/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090508.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, May 8, 2009, Vol. 13, No. 126 Headlines 318-322 WASHINGTON: Voluntary Chapter 11 Case Summary ABITIBIBOWATER INC: Canadian Units to Suspended Pension Payments ABITIBIBOWATER INC: Monitor Files Report on Bankruptcy, Liquidity ABITIBIBOWATER INC: Posts $2.2 Billion Net Loss for Year 2008 ABITIBIBOWATER INC: $100MM Bank of Montreal DIP Loan Approved ABRAMS ENTERPRIZES: Voluntary Chapter 11 Case Summary AGT CRUNCH: Judge Gerber Questions Terms of Insider Sale AGT CRUNCH: Case Summary & 30 Largest Unsecured Creditors ALERIS INT'L: Moelis Bills $3.9MM, Weil Seeks $1.6MM for Work ALERIS INT'L: Proposes September 15 as Claims Bar Date ALERIS INT'L: Sec. 341 Creditors Meeting Adjourned Sine Die ALERIS INT'L: Seeks Plan Extension, Waits for Markets to Stabilize ALFREDO RODRIGUEZ: Case Summary & 20 Largest Unsecured Creditors ALOHA AIRLINES: To Pay $5.5-Mil. in Damages for Pension Plans AMERICAN COMMUNITY: Wants More Time to File Schedules & Statements AMERICAN ENERGY: Moore & Associates Raises Going Concern Doubt AMERICAN INT'L: Posts $4.35 Billion First Quarter Net Loss AMERICAN INT'L: AIG-FP Concludes Commodity Index Business Sale ASAP STORAGE: Case Summary & 20 Largest Unsecured Creditors BACHRACH ACQUISITION: Sends 40 Clothing Stores to Chapter 11 BACHRACH ACQUISITION: Case Summary & 20 Largest Unsec. Creditors BELLUS HEALTH: Has $55MM Shareholders Deficit, Going Concern Doubt BERNARD L MADOFF: Irving Picard Subpoenas UBS AG on Accounts BERNARD L MADOFF: Picard Wants to Recoup $558MM From Ezra Merkin BORA BORA: Case Summary & 20 Largest Unsecured Creditors BRUNO'S SUPERMARKETS: Wins Nod to Sell Stores to C&S for $45.8MM CAPITAL CORP: Receives Default Notice on Bank Takeover CARITAS HEALTHCARE: Saint Vincents Discloses Pursuit of Claims CDX GAS: Files Disclosure Statement and Reorganizational Plan CHARTER COMMUNICATIONS: Discloses Interest in SFC Transmissions CHARTER COMMUNICATIONS: P. Allen, et al., Disclose Equity Stake CHARTER COMMUNICATIONS: Plan Confirmation Hearing on July 20 CHARTER COMMUNICATIONS: Pacific Microwave Unit Files Schedules CHARTER COMMUNICATIONS: Says JPMorgan Complaint Central to Plan CHRISTOPHER R BIELSER: Case Summary & 13 Largest Unsec. Creditors CHRYSLER LLC: Proposes to Use Prepetition Cash Collateral CHRYSLER LLC: Has Court Nod for $1.4 Billion Interim Loan CHRYSLER LLC: Michigan Says Fiat Sale Does Not Protect Workers CHRYSLER LLC: NCRO Wants Official Retiree Committee CHRYSLER LLC: Application to Hire Schulte As Corporate Counsel CHRYSLER LLC: Proposes Greenhill as Investment Banker CHRYSLER LLC: Expects to Lose $4.7 Billion This Year CHRYSLER LLC: Financial Unit Proceeds With Winding Down Operations CHRYSLER LLC: Togut Segal Reveals Delphi Conflict CHRYSLER LLC: Bankruptcy Forces Cummins to Close Columbus Plant CHRYSLER LLC: "No Active Plan" to Drop 3,200 Dealers in U.S. CHRYSLER LLC: To Protect Suppliers Holding Production Tooling CHRYSLER LLC: Court Grants Admin. Status on Postpetition Supplies CHRYSLER LLC: May Maintain Existing Bank Accounts CHRYSLER LLC: Court Waives Sec. 345 Deposit Rules on Interim Basis CHRYSLER LLC: Court Enforces Automatic Stay on All Creditors CHRYSLER LLC: 1-800 to Ramp Up Stock of Replacement Cooling Parts CLARK'S LTD: Case Summary & 15 Largest Unsecured Creditors COHR HOLDINGS: S&P Downgrades To 'CCC+' on Liquidity Profile CONSTELLATION BRANDS: Fitch Affirms 'BB-' Issuer Default Rating COYOTES HOCKEY: NHL May Ask Court to Dismiss Chapter 11 Filing CRUCIBLE MATERIALS: Files Chapter 11 Due to Auto Downturn CUMMINS INC: Chrysler Bankruptcy Forces Closure of Columbus Plant DELPHI CORP: Conflicts Counsel Togut Segal Represents Chrysler DELPHI CORP: Court Okays Bidding Protocol for Brakes Business DELPHI CORP: EU Commission Clears Sale of Steering Biz to GM DELPHI CORP: Former Execs Seek $6-Mil. More in D&O Defense Costs DELPHI CORP: Modifies Accommodation Pact, to File Plan May 21 DELPHI CORP: Schumer Calls for GM's Quick Reclamation of Plants DELPHI CORP: Tries to Keep Exclusivity, Control of Bankruptcy Case DR HORTON: Fitch Assigns 'BB' Rating on $400 Mil. Senior Notes EUROFRESH INC: U.S. Trustee Appoints 5-Member Creditors Committee EUROFRESH INC: Amends List of Creditors Holding Unsecured Claims EVA-TONE INC: Expects to File Plan "Within Several Business Days" GARY RICHARDS: Case Summary & 20 Largest Unsecured Creditors GENERAL GROWTH: Replaces Pershing Square as DIP Lender GENERAL GROWTH: Amicus Brief re Asset Isolation Concept Filed GENERAL GROWTH: Lenders Balk at Bid to Use Cash Collateral GENERAL GROWTH: Parties Dispute Bid to Use Cash Management System GENERAL GROWTH: U.S. Trustee Appoints 2 More Members to Committee GENERAL MOTORS: Called for Quick Reclamation of Delphi Plants GENERAL MOTORS: EU Commission Clears Sale of Delphi Steering Biz GENERAL MOTORS: Posts $6.0 Billion First Quarter Net Loss HAYES LEMMERZ: Rating Cut By S&P To 'CC'; Outlook Negative HCA INC: Fitch Affirms Issuer Default Rating at 'B' HUMBOLDT CREAMERY: Taps Burr Pilger as Restructuring Consultants HUMBOLDT CREAMERY: Wants Schedules Filing Extended until May 27 INTEGRA TELECOM: Moody's Cuts Default Probability Rating to 'Ca' INTERMET CORP: Sets Up Auction in Conjunction With Plan ISOLAGEN INC: Gets Bridge Financing to Let It Seek DIP Financing JAMIE VERGARA: May Sell Cookesville Tenn. Property for $292,500 JONATHAN R. COOPER: Voluntary Chapter 11 Case Summary JOURNAL REGISTER: Moves to Solicit Votes for Amended Joint Plan KA & KM DEVELOPMENT: Case Summary & 20 Largest Unsecured Creditors MAGNA ENTERTAINMENT: Former Owner to Help Keep Pimlico Afloat MEDICO LABS INC: Voluntary Chapter 11 Case Summary MICHELE M. CONTRERAS: Voluntary Chapter 11 Case Summary MIDWAY GAMES: Panel Objects to AHS Appeal on Cash Collateral Order MUELLER WATER: S&P Lowers Ratings to 'B' on Weak Results NALCO COMPANY: Fitch Rates $500 Mil. Unsecured Notes at 'BB/RR1' NEW YORK TIMES: Reaches Tentative Pact With Union at Boston Globe NORWOOD PROMOTIONAL: Files Ch. 11 to Sell Assets to Aurora Capital OBERLIN PLAZA ONE: Files for Chapter 11 Bankruptcy Protection OPUS SOUTH: Proposes to Hire Landis Rath as Conflicts Counsel OPUS SOUTH: Wants to Hire Greenberg Traurig as Bankruptcy Counsel PAMELA L FEIT: Case Summary & 20 Largest Unsecured Creditors PCG INC: Case Summary & 11 Largest Unsecured Creditors PILGRIM'S PRIDE: Inks Pact to Sell Farmerville Chicken Complex PLIANT CORP: Reports Operating Loss in First Quarter 2009 POLAROID CORP: Seeks Immediate Sale of Obsolete Equipment to CRG POLAROID CORP: Hilco and Gordon Brothers Close Asset Sale QIMONDA NA: Wins Court Approval of $60-Million DIP Loan RATHGIBSON INC: Annual Report Late, May Get Going Concern Doubt RHM INDUSTRIAL: Involuntary Chapter 11 Case Summary SAINT VINCENTS: Pursuing Claims Against Caritas Health Care SALEM GLEN: Case Summary & 24 Largest Unsecured Creditors SEED FAITH: Case Summary & 15 Largest Unsecured Creditors SHINGLE SPRINGS: Moody's Lowers Corporate Rating to Caa1 SILICON GRAPHICS: Can Hire AlixPartners as Restructuring Advisors SILICON GRAPHICS: Can Hire Davis Polk as Special Corporate Counsel SILICON GRAPHICS: Court Okays Ropes & Gray LLP as Bankr. Counsel SILICON GRAPHICS: Court OKs Houlihan Lokey as Financial Advisor SIX FLAGS: Offers Debt for Equity Exchange; Ch. 11 An Alternative SKY INN HOTEL: Files Chapter 11 Petition in Austin SMURFIT-STONE: Seeks August 24 Extension of Lease Decision Period SMURFIT-STONE: Seeks OK to Hire Studley as Real Estate Broker SMURFIT-STONE: Settles U.S. Trustee Objection on Incentive Payment SMURFIT-STONE: Sidley Austin Bills $1.6MM for Two Months' Work SMURFIT-STONE: To Receive $200,000 in Southeast Fuels Settlement SMURFIT-STONE: U.S. Bank Seeks Allowance of $17.5MM Admin. Claim SOURCE INTERLINK: Chapter 11 Case Could Take Only 1 Month SPARTAN PLUMBING: Case Summary & 20 Largest Unsecured Creditors STEBAR LLC: Case Summary & 20 Largest Unsecured Creditors STOCK BUILDING: Files Ch. 11 to Sell Majority Stake to Gores SYNTAX-BRILLIAN: Court Approves Sale of Olevia Brand to Emerson SYNTAX-BRILLIAN: Parties Still Negotiating Confirmation Order T. DARDAR PROPERTIES: Case Summary & 19 Largest Unsec. Creditors THEMETECH CORPORATION: Voluntary Chapter 11 Case Summary THORNBURG INDUSTRIES: Taps Houlihan Lokey as Investment Banker TITLEMAX HOLDINGS: Court OKs Temporary Access of Cash Collateral TITLEMAX HOLDINGS: U.S. Trustee Picks 7-Member Creditors Committee TODAY'S WAY: Case Summary & 3 Largest Unsecured Creditors VP PHASE IV: Case Summary & 12 Largest Unsecured Creditors WENDY B. BALDENSPERGER: Voluntary Chapter 11 Case Summary WEYERHAEUSER CO: Loses Investment Grade on Industry Conditions WHITE ENERGY: Case Summary & 20 Largest Unsecured Creditors WILLIAM J. BIELSER: Case Summary & 4 Largest Unsecured Creditors WINDY CITY GRILL: Case Summary & 8 Largest Unsecured Creditors WOLVERINE TUBE: Edward Howard Advised on Bond Debt Refinancing WOLVERINE TUBE: Successfully Exchanged Notes Due April 2009 WR GRACE: Asks Court to Approve Settlement of ERISA Litigation WR GRACE: Discloses Six Environmental Claims Settlement WR GRACE: Judge Molloy Dismisses Criminal Case vs. Two Ex-Officers WR GRACE: Proposes New Plan-Related Deposition Timeline WR GRACE: Seeks Permission to Continue Deloitte Engagement WR GRACE: Seeks to Settle Income Tax Dispute With IRS WR GRACE: Anderson Brings Claims Dispute to District Court ZARNOCH HYSON: Case Summary & 20 Largest Unsecured Creditors * 6th Circuit Permits Cramming Down Mobile Home Debt * Claim Buyer May Challenge Discharge of Debt * Trustees Not Automatic for Ponzi Scheme Bankruptcies * Airlines Must Rebound in Revenues & Credit Market Access * Big US Banks Face More In Losses Despite Q1 Gains, S&P Says * Federal Reserve Tells 7 Banks to Boost Capital Levels by $65BB * Stress Test Results Say 10 Banks Must Raise $75BB in Capital * BOOK REVIEW: Megamergers - Corporate America's Billion-Dollar Takeovers ********* 318-322 WASHINGTON: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: 318-322 Washington Mall, L.P. 318-322 Washington Street Mall Cape May, NJ 080204 Bankruptcy Case No.: 09-21674 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of New Jersey (Camden) Debtor's Counsel: Dimitri L. Karapelou, Esq. Ciardi Ciardi & Astin, P.C. One Commerce Square Suite 1930 2005 Market Street Philadelphia, PA 19103 Tel: (215) 557-3550 Fax: (215) 557-3551 Email: dkarapelou@ciardilaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of 20 largest unsecured creditors when it filed its petition. The petition was signed by Marybeth Stumpo. ABITIBIBOWATER INC: Canadian Units to Suspended Pension Payments ---------------------------------------------------------------- Abitibi-Consolidated Inc. and various Canadian subsidiaries seek the authority of the Quebec Superior Court Commercial Division in Canada to suspend remittance of past service special payments to these pension plans they maintained for the benefit of their Canadian employees: (1) About 20 registered pension plans maintained by Abitibi- Consolidated Inc., and its subsidiaries; and (2) About 13 registered pension plans maintained by Bowater Newsprint South LLC and their subsidiaries. The CCAA Applicants also seek the Canadian Court's permission to suspend the Pension Remittances of all current and former employees with respect to their Pension Plans. Some of the Abitibi Canadian Pension Plans and the Bowater Canadian Pension Plans provide defined benefits, some provide defined contributions, and some operate on a hybrid or defined benefit and defined contribution basis. The Pension Plans are registered with the Canada Revenue Agency and the provincial pension regulator, and are funded by monthly contributions from the Abitibi and Bowater Groups and in most cases, also by contributions from Pension Plan members. As of the fiscal year ended December 31, 2008, the aggregate contributions to the Pension Plans and the aggregate solvency deficit of the Abitibi Group and the Bowater Group were: As of December 31, 2008 ----------------------------------- Aggregate Aggregate Pension Plan Contributions Solvency Deficit ------------ ---------------- ----------------- Abitibi Grp Pension Plan $148,248,065 $964,000,000 Bowater Grp Pension Plan $66,431,915 $419,000,000 Based on recent estimates, for the fiscal year ended December 31, 2009, the aggregate contribution of the Abitibi Group is expected to be $131,000,000, including $102,400,000 in actual and estimated special payments. Meanwhile, the Bowater Group's contribution is estimated to reach $72,000,000, including actual and estimated special payments totaling $56,000,000. The CCAA Applicants maintain that all special payments with respect to past service to their Pension Plans must be suspended. Nevertheless, they propose to continue to make current service contributions to the Pension Plans. The CCAA Applicants also intend to make current contributions to all defined contribution plans. The CCAA Applicants explain that they have substantial operations with significant working capital flows, which are not predictable with precision. Those cash flow forecasts include advances to the CCAA Applicants under the DIP Facility and the Securitization Program to supplement current liquidity. However, those Advances do not take into consideration any Special Payments to the Pension Plans. Full-text copies of the Cash Flow Forecasts for the Abitibi and Bowater Groups covering the 13-week period from April 26, 2009 to July 19, 2009, are available for free at: http://bankrupt.com/misc/CCAA_ACICashFlowForecast.pdf http://bankrupt.com/misc/CCAA_BICashFlowForecast.pdf Given their limited anticipated liquidity and the margin of error inherent to any forecast of receipts and disbursements for an enterprise of their size and scope, the CCAA Applicants believe that they are not in a position to make the special payments without putting their operations at risk. "To make the special payments to their Pension Plans with respect to past service contributions would imperil the restructuring process," Stikeman Elliot LLP, in Montreal Quebec, adds on behalf of the CCAA Applicants. Even if the CCAA Applicants has authority from the Canadian Court to make special payments to their Pension Plans, "the amount of required special payments far exceeds the available liquidity of the [CCAA Applicants], and a requirement to pay these could thus lead rapidly to a total cessation of activities," according to Stikeman Elliot. The CCAA Applicants note that in bankruptcy context, the special payments would be treated as unsecured obligations. As a result, in the unlikely event of a failed CCAA proceeding and a subsequent bankruptcy, the Special Payments could be challenged by the CCAA Applicants as being fraudulent preferences. Moreover, there are possibilities of alleged liability of the CCAA Applicants' directors and officers arising out of the suspension of the Special Payments. In this regard, the CCAA Applicants ask the Canadian Court to declare that no director or officer will incur any obligation as a result of the failure by the CCAA Applicants to make any contribution to the Pension Plans other than current cost contribution obligations. The CCAA Applicants maintain that their request will ensure that their directors and officers remain in office throughout the duration of their CCAA Proceedings. About AbitibiBowater Inc. Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/-- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 27 pulp and paper facilities and 34 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has more third-party certified sustainable forest land than any other company in the world. Out-of-Court Restructuring Effort AbitibiBowater tried to renegotiate about $2.9 billion in the debts of its Canadian unit, Abitibi-Consolidated, and $1.8 billion of its U.S. unit, Bowater Inc. On March 13, AbitibiBowater and Abitibi-Consolidated commenced a recapitalization proposal which was intended to reduce the Company's net debt by roughly $2.4 billion, lower its annual interest expense by roughly $162 million and raise roughly $350 million through the issuance of new notes of ACI and common stock and warrants of the Company. On February 9, Bowater Finance II LLC, an indirect wholly owned subsidiary of AbitibiBowater, commenced private offers with respect to six series of outstanding debt securities issued by either Bowater Incorporated or Bowater Canada Finance Corporation, a wholly owned subsidiary of Bowater, to exchange the old notes for new notes. BowFin also intended for a concurrent private offering of new 15.5% First Lien Notes due November 15, 2011, to holders of Bowater Notes who tender notes in the exchange offers. The Company moved the exchange offer deadlines several times after failing to garner enough support from bondholders. It ultimately abandoned the exchange offer on March 31. Bankruptcy Filing The Company and several affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr. D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides over the case. The Company and its Canadian affiliates commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Quebec Superior Court Commercial Division the next day. Alex F. Morrison at Ernst & Young, Inc., was appointed CCAA monitor. Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serves as the Debtors' co-counsel, while Troutman Sanders LLP in New York, serves as the Debtors' conflicts Counsel in the Chapter 11 proceedings. The Debtors' financial advisors are Advisory Services LP, and their noticing and claims agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario. Abitibi-Consolidated Inc. and various Canadian subsidiaries filed for protection under Chapter 15 of the U.S. Bankruptcy Code on April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, represent the Chapter 15 Debtors. As of September 30, 2008, the Company had $9,937,000,000 in total assets and $8,783,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes Abitibibowater Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings and parallel proceedings under the Companies' Creditors Arrangement Act in Canada undertaken by Abitibibowater Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ABITIBIBOWATER INC: Monitor Files Report on Bankruptcy, Liquidity ----------------------------------------------------------------- Ernst & Young, Inc., as monitor in the proceedings commenced by Abitibi-Consolidated Inc., AbitibiBowater Canada Inc., Bowater Canadian Holdings Incorporated, Bowater Canadian Forest Products Inc., and certain of their affiliates under Canada's Companies' Creditors Arrangement Act, filed: -- a second status report dated April 21, 2009, to apprise the Quebec Superior Court Commercial Division with information on the Chapter 11 and Chapter 15 cases of the Debtors in the U.S. Bankruptcy Court for the District of Delaware. -- a third status report dated April 21, 2009, to apprise the Quebec Superior Court Commercial Division with updates regarding the current liquidity and cash flow forecasts of the CCAA Applicants. 2nd Status Report Alex Morrison, senior vice president of Ernst & Young, reported that on April 17, 2009, the Bankruptcy Court entered orders granting certain motions of the Debtors on final and interim bases. Specifically, the First Day Orders in the Chapter 11 cases authorized the Debtors to: -- continue to use their existing consolidated cash management systems and bank accounts; -- continue selling accounts receivable and related rights pursuant to the amended Securitization Program; -- pay employee obligations including prepetition wages, salaries and other compensation, reimbursable employee expenses and employee medical and similar benefits; -- pay prepetition amounts owing to certain critical vendors and administrative c1aimholders; -- pay prepetition claims of shippers, warehousemen and other lien claimants; -- pay prepetition customer and broker obligations; -- prohibit utility service providers from discontinuing or altering service to the Debtors; -- pay prepetition sales, use, franchise and property taxes; -- tap postpetition financing, use cash collateral and provide super priority administrative expense status, with respect to the DIP Financing Agreement with Fairfax Financial Holdings Limited as the initial lender; -- continue prepetition insurance coverage and maintain postpetition insurance premiums financing arrangements; -- retain Epiq Bankruptcy Solutions LLC, as notice, claims and balloting agent to the Debtors; and -- directing the joint administration of the Debtors' Chapter 11 cases. Mr. Morrison confirmed that the Debtors' DIP Agreement with Fairfax was fully executed on April 21, 2009. He further disclosed that the Bankruptcy Court recognized the CCAA proceedings as "foreign main proceedings," under Chapter 15 of the U.S. Bankruptcy Code. A full-text copy of the April 21 E&Y Report is available for free at http://bankrupt.com/misc/ABH_2ndE&YReport.pdf 3rd Status Report The Monitor related that based on cash flow forecast covering the 13-week period from April 26, 2009 to July 19, 2009: * the Abitibi Group anticipates having a positive cash balance of as low as $28.1 million; and * the Bowater Debtors' net cash position is forecast to be $17.7 million, assuming no past service pension contributions are made. The Monitor noted that the Abitibi Group's aggregate past service pension plan funding for its defined benefit pension plans is approximately $8.5 million per month, or $102.4 million per annum. Similarly, BCFPI's aggregate past service pension plan funding for its defined benefit pension plan is approximately $4.7 million per month or $56.9 million per annum. The Monitor believes that ACI and BCFPI do not have sufficient liquidity to fund the aggregate past service pension contributions and therefore, the payments should be suspended during the Stay Period. To address their financing needs during the CCAA Proceedings, the Abitibi Group and Donohue Corporation have entered into a Letter Loan Agreement with Bank of Montreal as lender and Investissement Quebec as guarantor or sponsor, the Monitor reported. The debtor-in-possession financing to be provided is to be guaranteed by certain of the Abitibi Group's wholly owned subsidiaries. The Bank of Montreal will essentially provide a senior secured superpriority DIP credit facility of up to $100 million to the Borrowers, provided that the aggregate amount of funds that may be made available to Donohue Corp. does not exceed $10 million. The Borrowers will be required to maintain, at all times, a minimum availability of $12.5 million under the DIP Facility. Hence, the net incremental liquidity provided by the ACI DIP Facility is projected to be $87.5 million, the Monitor said. The Monitor acknowledged that the Abitibi Group's ability to maintain its operations is fundamental to preserving the value of the collateral pledged to the secured lenders, as well as for preserving value for its other stakeholders, including employees and unsecured creditors. Accordingly, the Monitor recommends that the Abitibi DIP Financing be approved to allow the Abitibi Group to stabilize its operations and to ensure that it has adequate cash reserves to fund its operating disbursements and payroll costs. In a supplemental report dated April 30, 2009, Ernst & Young Senior Vice President Alex Morrison related to the Canadian Court that a Waiver Agreement has been provided by Citibank, N.A., London Branch, as operating agent to the Amended and Restated Receivables Purchase Agreement dated as of January 31, 2008, with Abitibi-Consolidated Inc., and Abitibi Consolidated Sales Corporation, in their capacity as subservicers and originators. Under the RPA, ASCS must deliver to the Citibank a written request for the release of the funds in lockboxes for the purpose of financing daily operating expenses which are then due and payable. Pursuant to the Waiver Agreement, dated April 27, 2009, ACSC will no longer be required to deliver the Expense Report for the release of the Funds, if either: (a) the ratio of amounts borrowed under the RPA compared to the gross, unadjusted, pool of accounts receivable is greater than 40%; or (b) the ratio of amounts borrowed under the RPA compared to the gross, unadjusted, pool of accounts receivable, excluding certain ineligible receivables, is greater than 78%. The proposed revised calculations set forth in the Waiver, Mr. Morrison avers, will not have a material impact on the Abitibi Group's liquidity. Mr. Morrison related that the Abitibi Group participates in the Securitization Program to help fund its working capital requirements as well as that of the Donohue Group. As a result of the Waiver, funds from the Securitization Program will flow automatically without the requirement for reporting with respect to the Abitibi Group's disbursements, thereby freeing up cash reserves for use in operations. Accordingly, the Monitor approves the Waiver. In order to be effective, the Waiver must also be approved by the Canadian Court. Full-text copies of the April 29 and April 30 Monitor Reports are available for free at: http://bankrupt.com/misc/ABH_3rdE&YReport.pdf http://bankrupt.com/misc/ABH_Supp3rdE&YReport.pdf About AbitibiBowater Inc. Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/-- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 27 pulp and paper facilities and 34 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has more third-party certified sustainable forest land than any other company in the world. Out-of-Court Restructuring Effort AbitibiBowater tried to renegotiate about $2.9 billion in the debts of its Canadian unit, Abitibi-Consolidated, and $1.8 billion of its U.S. unit, Bowater Inc. On March 13, AbitibiBowater and Abitibi-Consolidated commenced a recapitalization proposal which was intended to reduce the Company's net debt by roughly $2.4 billion, lower its annual interest expense by roughly $162 million and raise roughly $350 million through the issuance of new notes of ACI and common stock and warrants of the Company. On February 9, Bowater Finance II LLC, an indirect wholly owned subsidiary of AbitibiBowater, commenced private offers with respect to six series of outstanding debt securities issued by either Bowater Incorporated or Bowater Canada Finance Corporation, a wholly owned subsidiary of Bowater, to exchange the old notes for new notes. BowFin also intended for a concurrent private offering of new 15.5% First Lien Notes due November 15, 2011, to holders of Bowater Notes who tender notes in the exchange offers. The Company moved the exchange offer deadlines several times after failing to garner enough support from bondholders. It ultimately abandoned the exchange offer on March 31. Bankruptcy Filing The Company and several affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr. D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides over the case. The Company and its Canadian affiliates commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Quebec Superior Court Commercial Division the next day. Alex F. Morrison at Ernst & Young, Inc., was appointed CCAA monitor. Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serves as the Debtors' co-counsel, while Troutman Sanders LLP in New York, serves as the Debtors' conflicts Counsel in the Chapter 11 proceedings. The Debtors' financial advisors are Advisory Services LP, and their noticing and claims agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario. Abitibi-Consolidated Inc. and various Canadian subsidiaries filed for protection under Chapter 15 of the U.S. Bankruptcy Code on April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, represent the Chapter 15 Debtors. As of September 30, 2008, the Company had $9,937,000,000 in total assets and $8,783,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes Abitibibowater Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings and parallel proceedings under the Companies' Creditors Arrangement Act in Canada undertaken by Abitibibowater Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ABITIBIBOWATER INC: Posts $2.2 Billion Net Loss for Year 2008 ------------------------------------------------------------- AbitibiBowater, Inc., and its debtor-affiliates in the United States and Canada filed with the Securities and Exchanged Commission on April 30, 2009, an annual report for the fiscal year ended December 31, 2008. AbitibiBowater listed assets totaling $8.1 billion as of Dec. 31, 2008, a figure that reflects a decrease of $2.2 billion compared to December 31, 2007. The decrease relates primarily to planned reductions in inventory levels, the sale of assets, the impairments of long-lived assets, assets held for sale and goodwill, as well as the write-off of the carrying value of expropriated assets. The Company listed debts totaling $6 billion at December 31, 2008, an increase of $0.3 billion compared to December 31, 2007. Cash and cash equivalents decreased by $3 million to total $192 million at December 31, 2008, as cash generated from investing and financing activities in 2008 was used to fund the cash shortfall from operating activities in 2008, David Paterson, AbitibiBowater's president and chief executive officer, disclosed. According to Mr. Paterson, the Company experienced recurring losses in the recent years, which have resulted in significant negative operating cash flows. A number of factors have contributed to these results, including (i) a highly competitive market for our products, (ii) the highly cyclical nature of the forest products industry, (iii) significant annual declines over the past several years in the demand for newsprint, which is the Company's principal product, (iv) a weak U.S. housing market, (v) the capital-intensive nature of our operations, (vi) the weakened global economy, and (vii) cost pressures resulting from the volatility of currency exchange rates and costs for raw materials and energy. In an attempt to mitigate the impact of the factors that weaken its revenues and operations, the Company undertook numerous actions since the fourth quarter of 2007, including: -- reduction of newsprint and specialty papers production capacity by almost 1 million metric tons per year, which led to the permanent closure or indefinite idling of several mills, sawmills, and paper mills in Canada and the United States; -- removal of an additional 830,000 metric tons of newsprint, 110,000 metric tons of specialty paper and 70,000 metric tons of coated paper capacity through the permanent closure by the end of the first quarter of 2009 of certain newsprint mills, paper converting facility and paper machines; and -- price increase in North American newsprint and in export newsprint, coated papers, specialty papers and market pulp. Mr. Paterson adds that the Company also made several unsuccessful attempts to refinance its significant indebtedness, which included an exchange offer and concurrent notes offering to address the Bowater Debtors' liquidity issues and a Debt Recapitalization Plan to address Abitibi Group's liquidity issues. The Company and its affiliates commenced their Chapter 11 cases in the United States, and insolvency proceedings under Canada's Companies Creditors' Arrangement Act on April 16, 2009, to pursue their reorganization efforts. Employee-Related Items As of December 31, 2008, AbitibiBowater employed approximately 15,900 people, of whom approximately 11,600 were represented by bargaining units -- predominantly by the Communications, Energy and Paperworkers Union in Canada and by the United Steelworkers Union in the United States. "As we develop and implement our reorganization plan, we expect to have some decline in employment," Mr. Paterson disclosed. Mr. Paterson further related that as of December 31, 2008, the Company's defined benefit pension plans were underfunded by about $389,000,000 on a financial accounting basis. A significant number of the Company's collective bargaining agreements with respect to its paper operations in Eastern Canada, Catawba, and South Carolina will expire in 2009. The collective bargaining agreement for the Calhoun, Tennessee facility, which expired in July 2008, has not been renewed. The Communications, Energy and Paperworkers Union of Canada has selected contract talks with the Company to set the industry-wide pattern for contracts that will replace current agreements that expire at the end of April 2009, Mr. Paterson disclosed. Renewal of collective bargaining agreements could also result in higher wage or benefit costs, Mr. Paterson said. Thus, the Company could experience a disruption of our operations or higher ongoing labor costs, he added. A full-text copy of AbitibiBowater's Annual Report on Form 10K is available at the SEC at http://ResearchArchives.com/t/s?3c49 ABITIBIBOWATER, INC. Unaudited Consolidated Balance Sheets As of December 31, 2008 ASSETS Current Assets: Current Assets: Cash and cash equivalents $192,000,000 Accounts receivable, net 816,000,000 Inventories 713,000,000 Assets held for sale 953,000,000 Other current assets 93,000,000 ---------------- Total Current Assets 2,767,000,000 Timber and timberlands 47,000,000 Fixed assets, net 4,460,000,000 Goodwill 53,000,000 Amortization intangible assets, net 285,000,000 Other assets 460,000,000 ---------------- 5,305,000,000 ---------------- Total Assets $8,072,000,000 ================ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities $1,021,000,000 Short-term bank debt 677,000,000 Current installments of long-term debt 278,000,000 Liabilities associated with assets held for sale 409,000,000 ---------------- Total Current Liabilities 2,385,000,000 Long-term debt and capital leases 5,015,000,000 Pension & other postretirement projected benefit obligations 823,000,000 Other long-term benefits 147,000,000 Deferred income taxes 42,000,000 Minority interests in subsidiaries 136,000,000 Commitments and Contingencies Shareholders' Deficit (Equity): Common stock at $1 par value, 53.2 shares outstanding at Dec. 31, 2008 53,000,000 Exchangeable shares at no par value, 4.4 shares outstanding at Dec. 31, 2008 242,000,000 Additional paid-in capital 2,451,000,000 Deficit 2,838,000,000) Accumulated other comprehensive loss (384,000,000) ---------------- Total Shareholders' (Deficit) Equity (476,000,000) ================ Total Liabilities and Shareholders' Equity $8,072,000,000 ================ ABITIBIBOWATER, INC. Unaudited Consolidated Statements of Operations Year Ended December 31, 2008 Sales $6,771,000,000 Cost and expenses: Cost of sales 5,144,000,000 Depreciation, amortization and cost of timber 726,000,000 Distribution costs 757,000,000 Selling and admin. expenses 332,000,000 Impairment of goodwill 810,000,000 Closure costs, impairment of assets 481,000,000 Lumber duties refund 0 Arbitration award 0 Net gain on disposition oaf assets (49,000,000) ----------------- Operating (loss) income (1,430,000,000) Interest expense (706,000,000) Other income, net 93,000,000 ----------------- Loss before income taxes (2,043,000,000) ----------------- Income tax benefit (provision) 92,000,000 Minority interests, net of tax (27,000,000) ----------------- Loss before extraordinary item (1,978,000,000) Extraordinary loss on expropriation of assets, net (256,000,000) Cumulative effect of accounting charge, net - ----------------- Net Loss ($2,234,000,000) ================= ABITIBIBOWATER, INC. Unaudited Consolidated Statements of Cash Flow Year Ended December 31, 2008 Cash Flows from Operating Activities: Net loss ($2,234,000,000) Adjustments to reconcile net (loss) to net cash (used in) provided by operating activities: Extraordinary loss on expropriation of assets, net 256,000,000 Cumulative effect of accounting change, net 0 Share-based compensation 4,000,000 Depreciation, amortization and cost of timber 726,000,000 Impairment of goodwill 810,000,000 Closure costs, impairment of assets 428,000,000 Write-downs of mill stores inventory 30,000,000 Deferred income taxes (225,000,000) Minority interests, net of tax 27,000,000 Net pension contributions (241,000,000) Net gain on disposition of assets (49,000,000) Gain on extinguishment of debt (31,000,000) Amortization of debt discount (premium), net 123,000,000 Gain on translation of foreign currency debt (39,000,000) Changes in working capital: Accounts receivable (63,000,000) Inventories 159,000,000 Income taxes receivable and payable 17,000,000 Accounts payable & accrued liabilities (171,000,000) Other, net 53,000,000 ----------------- Net cash (used in) provided by operating activities (420,000,000) Cash Flows from Investing Activities: Cash invested in fixed assets (186,000,000) Dispositions of assets 220,000,000 Cash acquired in the Combination 0 Direct acquisition costs related to Combination 0 Cash received in monetization of financial instruments 5,000,000 Increase in deposit requirements, net (69,000,000) Other investing activities, net 3,000,000 ----------------- Net cash provided by (used in) investing activities (27,000,000) Cash Flows from Financing Activities: Cash dividends, including minority interests (25,000,000) Term loan financing 400,000,000 Term loan repayments (53,000,000) Short-term financing, net (248,000,000) Issuance of long-term debt 763,000,000 Repurchases and payments of long-term debt (298,000,000) Payments of financing & credit facility fees (89,000,000) Payments, equity issuance fees on Convertible Notes (6,000,000) ----------------- Net cash provided by (used in) financing activities 444,000,000 ----------------- Net decrease in cash & cash equivalents (3,000,000) Cash & cash equivalents: Beginning of year 195,000,000 ----------------- End of year $192,000,000 ================= By-Laws Amended Effective April 29 In a regulatory filing with the Securities and Exchange Commission, Jacques P. Vachon, AbitibiBowater Inc. senior vice- president for Corporate Affairs and chief legal officer, disclosed that effective April 28, 2009, the Company's board of directors adopted the Second Amended and Restated By-Laws: (1) to change the size of the Board from 14 -- with no fewer than 11 independent directors plus the Chairman -- to between nine and 15 directors, provided that the Board must be comprised entirely of independent directors, except for the President and Chief Executive Officer and at the discretion of the board, up to two additional directors; (2) to remove references to "Abitibi Directors" and "Bowater Directors", which referred to directors of the Company that were formerly directors of Abitibi-Consolidated Inc. or Bowater Incorporated, prior to the combination of Abitibi and Bowater in October 2007; and (3) to provide that the Chairman will be elected by a majority of the Board and will serve as lead director for so long he is an independent director. In the event the Chairman is not an independent director, the lead director will be an independent director selected by a majority of the Board. A full-text copy of AbitibiBowater's Second Amended and Restated By-Laws is available for free at: http://ResearchArchives.com/t/s?3c2e About AbitibiBowater Inc. Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/-- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 27 pulp and paper facilities and 34 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has more third-party certified sustainable forest land than any other company in the world. Out-of-Court Restructuring Effort AbitibiBowater tried to renegotiate about $2.9 billion in the debts of its Canadian unit, Abitibi-Consolidated, and $1.8 billion of its U.S. unit, Bowater Inc. On March 13, AbitibiBowater and Abitibi-Consolidated commenced a recapitalization proposal which was intended to reduce the Company's net debt by roughly $2.4 billion, lower its annual interest expense by roughly $162 million and raise roughly $350 million through the issuance of new notes of ACI and common stock and warrants of the Company. On February 9, Bowater Finance II LLC, an indirect wholly owned subsidiary of AbitibiBowater, commenced private offers with respect to six series of outstanding debt securities issued by either Bowater Incorporated or Bowater Canada Finance Corporation, a wholly owned subsidiary of Bowater, to exchange the old notes for new notes. BowFin also intended for a concurrent private offering of new 15.5% First Lien Notes due November 15, 2011, to holders of Bowater Notes who tender notes in the exchange offers. The Company moved the exchange offer deadlines several times after failing to garner enough support from bondholders. It ultimately abandoned the exchange offer on March 31. Bankruptcy Filing The Company and several affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr. D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides over the case. The Company and its Canadian affiliates commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Quebec Superior Court Commercial Division the next day. Alex F. Morrison at Ernst & Young, Inc., was appointed CCAA monitor. Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serves as the Debtors' co-counsel, while Troutman Sanders LLP in New York, serves as the Debtors' conflicts counsel in the Chapter 11 proceedings. The Debtors' financial advisors are Advisory Services LP, and their noticing and claims agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario. Abitibi-Consolidated Inc. and various Canadian subsidiaries filed for protection under Chapter 15 of the U.S. Bankruptcy Code on April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, represent the Chapter 15 Debtors. As of September 30, 2008, the Company had $9,937,000,000 in total assets and $8,783,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes Abitibibowater Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings and parallel proceedings under the Companies' Creditors Arrangement Act in Canada undertaken by Abitibibowater Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ABITIBIBOWATER INC: $100MM Bank of Montreal DIP Loan Approved ------------------------------------------------------------- AbitibiBowater Inc. and its Abitibi-Consolidated Inc. subsidiary said an order from the Quebec Superior Court in Canada has been obtained authorizing Abitibi to enter into a loan agreement with Bank of Montreal for debtor-in-possession financing which will be guaranteed by Investissement Quebec. The Abitibi DIP Agreement will support AbitibiBowater's business continuity by providing additional short-term liquidity while the Company continues to develop its restructuring plan. The Abitibi DIP Agreement will be among Abitibi, as borrower, and Bank of Montreal, as lender, and will be guaranteed by Investissement Quebec, as sponsor. The Abitibi DIP Agreement will provide for borrowings in an aggregate principal amount of up to $100 million for Abitibi, of which a minimum undrawn availability of $12.5 million must be maintained at all times. The outstanding principal amount of loans under the DIP Facility, plus accrued and unpaid interest, will be payable in full at the earliest of (i) November 1, 2009; (ii) the effective date of a plan of reorganization under the Companies' Creditors Arrangement Act in Canada or Chapter 11 of the United States Bankruptcy Code in the U.S.; and (iii) certain other events. About AbitibiBowater Inc. Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/-- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 27 pulp and paper facilities and 34 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has more third-party certified sustainable forest land than any other company in the world. Out-of-Court Restructuring Effort AbitibiBowater tried to renegotiate about $2.9 billion in the debts of its Canadian unit, Abitibi-Consolidated, and $1.8 billion of its U.S. unit, Bowater Inc. On March 13, AbitibiBowater and Abitibi-Consolidated commenced a recapitalization proposal which was intended to reduce the Company's net debt by roughly $2.4 billion, lower its annual interest expense by roughly $162 million and raise roughly $350 million through the issuance of new notes of ACI and common stock and warrants of the Company. On February 9, Bowater Finance II LLC, an indirect wholly owned subsidiary of AbitibiBowater, commenced private offers with respect to six series of outstanding debt securities issued by either Bowater Incorporated or Bowater Canada Finance Corporation, a wholly owned subsidiary of Bowater, to exchange the old notes for new notes. BowFin also intended for a concurrent private offering of new 15.5% First Lien Notes due November 15, 2011, to holders of Bowater Notes who tender notes in the exchange offers. The Company moved the exchange offer deadlines several times after failing to garner enough support from bondholders. It ultimately abandoned the exchange offer on March 31. Bankruptcy Filing The Company and several affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr. D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides over the case. The Company and its Canadian affiliates commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Quebec Superior Court Commercial Division the next day. Alex F. Morrison at Ernst & Young, Inc., was appointed CCAA monitor. Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serves as the Debtors' co-counsel, while Troutman Sanders LLP in New York, serves as the Debtors' conflicts counsel. The Debtors' financial advisors are Advisory Services LP, and their noticing and claims agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario. Abitibi-Consolidated Inc. and various Canadian subsidiaries filed for protection under Chapter 15 of the U.S. Bankruptcy Code on April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, represent the Chapter 15 Debtors. As of September 30, 2008, the Company had $9,937,000,000 in total assets and $8,783,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes Abitibibowater Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings and parallel proceedings under the Companies' Creditors Arrangement Act in Canada undertaken by Abitibibowater Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ABRAMS ENTERPRIZES: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Abrams Enterprizes, LLC PO Box 1330 Cabot, AR 72023 Bankruptcy Case No.: 09-13218 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court Eastern District of Arkansas (Little Rock) Debtor's Counsel: Paul A. Schmidt, Sr., Esq. Attorney at Law P.O. Box 564 Cabot, AR 72023-0564 Tel: (501) 843-7576 Fax: (501) 843-2335 Email: paschmidtbk@centurytel.net Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of 20 largest unsecured creditors when it filed its petition. The petition was signed by Joe Abrams, managing member of the Company. AGT CRUNCH: Judge Gerber Questions Terms of Insider Sale -------------------------------------------------------- At the first-day hearing in AGT Crunch Acquisition LLC's case, Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York raised concerns about the proposed sale the Company's chain of 19 high-end fitness clubs, named Fitness Crunch, to affiliates of Angelo, Gordon & Co. As reported by yesterday's Troubled Company Reporter, AGT Crunch Acquisition LLC said it has reached an agreement to be acquired by its senior secured lenders, New Evolution Fitness Company and certain investing affiliates of Angelo, Gordon & Co. NEFC and Angelo affiliates are offering to credit bid as much as $40 million that they are owed under various financing agreements with Crunch, instead of paying cash. Jacqueline Palank at The Wall Street Journal reported that the credit bid from CH Fitness Investors LLC -- the entity formed by New Evolution and the Angelo Gordon units -- of as much as $40 million would be comprised of debt on a bankruptcy loan as well as a portion of the $56.7 million Crunch owes on a pre-bankruptcy secured loan from CH Fitness. The parties expect to close the sale in 60 days. Crunch has also reached a deal with CH Fitness with respect to a $6 million bankruptcy loan to fund its operations as it restructures. Investment groups of Angelo Gordon bought the Fitness Crunch chain from Bally Total Fitness Holding Corp. in 2006 and purchased the first-lien debt in late 2008, Bloomberg's Bill Rochelle reported. According to the report, Judge Gerber, at the hearing, characterized aspects of the reorganization as "one of the most outrageous provisions I've seen in 40 years of practicing law." Judge Gerber, Bloomberg relates, also said the court papers didn't fully disclose the objective of selling the business to an insider. "You are proposing a sale to yourselves under the rubric of calling it a credit bid to another party -- and would use the DIP to wipe out another party," Judge Gerber said, citing about $10 million in debt owed to unsecured creditors, most of which are New York real estate owners and landlords. Judge Gerber at another time said, "The secured lenders want to rent the courthouse." Judge Gerber has granted interim approval on the proposed DIP financing on revised terms. A total of $1 million in borrowing will be available pending final hearing. Crunch, in procedures submitted to the Court, says that it will be accepting competing bids for its business. The Debtor proposes a June 25 deadline for bids; a June 30 auction, if multiple bids are received; and a July 2 hearing to consider approval of the sale. The petition listed assets of $104 million against $102 million in total liabilities. Debt includes $56.7 million on a first-lien loan now mostly owned by Angelo Gordon affiliates. There is a second-lien debt for another $22.7 million. According to Bill Rochelle, financial problems go back to a 2006 acquisition when Crunch says Bally "materially misrepresented the number of active members." The dispute went into litigation before Bally filed for Chapter 11 relief. Bally was out of Chapter 11 for 14 months before filing bankruptcy a second time in December. Crunch acquired 25 clubs from Bally and five from other operators. A court filing, Bloomberg relates, says bankruptcy was required to divest "certain unprofitable club locations" having "overpriced long-term leases." Crunch generated $84.5 million in revenue in 2008 and an operating loss of $11.2 million. About AGT Crunch AGT Crunch Acquisition LLC is a collection of state-of-the-art health clubs that believes in making serious exercise fun by pioneering a philosophy of entertainment and fitness. Headquartered in New York City, Crunch serves its 73,000 members with gyms in New York, Miami, San Francisco, Los Angeles, Chicago, and Atlanta. Renowned for creating unique programming that caters to an exceedingly diverse membership, Crunch has raised the bar for the entire fitness industry. AGT Crunch filed for Chapter 11 on May 6 (Bankr. S.D. N.Y. Case No. 09-12889). It listed $104 million in assets against $102 million in total liabilities in its petition. AGT CRUNCH: Case Summary & 30 Largest Unsecured Creditors --------------------------------------------------------- Debtor: AGT Crunch Acquisition LLC 22 West 19th Street, 4th Floor New York, NY 10011 Bankruptcy Case No.: 09-12889 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- AGT Crunch Atlanta LLC 09-12890 AGT Crunch Chicago LLC 09-12891 AGT Crunch Los Angeles LLC 09-12892 AGT Crunch Miami LLC 09-12893 AGT Crunch New York LLC 09-12894 AGT Crunch San Francisco LLC 09-12895 AGT Crunch Services LLC 09-12896 AGT Crunch Washington D.C. LLC 09-12897 AGT Union Street LLC 09-12898 Crunch CFI Atlanta, LLC 09-12899 Crunch CFI Georgia, LLC 09-12900 Crunch CFI GW, LLC 09-12901 Crunch CFI New York, LLC 09-12902 Crunch CFI San Francisco, LLC 09-12903 Crunch CFI, LLC 09-12904 Fort Greene Sports Club, LLC 09-12905 Hauppauge Sports Club, LLC 09-12906 Park Slope Sports Club, LLC 09-12907 Sports & Fitness Ventures, LLC 09-12908 The Silver Springs Sports Club, L.L.C. 09-12909 113 4th Sports Club, LLC 09-12910 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Judge: Robert E. Gerber Debtor's Counsel: Davin J. Hall, Esq. Shmuel Vasser Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 Tel: (212) 698-3500 Fax: (212) 698-3599 Email: davin.hall@dechert.com Email: shmuel.vasser@dechert.com Estimated Assets: $100 million to $500 million Estimated Debts: $100 million to $500 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Parkway Pointe Retail Corp. $456,721 1787 Paysphere Circle Chicago, IL 60674 DFD Development LLP $396,685 352 Park Avenue New York, NY 10010 B. Bros. Broadway Realty LLC $323,581 88 Pine Street New York, NY 10005 Principal Life Insurance $320,700 8000 Sunset Blvd Owner LLC $247,523 25 Braodway Off Properties LLC $226,035 Roc Agent Roc Le Triomphe $218,878 KS Realty Inc. $194,306 Google Inc. $176,403 Big Time Design Studios $165,798 DDR/Van Ness Operating Co. $147,769 Tower Plaza LLP $138,546 PPF OFF 345 Spears St. LLP $128,776 Red Apple Real Estate $121,176 Litke Properties Ansome LLC $110,193 Archives LLC $97,659 18-19th Associates LLC $95,837 Parkwood Realty Associates $90,403 RN 120 Company LLC $89,307 Pix Realty LLP $77,018 Hollywood Horizon Properties $73,711 RiverBank West $70,000 MyLaw Realty Corp. $69,853 The Lucia Group Inc. $68,649 Sol Goldman Investments LLC $66,232 2700 Halsted Building LLC $64,630 Quedan Construction Services $63,493 Coast Counties Property Mgt. $62,752 Blattels & Schnur Trust $60,000 Aramark $59,800 The petition was signed by Michael Jacobs, president & CFO of the company. ALERIS INT'L: Moelis Bills $3.9MM, Weil Seeks $1.6MM for Work ------------------------------------------------------------- Professionals hired in the bankruptcy cases of Aleris International, Inc., and its debtor-affiliates filed with the U.S. Bankruptcy Court for the District of Delaware applications for the allowance of fees and reimbursement of expenses. (A) Debtors' Professionals: Firm Period Fees Expenses ---- ---------- ---------- -------- Weil, Gotshal & 02/12/09 - Manges LLP 03/31/09 $1,617,396 $24,278 Moelis & Company LLC 03/01/09 - 03/31/09 3,950,000 13,899 Moelis & Company LLC 02/12/09 - 02/28/09 121,428 16,555 Fried Frank Harris Shriver & 02/12/09 - Jacobson LLP 03/31/09 695,354 42,645 Ernst & Young LLP 02/12/09 - 03/31/09 773,350 5,157 Richards, Layton 02/12/09 - Finger, P.A. 03/31/09 114,533 11,736 Moelis & Company, the Debtors' financial advisor, reported that its professionals spent 461 hours from February 12 to 28, 2009, and 800 hours from March 1 to 31, 2009, providing services related to the Debtors' business plan and forecasts and the due diligence process for both the senior secured lenders and the Official Committee of Unsecured Creditors. Weil, Gotshal & Manges LLP is the Debtors' counsel. Richards, Layton & Finger, P.A., is the Debtors' co-counsel, and Fried Frank Harris Shriver & Jacobson LLP, is special financing, corporate, tax and litigation counsel to the Debtors. Ernst & Young LLP, whose fee sought is net of $324,344 of voluntary reductions, is the Debtors' auditors. (B) Official Committee of Unsecured Creditors' Professionals Firm Period Fees Expenses ---- ---------- ---------- -------- Reed Smith LLP 02/20/09 - 03/31/09 $221,982 $3,536 Landis Rath & 02/28/09 - Cobb LLP 03/31/09 53,543 584 Reed Smith LLP is counsel to the Official Committee of Unsecured Creditors, and Landis Rath & Cobb LPP is the Committee's conflicts counsel. The Committee, in separate application, seeks reimbursement of $2,372 in expenses incurred for the period from February 19 through 28, 2009. About Aleris International Aleris International, Inc., produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC a as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of Dec. 31, 2008, the Debtors had total assets of $4,168,700,000; and total debts of $3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) ALERIS INT'L: Proposes September 15 as Claims Bar Date ------------------------------------------------------ Aleris International, Inc., and its debtor-affiliates ask Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware to establish September 15, 2009, as the deadline for any person or entity to file proofs of claim for obligations arising before the Petition Date against the Debtors. The prepetition claim must not have been scheduled, or scheduled as disputed, contingent or unliquidated. The Debtors also ask the Court to approve the: -- proposed proof of claim form; -- proposed bar date notices, including customized notices for employees, certain entities that may hold environmental claims, and certain publication; as well as the -- proposed notice procedures for the bar date, including specialized procedures for holders of potential environmental claims. Rule 3003(c)(3) of the Federal Rules of Bankruptcy Procedure provides that the Court will fix the time within which claimants must file proofs of claim in a Chapter 11 case. Section 502(b)(9) of the Bankruptcy Code provides that a proof of claim filed by a governmental unit be timely filed if it is filed before 180 days after the date of the order for the request. Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP, in New York, says fixing the proposed Bar Date will enable the Debtors to receive, process, and begin their analysis of creditors' claims in a timely and efficient manner and expedite the administration of their Chapter 11 cases. The Debtors assert that the proposed Bar Date complies with the time requirements of Section 502(b)(9), provides sufficient notice of the Bar Date to all parties-in-interest, and affords those parties-in-interest ample opportunity to prepare and file a proof of claim. Proposed Claim Filing Procedures The Debtors propose these procedures for filing proofs of claim: (a) Except as otherwise provided, all entities that assert a claim that arose prior to the Petition Date against the Debtors must file a proof of claim on or before the Bar Date. (b) The trustee or administrative agent of any debt issued by the Debtors may file a master proof of claim on behalf of the debt holder for which it acts, any proof of claim that may be filed by an individual debt holder. (c) Any entity that asserts a claim from the rejection of an executory contract or unexpired lease must file a proof of claim based on the rejection on or before the later of the Bar Date, and 5:00 p.m. (Eastern Time) on the date that is 30 days after the effective date of the rejection. A party to an executory contract or unexpired lease that asserts a claim for unpaid amounts outstanding as of the Petition Date, other than a rejection damages claim, must file a proof of claim for those amounts on or before the Bar Date unless another exception applies. (d) If any of the Debtors amends or supplements its Schedule D, E, or F of the Schedules of Assets and Liabilities, the deadline to file a Proof of Claim with respect to any affected claimant will be the later of (i) the Bar Date and (ii) 5:00 p.m. (Eastern Time) on the date that is 30 days from the notice of the amendment or supplement. (e) If, after the date of the order granting this motion, the Debtors identify a potential creditor that may hold an environmental claim and which did not otherwise receive actual notice of the Bar Date, the deadline for that creditor to file a Proof of Claim to assert any environmental claim will be the later of (i) the Bar Date and (ii) 5:00 p.m. (Eastern Time) on the date that is 30 days from the notice that the potential creditor must file a proof of claim to assert any claim against the Debtors is mailed to that potential creditor. (f) Proofs of claim must specify by name and case number the Debtor against which the proof of claim is asserted, and, if the holder asserts a claim against more than one Debtor, a separate Proof of Claim must be filed against each Debtor. (g) Moreover, proofs of claim must: * conform to the Proof of Claim Form or Official Bankruptcy Form No. 10; * assert any priority status pursuant to Section 507(a) of the Bankruptcy Code or administrative status pursuant to Section 503(b)(9); * be signed by the claimant or, if the claimant is not an individual, by an authorized agent of the claimant; * include supporting documentation or, if voluminous, a summary or explanation as to why documentation is not available; * be in the English language; and * be denominated in United States currency. (h) Proofs of claim must be received on or before the Bar Date by Kurtzman Carson Consultants LLC, the official claims agent in the Debtors' Chapter 11 cases, at: Aleris Claims Processing c/o Kurtzman Carson Consultants LLC 2335 Alaska Ave. El Segundo, California 90245 (i) Debtors and KCC will not be required to accept a proof of claim sent by facsimile, telecopy, or electronic mail transmission. (j) Proofs of claim will be deemed timely filed only if actually received by the Aleris Claims Processing Center on or before the Bar Date. (k) Any entity that files a proof of claim by mail and wishes to receive a clocked-in copy by return mail must include an additional copy of the Proof of Claim and a self-addressed postage-paid envelope. The Debtors propose that these entities will not be required to file a proof of claim: (1) any entity that has already properly filed with the Clerk of the U.S. Bankruptcy Court for the District of Delaware or KCC a proof of claim against a Debtor in a form substantially similar to Official Bankruptcy Form No. 10; (2) any entity whose claim is listed on a Debtor's Schedules of Assets and Liabilities, and * the claim is not described as disputed, contingent, or unliquidated; * the claimant agrees with the amount, nature, and priority of the claim set forth in the Schedules; and * the claimant agrees that the claim is an obligation of the specific Debtor that has listed the claim its Schedules; (3) any holder of a claim that has been allowed by order of the Court or satisfied in full prior to the Bar Date; (4) any Debtor or non-debtor subsidiary holding a claim against a Debtor; (5) any officer, director, or employee for a claim for indemnification, contribution, reimbursement, or wages and benefits,; provided that any officer, director, or employee must file a proof of claim if he or she wishes to assert any other claims against any of the Debtors; (6) any holder of a claim allowable under Section 503(b) or 507(a) of the Bankruptcy Code as an administrative expense of the Debtors' Chapter 11 cases other than administrative expenses allowable under Section 503(b)(9); (7) any entity that holds an equity interest in any Debtor; provided that any interest holder that wishes to assert any claim, as opposed to ownership interest, against any of the Debtors that relates to the ownership or purchase of an interest, must file its proof of claim on or before the Bar Date; and (8) any holder of a claim for which the Court has already fixed a specific deadline to file a Proof of Claim. The Debtors seek that any holder of a claim who is required, but fails, to file a proof of claim on or before the proposed Bar Date will be forever barred, estopped, and enjoined from asserting the claim against the Debtors, or filing a related proof of claim, so that the Debtors and their property will be forever discharged from all indebtedness or liability with respect to the claim. The Debtors also seek that that claimholder will not be permitted to vote to accept or reject any plan of reorganization filed in their Chapter 11 cases, or participate in any distribution in Debtors' Chapter 11 cases on account of its claim, or to receive further notices regarding the claim. The Debtors further seek that any of their claimholders who files a proof of claim but fails to assert the claim's priority or administrative status will be forever barred, estopped, enjoined from asserting the priority or administrative claim status with respect to that claim, and that the claim will not be entitled to an administrative status. The Debtors will mail the proposed Bar Date Notice and the proposed Proof of Claim Form to: * the Office of the U.S. Trustee for Region 3; * counsel to the Official Committee of Unsecured Creditors; * counsel to Deutsche Bank AG New York Branch, as administrative agent under the Debtors' prepetition credit and term loan agreements and the Debtors' postpetition revolving and term credit facilities; * counsel to the Wilmington Trust Company, as indenture trustee for the Debtors' prepetition senior notes; * all parties that have requested notice in these Chapter 11 cases; * all persons or entities that have previously filed a Proof of Claim; * all creditors and other known holders of claims as of the Petition Date; * all parties to executory contracts and unexpired leases of the Debtors listed on any of the Debtors' Schedule G; * all parties to litigation with the Debtors; * the Internal Revenue Service for the District of Delaware; and * the U.S. Attorney's Office for the District of Delaware. A full-text copy of the proposed Bar Date Notice is available for free at http://bankrupt.com/misc/aleris_BarDateNotice_prpsd.pdf The Debtors, however, subsequently filed a revised proposed proof of claim form, a full-text copy of which is available for free at http://bankrupt.com/misc/aleris_prpsdProofOfClaim_rvsd.pdf The Court will convene a hearing on the motion on May 21, 2009, at 11:00 a.m. (Eastern Time), to consider approval of the request. Objections must be filed no later than May 14. About Aleris International Aleris International, Inc., produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC a as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of Dec. 31, 2008, the Debtors had total assets of $4,168,700,000; and total debts of $3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) ALERIS INT'L: Sec. 341 Creditors Meeting Adjourned Sine Die ----------------------------------------------------------- Richard L. Schepacarter, Esq., trial attorney of the U.S. Department of Justice, filed a minute sheet of the Section 341 meeting of creditors in the Chapter 11 cases of Aleris International Inc. and its affiliates, held March 27, 2009. During that meeting, the parties agreed to continue the Section 341 Meeting to an indefinite date. Present at the meeting were Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP, lead counsel to the Debtors, and Mark Eckard, Esq., at Reed, Smith LLP, counsel to the Official Committee of Unsecured Creditors. The Debtors have sought an extension of their deadline to file their schedules of assets and liabilities and statements of financial affairs. The Section 341 meeting offers the creditors a one-time opportunity to examine the Debtor's representative under oath. About Aleris International Aleris International, Inc., produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC a as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of Dec. 31, 2008, the Debtors had total assets of $4,168,700,000; and total debts of $3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) ALERIS INT'L: Seeks Plan Extension, Waits for Markets to Stabilize ------------------------------------------------------------------ Aleris International, Inc., and its debtor-affiliates ask Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware to extend the period within which they may exclusively file a Chapter 11 plan of reorganization to December 9, 2009, and the period within which they have the exclusive right to solicit acceptances for that plan to February 7, 2010. The Debtors currently have until June 12, 2009, to file their plan, and until August 11 to solicit acceptances to that plan. Section 1121 of the Bankruptcy Code initially allows a debtor 120 days after the Petition Date to propose and file a Chapter 11 plan exclusively, and 180 days after the Petition Date to obtain acceptances of that plan. Moreover, Section 1121 authorizes the Court to extend a debtor's exclusive periods for cause shown. In just a few weeks of these Chapter 11 cases, the Court has entered at least 13 orders granting relief to help the Debtors stabilize their operations while in Chapter 11, relates Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, in New York. The Court has also approved the Debtors' DIP financing on a final basis. Moreover, the Debtors and their professionals have addressed excess production capacity, maintain and renegotiate vendor, supplier, labor and customer relationships, and rejected burdensome leases and agreements. In April 2009, the Debtors have developed and delivered to the DIP Lenders and the Official Committee of Unsecured Creditors an 18- month forecast that presents a near-term outlook of the company's performance. The Debtors have also developed a comprehensive cash flow modeling system that provides a short-term look at the company's liquidity. According to Mr. Karotkin, the company is currently exceeding its cash flow projections with the DIP financing fully in place. The Debtors and their advisers also have met with the legal and financial advisers of the Official Committee of Unsecured Creditors, and have provided the Committee significant information about the Company, as the Committee must review the company and its operations. Although the Debtors have made progress, they still have significant remaining work to do, Mr. Karotkin points out. He says the Debtors intend to implement operational initiatives and see some more stability in their key markets -- the automotive, building and construction and aircraft markets -- before they can develop a business plan that forms the basis of a plan of reorganization. With more stability in the marketplace and postpetition performance metrics, the Debtors hope to develop a business plan that focuses on longer-term viability that is not skewed by the shorter-term economic crisis affecting the company and its many key customers, he notes. Mr. Karotkin further discloses that the Debtors have consulted and coordinated with the Committee and representatives of their other creditor constituencies, on every major issue in their cases. The Committee and the backstop lenders for the Debtors' DIP financing, Apollo ALS Holding LP and Oaktree Capital Management, L.P., fully support the extension request, he says. Mr. Karotkin assures that Court that the Debtors are working in good faith towards the filing of a Chapter 11 plan. But they need more time to complete that process, thus the request for a 180-day extension of the Debtors' exclusive period, he explains. The Court will convene a hearing to consider approval of the motion on May 21, 2009. Objections must be filed no later than May 14. The Debtors initially filed incorrect documents related to the motion but shortly withdrew that motion. About Aleris International Aleris International, Inc., produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC a as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of Dec. 31, 2008, the Debtors had total assets of $4,168,700,000; and total debts of $3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) ALFREDO RODRIGUEZ: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Joint Debtors: Alfredo Rodriguez Sanchez Vilma Luz Diaz Deynes 403 Dorado Beach East Dorado, PR 00646 Bankruptcy Case No.: 09-03681 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Debtors' Counsel: Francisco R. Moya Huff, Esq. BCO Popular Bldg Ste 401 Tetuan 206 San Juan, PR 00901-1802 Tel: (787) 723-0714 (787) 724-2447 Fax: (787) 725-3685 Email: moyahuff55@prtc.net Total Assets: $1,974,026 Total Debts: $1,451,995 According to its schedules of assets and liabilities, $1,243,380 of the debt is owing to secured creditors, $171,904 for taxes owed to governmental units, and the remaining debt to creditors holding unsecured nonpriority claims. A full-text copy of the Debtors' petition, including their list of 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/prb09-03681.pdf The petition was signed by the Joint Debtors. ALOHA AIRLINES: To Pay $5.5-Mil. in Damages for Pension Plans ------------------------------------------------------------- Bloomberg's Bill Rochelle said that Aloha Airlines Inc. was authorized by the U.S. Bankruptcy Court for the District of Hawaii (Honolulu) to pay $5.5 million in damages for failing to safeguard employee pension plans by investing in its own stock. Aloha is now being liquidated by a Chapter 7 trustee. Based in Honolulu, Hawaii, Aloha Airgroup Inc., Aloha Airlines Inc. -- http://www.alohaairlines.com/-- and its affiliates flew passengers and freight to Hawaii's five major airports, as well as to half a dozen destinations in the western U.S. They operated a fleet of about 20 aircraft, all Boeing 737s, including three configured as freighters. Aloha filed for Chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063), and emerged from Chapter 11 bankruptcy protection in February 2006. The Company and its affiliates filed again for Chapter 11 protection on March 18, 2008 (Bankr. D. Hawaii Lead Case No. 08- 00337). Brian G. Rich, Esq., Jordi Guso, Esq., and Paul Steven Singerman, Esq., at Berger Singerman P.A., and David C. Farmer, Esq., represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors was represented by Sonnenschein Nath & Rosenthal LLP and Bronster Hoshibata, A Law Corporation. The Debtors' schedules reflected total assets of $74,600,000 against total liabilities of $197,100,000. On April 29, 2008, the Court converted the Debtors' cases into chapter 7 liquidation proceedings. The next day, the U.S. Trustee appointed Dane S. Field to serve as chapter 7 trustee for the cases. James Wagner, Esq., at Wagner Choi & Verbrugge, represents Mr. Field. AMERICAN COMMUNITY: Wants More Time to File Schedules & Statements ------------------------------------------------------------------ American Community Newspapers LLC and its debtor-affiliates ask the U.S. States Bankruptcy Court for the District of Delaware to extend the deadline to file their schedules of assets and liabilities, and statements of financial affairs by an additional 30 days. The Debtors tell the Court that they could not file the schedules and statements before the initial deadline. The extension of time will give them sufficient time to complete the requirements, the Debtors note. A hearing is set for May 27, 2009, at 11:30 a.m., to consider the Debtors' request. Objections, if any, are due May 20, 2009, at 4:00 p.m. Headquartered in Addison, Texas, American Community Newspapers LLC -- http://www.americancommunitynewspapers.com/-- claims to be one of the top community newspaper publishers in the United States based on circulation, and operates in four of the most attractive major U.S. markets: Minneapolis -- St. Paul, Columbus, Dallas -- Fort Worth and Suburban Washington, D.C. -- Northern Virginia. The Company's award winning group of 86 newspapers and fourteen niche publications reaches approximately 1.4 million households in the suburban communities surrounding these major cities and enjoys market leading circulation penetration in all of its markets. The Company and four of its affiliates filed for Chapter 11 protection on April 28, 2009 (Bankr. D. Del. Lead Case No. 09- 11446). Landis Rath & Cobb LLC and Lowenstein Sandler PC represents the Debtors in their restructuring efforts. The Debtor proposed Carl Marks & Co. Inc. as financial advisor, and Graubard Miller as special corporate counsel. When the Debtors filed for protection from their creditors, they listed assets between $50 million and $100 million, and debts between $100 million and $500 million. AMERICAN ENERGY: Moore & Associates Raises Going Concern Doubt -------------------------------------------------------------- Moore & Associates, Chartered, in Las Vegas, Nevada, raised substantial doubt about the ability of American Energy Production, Inc., to continue as a going concern. In its audit report dated May 5, 2009, Moore & Associates said the Company had a net loss of $2,148,551 and $2,283,978 for the years ended December 31, 2008, and 2007, respectively. Additionally, at December 31, 2008, the Company has minimal cash, a negative working capital balance of $6,693,177, and a stockholders' deficit of $3,055,149. American Energy Production had $4,236,266 in total assets and $7,291,415 in total liabilities as of December 31, 2008. "Our ability to have a successful oil and gas company is heavily dependent on securing additional capital to supplement the anticipated timeframe required for the oil and gas revenues and cash flows to be sufficient to cover our operating expenses. As a result, we are searching for an alternative means of securing additional capital, which may include the sale of additional shares of our common stock or the issuance of additional debt securities. Additionally, we require additional funds for working capital and for growth opportunities," American Energy Production said. According to American Energy Production, there is no assurance that additional equity or debt financing will be available on terms acceptable to management or that the additional financing will be available when the Company requires the funds. "If we are unable to obtain additional capital or successfully implement our business strategy, this will have a significant impact on our ability to continue as a going concern." A full-text copy of American Energy's Annual Report on Form 10-K is available at no charge at http://ResearchArchives.com/t/s?3c8b Based in Mineral Wells, Texas, American Energy Production, Inc. -- http://www.americanenergyproduction.com/-- is a publicly traded oil and gas company that is engaged primarily in the acquiring, developing, producing, exploring and selling of oil and natural gas. The Company traditionally has acquired oil and gas companies that have the potential for increased oil and natural gas production utilizing new technologies, well workovers and fracture stimulation systems. Additionally, the Company has expanded its scope of business to include the drilling of new wells with its own equipment through its wholly-owned subsidiary companies. AMERICAN INT'L: Posts $4.35 Billion First Quarter Net Loss ---------------------------------------------------------- American International Group, Inc., reported a net loss for the first quarter of 2009 of $4.35 billion or $1.98 per diluted share, compared to a net loss of $7.81 billion or $3.09 per diluted share in the first quarter of 2008. First quarter 2009 adjusted net loss, excluding net realized capital gains (losses) and FAS 133 gains (losses) net of tax, was $1.60 billion, compared to an adjusted net loss of $3.56 billion in the first quarter of 2008. FIRST QUARTER (in millions, except per share data) Per Diluted Share (a) ----------------------------- 2009 2008 2009 2008 ---------------- ------ ------ -------- ------- Net loss attributable to AIG $(4,353) $(7,805) $ (1.98) $ (3.09) Net realized capital gains (losses), net of tax (b) (2,631) (3,963) (0.97) (1.57) FAS 133 gains (losses), excluding net realized capital gains (losses), net of tax (c) (118) (281) (0.04) (0.11) ------ ------ -------- ------- Adjusted net loss $(1,604) $(3,561) $ (0.97) $ (1.41) ====== ====== ======== ======= Weighted average shares outstanding (d) 2,705 2,528 ---------------- ------ ------ -------- ------- Significant items included in adjusted net loss: (in millions, after tax) 1Q09 1Q08 -------- ---------- Significant Items, affecting adjusted net loss ------------------------------------------------- Fed credit line interest and amortization $ (994) - ------ ------ Restructuring-related costs (primarily AIGFP wind down and other) $(1,205) - ------ ------ Market disruption-related: AIGFP credit valuation adjustment $ 1,093 $ (24) AIGFP unrealized market valuation losses (294) (5,920) Partnership and mutual fund losses (722) 4 Losses related to retained interests in Maiden Lane II and Maiden Lane III (1,431) - Other, net (284) (40) ------ ------ Total market disruption-related activities $(1,638) $(5,980) ------ ------ Tax benefits not obtained for losses incurred during the quarter and other discrete period tax items $ (382) $ (703) ------ ------ (a) The per diluted share calculation in the first quarter of 2009 reflects a $1.0 billion reduction for dividends on Series D Preferred Stock accumulated but not declared or paid. (b) Represents primarily other-than-temporary impairment charges. (c) Represents the effect of hedging activities that did not qualify for hedge accounting treatment under FAS 133, including the related foreign exchange gains and losses. (d) As a result of the losses reported in the first quarter of 2009 and 2008, basic shares outstanding were used for both periods. AIG's first quarter 2009 net loss resulted primarily from a number of restructuring and market disruption-related charges and accounting charges related to taxes. Interest and amortization charges related to the FRBNY Facility were $1.5 billion pre-tax ($1.0 billion after tax). AIG reported a $1.9 billion pre-tax ($1.2 billion after tax) charge for restructuring costs, primarily related to the wind down of AIG Financial Products Corp., AIG Trading Group, Inc. and their subsidiaries (collectively, AIGFP) and other. AIG reported market disruption-related losses of $2.5 billion pre- tax ($1.6 billion after tax). Included in market disruption- related items were partnership and mutual fund losses of $1.1 billion pre-tax ($0.7 billion after tax) and a total of $2.2 billion pre-tax ($1.4 billion after tax) of fair value losses on the retained interests in Maiden Lane II and Maiden Lane III. AIGFP reported a $0.5 billion pre-tax loss ($0.3 billion after tax) in unrealized market valuation losses on the super senior credit default swap portfolio and a $1.7 billion pre-tax gain ($1.1 billion after tax) related to AIGFP's credit valuation adjustment. In addition, AIG recorded tax expense of $1.1 billion for tax benefits not obtained related to losses incurred during the quarter and other discrete period tax items, of which $0.4 billion affected the adjusted net loss. At March 31, 2009, total equity was $53.2 billion, which included $7.4 billion of equity attributable to noncontrolling interests under FAS 160. Consolidated assets at March 31, 2009 were $819.8 billion. Commenting on first quarter 2009 results, AIG Chairman and Chief Executive Officer Edward M. Liddy said, "AIG's first quarter 2009 results reflect our efforts, with the ongoing support of the Federal Reserve and the U.S. Treasury, to execute on our plans which were designed to maximize the value of our core businesses and repay U.S. taxpayers. In addition, we are making progress on winding down AIGFP. As of March 31, 2009 its portfolio had a notional value of approximately $1.5 trillion, down from approximately $2.7 trillion at December 31, 2007. Mr. Liddy stated, "Importantly, we are moving forward with our efforts to position our strong insurance companies as discrete businesses, for the benefit of all stakeholders, including policyholders, employees, and distribution partners. "In addition, since year end, we have closed a number of transactions and reached several asset sales agreements, despite a very challenging market environment. On April 16, we announced the sale of our U.S. personal auto business, representing our largest asset transaction to date. Several other transactions are under discussion, and we continue to evaluate how best to assure the continued strength and success of all of AIG's businesses," Mr. Liddy said. Restructuring Update Since the announcements of March 2, 2009, AIG has taken the following actions to improve its capital structure, execute on an orderly asset divestiture plan, protect and enhance the value of its key businesses, and position these franchises for the future as more independently run, transparent companies: Execution on Improvements to AIG's Capital Structure Previously Announced: -- The U.S. Department of the Treasury (U.S. Treasury) exchanged its shares of AIG's Series D Fixed Rate Cumulative Perpetual Preferred Stock for shares of AIG's Series E Fixed Rate Non-Cumulative Perpetual Preferred Stock, on April 17, 2009. Dividends on the Series E Preferred Stock are payable on a non-cumulative basis. Additionally, AIG entered into a replacement capital covenant that requires AIG to replace the Series E Preferred Stock with qualifying equity replacement capital securities if the company repays or redeems the Series E Preferred Stock. -- The U.S. Treasury provided AIG with a new five-year equity capital facility, which provides access to up to $29.835 billion of available funds to AIG under the terms of the purchase agreement for shares of Series F Fixed Rate Non-Cumulative Perpetual Preferred Stock. In connection with the establishment of this facility, AIG issued to U.S. Treasury a warrant to purchase 3,000 shares of AIG's common stock. -- The Federal Reserve Bank of New York (FRBNY) Credit Agreement was amended to remove the minimum 3.5% LIBOR floor as of April 17, 2009. AIG Financial Products Corp unwind: -- Since December 31, 2007, the notional amount on AIGFP's derivative portfolio has been reduced by more than 40% from approximately $2.7 trillion at December 31, 2007 to approximately $1.5 trillion at March 31, 2009. -- AIGFP reduced the number of trade positions in its portfolio to approximately 28,000 at March 31, 2009, down 20% from approximately 35,000 as of December 31, 2008. Completed Asset Sales: -- AIG PhilAm Savings Bank, PhilAm Auto Financing and Leasing, and PFL Holdings to EastWest Banking Corporation for $43 million, on March 12, 2009. -- Hartford Steam Boiler (HSB) to the Munich Re Group for $739 million, plus the assumption of $76 million of outstanding HSB capital securities on March 31, 2009. -- AIG Life Insurance Company of Canada to BMO Financial Group for $263 million, on April 1, 2009. -- AIG Retail Bank Public Company Limited and its credit card operation, AIG Card (Thailand) Company Limited, in Thailand to Bank of Ayudhya Public Company Limited for approximately $45 million, plus the repayment of intra-group indebtedness of approximately $495 million, on April 8, 2009. -- AIG Private Bank Ltd. (AIG Private Bank) to a subsidiary of Aabar Investments PJSC (Aabar), a global investment company based in Abu Dhabi for approximately $253 million for the entire share capital of AIG Private Bank. Aabar also purchased and assumed approximately $55 million of intra- company loans outstanding to AIG Private Bank, on April 16, 2009. -- Deutsche Versicherungs-und Ruckversicherungs- Aktiengesellschaft (Darag), a German general insurance subsidiary of AIG affiliate Wurttembergische und Badische Versicherungs-AG (WuBa) in Germany, to Augur for approximately $26 million on April 24, 2009. Asset Sales Agreements: -- On April 16, 2009, AIG announced an agreement to sell 21st Century Insurance Group, to the Farmers Group, Inc. (FGI), a subsidiary of Zurich Financial Services. Under the terms of the transaction, FGI will pay AIG $1.9 billion, consisting of $1.5 billion in cash and $400 million in face amount of subordinated, euro-denominated capital notes backed by Zurich Insurance Company, Zurich's principal operating unit. FGI will also assume 21st Century's outstanding debt of $100 million. Maximizing the Value of the Individual Businesses: -- On April 21, 2009, AIG announced an acceleration of steps to position AIU Holdings as a distinct brand by transferring it to a special purpose vehicle (SPV) in preparation for the potential sale of a minority stake in the business, which ultimately may include a public offering of shares, depending on market conditions. AIU Holdings will serve as the holding company for AIG's Commercial Insurance, Foreign General Insurance, and Private Client Group units. AIG also announced that it intends to purchase the equity interests in International Lease Finance Corporation, United Guaranty Corporation, and Transatlantic Holdings, Inc., from AIU Holdings. -- On March 2, 2009, AIG and the FRBNY announced their intent to enter into transactions pursuant to which AIG will transfer to the FRBNY preferred equity interests in newly- formed special purpose vehicles (SPVs). Each SPV will hold (directly or indirectly) 100% of the common stock of an AIG operating subsidiary (American International Assurance Company Limited, together with American International Assurance Company (Bermuda) Limited (AIA) in one case and American Life Insurance Company (ALICO) in the other). In exchange for the preferred equity interests received by the FRBNY, there would be a concurrent reduction in the outstanding balance of the FRBNY Facility and the maximum amount available to be borrowed thereunder, subject to the $25 billion minimum. -- On March 2, 2009, AIG and the FRBNY announced their intent to enter into a transaction pursuant to which AIG will issue to the FRBNY senior certificates in one or more newly-formed SPVs backed by in-force blocks of life insurance policies in settlement of a portion of the outstanding balance of the FRBNY Facility. The amount of the FRBNY Facility reduction will be based on the amount of senior certificates issued to the FRBNY. -- The FRBNY has agreed in principle that, after repayment of the FRBNY Facility through the AIA and ALICO debt for equity exchanges and the life insurance securitizations, the commitment under the FRBNY Facility will be not less than $25 billion. -- Additionally, AIG continues to examine the feasibility of combining its Domestic Life Insurance & Retirement Services businesses to enhance market competitiveness. Progress has been made on designing an organizational and operational model, identifying capability gaps and evaluating strategic and operational synergies. Overview of Business Results General Insurance General Insurance first quarter 2009 operating income before net realized capital gains (losses) was $446 million, compared to $1.6 billion in the first quarter of 2008. The first quarter's results reflect $483 million in operating losses at United Guaranty Corporation (UGC) and a decline in net investment income, primarily due to losses from partnership and mutual fund investments. General Insurance net premiums written were $10.0 billion in the first quarter of 2009, a 17.5% decline compared to the last year's first quarter. Commercial Insurance reported net premiums written during the first quarter of 2009 of $4.2 billion, an 18.3% decline from the first quarter of 2008. The decline was driven by the effect of the economic downturn on construction, real estate and transportation-related business and Commercial Insurance's deliberate strategy to remain price disciplined in workers' compensation, as well as changes in the amount of premiums ceded to reinsurers. Aside from the effect of these three items, net premiums written declined approximately 6 percent. Net premiums written were also adversely affected by the negative AIG publicity and the broader impact of the economy, which is decreasing ratable exposures on renewal business and limiting new opportunities across other lines of business. The retention of existing business was moderately lower than in the comparable prior year period, with some de-risking among clients, although retention levels have shown improvement since the end of the first quarter of 2009. Overall, rates in Commercial Insurance were essentially flat in the first quarter of 2009 compared to the first quarter of 2008. The stabilization of rates is an improvement from the fourth quarter of 2008 and reflects the current market conditions. Foreign General net premiums written in the first quarter of 2009 were $3.6 billion, a 10.3% decline in original currency, or 18.1% including the effect of foreign exchange. Excluding the effect of Unibanco, which was sold in November 2008, Foreign General net premiums written in the first quarter of 2009 declined by 4.5% for continuing operations in original currency, or a 12.8% decline including the negative impact of foreign exchange. In Foreign General's commercial business, renewal retention was solid while rates showed continued improvement, offset by reductions in insured's values, payrolls, sales and inventories. There was also expected de-risking among commercial customers to further diversify their portfolios as well as a slight reduction in new business production. In particular, Foreign General's European operations delivered strong client retention results during their critical January 1 renewal period. AIG Private Client Group reported first quarter 2009 net premiums written of $210 million, a decrease of 2.3% compared to first quarter of 2008. At March 31, 2009, General Insurance net loss and loss adjustment reserves totaled $72.3 billion, a decline of $201 million from December 31, 2008. The foreign exchange effect for the first quarter of 2009 was a reduction of reserves of $290 million. Reserves were also reduced by $287 million due to dispositions. For the first quarter of 2009, net adverse loss development from prior accident years, excluding accretion of loss reserve discount, was $64 million. The overall adverse development consisted of approximately $131 million of favorable development from accident years 2003 through 2008, offset by approximately $195 million of adverse development from earlier accident years. Life Insurance & Retirement Services Life Insurance & Retirement Services first quarter 2009 operating income before net realized capital gains (losses) was $1.2 billion reflecting a continued difficult operating environment. The first quarter results included deferred acquisition cost (DAC) unlocking and related reserve strengthening charges of $558 million in Domestic Retirement Services. Additionally, results were affected by lower assets under management in the retirement services businesses both in the U.S. and overseas. Net investment income was affected by losses on partnership investments, lower yield enhancements and overall lower investment margins from balance sheet de-risking activities and higher short-term liquidity, as well as $235 million of fair value losses on the retained economic interest in Maiden Lane II held primarily by Domestic Life Insurance & Retirement Services. These decreases were partially offset by higher DAC benefits related to net realized capital losses. Premiums and other considerations declined 10.5%, to $8.3 billion in the first quarter of 2009. Premiums, deposits and other considerations amounted to $14.5 billion, a decline of 43.3% compared to the first quarter of 2008. Sales of investment- oriented life and retirement services products remained challenged due to the general decline in global equity markets during most of the first quarter and negative AIG publicity. In AIG's Foreign Life & Retirement Services operations, sales activity has stabilized in most regions, though sales and surrender activity in foreign investment-oriented life and retirement products, especially in Japan and Korea, remain affected due to equity market performance. Domestic Retirement Services new business has slowed principally due to several distribution partners and plan sponsors suspending or de- emphasizing sales of AIG products pending clarification of the future ownership of these businesses. Similarly, the sales outlook in Domestic Life Insurance continues to remain challenging due to the current economic environment, current ratings and the negative press surrounding AIG. Financial Services Financial Services reported a $1.1 billion operating loss before net realized capital gains (losses) and the effect of FAS 133 in the first quarter of 2009, compared to an $8.5 billion operating loss in the first quarter of 2008. AIGFP, which is in the process of winding down its businesses and portfolios, reported a $1.1 billion operating loss in the first quarter of 2009 compared to $8.9 billion in the first quarter of 2008. The first quarter 2009 operating loss included a $452 million in unrealized market valuation losses on its super senior credit default swap portfolio, $933 million of interest charges on intercompany borrowings with AIG that are eliminated in consolidation, and the effect on operating results related to the continued unwinding of the AIGFP business. These items were partially offset by a $1.7 billion favorable credit valuation adjustment. International Lease Finance Corporation (ILFC) reported a 16.2% increase in operating income to $316 million, compared to $272 million in the first quarter of 2008, driven primarily by a larger aircraft fleet and lower composite borrowing rates compared to the first quarter of 2008. American General Finance, Inc. (AGF) reported a first quarter 2009 operating loss of $203 million compared to operating income of $11 million in the first quarter of 2008, primarily due to a $186 million increase in the provision for finance receivable losses in response to higher levels of delinquencies and net charge offs. In addition, AGF reported declines in finance charges and other revenues, partially offset by improvements in operating and interest expense. Asset Management Asset Management reported a first quarter 2009 operating loss before net realized capital gains (losses) of $481 million, compared to a $154 million operating profit in the first quarter of 2008. The quarter's results reflect significant valuation adjustments of certain real estate investments, lower partnership income and lower net carried interest revenues in private equity and real estate. Other Operations The first quarter 2009 operating loss from Other Operations, before net realized capital gains (losses) and consolidation and elimination adjustments, was $3.1 billion compared to a $503 million loss in the first quarter of 2008. These results include $1.5 billion of interest expense and amortization related to borrowings under the FRBNY Facility and $1.9 billion of fair value losses on the retained equity interest in Maiden Lane III. Additional supplementary financial data and an update on AIG's restructuring efforts are available in the Investor Information section of www.aigcorporate.com. About American International Based in New York, American International Group, Inc. (AIG), is the leading international insurance organization with operation in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. During the third quarter of 2008, requirements to post collateral in connection with AIG Financial Products Corp.'s credit default swap portfolio and other AIGFP transactions and to fund returns of securities lending collateral placed stress on AIG's liquidity. AIG's stock price declined from $22.76 on September 8, 2008, to $4.76 on September 15, 2008. On that date, AIG's long-term debt ratings were downgraded by Standard & Poor's, a division of The McGraw-Hill Companies, Inc., Moody's Investors Service and Fitch Ratings, which triggered additional requirements for liquidity. These and other events severely limited AIG's access to debt and equity markets. On September 22, 2008, AIG entered into an $85 billion revolving credit agreement with the Federal Reserve Bank of New York and, pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000 shares of Series C Perpetual, Convertible, Participating Preferred Stock to a trust for the benefit of the United States Treasury. At September 30, 2008, amounts owed under the facility created pursuant to the Fed Credit Agreement totaled $63 billion, including accrued fees and interest. Since September 30, AIG has borrowed additional amounts under the Fed Facility and has announced plans to sell assets and businesses to repay amounts owed in connection with the Fed Credit Agreement. In addition, subsequent to September 30, 2008, certain of AIG's domestic life insurance subsidiaries entered into an agreement with the NY Fed pursuant to which the NY Fed has borrowed, in return for cash collateral, investment grade fixed maturity securities from the insurance subsidiaries. On November 10, 2008, the U.S. Treasury agreed to purchase, through its Troubled Asset Relief Program, $40 billion of newly issued AIG perpetual preferred shares and warrants to purchase a number of shares of common stock of AIG equal to 2% of the issued and outstanding shares as of the purchase date. All of the proceeds will be used to pay down a portion of the Federal Reserve Bank of New York credit facility. The perpetual preferred shares will carry a 10% coupon with cumulative dividends. AIG and the Fed also agreed to revise the existing FRBNY credit facility. The loan terms were extended from two to five years to give AIG time to complete its planned asset sales in an orderly manner. The equity interest that taxpayers will hold in AIG, coupled with the warrants, will total 79.9%. At September 30, 2008, AIG had $1.022 trillion in total consolidated assets and $950.9 billion in total debts. Shareholders' equity was $71.18 billion, including the addition of $23 billion of consideration received for preferred stock not yet issued. The Troubled Company Reporter reported on March 4, 2009, that Moody's Investors Service confirmed the A3 senior unsecured debt and Prime-1 short-term debt ratings of American International Group, Inc. AIG's subordinated debt rating has been downgraded to Ba2 from Baa1. The rating outlook for AIG is negative. This rating action follows AIG's announcement of net losses of $62 billion for the fourth quarter and $99 billion for the full year of 2008, along with a revised restructuring plan supported by the U.S. Treasury and the Federal Reserve. This concludes a review for possible downgrade that was initiated on September 15, 2008. AMERICAN INT'L: AIG-FP Concludes Commodity Index Business Sale -------------------------------------------------------------- AIG Financial Products Corp. (AIG-FP), an AIG company, reported that it has completed the sale of its commodity index business to the Equities business of UBS Investment Bank, including AIG's rights to the DJ-AIG Commodity Index. The purchase price for the transaction is $15 million, payable upon closing, plus additional payments of up to $135 million over the following 18 months based on future earnings of the purchased business. Approximately 13 AIG-FP employees involved with the commodity index business are joining UBS Investment Bank in connection with the sale. "With this sale, AIG has realized value from the sale of a profitable business unit of AIGFP in connection with the ongoing unwind of AIG-FP's businesses and portfolios," said Gerry Pasciucco, AIG-FP Chief Operating Officer. As previously disclosed, AIG-FP began the process of unwinding its businesses and portfolios late last year. Based in New York, American International Group, Inc. (AIG), is the leading international insurance organization with operation in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. During the third quarter of 2008, requirements to post collateral in connection with AIG Financial Products Corp.'s credit default swap portfolio and other AIGFP transactions and to fund returns of securities lending collateral placed stress on AIG's liquidity. AIG's stock price declined from $22.76 on September 8, 2008, to $4.76 on September 15, 2008. On that date, AIG's long-term debt ratings were downgraded by Standard & Poor's, a division of The McGraw-Hill Companies, Inc., Moody's Investors Service and Fitch Ratings, which triggered additional requirements for liquidity. These and other events severely limited AIG's access to debt and equity markets. On September 22, 2008, AIG entered into an $85 billion revolving credit agreement with the Federal Reserve Bank of New York and, pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000 shares of Series C Perpetual, Convertible, Participating Preferred Stock to a trust for the benefit of the United States Treasury. At September 30, 2008, amounts owed under the facility created pursuant to the Fed Credit Agreement totaled $63 billion, including accrued fees and interest. Since September 30, AIG has borrowed additional amounts under the Fed Facility and has announced plans to sell assets and businesses to repay amounts owed in connection with the Fed Credit Agreement. In addition, subsequent to September 30, 2008, certain of AIG's domestic life insurance subsidiaries entered into an agreement with the NY Fed pursuant to which the NY Fed has borrowed, in return for cash collateral, investment grade fixed maturity securities from the insurance subsidiaries. On November 10, 2008, the U.S. Treasury agreed to purchase, through its Troubled Asset Relief Program, $40 billion of newly issued AIG perpetual preferred shares and warrants to purchase a number of shares of common stock of AIG equal to 2% of the issued and outstanding shares as of the purchase date. All of the proceeds will be used to pay down a portion of the Federal Reserve Bank of New York credit facility. The perpetual preferred shares will carry a 10% coupon with cumulative dividends. AIG and the Fed also agreed to revise the existing FRBNY credit facility. The loan terms were extended from two to five years to give AIG time to complete its planned asset sales in an orderly manner. The equity interest that taxpayers will hold in AIG, coupled with the warrants, will total 79.9%. At September 30, 2008, AIG had $1.022 trillion in total consolidated assets and $950.9 billion in total debts. Shareholders' equity was $71.18 billion, including the addition of $23 billion of consideration received for preferred stock not yet issued. The Troubled Company Reporter reported on March 4, 2009, that Moody's Investors Service confirmed the A3 senior unsecured debt and Prime-1 short-term debt ratings of American International Group, Inc. AIG's subordinated debt rating has been downgraded to Ba2 from Baa1. The rating outlook for AIG is negative. This rating action follows AIG's announcement of net losses of $62 billion for the fourth quarter and $99 billion for the full year of 2008, along with a revised restructuring plan supported by the U.S. Treasury and the Federal Reserve. This concludes a review for possible downgrade that was initiated on September 15, 2008. ASAP STORAGE: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Asap Storage, Inc. 820 Marietta Way Sparks, NV 89431 Bankruptcy Case No.: 09-51373 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of Nevada (Reno) Judge: Gregg W. Zive Debtor's Counsel: Stephen R. Harris, Esq. Belding, Harris & Petroni, Ltd 417 W Plumb Lane Reno NV 89509 Tel: (775) 786-7600 Fax: (775) 786-7764 Email: steve@renolaw.biz 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/nvb09-51373.pdf The petition was signed by Christopher R. Bielser, president of the Company. BACHRACH ACQUISITION: Sends 40 Clothing Stores to Chapter 11 ------------------------------------------------------------ Bachrach Acquisition LLC filed a Chapter 11 petition on May 6 before the U.S. Bankruptcy Court for the Southern District of New York (Manhattan), Bloomberg's Bill Rochelle said. The Company said assets and debt are both less than $50 million. Wells Fargo Bank NA, owed $6.2 million, was listed as having the largest secured claim. It is secured by all assets. Simon Property Group, owed $1.2 million, was listed as having the largest unsecured claim. Bachrach Acquisition LLC is a New York-based operator of 40 men's clothing stores in 13 states. Bachrach's distribution and customer service operations remain in Decatur, Illinois, while its corporate headquarters is located in the heart of the garment district in New York City. According to Web site Bachrach.com, the Bachrach's clothing stores are owned by a group of private investors headed by Brian Lipman. BACHRACH ACQUISITION: Case Summary & 20 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Bachrach Acquisition, LLC 1430 Broadway, Suite 308 New York, NY 10018 Bankruptcy Case No.: 09-12918 Type of Business: The Debtor sells men's apparel. See http://www.bachrach.com/ Chapter 11 Petition Date: May 6, 2009 Court: Southern District of New York (Manhattan) Judge: Stuart M. Bernstein Debtor's Counsel: Clifford A. Katz, Esq. ckatz@platzerlaw.com Evan J. Salan, Esq. esalan@platzerlaw.com Henry G. Swergold, Esq. hswergold@platzerlaw.com Teresa Sadutto-Carley, Esq. tsadutto@platzerlaw.com Platzer, Swergold, Karlan, Levine, Goldberg & Jaslow, LLP 1065 Avenue of the Americas, 18th Floor New York, NY 10018 Tel: (212) 593-3000 Fax: (212) 593-0353 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Simon Property Group $1,246,47 225 West Washington Street Indianapolis, IN 46204 M&H International $827,894 1333 Broadway Suite 1112 New York, NY 10018 Vestige Design Int'l, Inc. $782,643 Attn: Alan Lim 209 W. 38th St., Suite 411 New York, NY 1001 General Growth Properties $671,674 110 N. Wacker Dr. Chicago, IL 60606 William Gilbey, Inc. $661,257 1410 Broadway 14th Fl. New York, NY 10018 CIT Group/Commercial Services $462,056 Westfield - Hawthorn, L.P. $441,103 Taubman $380,099 Race Monsieur, Inc. $365,209 Macerich Partnership $324,711 Zakaryah Inc $318,147 SG Apparel, Inc. $300,000 Braemore Neckwear Co. $272,833 Pyramid Walden Company, L.P. $227,206 Quad/Graphics Inc. $191,734 Preit $190,577 Gordon Mitchell $188,105 North Park $180,705 CBL/Properties $178,134 Fed Ex Corporation $173,225 The petition was signed by Brian Lipman, chief executive officer. BELLUS HEALTH: Has $55MM Shareholders Deficit, Going Concern Doubt ------------------------------------------------------------------ BELLUS Health, Inc., says its ability to continue as a going concern is dependent upon raising additional financing through borrowings, share issuances, receiving funds through collaborative research contracts, distribution agreements or product licensing agreements, and ultimately, from obtaining regulatory approval in various jurisdictions to market and sell its product candidates and ultimately achieving future profitable operations. BELLUS Health says the outcome of these matters is dependent on a number of factors outside of the Company's control. "These factors raise significant doubt about the Company's ability to continue as a going concern," BELLUS Health adds. BELLUS Health says management continues to actively pursue additional financing. No definitive agreements have been reached yet and there can be no assurance that such agreements will be reached. On May 6, 2009, BELLUS Health reported a net loss of US$9,907,000 for the first quarter ended March 31, 2009, compared to US$13,042,000 for the same period the previous year. The decrease in the net loss is mainly due to a reduction in research and development expenses, before research tax credits and grants, which amounted to US$3,610,000 for the current quarter, compared to US$8,780,000 for the same period the previous year. The decrease is mainly attributable to a reduction in the research and development of tramiprosate (ALZHEMED(TM); homotaurine) for the treatment of Alzheimer's disease following the Company's decision in November 2007 to terminate the tramiprosate (ALZHEMED(TM)) pharmaceutical drug development program. The Company is also developing NC-503 (eprodisate) for the treatment of Type II diabetes and certain features of metabolic syndrome. As at March 31, 2009, the Company had US$17,924,000 in total assets; US$9,800,000 in total current liabilities and US$63,626,000 in total long-term deferred gain and liabilities, resulting in US$55,502,000 in shareholders' deficiency. As at March 31, the Company had available cash, cash equivalents and marketable securities of US$3,187,000, compared to US$10,595,000 at December 31, 2008. The decrease is primarily due to funds used in operating activities. The Company has incurred significant operating losses and negative cash outflows from operations since inception and has an accumulated deficit of US$381,908,000 as at March 31, 2009. As at that date, the Company's committed cash obligations and expected level of expenses for the upcoming 12 months exceed the committed sources of funds, including the completed financing after March 31, 2009, and the Company's cash and cash equivalents on hand. On April 16, after the end of the first quarter of 2009, the Company announced the completion of the first tranche of its C$20.5 million convertible notes. BELLUS Health received gross proceeds of C$10 million for the issuance of new convertible notes. A second tranche of C$10.5 million is expected to be funded by June 2009. In March 2009, the Company announced a reduction in the workforce and other related measures which are expected to result in annual savings of approximately C$3.5 million, and the restructuring of the lease of the Company's main premises and the 2006 and 2007 convertible notes, which are expected to result in annual cash savings of approximately an additional US$4.1 million on an annual basis. BELLUS Health, in a cost-saving measure, will take steps to remove its common shares from registration under the U.S. Securities Exchange Act of 1934, as amended, by filing a Form 15 with U.S. Securities and Exchange Commission. Consequently, BELLUS Health will no longer be required to file reports with the SEC. BELLUS Health will continue to be subject to public company reporting obligations in Canada. The Company expects the steps to be completed in the coming days. In January 2009, the Company delisted its shares from NASDAQ. The Company's shares trade on the Toronto Stock Exchange. On May 5, 2009, Calin Rovinescu tendered his resignation from the Board of Directors of BELLUS Health and all of its committees, effective immediately. "I recognize the significant challenges that Calin has assumed as President and Chief Executive Officer of Air Canada. We wish him every success and thank him for his valuable contribution to our Board of Directors and its committees," said Dr. Bellini, Chairman, President and Chief Executive Officer. Vice President, Finance and Chief Financial Officer Mariano Rodriguez will depart from the Company, effective May 22, 2009. Based in Laval, Quebec, BELLUS Health Inc. (TSX: BLU) -- http://www.BellusHealth.com/-- is a global health company focused on the development and commercialization of products to provide innovative health solutions to address critical unmet needs. BERNARD L MADOFF: Irving Picard Subpoenas UBS AG on Accounts ------------------------------------------------------------ Irving Picard, the bankruptcy trustee liquidating Bernard L. Madoff Investment Securities LLC, has subpoenaed UBS AG, said a report by David Glovin, David Voreacos, and Christopher Scinta at Bloomberg News, citing people familiar with the matter. According to Bloomberg, the source said that Mr. Picard is seeking information about Madoff accounts at UBS. Bloomberg, citing the source, states that Mr. Picard is seeking information about UBS accounts held by several Madoff feeder funds and banks, including Banco Santander SA. Bloomberg quoted UBS spokesperson Karina Byrne as saying, "We have received a third-party subpoena and we are complying." A person familiar with the matter said that Plaza Investments International Ltd. is named in the UBS subpoena, Bloomberg states. Citing Plaza Investments investor and Swiss money manager Notz, Stucki & Cie, Bloomberg says that Plaza Investments placed money with Madoff. Former federal prosecutor Daniel Richman said that Mr. Picard may be seeking to identify funds from which he can clawback assets, Bloomberg relates. Mr. Picard may consult with Florida prosecutors in the UBS case as well as New York prosecutors in the Madoff case, the report states, citing Mr. Richman. Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Mr. Madoff and his investment firm with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were allegedly at least 50 billion. Also on Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. istrict Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. Mr. Madoff, if found guilty of all counts, would be imprisoned for 150 years, but legal experts expect the actual sentence to be much lower and would still be an effective life sentence for the 70- year-old defendant, WSJ notes. Mr. Madoff, WSJ relates, would also face millions of dollars in possible criminal fines. The report says that Mr. Madoff has been free on bail since his arrest on December 11, 2008. There was no plea agreement with Mr. Madoff in which leniency in sentencing might be recommended, the report states, citing prosecutors. BERNARD L MADOFF: Picard Wants to Recoup $558MM From Ezra Merkin ---------------------------------------------------------------- Amir Efrati at The Wall Street Journal reports that Irving Picard, the trustee for Bernard L. Madoff Investment Securities LLC, has filed a lawsuit against financier and former GMAC Chairman J. Ezra Merkin, asking for the return of about $558 million that Mr. Merkin withdrew from the Madoff firm. WSJ relates that Mr. Merkin ran several investment firms that channeled client money to the Madoff firm. Mr. Picard said in court documents that Mr. Merkin "knew or should have known" that Mr. Madoff was engaged in fraud. According to court documents, Mr. Picard said that as a sophisticated fund manager, Mr. Merkin should have noticed the several warning signs that could have indicated Mr. Madoff was engaged in fraud. The court documents say that Mr. Picard pointed to a small, storefront accounting firm that was Mr. Madoff's auditor as one of the clues. Mr. Picard said in court documents that Mr. Merkin received at least one financial-industry press report expressing skepticism about Mr. Madoff's investment operation, and that Mr. Merkin suffered losses in four out of 144 months for which the trustee has records, which should have tipped off Mr. Merkin that such returns weren't possible through legitimate trading. WSJ notes that Mr. Picard may have trouble collecting much of that amount, as some of it has already been distributed to Mr. Merkin's clients. He may not be able to grab the funds withdrawn if Mr. Merkin's clients, which ranged from wealthy individuals to charities and universities, had no knowledge of the Madoff fraud, WSJ states, citing lawyers familiar with the matter. Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Mr. Madoff and his investment firm with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were allegedly at least 50 billion. Also on December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. Mr. Madoff, if found guilty of all counts, would be imprisoned for 150 years, but legal experts expect the actual sentence to be much lower and would still be an effective life sentence for the 70- year-old defendant, WSJ notes. Mr. Madoff, WSJ relates, would also face millions of dollars in possible criminal fines. The report says that Mr. Madoff has been free on bail since his arrest on December 11, 2008. There was no plea agreement with Mr. Madoff in which leniency in sentencing might be recommended, the report states, citing prosecutors. BORA BORA: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Bora Bora, Inc. aka Puerto Escondido aka Bora Bora aka Drop Out aka The Method PMB 302 B5 Calle tabonuco Suite 216 Guaynabo, PR 00968-3029 Bankruptcy Case No.: 09-03693 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Debtor's Counsel: Carmen D. Conde Torres, Esq. 254 San Jose Street 5th Floor San Juan, PR 00901-1523 Tel: (787) 729-2900 Fax: (787) 729-2203 Email: notices@condelaw.com Estimated Assets: $0 to $50,000 Estimated Debts: $10,000,001 to $50,000,000 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/prb09-03693.pdf The petition was signed by Oscar Juelle, president of the Company. BRUNO'S SUPERMARKETS: Wins Nod to Sell Stores to C&S for $45.8MM ---------------------------------------------------------------- Bruno's Supermarkets LLC received approval from the U.S. Bankruptcy Court for the Northern District Alabama (Birmingham) to sell 56 supermarkets to C&S Wholesale Grocers Inc., Bloomberg's Bill Rochelle said. C&S won the auction to buy the 56 stores for $45.8 million. Bruno's said C&S will operate 31 stores and liquidate the other 25, Bill Rochelle reported. The Birmingham Business Journal said that part of the almost $46 million that creditors will get from the sale includes about $10.5 million from CVS Caremark, Target and Walgreen's, which are buying assets from Bruno's in-store pharmacies. Business Journal relates that Southern Family will operate 31 Bruno's and Food World stores and liquidate the remaining 25 with its bidding partner, Hilco Merchant Resources. C&S Wholesale Grocers of Keene, New Hampshire, claims to be the second-largest food wholesaler and the 12th largest privately held company in the U.S. The company distributes food to supermarkets, retail stores, and military bases across the country. Currently, C&S serves over 5,000 stores from over 70 locations in 12 states. Its customers include Stop & Shop, Royal Ahold (Giant-Carlisle and Giant-Landover), Albertson's (Shaw's), Bi-Lo/Bruno's, Great Atlantic & Pacific TeaCo. (A&P), Pathmark, Safeway, and Target. The Bankruptcy Court last week denied Bruno's motion to terminate the existing labor contract. According to Bill Rochelle, the Company argued to Judge Benjamin Cohen that no one would buy the stores and continue operations so long as the contract remains in place with the United Food & Commercial Workers Union. The union countered with evidence that two buyers would bid at auction with the understanding that completion of the sale would depend on successfully negotiating a new contract with the union. The Court denied Bruno's request to scrap its union contract in its entirety, based on that evidence. The union vowed to strike if the collective bargaining agreement were terminated by the Court. About Bruno's Supermarkets Bruno's Supermarkets, LLC, is a privately held company headquartered in Birmingham, Alabama. Bruno's is the parent company of the Bruno's, Food World, and FoodMax grocery store chains, which includes 23 Bruno's, 41 Food World, and 2 FoodMax locations in Alabama and the Florida panhandle. Founded in 1933, Bruno's has operated as an independent company since 2007 after undergoing several transitions and changes in ownership starting in 1995. Bruno's filed for Chapter 11 relief on February 5, 2009 (Bankr. N.D. Ala. Case No. 09-00634). Burr & Forman LLP is the Debtor's lead counsel. Najjar Denaburg, P.C., is the Debtor's conflicts counsel. Greenberg Traurig, LLP, is the official committee of unsecured creditors' counsel. Alvarez & Marsal is the Debtor's restructuring advisor. When Bruno's filed for Chapter 11 protection from its creditors, it listed assets and debts of between $100 million and $500 million each. CAPITAL CORP: Receives Default Notice on Bank Takeover ------------------------------------------------------ Capital Corp. of the West, the holding company for County Bank of Merced, California, received a notice of default with respect to $25.8 million in floating rate junior subordinated debentures due 2037. Capital Corp of the West said in a regulatory filing it is obligated under an indenture dated as of October 31, 2007, for floating rate junior subordinated deferrable interest debentures due 2037. Wilmington Trust Company is the trustee under the indenture. The amount of these subordinated debt securities is $25,774,000 plus interest accrued since the Company elected in July 2008 to defer quarterly interest payments due for the second quarter and thereafter. On April 29, 2009, the Company received from Wilmington Trust Company as trustee under the indenture a purported notice of default dated April 21, 2009, asserting that the closing of the Company's subsidiary County Bank violated the provision of the indenture that requires the Company to have an operating subsidiary that is an insured depository institution. Under the indenture, the Company generally has 60 days after notice to remedy an alleged default before it can become an "event of default". The Company has no plans to contest the closing of County Bank. Wilmington Trust's notice, according to the filing with the Securities and Exchange Commission, also asserts that the seizure of the Bank violates the provision that makes it an event of default for a substantial portion of the Company's property to become subject to a court-ordered receivership if the receivership remains in effect for 90 days. The 90th day of County Bank's receivership is May 6, 2009. However, the receivership is not the result of a "decree or order" of a "court of competent jurisdiction." The Company said that upon the occurrence of an event of default, the entire principal, premium and any accrued unpaid interest may be declared immediately due and payable without further action by either the trustee or the holders of the related trust preferred securities. The Company has three other series of indentures and related trust preferred securities. The trustees under the three other indentures have sent similar notices. As reported by the TCR, County Bank, based in Merced, California, was closed February 6, 2009, by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Westamerica Bank, based in San Rafael, California, to assume all of the deposits of County Bank. As of February 2, 2009, County Bank had total assets of approximately $1.7 billion and total deposits of $1.3 billion. In addition to assuming all of the failed bank's deposits, including those from brokers, Westamerica Bank agreed to purchase all of County Bank's assets. A total of 32 banks have been closed as of May 1 this year. Only 25 banks were shut by regulators in 2008. CARITAS HEALTHCARE: Saint Vincents Discloses Pursuit of Claims -------------------------------------------------------------- Saint Vincent Catholic Medical Centers said it is prosecuting its interests in the bankruptcy cases of Caritas Health Care, Inc. Effective January 1, 2007, Caritas Health Care, formerly known as Caritas Health Care Planning, Inc., acquired Mary Immaculate Hospital, Queens, St. John's Queens Hospital, and certain related assets from Saint Vincent Catholic Medical Centers and certain of its affiliates pursuant to an Asset Purchase Agreement dated as of May 9, 2006. The U.S. Bankruptcy Court for the Southern District of New York, which oversees SVCMC's bankruptcy cases entered orders on May 17 and June 28, 2006, approving the deal. In consideration for the Queens Assets, Caritas delivered to SVCMC two secured promissory notes, each in the principal amount of $5,000,000, secured by, among other things, the Queens Assets. On February 28, Mary Immaculate Hospital and St. John's Queens Hospital closed. According to Carolina Leid at WABC, Mary Immaculate and St. John's stopped accepting patients. Additionally, the Debtors informed the Court that, as of April 15, 2009, more than 3,300 proofs of claim have been filed in their cases, of which the Debtors have undertaken, and are undertaking, a comprehensive review and reconciliation. Andrew M. Troop, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, reported that the Debtors have filed 19 omnibus objections to approximately 1,500 proofs of claim, certain of which they have sought to disallow and expunge, reduce, and reclassify. The Debtors have filed objections to certain claims on an individual basis, and have resolved a number of claims by stipulations or settlements, which previously have been approved by the Court. Pursuant to the Plan, the Debtors are authorized to resolve disputed claims without further Court order. The Plan provides for the liquidation of medical malpractice claims as to their amounts in accordance with non-bankruptcy law, which, in certain instances, may require approval of a state court, Mr. Troop noted. Mr. Troop disclosed that as of April 15, 2009, four claims have been allowed, totaling $29,500. Mr. Troop disclosed that the Debtors have not made any distributions to unsecured creditors since the Seventh Status Report was filed. About Caritas Health Care Inc. Caritas Health Care Inc. is the owner of Mary Immaculate Hospital and St. John's Queens Hospital. Caritas, created by Wyckoff Heights Medical Center, purchased the two hospitals in a bankruptcy sale in early 2007 from St. Vincent Catholic Medical Centers of New York. St. John's has 227 generate acute-care beds while Mary Immaculate has 189. Caritas Health Care and eight of its affiliates filed for Chapter 11 on February 6, 2009 (Bankr. E.D. N.Y., Lead Case No. 09-40901). Adam T. Berkowitz, Esq., at Proskauer Rose LLP, has been tapped as counsel. JL Consulting LLC is the Debtors' restructuring advisors. Caritas in its bankruptcy petition estimated assets of $50 million to $100 million, and debts of $100 million to $500 million. About Saint Vincent Catholic Medical Centers Saint Vincent Catholic Medical Centers -- http://www.svcmc.org/-- is anchored by St. Vincent's Hospital Manhattan, an academic medical center located in Greenwich Village and the only emergency room on the Westside of Manhattan from Midtown to Tribeca, St. Vincent's Westchester, a behavioral health hospital in Westchester County, and continuing care services that include two skilled nursing facilities in Brooklyn, another on Staten Island, a hospice, and a home health agency serving the Metropolitan New York area. Its behavioral health services also provide supportive housing programs for people with mental illness throughout the Metropolitan area. Saint Vincent's is the designated provider for the New York and New Jersey region of the US Family Health Plan sponsored by the US Department of Defense. Saint Vincent's serves as the academic medical center of New York Medical College in New York City. The healthcare organization is sponsored by the Roman Catholic Bishop of Brooklyn and the president of the Sisters of Charity of New York. Saint Vincent Catholic Medical Centers of New York and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' Chapter 11 cases. On September 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represented the Official Committee of Unsecured Creditors. As of April 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. The Debtors filed their Chapter 11 plan of reorganization and a disclosure statement explaining that Plan on February 9, 2007. On June 1, 2007, the Debtors filed an Amended Plan & Disclosure Statement. (Saint Vincent Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). CDX GAS: Files Disclosure Statement and Reorganizational Plan ------------------------------------------------------------- CDX Gas LLC and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the Southern District of Texas a disclosure statement explaining its Chapter 11 plan of reorganization. The Plan, among other things, does not provide for any distribution to holders of general unsecured claims. The Court has not set a date to consider approval of the adequacy of the information in the Disclosure Statement. A full-text copy of the Disclosure Statement is available for free at http://ResearchArchives.com/t/s?3c8f A full-text copy of the proposed Chapter 11 Plan is available for free at http://ResearchArchives.com/t/s?3c90 Based in Houston, Texas, CDX Gas LLC -- http://www.cdxgas.com/-- is an independent gas company that explores, develops, and produces onshore North American unconventional natural gas resources located in coal, shale, and tight gas sandstone formations. The Company and 19 of its affiliates filed for Chapter 11 protection on December 12, 2008 (Bankr. S.D. Tex. Lead Case No. 08-37922). Harry Perrin, Esq., D. Bobbitt Noel, Esq., John E. Mitchell, Esq., and Michaela C. Crocker, Esq., at Vinson Elkins LLP, represent the Debtors in their restructuring efforts. In its schedules, CDX listed total assets of $996,308,606 and total debts of $831,259,526. * * * The Debtors' exclusive period to file a plan will expire on July 30, 2009, and its solicitation period will end on September 28, 2009. CHARTER COMMUNICATIONS: Discloses Interest in SFC Transmissions --------------------------------------------------------------- Gregory L. Doody, chief restructuring officer and senior counsel to Charter Communications, Inc., discloses in a report filed with the U.S. Bankruptcy Court for the Southern District of New York, that Debtors Falcon Cable Systems Company II and Charter Communications Properties, LLC disclose that they hold substantial or controlling interest in SFC Transmissions. A copy of the report containing SFC's statement of operations for the year ended, and balance sheet as of, December 31, 2008, can be accessed at no charge at: http://bankrupt.com/misc/charter_SFCholdingsReport.pdf Based in St. Louis, Missouri, Charter Communications, Inc. (Pink OTC: CHTRQ) -- http://www.charter.com/-- is a broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. On March 16, 2009, Charter Communications filed its annual report on Form 10-K, which contained a going concern modification to the audit opinion from its independent registered public accounting firm. Charter Communications and more than a hundred affiliates filed voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y. Case No. 09-11435). Pacific Microwave filed for bankruptcy protection on April 20, 2009, disclosing assets of not more than $50,000 and debts of more than $1 billion. The Hon. James M. Peck presides over the cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as counsel to the Debtors, excluding Charter Investment Inc. Albert Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet-Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts counsel. Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the Debtors' independent auditors. The Debtors' valuation consultants are Duff & Phelps LLC; the Debtors' financial advisors are Lazard Freres & Co. LLC; and the Debtors' restructuring consultants are AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008, the Debtors had total assets of $13,881,617,723, and total liabilities of $24,185,668,550. Bankruptcy Creditors' Service, Inc., publishes Charter Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Charter Communications and more than 100 of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHARTER COMMUNICATIONS: P. Allen, et al., Disclose Equity Stake --------------------------------------------------------------- In separate regulatory filings with the Securities and Exchange Commission dated April 30, 2009, several parties disclosed that they disposed of certain shares of their Class A Common Stock issued by Charter Communications Inc. Reporting Securities Remaining Securities Person Disposed Beneficially Owned --------- -------- ------------------ Paul G. Allen 64,356 28,467,421 Lance Conn 64,356 114,799 Robert P. May 64,356 223,851 Larry W. Wangberg 64,356 131,264 John H. Tory 64,356 132,564 David C. Merritt 64,356 128,264 Jo Allen Patton 64,356 129,540 As of March 31, 2009, Charter had 392,705,927 shares of Class A common stock outstanding and 50,000 shares of Class B common stock outstanding. On April 30, 2009, Charter Communications, Inc., filed its Annual Report on Form 10-K/A with the Securities and Exchange Commission, which reveals information and compensation of Charter's directors and executive officers. Charter also discloses that as of March 31, 2009, it had 392,705,927 shares of Class A common stock outstanding and 50,000 shares of Class B common stock outstanding. Charter's directors and officers are: Name Position ---- -------- Paul G. Allen Chairman of the board of directors W. Lance Conn Director Rajive Johri Director Robert P. May Director David C. Merritt Director Jo Allen Patton Director Neil Smit Director, President and Chief Executive Officer John H. Tory Director Larry W. Wangberg Director Michael J. Lovett Executive Vice President and Chief Operating Officer Eloise E. Schmitz Executive Vice President and Chief Financial Officer Grier C. Raclin Executive Vice President, General Counsel and Corporate Secretary Marwan Fawaz Executive Vice President and Chief Technology Officer Ted W. Schremp Executive Vice President and Chief Marketing Officer Gregory L. Doody Chief Restructuring Officer and Senior Counsel Joshua L. Jamison President, East Operations Steven E. Apodaca President, West Operations Kevin D. Howard Vice President, Controller and Chief Accounting Officer The filing also discusses the compensation of the directors and officers, as well as their incentive and bonus programs and awards. A summary of the compensation to the executive officers rendered for the fiscal years ended December 31, 2008, 2007 and 2006 reveals: Total Officer's Name Year Compensation -------------- ---- ------------ Neil Smit 2008 $15,384,838 2007 6,227,866 2006 5,911,425 Eloise E. Schmitz 2008 2,066,388 2007 1,180,353 2006 709,503 Jeffrey T. Fisher 2008 2,042,910 2007 1,837,127 2006 1,370,793 Michael J. Lovett 2008 7,204,836 2007 4,336,289 2006 2,022,674 Grier C. Raclin 2008 2,408,690 2007 1,528,596 2006 1,104,537 Marwan Fawaz 2008 2,777,679 2007 1,275,881 2006 695,309 The complete Form 10-K/A is available at the SEC's Web site at: http://researcharchives.com/t/s?3c7a Based in St. Louis, Missouri, Charter Communications, Inc. (Pink OTC: CHTRQ) -- http://www.charter.com/-- is a broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. On March 16, 2009, Charter Communications filed its annual report on Form 10-K, which contained a going concern modification to the audit opinion from its independent registered public accounting firm. Charter Communications and more than a hundred affiliates filed voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y. Case No. 09-11435). Pacific Microwave filed for bankruptcy protection on April 20, 2009, disclosing assets of not more than $50,000 and debts of more than $1 billion. The Hon. James M. Peck presides over the cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as counsel to the Debtors, excluding Charter Investment Inc. Albert Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet-Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts counsel. Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the Debtors' independent auditors. The Debtors' valuation consultants are Duff & Phelps LLC; the Debtors' financial advisors are Lazard Freres & Co. LLC; and the Debtors' restructuring consultants are AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008, the Debtors had total assets of $13,881,617,723, and total liabilities of $24,185,668,550. Bankruptcy Creditors' Service, Inc., publishes Charter Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Charter Communications and more than 100 of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHARTER COMMUNICATIONS: Plan Confirmation Hearing on July 20 ------------------------------------------------------------ Charter Communications, Inc. and its subsidiaries said May 5, 2009, that the United States Bankruptcy Court for the Southern District of New York approved the Disclosure Statement filed in connection with their proposed pre-arranged Joint Plan of Reorganization and authorized the Company to begin soliciting votes on the Pre-Arranged Plan. At Charter's confirmation hearing, the Court will consider approval of the Pre-Arranged Plan, including the reinstatement of the debt of CCO Holdings, LLC and Charter Communications Operating, LLC, both subsidiaries of Charter. Charter's Pre-Arranged Plan is supported by Paul G. Allen and his affiliates, as well as by holders of approximately 73% in principal amount of the 11.00% Senior Secured Notes due 2015 of CCH I, LLC and approximately 52% in principal amount of the 10.25% Senior Notes due 2010 and 2013 of CCH II, LLC. "We are pleased to have reached this important milestone in our financial restructuring, and now with the Court's authorization, we can begin the solicitation of stakeholder votes on our Pre- Arranged Plan," said Neil Smit, Charter's president and chief executive officer. "Charter continues to remain focused on offering our customers the latest products and reliable services, including cable, Internet and phone service. We are moving forward on our financial restructuring as planned and expect to emerge as a stronger company." Charter will soon begin the process of soliciting votes for the Pre-Arranged Plan from eligible stakeholders. The Court has set the voting deadline for June 15, 2009, for eligible stakeholders. The Court scheduled the hearing to consider confirmation of the Pre-Arranged Plan for July 20, 2009. The Court's order approving the Disclosure Statement was not yet available as of press time. Reports note that although the date has been set for the Plan Confirmation Hearing, lender objections remain. Charter Files Amended Plan & Disclosure Statement Prior to Charter's announcement of the Court's approval of its Disclosure Statement, the company delivered to the Court on May 1, 2009, a First Amended Joint Plan of Reorganization and accompanying Disclosure Statement. The Plan and Disclosure Statement were modified to add, among other things, provisions relating to or in response to the many objections of the Debtors' original plan of reorganization and disclosure statement. The Objecting Parties include Law Debenture Trust Company of New York, the United States Trustee, JPMorgan Chase Bank, N.A., an unofficial committee of unaffiliated lenders known as the First Lien Lender Group, Wells Fargo Bank, N.A., Philip Powers, et al., Rembrandt Technologies, L.P., and Rembrandt Technologies, LLC. The Debtors noted that by including certain languages to the Disclosure Statement, they were able to resolve consensually most of the original Disclosure Statement's objections. They added that those that could not be resolved are premature confirmation objections or otherwise should not prevent approval of the Disclosure Statement. A copy of the table showing the Debtors' specific responses and resolutions to each of the Objecting Parties' issues can be obtained for free at: http://bankrupt.com/misc/CCI_Response_DS_Objections.pdf The Official Committee of Unsecured Creditors also objected to the approval of the Original Disclosure Statement saying it fails to provide adequate information necessary for certain creditor classes to assess the merits of the Original Plan and the rights offering referenced in that Plan. The Creditors Committee insisted that greater disclosure should be given concerning the proposed Rights Offering and the "CII Settlement," among others. A whole subsection under the title "Summary of Legal Proceedings" is added to the Amended Plan to present the "Challenges to the Plan." Among others, the Debtors discuss the objections filed by First Lien Lenders and JPMorgan Chase Bank, N.A., and the Debtors response to the objections. The Debtors also modified the Releases in the Amended Plan to explain certain provisions. The Debtors assert that the Third Party Release will not impair the rights to which an Allowed Unimpaired Claim entitles the Holder of that Allowed Unimpaired Claim. They point out that Third Party Release is justified as an integral part of the Debtors' overall restructuring efforts. Specifically, the Debtor Releasees and non-Debtor Releasees have all made substantial contributions to the Debtors' bankruptcy estates indeed, without those contributions the Debtors could not have proposed a confirmable Plan, the Debtors say. Releasees include Mr. Allen and the Debtors' officers and advisors. Claims and Interests The Amended Disclosure Statement provides that holders of Claims or Interests in these classes may vote for or against the Amended Plan: Estimated Class Description Allowed Amt. ----- ----------- ------------ Class A-3 General Unsecured Claims against $1,019,317 Charter Communications, Inc. Class A-4 CCI Notes Claims 497,489,463 Class B-3 General Unsecured Claims against 5,900,000 Charter Investment, Inc. Class B-4 CII Shareholder Claims -- Class C-3 General Unsecured Claims against -- Charter Communications Holdings Company LLC, Enstar Communications Corporation & Charter Gateway LLC Class C-4 Holdco Notes Claims 497,489,463 Class D-3 General Unsecured Claims against -- CCHC LLC Class E-3 General Unsecured Claims against -- Charter Communications Holdings, LLC and Charter Communications Holdings Capital Corp. Class E-4 CCH Notes Claims 599,379,759 Class F-3 General Unsecured Claims against -- CCH I Holdings, LLC and CCH I Holdings Capital Corp. Class F-4 CIH Notes Claims 2,625,060,226 Class G-3 General Unsecured Claims against -- CCH I and CCH I Capital Corp. Class G-4 CCH I Notes Claims 4,170,040,378 Class H-3 General Unsecured Claims against -- CCH II and CCH II Capital Corp. Class H-4 CCH II Notes Claims 2,575,678,701 Class I-5 General Unsecured Claims against -- CCO Holdings LLC and CCO Holdings Capital Corp. Class J-2 CCO Swap Agreements Claims 497,417,000 Class J-6 General Unsecured Claims against 42,207,023 CCO and its direct and indirect subsidiaries Each holder of CCH I Notes Claims that affirmatively represents it is not an Eligible CCH I Notes Claim Holder on a timely submitted investor certification will receive an amount of New Class A Stock equal to the value of the Rights that the Holder would have been offered if it were an accredited investor or qualified institutional buyer participating in the Rights Offering, which amount will be determined following receipt of the investor certification described in the Rights Offering Documents. The value of a Right will be determined by CCI in good faith and in consultation with its financial advisor. The Disclosure Statement discloses that Charter Communications Holding Company, LLC, is the direct 100% parent of CCHC. As of February 28, 2009, the common membership units of Holdco are owned approximately 54% by CCI and 46% by CII. The estimated recovery of Class A-4 CCI Notes Claims under the Amended Plan is 19.4%. Recoveries for holders of Claims against CCI are in part on account of intercompany claims against CCO and include liabilities payable to third parties, cash and intercompany loans and airplane capital lease obligations. Rights Offering The Debtors intend to raise funds through the issuance of Rights by the Reorganized Company that may be exercised for New Class A Stock through the Rights Offering. Under the Rights Offering, the Reorganized Company will offer to existing holders of CCH I Notes that are Eligible CCH I Notes Claim Holders the ability to purchase shares of the New Class A Stock pro rata based on a fraction to be issued upon the Debtors' emergence from bankruptcy, in exchange for a cash payment per share at a 25% discount to the Plan Value minus the Warrant Value per share of the Reorganized Company upon its emergence from bankruptcy. The Rights will not be listed or quoted on any public or over-the- counter exchange or quotation system and there is no assurance that an active trading market for the Rights will develop. However, the Rights will be independently transferable through the expiration date of the Rights Offering subject to a right of first refusal in favor of certain Equity Backstop Parties. Additional information and instructions regarding participation in the Rights Offering will be sent separately to holders of CCH I Notes. The right of first refusal may discourage third parties from attempting to purchase any Rights. As a result, unless Eligible CCH I Notes Claim Holders exercise their Rights, they may not be able to realize any value attributable to those Rights. All holders of CCH I Notes Claims as of April 17, 2009, have been sent an investor certification. Only Eligible CCH I Notes Claim Holders will be eligible to participate in the Rights Offering. All Eligible CCH I Notes Claim Holders will be mailed the Rights Offering Documents, on or about May 12, 2009. A holder of CCH I Notes Claims as of the Rights Offering Record Date that does not return the investor certification by May 11, 2009, will forfeit all rights that it may have had under the Rights Offering with respect to its CCH I Notes Claim. CII Settlement The Amended Plan provides for a settlement and compromise of the legal, contractual and equitable rights, Interests, Claims and remedies of Paul G. Allen and certain persons and entities affiliated with him against the Debtors other than Charter Investment, Inc., in exchange for certain consideration under the Amended Plan. The CII Settlement Claim Party is defined as Mr. Allen, his estate, spouse, immediate family members and heirs, any trust in which Mr. Allen is the grantor or which is created as a result of his death, CII and any other Allen Entity, provided that in no event will the "CII Settlement Claim Party" include any public company. Under the CII Settlement, subject to certain exceptions, the CII Settlement Claim Parties will compromise any Claim or Interest held by a CII Settlement Claim Party on the Effective Date against a Debtor, other than CII, including: -- 28,467,421 shares of Class A Common Stock of CCI; -- 10,000 vested options to acquire shares of Class A Common Stock of CCI; -- 64,356 shares of unvested restricted Class A Common Stock of CCI; -- 50,000 shares of Class B Common Stock of CCI; -- 324,300,479 Class A Common Units of Holdco; -- 14,831,552 Class C Common Units of Holdco; -- rights under the CCI-CII Exchange Agreement; -- all Interests with respect to 7,282,183 CC VIII Preferred Units; -- the CCHC Note; -- accrued and unpaid management fees owing to CII under the Management Agreement; -- rights under a letter agreement dated as of September 21, 1999, among Vulcan Ventures, Inc., an entity controlled by Mr. Allen, CCI, CII and Holdco, which would have granted Vulcan Ventures, Inc., exclusive rights for carriage of up to eight digital channels of each of the Debtors', other than CII's, cable systems; -- rights under that certain Consulting Agreement, dated as of March 10, 1999 by and among Vulcan, Inc., an entity controlled by Mr. Allen, CCI and CCH, which provides for payment of a fee to Vulcan, Inc. for assistance with acquisitions by CCI or CCH; and -- any other Claim or Interest held by a CII Settlement Claim Party, including any rejection damages Claims, other than Claims and certain Executory Contracts specifically excluded. The Amended Plan also provides that certain Claims and Interests held by the CII Settlement Claim Parties will not be compromised under the CII Settlement, including those under certain executory contracts, indemnification agreements and notes issued by the Debtors. The Debtors note that they are seeking approval of the CII Settlement in conjunction with the Amended Plan pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure. The Debtors intend to present their case in favor of the CII Settlement at the confirmation hearing and believe the CII Settlement satisfies the standards for approving settlements in bankruptcy cases. Absent the CII Settlement, among other things, the Debtors assert that the Amended Plan would not be feasible because they would not be able to reinstate certain debt obligations at CCO and CCOH. According to the Debtors, the CII Settlement was motivated in part by a desire to ensure that the CII Settlement Claim Parties caused CII to remain a member of Holdco through the Effective Date, thereby ensuring that a proportionate amount of the cancellation of debt income that will be generated by the consummation of the Amended Plan will be allocated to the CII Settlement Claim Parties. In turn, the Debtors continued, this will result in the retention of a larger portion of the tax attributes, including net operating losses that will be available to the Reorganized Company following the Effective Date. If the CII Settlement Claim Parties converted their interest in Holdco into stock of CCI prior to the Effective Date, all of the cancellation of debt income resulting from the consummation of the Amended Plan would be allocated to the Reorganized Company, which would result in the Reorganized Company having significantly less valuable tax attributes available after the Effective Date, they note. The benefit to the Debtors from the CII Settlement is derived not only from the tax benefits and the settlement and compromise of the rights, Claims, Interests and remedies set forth in the Plan, but also from the fact that without the Debtors' negotiation of the terms of the CII Settlement, the Amended Plan would not exist. It is only through Mr. Allen's agreement with the terms of the CII Settlement that the Debtors are able to avoid the occurrence of a "Change of Control," as defined in the CCO Credit Facility, the Amended Disclosure Statement explains. Treatment of Agreements and Contracts The Amended Plan provides that (i) all of the Debtors' executory contracts, except certain exceptions specified in the Plan and the Plan Supplement, will be deemed assumed as of the Effective Date, and (ii) for each of the Executory Contracts to be assumed, the Debtors will designate a proposed cure, and any disagreements as to the proposed cure must be filed by the cure bar date. The Cure Bar Date will not apply to any franchise or Executory Contract with a local franchise authority. The Second Amended and Restated Mutual Services Agreement, dated as of June 19, 2003, between CCI and Holdco will be deemed assumed as of the Effective Date. The consulting agreement, dated as of March 10, 1999, among Vulcan Inc., CCI, and CCH, which provides for payment of a fee to Vulcan Inc. for assistance with acquisitions made by CCI or CCH, will be terminated without any further obligation on the part of the reorganized CCI or any of its subsidiaries as of the Effective Date, and all claims existing under the Consulting Agreement at termination will be released and discharged as of the Effective Date, provided that the Allen Management Receivable will be paid in accordance with the CII Settlement under the Amended Plan. Reorganized Company's Capitalization Upon Consummation of the Plan The Reorganized Company's and its consolidated subsidiaries' cash and cash equivalents and capitalization as of February 28, 2009, (i) on an actual basis, and (ii) on an as-adjusted basis to reflect the consummation of the Amended Plan and application of the proceeds from the Rights Offering and New CCH II Notes Commitment, assuming $267 million aggregate principal amount of New CCH II Notes are issued and sold pursuant to the New CCH II Notes Commitment, and assumes an Effective Date of September 30, 2009: As of February 28, 2009 Pre- Post- Emergence Emergence ------------------------ (Unaudited) (in millions except per share data) ----------------------- Cash and Cash Equivalents $722 $571 Long-Term Debt: Charter Communications, Inc.: 5.875% convertible senior notes due 2009 3 ? 6.500% convertible senior notes due 2027 376 ? Charter Communications Holdings, LLC: Senior and senior discount notes 440 ? CCH I Holdings, LLC: Senior and senior discount notes 2,534 ? CCH I, LLC: 11.000% senior notes due 2015 4,071 ? CCH II, LLC: 10.250% senior notes due 2010 1,857 ? 10.250% senior notes due 2013 598 ? 13.500% senior notes due 2016 ? 1,706 CCO Holdings, LLC: 8.750% senior notes due 2013 797 797 Charter Communications Operating, LLC: 8.000% senior second lien notes due 2012 1,100 1,100 8?% senior second lien notes due 2014 770 770 10.875% senior second lien notes due 2014 527 527 Credit Facilities: CCOH 350 350 CCO 8,247 8,247 ----------------------- Total Long-Term Debt 21,670 13,497 Loans Payable ? Related Party 76 ? Preferred Stock ? 72 Noncontrolling Interest 167 ? Shareholders' Equity (Deficit) (10,544) 2,413 ----------------------- Total Capitalization $11,369 $15,982 ======================= Reorganized Company's Ownership Upon emergence, all shares of New Class B Stock will be owned by Mr. Allen and entities affiliated with Mr. Allen, which will be approximately 2% of the outstanding New Common Stock and 35% of the voting power of all of the outstanding New Common Stock. The Debtors note that the identity of the owners of the New Class A Stock upon emergence, which will be approximately 97% of the outstanding New Common Stock, including the impact of the exchange of reorganized Holdco equity for New Class A Stock by Mr. Allen and certain of his affiliates, and 65% of the voting power of all of the New Common Stock, is not determinable at this time because, among other reasons, the identity of all creditors receiving New Class A Stock is not known. Shares of New Class A Stock will be distributed upon emergence as: -- approximately 19.5% of the New Class A Stock will be distributed to CCH I Notes Claim Holders; and -- approximately 80.5% of the New Class A Stock will be sold pursuant to the Rights Offering. The allocation of New Class A Stock does not give effect to New Class A Stock distributable upon exercise of: -- CIH Warrants, which are exercisable for 5% of that number of shares of New Common Stock outstanding upon emergence, on a fully-diluted basis; -- CCH Warrants, which are exercisable for 1% of that number of shares of New Common Stock outstanding upon emergence, on a fully-diluted basis; -- CII Settlement Claim Warrants, which are exercisable for 4% of that number of shares of New Common Stock outstanding upon emergence, on a fully-diluted basis; and -- the Overallotment Option, which is the option to purchase additional shares of New Class A Stock at the Per Share Purchase Price for approximately 16% of the shares of New Common Stock to be outstanding upon emergence. Other Provisions In addition, the Debtors' Management Incentive Plan will include, among other things, an allocation of equity-based awards of New Class A Stock in the amount of 3% of the shares of New Class A Stock outstanding on the Effective Date. The parties who have committed to purchase New Class A Stock are affiliates of Apollo Management, Crestview Partners, Franklin Templeton, MFC Global, Oaktree Capital, and Western Asset Management. If the Overallotment Option is exercised, holders of New Common Stock and Warrants will suffer dilution of their investment due to sales of New Common Stock at a discount to the valuation used to satisfy Claims, the Debtors said. Issuances of awards under the Management Incentive Plan may also dilute the investment of holders of New Class A Stock and Warrants. Copies of the Amended Plan and Disclosure Statement are available for free at: * http://bankrupt.com/misc/CCI_1stAmendedPlan.pdf * http://bankrupt.com/misc/CCI_1stAmendedPlan_Blacklined.pdf * http://bankrupt.com/misc/CCI_Amended_DS.pdf * http://bankrupt.com/misc/CCI_Amended_DS_Blacklined.pdf The Debtors also filed an amended and restated Exhibit 19 to the Plan Supplement. Exhibit 19 contains the Rights Offering Procedures. A copy of Exhibit 19 can be obtained for free at: http://bankrupt.com/misc/CCI_Amended_PlanSupp_Exh19.pdf Based in St. Louis, Missouri, Charter Communications, Inc. (Pink OTC: CHTRQ) -- http://www.charter.com/-- is a broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. On March 16, 2009, Charter Communications filed its annual report on Form 10-K, which contained a going concern modification to the audit opinion from its independent registered public accounting firm. Charter Communications and more than a hundred affiliates filed voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y. Case No. 09-11435). Pacific Microwave filed for bankruptcy protection on April 20, 2009, disclosing assets of not more than $50,000 and debts of more than $1 billion. The Hon. James M. Peck presides over the cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as counsel to the Debtors, excluding Charter Investment Inc. Albert Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet-Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts counsel. Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the Debtors' independent auditors. The Debtors' valuation consultants are Duff & Phelps LLC; the Debtors' financial advisors are Lazard Freres & Co. LLC; and the Debtors' restructuring consultants are AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008, the Debtors had total assets of $13,881,617,723, and total liabilities of $24,185,668,550. Bankruptcy Creditors' Service, Inc., publishes Charter Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Charter Communications and more than 100 of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHARTER COMMUNICATIONS: Pacific Microwave Unit Files Schedules -------------------------------------------------------------- Pacific Microwave filed with the U.S. Bankruptcy Court for the Southern District of New York its schedules of assets and liabilities, disclosing: A. Real Property $ 0 B. Personal Property B.13 Stocks and interest Undetermined See: http://bankrupt.com/misc/charter_salB13.pdf B.14 Interests in partnerships and Undetermined joint ventures See: http://bankrupt.com/misc/charter_salB14.pdf B.23 Licenses, franchises, and other Undetermined general intangibles TOTAL SCHEDULED ASSETS $0 =========================================================== C. Property Claimed as Exempt N/A D. Secured Claim New Term Loan, JP Morgan Chase Bank $495,000,000 Revolving Loan Facility, JP Morgan C 1,445,008,533 Term Loan B, JP Morgan Chase Bank 6,449,813,583 8% Senior Second lien Notes due 2012 Wilmington Trust Company 1,135,688,889 8 3/8% Senior Second Lien Notes, due Wilmington Trust Company 796,576,156 E. Unsecured Priority Claims 0 F. Unsecured Non-priority Claims 0 TOTAL SCHEDULED LIABILITIES $10,322,087,161 =========================================================== Pacific Microwave also filed its statement of financial affairs. Eloise Schmitz, executive vice president and chief financial officer of Pacific Microwave, discloses that Pacific Microwave did not earn any income for the two years immediately preceding its Petition Date. She discloses, however, that the Debtor made several transfers within two years prior to the Petition Date, a list of which is available for free at: http://bankrupt.com/misc/charter_transfers.pdf Within the six years immediately preceding the Petition Date, the Debtor is an officer of several businesses, a list of which is available for free at: http://bankrupt.com/misc/charter_businesses.pdf Within two years prior to the Petition Date, KPMG LLP, in St. Louis, Missouri, has audited the Debtor's books of accounts and record. Also, these officers handle the Debtor's books of accounts: Name Title Period -------------- ----------- ------------------ Eloise Schmitz Chief Financial Officer 04/04/08 - present Jeffrey T. Fisher Chief Financial Officer 02/06/06 - 04/04/08 Kevin Howard Controller, Chief Accounting Officer 04/2007 - present Mr. Howard, Ms. Schmitz, PricewaterhouseCoopers LLP, Swink, Fiehler & Company, P.C., and Ernst & Young, were in possession of the Debtor's books of accounts at the time of the Chapter 11 petition. Falcon Cable Systems Company and Falcon Community Ventures I, LP, both have 50% interest in the Debtor. Both entities are general partnerships. About Charter Communications Based in St. Louis, Missouri, Charter Communications, Inc. (Pink OTC: CHTRQ) -- http://www.charter.com/-- is a broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. On March 16, 2009, Charter Communications filed its annual report on Form 10-K, which contained a going concern modification to the audit opinion from its independent registered public accounting firm. Charter Communications and more than a hundred affiliates filed voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y. Case No. 09-11435). Pacific Microwave filed for bankruptcy protection on April 20, 2009, disclosing assets of not more than $50,000 and debts of more than $1 billion. The Hon. James M. Peck presides over the cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as counsel to the Debtors, excluding Charter Investment Inc. Albert Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet-Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts counsel. Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the Debtors' independent auditors. The Debtors' valuation consultants are Duff & Phelps LLC; the Debtors' financial advisors are Lazard Freres & Co. LLC; and the Debtors' restructuring consultants are AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008, the Debtors had total assets of $13,881,617,723, and total liabilities of $24,185,668,550. Bankruptcy Creditors' Service, Inc., publishes Charter Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Charter Communications and more than 100 of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHARTER COMMUNICATIONS: Says JPMorgan Complaint Central to Plan --------------------------------------------------------------- The adversary proceeding brought by JPMorgan Chase Bank, N.A., against Charter Communications Operating, LLC, and CCO Holdings, LLC, goes to the very heart of the federal bankruptcy process, the Debtors tell Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York. They argue that the complaint should be dismissed because at issue is not a tangential question of contract interpretation between the debtor and a third party otherwise unrelated to the bankruptcy proceeding, the resolution of which might or might not marginally enhance the debtor's bankruptcy estate. Rather, at issue is the fundamental question of whether Charter can expeditiously confirm a plan of reorganization that reinstates its senior debt instruments under Section 1124 of the Bankruptcy Code, contends Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York. He insists that the resolution of the confirmation issue will be all but dispositive of the entire bankruptcy proceeding. "Absent reinstatement, there is no plan. JPMorgan's adversary proceeding is nothing more than a collateral attack on confirmation," Mr. Cieri argues. "Indeed, the entire purpose of this adversary proceeding is to scuttle Charter's bid for reinstatement, as evidenced by the timing of this suit, admissions in the suit, and the forum in which it was brought," he continues. The adversary proceeding is not peripheral to the plan, it is central to the plan, Mr. Cieri points out. He also contends that JPMorgan has long recognized that CCO's business is fundamentally affected by the financial condition of its several affiliates. He argues that JPMorgan cannot have it both ways and now ask the Court to ignore the effect that deciding the adversary proceeding will have on the other creditors of these affiliated companies, or the effect that failing to confirm the proposed plan will have not just on CCO's affiliates, but on CCO itself. "At bottom, the issues in this adversary proceeding are inextricably intertwined with the issues that this Court must decide as part of plan confirmation," Mr. Cieri asserts. He insists that reinstatement -- the lynchpin to confirmation in the case -- is entirely predicated on the Court finding that Charter has not incurably defaulted on the parties' Credit Agreement. He adds that the Court should properly dismiss the complaint for failure to state a claim. Creditors Committee's Proposed Order In a letter addressed to Judge Peck, David S. Elkind, Esq., at Ropes & Gray LLP, in New York, proposed counsel to the Official Committee of Unsecured Creditors, presented to the Court a proposed order modifying, as it applies to the Creditors Committee, the Confidentiality Agreement and Stipulated Protective Order between Charter Communications, Inc., and its subsidiaries, and JPMorgan Chase Bank, N.A, entered by the Court on April 6, 2009. Mr. Elkind assures the Court that the Debtors' counsel agreed to the Proposed Order. He notes that as discussed at a conference held April 27, 2009, counsel for the Debtors and the Creditors Committee agreed that its request to modify would be presented to the Court by letter to expedite approval of an appropriate protective order to apply to the Creditors Committee. The Proposed Order provides for the Creditors Committee to become a party to, and subject to, the Protective Order, with two modifications: (1) The Proposed Order, unlike the Protective Order, provides that the Creditors Committee would be deemed a party to the Protective Order with respect to all discovery materials produced by any of the parties in the adversary proceeding or the confirmation proceedings, but that it would not -- absent agreement of the parties -- apply to discovery materials produced by non-parties in other contested matters or adversaries in the case; and (2) The Proposed Order provides that the Creditors Committee's counsel may share all materials and information with the Committee members, with up to eight designees of the members and their counsel, provided that they agree to maintain the confidentiality of those materials. The sole exception is that, with respect to "Professional Eyes Only - Highly Confidential" materials, Committee counsel may discuss the substance of all those materials with the eight designees and their counsel, but may not provide them with actual copies of the documents without consent of the producing party or a further Court order. "It is essential that we, as counsel for the Committee, be free to discuss all matters with the Committee without fear that we are running afoul of a protective order," Mr. Elkind tells the Court. "The Committee has a unique role in the case as the official representative of unsecured creditors with a duty. In order to discharge its statutory duties in the best interests of creditors, the Committee must be given access to materials, and must be free to discuss all materials provided that they preserve confidentiality," he adds. Accordingly, the Creditors Committee asks the Court to sign the Proposed Order. Judge Peck said at a hearing held May 5, 2009, that he would delay addressing the dispute between JPMorgan and Charter, reports Kelsey Volkmann of St. Louis Business Journal. About Charter Communications Based in St. Louis, Missouri, Charter Communications, Inc. (Pink OTC: CHTRQ) -- http://www.charter.com/-- is a broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. On March 16, 2009, Charter Communications filed its annual report on Form 10-K, which contained a going concern modification to the audit opinion from its independent registered public accounting firm. Charter Communications and more than a hundred affiliates filed voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y. Case No. 09-11435). Pacific Microwave filed for bankruptcy protection on April 20, 2009, disclosing assets of not more than $50,000 and debts of more than $1 billion. The Hon. James M. Peck presides over the cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as counsel to the Debtors, excluding Charter Investment Inc. Albert Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet-Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts counsel. Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the Debtors' independent auditors. The Debtors' valuation consultants are Duff & Phelps LLC; the Debtors' financial advisors are Lazard Freres & Co. LLC; and the Debtors' restructuring consultants are AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008, the Debtors had total assets of $13,881,617,723, and total liabilities of $24,185,668,550. Bankruptcy Creditors' Service, Inc., publishes Charter Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Charter Communications and more than 100 of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRISTOPHER R BIELSER: Case Summary & 13 Largest Unsec. Creditors ----------------------------------------------------------------- Debtor: Christopher R. Bielser 15174 Timberlake Dr. Reno, NV 89511 Bankruptcy Case No.: 09-51376 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of Nevada (Reno) Judge: Gregg W. Zive Debtor's Counsel: Stephen R. Harris, Esq. Belding, Harris & Petroni, Ltd 417 W Plumb Ln Reno, NV 89509 Tel: (775) 786-7600 Fax: (775) 786-7764 Email: steve@renolaw.biz Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Mr. Bielser's petition, including his list of 13 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nvb09-51376.pdf The petition was signed by Mr. Bielser. CHRYSLER LLC: Proposes to Use Prepetition Cash Collateral --------------------------------------------------------- Chrysler LLC is a party to an amended and restated first lien credit agreement with: (a) CarCo Intermediate HoldCo II LLC, Chrysler's immediate parent company and a nondebtor, as guarantor; (b) Chrysler, as borrower; (c) the lender parties thereto; and (d) JP Morgan Chase Bank N.A. as administrative agent. The First Lien Credit Agreement sets forth the terms and conditions of a $10 billion term loan that matures on August 2, 2013. Corinne Ball, Esq., at Jones Day, in New York, the Debtors' proposed counsel, relates that within three months after the first lien loan was made, a significant payment of $3 billion reduced the outstanding principal amount to $7 billion in November 2007. As of the Petition Date, the principal amount outstanding under the First Lien Credit Agreement was approximately $6.9 billion. Principal payments of 0.25% of the original principal amount of $7 billion are due quarterly. Given the nature of this financing as a term loan, no additional borrowing has been available under the First Lien Credit Agreement since its inception, Ms. Ball notes. Chrysler Parent, as borrower, and the U.S. Treasury, as lender, entered into a loan and security agreement on December 31, 2008. The Troubled Assets Relief Program Loan Agreement sets forth the terms and conditions of a $4 billion loan for general corporate and working capital purposes that matures no later than January 2, 2012. Ms. Ball tells the Court that concurrently with entering into the TARP Loan Agreement, Chrysler Parent provided the U.S. Treasury with a separate promissory note amounting to $267 million that matures on January 2, 2012. She discloses that CarCo Intermediate HoldCo I LLC, CarCo Holding II, Chrysler and certain of Chrysler's domestic subsidiaries are guarantors of the TARP Financing. Under the First Lien Credit Agreement, the Debtors granted to the Collateral Trustee a security interest in and first lien on substantially all of their assets, including accounts receivable, inventory, equipment, books and records, cash, general intangibles, real property and a pledge of all of the capital stock of each of Chrysler's domestic subsidiaries and 65% of all of the capital stock of each of Chrysler's first-tier foreign subsidiaries, but excluding certain exclusive collateral of the U.S. Treasury. As security for the TARP Financing, the U.S. Treasury was granted a first priority lien on all unencumbered assets and Chrysler's Mopar parts inventory and a third priority lien on other assets serving as collateral for the obligations under the First Lien Credit Agreement and the Owners' Loan Agreement. In addition, the U.S. Treasury's recourse to the direct or indirect equity interest of Chrysler Parent in FinCo Intermediate HoldCo LLC or any of its subsidiaries, including Chrysler Financial, is limited to $2 billion. The TARP Loan was amended on April 30, 2009 to provide for a working capital line of up to $500 million. As of the Petition Date, less than $100 million of working capital is expected to be outstanding. Ms. Ball says that the Debtors' obligations under the First Lien Credit Agreement are secured by liens granted to the Collateral Trustee on certain property of the estate. She adds that the Debtors are currently in possession of cash that is Prepetition First Lien Collateral and may generate additional cash proceeds from the sale or other disposition of other Prepetition First Lien Collateral, which cash and cash proceeds are cash collateral of the First Lien Prepetition Lenders within the meaning of Section 363(a) of the Bankruptcy Code. In connection with its filing for bankruptcy protection, Chrysler is also seeking approval from the Court to consummate a sale transaction that preserves some portion of its business as a going concern and averts a liquidation. The proposed sale transaction would create the sixth-largest global automaker by volume unit, increasing competitiveness with other original equipment manufacturers and creating billions of dollars in synergies. The transaction is being financially backed by the United States Department of the Treasury and Export Development Canada, an affiliate of the Canadian government, which together will provide the new alliance with approximately $6 billion of taxpayer money to start up and maintain operations. Pursuant to a purchase agreement, among other things, (a) Chrysler will transfer the majority of its operating assets to New CarCo Acquisition LLC, a newly established Delaware limited liability company that currently is an indirect wholly-owned subsidiary of Fiat S.p.A.; and (b) in exchange for those assets, New Chrysler will assume certain liabilities of Chrysler and pay to Chrysler $2 billion in cash. By this motion, Chrysler and its 24 debtor-affiliates ask the Court for authority to use the Cash Collateral. Ms. Ball contends that it is essential that the Debtors obtain immediate postpetition authority to use Cash Collateral as it will enable them to accomplish their strategic restructuring goals and successfully complete a sale process and consummate a value-maximizing transaction. She further contends that the Debtors are facing a liquidity crisis and need immediate access to their cash to fund working capital and certain other costs pending a sale transaction. "Absent this new liquidity, not only would the Debtors' ability to maximize the value of their estates and successfully preserve asset values be jeopardized, but the Debtors also could be forced to immediately and abruptly liquidate to the direct detriment of all parties in interest," Ms. Ball submits. Ms. Ball tells the Court that the Debtors and the First Lien Prepetition Lenders have been negotiating the terms pursuant to which the Debtors can use the Cash Collateral on a consensual basis. She says that the negotiations have resulted in a proposed interim cash collateral order. The principal terms of the Interim Cash Collateral Order are: -- The Debtors may use the Cash Collateral in accordance with an approved budget, and subject to the terms of the Court's order approving the Debtors' request to obtain postpetition financing, for general corporate purposes. -- Superpriority claims will be granted as provided in Section 507(b) of the Bankruptcy Code, with priority in payment over any and all administrative expenses, subject and subordinate only to a DIP superpriority claim. -- Adequate Protection Liens: * Pursuant to section 364(c)(3) of the Bankruptcy Code, a valid, binding, continuing, enforceable, fully- perfected junior lien on, and security interest in all tangible and intangible prepetition and postpetition property of the Debtors whether now existing or hereafter acquired; and * The Adequate Protection Liens will not be (i) subject or subordinate to (a) any lien or security interest that is avoided and preserved for the benefit of the Debtors and their estates under section 551 of the Bankruptcy Code or (b) any liens arising after the Petition Date, including without limitation, any liens or security interests granted in favor of any federal, state, municipal or other governmental unit, commission, board or court for any liability of the Debtors, or (ii) subordinated to or made "pari passu" with any other lien or security interest granted under Sections 363 or 364 of the Bankruptcy Code or otherwise. The Adequate Protection Liens will be junior to a DIP lien on all property of the estates other than property that constitutes Prepetition First Lien Collateral. -- The liens and security interests granted under the Interim Cash Collateral Order will be deemed valid, perfected, allowed, enforceable, non-avoidable and not subject to challenge, dispute or subordination as of the date of entry of the order. -- No Collateral or Prepetition First Lien Collateral, including the Cash Collateral, may be used to (a) object to the validity, perfection, priority, extent or enforceability of any amount due under the Loan Documents, or the liens or claims granted under the Interim Cash Collateral Order or the Loan Documents, (b) assert any claims and defenses or any other causes of action against the First Priority Agent, the Collateral Trustee and the First Lien Prepetition Lenders or their respective agents, affiliates, subsidiaries, directors, officers, representatives, attorneys or advisors, (c) prevent, hinder or otherwise delay the Collateral Trustee's assertion, enforcement or realization on the Prepetition First Lien Collateral or the Collateral in accordance with the Loan Documents or the Interim Cash Collateral Order, (d) seek to modify any of the rights granted to the First Priority Agent, the Collateral Trustee and the First Lien Prepetition Lenders without such party's prior written consent or (e) pay any amount on account of any claims arising prior to the Petition Date unless the payments are approved by the Court. -- Upon consummation of the Fiat Transaction, not less than $2 billion in cash of the purchase price will be allocated as proceeds of Collateral and will be indefeasibly paid immediately upon consummation of the Fiat Transaction directly from New Chrysler to the First Priority Agent for immediate distribution to the First Priority Secured Parties pursuant to the First Priority Facility. A copy of the Proposed Interim Order is available for free at: http://bankrupt.com/misc/ChryslerPropIntCashCoORD.pdf The Debtors ask the Court to set a final hearing on their request that is no later than 20 days after the Petition Date. * * * The Court issued an interim order authorizing the Debtors to use the Cash Collateral -- from the Petition Date through and including the Termination Date for general corporate purposes -- in accordance with the approved 9-week Preliminary Budget, a full-text copy of which is available for free at: http://bankrupt.com/misc/9-weekPrelimDIPBudget.pdf "[T]his Order does not address the disposition of any Prepetition First Lien Collateral outside the ordinary course of business or the Debtor's use of the Cash Collateral resulting therefrom," Judge Gonzalez said. The First Priority Secured Parties are entitled to adequate protection of their interests in the Cash Collateral and other Prepetition First Lien Collateral, in an amount equal to the aggregate diminution in value of the Cash Collateral and other Prepetition First Lien Collateral resulting from the sale, lease or use by the Debtors of Cash Collateral and any other Prepetition First Lien Collateral or resulting from the imposition of the automatic stay pursuant to Section 362 of the Bankruptcy Code. The Debtors' right to use the Cash Collateral will terminate on the earliest to occur of: (a) 20 days after the Petition Date if the Final Order has not been entered by the Court on or before that date; or (b) upon 5 business days' written notice to the Debtors after the occurrence and continuance of any event of default beyond any applicable grace period. The Court will convene a final hearing on the Cash Collateral Motion on May 20, 2009, at 11:00 a.m., prevailing Eastern time. Parties have until May 15, 2009, at 12:00 p.m. to file objections. About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Has Court Nod for $1.4 Billion Interim Loan --------------------------------------------------------- Chrysler LLC and its debtor-affiliates obtained interim approval from the U.S. Bankruptcy Court for the Southern District of New York to obtain as much as $1.4 billion in initial postpetition loan from The United States Department of the Treasury and Export Development Canada. The U.S. Treasury and EDC committed to provide the Debtors $4.1 billion in postpetition loan under their Second Lien Secured Priming Superpriority Debtor-in-Possession Credit Agreement dated April 30, 2009. The Debtors, however, can only fully avail of the loan if the Court issues final approval of the credit agreement. In his order dated May 4, 2009, Judge Arthur Gonzalez said that the Debtors have demonstrated a need for immediate access to interim postpetition financing. "In the absence of this immediate access, the Debtors will be unable to continue operating their business, causing immediate and irreparable loss or damage to the Debtors' estates," he said. A full-text copy of the interim order is available without charge at http://bankrupt.com/misc/ChryslerInterimDIPOrder.pdf Attorney for the Debtors, Corinne Ball, Esq., at Jones Day, in New York, said in court papers that the Debtors need the interim loan in order to implement an expeditious sale of their assets as part of their deal with Fiat S.p.A., and pay the claims of suppliers, dealers and employees pending approval of the sale. "The availability of interim loans will provide the necessary assurance to suppliers, dealers, employees and customers of the Debtors' ability to meet their near-term obligations," Ms. Ball said. In return for the financing, the U.S. Treasury and EDC are granted security interests in and liens on all properties of the Debtors and their estates as well as the proceeds from those assets. They are also granted an allowed "super-priority" administrative expense claim in each of the Debtors' cases for all obligations owed by the Debtors under their DIP Credit Agreement. Subject only to the "carve-out," the super-priority claim will have priority over all other administrative expenses of the Debtors. The U.S. Treasury, as lender under the Loan and Security Agreement dated December 31, 2008, is also granted a claim as well as liens on the properties of the Debtors and their estates as adequate protection for the priming of its liens on and security interests in those properties. These claim and liens, however, will only have a priority junior to the super-priority claim and to the DIP liens. In the event of default under the DIP Credit Agreement, the U.S. Treasury and EDC may compel the Debtors to sell any of their properties. They are also entitled to credit bid their liens on the properties in any such sale. The Court will convene a hearing on May 20, 2009, at 11:00 a.m., to consider final approval of the DIP Financing. Legality of Fiat Deal Questioned As reported by the TCR on May 7, 2009, various parties have raised questions on the legality of the proposed marriage by Chrysler and Fiat which is also being supported by the U.S. and Canadian government. Ann Woolner, in a commentary at Bloomberg, said that the Fiat- Chrysler deal may be good for the economy, but the Chrysler deal with Fiat, which is to be accomplished under Section 363 of the Bankruptcy Code, is not "legal." The plan "would bulldoze well-established rights of secured creditors, property rights the U.S. Constitution guarantees," Ms. Woolner says. Section 1129(b)(2) of the Bankruptcy Code, known as the "absolute priority rule", provides that a plan under Chapter 11 is "fair and equitable" with respect to a dissenting impaired class of claimants if the creditors in the class receive or retain property of a value equal to the allowed amount of their claims or, failing that, no creditor of lesser priority, or shareholder, receives any distribution under the plan. According to Ms. Woolner, a Sec. 363 sale is perfectly legal when a sound business reason demands it and when it isn't reorganization in disguise. But she says that the transaction appears to be aimed at resolving creditors claims and may be a sub rosa plan of reorganization, a secret reordering dressed up to look like a sale, which is forbidden by bankruptcy law. Regardless of whether the Chrysler-Fiat transaction doesn't appear to be a true sale or whether it appears to favor junior creditors over senior creditors, the bankruptcy judge may still end up approving the deal, Ms. Woolner says. "There's an enormous momentum in favor of the government plan," Ms. Woolner quoted Jay Westbrook, who teaches bankruptcy law at the University of Texas, as saying. In response to questions of whether the "absolute priority rule" will kill the sale, Jim McCafferty, in an article, points to Chrysler's opening memorandum which focused on the US Supreme Court's classic pronouncement in NLRB v. Bildisco & Bildisco, 465 U.S. 513, 528 (1984), where the Court stated that the "fundamental purpose of reorganization is to prevent the debtor from going into liquidation, with an attendant loss of jobs and possible misuse of economic resources." This principle, Chrysler argues, is paramount and (quoting NY's judicial patriarch, Bankruptcy Judge Lifland, in the old Eastern Airlines case) "all other bankruptcy policies are subordinated" to it. Mr. McCafferty, on the other hand, says that a Supreme Court pronouncement that would favor the Non-Tarp lenders is Raleigh v. Ill. Dep't of Rev., 530 U.S. 15, 24-25 (2000) (argued in victory by now Chicago Bankruptcy Judge Ben Goldgar), where the Court stated: Bankruptcy courts are not authorized in the name of equity to make wholesale substitution of underlying law controlling the validity of creditors' entitlements, but are limited to what the Bankruptcy Code itself provides. About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Michigan Says Fiat Sale Does Not Protect Workers -------------------------------------------------------------- The State of Michigan Workers' Compensation Agency and Funds Administration complains that the proposed sale of Chrysler LLC's operating assets to a new company 20% owned by Fiat S.p.A. does not provide sufficient protection for the Debtors' workers in Michigan. Dennis Raterink, attorney general from the Workers' Compensation Unit, says that the sale violates the compensation self-insurance authority in Michigan and leaves the Debtors' workers without a source of compensation benefit payments. "The sale of substantially all assets to the successful bidder, without that bidder assuming the Debtors' workers compensation liabilities in Michigan, may leave Debtors without adequate resources to secure the payment of their workers' compensation obligations," Mr. Raterink says. He says that this may require the agency to revoke the Debtors' self-insured authority and require the Debtors to acquire workers' compensation insurance coverage or furnish a bond and other forms of security to cover their liabilities. "Should the current sale order be approved, as presented, the workers' compensation benefits of transferred employees could be affected, as the successful bidder, being a new employer in Michigan, could be prohibited from obtaining self-insurance authority in Michigan," Mr. Raterink says. Under Michigan law, an employer that is in business less than five years cannot be considered for self-insured authority unless its workers' disability compensation liability is guarantied by a parent corporation or combinable affiliated entity that has been in business not less than five years and that would qualify for self-insured authority in Michigan. "Without self-insured status, the successful bidder would need to acquire workers' compensation insurance coverage in order to operate in Michigan," Mr. Raterink points out. Mr. Raterink further says that if the Self-Insurers' Security Fund was forced to assume the Debtors' workers' compensation obligations, enough funds exist only to make benefit payments for a matter of weeks before Security Fund becomes insolvent itself. The Self-Insurers' Security Fund is one of the three funds that make up the Funds Administration. It was created to provide benefits to affected workers under the Workers' Compensation Disability Act. Mr. Raterink says that the Debtors' total workers compensation obligations may exceed $140 to $150 million, with yearly payment obligations of over $25 million. "Even if the Funds Administration levies emergency assessments to existing self-insured employers, the Self-Insurers' Security Fund's maximum possible balance would be approximately $9 million, substantially less than needed to cover the Debtors' statutory obligations," he says. The proposed sale also drew flak from Bridgestone Americas Tire Operations LLC, Superior Industries Inc., The Timken Company Harman Becker Automotive Systems Inc., Plast-O-Foam LLC, Flight Systems Automotive Group LLC, and BASF Corporation. The companies disapprove of the proposed procedures governing the assumption and assignment of executory contracts and leases to the purchaser. Bridgestone Americas complains that the proposed procedures may grant the Debtors or the purchaser authority to change the terms and conditions of executory contracts or unexpired leases. Bridgestone Americas points out that there is no provision in bankruptcy law granting such authority. Meanwhile, the other companies complain that the proposed procedures authorize the purchaser to exclude contracts and leases that have already been designated for assumption and assignment. They say it would permit the purchaser to void any prior assumption and assignment of a contract even if the closing of the proposed sale has occurred; the Court has entered an order approving the assumption and assignment; and the cure amount has been paid. Court Approves Bidding Procedures Chrysler LLC obtained approval from the U.S. Bankruptcy Court for the Southern District of New York of its proposed bidding procedures for the sale of substantially all its assets pursuant to an auction on May 27, 2009, according to a report by Bloomberg News. Chrysler offered to sell its assets in the auction to New CarCo Acquisition LLC, a Delaware company formed by Fiat S.p.A., or to any other company interested to bid for the assets. The Fiat group's $2 billion offer for the assets will be the lead bid in the auction. The assets to be sold include intellectual property rights, facilities, executory contracts and leases, and those related to the research, production and distribution of vehicles under brand names that include Chrysler, Jeep(R) and Dodge. The sale is part of the Master Transaction Agreement that Chrysler executed with Fiat and New CarCo on April 30, 2009. The Court also approved a $35 million breakup fee for Fiat in case it is outbid at the auction, Bloomberg reported. Meanwhile, the Court overruled an objection from a group of Chrysler's secured lenders that the process was overly influenced by President Barack Obama's administration and would distribute proceeds improperly because it involved a "sub rosa" or secret reorganization, the report further said. At the request of its Creditors' Committee, Chrysler put the deadline for competing bids at May 20, 2009, and set a May 27, 2009 hearing to approve the winning bid. Robert Manzo of Capstone Advisory Group LLC, a Chrysler financial adviser, had testified that the company has essentially been for sale for more than a year, as Chrysler executives sought automaker partners around the world and no bidders surfaced. Without the Fiat alliance, secured creditors may not receive any recovery, Mr. Manzo told the Court. About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: NCRO Wants Official Retiree Committee --------------------------------------------------- The National Chrysler Retirement Organization, an organization representing the interests of non-union retirees of Chrysler LLC and its affiliated debtor entities, asks the U.S. Bankruptcy Court for the Southern District of New York to authorize and instruct the United States Trustee for Region 2 to appoint an Official Non- Union Retiree Committee. The NCRO was established in 2008 with an express purpose of protecting pension and retiree benefits for Chrysler's non-union retirees. Trent P. Cornell, Esq., at Stahl Cowen Crowley Addis LLC, in Chicago, Illinois, counsel for the NCRO, relates there are more than 16,000 non-union retirees and surviving