from A3). The short-term deposit rating of Prime-2 was affirmed.
The rating outlook is negative. This concludes the review for
possible downgrade initiated on March 12, 2009. Wilmington Trust
Corporation and its bank subsidiary are referred to hereafter as
"Wilmington."
Moody's downgrade and negative outlook reflect the rating agency's
view that Wilmington's capital position, both its regulatory
capital and tangible common equity, could come under pressure over
the next 12 to 18 months because of its large real estate lending
concentration, as well as its investments in bank trust preferred
securities. Although Moody's had previously incorporated this
concentration into Wilmington's ratings, its loss expectations for
CRE have increased sharply, especially for construction and land,
as indicated in Moody's Structured Finance Rating Methodology
dated February 5, 2009. In this methodology, Moody's states that
commercial property values declined sharply in 2008 and are
expected to continue falling over the next 12 to 24 months.
Wilmington's true CRE, excluding owner occupied, equals
approximately $3.3 billion, or over 4 times TCE, including hybrid
equity credit. Wilmington's land and development exposure is more
than one-third of this amount, which Moody's considers an elevated
level. Over the last five quarters, Wilmington's nonperforming
assets, including 90 days past due, have increased by almost three
times to $281 million, or 30% of TCE and reserves, at March 31,
2009. About half of Wilmington's nonperforming loans are
construction-related. The deterioration in Wilmington's portfolio
was especially sharp in the latter part of 2008. The rating
agency noted that Wilmington's asset quality performance has
benefited somewhat from its mid Atlantic footprint, which has not
experienced the same severity of real estate market deterioration
as many other areas of the country, and where unemployment has
been below the national average through 2008. However as the
credit cycle unfolds, Moody's expects further deterioration in
Wilmington's markets and its loan portfolio.
Another factor in the downgrade was Wilmington's bank preferred
investments, which were $160 million (amortized cost) as of
December 31, 2008, of which $103 million were trust preferred
CDOs. Moody's notes the correlation between CRE and bank trust
preferred CDOs, and expects the further deterioration in the
residential construction sector will result in continued write-
downs of Wilmington's CDO portfolio. Moody's analysis of the loss
content of this portfolio incorporates Moody's recent downgrade of
these securities. On March 27, 2009, Moody's Structured Finance
Group concluded its review of all bank and insurance trust
preferred CDOs at which time most of the super senior Aaa notes
were downgraded to A/Baa and most of the junior Aaa notes were
downgraded to below investment grade.
Wilmington's sound capital ratios support its current ratings.
Tier 1 was 9.4% as of March 31, 2009. This rating action
incorporates the flexibility Wilmington has in reducing its common
dividend again to support capital should elevated credit costs
threaten to weaken its internal capital generation.
The rating agency pointed out that in the first quarter the
company's capital ratios improved as a result of balance sheet
management and positive earnings. The company's liquidity profile
has also improved over the last two quarters because it reduced
its wholesale funding.
The rating action is consistent with Moody's announcement that it
is recalibrating some of the weights and relative importance
attached to certain rating factors within its current bank rating
methodologies. Capital adequacy, in particular, takes on
increasing importance in determining the bank financial strength
rating in the current environment.
Moody's last rating action was on March 12, 2009, when
Wilmington's ratings were placed on review for possible downgrade.
Wilmington Trust Corporation, which is headquartered in
Wilmington, Delaware, reported total assets of $11.5 billion as of
March 31, 2009.
Issuer: Wilmington Trust Company
Downgrades:
-- Bank Financial Strength Rating, Downgraded to C- from C
-- Senior Unsecured Deposit Rating, Downgraded to Baa2 from A3
-- Issuer Rating, Downgraded to Baa2 from A3
-- OSO Senior Unsecured OSO Rating, Downgraded to Baa2 from A3
Outlook Actions:
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Wilmington Trust Corporation
Downgrades:
-- Issuer Rating, Downgraded to Baa3 from Baa1
-- Multiple Seniority Shelf, Downgraded to a range of (P)Ba1 to
(P)Baa3 from a range of (P)Baa2 to (P)Baa1
-- Subordinate Regular Bond/Debenture, Downgraded to Ba1 from
Baa2
Outlook Actions:
-- Outlook, Changed To Negative From Rating Under Review
WINDSTREAM CORP: S&P Gives Negative Outlook; Affirms 'BB+' Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook on
Little Rock, Arkansas-based Windstream Corp. to negative from
stable. In addition, S&P affirmed all ratings on the company,
including the 'BB+' corporate credit rating. Total debt
outstanding as of Dec. 31, 2008 was about $5.4 billion.
"The outlook revision reflects Windstream's modestly weaker credit
protection measures, primarily as a result of losses in market
value of the company's pension plan assets," said Standard &
Poor's credit analyst Allyn Arden.
Total leverage of 3.5x is high for the current rating level, and
increased from 3.2x at year-end 2007. Given the secular decline
for rural local exchange carriers, S&P could lower the rating if
leverage does not return to the low-3x area over the next year.
The 'BB+' rating continues to reflect:
-- An aggressive shareholder-oriented financial policy with a
commitment to a substantial common dividend, which limits
potential debt reduction;
-- Leverage, which is somewhat high for the ratings;
-- Increasing competition from wireless substitution and cable
telephony, which has resulted in access line losses and
margin pressure; and
-- Modestly declining revenues from its mature local telephone
business. Tempering factors include:
(1) The company's position as the leading provider of local and
long-distance telecommunications services in less competitive
and geographically diverse secondary and tertiary markets;
(2) Growth from digital subscriber line (DSL) services;
(3) Still healthy EBITDA margins; and
(4) Solid free operating cash flow.
Windstream is an incumbent local exchange carrier providing voice
and data communication services to approximately 3 million access
lines in 16 states throughout the U.S.
YRC WORLDWIDE: S&P Changes CreditWatch on 'CCC' Rating to Negative
------------------------------------------------------------------
Standard & Poor's Ratings Services revised the implications of its
CreditWatch review on YRC Worldwide Inc. (CCC/Watch Neg/--) to
negative from positive.
The CreditWatch revision reflects weak conditions in the less-
than-truckload sector. "Despite YRC's ongoing integration of the
Yellow Transportation and Roadway networks and cost-saving
initiatives, its first-quarter financial results were weaker than
expected. Further, S&P expects declining tonnage and industry
overcapacity to continue to put pressure on earnings for the
duration of 2009," said Standard & Poor's credit analyst Anita
Ogbara. This raises concerns that the company may not be able to
meet its recently amended bank covenants. The company's success
in securing the amendments was the basis for S&P's revising the
CreditWatch implications on the ratings to positive from
developing on Feb. 17, 2009.
For the first quarter 2009, YRC's operating revenues were down 33%
versus the prior year and the company reported a loss of
$257 million. Tonnage (as measured by total tonnage per day) was
down 28% and 30% in YRC's Regional and National segments,
respectively. Revenue per hundredweight, or pricing, was down
substantially versus 2008. S&P expects tonnage and pricing to
continue to decline, albeit at a slower pace during 2009. These
developments increase risks of a covenant breach or inadequate
cushion under the amended minimum cumulative EBITDA covenant,
which takes effect in the second quarter of 2009.
YRC's senior credit facilities consist of a $950 million senior
revolving credit facility and a $150 million term loan.
Covenants, as amended in February, include these:
-- Minimum EBITDA of $45 million in the quarter ended June 30,
2009, and minimum cumulative EBITDA of $130 million and
$180 million for the quarters ending Sept. 30 and Dec. 31,
2009, respectively;
-- Maximum gross capital expenditures of $150 million in 2009
and $235 million in 2010; and
-- Minimum liquidity (defined as cash and cash equivalents,
revolver availability less letters-of-credit exposure, and
ABS availability) of $100 million at all times.
The maturity date of the senior credit facility remains Aug. 17,
2012, unless $50 million or more remains outstanding on the 8.5%
USF Freightways Corp. notes due 2010 as of March 1, 2010; or if
$50 million or more is outstanding on the 5% contingent
convertible notes due 2023 as of June 25, 2010. The ABS facility
will expire on Feb. 11, 2010, and permits financings of up to
$500 million based on borrowing base availability.