spouses receiving health insurance benefits from the Debtors that are slated for elimination. Mr. Cornell notes that the aggregate present value of the Debtors' obligation is suspected to total several hundred million dollars. "While the Debtors have evaded communication, their pleadings and the exhibits thereto speak volumes about their intentions," Mr. Cornell tells the Court. "These documents evidence a clear and immediate plan to eliminate non-union retiree benefits, while at the same time heralding the continuation of retiree healthcare benefits for the Debtors' unionized retirees," Mr. Cornell adds. According to Mr. Cornell, it is paramount for the U.S. Trustee to appoint a Retiree Committee consisting of individuals that can quickly and comprehensively represent the Affected Retiree population. The NCRO proffers the following individuals for consideration: Name of Retiree Designation --------------- ----------- Richard Brown Former Human Resources Director Christopher Dyrda Manager of Vehicle Programs/Program Management Lynn Feldhouse Former Vice President & Secretary, Daimler Chrysler Fund John Glotzbach Former Director of Benefits Finance Richard Golpe Former Manager and early retiree John (Jay) Kuhne Former Director, Jeep Marketing Mark Newton Former Director of Financial Analysis Joseph Phillips Former Corporate Senior Financial Analyst Anthony Richards Roy Sjoberg, Jr. Executive Engineer Viper Team Kevin Tourneur Former Senior Manager Jeep Global Product Marketing The NCRO further asks the Court to expedite the hearing on its request, and accordingly set a hearing on May 14, 2009, at 10:00 a.m. to consider approval of its Request. Parties have until May 11 to file objections. About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Application to Hire Schulte As Corporate Counsel -------------------------------------------------------------- To recall, Chrysler LLC, Fiat S.p.A., and New CarCo Acquisition LLC or "New Chrysler", entered into a Master Transaction Agreement pursuant to which, among other things: (i) Chrysler LLC will transfer majority of its operating assets to New CarCo Acquisition LLC, a newly established Delaware liability company that currently is an indirect wholly-owned subsidiary of Fiat; and (ii) in exchange for those assets, New Chrysler will assume certain liabilities of Chrysler and pay to Chrysler $2 billion in cash. Pursuant to Sections 327(e) and 328(a) of the Bankruptcy Code, the Debtors seek the Court's authority to employ Schulte Roth & Zabel LLP as their special corporate counsel, nunc pro tunc to the Petition Date, to represent them in connection with the ongoing reorganization of the Debtors' ownership structure, the Fiat Transaction and certain defined and finite corporate, debt finance settlement matters. The Debtors have selected Schulte Roth because of the firm's extensive experience and knowledge in corporate transactional work and litigation, and because of the firm's renowned expertise in credit, finance, capital markets, taxation, compensation, employee benefits, environmental law, business reorganization and restructuring, and bankruptcy litigation, among other practices. Well before the Fiat Transaction was contemplated, Schulte Roth represented Cerberus Capital Management, L.P., in connection with the 2007 Transaction, by which Cerberus acquired a controlling interest in the Debtors from Daimler AG. According to Holly E. Leese, senior vice president and general counsel of Chrysler LLC, the Debtors wish to retain Schulte Roth to continue to render certain limited legal services including, but not limited to, strategic corporate and related advice regarding the acquisition by Fiat of certain interests in the Debtors. As special corporate counsel, Schulte Roth will: (a) negotiate transaction agreements with Fiat and other parties-in-interest, including the U.S. Department of Treasury; (b) conduct diligence of Fiat, including a massive document review encompassing some 6,000 documents and over 250,000 pages of information related to the Fiat Transaction; (c) draft and review all relevant transaction documents; and (d) advise the Debtors in specialized areas of law like tax, litigation, and employment to ensure that all aspects of the Fiat Transaction are in the Debtors' best interest. The Debtors will pay Schulte Roth based on the firm's customary hourly rates which ranges from $110 to$880. The attorneys of Schulte Roth who are expected to represent the Debtors and their hourly rates are: Attorney Rate/Hour -------- --------- Robert R. Keisel $780 Richard A. Presutti $715 Alan S. Waldenberg $880 Marc Weingarten $880 The Debtors also propose to reimburse Schulte Roth for out-of- pocket expenses. During the 12-month period prior to the Petition Date, the Debtors paid Schulte Roth $24,710,000 for professional services performed and expenses incurred. In addition, the Debtors paid Schulte Roth a retainer of $2,000,000 in April 2009. Adam C. Harris, Esq., at Schulte Roth Zabel LLP, in New York, assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Proposes Greenhill as Investment Banker ----------------------------------------------------- Chrysler LLC and its affiliate seek permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Greenhill & Co. LLC as their investment banker nunc pro tunc to the Petition Date. Greenhill is a leading corporate finance investment bank and has provided financial advice to numerous major corporate entities and investors worldwide. Corinne Ball, Esq., at Jones Day, in New York, relates that the Debtors selected Greenhill based on the firm's experience and expertise in providing financial advisory and investment banking services in Chapter 11 cases and merger-and-acquisitions, including BearingPoint, Inc., Constar International Inc., Delphi Corp., Refco, Bethlehem Steel Corporation, Eclipse Aviation Corp., AMRESCO, Regal Cinemas, Inc., United Artists Theatre Circuit, Inc., AmeriServe Food Distribution, Inc., US Office Products, Inc. and Weblink Wireless, Inc. In addition, Ms. Ball notes that Greenhill is already familiar with the Debtors' business and financial practices as a result of services provided to the Debtors before the Petition Date. Specifically, Greenhill was previously approached by the Debtors in relation to a potential alliance with Fiat S.p.A. On April 23, 2009, the scope of Greenhill's engagement was amended in anticipation of the Fiat deal structure changing from an out-of- court transaction to a sale pursuant to Section 363 of the Bankruptcy Code. The services that Greenhill will provide to the Debtors include: (a) rendering an opinion to the board of managers as to the fairness, from a financial point of view, of the consideration to be paid or received by the Debtors in connection with a proposed transaction; (b) participating in hearings before the Bankruptcy Court with respect to the matters upon which Greenhill has delivered an opinion, including, as relevant, coordinating with the Debtors' counsel with respect to testimony in connection therewith and testifying; (c) evaluating proposals received by the Debtors relating to specific assets following the Company?s filing under Chapter 11 of the Bankruptcy Code; (d) evaluating proposals for some or all of the Debtors' assets as an alternative to the transaction with Fiat; and (e) evaluating or delivering an opinion on an amended deal with Fiat or another potential purchaser that materially differs from the deal in respect of which Greenhill delivered its initial opinion. The Debtors will pay these amounts to Greenhill: * An initial advisory fee of $250,000, payable in cash promptly upon execution of the Greenhill Agreement. * An opinion fee for $3,000,000, payable in cash immediately before the time Greenhill delivers an Opinion. * A transaction fee of $1,000,000, payable in cash (i) upon consummation of a transaction on which Greenhill has delivered an opinion or (ii) upon the consummation of a transaction within 12 months from the date of the execution of the Greenhill Agreement. * A fee to be mutually agreed on by the Debtors and Greenhill if Greenhill is asked (i) to evaluate, and spends significant time evaluating, any proposals for some or all of the Debtors' assets as an alternative to the Transaction with Fiat or (ii) to evaluate or deliver an Opinion on an amended transaction with Fiat that materially differs from the deal in respect of which Greenhill delivered its initial opinion. * In addition to any fees that may be payable to Greenhill, the Debtors agree from time to time upon request, to promptly reimburse Greenhill for reasonable travel and other out-of-pocket expenses incurred by Greenhill in performing its services under the Greenhill Agreement, including the reasonable fees and expenses of legal counsel. Ms. Ball notes that the Initial Advisory Fee was paid on March 31, 2009, pursuant to the Debtors' first engagement with Greenhill and the Opinion Fee was paid on April 29, 2009. The Debtors have agreed to indemnify Greenhill and its affiliates, among others, from and against losses, claims, damages, demands and liabilities, related to or arising in any manner out of any activities performed or services furnished pursuant to the Greenhill Agreement. In addition, the Debtors will promptly reimburse the Indemnified Parties for all reasonable expenses, as incurred, in connection with, related to, or arising out of any Indemnified Activities, and enforcing any Indemnified Parties' right under the Greenhill Agreement. Bradley A. Robins, a managing director of Greenhill, assures the Court that Greenhill is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Expects to Lose $4.7 Billion This Year ---------------------------------------------------- Chrysler LLC lost about $16.8 billion last year and expects to lose $4.7 billion this year, according to papers filed in court. Chrysler said it believes it can become profitable in 2012 if it gets through the Chapter 11 process quickly and proceeds with its planned alliance with Fiat SpA. In an income statement forecast submitted to the court, Chrysler said it expects to earn $100 million in 2012 and $1.6 billion in 2013. Chrysler also expects its net income to increase to $3 billion by 2016. The income statement was submitted along with an affidavit from Robert Manzo, executive director of the Capstone Advisory Group LLC, a consultancy that started working with Chrysler in November 2008 and helped the Company prepare for its bankruptcy filing last week. Chrysler's forecasts are based on its emergence from Chapter 11 bankruptcy by July 1. Chrysler to Furlough Employees The Treasury Department has mandated that Chrysler LLC furlough salaried employees for two weeks during the bankruptcy, David Shepardson at Detroit News Washington Bureau reports, citing Mr., Manzo of Capstone Financial Group, which helped Chrysler assemble its bankruptcy budget. According to Detroit News, the unpaid furloughs would save Chrysler some $21 million. Will Launch Ad Campaign to Attract Buyers Jeff Bennett at The Wall Street Journal relates that Chrysler will launch a marketing campaign on TV and print to reassure clients and potential buyers that the Company is still operating and would bounce back from its bankruptcy filing. Citing dealers who were briefed on the campaign, WSJ states that Chrysler will also back its ads with incentives. WSJ quoted Chrysler sales and marketing chief Steve Landry as saying, "We want to establish a level of trust and confidence that customers can still buy cars and trucks from us and it's business as usual. We are working to exit bankruptcy as fast as we can." WSJ relates that Chrysler's vehicles sales dropped 48% in April 2009. Chrysler said on Friday that its vehicles sales decreased 48% in April to 76,682 cars and light trucks, according to WSJ. WSJ states that many dealers suffered as showroom traffic dropped in the past few weeks due to expectations of a bankruptcy filing. Clients have been asking about the bankruptcy filing, and salespeople were uneasy until news reports indicated that Chrysler could emerge from bankruptcy relatively quickly, WSJ reports, citing sales associate Armando Bulnes. About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Financial Unit Proceeds With Winding Down Operations ------------------------------------------------------------------ The Wall Street Journal relates that Chrysler Financial is moving ahead with plans to wind down its lending operations. According to the report, company executives told employees at a meeting on Friday that Chrysler Financial will need only minimal staff in the near future to handle the servicing of existing loans and leases on Chrysler vehicles. Chrysler, says WSJ, has also signed a new agreement to have GMAC LLC replace Chrysler Financial as its financing partner. Chrysler Financial already stopped offering loans to dealers and scaled back the number of consumer loans it approves, the report states. Citing dealers, WSJ reports that Chrysler is expected to outline a new round of incentives aimed at drawing customers into its dealership while the Company remains in bankruptcy court. About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Togut Segal Reveals Delphi Conflict ------------------------------------------------- Albert Togut, Esq., a senior member at Togut, Segal & Segal LLP, disclosed to the U.S. Bankruptcy Court for the Southern District of New York that his firm has been selected by Chrysler LLC and its affiliates to serve as their conflicts counsel in Chrysler's Chapter 11 cases. He says that prior to Chrysler's retention of Togut Segal, his firm has advised Delphi Corp. and its lead counsel, Skadden, Arps, Slate, Meagher & Flom LLP. He assures the Court that Togut Segal does not and will not represent Chrysler in any action against Delphi, and does not and will not represent Delphi in any action against Chrysler. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. 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 December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 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; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of Dec. 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Bankruptcy Forces Cummins to Close Columbus Plant --------------------------------------------------------------- Cummins Inc. said a number of job actions affecting its manufacturing operations in Southern Indiana. The Company is temporarily closing the Columbus MidRange Engine Plant in Walesboro, just outside Columbus, as a result of Chrysler's decision last week to idle its manufacturing operations while it undergoes bankruptcy reorganization. CMEP is the sole manufacturing site for the 6.7-liter turbo diesel engine used in the heavy-duty Dodge Ram pickup truck. The plant will close effective May 15 and be down until Chrysler resumes pickup truck production. Chrysler's Dodge Ram manufacturing plant in Saltillo, Mexico, which closed Monday, is expected to be idle for at least four weeks and Chrysler has indicated that its entire manufacturing operation could remain closed for nine weeks or longer. The shutdown affects a total of approximately 690 workers at CMEP. Cummins will layoff approximately 610 hourly workers - 560 members of the Diesel Workers Union and 50 members of the Office Committee Union. The Company plans to redeploy as many of the 80 exempt employees in the plant as possible throughout its Southern Indiana operations. The last work day for most of the hourly employees at CMEP will be May 13. A small staff will be retained through the end of May to complete the shutdown process. "The engines we produce for Chrysler make up virtually all the demand at CMEP, and without the Chrysler production it is not economically feasible to operate the plant," said Jim Kelly, President of the Engine Business. "There is considerable uncertainty around Chrysler and when it will resume manufacturing operations, which makes it necessary for us to take this difficult action. "At the same time, the Dodge Ram is a valuable part of Chrysler's product portfolio, and the Cummins turbo diesel engine for the heavy-duty pickup has been a key part of the Ram's success for more than two decades. We are hopeful that once Chrysler emerges from its reorganization, demand for our award-winning engine will return." In actions unrelated to the Chrysler bankruptcy, Cummins also said will permanently layoff approximately 110 hourly workers in June at three locations in Southern Indiana: -- Approximately 30 workers at the Cummins Fuel Systems Plant in Columbus will be laid off effective June 1. -- Approximately 50 workers at the Cummins Industrial Center in Seymour will be laid off effective June 1. The plant manufactures high horsepower engines used in industrial, power generation, marine and military applications. -- Approximately 30 workers in the Heavy Duty Machining operation at Columbus Engine Plant will be laid off effective June 29. The operation machines cylinder blocks and heads for heavy duty engines produced by Cummins in Jamestown, N.Y. These job reductions are in response to further weakening demand for engines and components as a result of the global recession, and are consistent with our efforts to align manufacturing capacity and costs with that lower demand. About Cummins Cummins Inc. -- http://www.cummins.com/-- designs, manufactures, distributes and services engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, Cummins serves customers in approximately 190 countries and territories through a network of more than 500 company-owned and independent distributor locations and approximately 5,200 dealer locations. Cummins reported net income of $755 million on sales of $14.3 billion in 2008. CHRYSLER LLC: "No Active Plan" to Drop 3,200 Dealers in U.S. ------------------------------------------------------------ Neal E. Boudette at The Wall Street Journal reports that Chrysler LLC Vice Chairperson Jim Press said that the Company currently has "no active plan" to drop any of its 3,200 dealers in the U.S. Chrysler is working on "contingencies" to reduce its dealers as part of its restructuring in bankruptcy court, WSJ says, citing Mr. Press. "We have contingencies but they are not active now," the report quoted Mr. Press as saying. According to court documents, Chrysler might eliminate more than 800. Chrysler, says WSJ, asked and got permission to pay $753 million to dealers for the incentives. According to WSJ, Chrysler said that it wouldn't reimburse some of its dealers for price discounts that were given to clients. Court documents say that Chrysler assumed it would pay dealers it intends to keep in its sales network once it emerges from Chapter 11 bankruptcy. WSJ reports that many dealers started getting money they were owed, but there are those who didn't. Mr. Press, according to the report, said that 18 of the dealers weren't paid, but they will soon receive payments. The missed payments were due to a switch to a new bank account set up after Chrysler filed for bankruptcy, the report states, citing Mr. Press. 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of Dec. 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: To Protect Suppliers Holding Production Tooling ------------------------------------------------------------- Chrysler LLC and its affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to grant, subject to procedures, adequate protection to certain potential lienholders to permit the recovery of tooling used in the production of their vehicles. Corinne Ball, Esq., at Jones Day, in New York, the Debtors' proposed counsel, notes that the Debtors are pursuing the prompt approval and consummation of the Fiat S.p.A. transaction or a similar going concern transaction with a competing bidder. She further notes that pending a sale, the Debtors intend to idle most operations as they conserve their resources, while at the same time ensuring that (a) the facilities are prepared to resume normal production schedules in connection with the consummation of a Sale Transaction and (b) consumers are not impacted by the filing. The Debtors anticipate that the purchased manufacturing and assembly facilities will resume normal operations under ownership of New Chrysler or other purchaser. Given the cessation of operations at the Idled Facilities, the Debtors currently are contemplating the potential sale of the Idled Facilities as well as any related vehicle platforms. In connection with their efforts, the Debtors anticipate that they may need to marshal certain valuable machinery, jigs, dies, gauges, molds, patterns, equipment, tooling and other personal property previously dedicated and tailored to the production of component parts incorporated into the Debtors' vehicles at the Idled Facilities. Although the Debtors typically have manufactured some of the component parts incorporated into the vehicles they produce, the vast majority of these component parts are produced by outside suppliers, Ms. Ball relates. She adds that because the production of component parts is particularly capital intensive, the Debtors historically have funded certain of these production costs for their outside suppliers. Ms. Ball tells the Court that the Debtors regularly have purchased various types of Production Tooling for use by their suppliers. She explains that although the Production Tooling is owned by the Debtors, it is located at the suppliers' facilities and used by the suppliers solely in the production of vehicle parts for the Debtors. In addition to helping the suppliers financially, the Debtors' purchase of Production Tooling provides the Debtors with the flexibility to move production to a new supplier if circumstances warrant or to collect the tooling in connection with a sale of their businesses and assets, Ms. Ball further explains. In recent years, the Debtors have purchased between $600 million and $900 million in Production Tooling annually, Ms. Ball discloses. She says that millions of dollars' worth of Production Tooling currently in the possession of the Debtors' suppliers was dedicated to the production and assembly of vehicle platforms at the Idled Facilities. Because the Debtors have paid for -- and own -- the Production Tooling, Ms. Ball asserts that the Production Tooling is property of the Debtors' estates within the meaning of Section 541(a) of the Bankruptcy Code even though possession is maintained by suppliers. The Debtors seek the Court's authority to implement these procedures if and when necessary to satisfy a supplier's request for adequate protection: * If the Debtors seek to recover Production Tooling from a supplier that is asking for adequate protection of its interest, the Debtors may file with the Court, and serve on the supplier, a notice which will describe (a) the Production Tooling for which a replacement lien is to be provided to the supplier, which will be identical in validity, extent and priority to any possessory lien on the Production Tooling held by the supplier at the time of the Debtors' recovery of the Production Tooling; and (b) whether the Debtors and the supplier have reached a consensual agreement regarding the return of the Production Tooling. * Where the Debtors and a supplier have not reached a consensual agreement regarding the return of Production Tooling, the Replacement Lien Notice will further set forth: (a) the Debtors' demand for the return of the Production Tooling; (b) the supplier's obligation to comply with the Debtors' demand for return of the Production Tooling and otherwise assist and cooperate with the Debtors in their efforts to recover possession of the Production Tooling, in accordance with the supplier's duties under Section 542 of the Bankruptcy Code; and (c) that the supplier will have 10 business days from the date of the Debtors' service of the Replacement Lien Notice to arrange for the return of the Production Tooling to the Debtors, with the costs of recovery to be borne by the Debtors. * Upon a supplier's relinquishment of possession of Production Tooling subject to a Replacement Lien Notice, the Replacement Lien will automatically attach thereto. * If a supplier fails to comply with a demand for return of the Production Tooling set forth in a Replacement Lien Notice or otherwise fails to assist and cooperate with the Debtors in their efforts to recover possession of the Production Tooling in a timely fashion, or withholds possession of the Production Tooling from the Debtors, the Debtors will be authorized to seek immediate entry of an order requiring the supplier to appear before the Court to show cause why it should not be found to have willfully violated Sections 362 and 542(a) of the Bankruptcy Code and why it should not be required to immediately turn over any Production Tooling to the Debtors. * The hearing on an order to show cause may be scheduled on an expedited basis, provided that no hearing on an Order to Show Cause will be scheduled upon less than two business days' notice of a hearing to the relevant supplier. About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of Dec. 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Court Grants Admin. Status on Postpetition Supplies ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York issued a ruling confirming the administrative expense priority status of Chrysler LLC's undisputed and liquidated obligations to suppliers and service providers for the postpetition delivery of goods and services. The Court also authorized the Debtors to pay those expenses in the ordinary course of their business. The Debtors, however, are not authorized to pay any obligations to the suppliers and service providers where title to the goods was transferred to the Debtors prior to their bankruptcy, the Court said. Numerous suppliers regularly provide goods and services to the Debtors prior to the Petition Date. The Debtors have outstanding prepetition purchase orders or outstanding releases under existing purchase orders with their suppliers. Proposed counsel to the Debtors, Corinne Ball, Esq., at Jones Day, in New York, relates that the Debtors are currently pursuing the prompt approval and consummation of their transaction with Fiat S.p.A. or a similar transaction with a competing bidder. Pending that sale, the Debtors have idled most operations as they conserve their resources while at the same time ensuring that the facilities are prepared to resume normal production schedules quickly upon the completion of a sale and consumers are not impacted by the filing, she cites. Immediately upon the consummation of the Fiat transaction, the Debtors anticipate their manufacturing and assembly facilities to resume normal operations under the ownership of new Chrysler. "Under the circumstances, in many cases, the Debtors will not wish to take delivery of additional goods or receive additional services after the Petition Date while their manufacturing facilities are idled," Ms. Ball says. The Debtors, however, aver that they continue to operate certain parts depots and are maintaining their facilities to be prepared to restart quickly in connection with a sale. In support of these activities, the Debtors may wish to have certain goods delivered to them or to have certain services performed after the filing of their Chapter 11 cases to help preserve and maximize the value of their assets, according to Ms. Ball. Under these circumstances, the Debtors expect their suppliers to perceive a risk that they will not be paid or may be treated as prepetition general unsecured creditors for the cost of any shipments made or services provided after the Petition Date. This perceived risk, Ms. Ball notes, may be enhanced given the idling of the Debtors' operations. In effect, she continues, the suppliers may even refuse to ship goods or provide services to the Debtors. Accordingly, the Debtors asked the Court to issue a ruling pursuant to Sections 105, 363(c) and 503(b)(1)(A) of the Bankruptcy Code confirming: (i) the administrative expense priority status of the Debtors' undisputed and liquidated obligations to suppliers and service providers for the postpetition delivery of goods and services; and (ii) that the Debtors have authority to pay those expenses in the ordinary course of their business. About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of Dec. 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: May Maintain Existing Bank Accounts ------------------------------------------------- Chrysler LLC and its affiliates sought and obtained, on an interim basis, permission from the U.S. Bankruptcy Court for the Southern District of New York to continue their existing bank accounts. In connection with their cash management system, the Debtors maintained approximately 96 foreign and domestic bank accounts in the ordinary course of their businesses. They manage cash receipts and disbursements through these bank accounts. The Bank Accounts include concentration, collection, disbursement, demand deposit, payroll and benefits, and other special purpose accounts. A list of the Chrysler Bank Accounts is available for free at: http://bankrupt.com/misc/Chrysler_List_BankAccounts.pdf Corinne Ball, Esq., at Jones Day, in New York, proposed counsel to the Debtors, assures the Court and parties-in-interest that all of Chrysler's domestic Bank Accounts are maintained at financial institutions insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation. The Debtors utilized the Bank Accounts, on a regular basis, as part of the Cash Management System. Thus, to avoid substantial disruption of their ability to manage cash, the Debtors sought the Court's authority to continue using their existing Bank Accounts and allow those Accounts to be maintained with the same account numbers to assist the Debtors in accomplishing a smooth transition to Chapter 11. The Debtors also asked Judge Arthur Gonzalez to authorize their banks to honor their requests to open or close any bank account, provided that any new domestic account is established at a bank insured with the FDIC or the FSLIC and that is organized under the laws of the United States; or in the case of accounts that may carry a balance exceeding insurance limitations, that new domestic account must also be on the list of authorized bank depositories for the Southern District of New York. "To protect against the possible inadvertent payment of prepetition claims, the Debtors immediately will advise their Banks not to honor checks issued prior to the Petition Date, except as otherwise expressly permitted by an order of the Court and directed by the Debtors," Ms. Ball assures Judge Gonzalez. She maintains that the Debtors have the capacity to draw the necessary distinctions between prepetition and postpetition obligations and payments without closing the Bank Accounts and opening new ones. About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of Dec. 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Court Waives Sec. 345 Deposit Rules on Interim Basis ------------------------------------------------------------------ Chrysler LLC obtained interim approval from the U.S. Bankruptcy Court for the Southern District of New York to invest and deposit funds in accordance with their Investment Guidelines, notwithstanding that the guidelines may not strictly comply in all respects with the approved investment guidelines set forth in Section 345 of the Bankruptcy Code. All excess funds generated by Chrysler and its affiliates are historically maintained in domestic bank accounts insured by the United States through Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, or invested in low risk investments through the Debtors' investment accounts. Section 345(b) of the Bankruptcy Code provides that any deposit or other investment made by a debtor, except those insured or guaranteed by the United States or by a department, agency or instrumentality of the United States or backed by the full faith and credit of the United States, must be secured by either a bond in favor of the United States that is secured by the undertaking of a corporate surety approved by the United States Trustee for the relevant district or the deposit of securities of the kind specified in Section 9303 of the Money and Finance Code. Section 345(b) provides further, however, that a bankruptcy court may allow the use of alternatives to approved investment guidelines "for cause." Although their Investment Guidelines may not strictly comply with the approved investment guidelines identified in Section 345 in all cases, the Debtors' deposits and investments nevertheless are safe, prudent, and designed to yield the maximum reasonable net return on the funds invested, taking into account the safety of the deposits and investments, proposed counsel to the Debtors, Corinne Ball, Esq., at Jones Day, in New York, had told the Court. 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of Dec. 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Court Enforces Automatic Stay on All Creditors ----------------------------------------------------------- Judge Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York has entered a ruling, under Section 362 of the Bankruptcy Code, that says all persons and all foreign or domestic governmental units are stayed, restrained and enjoined from, among other things: (a) commencing or continuing any judicial, administrative or other proceeding against the Debtors, including the issuance or employment of process that was or could have been commenced before any of the Debtors' Chapter 11 cases were commenced; (b) recovering a claim against any of the Debtors that arose before the commencement of any of their Chapter 11 cases; and (c) taking any action to obtain possession of property of any of the Debtors or of property from any of the Debtors. Judge Gonzalez also prohibited all persons and all foreign or domestic governmental units, pursuant to 365 of the Bankruptcy Code, from modifying or terminating any executory contract or unexpired lease, or any right or obligation under that contract or lease, at any time after the commencement of the cases solely because of a provision in the contract or lease that is conditioned on: (a) the insolvency or financial condition of a debtor at any time before the closing of the Debtors' cases; (b) the commencement of the cases; or (c) the appointment of a trustee in the cases. Pursuant to Sections 362 and 365 of the Bankruptcy Code, all parties to an executory contract or unexpired lease with one or more of the Debtors will continue to perform their obligations under the contract or lease until the contract or lease is assumed or rejected by the Debtors or otherwise expires by its own terms. The order, however, will not affect the exceptions contained in Sections 362(b), 365(b)(4) and 365(e)(2) of the Bankruptcy Code or the right of any party-in-interest to seek relief from the automatic stay in accordance with Section 362(d) or with respect to an unexpired lease or executory contract under Section 365. The Court further ruled that pursuant to Section 525 of the Bankruptcy Code, all foreign and domestic governmental units are prohibited and enjoined from: (a) denying, revoking, suspending or refusing to renew any license, permit, charter, franchise or other similar grant to the Debtors; (b) placing conditions upon a grant to the Debtors; or (c) discriminating against the Debtors with respect to a grant, solely because the Debtors are debtors under the Bankruptcy Code, may have been insolvent before the commencement of the cases or are insolvent during the pendency of the cases. Chrysler LLC and 24 of its debtor affiliates, in its request for the order, said that a ruling enforcing the "automatic stay" in their Chapter 11 cases is necessary. Corinne Ball, Esq., at Jones Day, in New York, the Debtors' proposed counsel, said a court order enforcing the automatic stay pursuant to the Bankruptcy Code is required given the global nature of Chrysler's businesses and its extensive dealings with foreign creditors. Under Section 362 of the Bankruptcy Code, the filing of a bankruptcy case triggers an injunction against the continuance of an action by any creditor against the debtor or its property. The automatic stay gives the debtor protection from its creditors subject to the oversight of the bankruptcy judge. "Many of the non-U.S. creditors affected by Section 362 of the Bankruptcy Code are unaware of the significant protection it provides to [the Debtors]," Ms. Ball says. "A certain amount of [the Debtor's] assets are located around the globe, which may further confuse a non-U.S. creditor that is unaccustomed to the broad reach of the automatic stay." Ms. Ball notes that the Debtors have operated global businesses across numerous countries and sold hundreds of thousands of cars annually outside of North America. "The existence of such an order, which the Debtors will be able to transmit to affected parties, will maximize the protections afforded by Sections 362 of the Bankruptcy Code," Ms. Ball says. She further notes that the automatic stay may not be recognized by foreign creditors or tribunals unless embodied in a Court order. About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of Dec. 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: 1-800 to Ramp Up Stock of Replacement Cooling Parts ----------------------------------------------------------------- 1-800-Radiator responded to Chrysler's bankruptcy filing with an announcement that it will be ramping up its stock levels of replacement cooling parts for Chrysler automobiles. 1-800-Radiator estimates over one million cooling system replacement parts will be needed in the next 12 months for Chrysler models currently on the road. The Company projects that Chrysler's Town and Country Van will lead the list, with approximately 116,000 cooling replacement parts, followed by the PT Cruiser with 113,000 and the Sebrings with 47,000 replacements. Radiators, condensers and compressors are projected to comprise 75 percent of all Chrysler cooling parts replacements. Evaporators, dryers, heaters, fan assemblies and expansion valves will comprise most of the rest. "People are going to need to get their cars repaired at increasing rates, now that fewer new cars are being sold," says Mike Rippey, CEO of 1-800-Radiator. "We will continue to be the leading provider of cooling and air conditioning parts to the nation's auto repair shops, especially now with the possible closures of many of the U.S. automakers' parts suppliers." 1-800-Radiator estimates most cooling part replacements due to wear-and-tear will occur in Chryslers eight to nine years old. These replacements will consist primarily of radiators and air conditioning parts. These will account for nearly 70 percent of all replacements. Most of the remaining 30 percent will come from crash repairs. The average Chrysler crash replacements will occur in models two to three years old. Crash replacement parts will consist mainly of condensers, fan assemblies and radiators. 1-800-Radiator is also increasing stock levels for General Motors and Ford vehicles in light of the uncertainties faced by the automakers and the projected closings of more than one thousand dealers. 1-800-Radiator is North America's established authority regarding automotive cooling and heating replacement parts. In its 268 nationwide locations, 1-800-Radiator receives nearly seven million phone calls from customers annually. Data from all phone calls are tabulated daily to gain the clearest picture on up-to-the- minute automotive market demand by region, in the U.S. and Canada. About 1-800-Radiator 1-800-Radiator is the largest independent parts distributor in the nation. The company continues to increase market share through added product lines and acquisitions. The 1-800-Radiator business model provides retail and wholesale customers with radiators delivered to their doorstep in a matter of hours at competitive pricing. To its franchisees, 1-800-Radiator provides state-of- the-art software technology, along with 24-7 support. For more information about the company or available franchises for sale, go to: http://www.1800radiator.com About Chrysler LLC 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of Dec. 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CLARK'S LTD: Case Summary & 15 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Clark's Ltd dba Clark's Fine Jewelry dba Clark Jewelers 2191 N Rock Road Wichita, KS 67226 Bankruptcy Case No.: 09-11344 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of Kansas (Wichita) Judge: Chief Judge Robert E. Nugent Debtor's Counsel: Edward J. Nazar, Esq. 245 North Waco Ste 402 Wichita, KS 67202 Tel: (316) 262-8361 Fax: (316) 263-0610 Email: ebn1@redmondnazar.com Total Assets: $1,590,894 Total Debts: $1,037,437 According to its schedules of assets and liabilities, $851,520 of the debt is owing to secured creditors, $62,844 for taxes owed to governmental units, and the remaining debt to creditors holding unsecured nonpriority claims. 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/ksb09-11344.pdf The petition was signed by Gary L. Clark, president of the Company. COHR HOLDINGS: S&P Downgrades To 'CCC+' on Liquidity Profile ------------------------------------------------------------ Standard & Poor's Ratings Services said May 6 it lowered its corporate credit rating on Cohr Holdings Inc. (d/b/a Masterplan Inc.) to 'CCC+' from 'B-'. At the same time, it lowered the rating on the company's senior secured first-lien credit facilities to 'CCC+' from 'B-'. The outlook is negative. "The action reflects our heightened concern regarding the company's liquidity profile, as well as its highly leveraged financial risk profile," said Standard & Poor's credit analyst Alain Pelanne. The Company's very concentrated customer base and uncertain business prospects are additional factors. "Recent cash burn, while mainly due to one-time items, has exceeded our expectations," added Mr. Pelanne, "and the company's liquidity will be a key rating factor in the near term." CONSTELLATION BRANDS: Fitch Affirms 'BB-' Issuer Default Rating --------------------------------------------------------------- Fitch Ratings has affirmed its ratings on Constellation Brands Inc. and revised the Rating Outlook to Stable from Negative. STZ' ratings are: -- Issuer Default Rating at 'BB-'; -- Bank credit facility at 'BB-'; -- Senior unsecured notes at 'BB-'; -- Senior subordinated notes at 'B+'. Fitch's ratings apply to STZ's approximately $2.4 billion credit facilities, $2.1 billion of senior unsecured debt, and $250 million of senior subordinated notes. STZ's ratings and Outlook reflect the company's leading global market positions and well-known portfolio of wine, spirits and beer brands, the general stability of its operations and high leverage, although considerable strides have recently been made regarding debt reduction. In addition, liquidity has improved with a considerable reduction in term debt repayment requirements and availability of $708 million under its revolver (as of April 20, 2009). Any further rating actions will be driven by operating margins and the level of debt reduction balanced against acquisitions and stock repurchases over time. For fiscal 2010, slowing growth in the premium wine market and the imported beer market in the U.S., limited wine growth internationally, and continuing operational difficulties in Great Britain and Australia are challenges. This combined with divestitures in fiscal 2009 will result in lower revenue in fiscal 2010. Operating income will also be pressured by these factors as well as potentially weaker equity income from Crown Imports. However, cost savings will occur as a result of previous restructurings and the global initiative. Additionally, interest expense is expected to meaningfully decline. After generating essentially flat free cash flow of $378 million in fiscal 2009, free cash flow is expected to decline in fiscal 2010. A $65 million tax payment related to the sale of the value spirits business, higher capital expenditures and estimated $80 million in cash costs regarding a global restructuring initiative will affect free cash flow in fiscal 2010. STZ's debt reduction is a positive step regarding its ratings. Total debt outstanding as of February 28, 2009, amounted to $4.4 billion, down $824 million from February 29, 2008. The reduction in debt was due to solid free cash flow generation and proceeds from asset dispositions. Subsequent to February 28, 2009, STZ used proceeds from the sale of its value spirits business to prepay $260 million of term loans. Further debt reduction is expected in fiscal 2010 as STZ expects to repay GBP155 million of Sterling notes due in November 2009 with free cash flow generation. As a result of rapid deleveraging, debt protection measures have improved with total debt/adjusted EBITDA plus equity income down to 5.1 times (x) from 6.0x last year and adjusted EBITDA plus equity income/interest expense up to 2.7x from 2.5x. Further improvement in these measures is expected over the next couple of years with sustained debt reduction. In fiscal 2009, net sales decreased 3% to $3.7 billion due primarily to the impact of year-over-year currency exchange rate fluctuation. Branded wine sales were flat at $3 billion as sales gains in North America offset declining revenues in Europe and Australia/New Zealand. Spirits sales increased 1% to $419 million for the year, led by a 50% gain for SVEDKA Vodka and solid performance of Black Velvet Canadian Whisky. Wines segment operating income increased $63 million to $622 million in fiscal 2009. Spirits operating income decline $2 million to $70 million, while equity earnings from its 50% interest in the Crown Imports joint venture totaled $252 million, a decrease of 1%. The reporting of a material weakness as part of its assessment of internal controls for fiscal 2009 is not considered a critical event. STZ determined there were some inventory reporting issues at its Australian subsidiary. The error has been corrected and internal controls improved in this area. STZ is a leading international producer and marketer of beverage alcohol with a broad portfolio of brands across the wine, spirits and imported beer categories. The company is the world's largest wine producer and has a leading market position in each of its core markets, which include the U.S, Canada, U.K., Australia and New Zealand. In addition to its market leading position in wine in the U.S., the company is also a leading producer and marketer of distilled spirits in the U.S. STZ also supplies imported beer in the U.S. through its investment in a joint venture with Grupo Modelo, S.A.B. de C.V. COYOTES HOCKEY: NHL May Ask Court to Dismiss Chapter 11 Filing -------------------------------------------------------------- Mike Sunnucks and Chris Casacchia at Phoenix Business Journal report that the National Hockey League is expected to ask the Hon. Charles G. Case II of the U.S. Bankruptcy Court for the District of Arizona to dismiss a Chapter 11 filing by Dewey Ranch Hockey LLC and its affiliates. According to Business Journal, the NHL took control of the team on Tuesday after team owner the Debtors filed for bankruptcy. Business Journal relates that part of the Chapter 11 filing calls for the hockey team to be sold for $213 million to a Canadian businessman who wants to move the team from Glendale to Ontario, Canada. Business Journal states that the NHL and the city of Glendale, where the Coyotes Hockey have a 30-year lease to play at Jobing.com Arena, have opposed owner Jerry Moyes' efforts to sell the team Phoenix Coyotes to Research in Motion CEO Jim Balsillie. NHL Deputy Commissioner Bill Daly said in a statement that the league would appear as the Coyotes owner in bankruptcy court. The Coyotes should remain in Arizona, Business Journal says, citing NHL Commissioner Gary Bettman. According to the report, Mr. Bettman questioned whether Mr. Moyes had the authority to file bankruptcy and sell the team. Business Journal reports that the NHL lent money to the Phoenix Coyotes in February 2008, a deal that included provisions to take over the team if need be. Mr. Moyes and the NHL, Business Journal relates, have been seeking possible investors and new owners. Mr. Bettman said in a statement, "This is about the league rules and the enforceability of our rules, whether or not Mr. Moyes even had the authority to file a bankruptcy petition is something we're going to get into. This is more about the tactic and I think a challenge to league rules than it is about economic conditions of the club, which we believe, with new ownership and with accommodations the city of Glendale is prepared to make, we think can succeed." The bankruptcy filing gives the federal bankruptcy court the power to decide whether the league or Moyes owns the team, Business Journal states, citing Dan Gaffney, a bankruptcy attorney for Snell & Wilmer LLP. Mr. Gaffney, Business Journal relates, said that bankruptcy courts can undo lease terms and could help Mr. Moyes avoid NHL restrictions on the team's sale. Coyotes Bankruptcy May Bring Wayne Gretzky Millions Eric Morath posted on The Wall Street Journal blog that NHL's all- time leading scorer, Wayne Gretzky, would receive a big windfall if the Phoenix Coyotes hockey team succeeds in selling itself to BlackBerry baron Jim Balsillie. Mr. Gretzky, says WSJ, is Phoenix Coyotes' coach and minority owner. According to WSJ, Mr. Gretzky is slated to receive an $8 million payment for deferred compensation under Mr. Balsillie's offer to purchase the Coyotes out of bankruptcy. Court documents say that Mr. Gretzky could see an additional $14.5 million payment if he exercises an option in his contract to resign due to a change in ownership. Glendale, Arizona-based Dewey Ranch Hockey LLC and its affiliates, which own the Phoenix Coyotes team and franchise in the National Hockey League, filed for Chapter 11 bankruptcy protection on May 5, 2009 (Bankr. D. Ariz. Case No. 09-09488). Thomas J. Salerno, Esq., at Squire, Sanders & Dempsey, LLP, assists the Debtors in their restructuring efforts. Dewey Ranch listed $100 million to $500 million in assets and $100 million to $500 million in debts. CRUCIBLE MATERIALS: Files Chapter 11 Due to Auto Downturn --------------------------------------------------------- Bloomberg's Bill Rochelle said that secured lenders owed $64.5 million will provide as much as $69.4 million in financing for the Chapter 11 effort of Crucible Materials Corporation and Crucible Development Corporation. The DIP financing, Mr. Rochelle relates, will decrease in amount after May 29. The Crucible entities filed on May 6, 2009, voluntary petitions for relief under Chapter 11 before the U.S. Bankruptcy Court for the District of Delaware. Crucible said its management team had hoped to avoid the necessity of seeking bankruptcy relief, but in light of the current economic downturn and the resulting drop in the demand for Crucible's products, especially in the automotive sector, determined that immediate and decisive action was needed in order to preserve and protect the value of the company for all of its stakeholders, including its employees. Crucible intends to continue operating while it seeks to implement, with the assistance of its legal and financial advisors, a strategy for reorganizing and emerging from Chapter 11 as a leaner and more profitable company. "We had hoped to restructure our debt outside of Chapter 11", said David Robbins, Chairman and Chief Executive Officer. "However, given the current economic crisis and the prolonged downturn in the marketplace, we determined that filing would be the best option in order to achieve a sustainable long-term financial structure, and to save jobs." Crucible is a producer and distributor of specialty metals and powders with manufacturing facilities in New York and Pennsylvania, a research facility in Pennsylvania, and service centers throughout North American. Crucible, owned by its 1,000 employees, operates two plants and 12 regional service centers. Crucible Materials Corp. and an affiliate filed for Chapter 11 on May 6, 2009 (Bankr. D. Del. Case No. 09-11582). Judge Mary F. Walrath handles the case. The Debtors have tapped Mark Minuti, Esq., at Saul Ewing LLP, as counsel. They also tapped Duff & Phelps Securities LLP as investment banker and RAS Management Advisors LLC as business advisor. Epiq Bankruptcy Solutions LLC is the claims agent. Crucible Materials said its assets and debts both range from $100 million to $500 million. CUMMINS INC: Chrysler Bankruptcy Forces Closure of Columbus Plant ----------------------------------------------------------------- Cummins Inc. said a number of job actions affecting its manufacturing operations in Southern Indiana. The Company is temporarily closing the Columbus MidRange Engine Plant in Walesboro, just outside Columbus, as a result of Chrysler's decision last week to idle its manufacturing operations while it undergoes bankruptcy reorganization. CMEP is the sole manufacturing site for the 6.7-liter turbo diesel engine used in the heavy-duty Dodge Ram pickup truck. The plant will close effective May 15 and be down until Chrysler resumes pickup truck production. Chrysler's Dodge Ram manufacturing plant in Saltillo, Mexico, which closed Monday, is expected to be idle for at least four weeks and Chrysler has indicated that its entire manufacturing operation could remain closed for nine weeks or longer. The shutdown affects a total of approximately 690 workers at CMEP. Cummins will layoff approximately 610 hourly workers - 560 members of the Diesel Workers Union and 50 members of the Office Committee Union. The Company plans to redeploy as many of the 80 exempt employees in the plant as possible throughout its Southern Indiana operations. The last work day for most of the hourly employees at CMEP will be May 13. A small staff will be retained through the end of May to complete the shutdown process. "The engines we produce for Chrysler make up virtually all the demand at CMEP, and without the Chrysler production it is not economically feasible to operate the plant," said Jim Kelly, President of the Engine Business. "There is considerable uncertainty around Chrysler and when it will resume manufacturing operations, which makes it necessary for us to take this difficult action. "At the same time, the Dodge Ram is a valuable part of Chrysler's product portfolio, and the Cummins turbo diesel engine for the heavy-duty pickup has been a key part of the Ram's success for more than two decades. We are hopeful that once Chrysler emerges from its reorganization, demand for our award-winning engine will return." In actions unrelated to the Chrysler bankruptcy, Cummins also said will permanently layoff approximately 110 hourly workers in June at three locations in Southern Indiana: -- Approximately 30 workers at the Cummins Fuel Systems Plant in Columbus will be laid off effective June 1. -- Approximately 50 workers at the Cummins Industrial Center in Seymour will be laid off effective June 1. The plant manufactures high horsepower engines used in industrial, power generation, marine and military applications. -- Approximately 30 workers in the Heavy Duty Machining operation at Columbus Engine Plant will be laid off effective June 29. The operation machines cylinder blocks and heads for heavy duty engines produced by Cummins in Jamestown, N.Y. These job reductions are in response to further weakening demand for engines and components as a result of the global recession, and are consistent with our efforts to align manufacturing capacity and costs with that lower demand. About Cummins Cummins Inc. -- http://www.cummins.com/-- designs, manufactures, distributes and services engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, Cummins serves customers in approximately 190 countries and territories through a network of more than 500 company-owned and independent distributor locations and approximately 5,200 dealer locations. Cummins reported net income of $755 million on sales of $14.3 billion in 2008. DELPHI CORP: Conflicts Counsel Togut Segal Represents Chrysler -------------------------------------------------------------- Albert Togut, Esq., a senior member at Togut, Segal & Segal LLP, disclosed to the U.S. Bankruptcy Court for the Southern District of New York that his firm has been selected by Chrysler LLC and its affiliates to serve as their conflicts counsel in Chrysler's Chapter 11 cases. He says that prior to Chrysler's retention of Togut Segal, his firm has advised Delphi Corp. and its lead counsel, Skadden, Arps, Slate, Meagher & Flom LLP. He assures the Court that Togut Segal does not and will not represent Chrysler in any action against Delphi, and does not and will not represent Delphi in any action against Chrysler. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. 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 December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 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; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) 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. 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 U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of Dec. 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Court Okays Bidding Protocol for Brakes Business ------------------------------------------------------------- Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York entered an order on April 30, 2009, approving bidding procedures to govern the sale of Delphi Corp.'s Brakes and Ride Dynamics Businesses to Beijingwest Industries Co., Ltd., for $90 million, free and clear of liens, and subject to higher bids. These deadlines will apply: May 11, 2009 Deadline or all bids to the Brakes Business to be received by the Debtors. May 14, 2009 Deadline for parties to file objections to the Sale. May 15, 2009 Auction Date, to be conducted if at least one Qualified Bid is received. May 21, 2009 Date for the Debtors to seek approval of the Brakes Business Sale to Beijingwest or the Successful Bidder. To address objection lodged by the Pension Benefit Guaranty Corporation, the Selling Debtors and Beijingwest have agreed to modify the Master Sale and Purchase Agreement, solely with respect to PBGC's purported liens. The indemnifications with respect to the title and encumbrance portions of the representations in the Sale Agreement will survive until the expiration of the local and applicable statute of limitations to enforce PBGC's purported liens in the non-U.S. jurisdictions where the acquired assets owned by the non-Debtor Sellers are located. Moreover, the amendment to the Sale Agreement will be incorporated into the stalking horse bid and will be circulated to Qualified Bidders at the auction. The Sellers and Beijingwest will continue to work together in order to reach a resolution to the Purported Liens issue prior to the closing. On behalf of the Debtors, John Wm. Butler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, filed with the Court a list of 21 contracts the Selling Debtors will seek authority to assume and assign to Beijingwest or the Successful Bidder at the Sale Hearing on May 21, 2009. A full copy of the Contract List and the corresponding cure amounts is available for free at http://bankrupt.com/misc/Delphi_BrakesBizContracts.pdf Non-Debtor counterparties to U.S. Contracts to be assumed in connection with the proposed sale will be entitled to recover only the Cure Amounts and will be barred from asserting at the Sale Hearing any other cure amount. Counterparties to a U.S. Contract to be assumed have the right to object only to the adequate assurance of future performance by the Buyers. Objections, if any, to the assumption and assignment of the U.S. Contracts to be assumed, including objections asserting the existence of a postpetition default that must be cured under Section 365 of the Bankruptcy Code, must be filed no later than May 11, 2009. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. 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 December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 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; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: EU Commission Clears Sale of Steering Biz to GM ------------------------------------------------------------ In a public statement dated April 30, 2009, the European Commission has cleared under the EU Merger Regulation the proposed acquisition of Delphi Corp.'s Steering Business by General Motors' Corporation. The Commission said that the transaction would not significantly impede effective competition within the European Economic Area or a substantial part of the European Union. Upon review, the Commission noted that the merged entity would continue to face several strong, effective competitors with significant market shares. The Commission also related that the merged entity would not have an incentive to close off competing car manufacturers' access to the Steering Business, given that the vehicle components represent a modest fraction of the cost of a car. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. 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 December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 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; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) About General Motors Corp. 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. DELPHI CORP: Former Execs Seek $6-Mil. More in D&O Defense Costs ---------------------------------------------------------------- Delphi Corp., Delphi Trust I, Delphi Trust II, certain former Delphi officers and employees, and certain of the Debtors' insurance companies on August 31, 2007, entered into an Insurance Settlement Stipulation, which provided for the creation of a fund for the defense costs of former Delphi officers and employees with the funds to administered by the Delphi former Officers and employees as escrow agent. Pursuant to the Stipulation, the escrow agent was authorized to disburse up to $1,000,000 to the Former Delphi Officers and Employees to be used solely for defense costs in connection with the lawsuit, In re Delphi Corporation Securities, Derivative and ERISA Litigation, 05-md-1725 (E.D. Mich.). In August 2008, the parties entered into a second Court-approved stipulation, authorizing the Escrow Agent to disburse up to $5,000,000, inclusive of the sums already disbursed, to the Delphi Former Officers and Employees to be used solely for defense costs. Since then, however, several of the former officers and employees continue to incur defense costs that require reimbursement. Accordingly, the parties further stipulate to allow the Escrow Agent to disburse up to $10 million of the principal amount of funds deposited into the Escrow Account, inclusive of any sums already disbursed, to the Delphi Former Officers and Employees to be used solely for defense costs. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. 