As of March 31, 2009, the company has unrestricted cash on balance
sheet of $248.5 million. The company continues to raise cash
through asset sales and sale and financing leaseback transactions.
S&P will review the company's earnings prospects for the remainder
of 2009 to judge the likelihood of a bank covenant breach and
prospects, if necessary, for further amendment of the covenants.
S&P could lower the rating if S&P believes that the company will
not be able to meet its covenant requirements or if liquidity
becomes further constrained.
ZOUNDS INC: Panel Asks Court to Deny Approval of $1MM DIP Loan
--------------------------------------------------------------
The Official Committee of Unsecured Creditors of Zounds, Inc.
objects to the entry of a final order authorizing the Debtor to
obtain up to $1,000,000 of delayed draw DIP financing from Michael
Stewart and Derwood, two of the lenders under the Debtor's Series
D Notes.
Specifically, the Creditors Committee makes these objections:
-- The budget provides for additional payments to the DIP
lenders of $205,000 through July 2009, yet the Debtor's
motion or the attached Term Sheet makes no mention of any
payment other than the $20,000 front end fee.
-- The Debtor's principal agreed with the Court that the
financing does not solve any of the Debtor's real problems
and it will be necessary to obtain much larger financing.
-- The motion gives away significant rights to the DIP lenders.
-- The Court's interim order provides that the Committee must
bring any actions against the DIP lenders by June 7. The
Committee must be allowed adequate time to conduct a proper
analysis and proposes that it be given until August 20,
2009, to challenge the liens of both the DIP lenders and the
pre-petition lenders.
-- The Carve-Out for Debtor's counsel of $50,000 is much too
low given the issues identified above and certainly given
what will be necessary to review any proposed plan.
Restricting the use of any of the Debtor's funds to conduct
a proper investigation is an unreasonable hindrance.
-- Nothing has been provided to indicate how the DIP loan will
be reapid. The Committee needs additional information and a
reasonable time to review that information in order to
properly assess whether the DIP loan is necessary, advisable
or whetehre it is just a means to validate security.
Accordingly, the Committee asks the Court to deny final approval
of the proposed DIP financing.
As reported in the Troubled Company Reporter on April 15, 2009,
Zounds Inc. asked the U.S. Bankruptcy Court for the District of
Arizona:
a) for authority to obtain up to $1,000,000 of delayed draw
debtor-in-possession financing and to borrow up to
$300,000, in the interim basis, from Michael Stewart and
Derwood Chase, two of the lenders under Series D Notes;
b) to approve the terms and conditions of the DIP loan
documents, and authorize the Debtor to execute and enter
into the DIP loan documents;
c) for authority to use the cash collateral; and
d) grant adequate protection to the prepetition lenders.
Until January 2009, the Debtor had not incurred significant
secured debt and had issued 2 series of convertible unsecured
notes to accredited investors through private placements,
including: (i) $3,685,000 aggregate principal amount of 10% Series
B Convertible Notes due 2009; and (ii)$11,937,870 aggregate
principal amount of 10% Series C Convertible Notes due 2009.
Interest on the convertible notes is payable at maturity.
In November 2008, certain additional holders of Series C
Convertible Notes received a security agreement from the Debtor,
purporting to secure an additional $525,000 aggregate principal of
notes under that series. From December 2008 through February
2009, the Debtor issued a series of 10% Secured Convertible Notes
to accredited investors through private placements in the
aggregate principal amount of $4,500,000. Interest on the
prepetition secured debt compounds quarterly and is payable at
maturity.
All the Debtor's obligations under the prepetition secured debt
are secured by liens on substantially all the Debtor's assets.
The Debtor also incurred, as of the petition date, approximately
$10,000,000 in unsecured debt, not including alleged lease
rejection damages arising from the Debtor's closure of several of
its leased retail locations.
Salient Terms of the DIP Facility
Borrower: Zounds Inc.
Lenders: Michael Stewart, Derwood Chase and other
affiliated entities that may be
designated.
Loan Amount: $1,000,000
Term: The DIP Facility terminates on the earliest
of: (i) 120 days after the petition date;
(ii) 30 days after the petition date if the
final DIP order is not entered in that
time; (iii) confirmation and effectiveness
of a Plan of Reorganization in this case;
and (iv) the occurrence of an event of
default.