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 December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 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; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Modifies Accommodation Pact, to File Plan May 21 ------------------------------------------------------------- Delphi Corp. and its debtor affiliates seek approval from the U.S. Bankruptcy Court for the Southern District of New York of a "third amendment" to their DIP Accommodation Agreement executed with JP Morgan Chase Bank, N.A., and certain lenders under the $4.35 billion DIP Credit Facilities on May 6, 2009. The Debtors and DIP Lenders have yet agreed on further amendments of the DIP Accommodation Agreement to avoid negative consequences the Debtors might entail in not satisfying certain DIP Accommodation Agreement milestones. The Debtors have filed motions seeking Court approval of (i) amendments to their liquidity support agreement with General Motors Corporation that would have increased GM's commitments to the Debtors from $300 million to $450 million, and (ii) GM exercising the Unsold Business Option of the Amended Master Restructuring Agreement with respect to the Debtors' global steering and half-shaft business. The U.S. Department of Treasury's Auto Task Force objected to both Motions, citing the need for further opportunity to review the details of those transactions and the alternatives with respect to the Debtors' emergence from Chapter 11. The Court adjourned the hearing on the GM-related Motions to May 7, 2009, to allow further discussions among the parties and to push for the Debtors' overall reorganization framework to progress. As a result of subsequent events, the hearing on the GM-related Motions has been further adjourned to May 21, 2009. Delphi's agreements with GM, which would have provided significant liquidity to the Debtors, continue to be blocked by the Auto Task Force, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, Chicago, Illinois, relates. In this light, he avers, additional amendments to the DIP Accommodation Agreement were necessary. Thus, on March 31, 2009, the Debtors reached an agreement with the Participant DIP Lenders to enter into a second amendment to the DIP Accommodation Agreement. The DIP Accommodation Second Amendment was supplemented on April 2 and 22, 2009. The DIP Second Amendment Second Supplement required the Debtors to deliver to the DIP Agent by May 4, 2009, a detailed term sheet agreed to by GM and the Auto Task Force setting forth the terms of a global resolution of matters relating to GM's fund contribution to the Debtors' Chapter 11 cases. The Court authorized the Debtors' entry of the DIP Accommodation Second Amendment on April 23, 2009. The DIP Second Amendment Second Supplement modified the milestones in the DIP Accommodation Agreement and provided interim liquidity by lowering the required cash collateral balances to facilitate continued discussions regarding a consensual resolution of the Chapter 11 cases. Mr. Butler discloses that after the approval of the DIP Second Amendment Second Supplement, the Debtors continued to seek resolution on a Term Sheet but were unable to reach agreement by May 4, 2009. The parties thus agreed to further amend the DIP Accommodation Agreement to provide the Debtors additional time and sufficient liquidity to continue negotiations. Accordingly, the Debtors and the DIP Lenders executed the DIP Accommodation Third Amendment on May 6, 2009, to modify certain provisions of the DIP Accommodation Agreement and avoid an early termination of the Accommodation Period. The DIP Accommodation Third Amendment sets these milestones: May 21, 2009 Deadline by which the Debtors are obligated to deliver a Term Sheet to the DIP Agent. Failure to meet this revised deadline would constitute an Accommodation Default. May 22, 2009 Date by which the Debtors would be required to apply the Incremental Borrowing Base Cash Collateral to repayment of Tranche A and B DIP Loans if they have not delivered a Term Sheet to the DIP Agent by May 21. June 2, 2009 Date by which the DIP Accommodation Agreement would terminate if the requisite DIP Lenders do not affirmatively notify the Debtors that the Term Sheet was satisfactory. The DIP Accommodation Third Amendment has a new section that provides for the Debtors to agree to continue to explore strategic alternatives for resolving their Chapter 11 cases. The DIP Accommodation Third Amendment also contains certain fee and expense provisions, including the payment to the Participant DIP Lenders that consent to the DIP Accommodation Third Amendment of an amendment fee of 20 basis points. Other fee and expense provisions are contained in separate fee and expense letters, which the parties have agreed will be kept confidential. The DIP Accommodation Third Amendment also contemplates conditions that provide for termination under certain scenarios: (1) The DIP Accommodation Third Amendment will terminate on May 12, 2009, if prior to that date: -- the Court has not entered an order satisfactory to the DIP Agent authorizing the DIP Accommodation Third Amendment on an interim basis and the payment of related fees and expenses; and -- the Debtors have not applied $45 million from the Incremental Borrowing Base Cash Collateral Accounts to repay the Tranche A and Tranche B DIP Loans. (2) The DIP Accommodation Third Amendment will terminate on May 23, 2009, if prior to that date the Court has not entered an order satisfactory to the DIP Agent authorizing the Third DIP Accommodation Amendment on a final basis and the payment of related fees and expenses. (3) The DIP Accommodation Third Amendment may be terminated if before May 12 or May 23, 2009, the Debtors have not paid all reimbursable fees and expenses required under the DIP Credit Agreement or the Expense Side Letters for which invoices have been submitted prior to that date. A full-text copy of the DIP Accommodation Third Amendment executed on May 6, 2009, is available for free: http://bankrupt.com/misc/Delphi_DIPAccommThirdAmendment.pdf Mr. Butler stresses that the Debtors' entry into the DIP Accommodation Third Amendment is a necessary step to enable them to maintain operations with sufficient and uninterrupted liquidity, as they continue their complex emergence negotiations with their stakeholders and the Auto Task Force and as they continue to undertake efforts to formulate modifications to their Confirmed First Modified Joint Plan of Reorganization. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. 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 December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 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; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Schumer Calls for GM's Quick Reclamation of Plants --------------------------------------------------------------- New York Senator Charles Schumer urged General Motors Corp. and Delphi Corp. to reach an agreement, on GM's reclamation of Delphi plants, Reuters said. Reuters said the senator urged for an agreement by May 5, 2009. In February 2009, GM and Delphi were in discussions on GM's possible reclamation of Delphi plants to ensure the continued supply of parts to GM. It was also contemplated that reclaiming the plants might help Delphi get exit financing and ensure that GM's supply of parts won't be affected by any liquidation. In a letter addressed to GM and Delphi, Senator Schumer noted that an immediate deal will avoid a shutdown of Delphi facilities, according to Bloomberg News. The deal is also economical for both parties because it maintains the existing supply chain at an affordable cost, Bloomberg quoted Sen. Schumer as saying. According to Sen. Schumer, the U.S. Department of Treasury's Auto Task Force is in support of GM's possible buyback, Bloomberg reports. As of press time, no official agreement between Delphi and GM has been made public. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. 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 December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 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; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) About General Motors Corp. 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. DELPHI CORP: Tries to Keep Exclusivity, Control of Bankruptcy Case ------------------------------------------------------------------ Delphi Corp. and its debtor affiliates tell Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York that due to the dramatic decline in volume in the auto industry, they continue to negotiate with their DIP Lenders, General Motors Corporation and the U.S. Department of Treasury's Auto Task Force for further liquidity support. Since negotiations are not expected to be final until late May 2009 in light of the Obama administration's June 1, 2009 deadline for an agreement on GM's restructuring, the Debtors say they anticipate needing more time beyond May 31, 2009, to file appropriate plan modifications and to solicit acceptances to those modifications. Against this backdrop, the Debtors maintain that a further extension of the Exclusive Periods is justified. Specifically, the Debtors ask Judge Drain to further extend the exclusivity period, solely as between them and the Court-approved Statutory Committees, to: (a) file a plan of reorganization, through and including July 31, 2009; and (b) solicit acceptances of that plan, through and including September 30, 2009. Delphi's current Exclusive Plan Filing Period expires on May 31, 2009, and the Exclusive Solicitation Period expires on July 31, 2009. According to John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, Chicago, Illinois, the Debtors have continued to make progress in their reorganization: * The Debtors, with the support of JPMorgan Chase Bank, N.A., as administrative agent to their DIP Credit Facility and the requisite DIP Lenders, have entered into additional Court -approved amendments to the DIP Accommodation Agreement, which permit the continued use of certain of the proceeds from their DIP Credit Facility through June 30, 2009, subject to certain milestones. * The Debtors have been involved in ongoing negotiations with GM, the Auto Task Force and the DIP Lenders regarding an emergence capital funding structure that would facilitate the Debtors' emergence from Chapter 11. * The Debtors have obtained Court approval of procedures to sell their brakes and ride dynamics businesses to BeijingWest Industries Co. Ltd. for $90 million, about $30 million of which would be allocated to the Selling Debtor Entities. * The Debtors have received final approval to terminate certain salaried retiree benefits, thereby eliminating more than $1.1 billion in liabilities from their balance sheet, and have received approval of a settlement agreement with the Official Committee of Eligible Retirees and the Delphi Salaried Retirees Association settling all appeal rights in connection with the termination of the retiree benefits. * The Debtors have reconciled most of more than 17,000 proofs of claim filed in these Chapter 11 cases, which have an aggregate value for $34 billion in liquidated amounts plus certain unliquidated amounts. As of April 30, 2009, the Debtors have objected to 13,400 claims asserting nearly $10.1 billion and the Court has granted relief with respect to $10.5 billion in asserted liquidated claims. * The Debtors obtained Court approval to sell a parcel of real property located in Anaheim, California, to Bircher Anaheim Magnolia Avenue, LLC, for $20 million. * The Debtors have taken steps to further reduce their U.S. cash burn rate. * The Debtors have closed the sale of their exhaust business to Bienes Turgon S.A. de C.V. for $17 million. * The Debtors have conducted expert deposition discovery and obtained Court approval to file an Amended Complaint against Appaloosa Management, LP and other Plan Investor. An Exclusivity Period extension is further justified, Mr. Butler adds, because the markets have remained extremely volatile and liquidity in the capital markets has been nearly frozen, resulting in an unprecedented challenge for the Debtors to successfully attract emergence capital funding for their Confirmed First Modified Joint Plan of Reorganization. As previously reported, the Auto Task Force objected to the several agreements reached between the Debtors and GM that intend to provide more liquidity to the Debtors and have asked for additional time to review the agreements and alternatives for the Debtors' reorganization. Hearing on the GM-related matters has been adjourned to May 7, 2009, to allow further discussions with respect to the agreements and the Debtors' overall reorganization framework in progress. Proceedings against Appaloosa and other Plan Investors are also still ongoing, Mr. Butler adds. Mr. Butler also notes that the Debtors' task of negotiating plan modifications, securing exit financing and obtaining Court approval remain significant. He stresses that the Debtors' cases are large and multi-dimensional and that the scope of actions that have been taken, and must be taken, to address those restructuring requirements is exceedingly complex. Thus, an extension of the Exclusive Periods is necessary to continue progress in addressing those complexities, he says. Under these circumstances, the Debtors assure the Court that they will continue to pay their bills as they become due, including the statutory fees paid quarterly to the U.S. Trustee. Mr. Butler maintains that the Debtors' request for an extension of the Exclusive Periods as between the Debtors and the Statutory Committees is not a negotiation tactic. On the contrary, he elaborates, the Debtors continue to negotiate with certain of their stakeholders, as evidenced in the amendments to the DIP Accommodation Agreement. The Debtors' next steps will include negotiating and finalizing modifications to the Confirmed Plan and obtaining emergence capital funding necessary to emerge from Chapter 11, he discloses. The Court will consider the Debtors' request on May 21, 2009. Objections are due no later than May 14. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. 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 December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 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; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DR HORTON: Fitch Assigns 'BB' Rating on $400 Mil. Senior Notes -------------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to D.R. Horton's proposed $400 million in convertible senior notes due 2014. The Rating Outlook is Negative. Proceeds will be used for general corporate purposes, including repayment or repurchase of outstanding indebtedness. This offering was an opportunistic access of the capital markets which might not be as accessible to homebuilders in the future. Liquidity was enhanced at a lower cost than the debt it is likely to replace with limited constraints from covenants. The debt- to-capital ratio as of March 31, 2009, rose to 55.1% on a pro forma basis, but the pro forma net debt-to-capital ratio is only 34.3%. DHI's long-term net debt-to-capital ratio is expected to remain below 45%. Fitch lowered DHI's Issuer Default Rating and senior unsecured rating in mid-December 2008 from 'BB+' to 'BB'. The senior subordinated debt rating was lowered from 'BB-' to 'B+'. The downgrades reflected the very difficult housing environment and Fitch's expectations that housing activity will be 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 negative trends in DHI's operating margins, further deterioration in credit metrics (especially interest coverage and debt/EBITDA ratios), erosion in tangible net worth from non-cash real estate charges and operating losses, which have led to atypically high leverage. DHI's liquidity position provides a buffer and supports the current ratings. Fitch notes that it is likely there will be positive operating cash flow generation in Fiscal 2009, excluding income tax refunds of $621.7 million received in the fiscal 2009 first quarter and an estimated $55 million to be realized in the fourth quarter. Fitch projects cash flow generation of $400-500 million, excluding refunds, in fiscal 2009. 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. DHI's ratings are based on the company's execution of its business model in the current housing correction, steady capital structure, geographic and product line diversity, and the company's above average growth during the past housing expansion. DHI had been an active consolidator in the homebuilding industry, which had kept debt levels a bit higher than its peers. But management also exhibited an ability to quickly and successfully integrate its many acquisitions. During fiscal 2002 DHI completed its largest acquisition in absolute size (Schuler Homes). However, DHI made no acquisitions in fiscal 2003 through the first quarter of fiscal 2009. It also appears that DHI may be less acquisitive of companies in the future as it primarily focuses on harvesting the opportunities within its current and adjacent markets. DHI maintains a 5.7-year supply of lots (based on last 12 months deliveries), 80.5% of which are owned and the balance controlled through options. (The options share of total lots controlled is down sharply over the past three years as the company has written off substantial numbers of options.) The company maintains a 4.6- year supply of owned lots. The ratings also manifest DHI's historic aggressive, yet controlled growth strategy and its relatively heavy speculative building activity (which had lessened late in the last up-cycle). The company has historically built a significant number of its homes on a speculative basis (i.e. begun construction before an order was in hand). DHI successfully executed this strategy in the past. Nevertheless, Fitch was more comfortable with the more modest 'spec' targets of 2004 and 2005. At present 'spec' counts are somewhat high for DHI as with certain other builders because of higher than normal cancellation rates and market conditions that favor 'spec' building. DHI ended the March 2009 quarter with $1.48 billion of cash on the balance sheet and $275 million of availability under its $1.65 billion unsecured revolving credit facility. As noted earlier, the company expects to receive a tax refund of $55 million in its fiscal 2009 fourth quarter. As of March 31, 2009, DHI was in compliance with all the covenants under its revolving credit facility, which matures in December 2011. However, with its substantial cash balance and expected future cash position, the company does not anticipate a need to borrow from the facility for the remainder of its term. Therefore, DHI has chosen to terminate the facility. The company has provided notice to its lenders participating in the facility and expects the termination to be effective May 11, 2009. DHI expects to save over $3 million annually in non-use fees as a result of terminating its revolving credit facility. Perhaps, more importantly, this strategy provides more flexibility for DHI in its efforts, as needed, to access meaningful capital. During the fiscal 2009 second quarter, DHI repaid the outstanding principal of $460 million of its 5% and 8% senior notes, which became due on January 15, 2009 and February 1, 2009, respectively. Also during the quarter, the company repurchased $77.8 million principal amount of its outstanding notes with maturities beyond 2009 for a total purchase price of $75.3 million, plus accrued interest. Subsequent to March 31, 2009, DHI repurchased a total of $25.2 million principal amount of its outstanding notes for a total purchase price of $23.7 million, plus accrued interest. EUROFRESH INC: U.S. Trustee Appoints 5-Member Creditors Committee ----------------------------------------------------------------- Ilene J. Lashinsky, U.S. Trustee for Region 14, appointed five creditors to serve on the official committee of unsecured creditors in Eurofresh, Inc., and Eurofresh Produce Ltd.'s Chapter 11 cases: The Committee members are: 1. U.S. Bank National Association, Indenture Trustee Attn: Diana Jacobs PD-WA-T7CT 1420 5th Avenue, 7th Floor Seattle, WA 98101 Tel: (206) 344-4680 Fax: (206) 344-4632 2. Apollo Investment Corporation Attn: Gerald Girardi 9 W. 57th Street, 37th Floor New York, NY 10019 Tel: (212) 822-0607 Fax: (646) 417-6653 3. Barclays Bank PLC Attn: Holly Kim 1620 26th Street, No. 2000N Santa Monica, CA 90404 Tel: (310) 907-0453 Fax: (310) 828-5747 4. John Christner Trucking Attn: Daniel Christner P.O. Box 1900 Sapulpa, OK 74067 Tel: (918) 227-6641 Fax: (918) 248-3032 5. Southwest Gas Corporation Attn: Randy Gabe LVB-106 P.O. Box 98510 Las Vegas, NV 89193-8510 Tel: (702) 876-7193 Fax: (702) 365-5904 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 Eurofresh, Inc. 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 Eurofresh Inc., in its bankruptcy petition, said it has assets worth $50 million to $100 million and debts of $100 million to $500 million. EUROFRESH INC: Amends List of Creditors Holding Unsecured Claims ---------------------------------------------------------------- Eurofresh, Inc., and Eurofresh Produce Ltd. filed with the U.S. Bankruptcy Court for the District of Arizona an amended list of their largest unsecured creditors, disclosing: Entity Nature of Claim Claim Amount ------ --------------- ------------ Redwood Capital Management Notes $2,500,000 Attn: Sean Sauler 910 Sylvan Avenue, Suite 130 Englewood Cliffs, NJ 07632-3306 Montis Contract $1,522,125 Attn: Johan van den Berg Klinkaardstraat 223 B-2950 Kapellen, Belgium John Christner Trucking Contract $1,372,244 Attn: Bob Snell 19007 W. Hwy. 33 Sapulpa, OK 74066 Southwest Gas Corp Utility $822,177 Attn: Melissa Miller 1850 9 TH ST Douglas, AZ 85607-3953 Fertizona Trade $677,570 Attn: Steve Fenn P.O. Box 519 Willcox, AZ 85644 BRS Tomato Acquisition Contract $672,140 Attn: Tom Baldwin 126 East 56th Street New York, NY 10022 Bank of American Capital Investors Contract $672,140 Attn: Mary Hunt 100 N Tryon Street, 25th Floor Charlotte, NC 28255-0001 Az.Corrrectional Industries Contract $653,597 Attn: Bill Branson Arizona State Prison Complex - Safford Safford, AZ 85546 Rene Produce LLC Contract $525,321 Attn: Alberto Flores P.O. Box 1178 Nogales, AZ 85628 Pacheco Farm Labor Contract $336,316 Attn: Amanda Plaza 160 Potter Street Shafter, CA 93263 Maquila International, Inc. Contract $269,675 Attn: Humberto Ramirez 235 N. Freeport Drive Nogales, Arizona 85621-0000 International Paper Trade $192,379 Bioparques de Occidente Trade $153,807 SSVEC-Primary Utility $133,451 Smurfit Stone Containers Enterprises, Inc. Trade $127,057 Seminis Vegetable Seeds $117,032 Blue Creek Produce LLC Tom Trade $104,540 De Ruiter Seeds, Inc. Trade $102,598 Sierra Southwest Cooperative Sevices Utility $77,487 BioBest USA Inc Trade $65,144 CHEP Equipment Pooling Systems Trade $65,028 Mullinix Packages, Inc Trade $61,127 Koppert Biological Systems Trade $58,608 About Eurofresh, Inc. 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 Eurofresh Inc., in its bankruptcy petition, said it has assets worth $50 million to $100 million and debts of $100 million to $500 million. EVA-TONE INC: Expects to File Plan "Within Several Business Days" ----------------------------------------------------------------- According to Bloomberg's Bill Rochelle, Eva-Tone Inc., maker of CDs and DVDs based in Clearwater, Florida, said in a court filing that it expects to file a reorganization plan "within several business days." The report relates that the Company has disclosed in its schedules, about $11.3 million in both assets and debt. The secured lender is listed as being owed $2.3 million. Revenue fell to $28 million in 2008 from $36 million in 2007. Headquartered in Clearwater, Florida, Eva-tone Inc. -- http://www.evatone.com-- offers audio duplication, compact disc and CD-ROM replication. The company filed for Chapter 11 protection on November 3, 2008 (Bankr. M.D. Fla. Case No. 08-17445). Rod Anderson, Esq., at Holland & Knight LLP, represents the Debtor. When the Debtor filed for protection from its creditors, it listed assets and debts between $10 million and $50 million each. GARY RICHARDS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Joint Debtors: Gary Richards Diane Richards 605 NE 13th Street Casey, IL 62420 Bankruptcy Case No.: 09-60328 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court Southern District of Illinois (Effingham) Judge: Kenneth J. Meyers Debtors' Counsel: Steven M. Wallace, Esq. Kunin Law Offices LLC 412 Missouri Ave East St Louis, IL 62201-3016 Tel: (618) 274-0434 Fax: (618) 274-8369 Email: swallace@kuninlaw.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 their list of 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/ilsb09-60328.pdf The petition was signed by the Joint Debtors. GENERAL GROWTH: Replaces Pershing Square as DIP Lender ------------------------------------------------------ General Growth Properties, Inc., and its 386 debtor affiliates seek permission from Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern District of New York to obtain $400 million of senior secured debtor-in-possession loans from a group of lenders composed of holders of unsecured obligations of the Debtors. The $400 million DIP financing replaces the $375 million committed by Pershing Square Capital Management, L.P., which owned 24% of General Growth's equity before the company filed for bankruptcy. The new DIP Loan Lenders and their loan commitments are: Lender Committed Amount ------ ---------------- Farallon Capital Management, L.L.C. $210,000,000 Luxor Capital Group 110,000,000 Canpartners Investments IV, LLC 25,000,000 Perry Principals Investments LLC 25,000,000 Whitebox Combined Partners LP 11,000,000 Whitebox Hedged High Yield Partners LP 6,000,000 Whitebox Convertible Arbitrage Partners LP 5,000,000 Pandora Select Partners LP 2,000,000 Whitebox Special Opportunities Fund Series B 1,000,000 Delaware Street Capital Master Fund, L.P. 5,000,000 ---------------- Total DIP Commitments $400,000,000 ================ A draft copy of the revised DIP Credit Agreement is available for free at http://bankrupt.com/misc/ggp_revisedDIP.pdf The Debtors' proposed counsel, Marcia L. Goldstein, Esq., at Weil, Gotshal & Manges, LLP, in New York, relates that since April 16, 2009, the Debtors have engaged in a non-stop effort to improve on the terms of the DIP loan, negotiating with numerous additional parties as well as the original proposed DIP Lender, Pershing Square. That process, she says, has resulted in a significantly improved DIP financing facility. Aside from the increased loan amount, the material differences between the Pershing DIP Agreement and the revised DIP Credit Agreement are: Pershing Revised Term DIP Agreement DIP Agreement ---- ------------- ------------- Warrant Ability to acquire None up to 4.9% of equity securities Conversion to Ability to convert Ability to convert Equity Feature all or a portion all or a portion of outstanding DIP of outstanding DIP loan into up to 5% loan into up to 6% of reorganized of reorganized equity equity or to post- emergence debt Loan Draw Fully funded Fully funded Requirements at closing at closing Collateral Includes senior lien Includes senior Package on unencumbered lien on collateral, junior unencumbered, lien on encumbered collateral, junior collateral and liens on senior lien on cash unencumbered and collateral junior lien on cash collateral Pricing LIBOR plus 12% LIBOR plus 12% (with a LIBOR Floor (with a LIBOR Floor of 3%) of 2.25%) The Revised DIP Loan, Ms. Goldstein contends, provides the Debtors with flexibility and optionality for their exit from Chapter 11 by permitting conversion of the loan to post-emergence equity. The Revised DIP Loan has significant improvements, including: * Eliminating the proposed warrant to acquire up to 4.9% of the equity in the Debtors pursuant to any plan of reorganization; * $25 million in additional borrowing capacity; * Increasing the term of the loan by six months, from 18 months to 24 months; * Adding to Debtors' option to convert the Revised DIP Loan into equity at emergence another option to convert the Revised DIP Loan to post-emergence debt; and * Lower interest rate and lower overall cost of borrowing. The Revised DIP Loan also offers the Debtors the ability to eliminate most of the major objections by mortgage lenders and others concerning cash collateral and adequate protection issues as follows: * Granting secured mortgage lenders, as adequate protection, a first priority security interest in the account within the centralized cash management system that holds the cash transferred from the properties; * Granting secured mortgage lenders as adequate protection a silent, second priority lien on the properties currently securing the Prepetition Goldman Facility; * Additional financial reporting to secured mortgage lenders entitled to adequate protection in accordance with those lenders' original loan documents; and * Compliance with certain leasing covenants in the secured mortgage loan agreements. A blacklined copy of the revised DIP Agreement versus the Pershing DIP Agreement is available for free at: http://bankrupt.com/misc/ggp_revisedDIP_blackline.pdf Approval of the Revised DIP Loan, use of cash collateral, and continued use of the prepetition cash management system are essential to the Debtors' ability to operate in Chapter 11 and should be approved, Ms. Goldstein maintains. The relief requested, she points out, is modest in scope and scale and is designed to allow the Debtors to operate in Chapter 11 the same way they operated outside of Chapter 11 -- as an integrated enterprise -- with appropriate protections for all parties-in- interest. The Revised DIP Loan, she adds, will provide additional liquidity for the benefit of all Debtors, and all secured lenders, cushioning the Debtors against unforeseen circumstances, and ensuring they will be able to continue funding the operation and maintenance of each of their properties. Ms. Goldstein further maintains that access to the Revised DIP Loan will ensure and enhance the Debtors' ability to provide the centralized management services essential to the success of each property, just as they did prepetition. Likewise, use of cash collateral will provide the Debtors with the liquidity necessary to pay the direct operation and maintenance expenses of each property, as well as the costs of the corporate infrastructure and the employees who actually perform the services necessary to operate each shopping center, just as was done prepetition. Maintaining the prepetition cash management system will allow the Debtors to continue sweeping cash into a centralized bank account held by Debtor GGP Limited Partnership, and enable payment of all expenses from centralized disbursement accounts and retention of any excess cash -- a system to which no mortgage lender objected prepetition. The Revised DIP Loan eliminates the warrant on the post-emergence equity interests of the company, mooting the numerous objections to this feature of the original proposed financing, Ms. Goldstein asserts. The Revised DIP Loan, she adds, resolves an issue that pervades many of the Objections of secured lenders by permitting the Debtors to grant to secured lenders, as adequate protection for the Debtors' use of their cash collateral: (x) first-priority replacement liens in the Debtors' bank account containing the cash concentrated from the properties; and (y) a silent second lien on the properties currently securing the Prepetition Goldman Facility, in each case to the extent the respective lender's project entity has a net intercompany receivable for any diminution in the value of their collateral (after taking into account the value of the prepetition collateral). These replacement liens will be granted to the secured lenders, in addition to a lien on the intercompany claims of their specific Debtor borrowers. In addition, the adequate protection offered by the Debtors to these secured lenders provides for additional reporting requirements and compliance with certain leasing covenants, addressing other concerns raised by some of the objecting parties. Eurohypo, et al., Want DIP Request Denied Eurohypo AG, New York Branch, as administrative agent for $1.51 billion 2008 Facility Lenders, and 19 other parties-in-interest, in separate filings, objected to, and ask the Court to deny approval of, the Debtors' request to access the $375 million Pershing Square DIP Loan: * Deutsche Bank Trust Company Americas; * Bank of America, N.A.; * AllState Life Insurance Company; * Wells Fargo Bank, N.A.; * U.S. Bank National Association; * Goldman Sachs Mortgage Company; * ING Clarion Capital Loan Services LLC; * Elliot Associates, L.P.; * Prudential Insurance Company of America; * Principal Life Insurance Company; * CWCapital Asset Management LLC; * New York Life Insurance Company; * Metropolitan Life Insurance Company; * KBC Bank, N.V.; * FRM Funding Company; * Teachers Insurance and Annuity Association of America; * 2006 Lenders; * American General Life Insurance Company; and * Property Level Lenders, a list of which is available for free at http://bankrupt.com/misc/GenGrowth_PropLevelLenders.pdf (1) Eurohypo Eurohypo complains that the Pershing DIP Financing Motion seeks to disregard the operating agreements of single purpose entities and ignore those SPEs' separate existence by placing second mortgages on the 2008 Facility Borrowers for the benefit of the Debtors who are non-borrowers under the 2008 Facility. Eurohypo argues that the 2008 Facility Borrowers have no need for the DIP Loan and will not receive the proceeds of the DIP Loan. By making the 2008 Facility Borrowers liable to repay loans to other separate entities, approval of the DIP Loan Agreement would prejudice the 2008 Facility Lenders' rights to seek dismissal or to exercise their rights under Section 362(d)(3) of the Bankruptcy Code since the DIP Loan would entangle the 2008 Facility Borrowers with the other non-borrower Debtor-affiliates that dismissal could be foreclosed, Eurohypo asserts. Eurohypo also complains that the Debtors seek to grant a senior lien to the DIP Lenders in all postpetition rent and all other cash collateral of the 2008 Facility Lenders despite the 2008 Facility Lenders' lien under Section 552(b)(2). More importantly, Eurohypo complains that the Pershing DIP Loan Agreement attempts to undermine the "blanket mortgage" structure of the 2008 Facility by permitting payment of only of the portion of the outstanding balance of the 2008 Facility which has been allocated to the property being sold. The Pershing DIP Loan Agreement cannot rewrite the 2008 Facility in this fashion, Eurohypo argues. Accordingly, Eurohypo asks the Court to deny the DIP Financing Motion. Eurohypo filed a declaration by Jeffrey D. Ganz to support its objection. A full-text copy of the declaration is available for free at http://ResearchArchives.com/t/s?3c86 (2) Deutsche Bank Deutsche Bank, as administrative agent for lenders to Debtor Fashion Show Mall, LLC, complains that the proceeds of the DIP Financing will not confer any meaningful benefit to the Fashion Show Borrower-Debtor, let alone serve as a necessary means to preserve the assets of its estate. The terms of the DIP Financing Agreement and the absence of appropriate subordination of the DIP Liens to the Fashion Show Agent's first liens on the Fashion Show Property imposes unsupportable burdens on the Fashion Show Debtor and its secured creditors, in violation of the prior decisions of the Court and Section 364, Deutsche Bank further complains. The Fashion Show Agent asks the Court to deny the DIP Motion insofar as it seeks DIP Fashion Show Guaranties and Liens. Deutsche Bank, as administrative agent for lenders to Debtor Shoppes at Palazzo and second lien holder to the Fashion Show Mall pursuant to the Palazzo Loan, raises the same objection as they relate to the Shoppes at Palazzo Loan and Fashion Show 2nd Lien Notes. Deutsche Bank filed declarations by James Rolison and Donald Berger in support of its objection. Full-text copies of the declarations are is available for free at: * http://ResearchArchives.com/t/s?3c84 * http://ResearchArchives.com/t/s?3c85 (3) BofA and Wells Fargo The Debtors seek approval of the DIP Financing even though they have no actual need for the financing, BofA, as holder of $225 million mortgage loan with Debtor Tysons Galleria L.L.C., tells the Court. BofA also complains that the DIP Financing violates state law in that the incurring of additional indebtedness and granting of a junior lien on Tysons' collateral constitutes ultra vires acts beyond the scope of its corporate authority. BofA asserts that the Debtors fail to provide the requisite showing of both the necessity for the DIP Financing and the reasonableness of its use and terms. Allstate Life, holder of $17.5 million Promissory Note dated October 19, 2006, and $17.5 million Promissory Note dated October 19, 2006, adopts BofA's Objection. In a joint filing, BofA and Wells Fargo, owners and holders of seven separate loans made to eight debtors secured by mortgages on 16 separate properties, complain that it is unclear whether any assets of the Non-Debtor Borrowers are intended to be used to secure the proposed DIP Loans. Wells Fargo, as trustee for holders of Banc of America Commercial Mortgage, Inc., Commercial Mortgage Pass-through Certificates, Series 2006-2, stresses that the since the Debtors admitted that they do not require DIP Financing imminently but rather on a long-term basis, fundamental fairness dictates against granting the Motion at this juncture before the Court has had an opportunity to evaluate whether the applicable Debtors' Chapter 11 petitions should be dismissed. Wells Fargo complains that the Debtors fail to cite any reason justifying the proposed prompt repayment of the Debtors' obligations under the Prepetition Goldman Facility. Wells Fargo notes that absent repayment, the DIP Financing is not necessary because the Debtors will end the 13-week period with $87 million of available cash even without a DIP Loan. Accordingly, Wells Fargo asserts that the DIP Financing cannot be approved to the extent that any proceeds are to be used to maintain, repair or improve the its collateral because the Debtors have not shown that it is unwilling to make postpetition advances on more favorable terms. (4) U.S. Bank U.S. Bank objects to the entry of final order to the DIP Financing Motion to the extent that it grants a priming lien against the Debtors' Main Operating Account without adequate protection against the diminution in the value of its collateral. U.S. Bank asks the Court to: (i) deny approval of the DIP Financing Motion to the extent it seeks to impose the Priming Lien; or (ii) order that U.S. Bank be given adequate protection against the Priming Lien in the form of U.S. Bank's retaining a first priority right of setoff, to the extent of $1,717,336 in the Main Operating Account, with priority over all other liens and interest, including the Priming Lien. (5) Goldman Sachs Goldman Sachs, as administrative agent under the Bridge Loan Agreement, files this objection to preserve the rights of the Bridge Loan Lenders to challenge the sufficiency of the adequate protection package proposed by the Debtors in the event the Debtors' motion for approval of proposed DIP financing is denied or otherwise results in all or any portion of the Bridge Loan remaining unpaid. Goldman Sachs reserves its rights and the rights of the Bridge Loan Lenders with respect to the language to be contained in the DIP Financing Order, which it hopes to resolve with the Debtors before the hearing. (6) ING Clarion ING Clarion, as special servicer for certain lenders, points out that the properties under the loans have positive cash flow, and the Clarion Debtors have no need for the proposed postpetition financing. However, the Clarion Lenders will be subjected to diminution in the value of their collateral, inasmuch as the Clarion Debtors must guaranty the DIP Financing and the DIP Lenders will receive junior liens on the Clarion Properties and senior liens on the Clarion Lenders' cash. Against this backdrop, ING Clarion asserts that the Debtors, the DIP Lenders and Agent, and possibly other affiliates of the Debtors are the sole beneficiaries of this scheme, while the Clarion Debtors bear the risk. ING Clarion asks the Court to deny at this time the Debtors' DIP Financing Motion to the extent it requires the guaranties of, and imposes any other obligations on, the Clarion Debtors and the Clarion Properties. At a minimum, the Court should carve out the Clarion Debtors and the Clarion Properties from the guaranty, lien grant and other obligations under the proposed DIP Financing until time as the Court can dispose of ING Clarion's motion to dismiss certain debtors' Chapter 11 cases pending before the Court, ING Clarion adds. (7) Elliot Associates Elliot Associates objects to the DIP Financing Motion on the basis that the roll-up of the Goldman Prepetition Facility is unnecessary under the circumstances and the financing does not represent the best financing available to the Debtors. Elliot Associates tells the Court that its proposal is far superior to the proposed DIP Financing Agreement because the Elliot Proposal dispenses with the roll-up of the Goldman Prepetition Facility. Elliott Associates reserves its right to supplement this objection, seek discovery, and introduce evidence at any hearing relating to the DIP Motion and this objection. (8) Prudential Entities Prudential Insurance and Prudential Retirement Insurance and Annuity Company formerly known as CIGNA Life Insurance Company, lender of a $50,000,000 loan to Debtor Harborplace Borrower, LLC, asks the Court to deny the Motion as to Prudential's borrowers and also as to Harborplace, as owned by one of Prudential's borrowers. Prudential tells the Court that there is no reason for its borrowers or their assets to be the subject of any liens of any kind for any DIP financing that is wholly unnecessary. Prudential insists that there is no evidence that Prudential's borrowers need any new or additional financing or has there been any payment default or demonstration of a need for additional financing by Prudential's borrowers. (9) Principal Life Principal Life, holder of notes secured by mortgages or deeds of trust and rents and other revenues on six Shopping Center Properties, objects to the extent that the proposed terms of the DIP financing would adversely affect its rights and interests without any adequate protection provided. (10) CW Capital, et al. CWCapital, J.E. Robert Company, Inc., Midland Loan Services, Inc., and Orix Capital Markets, LLC, acting solely in their capacities as special services for the trustees of 40 trusts, argue that the Motion is fatally flawed because it seeks to: -- direct all trust Debtor cash flows to a consolidated account owned and controlled by the Debtor corporate parent; -- subordinate the Trusts' first priority liens in those cash proceeds to the corporate parent DIP Lender; -- replace the loss of the Trusts' first priority liens in proceeds with illusory junior liens; -- permit 60% of the DIP funds to be paid to Goldman Sachs, with the remainder being used for cash needs having nothing to do with the Trust Debtors; -- encumber all of the property owned by the Trust Debtors in favor of the DIP Lenders; -- make key bankruptcy remedies available to the Trusts, including obtaining orders granting relief from stay and dismissal of the SPE bankruptcy cases subject to the consent of DIP Lenders; and -- compel the Trusts to fund administrative costs of these bankruptcy cases out of their cash collateral scrutiny. Declarations by Jeffrey A. Wiseman, Ned Smith, Charles Crouch, and Demetrios J. Morakis were submitted to support CWCapital's Objection. Full-text copies of the declarations are available for free at: * Wiseman Declaration http://ResearchArchives.com/t/s?3c86 * Smith Declaration http://ResearchArchives.com/t/s?3c87 * Crouch Declaration http://ResearchArchives.com/t/s?3c88 * Morakis Declaration http://ResearchArchives.com/t/s?3c89 (11) New York Life New York Life objects to the Motion as it relates to Debtor GGP- North Point, Inc. because (i) GGP-North is solvent and adequately capitalized and will not receive any benefit from, and will be significantly burdened by the Motion; and (ii) the implementation of the Motion may constitute a fraudulent conveyance and approval of the relief would be a breach of fiduciary duties of GGP-North Point's directors. New York Life adds that the Debtors did not offer any business or other justification for GGP-North Point's guarantee of, or grant of liens to secure, the obligations arising under the DIP Credit Agreement or any evidence that the Debtors' entry into the DIP Credit Agreement benefits GGP-North Point in any way. New York Life also joins in CWCapital's Objection. (12) Metropolitan Life Metropolitan Life, lender to $307 million loans to four Debtors and co-lender and servicer for KBC Bank, N.V., points out that the Debtors did not explain how the DIP financing benefits each of Debtor's estate. Since the DIP Loan is being used to pay down the Goldman Prepetition Facility for which the Borrowers currently have no liability, the Cash Collateral would be dissipated if the Goldman Collateral ultimately proves insufficient to pay the principal and interest obligations incurred under the DIP Loan as a result of the Goldman Paydown, Metropolitan Life stresses. In addition, as set forth in the Motion, if a lien is granted on the assets of the Senior Loan Borrower, it will effectively prime Metropolitan Life's mezzanine loan collateral, Metropolitan Life asserts. In another filing, KBC joins in Metropolitan Life's Objection. (13) FRM FRM, a holder of first priority mortgage of Debtor Fox River Shopping Center, LLC's real property, argues that despite the fact that Fox River does not require any borrowing under the DIP Financing, Fox River is saddled with $375 million of guaranty obligations. FRM points out that the Debtors did not only fail to establish that the DIP Financing is necessary to Fox River's estate, the Debtors also fail to provide any authority for violating Fox River's formation agreements. FRM stresses that it is unfair to use solvent Debtors to finance the operations of insolvent Debtors with no realistic provision for repayment or to prime the prepetition lenders' liens without acknowledging it. (14) Teachers Insurance Teachers Insurance, creditor to the New Debtors and project-level Debtors, asserts that the Debtors failed to show that the DIP Facility, which the New Debtors and Project-Level Debtors will be forced to guarantee, will in any way benefit their estates, nor that using the DIP Facility to repay the Prepetition Goldman Facility is beneficial to the New Debtors' and Project-Level Debtors' creditors. Teachers Insurance stresses that neither the New Debtors nor the Project-Level Debtors are obligors under the Prepetition Goldman Facility nor did they receive the proceeds of the Prepetition Goldman Facility. Teachers Insurance thus asserts that it should not be forced to upstream its cash collateral in order to refinance the prepetition debts that neither the New Debtors or Project-Level Debtors incur. Accordingly, Teachers Insurance asks the Court to deny the Motion as it relates to the New Debtors and Project-Level Debtors. (15) American General American General, lender to certain Debtors, argues that the DIP Financing does not provide any benefit to the applicable Debtors. American General points out that it will be stripped of its replacement lien proposed as adequate protection, since the DIP lenders will granted first priority security interest in the concentration account as well as superpriority administrative claim senior to the intercompany claims. American General notes that because the DIP Financing is being used to pay down the Prepetition Goldman Facility, the cash collateral would be dissipated if the Goldman collateral ultimately proves to be insufficient to pay the principal and interest obligations incurred under the DIP Financing. (16) Property Level Lenders The Property Level Lenders ask the Court to deny the Motion because there is no basis for obligating the Property Level Debtors on the DIP Facility and granting junior liens on the collateral securing the Property Level Loans in order to provide DIP financing for other Debtors without any showing that the Property Level Debtors will benefit from the financing. The Property Level Lenders stress that the positive cash flow of the Property Level Debtors contradicts the Debtors' assertion that the Property Level Debtors need any of the $375 million of the DIP Financing. Moreover, the Debtors' proposal to use 60% of the DIP funds to satisfy the Prepetition Goldman Facility is without any benefit to the Property Level Debtors' estates. A full-text copy of a declaration by Job Warshaw, filed in support of the Property Level Lenders' DIP Objection, is accessible for free at http://ResearchArchives.com/t/s?3c82 A full-text copy of a declaration by Tom Floyd, filed in furtherance of the Property Level Lenders' DIP Objection, can be accessed for free at http://ResearchArchives.com/t/s?3c83 Wilmington Trust & 2006 Lenders Reserve Rights Wilmington Trust Company, as indenture trustee for 3.98% exchange notes due 2027 and the ad hoc consortium of holders of Notes, says it has material concerns regarding certain aspects of the Debtors' DIP Financing but, in furtherance of the Debtors' obligation to obtain postpetition credit on the terms most favorable to their estates, Wilmington Trust and the Noteholders state that they understand that the Debtors are engaged in earnest and good faith efforts to obtain postpetition financing on terms materially more favorable than those described in the Motion. Wilmington Trust and the Noteholders support the Debtors' continued efforts in that regard, and reserve their rights to comment on the financing that will be ultimately presented to the Court, and to oppose the previously negotiated facility to the extent that more favorable terms are available to the Debtors' estates. In a separate filing, the Lenders under the Second Amended and Restated Credit Agreement dated February 24, 2006, explain that instead of filing an objection to the DIP Agreement, they will review the Debtors' Omnibus Response to DIP Objections. By this statement, the 2006 Lenders reserve their rights to object to terms and conditions during hearing of the Motion on May 8, 2009. Debtors Insist DIP Financing is Necessary The secured lenders assertion that the Pershing DIP financing is unnecessary because their particular Debtors generate positive cash flow and therefore do not need financing is a myopic assertion and ignores the way the Debtors operate, Marcia L. Goldstein, Esq., at Weil, Gotshal & Manges, LLP, in New York, the Debtors' proposed counsel, argues. To continue their business uninterrupted and preserve value at each property, the Debtors need sufficient liquidity to operate the entire national platform and provide centralized management services for the duration of the Chapter 11 cases, Ms. Goldstein maintains. The consequences of insufficient liquidity would be severe and felt at every one of the Debtors' properties. If the Debtors run out of cash and cannot pay the employees who provide essential services to all properties, and the other centralized operating costs of the enterprise, the value of every property will suffer, she tells the Court. Ms. Goldstein assures the Court and the parties-in-interest in the Debtors' Chapter 11 cases that the Revised DIP Loan provides an appropriate and prudent cushion on liquidity to ensure continued operations through the Chapter 11 cases. In response to the objections, the Debtors argue that: (a) the Objecting Parties cite no authority, and the Debtors are aware of none, holding that the relief the Debtors' request constitutes substantive consolidation; (b) it is common for multiple debtors with DIP financing arrangements involving joint and several obligations to the DIP lender to continue to use of prepetition cash management systems that sweep cash from multiple subsidiaries and concentrate it at one entity; (c) the relief requested in the DIP Motion or the Cash Management Motion is not inconsistent with the requirements of organizational documents or loan documents, and even if it were, the provisions of the Bankruptcy Code that specifically authorize the Court to approve DIP financing and authorize use of cash collateral prevail over any contractual arrangements to the contrary and (d) it was the collapse of the real estate market generally in the second half of 2008 and the commercial mortgage backed securities markets in particular that precipitated the Debtors' cases, not vice versa. Ms. Goldstein filed with the Court on April 27, 2009, supplements to the Debtors' DIP Credit Agreement. Full-text copies of the DIP Credit Agreement Supplements are available for free at: http://bankrupt.com/misc/GenGrowth_DIPCreditSchedules.pdf The Court will convene a hearing on May 8, 2009, to consider approval of the revised DIP Facility. Objections were due May 1. 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: Amicus Brief re Asset Isolation Concept Filed ------------------------------------------------------------- The Commercial Mortgage Securities Association, an international trade organization representing firms and individuals actively engaged in commercial real estate capital market finance activities; and Mortgage Bankers Association, an organization representing service providers relating to housing and community financing needs, filed a joint amicus curiae brief with respect to the bankruptcy filing of individual property owner subsidiaries of General Growth Properties, Inc. The amicus brief, CMSA and MBA tell Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern District of New York, is not being delivered in opposition to any particular motion but to present information on the implications for commercial real estate finance of certain positions that GGP takes in its filings to date with respect to this issue from the perspective of a wide range of market participants, including capital providers, servicers, investors and major trade associations committed to preserving and expanding the flow of debt capital into commercial real estate. As reported by the Troubled Company Reporter, ING Clarion Capital Loan Services, LLC, asked the Court to dismiss the bankruptcy cases of each of these Debtors: (1) Bakersfield Mall LLC; (2) RASCAP Realty, Ltd.; (3) Visalia Mall, L.P.; (4) GGP-Tucson Mall L.L.C.; (5) Lancaster Trust; (6) HO Retail Properties II Limited Partnership; (7) RS Properties Inc.; (8) Stonestown Shopping Center L.P.; and (9) Fashion Place, LLC. CMSA and MBA note that the filings by the myriad single-purpose subsidiaries of GGP that actually hold title to the real estate assets, along with the declarations filed by GGP, raise a critical issue at the heart of the market for commercial real estate finance, as well as for structured finance markets in general that in the aggregate constitute a significant share of non-bank lending in the United States. The issue, central to the functioning of these markets, is asset isolation and the critical role it plays in almost all forms of structured finance, particularly in the market for commercial mortgage-backed securities, CMSA and MBA points out. On behalf of CMSA and MBA, Joseph Philip Forte, Esq., at Alston & Bird LLP, in New York, tells Judge Gropper that CMSA and MBA and their members are "gravely concerned" with the filings by the individual Property Owners as part of the GGP Chapter 11 filing and the catastrophic impact that a precedent, if it stands, could have on the CMBS market, as well as on structured finance and the broader capital markets that rely on the same principles of asset isolation in the architecture of securitization. The twin components of asset isolation are (i) separateness covenants and (ii) narrow limitations on the lender's general agreement not to pursue recourse liability. The CMBS market and structured finance generally rely on the concept of asset isolation. This reliance, Mr. Forte tells the Court, would be shattered if GGP and the Property Owners are permitted to ignore the structures to which they have agreed and from which they have profited handsomely. Mr. Forte notes that in many of the filings, GGP and the Property Owners are defined collectively as the "Debtors' without acknowledgement of the separate and independent nature of those entities. The Debtors further state that their business is run as an integrated enterprise with management centralized in its Chicago, Illinois headquarters. These statements, Mr. Forte tells the Court, are extraordinarily troubling. The statements, Mr. Forte points out, suggest that the agreement that each Property Owner made with its lenders is a sham and that prima facie respect for the corporate structure -- among the most settled principals in the law of business organizations -- is discarded without reason or analysis. He notes that through its many subsidiaries, GGP was one of the most active and aggressive participants in the CMBS market, and it is quite reasonable to assume that they understood the content of the Separateness Covenants. However, he says it now appears GGP looks to summarily recharacterize each of Property Owners and all GGP affiliates as one enterprise with all assets held for the benefit of the collective whole. And this approach, Mr. Forte tells the Court, would be disastrous to the world of real estate finance. A full-text copy of the CMSA/MBA Amicus Brief is available for free at http://ResearchArchives.com/t/s?3c92 ING's Motion to Dismiss ING Clarion is special servicer for loans entered by nine debtors and a group of lenders, a list of which is available for free at http://bankrupt.com/misc/GenGrowth_ClarionLenders.pdf ING relates that the nine debtors are parties to one or more of these prepetition loans for which ING acts as servicer: Loan Debtor Loan Amount Maturity ---- ------ ----------- -------- Valley Plaza Bakersfield and $95.4-Mil. 07/11/33 Shopping Center RASCAP Tucson Mall GGP-Tucson Mall $119.2-Mil. 10/31/33 Park City Center Lancaster Trust $150.9-Mil. 10/01/10 Washington Park HO Retail $12.1-Mil. 04/01/14 Mall Properties Regency Square RS Properties $94.9-Mil. 07/01/10 Mall Stonestown Mall Stonestown $215.6-Mil. 09/01/11 Fashion Place Fashion Place $144.4-Mil. 10/05/10 Visalia Mall Visalia Mall $41.7-Mil. 07/11/28 On behalf of ING, Todd C. Meyers, Esq., at Kilpatrick Stockton LLP, in Atlanta, Georgia, relates that each of the Loan is not in default and each of the Property has positive cash flow, and the monthly cash flow exceeds the amounts required under the applicable loan documents to fund escrows and reserves, pay debt service and cover the property's operating expenses. ING alleges that the Nine Debtors' Chapter 11 cases were commenced in bad faith and should be dismissed for cause pursuant to Section 1125(b). In addition to the fact that the bankruptcy filings by all of the Property Owners likely will wreak havoc with the structured finance markets if permitted to proceed, from the standpoint of the Clarion Debtors, the cases were not filed for a legitimate reorganizational purpose, Mr. Meyers iterates. As shown in the status of the Clarion Debtors, there is no imminent threat to their financial viability, Mr. Meyer points out. The mortgage loan on the property of each Clarion Debtor is a performing loan and there are no imminent maturities for any of those loans, and some of which have maturity dates as far into the future as the year 2033. None of the loans is also scheduled to mature within the next twelve months and there is ample time for the Clarion Debtors whose loans mature in 2010, to seek refinancing or extension of their loans, he notes. The reason that General Growth Properties, Inc., might prefer to negotiate from a bankruptcy platform about extensions of the loans to Lancaster Trust, RS Properties and Fashion Place is no justification for placing them in bankruptcy, Mr. Meyer asserts. The Nine Debtors' Chapter 11 cases, thus, do not have a cognizable reorganizational purpose and should be dismissed as having been filed in bad faith, he contends. Mr. Meyers also notes that Lancaster Trust is described as an Illinois Trust in the Loan Agreement it entered into with Eurohypo AG, New York. The fact that Lancaster Trust is a "trust" raises the question whether it is eligible to be a debtor in a case under the Bankruptcy Code, he asserts. Judge Gropper will convene a hearing on May 8, 2009, to, among other things, consider approval of the Debtors' DIP Financing and Cash Collateral requests and ING Clarion's request to dismiss the Chapter 11 cases of nine debtor affiliates. Judge Gropper will also hear amicus statements from CMSA and MBA during the hearing. Judge Gropper's decision on whether the Property Owners are separate from GGP could prove vital to the future of the nearly $1 trillion CMBS market, Prabha Natarajan of Dow Jones Newswires said, in agreement to CMSA and MBA's statements. 