Pricing: Interest will be computed and accrue
monthly on the outstanding principal amount
of all draws under the DIP Facility at a
rate of 12% per annum. All accrued
interest will be added to the principal
amount of the DIP facility. All
outstanding principal and accrued interest
will be due and payable on the termination
date. The Debtor must pay an initial fee
to the DIP lender of 2%, added to the
principal amount owing under the DIP
facility.
Collateral: All borrowings under the DIP loan will at
all times be secured by: (a) a perfected
first priority lien on all the Debtor's
prepetition and postpetition property not
already subject to valid, perfected and
non-avoidable liens; (b) perfected lien on
all the Debtor's pre-petition and post-
petition property, subject to the liens
permitted by the loan agreement; and (c)
perfected priority priming liens on all the
Debtor's property subject to valid,
perfected and non-avoidable liens. All
security interests and liens granted are
subject to the Carve Out.
Carve Out: The liens, security interests and
superpriority administrative expense claims
granted to the DIP lender would be subject
to a limited Carve Out.
Adequate Protection: In order to adequately protect the
prepetition lenders from the Debtor's use
of cash collateral and the granting of the
priming liens to the DIP lender, the Debtor
believes that the prepetition lenders
security interests in the Debtor's assets
are adequately protected by virtue of a
substantial equity cushion held by the
prepetition lenders.
The Debtor believes that the current outstanding balance under the
prepetition secured debt is approximately $5,100,000. At the same
time, the Debtor believes that the aggregate fair market value of
the Debtor's assets is approximately $13.5 million. This equates
to a very substantial equity cushion.
About Zounds Inc.
Headquartered in Phoenix, Arizona, Zounds, Inc. --
http://www.zoundshearing.com/-- offers a portfolio of hearing
aids and wireless devices. The company filed for Chapter 11
protection on March 30, 2009 (Bankr. D. Ariz. Case No. 09-06053).
Jordan A. Kroop, Esq., at Squire Sanders & Dempsey LLP, represents
the Debtor in its restructuring efforts. Carolyn J. Johnsen,
Esq., at Jennings, Strouss & Salmon, P.L.C., represents the
Official Committee of Unsecured Creditors as counsel. The Debtor
listed assets of $10 million to $50 million and debts of
$10 million to $50 million.
ZOUNDS INC: U.S. Trustee Appoints Five-Member Creditors Panel
-------------------------------------------------------------
Ilene J. Lashinsky, the United States Trustee for the District of
Arizona, appointed five creditors to serve on the Official
Committee of Unsecured Creditors in Zounds, Inc.'s Chapter 11
case.
The Creditors Committee members are:
a) Robert Clements
12700 Hillcrest Road, Suite 150
Dallas, TX 75230
b) Group 7 Design, Inc.
Attn: Luanne Perry
124 Grove Street, Suite 301
Franklin, MA 02038
c) JWT Specialized Communications, Inc.
c/o J. Walter Thompson USA Inc.
Attn: Nick Read
466 Lexington Avenue
New York, NY 10017
d) Simon Property Group, Inc.
Attn: Ronald Tucker
225 W. Washington Street
Indianapolis, IN 46204
e) Steve Walczak
5 Sunnyside Road
Greenville, DE 19807
About Zounds Inc.
Headquartered in Phoenix, Arizona, Zounds, Inc. --
http://www.zoundshearing.com/-- offers a portfolio of hearing
aids and wireless devices. The company filed for Chapter 11
protection on March 30, 2009 (Bankr. D. Ariz. Case No. 09-06053).
Jordan A. Kroop, Esq., at Squire Sanders & Dempsey LLP, represents
the Debtor in its restructuring efforts. Carolyn J. Johnsen,
Esq., at Jennings, Strouss & Salmon, P.L.C., represents the
Official Committee of Unsecured Creditors as counsel. The Debtor
listed assets of $10 million to $50 million and debts of
$10 million to $50 million.
* Federal Officials Urge Large Banks to Boost Capital Reserves
--------------------------------------------------------------
Damian Paletta, David Enrich, and Deborah Solomon at The Wall
Street Journal report that federal officials are urging several of
the country's largest banks -- who are among the 19 institutions
that were subjected to federal "stress tests" -- to boost capital
reserves.