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: Lenders Balk at Bid to Use Cash Collateral ---------------------------------------------------------- Eurohypo AG, New York Branch, as administrative agent for the lenders under General Growth Properties, Inc.'s $1.51 billion 2008 credit facility, and 21 other parties-in-interest, filed separate responses to the request of General Growth Properties Inc. and its debtor-affiliates to use the cash collateral securing their prepetition indebtedness. Most of the Objectors complain before the U.S. Bankruptcy Court for the Southern District of New York that the Debtors' proposed adequate protection to prepetition lenders are inadequate. The Court will convene a hearing later today, May 8, 2009, to consider final approval of the Motion. The other objectors are: * Wilmington Trust Company; * Deutsche Bank Trust Company Americas; * Bank of America, N.A.; * Allstate Life Insurance Company; * Wells Fargo Bank, N.A.; * U.S. Bank National Association * Citicorp North America, Inc.; * Goldman Sachs Mortgage Company; * ING Clarion Capital Loan Services LLC * Prudential Insurance Company of America; * Principal Life Insurance Company; * CWCapital Asset Management LLC; * New York Life Insurance Company; * Ivanhoe Capital LP; * Metropolitan Life Insurance Company; * KBC Bank, N.V.; * FRM Funding Company; * Teachers Insurance and Annuity Association of America; * Sandelman Partners LP; * American General Life Insurance Company; and * Property Level Lenders, a list of which is available for free at http://bankrupt.com/misc/GenGrowth_PropLevelLenders.pdf (1) Eurohypo Eurohypo complains that the Debtors seek to improperly use cash collateral of the 2008 Facility Lenders by shifting cash from the cash flow positive 2008 Facility Borrowers to the Debtors who are non-borrowers under the 2008 Facility. Eurohypo argues that the proposed lien on Intercompany Claims is illusory and, in any event, could leave the 2008 Facility Lenders with an administrative claim against one or more administratively insolvent estates or an uncollectable "administrative claim" against one or more non-Debtor affiliates. To adequately protect the 2008 Facility Lenders, Eurohypo suggests that not only should interest be paid currently as well as all potential property level, the 2008 Facility Lenders' costs, expenses, and professional fees and expenses should also be paid currently. In addition, any surplus in the operations of the 2008 Facility Borrowers' properties after payment and maintenance of those foregoing costs should be retained by them, since they are separate and distinct entities from the Debtors. In support of its objection, Eurohypo filed a declaration by Jeffrey D. Ganz, a full-text copy of which is available for free at http://ResearchArchives.com/t/s?3c86 (2) Deutsche Bank The Debtors' proposed use of the Fashion Show collateral is a way to divert all Fashion Show Property revenues from the "closed loop" cash management system to a commingled cash account that benefits only the non-Fashion Show debtor-borrowers, Deutsche Bank complains. Deutsche Bank further complains that the lien on the intercompany claims is illusory because those claims are only unsecured rights of a Debtor affiliate against another and are subordinated to the DIP Financing liens. Similarly, Deutsche Bank notes that the administrative claims are flawed because they are subordinated to the DIP Financing Loan Liens. Deutsche Bank says it agrees to the Debtors' use of its cash collateral, provided that: -- revenues from the Fashion Show Property would be used to pay the capital and operating expenses and reserves necessary to continue without disruption of the Fashion Show Debtor's operations; -- the Fashion Show Debtor would provide monthly reporting of revenue and expenses; -- interest would continue to be paid to the Fashion Show Lenders; and -- as adequate protection for the Fashion Show Lenders, any excess sums would be applied to amortize the Fashion Show Loan. In support of Deutsche Bank's objections, it filed the declarations of James Rolison and Donald Berger, available for free at: * http://ResearchArchives.com/t/s?3c84 * http://ResearchArchives.com/t/s?3c85 (3) Wilmington Trust Wilmington Trust supports the use of cash collateral by the Debtors asserting that the nature and amount of the adequate protection that may be offered by the Debtors to particular lenders as to properties owned by SPE entities may still be subject to negotiation and litigation. Wilmington, however, reserves its rights to review and would object to any aspects of adequate protection of holders of Notes, including as to whether any adequate protection is appropriate and as to whether any SPE is properly a Debtor in these Chapter 11 cases. (4) BofA and Wells Fargo BofA asks the Court to deny the Debtors' use of cash collateral because the adequate protection proposed by the Debtors is insufficient as a matter of law and leaves its secured position in the cash collateral effectively valueless. BofA proposes that any use of its cash collateral must be (i) conditioned on the provision of appropriate, meaningful adequate protection, (ii) limited to use for the operation of the property owned by Tysons, and (iii) subject to other limits on the use of BofA's cash collateral. Allstate Life joins in BofA's Objection to the Motion. BofA and Wells Fargo, as owners and holders of seven separate loans made to eight debtors secured by mortgages on 16 separate properties, jointly object to the commingling of cash collateral and the use of cash collateral from any one property to pay for the operations of any other property or Debtor. To the extent the Court allows the Cash Collateral Motion, the Mortgagees suggest that loans made by the use of their cash collateral should be on terms similar to the DIP Financing. Wells Fargo, as trustee for holders of Banc of America Commercial Mortgage, Inc., Commercial Mortgage Pass-through Certificates, Series 2006-2, comments that given possible dismissal of applicable Debtors' Chapter 11 cases, the Court should at minimum defer entry of a final Cash Collateral order. (5) U.S. Bank U.S. Bank asks the Court to deny the Motion to the extent it allows the Debtors to use of funds on deposit in the Debtors' Main Operating Account without providing adequate protection. U.S. Bank contends that it does not consent to the use of its Cash Collateral and has not consented to the imposition of a lien senior or equal to its rights in the property. In the alternative, U.S. Bank asks the Court to direct the Debtors to maintain a minimum $1,171,336 in its Main Operating Account at all times prior to U.S. Bank's obtaining relief from the automatic stay and foreclosing on the amount. (6) Citicorp Citicorp, as administrative agent for lenders to Debtor Oakwood Shopping Center Limited Partnership, complains that the Debtors impermissibly seek to take the cash collateral generated by properties with positive cash flow and use that cash collateral to pay the operating expenses of the Debtors. The Debtors further compound their error by providing that any intercompany claims created by this wrongful use of cash collateral will be subordinated to the prior claims of their DIP lenders and any secured debt at the parent company level. Citicorp states that the Oakwood Lenders' consent would be conditioned on their being provided with traditional property-specific budgets and reporting. (7) Goldman Sachs Goldman Sachs, as administrative agent under the Bridge Loan Agreement, says the proposed cash collateral motion would eliminate the parties' bargained for prepetition cash management system, shifting disbursement authority of the Bridge Loan Lenders' cash collateral from the Agent, to the Bridge Loan Debtors' ultimate parent, General Growth Properties, Inc., and allowing GGP to use the cash collateral for purposes that have nothing to do with the operations or maintenance of the Bridge Loan Debtors' property or the servicing of their debt. In return for stripping the Bridge Loan Lenders of their bargained for rights and protection of their collateral, the Debtors offer the Bridge Loan Lenders an adequate protection package that is plainly insufficient, Goldman Sachs argues. (8) ING Clarion ING Clarion asks the Court to grant the use of cash collateral only (i) on the condition that all cash remain with the Clarion Debtors and subject to the Clarion Lenders' liens until the waterfall provisions of the underlying loans are satisfied, thus preserving the status quo; and (ii) on an interim basis until adjudication of its motion to dismiss certain Debtors' Chapter 11 cases. ING Clarion adds that the proposed adequate protection is likely of little value. (9) Property Level Lenders The Property Level Lenders tell the Court that they do not object to the use of their cash collateral for ordinary course property level expenses and operations, provided that the use is consistent with (i) the ordinary prepetition operations of the Property Level Debtors, (ii) the terms and conditions of loan documents, and (iii) budgets subject to review and reasonable approval of the Property Level Lenders. The Property Level Lenders, however, object to the Debtors' use of the Property Level Lenders' cash collateral to maintain and fund the Other Debtors and Non-Debtors. In support of their The Property Level Lenders A declaration of Job Warshaw is filed in support of the Property Level Lenders' Cash Collateral Objection, which declaration is accessible for free at: http://ResearchArchives.com/t/s?3c82. Moreover, Tom Floyd also filed a declaration in furtherance of the Property Level Lenders' Objection, which declaration is accessible for free at: http://ResearchArchives.com/t/s?3c83 (10) Other Objectors Prudential Insurance and Prudential Retirement Insurance and Annuity Company; Principal Life; CWCapital, J.E. Robert Company, Inc., Midland Loan Services, Inc., and Orix Capital Markets, LLC; New York Life; Ivanhoe Capital LP; Metropolitan Life; KBC; FRM; Teachers Insurance; Sandelman Partners; and American General assert that they are entitled to adequate protection that is more than the adequate protection offered by the Debtors. CWCapital, in support of its objection, filed declarations by Jeffrey A. Wiseman, Ned Smith, Charles Crouch and Demetrios J. Morakis, full- text copies of which are available for free at: * Wiseman Declaration http://ResearchArchives.com/t/s?3c86 * Smith Declaration http://ResearchArchives.com/t/s?3c87 * Crouch Declaration http://ResearchArchives.com/t/s?3c88 * Morakis Declaration http://ResearchArchives.com/t/s?3c89 Debtors Address Objections The Debtors' use of Cash Collateral is warranted pursuant to Section 363(c)(2) of the Bankruptcy Code, proposed counsel to the Debtors, Marcia Goldstein, Esq., at Weil, Gotshal & Manges LLP, in New York, maintains. The proposed adequate protection to the property lenders whose Cash Collateral the Debtors seek to use is sufficient and consistent with the terms of the Bankruptcy Code, she asserts. To address the objections, the Debtors, with the agreement of the DIP Lenders, have supplemented the adequate protection package to be provided to the Adequate Protection Parties. The Debtors and the DIP Lenders have agreed, among other things: (a) to modify the replacement liens to be provided to the Adequate Protection Parties in exchange for the Debtors' use of Cash Collateral; (b) to comply with covenants in first mortgage documents imposing notification or consent requirements, or other limitations, on the Debtors' ability to enter into, terminate, restate or amend leases or reciprocal easement agreements; and (c) to provide to the Adequate Protection Parties the financial reporting to which those parties were entitled in accordance with their original first mortgage loan documents. The Adequate Protection Liens to be provided to the Adequate Protection Parties now include, in addition to the adequate protection described in the Motion: -- a continuing, valid, binding, enforceable, and automatically perfected postpetition security interest in, and lien on (i) the cash in the Main Operating Account; and -- a silent second lien on the properties currently securing the Prepetition Goldman Facility in an amount equal to the lesser of (x) the aggregate diminution in the value of the Adequate Protection Parties' interest in the Prepetition Collateral; and (y) the net positive balance of the Intercompany Claim of the Debtor whose property constitutes Prepetition Collateral of the Adequate Protection Party. All the liens granted to the Adequate Protection Parties will be subject and subordinate only to any liens on the Collateral that are senior to, or pari passu with, the Prepetition Liens and the Carve-Out. To facilitate the Debtors' ability to enter into property transactions and preserve and enhance the value of the secured lenders' collateral, the Debtors propose that any lender who receives the benefit of the Debtors' compliance with restrictions on property transactions will be required to execute a subordination, non-disturbance and attornment agreement in favor of a qualified tenant, or a consent and subordination agreement for anchor occupants and adjoining landowners. With the proposed additional adequate protection package, the objecting secured creditors suffer no harm from any of the relief requested because their interests in real property and cash collateral are adequately protected, Ms. Goldstein asserts. The Debtors' financial projections will show that, for the anticipated duration of the Chapter 11 cases, they will have sufficient cash and assets to protect the secured lenders against diminution in the value, as of the Petition Date, of their allowed secured claims, Ms. Goldstein tells the Court. The Debtors filed their 2009 to 2010 financial projections, available for free at http://bankrupt.com/misc/ggp_0910projections.pdf 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: Parties Dispute Bid to Use Cash Management System ----------------------------------------------------------------- Ten parties-in-interest ask Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern District of New York to deny approval of General Growth Properties Inc. and its affiliates' request to continue using their existing cash management system: * Eurohypo AG, New York Branch; * Bank of America, N.A.; * AllState Life Insurance Company; * Bank of America, and Wells Fargo Bank, N.A.; * New York Life Insurance Company * Metropolitan Life Insurance Company * KBC Bank, N.V. * Teachers Insurance and Annuity Association of America, * CWCapital Asset Management LLC * American General Life Insurance Company Eurohypo AG, New York Branch, as administrative agent for the lenders under General Growth Properties, Inc.'s $1.51 billion 2008 credit facility, complains that the Motion would strip the 2008 Facility Lenders of their first perfected security interest in the rents generated by their borrowers' properties without providing adequate protection. Eurohypo further complains that the Debtors fail to justify business as usual unless and until the use of the rents to finance the operations of affiliated debtors, and notably those who lack properties that are cash flow positive, is shown to be protected by adequate protection at least equal to the diminution of the cash derived from the rents that is not reflected in benefit directly conferred on the 2008 Facility Lenders. A declaration by Jeffrey D. Ganz was filed in support of Eurohypo's Objection. A full-text copy of the declaration is available for free at http://ResearchArchives.com/t/s?3c86 BofA complains that in the Debtors' proposed cash management system it will thus be forced to assume the risks associated with the financial condition of all Debtors, not only Debtor-borrower, Tysons Galleria, L.L.C. Allstate Life joins in BofA's arguments. BofA and Wells Fargo, owners and holders of seven separate loans made to eight debtors secured by mortgages on 16 separate properties, jointly object to the Motion to the extent it permits commingling of their cash collateral. Although it might be easier to allow the Debtors to commingle funds, they have not asserted or provided any basis for the Court to conclude that a system in necessary, the Mortgagees point out. New York Life comments that the Motion is unclear as to how the amount of the claims will be calculated or, given the fungibility of cash, against which of the Debtors the claims may be asserted. New York Life argues that the Debtors do not offer any business or other justification for Debtor GGP-North Point's inclusion in the Cash Management System or any evidence that the Cash Management system benefits GGP-North Point in any way. Metropolitan Life, lender to $307 million loans to four Debtors and co-lender and servicer for KBC Bank, N.V., stresses that the Debtors intend to sweep all rents into their concentration account that will be used to finance other Debtors' operations. Metropolitan Life notes that while it may not be unusual in large cases with multiple debtors to permit debtors to continue to use their cash management system and record intercompany transfers, the facts here are very different. Metropolitan Life explains that the Debtors' Chapter 11 cases are unprecedented as they involve hundreds of separate special purpose entities, intended to be bankruptcy remote, each with its own creditors with separate collateral. Metropolitan Life also asserts that the Debtors did not even negotiate with or any other secured property lenders with respect to these issues. KBC supports Metropolitan Life's Objection. Teachers Insurance argues that the Cash Management System benefits neither the New Debtors nor the Project-Level Debtors, but instead, seriously threatens the value of each of their estates. By agreeing to the Cash Management System, (i) the Project-Level Debtors are agreeing to become cash-neutral at a time when the real estate market is declining, and (ii) the Mezzanine Borrowers are agreeing to forfeit their right under the Loan Documents to receive cash flow from their Project-Level Debtors, which cash flow would be used to pay the New Debtors' debt obligations or to secure their own financial well-being, Teachers Insurance explains. CWCapital, J.E. Robert Company, Inc., Midland Loan Services, Inc. and ORIX Capital Markets, LLC, acting solely in their capacities as special servicers for trustees of certain trusts, argue that the Motion is in contravention to the Trust Debtors' loan documents, which requires the Trust Debtors to maintain corporate separateness. The Loan Documents further provide that the Trusts have sole dominion and control over the relative lockboxes. Against this backdrop, CWCapital points out that there is no basis for the Court to impair the Trusts' rights, or provide the Debtors with greater rights pursuant to this Motion. Moreover, CWCapital stresses that since the proposed Cash Management System would result in the Debtors' use of the Trusts' cash collateral, the Trusts do not consent to the use as they are not adequately protected. American General argues that by the Cash Management System, rents generated by its Debtor-Borrowers will be swept to the Debtors Concentration Account used to finance the Debtors' enterprise as a whole. However, American General contends that the Debtors' Chapter 11 cases are not substantively consolidated, thus, it is improper to ignore the separateness of each entity and to use the property of one Debtor, to the detriment of its creditors. American General emphasizes that it has relied on the separateness and the credit-worthiness of each Debtor-Borrower when making its credit decision and should thus receive the full benefit of its bargain. Debtors Address Objections The Court should not be misled by the protestations of some of the Objectors that the Debtors are attempting to change their preexisting cash management system or that individual Debtors already have separate cash management systems, Marcia Goldstein, Esq., at Weil, Gotshal & Manges LLP, in New York, argues on the Debtors' behalf. The Debtors, Ms. Goldstein asserts, only ask to maintain the pre- bankruptcy and pre-default status quo of the cash management system, not change it. The existence of cash traps at certain entities, through which lenders exercised control over the Debtors' cash due to defaults, does not equate to having separate cash management systems, she argues. The plain fact is that the Debtors operated prepetition through a single, centralized cash management system. Ms. Goldstein explains that the property-level Debtors have no cash management system of their own, but instead rely on the GGP Group's centralized Cash Management System, under which the revenues from the property entities flow to a Main Operating Account held in the name of GGP LP. Funds are upstreamed into the Main Operating Account directly from a project subsidiary's lockbox receipts or indirectly through intermediary accounts. GGP LP in turn generally makes disbursements from the Main Operating Account in payment of the project subsidiaries' debt service, accounts payable, taxes, and all other expenses associated with operating, managing, and maintaining the subsidiary's property. Ms. Goldstein tells the Court that the centralized Cash Management System has been transparent to, and in no way concealed from, the Lenders. She says GGP has made numerous disclosures over the years showing that project subsidiaries were part of a consolidated enterprise providing centralized management for substantially all aspects of business operations, including cash management services. 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: U.S. Trustee Appoints 2 More Members to Committee ----------------------------------------------------------------- Pursuant to Section 1102 of the Bankruptcy Code, Diana G. Adams, United States Trustee for Region 2, appointed on May 6, 2009, two more entities 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) General Electric Capital Corp. Attn: Carl L. Goetemoeller 201 Merritt Norwalk, CT 06856 Tel. No. (513) 956-4405 (2) Millard Mall Services, Inc. Attn: Lawrence B. Kugler 7301 North Cicero Avenue Lincolnwood, IL 60712 Tel. No. (847) 763-2040 The U.S. Trustee appointed on April 24, 2009, Eurohypo AG, New York Branch; Calyon New York Branch; The Bank of New York Mellon Trust Co.; American High-Income Trust; Fidelity Fixed Income Trust, Fidelity Strategic Real Return Fund and Fidelity Investments; Wilmington Trust; Capital Ventures International; Taberna Capital Management, LLC; and Macy's Inc. as members of the Committee. Millard Mall is listed in the Debtors' 100 largest unsecured creditors holding $262,643 in trade claims. 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 MOTORS: Called for Quick Reclamation of Delphi Plants ------------------------------------------------------------- New York Senator Charles Schumer urged General Motors Corp. and Delphi Corp. to reach an agreement, on GM's reclamation of Delphi plants, Reuters said. Reuters said the senator urged for an agreement by May 5, 2009. In February 2009, GM and Delphi were in discussions on GM's possible reclamation of Delphi plants to ensure the continued supply of parts to GM. It was also contemplated that reclaiming the plants might help Delphi get exit financing and ensure that GM's supply of parts won't be affected by any liquidation. In a letter addressed to GM and Delphi, Senator Schumer noted that an immediate deal will avoid a shutdown of Delphi facilities, according to Bloomberg News. The deal is also economical for both parties because it maintains the existing supply chain at an affordable cost, Bloomberg quoted Sen. Schumer as saying. According to Sen. Schumer, the U.S. Department of Treasury's Auto Task Force is in support of GM's possible buyback, Bloomberg reports. As of press time, no official agreement between Delphi and GM has been made public. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. 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 December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 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; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) About General Motors Corp. 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: EU Commission Clears Sale of Delphi Steering Biz ---------------------------------------------------------------- In a public statement dated April 30, 2009, the European Commission has cleared under the EU Merger Regulation the proposed acquisition of Delphi Corp.'s Steering Business by General Motors' Corporation. The Commission said that the transaction would not significantly impede effective competition within the European Economic Area or a substantial part of the European Union. Upon review, the Commission noted that the merged entity would continue to face several strong, effective competitors with significant market shares. The Commission also related that the merged entity would not have an incentive to close off competing car manufacturers' access to the Steering Business, given that the vehicle components represent a modest fraction of the cost of a car. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. 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 December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 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; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) About General Motors Corp. 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: Posts $6.0 Billion First Quarter Net Loss --------------------------------------------------------- General Motors has released its financial results for the first quarter of 2009, which predominantly reflect the effects of continued global economic pressures and low auto industry volumes worldwide. Industry sales volume was down 21% globally in the first quarter versus the year-ago period, leading to significantly reduced volume and revenue for GM. GM posted a reported net loss of $6.0 billion, including special items, or $9.78 per share in the first quarter of 2009. This compares with a reported net loss of $3.3 billion, or $5.80 per share, in the year-ago quarter. Excluding special items, the company reported an adjusted net loss of $5.9 billion, or $9.66 per share, in the first quarter of 2009 compared to an adjusted net loss of $381 million, or $0.67 per share, in the first quarter of 2008. "Our first quarter results underscore the importance of executing GM's revised Viability Plan, which goes further and faster to lower our break-even point," said Fritz Henderson, president and chief executive officer. "Our Plan is designed to fix the fundamentals of our business by restructuring and deleveraging our balance sheet, enhancing our revenue capability and dramatically reducing costs. It's focused on taking care of customers every single day, winning with four core brands, and investing in new products and technology, while at the same time accelerating actions to lower our cost structure to return GM to profitability quickly." The reported results for the first quarter of 2009 include special items and charges netting to a loss of $73 million. The special items include GM's $906 million gain on debt extinguishment and $385 million related to GM's portion of GMAC Financial Services' (GMAC) gain associated with the accounting on its debt extinguishment. These items were offset by charges of $116 million for restructuring, a charge of $822 million related to Saab filing for reorganization, and a charge of $291 million in GM North America (GMNA) related to asset impairments. Charges of $135 million were recorded for advances made under the Delphi Advance Agreement. A reserve was recorded to write-off the receivable as it is deemed uncollectable. GM's revenue for the first quarter of 2009 was $22.4 billion, down 47% from $42.4 billion in the year-ago quarter. The drop in revenue was primarily due to GM's production volume decline of 903,000 units, or approximately 40%, on a global basis year-over- year. Beginning in the first quarter of 2009 and reflected in this release, GM will report its automotive operations and regional results on an earnings-before-interest-and-taxes (EBIT) basis, with interest expense and income tax reported in the corporate sector. GM Automotive Operations GM recorded an adjusted automotive EBIT loss of $3.9 billion ($5.2 billion reported EBIT loss) in the first quarter 2009. The loss compares with adjusted automotive EBIT income of $808 million in the first quarter of 2008 (reported EBIT income of $484 million). GM's automotive results in the first quarter of 2009 were driven by a revenue decline in all regions, due in part to a depressed global industry. In addition, GM's results were impacted by unfavorable foreign currency exchange and mark-to-market commodity hedging versus the year-ago quarter. However, these losses were partially offset by a significant structural cost improvement of $3.1 billion when compared to the first quarter of 2008. Demonstrating its commitment to product and technology excellence, GM launched several new vehicles in the first quarter, including the fuel-efficient Chevrolet Cruze in China. In North America, GM began production of the reinvented Chevrolet Camaro, which offers 29 miles-per-gallon fuel economy on the highway. The Company also launched the Chevrolet Captiva Sport with its new 2.4L engine in Brazil, and introduced the Cadillac CTS-V to the Middle East. The 2009 European Car of the Year, the Opel/Vauxhall Insignia, continued to ramp-up production and in its first full quarter of sales, and surpassed all competitors in the mid-size sedan segment in Europe. GMNA GMNA revenue for the first quarter 2009 was $12.3 billion, down 50% compared to $24.5 billion in the year-ago period, mainly attributable to the impact of the U.S. recession on consumer spending. Earnings were affected by substantially lower production volume, down 58% year-over-year, due to the depressed industry, lower market share and adjustments to U.S. dealer inventory. GMNA managed its business in-line with lower industry demand by reducing U.S. dealer inventories by 105,000 units within the first quarter of 2009, from 872,000 units down to 767,000 units. GMNA's losses were partially offset by a reduction in the accrual for residual support programs for leased vehicles, primarily due to the improvement in residual values. In addition, GMNA significantly reduced engineering and manufacturing cost in the first quarter. First Quarter 2009 2008 '09 O/(U) '08 Revenue (bils.) $12.3 $24.5 $(12.2) Reported EBIT (bils.) $(3.2) $(.4) $(2.8) Adjusted EBIT (bils.) $(2.8) $(.2) $(2.6) GMNA Market Share 17.9% 21.7% (3.8) p.p. GME GM Europe (GME) sales volume was up in Germany, as were industry sales, which were aided by aggressive government stimulus for the automotive sector. However, due to sales declines in other countries, GME experienced a 46% decline in production volume versus the year-ago quarter, which largely impacted regional earnings. In addition, GME experienced unfavorable foreign currency exchange, driven mainly by the weakening of the British Pound, and unfavorable mark-to-market commodity hedging. Results were partially offset by favorable mix and pricing, due in part to the success of the Opel/Vauxhall Insignia, and improved structural cost performance across the region. First Quarter 2009 2008 '09 O/(U) '08 Revenue (bils.) $5.3 $9.9 $(4.6) Reported EBIT (bils.) $(2.0) $0.1 $(2.1) Adjusted EBIT (bils.) $(1.2) $0.2 $(1.4) GME Market Share 8.9% 9.6% (0.7) p.p GMAP GM sales in China were up 17%, driven by strong SAIC-GM-Wuling performance and aggressive government stimulus. This helped fuel overall regional sales and market share increases. However, sales decreased in most countries across the region excluding China, driving down production volumes, which impacted GMAP revenue. In addition, GM Daewoo revenue dropped as export volumes declined significantly across its major export markets. First Quarter 2009 2008 '09 O/(U) '08 Revenue (bils.) $2.4 $5.3 $(2.9) Reported EBIT (mils.) $(21) $310 $(331) Adjusted EBIT (mils.) $(21) $310 $(331) GMAP Market Share 8.0% 6.9% 1.1 p.p. GMLAAM GM Latin America, Africa and Middle East (GMLAAM) experienced sales increases in Ecuador and Peru in the first quarter, where it set new sales records. At the same time, GMLAAM saw market share increases in Colombia, Ecuador, Chile, Peru, Venezuela, Egypt, Kenya and North Africa. However, consistent with the industry's downward trend in the region, GMLAAM production volume dropped 24% versus the year-ago quarter, which impacted revenue. The region also experienced unfavorable foreign currency exchange primarily related to the depreciation of the Brazilian Real. In addition, special charges related to restructuring were incurred in several countries. First Quarter 2009 2008 '09 O/(U) '08 Revenue (bils.) $3.4 $4.8 $(1.4) Reported EBIT (mils.) $16 $500 $(484) Adjusted EBIT (mils.) $42 $500 $(458) GMLAAM Market Share 16.9% 17.6% (0.7) p.p. GMACOn a standalone basis, GMAC reported a net loss of $675 million for the first quarter 2009, down $86 million from the year-ago quarter. GM realized a reported loss of $500 million for the quarter as a result of its equity interest in GMAC. Excluding the impact of the $385 million gain related to GM's portion of GMAC's gain associated with the accounting on its debt extinguishment, GM realized an adjusted net loss of $885 million. GMAC's results were primarily attributable to continued pressure in mortgage operations, weaker credit performance on both auto and mortgage assets, mark-to-market adjustments, and an original issue discount related to its fourth quarter debt exchange. The losses were partially offset by profitable performance in its insurance business and gains on debt extinguishment transactions. Cash and Liquidity Cash and marketable securities totaled $11.6 billion on March 31, 2009, down from $14.2 billion on December 31, 2008. The change in liquidity reflects negative adjusted operating cash flow of $10.2 billion in the first quarter of 2009, which was partially offset by U.S. TARP funding. Further detail on GM's current liquidity position and outlook will be disclosed in a Form 10-Q filing with the Securities and Exchange in the coming days. General Motors Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Dollars in millions) (Unaudited) March 31, December 31, March 31, 2009 2008 2008 ---- ---- ---- ASSETS Current Assets Cash and cash equivalents $11,448 $14,053 $21,601 Marketable securities 132 141 2,043 --- --- ----- Total cash and marketable securities 11,580 14,194 23,644 Accounts and notes receivable, net 7,567 7,918 10,471 Inventories 11,606 13,195 17,321 Equipment on operating leases, net 3,430 5,142 7,094 Other current assets and deferred income taxes 2,593 3,146 4,142 ----- ----- ----- Total current assets 36,776 43,595 62,672 Non-Current Assets Equity in net assets of nonconsolidated affiliates 2,447 2,146 7,322 Property, net 37,625 39,665 43,294 Goodwill and intangible assets, net 242 265 1,093 Deferred income taxes 89 98 915 Prepaid pension 106 109 20,593 Equipment on operating leases, net 375 442 3,035 Other assets 4,630 4,719 6,784 ----- ----- ----- Total non-current assets 45,514 47,444 83,036 ------ ------ ------ Total Assets $82,290 $91,039 $145,708 ======= ======= ======== LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts payable (principally trade) $18,253 $22,259 $29,817 Short-term debt and current portion of long-term debt 25,556 16,920 8,532 Accrued expenses 36,989 36,429 34,806 ------ ------ ------ Total current liabilities 80,798 75,608 73,155 Non-Current Liabilities Long-term debt 28,846 29,018 34,757 Postretirement benefits other than pensions 22,503 28,919 46,994 Pensions 24,476 25,178 11,624 Other liabilities and deferred income taxes 16,187 17,392 18,554 ------ ------ ------ Total non-current debts 92,012 100,507 111,929 ------ ------- ------- Total Liabilities 172,810 176,115 185,084 Commitments and contingencies Stockholders' Deficit Preferred stock, no par value, 6,000,000 shares authorized, no shares issued and outstanding - - - Preference stock, $0.10 par value, authorized 100,000,000 shares, no shares issued and outstanding - - - Common stock, $1 2/3 par value (2,000,000,000 shares authorized, 800,937,541 and 1,018 1,017 944 610,505,273 shares issued and outstanding at March 31, 2009, respectively, 800,937,541 and 610,483,231 shares issued and outstanding at December 31, 2008, respectively, and 756,637,541 and 566,100,839 shares issued and outstanding at March 31, 2008, respectively) Capital surplus (principally additional paid-in capital) 16,489 16,489 16,108 Accumulated deficit (76,703) (70,727) (42,912) Accumulated other comprehensive loss (31,946) (32,339) (14,490) -------- -------- -------- Total stockholders' deficit (91,142) (85,560) (40,350) Noncontrolling interests 622 484 974 --- --- --- Total stockholders' deficit (90,520) (85,076) (39,376) -------- -------- -------- Total Liabilities and Stockholders' Deficit $82,290 $91,039 $145,708 =========== ========== ========= $6.9 Billion Net Loss Expected Jeff Green and Katie Merx at Bloomberg News report that analysts said that General Motors Corp. will probably report $6.9 billion net loss in the first quarter 2009, its seventh straight quarterly loss. Bloomberg relates that GM reported a net loss of $3.3 billion in the first quarter 2008. According to Bloomberg, GM lost about $82 billion since 2004, its last profitable year. Citing 11 analysts, Bloomberg states that excluding some costs, GM may report a loss of $10.97 a share. Bloomberg quoted Argus Research analyst Kevin Tynan as saying, "It actually helps their cause to report a big loss, to show how close they are to actually being bankrupt." According to Bloomberg, AutoPacific analyst Stephanie Brinley said, "They're in such a precarious situation, a strong earnings report might not stave off bankruptcy. Their problems are systemic. One quarter's performance isn't going to fix the fact that they're running out of cash." GM will probably be removed from the Dow Jones Industrial Average after almost 74 years, Bloomberg states, citing John Prestbo, the editor and executive director of Dow Jones Indexes. GM in Talks With Toyota for New GM Vehicle Automotive News reports that GM is in talks with Toyota Motor Corp. to designate a new GM vehicle that would be built by the automakers' joint venture, New United Motor Manufacturing Inc. Citing GM spokesperson Jim Hopson, Automotive News says that if the negotiations succeed, they would lead to a new model for one of GM's surviving brands Chevrolet, Cadillac, Buick, or GMC. According to Automotive News, Mr. Hopson said that GM is talking with Toyota and NUMMI to identify another vehicle to be built at the former GM plant in Fremont. The report says that the Pontiac Vibe crossover is currently GM's only product from the NUMMI partnership in Fremont, after the Company said last week that it will stop the production of the Pontiac line, including the Vibe, by the end of 2010. Automotive News quoted Mr. Hopson as saying, "We're negotiating to see how best to utilize that facility. We're clearly not backing away from our partnership at NUMMI." About General Motors Corp. 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. HAYES LEMMERZ: Rating Cut By S&P To 'CC'; Outlook Negative ---------------------------------------------------------- Standard & Poor's Ratings Services on May 6 said it has lowered its corporate credit rating on Hayes Lemmerz International Inc. to 'CC' from 'CCC+', reflecting what it believes are increased near- term prospects for either a distressed debt exchange or a bankruptcy filing. S&P also lowered the issue-level ratings on the company's senior secured and unsecured debt. The outlook is negative. The downgrades follow Hayes's disclosure that it is in detailed discussions with its senior secured creditors, unsecured noteholders, and other stakeholders regarding its strategic and financial planning processes. "Although the company did not provide specific details, we interpret this to mean that Hayes will offer to exchange some or all of its debt for equity or new debt at a steep discount to face value," said Standard & Poor's credit analyst Gregg Lemos Stein. "Given Hayes's weak liquidity and financial risk profile, we would consider such an offer to be a distressed exchange and, as such, tantamount to a default. In our opinion, if the company were unable to complete an exchange offer, it could file for bankruptcy," he continued. Separately, Hayes said it expects its independent auditors to express doubt about the company's ability to continue as a going concern in its 10-K report, which has been delayed. The company said its secured lenders agreed to waive any default that would arise from the receipt of such a going concern qualification or the delay in releasing the 10-K. The outlook is negative. S&P expects to lower the corporate credit rating to 'SD' and the affected issue ratings to 'D' upon completion of any future distressed exchange offer. S&P would then, shortly thereafter, assign a new corporate credit rating to Hayes based on, among other things, its assessment of the company's new capital structure and liquidity profile. Its preliminary expectation is that, even with substantial debt and interest cost reduction, the corporate credit rating would likely not rise out of the 'CCC' category immediately following the consummation of a debt exchange because of the various challenges the company faces in the near term, most notably its exposure to weak automotive production in Europe and North America. HCA INC: Fitch Affirms Issuer Default Rating at 'B' --------------------------------------------------- Fitch Ratings has affirmed HCA Inc.'s ratings: -- Issuer Default Rating at 'B'; -- Secured Bank Credit Facility at 'BB/RR1'; -- First Lien Notes at 'BB/RR1'; -- Second Lien Notes at 'B+/RR3'. In addition, as a result of revisions to Fitch's ratings definitions, which have eliminated the use of '+' or '-' modifiers to ratings of corporate finance obligations below 'B', Fitch has revised the Senior Unsecured Notes rating: -- Senior Unsecured Notes to 'CCC/RR6' from 'CCC+/RR6'. The Rating Outlook is Stable . Total rated debt on Dec. 31, 2008, was approximately $27 billion. HCA's ratings reflect the company's significant leverage and challenging industry environment, partially offset by improvements in the company's operations and debt levels. HCA's high debt levels stem from its 2006 leveraged buy-out, which added approximately $17 billion of debt to the company's capital structure. Since then, HCA has reduced outstanding debt by more than $1.8 billion while leverage (total debt/EBITDA) has declined to approximately 5.9 times (x) on December 31, 2008, from 6.6x on December 31, 2006. HCA has made additional debt reductions in the first quarter, with preliminary first quarter results indicating that debt has declined to approximately $26.6 billion while leverage for the last 12 month period is approximately 5.5x. Going forward, Fitch expects gradual leverage improvement from both EBITDA expansion and debt reduction, barring any major event, such as an initial public offering, significant asset divestitures, or similar transaction, which could have a more significant effect on the credit. One of Fitch's key rating concerns is the large amount of debt maturing between 2010 and 2013, including approximately $10 billion in secured term loan borrowings that mature in 2012 and 2013. Fitch believes the company will not be able to satisfy all of these maturities with cash on hand and free cash flow. In addition, Fitch notes that market conditions may not be amenable to refinancing large quantities of bank debt. HCA has begun to address these concerns by refinancing a portion of the term loan borrowings with the proceeds of new first lien ($1.5 billion of 8.5% Senior Secured Notes due 2019) and second lien ($310 million of 9.875% Senior Secured Notes due 2017) notes issued through the first four months of the year. Fitch expects additional activity over the next couple of years to address these maturities. However, if HCA were unable to proactively address these maturities and Fitch believes the company would be unable to either refinance or retire the obligations when due, a negative ratings action would result. HCA's ratings are supported by the company's improving operating performance. In 2008, HCA outperformed the for-profit hospital industry average in terms of organic admissions growth after lagging the industry in 2007. HCA's performance continued to improve during the first quarter of 2009, despite the weak economy and a tough prior year comparable, as the company reported its sixth consecutive quarter of positive same-facility adjusted admissions growth. HCA also benefited from cost management efforts, including the results of recent labor force reductions, and new emergency room coding efforts, which resulted in year- over-year EBITDA growth of more than 20%. The ER coding initiative alone added approximately $75-$100 million of adjusted EBITDA during the quarter. Fitch notes that the coding change is not unusual for the industry and the company's new coding method, which is based on the American College of Emergency Physicians model, is accepted in the industry and by the Centers for Medicare & Medicaid Services. However, Fitch believes the level of EBITDA growth recorded during the quarter will not be completely sustainable, especially given the weak economy. HCA's liquidity also improved over the past year as a result of improved free cash flow and actions taken to extend its maturity profile. Liquidity is provided by the company's revolving credit facilities ($2.2 billion available on March 31, 2009), cash on hand (approximately $356 million on March 31, 2009) and free cash flow (an estimated $508 million for the LTM on March 31, 2009). FCF improved sharply over the past year from a negative $147 million for the LTM ended March 31, 2008. Going forward, Fitch believes FCF will remain consistent with current levels as the company realizes benefits from reduced capital expenditures and cost management efforts, offset by increasing pressure on profitability from rising bad debt expense and shifting payer mix. Although preliminary first quarter results within the industry indicate the economy has had minimal impact on the sector, Fitch remains concerned that providers could be pressured later this year. The unemployment rate continues to increase which will almost certainly lead to more uninsured patients and increases in bad debt expense. In addition, volumes may be pressured as patients choose to delay or forgo non-emergency procedures. Furthermore, providers may experience unfavorable payer mix shifts as managed care volumes are replaced by self-pay or Medicaid volumes. In addition, although reimbursement is largely set for 2009 and consistent with recent trends, there could be additional pressure in 2010. Of particular importance for the industry is the potential for significant regulatory changes in the near future. Health care reform (including universal coverage) and changes in reimbursement levels or methodology could have meaningful effects (positive or negative) on credits in the sector. HUMBOLDT CREAMERY: Taps Burr Pilger as Restructuring Consultants ---------------------------------------------------------------- Humboldt Creamery, LLC, asks the U.S. Bankruptcy Court for the Northern District of California for permission to employ Burr, Pilger, & Mayer, LLP, as financial and restructuring consultants. Burr Pilger will: a) development and maintain daily and weekly cash flow and borrowing collateral reports; b) facilitate communications between lenders, management and the board of directors with respect to the Debtor's recovery plan and progress toward recovery plan objectives; and c) assist with other accounting, financial or operational management and reporting needs as may be required. The Debtor relates that there will be no overlap between Burr Pilger's role as financial and restructuring consultant and Chanin Capital Partners, LLC and Duff & Phelps Securities, LLC's role as financial advisor in connection with an asset sale, as Duff & Phelps' efforts are focused solely on a potential asset sale or reorganization based on new investment. The Debtor paid the initial $60,000 retainer and all increases to Burr Pilger prior to the petition date. On the petition date, the retainer held by Burr Pilger was approximately $75,863. To the best of the Debtor's knowledge, Burr Pilger is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Humboldt Creamery, LLC 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. HUMBOLDT CREAMERY: Wants Schedules Filing Extended until May 27 --------------------------------------------------------------- Humboldt Creamery, LLC, asks the U.S. Bankruptcy Court for the Northern District of California to extend until May 27, 2009, the time within which the Debtor must file schedules of assets and liabilities, statement of financial affairs, and related materials. The Debtor related that it was unable to file its schedules and statements by the May 6 deadline because many of its liabilities may constitute contingent, unliquidated claims relating to obligations that are difficult to quantify. The Debtor has approximately 3,000 parties in interest and potential creditors, and its operations involve numerous employees, contracts, leases, and other agreements. The Debtor adds that the extension is to the best interest of the estate and parties-in-interest. 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. INTEGRA TELECOM: Moody's Cuts Default Probability Rating to 'Ca' ---------------------------------------------------------------- Moody's Investors Service downgraded Integra Telecom, Inc.'s ("Integra" or the "Company") Probability of Default Rating to Ca from Caa1 based on expectations of imminent default on at least a portion of its debt obligations based on certain ongoing actions being undertaken by the Company to restructure its balance sheet. Moody's also downgraded the ratings for Integra's Senior Unsecured PIK Notes, to Ca from Caa3, and the ratings for the Senior Secured Second Lien Credit Facility at its wholly-owned subsidiary Integra Telecom Holdings, Inc. ("Holdings"), to Ca from Caa2, reflecting the elevated default risk and expectations of meaningful impairment of these claims in particular in the event of a restructuring, which again would be deemed tantamount to a default. As Moody's recognizes the incongruous recoveries for the two classes of debt likely to be impaired, the loss given default assessments of the instruments were left unchanged. Moody's affirmed all other ratings and maintained them on review for further possible downgrade pending the outcome of its negotiations with its creditors. Downgrades: ..Issuer: Integra Telecom Holdings, Inc. ....Senior Secured Bank Credit Facility, Downgraded to Ca from Caa2 ..Issuer: Integra Telecom, Inc. ....Probability of Default Rating, Downgraded to Ca from Caa1 ....Senior Unsecured Bank Credit Facility, Downgraded to Ca from Caa3 Moody's notes that under the proposal being negotiated between the Company and its lenders, the company's total debt load is likely to be cut in half, leading to an arguably stronger credit profile following the restructuring and prospective restoration of the Company's growth potential. However, in order to accomplish that goal, the Company would need its creditors to agree to an out-of- court restructuring or a reorganization of its debt via a formal bankruptcy filing. Either of the above events would constitute an event of default under Moody's methodologies. As Moody's stated in its special comment on the U.S. Competitive Local Exchange Carriers (August 2008, document # 110730), the history of CLEC restructurings has demonstrated rapid deterioration of value for companies operating in bankruptcy, and failed CLECs can bring potentially low recoveries to lenders. Therefore, Moody's believes that CLEC lenders would be more willing to keep a CLEC out of default if a realistic turnaround plan is in place. As a result of the Company's EBITDA falling short of projections, Integra was on the verge of violating financial covenants under its credit facilities for the quarter ended March 31, 2009. The Company has obtained successive waivers to the covenant defaults as it continues to negotiate with the bank group. The ongoing Moody's review will focus on the Company's ability to successfully restructure its debt obligations to give it sufficient operating flexibility to grow its business. In the event that the Company does not come to terms with its lenders on an out-of-court restructuring, Moody's will likely downgrade Integra's corporate family rating by more than one notch, reflecting the probable bankruptcy filing. On the other hand, the conclusion of the review following a successful restructuring may result in an upgrade of the corporate family rating if Moody's believes that the company permanently right-sized its debt capital structure based on its business plan and path to expand free cash flow growth. Moody's most recent rating action for Integra was on February 6, 2009 when Moody's downgraded the Company's CFR and PDR each to Caa1 from B3 and placed all ratings on review for downgrade, based on the heightened probability of a debt restructuring. Integra is headquartered in Portland, OR, and provides telecommunications services to small and medium-sized enterprises and other communications companies. INTERMET CORP: Sets Up Auction in Conjunction With Plan ------------------------------------------------------- Intermet Corp. intends to hold an auction on June 8 to determine if anyone will buy the business for more than the first-lien lenders, who would use their debt to purchase the assets, Bloomberg's Bill Rochelle said. The Company said competing bids must offer at least $23 million, the report said. Bids must be submitted by June 1. According to Bloomberg, the Company said it is on the cusp of filing a Chapter 11 plan to carry out the sale. The Company already has agreements with its labor unions on modifications to the existing collective-bargaining agreements. Based in Fort Worth, Texas, Intermet Corp. designs and manufactures machine precision iron and aluminum castings for the automotive and industrial markets. The Company and its debtor- affiliates filed for Chapter 11 protection on August 12, 2008 (D. Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878). Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Michael E. Comerford, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as the Debtors' counsel. James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' co-counsel. Kurtzman Carson Consultants LLC serves as the Debtors' claims, notice and balloting agent. An Official Committee of Unsecured Creditors has been formed in this case. When the Debtors filed for protection from their creditors, they listed assets of between $50 million and $100 million and debts of between $100 million and $500 million. This is the Debtors' second bankruptcy filing. Intermet Corp., along with its debtor-affiliates, filed for Chapter 11 protection on September 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597 through 04-67614). Salvatore A. Barbatano, Esq., at Foley & Lardner LLP, represents the Debtors. In their previous bankruptcy filing, they listed $735,821,000 in total assets and $592,816,000 in total debts. Intermet Corporation emerged from this first bankruptcy filing in November 2005. ISOLAGEN INC: Gets Bridge Financing to Let It Seek DIP Financing ---------------------------------------------------------------- Isolagen(TM), Inc., has entered into secured promissory notes and security agreements with eight lenders pursuant to which the Company borrowed an aggregate of $500,417.00 in principal amount. The Notes bear interest at a rate of 20% per annum with principal and interest on the Notes due on the earlier of June 20, 2009, or the date that the Company files for voluntary or involuntary bankruptcy. If the Company receives debtor-in-possession financing in any bankruptcy proceeding, the holders of the Notes shall have the right to exchange the face amount of the Notes, plus any accrued but unpaid interest, into such debtor-in-possession financing on the same terms and conditions as the debtor-in-possession financing on a pari passu basis and on a dollar-for-dollar basis. To secure the repayment of the Notes, the Company granted the holders of the Notes a security interest in and a lien on the Company's 57% equity interest in Agera Laboratories, Inc. Viriathus Capital LLC acted as the Company's financial advisor and placement agent with respect to the offering of the Notes. Viriathus is also assisting the Company in seeking potential debtor-in-possession financing in connection with the possible filing of a voluntary petition for reorganization relief under Chapter 11 of Title 11 of the United States Bankruptcy Code. If the Company is successful in obtaining commitments for such financing in sufficient amounts, it is likely that the Company will file such a petition. The Company currently has no legal commitments for such financing, and there is no assurance that such financing will be available to the Company on satisfactory terms, if at all. If the Company is unable to secure sufficient debtor-in-possession financing, it will likely cease operations and may file a petition for protection from creditors under Chapter 7 of the Bankruptcy Code. The Company was advised that due to the foregoing disclosure effective immediately the NYSE Amex LLC, formerly known as the American Stock Exchange, has halted trading in the Company's common stock. The Company has been further advised that it will receive a notice from the NYSE Amex that the exchange intends to delist the Company's common stock from listing on the NYSE Amex, which delisting will occur approximately seven days from the receipt of such notification if the Company determines not to appeal such decision. If the Company's common stock is delisted from the NYSE Amex, the Company intends to apply to have its common stock quoted on the OTC Bulletin Board as soon as practicable after the delisting. If the Company's common stock is delisted from the NYSE Amex, the Company does not anticipate that the trading of the Company's common stock will recommence prior to the exchange's delisting of the common stock and its quotation on the OTC Bulletin Board. Isolagen(TM), Inc. (ILE:ILE) -- http://www.isolagen.com/-- is an aesthetic and therapeutic company committed to developing and commercializing scientific advances and innovative technologies. The company's technology platform includes the Isolagen Process(TM), a cell processing system for skin and tissue rejuvenation which is currently in clinical development for a broad range of aesthetic and therapeutic applications including wrinkles, acne scars, burns and periodontal disease. Isolagen also commercializes a scientifically-advanced line of skincare systems through its majority-owned subsidiary, Agera(R) Laboratories, Inc. JAMIE VERGARA: May Sell Cookesville Tenn. Property for $292,500 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida has approved the sale of Jaime Ruben Vergara's real property located at 104 Eighteen Grand Place, Cookesville, Tennessee, to Eugene C. and Shelby Jo Palmer for $292,500. There are two existing mortgages on the property in the approximate amount of $288,738. The first mortgage is with 1st Mercantile Bank in the amount of $225,738. The second mortgage is also with 1st Mercantile Bank in the amount of $63,000. Pursuant to the Court's order, the Debtor will satisfy the mortgages relating to the property as well as any and all real estate taxes due on the property. Headquartered in Orlando, Florida, Jamie Ruben Vergara filed for Chapter 11 protection on March 9, 2009 (Bankr. M.D. Fla. Case No. 09-02751). Lawrence M. Kosto, Esq., at Kosto & Rotella PA, represents the Debtor as bankruptcy counsel. In his petition, Mr. Vergara listed assets of between $10 and $50 million, and the same range of debts. JONATHAN R. COOPER: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Jonathan R. Cooper aka Jon R. Cooper 1409 E. Coral Cove Gilbert, AZ 85234 Bankruptcy Case No.: 09-09597 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Judge: Sarah Sharer Curley Debtor's 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: $1,000,001 to $10,000,000 Mr. Cooper did not file his list of 20 largest unsecured creditors when he filed his petition. The petition was signed by Mr. Cooper. JOURNAL REGISTER: Moves to Solicit Votes for Amended Joint Plan --------------------------------------------------------------- The Hon. Allan L. Gropper of the U.S. States Bankruptcy Court for the Southern District of New York approved a disclosure statement explaining an amended joint Chapter 11 plan of reorganization filed on April 28, 2009, by Journal Register Company and its debtor-affiliates. With the Court affirming that the Disclosure Statement contains adequate information necessary for stakeholders to make an informed judgment of the Plan, the Debtors may now proceed to the solicitation of votes, and the confirmation stages for the Plan. Judge Gropper also approved the forms of ballots and procedures for voting on the plan. Voting deadline is set for June 12, 2009, at 4:00 p.m. The plan confirmation hearing will be held on June 25, 2009, at 11:00 a.m. Objections, if any, are due June 8, 2009, by 4:00 p.m. The TCR, citing Bloomberg reported on May 1, 2009, that JRC revised its plan to "placate unsecured creditors." The revised plan has support from the official unsecured creditors' committee, which urges creditors to vote "yes." The original version of the Plan didn't offer any recovery to unsecured creditors who didn't provide goods and services. Now, unsecured creditors with some $27.1 million in claims are to recover 9.2% of their claims. The revised plan would give all of the new stock and $225 million in new term loans to the pre-bankruptcy secured lenders owed $695 million. Existing stock would be canceled. The disclosure statement says the Plan represents a 42% recovery for the lenders. Overview of the Plan The overall purpose of the Plan is to provide for the restructuring of the Debtors liabilities in a manner designed to maximize recovery to stakeholders and to enhance the financial viability of the reorganized Debtors. Generally, the Plan provides for a balance sheet restructuring that exchanges the Debtors' current debt obligations under the existing credit agreement for new term loans and equity in reorganized Debtors. The reorganized Debtors' existing common stock has no value and will be cancelled. Upon emergence, all of reorganized Debtors' new common stock will be owned by the lenders, and will be subject to dilution only by: a) the options to purchase the new common stock that may be issued to the reorganized Debtors' post-Effective date directors, officers and employees; and b) the warrant shares issued upon exercise of the revolving facility warrants. Neither the new common stock nor the revolving facility warrants will be registered with the SEC or any state securities regulatory authority and will not trade on any public exchange. Other secured creditors will receive cash, their collateral or retain their liens, as applicable, in satisfaction of their Claims. Unsecured creditors will receive their pro rata share of the unsecured claim distribution on account of their allowed claims under the Plan. In addition to their distribution under the plan, holders of trade unsecured claims that (i) do not object to confirmation of the Plan and (ii) have granted the releases provided in the Plan will be eligible to receive payment of the remaining balance of the allowed amount of their claims in full in cash from an account established by the Lenders. The Debtors currently estimate that the allowed trade unsecured claims will total approximately $5.4 million. The resulting debt structure of the reorganized Debtors will substantially de-lever the company and provide liquidity needed to support its future operations. The Debtors believe that the Plan provides for appropriate treatment of all classes of claims and interests, taking into account the valuation of the company and the differing natures and priorities of the claims and interests. In connection with preparing the estimation of recoveries set forth herein, the following assumptions were made: -- The ongoing enterprise value of the reorganized Debtors for purposes of the Plan, based on the valuation prepared by Lazard Freres & Co., LLC, the Debtors' financial advisors, is approximately $300 million. -- The aggregate allowed amount of administrative expense claims unpaid as of the effective date will be approximately $4.2 million. -- The aggregate allowed amount of U.S. Trustee fees unpaid as of the effective date will be approximately $38,000. -- The aggregate Allowed amount of fee claims will be approximately $6.7 million. -- The aggregate Allowed amount of unpaid priority tax claims will not exceed approximately $21.6 million. -- The aggregate Allowed amount of priority non-tax claims unpaid as of the effective Date will be approximately $0.5 million -- The aggregate allowed amount of other secured claims will be approximately $2.6 million. -- The aggregate allowed amount of unsecured claims will be approximately $27.1 million, which is comprised of approximately $5.4 million of trade unsecured claims and $21.7 million of other unsecured claims. In addition, holders of secured lender claims, totaling $695 million, are expected to recover 42% and holders of unsecured creditors, totaling $27.1 million, are expected to recover 9.2% under the Plan. All holders of existing securities laws claims and common stock interest will not receive any distribution. A full-text copy of the Debtors' disclosure statement is available for free at: http://ResearchArchives.com/t/s?3c8d A full-text copy of the Debtors' amended joint Chapter 11 plan or reorganization is available for free at: http://ResearchArchives.com/t/s?3c8c About Journal Register Yardley, Pennsylvania-based Journal Register Company (PINKSHEETS: JRCO) -- http://www.JournalRegister.com-- owns 20 daily newspapers, more than 180 non-daily publications and operates over 200 individual Web sites that are affiliated with the Company's daily newspapers, non-daily publications and its network of employment Web sites. All of the company's operations are strategically clustered in six geographic areas: Greater Philadelphia; Michigan; Connecticut; Greater Cleveland; and the Capital-Saratoga and Mid-Hudson regions of New York. The company also owns JobsInTheUS, a network of 20 employment Web sites. The company, along with its affiliates, filed for Chapter 11 bankruptcy protection on February 21, 2009 (Bankr. S.D. N.Y. Case No. 09-10769). Marc Abrams, Esq., Rachel C. Strickland, Esq., Shaunna D. Jones, Esq., and Jennifer J. Hardy, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors as counsel. William M. Silverman, Esq., Scott L. Hazan, Esq., and Jeanette A. Barrow- Bosshart, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represent the Official Committee of Unsecured Creditors as counsel. Conway, Del Genio, Gries & Co., LLC, provides restructuring management services to the Debtors. Robert P. Conway is the company's chief restructuring officer. The company listed $100 million to $500 million in total assets and $500 million to $1 billion in total debts. KA & KM DEVELOPMENT: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: KA and KM Development, Inc. 8865 Commodity Circle, Suite 14B Orlando, FL 32819 aka Villas at Lake Eve aka Lake Eve Resort Bankruptcy Case No.: 09-06245 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court Middle District of Florida (Orlando) Debtor's Counsel: Elizabeth A. Green, Esq. Latham Shuker Eden & Beaudine LLP 390 North Orange Avenue, Suite 600 Orlando, FL 32801 Tel: (407) 481-5800 Fax: (407) 481-5801 Email: bankruptcynotice@lseblaw.com 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 ------ --------------- ------------ Adreinne and Alana Jessop Contract $55,600 160 Lower Shelton Rd. Bedford, UK Charles Fleming Contract $55,600 801 N. Magnolia Orlando, FL 32803 Chris and Sarah Oglethorpe Contract $55,600 4410 Dovehill Drive Austin, TX 78744 David & Bernadette Futerman Contract $55,600 David & Kevin Bissett Contract $55,600 Edward & Nikki Milner Contract $55,600 Gary & Diane Nicol Contract $55,600 Josephine Jones Contract $55,600 Martin & Wendy Southgate Contract $55,600 Michael Davies Contract $55,600 Philip & Jane Horner Contract $55,600 Stephen & Catherine Russell Contract $55,600 Andrew & Lisa Bryant Contract $48,600 Andrew Brown Contract $48,600 Candy Wang Contract $48,600 Ian Matthews Contract $48,600 Ian and Freida Peirce Contract $48,600 Robert & Susan Mann Contract $48,600 Stephen & Gail Graham Contract $48,600 Teresa & James Rooney Contract $48,600 MAGNA ENTERTAINMENT: Former Owner to Help Keep Pimlico Afloat ------------------------------------------------------------- David Ginsburg at The Associated Press reports that former Pimlico Race Course owner Joe De Francis said that he would be willing to support efforts to keep Magna Entertainment Corp.'s struggling track afloat. The AP relates that Mr. De Francis, the head of the Maryland Jockey Club for 18 years, sold controlling interest in Pimlico and Laurel to Magna Entertainment in 2002. The report says that Magna Entertainment purchased the remaining 49% from Mr. De Francis and his sister in 2007. According to The AP, Magna Entertainment will put the racetracks Pimlico up for auction in August, along with Preakness, Laurel Park, and the Bowie Training Center. The AP quoted Mr. De Francis as saying, "I wouldn't rule out getting involved, if my involvement would be perceived to be positive and helpful. When you've been around as long as I have, you have your share of friends and enemies. My main interest is to try to help as a positive force." Preakness wouldn't leave Baltimore, The AP relates, citing Mr. De Francis. According to the report, Mr. De Francis said, "I don't see any threat of the Preakness not being here. There is a risk, but I don't believe it will sold or moved to another track. The problem is the state of the horse racing industry in Maryland. If we don't clear up the problems, it's not going to be viable to continue horse racing in Maryland." Based in Aurora, Ontario, Magna Entertainment Corp. is North America's largest owner and operator of horse racetracks, based on revenue. The Company develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. MEC also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. MEC owns and operates AmTote International, Inc., a provider of totalisator services to the pari-mutuel industry, XpressBet(R), a national Internet and telephone account wagering system, as well as MagnaBet(TM) internationally. Pursuant to joint ventures, MEC has a fifty percent interest in HorseRacing TV(R), a 24-hour horse racing television network, and TrackNet Media Group LLC, a content management company formed for distribution of the full breadth of MEC's horse racing content. As of December 31, 2008, the Company had total assets of $1,049,387,000 and total debts of $958,591,000. Following its failure to meet obligations to lenders led by PNC Bank, National Association, and Wells Fargo Bank, National Association, and controlling shareholder MI Developments Inc.'s decision not to provide further financial backing, Magna Entertainment Corp. and 24 affiliates filed for Chapter 11 on March 5, 2009 (Bankr. D. Del., Lead Case No. 09-10720). Marcia L. Goldstein, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, have been engaged as bankruptcy counsel. L. Katherine Good, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., are the Debtors' local counsel. Miller Buckfire & Co. LLC, has been tapped as financial advisor and Kurtzman Carson Consultants LLC, as claims agent. MEDICO LABS INC: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Medico Labs Inc. 100 Nottingham Way Trenton, NJ 08609 Bankruptcy Case No.: 09-21588 Debtor-affiliates filing separate Chapter 11 petition: Entity Case No. ------ -------- Medico Holdings, Inc. 09-21598 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of New Jersey (Trenton) Debtor's Counsel: Gary N. Marks, Esq. Norris, McLaughlin & Marcus A Professional Corporation 721 Route 202-206, PO Box 1018 Somerville, NJ 08876 Tel: (908) 722-0700 Email: gnmarks@nmmlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of 20 largest unsecured creditors when it filed its petition. The petition was signed by Venkat Kakani, president of the Company. MICHELE M. CONTRERAS: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Michele M. Contreras 1328 E Rosemont Ln Fresno, CA 93730 Bankruptcy Case No.: 09-14107 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court Eastern District of California (Fresno) Judge: W. Richard Lee Debtor's Counsel: Sidney C. Flores, Esq. 97 E St James St #102 San Jose, CA 95112 Tel: (408) 292-3400 Email: FloresLawFirm@yahoo.