According to WSJ, analysts believe that the banks likely include
regional banks with large exposures to commercial real estate in
the Midwest and Southeast. Three people familiar with the matter
said that at least three banks are in this position, states WSJ.
WSJ relates that government officials believe that most banks in
need can boost their capital reserves without taking money from
the government bailout fund. WSJ notes that the banks could raise
funds from private investors or converting the government's
existing investments in banks into a new type of equity to better
cover banks in case of future losses. According to the report,
the U.S. could own large chunks of banks, raising the specter of
something akin to nationalization. Any such move would be
temporary, WSJ says, citing federal officials. The report states
that some banks could require a cash infusion from the Treasury.
WSJ reports that the government said in February that about 19
bank holding companies with more than $100 billion of assets would
have to undergo a stress test, which analyzed potential losses
from residential mortgages to complex securities products and was
aimed at calming fears about the solvency of the banking system.
More than 150 federal regulators conducted the exams, says WSJ.
Citing a Federal Reserve official, WSJ states that regulators want
banks to be able to keep an additional "buffer" of capital above
the minimum standards.
The Federal Reserve, according to WSJ, released on Friday the
methodology for the tests, but didn't provide many of the
specifics that bank investors and analysts had been seeking. The
test reveals that all 19 banks are all believed to be "well
capitalized" by current standards, WSJ states. According to the
report, the tests pushed banks to determine what their conditions
would look like if the economy worsened.
WSJ says that banks can challenge the findings before the
government makes the results public by May 4. White House
spokesperson Robert Gibbs said that he believes that the banks
themselves would release specific results, WSJ reports.
* Large Companies With Insolvent Balance Sheets
-----------------------------------------------
Total
Share- Total
Total holders' Working
Assets Equity Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------ -------- -------
ABSOLUTE SOFTWRE ABT CN 107 (7) 24
AFC ENTERPRISES AFCE US 132 (39) (4)
AMR CORP AMR US 24,518 (3,109) (3,546)
ARBITRON INC ARB US 190 (3) (29)
AUTOZONE INC AZO US 5,235 (187) 112
BARE ESCENTUALS BARE US 300 (0) 146
BLOUNT INTL BLT US 500 (44) 128
BOEING CO BA US 55,340 (509) (2,161)
BOEING CO BAB BB 55,340 (509) (2,161)
BOEING CO-CED BA AR 55,340 (509) (2,161)
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 LNG US 2,922 (354) 350
CHENIERE ENERGY CQP US 1,979 (352) 139
CHOICE HOTELS CHH US 328 (138) (15)
CLOROX CO CLX US 4,398 (403) (389)
COCA-COLA ENTER CCE US 15,589 (31) (491)
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)
EINSTEIN NOAH RE BAGL US 173 (14) (51)
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 BB 222,977 (18,651) (13,313)
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 1,329 (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 1,492 (289) 996
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 136 (5) 34
PALM INC PALM US 656 (84) 31
PDL BIOPHARMA IN PDLI US 191 (353) 149
PRIMEDIA INC PRM US 270 (124) (3)
QWEST COMMUNICAT Q US 20,182 (1,449) (883)
REGAL ENTERTAI-A RGC US 2,600 (242) (93)
RENAISSANCE LEA RLRN US 53 (3) (12)
REVLON INC-A REV US 813 (1,113) 105
SALLY BEAUTY HOL SBH US 1,489 (720) 365
SEALY CORP ZZ US 889 (162) 34
SEMGROUP ENERGY SGLP US 314 (130) (432)
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 215 (144) 174
UAL CORP UAUA US 19,461 (2,465) (2,420)
UNITED RENTALS URI US 4,191 (29) 276
US AIRWAYS GROUP LCC US 7,421 (596) (707)
VENOCO INC VQ US 864 (135) 3
VERIFONE HOLDING PAY US 840 (38) 308
VERIFONE HOLDING VF2 GR 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)
WR GRACE & CO GRA US 3,727 (375) 898
*********
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
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related conferences are encouraged. Send announcements to
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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.
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re-mailing and photocopying) is strictly prohibited without prior
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*** End of Transmission ***