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 Ms. Contreras did not file her list of 20 largest unsecured creditors when she filed her petition. The petition was signed by Ms. Contreras. MIDWAY GAMES: Panel Objects to AHS Appeal on Cash Collateral Order ------------------------------------------------------------------ The official committee of unsecured creditors of Midway Games Inc., et al., has filed an objection to Acquisition Holdings Subsidiary LLC's motion to appeal the U.S. Bankruptcy Court for the District of Delaware's order dated April 9, 2009, authorizing the Debtors' use of cash collateral. The Thomas Entities also sought to appeal a related order denying their motion for relief from the automatic stay to foreclose on the Debtors' assets. The Committee said that the Court should deny AHS's motion because the orders at issue are interlocutory. Under 28 U.S.C. Section 158(a)(1),(3), interlocutory orders may only be appealed with permission from the Court. In addition, the Committee tells the Court that AHC's motion does not satisfy the statutory requirements set forth under 28 U.S.C. Section 1292(b). Under 28 U.S.C. Section 1929(b), to appeal an interlocutory order, an appellant must establish that: (a) there is a controlling question of law, (b) there are substantial grounds for difference of opinion as to the controlling question of law, and (c) that the appeal materially advances the ultimate termination of the litigation. The Committee argues that there is no controlling question of law presented on appeal, the Thomas Entities simply disaagree with the factual finds made by the Bankruptcy Court. The Committee adds that the appeal will not materially advance the ultimate termination of the litigation between the parties. Even assuming, for the sake of argument, that all three elements were satisfied, the Court should, in the exercise of its discretion, decline to hear the appeal, because an appeal would provide little, if any, value to any of the interested parties. As reported in the Troubled Company Reporter on April 22, 2009, AHS informed the Bankruptcy Court that it was appealing the Court's order allowing Midway Games Inc. to use cash collateral. AHS protests the Bankruptcy Court's findings that AHS is adequately protected from the diminution in value of its interest in the Debtors' assets, and the Bankruptcy Court's order allowing the Commitee to use cash collateral without limit. AHS said it holds a perfected security interest in substantially all of the Debtors' property. AHS is a party to a transaction with National Amusements, Inc., Sumner Redstone, chairman of NAI, and Sumco, Inc., an affiliate of NAI, under which AHS paid $100,000 in cash and in return acquired 87.2% of Midway's total issued and outstanding common stock, and a 100% participating in two loans -- $30 million secured loan and a $40 million unsecured loan -- extended by NAI to Midway in February 2008. NAI assigned those loans to AHS on January 20, 2009, elevating AHS to the status of lender. The Committee argued that the loans made by the NAI Parties to the Debtors were equity or unenforceable. The Bankruptcy Court's cash collateral order has allowed the Debtors to use cash to pay, among other things, professional fees and expenses incurred by the Committee in investigating and prosecuting claims against AHS, NAI, and other parties. In its motion for leave to file an appeal before the District Court, AHS said that it has presented evidence that its cash collateral will be depleted by July 2009 and the value of the non- cash collateral is uncertain. According to AHS's counsel, Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, the Debtors are "rapidly burning cash," leaving the Debtors with a small, speculative and uncertain "equity cushion" in AHS's non- cash collateral. She added that certain noteholders' contentions that AHS was "substantially oversecured" by a sizeable equity cushion were without basis. AHS noted that with cash collateral gone by July 2009, the Debtors would have to sell non-cash collateral at a high enough price to replace the cash collateral -- approximately $30 million. It noted that if the $30 million sale target in the Debtors' incentive plan for management was a certainty or even highly likely, it would not qualify as a target for management bonuses under Section 503(c) of the Bankruptcy Code. Incentive Plan Midway Games Inc. has an incentive program for its key employees. Midway obtained approval from the U.S. Bankruptcy Court for the District of Delaware a revised plan at the April 6 hearing. The Debtor's counsel filed a notice of the revised plan on April 13. A copy of that plan is available for free at: http://bankrupt.com/misc/Midway_Revised_KEIP.pdf Bloomberg's Bill Rochelle reported that Midway faced objections from the U.S. Trustee and the Committee with respect to the $3.76 million bonus program for 29 unidentified employees. According to the report, both the committee and the U.S. Trustee, an arm of the U.S. Justice Department, had argued that the proposal is a disguised retention bonus program outlawed by Congress in bankruptcy cases. Kotaku.com previously stated that the revised plan addresses concerns about the proposed payouts going to 29 employees. According to Kotaku.com, one of the alterations to Midway's "Key Employee Incentive Program" was the exclusion of CEO Matt Booty from eligibility of those payouts, reducing the number of folks who could potentially benefit to 28. The report says that Mortal Kombat has also been removed from the agreement, and the "milestone" previously attached to the sale of Mortal Kombat now includes the company's assets -- possibly all of them -- to the tune of a committee approved "target cash amount." Rights to Narc, Smash TV, and Area 51 must first be sold before certain bonuses would be paid out, according to the report. About Midway Games Headquartered in Chicago, Illinois, Midway Games Inc. -- http://www.midway.com-- develops video games and sell them primarily in North America, Europe, Asia and Australia. The company and nine of its affiliates filed for Chapter 11 protection on February 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard as their investment banker, Dewey & LeBoeuf LLP as special counsel, and Epiq Bankruptcy Solutions LLC as claims agent. The Debtors' financial condition as of September 30, 2008, showed $167,523,000 in total assets and $281,033,000 in total debt. MUELLER WATER: S&P Lowers Ratings to 'B' on Weak Results -------------------------------------------------------- Standard & Poor's Ratings Services on May 6 lowered its ratings on Mueller Water Products Inc., including the long-term corporate credit rating to 'B' from 'BB-', and placed the ratings on CreditWatch with negative implications. The Company had total balance sheet debt of more than $1 billion at March 31, 2009. Mueller announced weak fiscal second-quarter results today with sales down more than 20% and an operating loss for the quarter. "The downgrade reflects our expectation that operating conditions will remain challenging and that credit measures will deteriorate beyond our previous range of expectations," said Standard & Poor's credit analyst Dan Picciotto. In addition, the company will seek to relax financial covenants. In order to obtain covenant relief, the company is likely to experience higher interest costs, which will reduce free cash flow generation. Conditions in a number of key end markets have been difficult and appear unlikely to improve meaningfully in the near term. The ratings on Mueller reflect the Company's highly leveraged financial risk profile and weak business risk profile. Mueller operates in the moderately cyclical niche markets of the North American water infrastructure market and maintains a good position. The Company offers a full line of water infrastructure, flow control, and piping component system products, including ductile iron pipe, fire hydrants, and pipe fittings. New housing starts and replacement needs for aging water infrastructure are key drivers of the business. Nonresidential construction activity also fuels demand but Standard & Poor's expects this to soften over the next couple of years. Residential housing remains weak, while municipal demand has declined recently. Mueller's profitability has deteriorated, with the adjusted operating margin (before depreciation and amortization) declining from the high-teens percentage area to closer to 10%. The decline reflects lower volumes and higher raw material costs, which have been only partially offset by increased pricing. Mueller's financial profile is highly leveraged. The Company's capital expenditures and working capital usage represents a moderate use of cash. As of March 31, 2009, total debt (including operating leases and postretirement benefit obligations) to EBITDA was more than 5x and funds from operations to total debt approached 10%. These credit measures are likely to deteriorate further given the challenging operating environment. In resolving the CreditWatch S&P will examine developments related to the company's plan to seek an amendment to financial covenants under its credit agreement. If Mueller is able to receive adequate relief from lenders in a timely fashion, we would expect to affirm the ratings. If the Company is delayed in amending its covenants or if we consider relief to be inadequate,4 we could lower the ratings further. NALCO COMPANY: Fitch Rates $500 Mil. Unsecured Notes at 'BB/RR1' ---------------------------------------------------------------- Fitch Ratings rates Nalco Company's $500 million unsecured notes due 2017, $250 million senior secured revolving credit facility due 2014 and $750 million senior secured term loan due 2016 'BB'/RR1. In addition, Fitch affirms Nalco's existing ratings: -- Issuer Default Rating at 'B'; -- Existing senior secured bank facilities at 'BB/RR1'; -- Senior unsecured notes at 'BB/RR1'; -- Senior subordinated notes 'BB-/RR2'. Fitch also affirms the ratings for Nalco Finance Holdings LLC and Nalco Finance Holdings Inc.: -- IDR at 'B'; -- Senior discount notes at 'B-/RR5'. Proceeds of the new notes and term loan will go to prepay the existing bank facilities and to tender for the senior notes due 2011. The Rating Outlook for both Nalco Company and Nalco Finance Holdings is Stable. The ratings reflect Nalco's high financial leverage and weak trading conditions as well as strong liquidity and a track record of steady free cash flow generation. Nalco's operations benefit from its dominant market share, broad product offerings, geographic reach, and strong customer retention. Diversification across products, geography and customers and low capital spending requirements have resulted in stable free cash flow generation. Nalco evidences strong near term liquidity with latest twelve months free cash flow generation of $234.1 million (after a $30 million voluntary pension contribution in the third quarter of 2008), $163.3 million cash on hand and $230.3 million available under its $250 million revolving credit facility, after utilization of $19.7 million for letters of credit, as of March 31, 2009. Near term maturities are modest with $5 million due in 2010 pro forma for the prepayment of the term loan B ($887 million outstanding at March 31, 2009) with the proceeds of the $500 million in new notes and the $750 million new term loan. Excess proceeds will be used to tender for a portion of the $665 million senior notes due in November 2011 and EUR200 million senior notes due in November 2011. In February 2007 the company initiated a dividend amounting to about $20 million annually and, in July 2007, the company instituted a $300 million share repurchase program. Through December 31, 2008, $211.3 million was spent to repurchase shares; no additional shares were repurchased during the first quarter of 2009. Total Debt at March 31, 2009 of $3.2 billion covers LTM operating EBITDA of $715 million by 4.5 times (x). The bank facilities have a maximum consolidated net debt to EBITDA ratio that is currently 5x but steps down to 4.75x beginning January 1, 2010. Fitch expects that the company could obtain short-term covenant relief should earnings and cash generation fall short of expectations during the later half of 2009 and the beginning of 2010. Secured debt pro forma for the prepayment of term loans with new unsecured notes is $853 million represents about 27% of total debt. The Stable Outlook reflects Fitch's expectation that total debt to operating EBITDA will remain below 5.5x over the next 12-18 months. A review of the ratings would be warranted should liquidity deteriorate or if trading conditions worsen. Nalco is a leading global provider of integrated water treatment and process improvement services, chemicals and equipment programs for industrial and institutional applications. Nalco's products and services are typically used in water treatment applications to prevent corrosion, contamination and the buildup of harmful deposits, or in production processes to enhance process efficiency and improve the customers' end products. The company generated Operating EBITDA of $715 million on $4.1 billion in sales for the LTM period ending March 31, 2009. NEW YORK TIMES: Reaches Tentative Pact With Union at Boston Globe ----------------------------------------------------------------- The New York Times Co. has reached a tentative agreement with the Boston Newspaper Guild union at the Boston Globe, Russell Adams at The Wall Street Journal report, citing a person familiar with the matter. As reported by the Troubled Company Reporter on May 5, 2009, The Globe extended negotiations with workers who are members of The Guild past Sunday's deadline. The NY Times asked 10 unions to find about $20 million in savings, half of that from the Guild, the largest union at the newspaper. The Guild said that it offered more than enough in wage and benefits cuts to save The Globe from closure. The NY Times had given The Globe's unions 30 days to agree to concessions. The first deadline was Friday, but shortly after midnight on that day, management said it had extended the deadline by two days because of progress in negotiations. The Globe is seeking to cut $20 million in costs and avert a possible closure. According to The Boston Globe spokesperson Bob Powers, the newspaper presented unions on Sunday with copies of paperwork required under the Workers Adjustment and Retraining Notification Act that if filed, would result in the newspaper's shutdown in two months. The Guild President Dan Totten said in a statement that the union submitted on Sunday a new proposal with more than the $10 million in cuts to The NY Times. WSJ relates that The Globe said on Monday that it had reached agreements with six of the seven unions involved in talks and would delay the filing of formal notice of the company's closure. According to WSJ, unionized employees of the NY Times agreed on Monday to a 5% pay reduction through the end of the year, which followed similar cuts imposed on the paper's non-union workers. Negotiations resumed on Tuesday evening, says WSJ. Globe spokesperson said in a statement that the management has completed talks with the union but has agreed not to release details until the union speaks with its members. Management has insisted on modifications to lifetime job guarantees held by one third of the Guild's more than 600 members, needing more leeway to pare the Globe's staff, WSJ relates. The Globe's next moves are expected to involve additional job cuts, according to WSJ. The New York Times Co., a leading media company with 2008 revenues of $2.9 billion, includes The New York Times, the International Herald Tribune, The Boston Globe, 16 other daily newspapers, WQXR- FM and more than 50 Web sites, including NYTimes.com, Boston.com and About.com. The Company was founded in 1896. * * * As reported in the Troubled Company Reporter on Dec. 4, 2008, the NY Times cut its quarterly dividend by 74%, as part of an effort to conserve cash. The NY Times said that it took steps to lower debt and increase liquidity, including reevaluating its assets. The NY Times has laid off employees, merged sections of the NY Times and Globe to reduce printing costs, and consolidated New York area printing plants this year. According to the TCR on April 28, 2009, 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. The TCR reported on April 24, 2009, that Standard & Poor's Ratings Services lowered its corporate credit rating for The New York Times Co., as well as its issue-level rating on the company's senior unsecured debt, to 'B+' from 'BB-', and placed them on CreditWatch with negative implications. NORWOOD PROMOTIONAL: Files Ch. 11 to Sell Assets to Aurora Capital ------------------------------------------------------------------ Norwood Promotional Products Holdings Inc. has sought Chapter 11 protection before the U.S. Bankruptcy Court for the District of Delaware to effectuate a quick sale of its assets to a private equity firm. An affiliate of Aurora Capital Group is offering $132 million for the assets. The price includes $101 million in cash plus the assumption of debt. Norwood Promotional Products announced on May 6 that it has entered into an agreement to sell Norwood to Aurora Resurgence, an affiliate of Aurora Capital Group. This transaction, according to the Company, is the culmination of the refinancing and restructuring efforts that the Company has been working on since 2006. The proposed purchase will be subject to a competitive bidding process to be sanctioned by the Bankruptcy Court. Norwood is proposing a June 16 deadline for competing bids, and a June 18 auction for the assets. The Court will consider approval of the sale to Aurora or the highest bidder at the auction at a hearing on June 19. The sale to Aurora has a targeted closing by the end of June, according to Norwood. Norwood said in a statement that it has secured an extension of its existing revolving credit line to avoid any disruption to the business. Norwood is getting $30 million from Wachovia Bank NA, Bloomberg said. Aurora Resurgence has secured financing in support of the sale from a unit of Wells Fargo & Company (NYSE: WFC). Under the terms of the sale to Aurora, the current management team, including CEO Paul Lage, will continue to lead the Company once the sale closes. The team has more than 70 years of experience in the promotional products industry and is responsible for executing the plan to strengthen Norwood's balance sheet. "This sale will result in a stronger, more flexible, Norwood," said Mr. Lage. "It's a major step to cementing the Company's stature atop the industry." "We are pleased to have Aurora as our partner for the long term," added Mr. Lage. "Their vision, values and strategies are aligned with Norwood's direction. Their tremendous experience and knowledge of the industry will immediately benefit our customers and enhance our opportunities going forward." Aurora Resurgence, which has $2 billion in assets, invests in middle market companies across many sectors, including manufacturing and distribution. Aurora's knowledge and experience in the promotional products industry makes it the ideal partner for Norwood and is a clear sign to the industry that Norwood's business remains robust. "We will continue to purchase inventory and take and ship orders under normal schedules, so it is business as usual. Customers will receive the same high quality products and prompt service to which they are accustomed," says Mr. Lage. "Norwood has come a long way in a relatively short period of time," Mr. Lage said. "Every one of our associates should be proud of the Company's achievements and confident in Norwood's future." According to Bloomberg, the Company said in court papers that it's the secondlargest promotional products supplier in the U.S., not including apparel. Norwood was forced into Chapter 11 by $175 million in debt maturing in the next 10 months, the effects of the recession and a flood that caused $17 million in damages at a plant. Norwood has been owned by its lenders since a 2004 debt restructuring. Debt includes $165 million on secured credit facilities owed by the operating company and $127 million owed at the holding company level. Sales were $132 million last year. Economic Downturn Jacqueline Palank at Dow Jones Daily Bankruptcy Review relates that economic downturn slashed orders for Norwood Promotional products and kept the Company from refinancing its debt. Norwood Promotional, according to Dow Jones, said that Chapter 11 is its only remaining option to address its $295.4 million debt load -- of which $175 million comes due in the next 10 months -- and to line up additional financing until its assets can be sold. Norwood Promotional, says Dow Jones, suspended operations at its Cedar Rapids, Iowa, manufacturing facility, which supplied the Company's entire writing-instrument product line, which accounted for about 10% of the Company's total sales. Dow Jones states that the facility was flooded in June 2008, which resulted in a total loss for Norwood Promotional of about $17 million. According to Dow Jones, Norwood Promotional said that as of December 31, 2008, its assets totaled $150.26 million. Dow Jones relates that the Company's debts include: -- $11.8 million in secured debt owed to Wachovia on account of the bankruptcy loan; and -- $133.8 million on a secured loan provided by a group of lenders led by The Bank of New York Mellon. Agreement to Sell Operations to Aurora Resurgence Norwood Promotional has entered into an agreement to sell itself to Aurora Resurgence, an affiliate of Aurora Capital Group, a private equity firm managing over $2.0 billion. This transaction is the culmination of the refinancing and restructuring efforts that the Company has been working on since 2006. The purchase price includes cash and the assumption of certain liabilities. The current management team, including Norwood Promotional CEO Paul Lage, will continue to lead the Company once the sale closes. The team has more than 70 years of experience in the promotional products industry and is responsible for executing the plan to strengthen Norwood Promotional's balance sheet. "This sale will result in a stronger, more flexible, Norwood," said Mr. Lage. "It's a major step to cementing the Company's stature atop the industry. We are pleased to have Aurora as our partner for the long term. Their vision, values and strategies are aligned with Norwood's direction. Their tremendous experience and knowledge of the industry will immediately benefit our customers and enhance our opportunities going forward." Aurora Resurgence invests in middle market companies across many sectors, including manufacturing and distribution. Aurora's knowledge and experience in the promotional products industry makes it the ideal partner for Norwood Promotional and is a clear sign to the industry that the Company's business remains robust. The sale will be completed through a proceeding in a Chapter 11 case, which Norwood Promotional has commenced with a targeted closing by the end of June. Competitive offers may be submitted pursuant to bidding procedures as established for the case. "We will continue to purchase inventory and take and ship orders under normal schedules, so it is business as usual. Customers will receive the same high quality products and prompt service to which they are accustomed," said Mr. Lage. Norwood Promotional has secured an extension of its existing revolving credit line to avoid any disruption to the business. Additionally, Aurora Resurgence has secured financing in support of the sale from a unit of Wells Fargo & Company. Promotional Holdings, Dow Jones relates, is offering about $132.5 million to acquire Norwood Promotional, subject to higher bids at an auction that the Company wants to hold soon. Norwood Promotional said that it must win court approval of an auction timeline by May 21 under the terms of its purchase agreement with the Aurora unit and the $30 million bankruptcy loan it's seeking to borrow from pre-bankruptcy lender Wachovia Bank, says Dow Jones. Norwood Promotional said in court documents that failure to do so "could cost the debtors the hard-fought benefits obtained under both agreements, and effectively, cause these Chapter 11 cases to collapse before they have even begun." About Norwood Promotional Norwood Promotional Products -- http://www.norwood.com/-- is an industry leading supplier of imprinted promotional products. The company offers nearly 5,000 products and is a market leader in several of the industry's major product categories. Norwood also offers hundreds of products on 24-Hour service at no extra charge. Norwood Promotional Products Holdings, Inc. and five affiliates filed for Chapter 11 on May 5 (Bankr. D. Del. Case No. 09-11547). Judge Peter Walsh is handling the case. The Debtors hired Margaret Whiteman Greecher, Esq., and Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor, as counsel. Kirkland & Ellis LLP is general counsel and Mackinax Partners LLC is the restructuring consultant. Epiq Bankruptcy Solutions, LLC, has been hired as claims and noticing agent. The Company said its assets are $150 million while debt totals $295 million. OBERLIN PLAZA ONE: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------------- Mark Scheer at Lockport Union-Sun & Journal reports that Oberlin Plaza One, LLC, has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Eastern District of North Carolina to end "years of cash deficits". According to Lockport Union-Sun, Oberlin Plaza's bankruptcy filing nullifies leases with 26 tenants in the interior of the Summit mall. The tenants, the report says, will have 30 days to pack up and move out. Three stand-alone stores on the property will remain open: -- Sears, -- The Bon Ton, and -- Sav-A-Lot. Lockport Union-Sun relates that Oberlin Plaza would be offered up for sale. The report says that three stores in the mall, including will also be closed, effective June 6. Niagara County officials, according to Lockport Union-Sun, said that they are hoping to accommodate all of the tenants who are about to be forced out. As many as 200 workers would be laid off, Lockport Union-Sun states, citing the officials. Town of Wheatfield Supervisor Timothy Demler said that he and other county officials are continuing talks with James Anthony of Oberlin Plaza to try to extend the 30-day notice given to all tenants to at least 60 days. Raleigh North Carolina-based Oberlin Plaza One, LLC, filed for Chapter 11 bankruptcy protection on May 5, 2009 (Bankr. E.D. N.C. Case No. 09-03686). N. Hunter Wyche, Jr., Esq., at Wilson & Ratledge PLLC assists the Company in its restructuring efforts. The Company listed $1,000,001 to $10,000,000 in assets and $10,000,001 to $50,000,000 in debts. OPUS SOUTH: Proposes to Hire Landis Rath as Conflicts Counsel ------------------------------------------------------------- Opus South Corporation and its debtor-affiliates ask the U.S. Bankruptcy court for the District of Delaware for permission to employ Landis Rath & Cobb LLP as conflicts counsel. The Debtors relate that Greenberg Taurig, LLP, the Debtors' proposed general bankruptcy counsel, may be unable to represent the Debtors with respect to certain claims, controversies and causes of action due to actual or potential conflicts of interest with certain non-debtor parties. LRC will represent the Debtors only in connection with the conflict matters. The hourly rates of LRC personnel are: Adam G. Landis $595 William E. Chipman, Jr. $500 Kerri K. Mumford $370 Mark D. Olivere $340 Attorneys $250 - $595 Legal Assistants/Paralegals $95 - $250 Mr. Chipman tells the Court that LRC received an advanced fee retainer of $150,000 for its prepetition and postpetition representation of the Debtors in the Chapter 11 cases. Mr. Chipman assures the Court that LRC is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Chipman can be reached at: Landis Rath & Cobb LLP 919 Market Street, Suite 1800 P.O. Box 2087 Wilmington, DE 19899 Tel: (302) 467-4400 Fax: (302) 467-4450 About Opus South Corporation Headquartered in Atlanta, Georgia, Opus South Corporation -- http://www.opuscorp.com/-- provides an array of real estate related services across the United States including real estate development, architecture & engineering, construction and project management, property management and financial services. The Company and its affiliates filed for Chapter 11 on April 22, 2009 (Bankr. D. Del. Lead Case No. 09-11390). Victoria Watson Counihan, Esq., at Greenberg Traurig, LLP, represents the Debtors in their restructuring efforts. The Debtors propose to employ Landis, Rath & Cobb, LLP, as conflicts counsel, Chatham Financial Corporation as real estate broker, Delaware Claims Agency LLC as claims agent. The Debtors have assets and debts both ranging from $50 million to $100 million. OPUS SOUTH: Wants to Hire Greenberg Traurig as Bankruptcy Counsel ----------------------------------------------------------------- Opus South Corporation and its debtor-affiliates ask the U.S. Bankruptcy court for the District of Delaware for permission to employ Greenberg Traurig, LLP, as counsel. Greenberg Traurig will, among other things: a) provide legal advise with respect to the Debtors' powers and duties as debtor-in-possession in the continued operation of their businesses and management of their property; b) negotiate, draft, and pursue all documentation necessary in the Chapter 11 cases; and c) prepare on behalf of the Debtors all applications, motions, answers, orders, reports, and other legal papers necessary to the administration of the Debtors' estates; The hourly rates of Greenberg Traurig personnel are: Nancy A. Mitchell $780 Clifton R. Jessup, Jr. $660 Matthew T. Gensburg $610 Victoria W. Counihan $585 Dennis Meloro $455 Bryan L. Elwood $425 Benjamin B. Heilman $350 Jose J. Bartolomei $305 In addition, other attorneys and paralegal will render services to the Debtors as needed, with these hourly rates: Shareholders $335 - $1,050 Of Counsel $325 - $900 Associates $200 - $575 Legal Assistants/Paralegals $65 - $310 Mr. Jessup tells the Court that Greenberg Traurig received various advance payment retainers, a portion of which was applied in satisfaction of fees and expenses incurred. As of the petition date, the retainer balance is $402,212. Mr. Jessup assures the Court that Greenberg Traurig is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Jessup can be reached at: Greenberg Traurig, LLP The Nemours Building 1007 North Orange Street, Suite 1200 Wilmington, DE 19801 Tel: (302) 661-7000 Fax: (302) 661-7360 About Opus South Corporation Headquartered in Atlanta, Georgia, Opus South Corporation -- http://www.opuscorp.com/-- provides an array of real estate related services across the United States including real estate development, architecture & engineering, construction and project management, property management and financial services. The Company and its affiliates filed for Chapter 11 on April 22, 2009 (Bankr. D. Del. Lead Case No. 09-11390). Victoria Watson Counihan, Esq., at Greenberg Traurig, LLP, represents the Debtors in their restructuring efforts. The Debtors propose to employ Landis, Rath & Cobb, LLP, as conflicts counsel, Chatham Financial Corporation as real estate broker, Delaware Claims Agency LLC as claims agent. The Debtors have assets and debts both ranging from $50 million to $100 million. PAMELA L FEIT: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Pamela L. Feit 12 Cliffholme Road Owings Mills, MD 21117 Bankruptcy Case No.: 09-18131 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of Maryland (Baltimore) Judge: Robert A. Gordon Debtor's Counsel: Adam M. Freiman, Esq. Sirody, Freiman & Feldman,P.C. 1777 Reisterstown Road Suite 360 E Baltimore, MD 21208 Tel: (410) 415-0445 Fax: (410) 415-0744 Email: afreiman@sfflegal.com Total Assets: $1,108,200 Total Debts: $1,979,544 According to its schedules of assets and liabilities, $1,792,416 of the debt is owing to secured creditors, $172,755 for taxes owed to governmental units, and the remaining debt to creditors holding unsecured nonpriority claims. A full-text copy of the Ms. Feit's petition, including her list of 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/mdb09-18131.pdf The petition was signed by Ms. Feit. PCG INC: Case Summary & 11 Largest Unsecured Creditors ------------------------------------------------------ Debtor: PCG, Inc. 7100 East Belleview Avenue Suite 210 Greenwood Village, CO 80111 Bankruptcy Case No.: 09-18472 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of Colorado (Denver) Judge: Sidney B. Brooks Debtor's Counsel: Aaron A. Garber, Esq. 303 E. 17th Ave. Ste. 500 Denver, CO 80203 Tel: (303) 832-2400 Email: aag@kutnerlaw.com Total Assets: $131,945 Total Debts: $1,318,479 According to its schedules of assets and liabilities, $1,216,564 of the debt is owing to secured creditors, $29,159 for taxes owed to governmental units, and the remaining debt to creditors holding unsecured nonpriority claims. A list of the Company's 11 largest unsecured creditors is available for free at: http://bankrupt.com/misc/cob09-18472.pdf The petition was signed by Wendy B. Baldensperger, president of the Company. PILGRIM'S PRIDE: Inks Pact to Sell Farmerville Chicken Complex -------------------------------------------------------------- Pilgrim's Pride Corporation has signed a definitive agreement to sell its chicken complex in Farmerville, La., to Foster Farms for $80 million, subject to a price adjustment for associated inventory and other reimbursements. Completion of the transaction is contingent upon customary closing conditions, including the expiration or termination of the waiting period under the Hart- Scott Rodino Improvements Act and approval by the U.S. Bankruptcy Court. The transaction is also subject to Foster Farms' receipt of $40 million from the state of Louisiana to fund a portion of the purchase price. The sale is expected to be completed within 30 days. The U.S. Bankruptcy Court has approved procedures for the sale of the Farmerville complex assets. The sale will be completed via an auction in accordance with Section 363 of the U.S. Bankruptcy Code. The Court set May 15, 2009, at 12:00 p.m. Central as the deadline for the submission of qualified bid packages, and scheduled an auction for May 18, 2009, at 10:00 a.m. Central at the offices of Weil, Gotshal & Manges LLP, 200 Crescent Court, Suite 300, Dallas, Texas 75201. At that time, the company will sell its assets to Foster Farms or another qualified bidder, if such bidder makes the highest and best offer for the assets. A hearing to approve the sale has been scheduled for May 19, 2009, at 10:30 a.m. Central. The Farmerville complex includes a processing facility, a cook plant, two hatcheries, a feed mill, a protein conversion plant and any associated inventory. "We thank Foster Farms, Governor Bobby Jindal and the State of Louisiana for their commitment to this sale," said Don Jackson, president and chief executive officer. "We believe it is in the best interest of all parties involved, including our employees, growers, the Farmerville community and our creditors." The Debtors have implemented various restructuring initiatives to streamline their operations and right-size production. In light of this, the Debtors decided to idle their chicken processing plants in Douglas, Georgia; El Dorado, Arkansas; and Farmerville, Louisiana, by mid-May 2009. Pilgrim's Pride previously submitted to Judge D. Michael Lynn of the U.S. Bankruptcy Court for Northern District of Texas (Fort Worth) proposed sale procedures for their chicken processing plants in Douglas and El Dorado. The proposed uniform bidding procedures contemplate this schedule: (a) any person or entity wanting to participate in the Auction must submit a Qualified Bid on or before May 15, 2009, at 12:00 noon prevailing Central Time; (b) bidders will be required to submit good faith deposits, which is equal to 10% of the cash purchase price of the bid, with the Debtors on or before the Bid Deadline; (c) if more than one bid is timely received, the Debtors will conduct an auction on June 13, 2009, at 10:00 a.m., Central Time, at the offices of Weil, Gotshal & Manges LLP, at Suite 300 at 200 Crescent Court, in Dallas, Texas; (d) a status conference with the Court will be held on May 26, 2009, in the event either the senior lender groups or the Debtors determine that no acceptable Qualified Bids for either of the Facilities has been received by the Bid Deadline; and (e) a hearing for the approval of a sale with respect to any bid accepted by the Debtors will be held on June 16, 2009. The Debtors say chicken growers affected by the proposed idling of the three plants objected arguing that idling will put them out of business, causing bankruptcies and foreclosures to Growers with millions of dollars of current debt obligations. The Growers, however, informed the Court that these effects would be avoided if the Plants were sold rather than "idled" allowing the Growers to transfer their growing operations to Pilgrim's Pride Corporation's purchaser and repay their debts. The El Dorado complex, located at 1902 South West Ave., in El Dorado, Arkansas, has an associated feed mill and a hatchery with a capacity of approximately 1,512,000 eggs per week. The complex would employ 1,650 workers when operating at full capacity, is a union facility, and is served by 172 growers with 598 houses. The Douglas complex, located at 113 McNeal Drive, in Douglas, Georgia, also has an associated feed mill and a hatchery with a capacity of 2,042,000 eggs per week. The complex would employ 1,300 workers when operating at full capacity, is a non-union facility, and is served by 160 growers with 668 houses. About Pilgrim's Pride Corp. Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation (Pink Sheets: PGPDQ) -- http://www.pilgrimspride.com/-- produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the U.S., Mexico and in Puerto Rico. In addition, the company owns 34 processing plants in the United States and 3 processing plants in Mexico. The processing plants are supported by 42 hatcheries, 31 feed mills and 12 rendering plants in the United States and 7 hatcheries, 4 feed mills and 2 rendering plants in Mexico. Moreover, the company owns 12 prepared food production facilities in the United States. The Company employs about 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico, and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi, and Utah. Pilgrim's Pride Corp. and six other affiliates filed Chapter 11 petitions on December 1, 2008 (Bankr. N.D. Tex. Lead Case No. 08-45664). The Debtors' operations in Mexico and certain operations in the United States were not included in the filing and continue to operate as usual outside of the Chapter 11 process. Pilgrim's Pride has engaged Stephen A. Youngman, Esq., Martin A. Sosland, Esq., and Gary T. Holzer, Esq., at Weil, Gotshal & Manges LLP, as bankruptcy counsel. The Debtors have also tapped Baker & McKenzie LLP as special counsel. Lazard Freres & Co., LLC, is the company's investment bankers and William K. Snyder of CRG Partners Group LLC as chief restructuring officer. The Company's claims and noticing agent is Kurtzman Carson Consulting LLC. A nine-member committee of unsecured creditors has been appointed in the case. As of December 27, 2008, the Company had $3,215,103,000 in total assets, $612,682,000 in total current liabilities, $225,991,000 in total long-term debt and other liabilities, and $2,253,391,000 in liabilities subject to compromise. Bankruptcy Creditors' Service, Inc., publishes Pilgrim's Pride Bankruptcy News. The newsletter tracks the Chapter 11 proceeding of Pilgrim's Pride Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) PLIANT CORP: Reports Operating Loss in First Quarter 2009 --------------------------------------------------------- Pliant Corp., reported a combined net loss of $22,767,000 on net sales of $214,356,000 for three months ended March 31, 2009. Pliant also said in a filing with the U.S. Bankruptcy Court for the District of Delaware that its assets total $492,039,000 and its debts subject to comprise total $939,480,000. The Debtor added that with respect to professionals retained for the administration of its Chapter 11 case, it has paid these fees and expenses for three months ended March 31: Professional Fees Expenses ------------ ---- -------- FTI Restructuring $31,050 $91 Weil, Gotshal & Manges LLP 87,797 1,282 Houlihan Lokey 300,000 5,317 RSM Richter Inc 10,986 549 Goodman's 225,567 2,463 Blake, Cassels & Graydon LLP 60,366 3,723 Stroock & Stroock & Lavan LLP 730,869 16,529 Headquartered in Schaumburg, Illinois, Pliant Corporation produces polymer-based films and flexible packaging products for food, beverage, personal care, medical, agricultural and industrial applications. The Company has operations in Australia, New Zealand, Germany, and Mexico. Pliant and 10 of its affiliates filed for Chapter 11 protection on January 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represented the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as Canadian counsel. As of September 30, 2005, the Company had $604.3 million in total assets and $1.19 billion in total debts. The Debtors emerged from Chapter 11 on July 19, 2006. Almost three years later Pliant Corp. and its affiliates again filed for Chapter 11 after reaching terms of a pre-packaged restructuring plan. The voluntary petitions were filed February 11, 2009 (Bank. D. Del. Case Nos. 09-10443 through 09- 10451). The Hon. Mary F. Walrath presides over the cases. Jessica C.K. Boelter, Esq., at Sidley Austin LLP, in Chicago, Illinois, and Edmon L. Morton, Esq., at Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, provide bankruptcy counsel to the Debtors. Epiq Bankruptcy Solutions LLC acts as claims and noticing agent. The U.S. Trustee for Region 3 appointed five creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Lowenstein Sandler PC as its counsel. As of September 30, 2008, the Debtors had $688.6 million in total assets and $1.03 billion in total debts. Pliant Corp., a manufacturer of flexible packaging and plastic films that filed under Chapter 11 in February, had a $2.4 million operating loss for the first three months of 2009 on net sales of $214 million. The net loss for the period was $22.8 million. POLAROID CORP: Seeks Immediate Sale of Obsolete Equipment to CRG ---------------------------------------------------------------- Polaroid Corporation and its affiliates ask the U.S. Bankruptcy Court for the District of Minnesota for authority to sell equipment previously used in the packaging of instant film products at is Readville faciity located at 100 Meadow Road, Readville, MA, to Capital Recovery Group, LLC. The equipment is not part of the assets that were sold to a joint venture led by PLR Acquisition, LLC, a joint venture between Hilco Consumer Capital Corp. and Gordon Brothers Brands, LLC. Capital Recovery Group, LLC made a bid of $75,000 for the equipment. Polaroid tells the Court that because it has discontinued its instant film business segment, the equipment is unused, aged and obsolete. Polaroid seeks expedited relief because the equipment is located in the Readville facility, which lease expires on May 31, 2009. As reported in the Troubled Company Reporter on April 28, 2009, the Bankruptcy Court the Debtors' debtors' exclusive period to file a plan to May 18, 2009, and their exclusive period to 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 Brothers Brands, LLC and Hilco 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 Delaware 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: Hilco and Gordon Brothers Close Asset Sale --------------------------------------------------------- A joint venture led by Gordon Brothers Brands, LLC and Hilco Consumer Capital, L.P., yesterday closed the sale of substantially all assets of Polaroid, including the Polaroid brand, intellectual property, inventory and other assets. The Federal Bankruptcy Court for the District of Minnesota approved the sale on April 16, 2009. Polaroid's new owners said former Polaroid Executive Vice President & General Manager -- Americas, Scott W. Hardy, has been named President of Polaroid. Mr. Hardy and the majority of existing, Minnesota-based Polaroid employees will remain with the company and its affiliates. The company will continue to maintain its headquarters in Minneapolis and also have offices in Boston, New York and Toronto. "With the successful closing and a new management team in place, we can move forward with executing our full-scale global licensing and distribution strategy for wholesale, direct-to-retail and e- commerce businesses," stated Scott Hardy, President of Polaroid. "We have already signed agreements with several major licensees, representing a range of innovative product categories." Stephen Miller, Co-President of Gordon Brothers Retail Group and Jamie Salter, CEO of Hilco Consumer Capital, jointly added, "With Scott at the helm, an established team behind him, and a number of key licensees already in place, we are on track to expand the Polaroid brand globally while leveraging its pioneering heritage." Founded in 1937, Polaroid's unique "innovation-made-simple" brand platform has global appeal across a wide demographic and can be expanded across numerous products, such as digital cameras, digital photo frames, digital HD camcorders, flat panel televisions, portable DVD players, and more. Always on the cutting edge of the latest "instant" technologies, Polaroid is also responsible for the world's very first ZINK(TM) (Zero Ink(TM) Printing Technology) enabled printing device. The Polaroid PoGo(TM) Instant Mobile Printer offers the capability to print and share 2"x3" borderless, color images from a camera cell phone or digital camera in under a minute. In 2009, Polaroid unveiled a digital camera with the same printing capabilities, the palm-sized PoGo Instant Digital Camera. For press inquiries, contact: Lorrie Parent Director of Marketing parentl@polaroid.com Tel: (952) 936-5466 For licensing inquires, contact: Scott Hardy President hardys@polaroid.com Tel: (952) 936-5170 Jordan Goodman Licensing Manager jordan.goodman@polaroid.com Tel: (416) 682-5683 For other inquires, contact: Mary Dean mdean@gordonbrothers.com Tel: (617) 422-7867 Diane Pedreira dpedreira@hilcocc.com Tel: (416) 682-5693 About Hilco Consumer Capital Hilco Consumer Capital, L.P. -- http://www.hilcocc.com/ -- specializes in private equity investments in branded companies with high target market awareness. HCC looks to acquire retailers, wholesalers and intellectual property in this space and seeks to build significant, additional value through innovative product development, marketing, merchandising and licensing strategies. Current portfolio brands and companies include House of Marley, Caribbean Joe(R), Ellen Tracy(R), Halston(R), Tommy Armour Golf(R), RAM Golf(R), The Sharper Image(R), Linens 'N Things(R) and Bombay(R ). HCC is a unit of The Hilco Organization -- http://www.hilcotrading.com/-- a Chicago-based, international provider of diversified financial and operational services, including business asset valuations, asset acquisition and disposition services, M&A services and retail consulting. About Gordon Brothers Brands Gordon Brothers Brands, LLC is a member of the Gordon Brothers Group family of companies. Gordon Brothers Brands purchases, sells, and licenses brands and other intellectual property. Current portfolio brands and companies include Rugged Shark(R), The Sharper Image(R), Linens 'N Things(R) and Bombay(R), among others. Founded in 1903, Gordon Brothers Group -- http://www.gordonbrothers.com/-- is a global advisory, restructuring and investment firm specializing in retail and consumer products, industrial and real estate sectors. Gordon Brothers Group maximizes value for both healthy and distressed companies by purchasing or selling all categories of assets, appraising assets, providing debt financing, making private equity investments and operating businesses for extended periods. Gordon Brothers Group conducts over $50 billion in annual transactions and appraisals. 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. QIMONDA NA: Wins Court Approval of $60-Million DIP Loan ------------------------------------------------------- Qimonda North America Corp., a U.S. subsidiary of Qimonda AG, received final approval from the U.S. Bankruptcy Court for the District of Delaware for $60 million in secured financing to support its Chapter 11 effort until the assets can be sold, Bloomberg's Bill Rochelle reported. The DIP financing is being provided by an affiliate of Gordon Brother Group LLC named GB Merchant Partners LLC, Bill Rochelle said. As reported by the TCR on May 6, 2009, Qimonda has filed a motion seeking a four-month extension, until Oct. 18, of its exclusive period to propose a Chapter 11 plan, and an extension until December 17, of its deadline to solicit acceptances of that plan. The Debtors say the extension will, among other things, allow them to initiate a sale process and employ professionals to assist them in executing the sale plan. Qimonda, according to Bill Rochelle, says it has only begun the process of "searching for strategic purchasers globally" and selling "their highly technical equipment and facilities." Qimonda, Mr. Rochelle relates, already has begun the process of selling its plant in Sandston, Virginia, that makes DRAM chips from 200-millimeter and 300-millimeter wafers along with other assets worth less than $1 million. About Qimonda North America Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- is a leading global memory supplier with a diversified DRAM product portfolio. The company generated net sales of EUR1.79 billion in financial year 2008 and had -- prior to its announcement of a repositioning of its business -- approximately 12,200 employees worldwide, of which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond (Virginia, USA). The company provides DRAM products with a focus on infrastructure and graphics applications, using its power saving technologies and designs. Qimonda is an active innovator and brings high performance, low power consumption and small chip sizes to the market based on its breakthrough Buried Wordline technology. Qimonda AG filed an application with the local court in Munich, Germany, on January 23, 2009, to open insolvency proceedings. QAG's U.S. units, Qimonda North America Corp. and Qimonda Richmond LLC, filed for Chapter 11 before the Delaware bankruptcy court on February 20 (Bankr. D. Del., Lead Case No. 09-10589). Mark D. Collins, Esq., at Richards Layton & Finger PA, has been tapped as counsel. Roberta A. DeAngelis, the United States Trustee for Region 3, appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Jones Day and Ashby & Geddes represent the Committee. In its bankruptcy petition, Qimonda estimated assets and debts of more than $1 billion. RATHGIBSON INC: Annual Report Late, May Get Going Concern Doubt --------------------------------------------------------------- RathGibson, Inc., has determined that it is unable to file its Annual Report on Form 10-K for the fiscal year ended January 31, 2009, by May 1, 2009, without unreasonable effort and expense because it has not yet completed the preparation of its consolidated financial statements for the fiscal year ended January 31, 2009. The Company told the Securities and Exchange Commission that it has entered into an amendment with its lender under the Revolving Credit Facility regarding a breach of a solvency requirement of its Revolving Credit Facility regarding RGCH Holdings Corp., which is the Company's direct parent, at January 31, 2009. The amendment waives the solvency requirements for RGCH Corp. for all periods prior to May 4, 2009 and amends the Revolving Credit Facility to exclude RGCH Corp. from future solvency requirements. Prior to the execution of the Revolving Credit Facility amendment, the Company provided the lender with the solvency certification and the underlying calculation. Because the specific calculation is not identified in a formulaic manner, there are a number of ways to calculate enterprise value and all of them may not yield a positive solvency. The Company believes the calculation is proper, however, there can be no assurance of lender concurrence. Additionally, due to cross-default provisions in the Company's other debt agreements, a default under one of its debt agreements could be cause for the acceleration of outstanding indebtedness under other of the Company's debt agreements. If the Company is unable to obtain positive assurance from the lender, the Company may reclassify all of its indebtedness as short-term. In the absence of further information in support of the Company's ability to continue as a going concern, the Company anticipates that the report of its independent registered public accounting firm, KPMG LLP, on the Company's consolidated financial statements for the fiscal year ended January 31, 2009, will contain an explanatory paragraph indicating substantial doubt about the Company's ability to continue as a going concern. Because of the Company's time devoted to these discussions and the uncertainty and range of potential outcomes of these and other discussions, the Company is unable to complete the financial statements and other disclosures required to be included in its 2009 Form 10-K within the prescribed time period without unreasonable effort and expense. Rathgibson had a $123 million net loss for the quarter ended October 2008 after asset-impairment charges. Revenue in the quarter was $83 million. Long-term debt was $275 million. Based in Janesville, Wisconsin, RathGibson Inc. -- http://www.rathgibson.com/-- makes welded finished stainless steel and special alloy pipe and tubing used in the commercial, food services, pharmaceutical, and semiconductor industries. A series of deals has expanded the company's operations. Rath Manufacturing bought Gibson Tube in 1999 to produce an expanded line of commercial and sanitary tubing; the combined company took the RathGibson name in 2005. It acquired Greenville Tube in 2006, adding even further to its product offering and geographic scope. RathGibson operates manufacturing facilities in Arkansas, New Jersey, and Wisconsin and maintains a sales office in China. Private equity group DLJ Merchant Banking Partners owns RathGibson. RHM INDUSTRIAL: Involuntary Chapter 11 Case Summary --------------------------------------------------- Alleged Debtor: RHM Industrial/Specialty Foods, Inc. dba Colusa County Canning Co. dba Colusa Canning Co. 6229 Meyers Rd. Williams, CA 95987 Case Number: 09-28955 Debtor-affiliates filing subject to involuntary Chapter 11 petitions: Entity Case No. ------ -------- SK Foods, L.P. 09-28956 Involuntary Petition Date: May 5, 2009 Court: Eastern District of California (Sacramento) Judge: Robert S. Bardwil Petitioner's Counsel: Marc A. Levinson, Esq. Orrick, Herrington & Sutcliffe LLP 400 Capitol Mall #3000 Sacramento, CA 95814-4407 Tel: (916) 447-9200 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ BMO Capital Markets Financing unsecured $4,492 Inc. c/o Larry Mizera 115 S LaSalle St Chicago, IL 60603 Bank of America, NT and SA unsecured $4,492 c/o Philip Raby 231 S LaSalle St 11-19 Chicago, IL 60604 Wells Fargo Bank, National unsecured $4,492 Assoc. c/o Leonard Kam 333 Market St 3rd Fl San Francisco, CA 94163 U.S. Bank, National unsecured $4,492 Association 555 SW Oak St #505 Portland, OR 97204 Bank of the West unsecured $4,492 633 17th St #2000 Denver, CO 80202 Bank of Montreal unsecured $4,492 c/o Larry Mizera 115 S LaSalle St Chicago, IL 60603 Bank of America, N.A. unsecured $4,492 c/o Philip Raby 231 S LaSalle St 11-19 Chicago, IL 60604 SAINT VINCENTS: Pursuing Claims Against Caritas Health Care ----------------------------------------------------------- Saint Vincent Catholic Medical Centers said it is prosecuting its interests in the bankruptcy cases of Caritas Health Care, Inc. Effective January 1, 2007, Caritas Health Care, formerly known as Caritas Health Care Planning, Inc., acquired Mary Immaculate Hospital, Queens, St. John's Queens Hospital, and certain related assets from Saint Vincent Catholic Medical Centers and certain of its affiliates pursuant to an Asset Purchase Agreement dated as of May 9, 2006. The U.S. Bankruptcy Court for the Southern District of New York, which oversees SVCMC's bankruptcy cases entered orders on May 17 and June 28, 2006, approving the deal. In consideration for the Queens Assets, Caritas delivered to SVCMC two secured promissory notes, each in the principal amount of $5,000,000, secured by, among other things, the Queens Assets. On February 28, Mary Immaculate Hospital and St. John's Queens Hospital closed. According to Carolina Leid at WABC, Mary Immaculate and St. John's stopped accepting patients. Additionally, the Debtors informed the Court that, as of April 15, 2009, more than 3,300 proofs of claim have been filed in their cases, of which the Debtors have undertaken, and are undertaking, a comprehensive review and reconciliation. Andrew M. Troop, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, reported that the Debtors have filed 19 omnibus objections to approximately 1,500 proofs of claim, certain of which they have sought to disallow and expunge, reduce, and reclassify. The Debtors have filed objections to certain claims on an individual basis, and have resolved a number of claims by stipulations or settlements, which previously have been approved by the Court. Pursuant to the Plan, the Debtors are authorized to resolve disputed claims without further Court order. The Plan provides for the liquidation of medical malpractice claims as to their amounts in accordance with non-bankruptcy law, which, in certain instances, may require approval of a state court, Mr. Troop noted. Mr. Troop disclosed that as of April 15, 2009, four claims have been allowed, totaling $29,500. Mr. Troop disclosed that the Debtors have not made any distributions to unsecured creditors since the Seventh Status Report was filed. About Caritas Health Care Inc. Caritas Health Care Inc. is the owner of Mary Immaculate Hospital and St. John's Queens Hospital. Caritas, created by Wyckoff Heights Medical Center, purchased the two hospitals in a bankruptcy sale in early 2007 from St. Vincent Catholic Medical Centers of New York. St. John's has 227 generate acute-care beds while Mary Immaculate has 189. Caritas Health Care and eight of its affiliates filed for Chapter 11 on February 6, 2009 (Bankr. E.D. N.Y., Lead Case No. 09-40901). Adam T. Berkowitz, Esq., at Proskauer Rose LLP, has been tapped as counsel. JL Consulting LLC is the Debtors' restructuring advisors. Caritas in its bankruptcy petition estimated assets of $50 million to $100 million, and debts of $100 million to $500 million. About Saint Vincent Catholic Medical Centers Saint Vincent Catholic Medical Centers -- http://www.svcmc.org/-- is anchored by St. Vincent's Hospital Manhattan, an academic medical center located in Greenwich Village and the only emergency room on the Westside of Manhattan from Midtown to Tribeca, St. Vincent's Westchester, a behavioral health hospital in Westchester County, and continuing care services that include two skilled nursing facilities in Brooklyn, another on Staten Island, a hospice, and a home health agency serving the Metropolitan New York area. Its behavioral health services also provide supportive housing programs for people with mental illness throughout the Metropolitan area. Saint Vincent's is the designated provider for the New York and New Jersey region of the US Family Health Plan sponsored by the US Department of Defense. Saint Vincent's serves as the academic medical center of New York Medical College in New York City. The healthcare organization is sponsored by the Roman Catholic Bishop of Brooklyn and the president of the Sisters of Charity of New York. Saint Vincent Catholic Medical Centers of New York and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' Chapter 11 cases. On September 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represented the Official Committee of Unsecured Creditors. As of April 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. The Debtors filed their Chapter 11 plan of reorganization and a disclosure statement explaining that Plan on February 9, 2007. On June 1, 2007, the Debtors filed an Amended Plan & Disclosure Statement. (Saint Vincent Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). SALEM GLEN: Case Summary & 24 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Salem Glen Country Club, LLC 6420 Grovedale Drive, Suite 200 Alexandria, VA 22310 Bankruptcy Case No.: 09-13547 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court Eastern District of Virginia (Alexandria) Debtor's Counsel: Bradford F. Englander, Esq. Whiteford Taylor & Preston, L.L.P. Suite 300 3190 Fairview Park Drive Falls Church, VA 22042 Tel: (703) 280-9081 Fax: (703) 280-3370 Email: benglander@wtplaw.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 24 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/vaeb09-13547.pdf The petition was signed by William L. Collins, III. SEED FAITH: Case Summary & 15 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Seed Faith International Church 5200 Rivers Edge Place Indian Head, MD 20640 Bankruptcy Case No.: 09-18011 Chapter 11 Petition Date: May 5, 2009 Court: United States Bankruptcy Court District of Maryland (Greenbelt) Judge: Wendelin I. Lipp Debtor's Counsel: Walter L. Blair, Esq. Muyiwa Sobo, Esq. Law Firm of Blair & Lee, PC 4710 Melbourne Place College Park, MD 20740 Tel: (301) 474-7121 Total Assets: $2,206,719 Total Debts: $3,195,052 According to its schedules of assets and liabilities, $1,826,122 of the debt is owing to secured creditors, $1,011,765 for taxes owed to governmental units, and the remaining debt to creditors holding unsecured nonpriority claims. 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/mdb09-18011.pdf The petition was signed by Jeffrey Mouls. SHINGLE SPRINGS: Moody's Lowers Corporate Rating to Caa1 -------------------------------------------------------- Moody's Investors Service on May 6 lowered Shingle Springs Tribal Gaming Authority's corporate family, probability of default and senior notes ratings to Caa1 from B3. The outlook was also revised to negative from stable. The rating actions reflect the weaker than initially anticipated ramp-up for the recently opened casino due to severe economic challenges, our expectation of high leverage at the end of the first year of operations and the risk of financial covenant violation under the Furniture, Furnishings and Equipment ("FF&E") loan. In the first quarter of 2009, we believe that the ramp-up of The Red Hawk Casino was negatively impacted by challenging economic conditions in the Sacramento area, where unemployment exceeded 11%. Additionally, the housing correction and the area's poor credit conditions have severely reduced the local consumers' propensity to spend. Assuming no significant near-term improvement in the earnings trend, Moody's believes that total debt/EBITDA could exceed 6 times at the end of 2009. The rating outlook is negative. Although Moody's believe that the Authority should meet its debt service obligations in the short term, assuming no quarter-over-quarter deterioration in EBITDA, the risk of financial covenant violation under the FF&E loan weighs on Shingle Springs' liquidity profile. In Moody's view, Shingle Springs could find it challenging to satisfy the fixed charge coverage test later this year. The last rating action was on June 13, 2007, when a B3 corporate family rating was assigned to Shingle Springs. Ratings downgraded: - Corporate family rating to Caa1 from B3 - Probability of default rating to Caa1 from B3 - Senior notes rating to Caa1 (LGD 4; 50%) from B3 (LGD 4; 52%) Shingle Springs is an unincorporated governmental authority of the Shingle Springs Band of Miwok Indians. The Authority was formed to develop, own and operate the Red Hawk Casino, which opened on December 17, 2008 near Sacramento, California. SILICON GRAPHICS: Can Hire AlixPartners as Restructuring Advisors ----------------------------------------------------------------- The Hon. Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York authorized Silicon Graphics, Inc., and its debtor-affiliates to employ AlixPartners, LLP, as restructuring advisors. As reported in the Troubled Company Reporter on April 13, 2009, AlixPartners is expected to: a) assist the Debtors and their management in developing a short-term cash flow forecasting tool and related methodologies and to assist with planning for alternatives as requested by the Debtors; b) assist with preparation for a potential bankruptcy filing under Chapter 11 of the U.S. Bankruptcy Code; c) assist the Debtors with preparing and filing of the bankruptcy schedules and statements of financial affairs; d) assist with the overall claims and contracts resolution process and provide both the Debtors and their counsel access to the claims and contracts data; e) work at the direction of the Debtors and counsel to assist with planning and directing Chapter 11-related communications to employees, vendors, customers and parties in interest. f) be available for testimony as necessary; and g) assist with other matters as may be requested that fall within AlixPartners' expertise and that are mutually agreeable. Meade Monger, managing director of AlixPartners, told the Court that the discounted hourly rates of the professionals assigned to this case are: Managing Directors $595 Directors $485 Vice Presidents* $395 Associates $295 Analysts $195 Paraprofessionals $120 Jeannie Tang will be billed at $295 per hour. Kortney Bauer and a vice president responsible for cash management assistance will be billed at $335 per hour. All three are based in San Francisco and will incur limited travel expenses to the client site. Mr. Monger added that prior to commencement of the Chapter 11 cases, AlixPartners received $69,257 for professional services performed and expenses incurred. Those payments have been applied to outstanding invoices on account of fees and expenses incurred in providing services to the Debtors. In addition, AlixPartners received an advance retainer of $25,000 on March 9, 2009, for professional services. AlixPartners will retain the balance of the retainer to apply to fees and expenses incurred post-petition. Mr. Monger assured the Court that AlixPartners is a "disinterested person" as that term is defined in Section 101(14) of Bankruptcy Code. About Silicon Graphics Inc. Headquartered in Sunnyvale, California, Silicon Graphics Inc. -- http://www.sgi.com/-- delivers an array of server, visualization, and storage software. This is the second bankruptcy filing for Silicon Graphics. The Debtors first filed for Chapter 11 on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. The Court confirmed the Debtors' Plan of Reorganization on Sept. 19, 2006. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. The Company and 14 of its affiliates filed for protection for the second time on April 1, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-11701). Mark R. Somerstein, Esq., at Ropes & Gray LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Davis Polk & Wardell as their corporate counsel; 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. SILICON GRAPHICS: Can Hire Davis Polk as Special Corporate Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York authorized Silicon Graphics Inc. and its debtor-affiliates to employ Davis Polk & Wardwell as special corporate counsel. As reported in the Troubled Company Reporter on April 13, 2009, DPW is expected to: 1) evaluate and negotiate strategic alternatives including the sales of assets, business units and intellectual property assets, both core and non-core, of the Debtors as may be proposed during the course of the Chapter 11 Cases; 2) advise the Debtors, their board of directors and management as may be requested; and 3) advise the Debtors regarding transaction agreements, specific assets or liabilities and advice in connection with the sale of these assets and divestitures of these liabilities. To minimize costs, DPW will work with the Debtors, Ropes & Gray LLP, the proposed counsel and each of the Debtors' other retained professionals to delineate each professional duties and to prevent unnecessary duplication of services whenever possible. William M. Kelly, a partner of DPW, told the Court that the hourly rates of the firm's professionals are: Partners and Counsel $655 - $1,020 Associates $325 - $695 Paraprofessionals and Staff $110 - $315 Mr. Kelly added that during the twelve month period prior to the petition date, DPW received from the Debtors an aggregate of $759,421 for professional services performed and expenses incurred. Beginning March 2009, the Debtors established a retainer balance with DPW. As DPW issued invoices to the Debtors, DPW applied the amount due from the retainer, and the Debtors subsequently replenished the retainer. After giving effect to the application of its prepetition charges, the retainer is zero. Mr. Kelly assured the Court that DPW is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Kelly can be reached at: Davis Polk & Wardwell 450 Lexington Avenue New York, NY 10017 Tel: (212) 450-4000 Fax: (212) 450-3800 About Silicon Graphics Inc. Headquartered in Sunnyvale, California, Silicon Graphics Inc. -- http://www.sgi.com/-- delivers an array of server, visualization, and storage software. This is the second bankruptcy filing for Silicon Graphics. The Debtors first filed for Chapter 11 on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. The Court confirmed the Debtors' Plan of Reorganization on Sept. 19, 2006. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. The Company and 14 of its affiliates filed for protection for the second time on April 1, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-11701). Mark R. Somerstein, Esq., at Ropes & Gray LLP, represents the Debtors in their restructuring efforts. The Debtors proposed 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. SILICON GRAPHICS: Court Okays Ropes & Gray LLP as Bankr. Counsel ---------------------------------------------------------------- The Hon. Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York authorized Silicon Graphics Inc. and its debtor-affiliates to employ Ropes & Gray LLP as counsel. As reported in the Troubled Company Reporter on April 13, 2009, Ropes & Gray is expected to: a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of the businesses and properties; b) advise and consult on the conduct of these Chapter 11 cases, including all of the legal and administrative requirements of operating in Chapter 11; c) take all necessary action to protect and preserve the Debtors' estates, including prosecuting actions on the Debtors' behalf, defend any action commenced against the Debtors' interests in negotiations concerning litigations in which the Debtors are involved, including objections to claims filed against the Debtors' estates; d) prepare all pleadings, including motions, applications, answers, orders, reports, and any other papers necessary or otherwise beneficial to the administration of the Debtors' estates; e) advise the Debtors with respect to the implementation, closing, and consummation of any sales of assets or other corporate transactions in these Chapter 11 cases; f) advise the Debtors with respect to a debtor-in-possession credit facility or authorization to use cash collateral, compliance therewith, and all matters related thereto; g) attend meetings with third parties and participate in negotiations with respect to these matters; h) take all necessary action on behalf of the Debtors to negotiate, prepare on behalf of the Debtors, and obtain approval of a Chapter 11 Plan and all documents related thereto; and i) perform all other legal services and provide all other legal advice requested by the Debtors with respect to the restructuring. The hourly rates of Ropes & Gray's professionals are: Partners $635 - $945 Special Counsel and Counsel $255 - $860 Associates $240 - $645 Paraprofessionals $115 - $280 The hourly rates of Ropes & Gray professionals with primary responsibility for these cases are: Mark I. Bane $895 Mark R. Somerstein $780 Christopher W. Rile $720 Shuba Satyaprasad $600 Charles M. Roh $525 Patricia I. Chen $380 Mr. Somerstein, told the Court that on Nov. 20, 2008, Ropes & Gray received a $500,000 retainer. The firm's retainer was later increased to $1 million. As of the petition date, Ropes & Gray holds a retainer of $575,000 and the Debtors do not owe the firm any amounts for legal services rendered pre-bankruptcy. Mr. Somerstein assured the Court that Ropes & Gray is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Somerstein can be reached at: Ropes & Gray LLP 1211 Avenue of the Americas New York, NY 10036-8704 Tel: + 1-212-596-9000 Fax: + 1-212-596-909 About Silicon Graphics Inc. Headquartered in Sunnyvale, California, Silicon Graphics Inc. -- http://www.sgi.com/-- delivers an array of server, visualization, and storage software. This is the second bankruptcy filing for Silicon Graphics. The Debtors first filed for Chapter 11 on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. The Court confirmed the Debtors' Plan of Reorganization on Sept. 19, 2006. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. The Company and 14 of its affiliates filed for protection for the second time on April 1, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-11701). Mark R. Somerstein, Esq., at Ropes & Gray LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Davis Polk & Wardell as their corporate counsel; AlixPartners LLC as restructuring advisor; Houlihan Lokey Howard & Zukin Capital, Inc., as financial advisor; and Donlin, Recano & Company, Inc., as claims and noticing agent. When the Debtors filed for protection from their creditors, they listed $390,462,000 in total assets and $526,548,000 in total debts as of 2008. SILICON GRAPHICS: Court OKs Houlihan Lokey as Financial Advisor --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Silicon Graphics Inc. and its debtor-affiliates to employ Houlihan Lokey Howard & Zukin Capital, Inc., as their financial advisor. As reported in the Troubled Company Reporter on April 7, 2009, the firm is expected to provide advice to the Debtors in connection with: a) Financing Transaction: includes any proposals for a private placement of equity, equity-linked or debt securities to provide financing to the Debtors and any of their affiliates. b) Sale Transaction: includes any proposals for a merger, consolidation, joint venture, partnership, spin-off, split- off, business combination, tender or exchange offer, acquisition, sale, distribution, transfer or other disposition of assets or equity interests, or similar transaction, involving all, or a portion of, the business, assets or equity interests of the Company and any of its subsidiaries or affiliates, in one or more transactions. c) Recapitalization Transaction: includes any transaction or series of transactions that constitutes a recapitalization or restructuring of the Debtors' equity and debt securities and other indebtedness, obligations or liabilities, including accrued and accreted interest thereon, including without limitation, interest bearing trade debt, which recapitalization or restructuring is effected pursuant to an exchange transaction, tender offer, a plan of reorganization under the Bankruptcy Code, a solicitation of consents, waivers, acceptances or authorizations, any change of control transaction, any refinancing, sale, acquisition, merger, repurchase, exchange, conversion to equity, cancellation, forgiveness, retirement and modification or amendment to the terms, conditions, or covenants of any agreements or instruments governing any of the Debtors' equity and debt securities or any combination of the foregoing transactions. d) Liquidity Transaction: includes any proposals for the purchase or other acquisition by the Company and/or any of its subsidiaries or affiliates of the Debtors' own capital stock or the capital stock of its subsidiaries, in one or more transactions. Eric Winthrop, Esq., director of the firm, assured the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. A full-text copy of the Debtors' engagement letter is available for free at http://ResearchArchives.com/t/s?3b0a About Silicon Graphics Inc. Headquartered in Sunnyvale, California, Silicon Graphics Inc. -- http://www.sgi.com/-- delivers an array of server, visualization, and storage software. This is the second bankruptcy filing for Silicon Graphics. The Debtors first filed for Chapter 11 on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. The Court confirmed the Debtors' Plan of Reorganization on Sept. 19, 2006. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. The Company and 14 of its affiliates filed for protection for the second time on April 1, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-11701). Mark R. Somerstein, Esq., at Ropes & Gray LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Davis Polk & Wardell as their corporate counsel; AlixPartners LLC as restructuring advisor; 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. SIX FLAGS: Offers Debt for Equity Exchange; Ch. 11 An Alternative ----------------------------------------------------------------- Six Flags, Inc. on May 6, 2009, commenced an offer to exchange any and all of its 4.50% Convertible Notes due 2015 for shares of common stock of Six Flags: * Principal amount will be $280,000,000 * For each $1,000 claims (consisting of principal amount, and accrued and unpaid interest thereon through, and including, June 25, 2009.) exchanged, the holders will receive 18.5857 shares of common stock. * For each $1,000 of principal amount exchanged, the holders will receive 18.6786 shares of common stock Six Flags is offering to exchange all properly tendered and accepted SFI Convertible Notes for shares of Common Stock. Subject to the terms and conditions of the Convertible Note Exchange Offer, each holder of SFI Convertible Notes who validly tenders and does not revoke all SFI Convertible Notes held by such Holder will receive for each $1,000 claim (consisting of principal amount, and accrued and unpaid interest thereon through, and including, June 25, 2009) of SFI Convertible Notes tendered, 18.5857 shares of Common Stock, however, it is a condition to the Convertible Note Exchange Offer that at least 95% of the outstanding principal amount of the SFI Convertible Notes are validly tendered for exchange and not revoked by 5:00 p.m., New York City time, on May 28, 2009 and that Holders of such SFI Convertible Notes do not withdraw their SFI Convertible Notes prior to the Expiration Date. Holders who tender and do not revoke their SFI Convertible Notes in the Convertible Note Exchange Offer will not be entitled to any interest on such SFI Convertible Notes from June 25, 2009, regardless of when the Convertible Note Exchange Offer closes, and any subsequent interest that would otherwise have been earned on such SFI Convertible Notes will be deemed paid in full upon receipt of the Total Consideration in the Convertible Note Exchange Offer. Concurrently with the Convertible Note Exchange Offer, Six Flags is also soliciting consents from the Holders for certain amendments to the indenture pursuant to which the SFI Convertible Notes were issued, to eliminate or amend substantially all of the restrictive covenants and modify certain of the events of default and various other provisions contained in the Indenture. A tender by any Holder in the Convertible Note Exchange Offer will also constitute an approval by such Holder of the Proposed Amendments. The Proposed Amendments will not become operative unless and until the Convertible Note Exchange Offer is consummated. The Convertible Note Exchange Offer and Consent Solicitation will expire at 11:59 p.m., New York City time, on June 25, 2009, unless extended or earlier terminated. Tenders of SFI Convertible Notes pursuant to the Convertible Note Exchange Offer may be withdrawn and consents delivered pursuant to the Consent Solicitation may be revoked at any time until the Expiration Date, however, it is a condition to the Convertible Note Exchange Offer that at least 95% of the outstanding principal amount of the SFI Convertible Notes are validly tendered for exchange and not revoked by 5:00 p.m., New York City time, on May 28, 2009 and that Holders of such SFI Convertible Notes do not withdraw their SFI Convertible Notes prior to the Expiration Date. The Convertible Note Exchange Offer and the Consent Solicitation are part of a restructuring plan with respect to the SFI Convertible Notes and SFI's 8-7/8% Senior Notes due 2010, SFI's 9- 3/4% Senior Notes due 2013, SFI's 9-5/8% Senior Notes due 2014 and SFI's Preferred Income Equity Redeemable Shares (the "PIERS"). As part of the Restructuring Plan, SFI is also conducting (i) a separate exchange offer for $131.1 million aggregate principal amount, plus accrued and unpaid interest thereon through, and including, June 25, 2009, of the SFI 2010 Notes, $142.4 million aggregate principal amount, plus accrued and unpaid interest thereon through, and including, June 25, 2009, of the SFI 2013 Notes and $314.8 million aggregate principal amount, plus accrued and unpaid interest thereon through, and including, June 25, 2009, of the SFI 2014 Notes to exchange 18.5857 shares of Common Stock for each $1,000 claim, and (ii) a consent solicitation from the holders of 11.5 million currently outstanding PIERS to amend the terms of the PIERS to provide, among other things, that each initial $25.00 of liquidation preference, plus accrued and unpaid dividends thereon through, and including, June 25, 2009, shall automatically convert into 0.17 shares of Common Stock upon consummation of the Restructuring Plan (the "PIERS Amendment"). SFI currently intends to take advantage of the applicable 30-day grace period for making the semi-annual cash interest payment due on June 1, 2009 on the SFI 2014 Notes. The cash interest that holders of the SFI 2014 Notes would otherwise be entitled has been included in the calculation of the number of shares of Common Stock such holders are being offered in the SFI Note Exchange Offer and will receive in lieu of such cash payment. If the Restructuring Plan is successful and all of the Holders of SFI Convertible Notes and holders of SFI Notes participate therein, the PIERS would be converted to approximately 10% of the outstanding Common Stock, the SFI Convertible Notes would be exchanged for approximately 26.7% of the outstanding Common Stock and the SFI Notes would be exchanged for approximately 58.3% of the outstanding Common Stock, with the existing holders of Common Stock holding approximately 5.0% of the outstanding Common Stock, in each case prior to taking into account the issuance of any equity under an equity incentive plan to be adopted in connection with the Restructuring Plan. The consummation of the Convertible Note Exchange Offer is conditioned upon the satisfaction or waiver of the other conditions set forth in the Offering Memorandum and Consent Solicitation Statement, dated May 6, 2009, including, among other things: (i) at least 95% of the outstanding aggregate principal amount of the SFI Convertible Notes are validly tendered for exchange and not revoked by 5:00 p.m., New York City time, on May 28, 2009, that holders of such SFI Convertible Notes do not withdraw their SFI Convertible Notes on or prior to the Expiration Date, and holders representing such SFI Convertible Notes deliver their consents to the Proposed Amendments; (ii) at least 95% of the aggregate principal amount of each issue of the SFI Notes are validly tendered for exchange and not revoked by 5:00 p.m., New York City time, on May 28, 2009, such tenders of SFI Notes being irrevocable thereafter, and holders representing such SFI Notes deliver their consents to the proposed amendments to the indentures pursuant to which the SFI Notes were issued; (iii) holders of a majority of the outstanding liquidation preference of the PIERS consent to the PIERS Amendment; and (iv) holders of a majority of the outstanding shares of Common Stock consent to the adoption of a new equity incentive plan, the PIERS Amendment, a 1- for-100 reverse stock split and a decrease in Six Flags' authorized shares of common stock and certain other amendments to Six Flags' certificate of incorporation. In the event that the Restructuring Plan does not occur, Six Flags intends to explore all other restructuring alternatives available to it at that time, which may include an alternative out-of-court restructuring or the commencement of a chapter 11 plan of reorganization, with or without a pre-arranged plan of reorganization. There can be no assurance that any alternative restructuring arrangement or plan could be accomplished. Six Flags' obligations to accept any SFI Convertible Notes tendered and to pay the applicable consideration for them are set forth solely in the Offering Memorandum relating to the Convertible Note Exchange Offer and Consent Solicitation filed with the Securities and Exchange Commission (the "SEC") on Schedule TO and the accompanying Letter of Transmittal. Bloomberg's Bill Rochelle notes that Six Flags reported a $113 million net loss last year on revenue of $1 billion. Income from operations was $144 million. Interest expense was $179 million. About Six Flags Headquartered in New York City, Six Flags Inc. (NYSE: SIX) -- http://www.sixflags.com/-- is the world's largest regional theme park company with 21 parks across the United States, Mexico and Canada. Founded in 1961, Six Flags has provided world class entertainment for millions of families with cutting edge, record- shattering roller coasters and appointment programming with events like the popular Thursday and Sunday Night Concert Series. Now 47 years strong, Six Flags is recognized as the preeminent thrill innovator while reaching to all demographics -- families, teens, tweens and thrill seekers alike -- with themed attractions based on the Looney Tunes characters, the Justice League of America, skateboarding legend Tony Hawk, The Wiggles and Thomas the Tank Engine. * * * According to the Troubled Company Reporter on March 13, 2009, Six Flags said it does not have sufficient cash to redeem $287.5 million in Preferred Income Equity Redeemable Shares on August 15, 2009. As of December 31, 2008, Six Flags had $3.03 billion in total assets, including $210.3 million in cash and cash equivalents; $2.11 billion in total long-term debt, and $2.36 billion in total debt, excluding $123.1 million in debt at December 31, 2004, which had been called for prepayment; and $443.8 million in stockholders' deficit. Given the current negative conditions in the economy generally and the credit markets in particular, Six Flags said there is substantial uncertainty that it will be able to effect a refinancing of its debt on or prior to maturity or the PIERS prior to their mandatory redemption date on August 15, 2009. "As a result of these factors, there is substantial doubt about our ability to continue as a going concern unless a successful restructuring occurs," Six Flags said. Six Flags Inc., has reportedly hired Paul Hastings Janofsky & Walker as bankruptcy counsel and investment bank Houlihan Lokey Howard & Zukin to negotiate with creditors, including its banks, bondholders, and preferred shareholders. As reported by the Troubled Company Reporter on March 3, 2009, Fitch Ratings has downgraded Six Flags, Inc. and its subsidiaries -- Six Flags (Issuer Default Rating to 'CC' from 'CCC'; and Senior unsecured notes, including the 4.5% convertible notes, to 'C/RR6' from 'CC/RR6'); Six Flags Operations Inc. (IDR to 'CC' from 'CCC'; and Senior unsecured notes to 'C/RR6' from 'CCC-/RR5'); and Six Flags Theme Park Inc. (IDR to 'CC' from 'CCC'; and Secured bank credit facility to 'B-/RR2' from 'B/RR1'). In addition, Fitch affirms Six Flags' preferred stock at 'C/RR6'. As reported by the TCR on April 6, Standard & Poor's Ratings Services withdrew its ratings on New York, New York-based Six Flags Inc. and its subsidiaries, including the 'CCC' corporate credit rating, at the Company's request. AS reported by the TCR on April 23, 2009, Moody's Investors Service said that Six Flags, Inc.'s proposed exchange offer to convert its approximate $868 million of bonds and approximate $318.8 million of Preferred Income Equity Redeemable Shares into common stock, if completed, will constitute a distressed exchange, which is an event of default under Moody's definition of default. SKY INN HOTEL: Files Chapter 11 Petition in Austin -------------------------------------------------- Sky Inn Hotel & Suites Inc. filed for Chapter 11 reorganization May 5 in its hometown, Bloomberg's Bill Rochelle said. The petition says assets and debt both exceed $10 million. Sky Inn Hotel & Suites Inc. operates a hotel near the airport in Austin, Texas. SMURFIT-STONE: Seeks August 24 Extension of Lease Decision Period ----------------------------------------------------------------- Smurfit-Stone Container Corp. and its debtor affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend their May 26, 2009 deadline to assume or reject non-residential real property leases. The Debtors seek to extend the Assumption/Rejection Period by 90 days, through and including August 24, 2009, pursuant to Section 365(d)(4). Section 365(d)(4) provides that a debtor's unexpired lease of nonresidential real property will be deemed rejected if the trustee does not assume or reject the unexpired lease by the earlier of (i) the date that is 120 days after the order for the relief, or (ii) the date of entry of an order confirming a plan. Section 365(d)(4) provides, however, that the court may extend the period prior to the expiration of the 120-day period for 90 days on the debtor's motion for cause. James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, notes that on the Petition Date, the Debtors were parties to approximately 130 Real Property Leases that must be assumed or rejected prior to expiration of the Assumption/Rejection Period. An extension of the Assumption/Rejection Period is consistent with the rehabilitative goals of the Bankruptcy Code and will not unduly prejudice any of the counterparties to the Real Property Leases, Mr. Conlan contends. He notes that the Debtors are current on all of their postpetition obligations under the Real Property Leases. In addition, Mr. Conlan points out that the Debtors' cases involve 25 separate Debtors, 11 of which are cross-border Debtors, with manufacturing operations in the United States, Canada and Mexico. He further notes that the Real Property Leases relate to plant, office and warehouse properties located in approximately 28 different states, three different Canadian provinces, and Mexico. "Evaluating each of the Real Property Leases and determining whether they should ultimately be assumed or rejected is a substantial and time-consuming task," Mr. Conlan says. Given the volume of other tasks required of the Debtors' personnel and professionals during the initial Assumption/Rejection Period, the Debtors does not have sufficient time to carefully evaluate each of the Real Property Leases, Mr. Conlan relates. However, he says that the Debtors have begun the process, and have: (i) rejected approximately 35 Real Property Leases pursuant to four separate Court-approved requests; and (ii) sought to reject an additional five Real Property Leases pursuant to another motion that is currently pending. An extension is without prejudice to the Debtors' right to request a further extension with the consent of affected lessors. Debtors Seek Extension of Removal Periods The Debtors also ask the Court to extend the deadline within which they may file notices of removal of claims and causes of action pursuant to Section 1452 of the Bankruptcy Code and Rule 9027 of the Federal Rules of Bankruptcy Procedure by 120 days, through and including August 24, 2009. The Debtors also ask the Court that their request be granted without prejudice to their right to seek further extensions. Pursuant to Rule 9006(b) of the Federal Rules of Bankruptcy Procedures, the Court may extend the period within which the Debtors may remove actions pending against them before the Petition Date "for cause . . . at any time in its discretion . . . if the [request is] made before the expiration of the period originally prescribed or as extended by a previous [O]rder." Section 1452 of the Bankruptcy Code provides that "a party may remove a claim or cause of action in a civil action . . . to the district court for the district where such civil action is pending. . . " James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, notes that the current deadline for the Debtors to file notices of removal is April 26, 2009. Mr. Conlan contends that since the Petition Date, the Debtors have devoted substantially all of their resources to stabilizing their business operations and addressing critical case management issues. He adds that given the size of the Debtors' business operations and the large number of Debtors involved in the Chapter 11 Cases, the Debtors' management and advisors have devoted an extraordinary amount of time and effort towards ensuring a smooth transition of the Debtors' operations into Chapter 11 and meeting the initial requirements of the Chapter 11 process, along with the substantial efforts that are required to manage the Debtors' business operations. Given the tasks and their attendant demands on the Debtors' personnel and professional advisors, the Debtors have a legitimate need for additional time to review their outstanding litigation matters and evaluate whether those matters should properly be removed pursuant to Section 1452 and Rule 9027, Mr. Conlan explains. He argues that if the Debtors' request is denied, they could lose a significant element of their overall ability to manage pending litigation matters during their Chapter 11 cases before they even had the opportunity to evaluate the merits of the litigation, to the detriment of the Debtors, their estates, and their creditors. Furthermore, Mr. Conlan tells the Court that the counterparties to any claims or causes of action will not suffer any prejudice because prepetition claims and causes of action against the Debtors are stayed by operation of the automatic stay under Section 362(a) of the Bankruptcy Code, and no bar date for the filing of claims against the Debtors has yet been established. Accordingly, preserving the Debtors' ability to remove related claims and causes of action will not impose significant delay or unnecessary burdens on any counterparties to related claims and causes of action, Mr. Conlan further argues. About Smurfit-Stone Container Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SMURFIT-STONE: Seeks OK to Hire Studley as Real Estate Broker ------------------------------------------------------------- Smurfit-Stone Container Corp. and its affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authority to employ Studley, Inc., as their real estate broker, in connection with: * negotiations towards a potential restructuring of existing leases for the Debtors' corporate headquarters at 150 North Michigan Avenue in Chicago, Illinois, and Six City Place Drive in Creve Coeur, Missouri; and * on a parallel track, the analysis and evaluation of the options available to the Debtors for a potential relocation of the Facilities, in accordance with the terms and conditions of a working agreement. The Debtors are in the process of reviewing each of their unexpired leases of nonresidential real property to determine whether the leases should ultimately be assumed or rejected, Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, relates. He adds that in connection with the review, the Debtors will attempt to renegotiate the existing leases for the Facilities in order to realize potential cost savings. At the same time, the Debtors will explore other options in the Chicago and St. Louis real estate markets and will consider relocating the Facilities if negotiations are not successful. In connection with the process, Mr. Brady says that the Debtors need the services of a seasoned and experienced real estate broker and the Debtors believe that Studley is particularly well suited. Mr. Brady tells the Court that since March 19, 2009, Studley's professionals have worked closely with the Debtors' management team and the other professionals retained by the Debtors and have become well-acquainted with the Debtors' business operations and real estate needs. As the Debtors' real estate broker, Studley will represent the Debtors in connection with the negotiations over the Restructuring Transactions and will analyze and evaluate the opportunities available to the Debtors in connection with the potential New Space Transactions. Mr. Brady relates that the Debtors have agreed that Studley will have the exclusive right, for a period of 12 months from May 19, to represent the Debtors in connection with the Restructuring Transactions and the New Space Transactions. The Debtors will pay Studley according to these terms: (a) Restructuring Transaction In the event of a Restructuring Transaction with respect to either of the two Facilities, the Debtors have agreed to pay a fixed fee equal to 6% of the total savings generated by the Restructuring Transaction, provided that the fee will be capped at a maximum of $240,000 for the Chicago facility and $560,000 for the Creve Coeur facility. If the amount of space the Debtors currently lease for the Facilities is reduced within 12 months of the effective date of a Restructuring Transaction, Studley's fees in respect to space reductions cannot exceed the lesser of: * 40% of the Chicago Capped Fee or the Creve Coeur Capped Fee, as the case may be, or * 6% of the total savings achieved by the Debtors, up to the Chicago Capped Fee or the Creve Coeur Capped Fee, as the case may be. If the amount of space the Debtors currently lease for the Facilities is reduced later than 12 months from the effective date of a Restructuring Transaction, Studley's fees cannot exceed the lesser of: * 40% of the Chicago Capped Fee or the Creve Coeur Capped Fee, as the case may be; or * 6% of the total savings achieved by the Debtors, up to the Chicago Capped Fee or the Creve Coeur Capped Fee, as the case may be. (b) New Space Transactions If the Debtors elect to relocate either of the Facilities, the party with whom the Debtors enter into a New Space Transaction will pay Studley a market brokerage commission and the Debtors will not be obligated to pay any fee to Studley. The Debtors have agreed that they will not enter into any commitments for leaving new space until the Landlord has agreed to pay Studley a full commission at market rates and terms. However, if the Debtors decide to relocate their Chicago headquarters, Studley's commission will be capped at a dollar per rentable square foot per lease year, with any excess amount being paid directly to the Debtors. Because Studley's fees will be calculated strictly based on a percentage of savings generated with respect to the Restructuring Transactions, and given that any commission payable to Studley with respect to the New Space Transactions will be payable by the Landlord, Studley asks that it not be obligated to keep time records in connection with its engagement by the Debtors. John Goodman, an executive vice president of Studley, assures the Court that his company is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Smurfit-Stone Container Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SMURFIT-STONE: Settles U.S. Trustee Objection on Incentive Payment ------------------------------------------------------------------ Smurfit-Stone Container Corp. settled an objection by Roberta A. DeAngelis, the Acting United States Trustee for Region 3, on the Debtors' request to provide employee incentives. The U.S. Trustee argued that the Debtors have not provided sufficient evidence to justify the payment of more than $47,000,000 in short-term bonuses to employees, some of which are insiders, and over $15,000,000 in long-term bonuses to employees. The U.S. Trustee asked the Court to deny the Debtors' request. The U.S. Trustee argued that the Debtors must provide the Court and parties-in-interest with information regarding what employees to be paid are insiders, or whether the payments to be made to them are triggered by truly-incentive based criteria. Moreover, she said the Debtors need to justify that the metrics that trigger the bonus payments, adjusted operating corporate and division earnings before taxes, are consistent with historical practice and present true incentive-based criteria for the particular employees covered by the Bonus Plans. Subsequently, the Debtors and the U.S. Trustee came up with an agreed order signed by Judge Shannon, addressing the concerns and changes requested by the U.S. Trustee, including the Debtors' duty to notify the U.S. Trustee, the Court, and other parties-in- interest which employees that insiders are to be paid. Pursuant to the agreed order, the Debtors are authorized, but not directed, to implement the Employee Compensation Plan for 2009. A copy of the agreed order is available for free at: http://bankrupt.com/misc/SmurfAgORDPlan.pdf In a separate order, Judge Shannon approved the Debtors' request to file under seal Hewitt Associates LLC's compensation review of the Compensation Plans. About Smurfit-Stone Container Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SMURFIT-STONE: Sidley Austin Bills $1.6MM for Two Months' Work -------------------------------------------------------------- Five professionals retained in the bankruptcy cases of Smurfit- Stone Container Corp. and its affiliates filed applications with the U.S. Bankruptcy Court for the District of Delaware for allowance of fees and reimbursement of expenses: Professional Period Fees Expenses ------------ ------ ---------- -------- Sidley Austin LLP Jan. to $1,615,405 $39,653 Feb. 2009 Ernst & Young LLP Jan. to 601,221 359 Feb. 2009 Lazard Freres & Co. LLC Jan. to 298,387 1,835 Feb. 2009 Kramer Levin Naftalis Feb. 2009 375,004 6,182 & Frankel LLP Bennett Jones LLP Feb. 2009 22,474 114 Mar. 2009 64,012 581 Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, certifies that as of April 29, 2009, there were no objections to Sidley Austin's January to February 2009 monthly fee application. About Smurfit-Stone Container Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SMURFIT-STONE: To Receive $200,000 in Southeast Fuels Settlement ---------------------------------------------------------------- Smurfit-Stone Container Corp. and its debtor affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve a settlement agreement with Southeast Fuels, Inc., pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure. On September 19, 2008, Smurfit-Stone Container Corporation commenced an action against Southeast Fuels in the United States District Court for the Eastern District of Virginia, seeking $2,500,000 in damages, plus all costs and attorneys' fees, for Southeast Fuel's breach of a coal supply contract. Southeast Fuels denied SSCC's allegations and asserted a counterclaim against SSCC by alleging that SSCC failed to pay certain invoices for shipments of coal amounting to $121,968 and seeks damages against SSCC in an amount to be proven at trial, plus all costs incurred by Southeast Fuel in connection with the District Court Action. Southeast Fuels obtained relief from the automatic stay through a stipulated order allowing Southeast Fuels to assert the Counterclaim for purposes of a mediation of the dispute before a magistrate judge of the District Court on February 11, 2009. James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, relates that the Debtors agreed to enter into mediation to bring the Complaint and Counterclaim to a final judgment. However, he notes that the Stipulated Order did not permit Southeast Fuels to seek any affirmative recovery on the Counterclaim against any assets of the Debtors. Mr. Conlan says that although the Mediation did not result in a resolution of the Complaint and Counterclaim, the Debtors and Southeast Fuels continued to discuss a potential negotiated settlement which resulted in a resolution. The terms of the Parties' Agreement are: -- SSCC will pay nothing to Southeast Fuels and Southeast Fuels will pay $200,000 to SSCC to settle all of the claims asserted in the District Court Action; -- Southeast Fuels will place an initial cash payment of $150,000 in escrow; -- Southeast Fuels will make a second cash payment amounting to $50,000, on or before July 2, 2009 which will be secured by a promissory note from Southeast Fuels; -- SSCC and Southeast Fuels mutually release each other of all claims effective immediately upon the Court's approval of the Settlement Agreement; -- upon the Court's approval of the Settlement Agreement, SSCC and Southeast Fuels will cause the District Court Action, including the Complaint and the Counterclaim, to be dismissed with prejudice, with each Party paying its own costs and attorneys' fees. Mr. Conlan contends that the terms of the Settlement Agreement are fair and reasonable and is in the best interests of the Debtors' estates as it avoids the costs and uncertainty of litigation. About Smurfit-Stone Container Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SMURFIT-STONE: U.S. Bank Seeks Allowance of $17.5MM Admin. Claim ---------------------------------------------------------------- Various creditors ask the U.S. Bankruptcy Court for the District of Delaware for allowance and immediate payment of administrative expenses pursuant to Section 503(b)(9) of the Bankruptcy Code, relating to the prior delivery of goods to Smurfit-Stone Container Corp., 20 days before the Petition Date and in the ordinary course of business. The Creditors are: Amount Creditors Asserted --------- -------- U.S. Bank Trust N.A. $17,599,249 Philipp Lithographing Company 204,763 Xerium Technologies, Inc. 101,519 Corrugated Gear Services, Inc. 46,544 NPP Packaging Graphics Specialist, Inc. 50,038 Kentucky Cumberland Coal Company had sought payment of its $972,877 administrative expense claim. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, relates that the Debtors and Kentucky Cumberland entered into discussions and reached an agreement. Pursuant to a stipulation approved by the Court, the Parties agreed that Kentucky Cumberland holds an allowed administrative expense claim amounting for $972,877. Kentuck Cumberland waives its right to file further motions or notices seeking allowance and payment of administrative expense claims under Section 503(b)(9) of the Bankruptcy Code. About Smurfit-Stone Container Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SOURCE INTERLINK: Chapter 11 Case Could Take Only 1 Month --------------------------------------------------------- Source Interlink Cos. stands to be in and out of Chapter 11 in just over one month, Bloomberg's Bill Rochelle says. He notes that the Company filed for Chapter 11 on April 27 and has already obtained a May 28 hearing for the confirmation of its reorganization plan. On April 28, 2009, the Company reached a restructuring agreement to take the Company private and eliminate nearly $1 billion of its existing debt. To facilitate the restructuring, the Company filed a lender-approved pre-packaged Plan of Reorganization under Chapter 11 of the U.S. Bankruptcy Code. Recognizing the unique nature of the case and the parties' desire for a prompt conclusion of the proceedings, the Court set a hearing for May 28, 2009 to confirm the Company's Plan of Reorganization. The Plan proposes to pay holders of term loan claims 66.4% of their allowed claims. General unsecured claimants will get 100% of the amount they're owed. Holders of Senior Notes and equity securities won't get a dime. A full-text copy of Source Interlink's plan summary is available at no charge at: http://bankrupt.com/misc/SourceInterlinkPlanSummary.PDF About Source Interlink Bonita Springs, Florida-based Source Interlink Companies, Inc., -- http://www.sourceinterlink.com/-- is a U.S. distributor of home entertainment products and services and one of the largest publishers of magazines and online content for enthusiast audiences. Source Interlink Media, LLC publishes more than 75 magazines and 90 related Web sites. Source Interlink Distribution services tens of thousands of retail store locations throughout North America distributing DVDs, music CDs, magazines, video games, books, and related items. In addition to distributing more than 6,000 distinct magazine titles annually, the Company maintains the largest in-stock catalog of CDs and DVDs in the US -- a combined total of more than 260,000 titles. Supply chain relationships include consumer goods advertisers, subscribers, movie studios, record labels, magazine, book, and newspaper publishers, confectionary companies and manufacturers of general merchandise. Source Interlink Companies, Inc. and 17 affiliates filed for bankruptcy on April 27, 2009 (Bankr. D. Del. Case No. 09-11424). Judge Kevin Gross presides over the case. David Eaton, Esq., and David Agay, Esq., at Kirkland & Ellis LLP; and Laura Davis Jones, Esq., Mark M. Billion, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl Young Jones in Wilmington, Delaware, serve as bankruptcy counsel. Meolis & Company LLC serves as the Debtors' financial advisors, while Kurtzman Carson Consultants LLC is the Debtors' claims and notice agent. As of April 24, 2009, the Debtors had $2,436,005,000 in total assets and $1,995,504,000 in total debts. SPARTAN PLUMBING: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Spartan Plumbing 1002 S Campbell Ave Tucson, AZ 85719 Bankruptcy Case No.: 09-09626 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of Arizona (Tucson) Judge: James M. Marlar Debtor's Counsel: Eric Slocum Sparks, Esq. 110 S Church Ave #2270 Tucson, AZ 85701 Tel: (520) 623-8330 Fax: (520) 623-9157 Email: eric@ericslocumsparkspc.com Total Assets: $353,000 Total Debts: $2,847,714 According to its schedules of assets and liabilities, $1,104,108 of the debt is owing to secured creditors, $936 for taxes owed to governmental units, and the remaining debt to creditors holding unsecured nonpriority claims. 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/azb09-09626.pdf The petition was signed by Michael J. Gesty, member of the Company. STEBAR LLC: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Stebar, LLC dba DeLap's Hardware & Rental 3288 Main Street East Troy, WI 53120 Bankruptcy Case No.: 09-26464 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court Eastern District of Wisconsin (Milwaukee) Debtor's Counsel: Brent D. Nistler, Esq. Nistler Law Office S.C. 3235 N. 124th Street Suite 4 Brookfield, WI 53005 Tel: (262) 373-1420 Fax: (262) 373-1421 Email: bnistler@nistlerlaw.com Total Assets: $931,471 Total Debts: $1,238,850 According to its schedules of assets and liabilities, $380,674 of the debt is owing to secured creditors, $44,546 for taxes owed to governmental units, and the remaining debt to creditors holding unsecured nonpriority claims. 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/wieb09-26464.pdf The petition was signed by Steve DeLap and Barbara Ann DeLap. STOCK BUILDING: Files Ch. 11 to Sell Majority Stake to Gores ------------------------------------------------------------ Stock Building Supply Holdings LLC filed for Chapter 11 protection May 6 in Delaware to complete a transaction in which private equity investor Gores Group LLC receives 51% ownership as part of a reorganization plan to pay all creditors in full except current owner Wolseley Plc, Bloomberg's Bill Rochelle said. A statement by the parties said that the transaction is the result of a strategic review process undertaken by Wolseley and Stock to identify a partner to position Stock for future growth. During this process, Wolseley and Stock met with and received bids from many interested parties. After conducting a thorough evaluation, it was determined that a partnership with Gores would be most beneficial for Stock's employees, vendors and customers. Given its confidence and support for the business, Wolseley will retain a 49% interest in the business. "We are very excited about [May 6's] announcement and look forward to working with Gores to develop the business," said Stock President Joe Appelmann. "Gores' strong operational expertise and focus will help position the company during this unprecedented downturn and to outperform the market." "Stock has been providing the U.S. market with the highest quality building materials for more than 80 years. As one of the United States' leading suppliers of building materials to professional home builders and contractors, Stock presents a compelling investment opportunity, particularly at this point in the economy," said Ian R. Weingarten, Managing Director of The Gores Group. "The company has taken aggressive actions to mitigate the effects of the housing downturn by continuing to diversify its business and streamline its operations. These steps taken by the Stock team in tandem with Gores' focus and operational expertise, will position the business to achieve its full potential and continue to deliver high quality products and service to its customers." "Executing a joint-venture agreement with Gores and completing this recapitalization will allow Stock to emerge financially stronger from this economic down cycle," said Chip Hornsby, Group Chief Executive Officer of Wolseley. "We look forward to working with Gores to move forward with the business." Stock's operations will continue as usual during the filing and beyond. Throughout the process employees will continue to receive their salaries and benefits and Stock will pay in full all vendor obligations. 45-60 Days for Pre-Pack Case Definitive documentation for the transaction was executed and the closing of the 51% purchase was consummated May 6, according to the statement. As part of the transaction, Gores has committed to invest $75 million in the company and provide a $125 million revolving credit bridge facility. Gores investment is conditioned upon completion of a voluntary, pre-packaged Chapter 11 process that is expected to last 45 to 60 days. The company filed a Chapter 11 plan and explanatory disclosure statement along with the petition. The parties say the bankruptcy process provides Stock with the flexibility to shed the company's operations associated with its closed locations and underperforming markets as well as inject fresh, needed capital. The new capital is intended to ensure a stable ongoing business model as well as permit the company to pay all of its creditors their claims in full as allowed by the bankruptcy laws. Integral to the pre-packaged plan is the stipulation that all trade creditors, suppliers, customers and employees will receive the full allowed amounts owed to them. As a result, creditors are not required to vote on the plan. In conjunction with the pre-packaged recapitalization, Stock has arranged for debtor-in-possession ("DIP") financing from Wolseley with an initial commitment of up to $100 million. 210 Leases to Be Terminated Bill Rochelle relates the Plan calls for terminating about 210 leases where operations are being shut down. Court papers say other locations also may close. Court papers, according to the report, say Gores would not have acquired control without using Chapter 11 to "significantly reduce lease expenses for closed locations" while eliminating $700 million in loans owed to Wolseley. Mr. Rochelle says Gores and Stock may be intending to use Chapter 11 so landlords with rejected leases will have damage claims limited to three years' rent under bankruptcy law. About The Gores Group, LLC Founded in 1987, The Gores Group, LLC -- http://www.gores.com/-- is a private equity firm focused on acquiring controlling interests in mature and growing businesses which can benefit from the firm's operating experience and flexible capital base. The firm combines the operational expertise and detailed due diligence capabilities of a strategic buyer with the seasoned M&A team of a traditional financial buyer. The Gores Group, LLC has become a leading investor having demonstrated over time a reliable track record of creating substantial value in its portfolio companies alongside management. The firm's current private equity fund has committed equity capital of $1.7 billion. Headquartered in Los Angeles, California, The Gores Group, LLC maintains offices in Boulder, Colorado and London. About Wolseley PLC Wolseley plc is the world's largest specialist trade distributor of plumbing and heating products to professional contractors and a leading supplier of building materials to the professional markets. Group revenue for the year ended 31 July 2008 was approximately �16.5 billion and trading profit was �683 million. At 31 January 2009, Wolseley had around 63,000 employees operating in 27 countries namely: UK, USA, France, Canada, Ireland, Italy, The Netherlands, Switzerland, Austria, Czech Republic, Hungary, Belgium, Luxembourg, Denmark, Sweden, Finland, Norway, Slovak Republic, Poland, Romania, San Marino, Panama, Puerto Rico, Trinidad & Tobago, Mexico, Barbados and Greenland. Wolseley plc is listed on the London Stock Exchange (LSE: WOS) and is in the FTSE 250 index of listed companies. About Stock Building Supply Raleigh, North Carolina-based Stock Building Supply is a leading supplier of building materials to professional home builders and contractors in the United States. Stock -- http://www.stockbuildingsupply.com/-- currently operates approximately 200 locations in 27 states, with reported sales of $3.5 billion for the fiscal year 2008. Stock Building Supply Holdings, LLC and several affiliates filed for Chapter 11 on May 6 (Bankr D. Del. Case No. 09-11554). Together with the petition, the Debtors filed a pre-packaged plan Under which creditors will be paid in full and Wolseley Plc will transfer a 51% stake in Stock Building to Gores Group LLC, and retain the remaining 49% stake. Judge Mary F. Walrath handles the Chapter 11 case. The Debtors have tapped Edward J. Kosmowski, Esq., and Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor, for representation in their Chapter 11 cases. They have tapped Shearman & Sterling LLP as general counsel and FTI Consulting as restructuring advisor. Stock Building, in its petition, says it assets are between $50 million and $100 million and debts $10 million to $50 million. SYNTAX-BRILLIAN: Court Approves Sale of Olevia Brand to Emerson --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved on May 4, 2009, the sale of Syntax-Brillian Corporation, et al.'s brand and related assets, free and clear of all liens and interests, to Emerson Radio Corp. The Debtors relate that Emerson made the winning bid in the amount $1,270,000, all in cash, upon the resumption of the auction on April 29, which commenced the day before. Of the cash received at cloing out of the purchase price to be paid by Emerson, $98,000 shall be paid to Amergnece immediately upon closing as a Break-Up Fee, expense reimbrusement and in consideration for the withdrawal of its objections to the sale, waiver of appeal rights, and dismissal with prejudice of the Amergence adversary proceeding. As reported in the Troubled Company Reporter on May 1, 2009, Amergence Technology Inc., filed an adversary complaint against Syntax-Brillian Corp., after the Debtors breached an agreement to sell the Olevia brand of televisions and associated intellectual property to Amergence. Amergence asked the Bankruptcy Court to enter a temporary restraining order barring the Debtors from selling the assets to another party. Amergence is an IT and electronics services provider based in City of Industry, California. On March 27, the Debtors and Amergence entered into an asset purchase agreement wherein Amergence was the stalking horse bidder for the Olevia brand. The Court on April 16 approved bidding and auction procedures for the sale, and set April 24 as the deadline for competing bids. Amergence related that it was not informed of any competing offer for the asset. Three days after the bid deadline, however, the Debtors informed Amergence that they accepted an overbid from Emerson Radio Corporation. Amergence offered $280,000 for the asset. About Syntax-Brillian Based in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq: BRLC) -- http://www.syntaxbrillian.com/-- and its affiliated debtors, Syntax-Brillian SPE, Inc., and Syntax Groups Corp. design, develop, and distribute high-definition televisions (HDTVs) utilizing liquid crystal display (LCD) and, formerly, liquid crystal (LCoS) technologies. The Debtors sell their HDTVs under the Olevia brand name. SBC is also the sole shareholder of Vivitar Corp., a supplier of film cameras and a line of digital imaging products, including digital cameras. The Debtors filed separate petitions for Chapter 11 relief July 8, 2008 (Bankr. D. Del. Lead Case No. 08-11407). Nancy A. Mitchell, Esq., Allen G. Kadish, Esq., and John W. Weiss, Esq., at Greenberg Traurig LLP in New York, represent the Debtors as counsel. Victoria Counihan, Esq., at Greenburg Traurig LLP in Wilmington, Delaware, represents the Debtors as Delaware counsel. Five members compose the Official Committee of Unsecured Creditors. Pepper Hamilton, LLP, represents the Committee as counsel. Epiq Bankruptcy Solutions, LLC, is the Debtors' balloting, notice, and claims agent. When the Debtors filed for protection from their creditors, they listed total assets of $175,714,000 and total debts of $259,389,000. SYNTAX-BRILLIAN: Parties Still Negotiating Confirmation Order ------------------------------------------------------------- Syntax-Brillian Corporation and its affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further extend their exclusive period to solicit acceptances of their plan through and including June 15, 2009. As reported in the Troubled Company Reporter, on January 16, 2009, the Debtors filed their joint plan and disclosure statement which provides for the winding-up of the Debtors' estates. On March 12, 2009, the Court approved the Debtors' disclosure as containing adequate information. At the confirmation hearing, the Court said that he will approve the Plan, Bloomberg's Bill Rochelle previously reported. In their motion for the extension, the Debtors said that on April 21, and 22, 2009, the Bankruptcy Court approved the Plan, however an order confirming the Plan has not yet been entered. The Debtors relate that the parties are still negotiating toward a consensual form of the proposed confirmation order. Certain objections to claims have been filed which will need to be resolved prior to declaration of the Plan's Effective Date. The Debtors add that extension requested herein will ensure that the the process, which is nearing completion, may take place without interruption and without the Debtors ceding any exclusivity rights. About Syntax-Brillian Based in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq: BRLC) -- http://www.syntaxbrillian.com/-- and its affiliated debtors, Syntax-Brillian SPE, Inc., and Syntax Groups Corp. design, develop, and distribute high-definition televisions (HDTVs) utilizing liquid crystal display (LCD) and, formerly, liquid crystal (LCoS) technologies. The Debtors sell their HDTVs under the Olevia brand name. SBC is also the sole shareholder of Vivitar Corp., a supplier of film cameras and a line of digital imaging products, including digital cameras. The Debtors filed separate petitions for Chapter 11 relief July 8, 2008 (Bankr. D. Del. Lead Case No. 08-11407). Nancy A. Mitchell, Esq., Allen G. Kadish, Esq., and John W. Weiss, Esq., at Greenberg Traurig LLP in New York, represent the Debtors as counsel. Victoria Counihan, Esq., at Greenburg Traurig LLP in Wilmington, Delaware, represents the Debtors as Delaware counsel. Five members compose the Official Committee of Unsecured Creditors. Pepper Hamilton, LLP, represents the Committee as counsel. Epiq Bankruptcy Solutions, LLC, is the Debtors' balloting, notice, and claims agent. When the Debtors filed for protection from their creditors, they listed total assets of $175,714,000 and total debts of $259,389,000. T. DARDAR PROPERTIES: Case Summary & 19 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: T. Dardar Properties, LLC 321 Sandy Brook Ct. Madisonville, LA 70447 Bankruptcy Case No.: 09-11326 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court Eastern District of Louisiana (New Orleans) Judge: Elizabeth W. Magner Debtor's Counsel: Adam Hutton, Esq. 324 North Theard Street Covington, LA 70433 Tel: (985) 898-0611 Fax: (985) 898-0118 Email: adam_hutton@yahoo.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 19 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/laeb09-11326.pdf The petition was signed by Timothy H. Dardar. THEMETECH CORPORATION: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Themetech Corporation 3839 North 35th Avenue Phoenix, AZ 85017 Bankruptcy Case No.: 09-09583 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Judge: George B. Nielsen Jr. Debtor's Counsel: Donald W. Powell, Esq. Carmichael & Powell, P.C. 7301 N. 16th St., #103 Phoenix, AZ 85020 Tel: (602) 861-0777 Fax: (602) 870-0296 Email: d.powell@cplawfirm.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of 20 largest unsecured creditors when it filed its petition. The petition was signed by Michael D. Kennedy, president of the Company. THORNBURG INDUSTRIES: Taps Houlihan Lokey as Investment Banker -------------------------------------------------------------- Thornburg Mortgage Inc. and its debtor-affiliates ask the U.S. States Bankruptcy Court for the District of Maryland for permission to employ Houlihan Lokey Howard & Zukin Capital Inc. as their investment banker for the sale of ADFITECH Inc. The firm will assist the Debtors in the critical tasks associated with analyzing and implementing the possible courses of action available with respect to the sale of the business of ADFITECH, an independently-operated wholly owned subsidiary of Thornburg Mortgage Home Loans Inc. that provides mortgage-related auditing and quality control consulting services to financial institutions in Edmund, Oklahoma. The firm will receive $100,000 per month for this engagement. Bradley Jordan, director of the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Thornburg Mortgage Based in Santa Fe, New Mexico, Thornburg Mortgage Inc. (NYSE: TMA) -- http://www.thornburgmortgage.com/-- is a single-family residential mortgage lender focused principally on prime and super-prime borrowers seeking jumbo and super-jumbo adjustablerate mortgages. It originates, acquires, and retains investments in adjustable and variable rate mortgage assets. Its ARM assets comprise of purchased ARM assets and ARM loans, including traditional ARM assets and hybrid ARM assets. Thornburg Mortgage, Inc. and its four affiliates filed for Chapter 11 on May 1 (Bankr. D. Md. Lead Case No. 09-17787). Judge Duncan W. Keir is handling the case. David E. Rice, Esq., at Venable LLP, in Baltimore, Maryland, has been tapped as counsel. Orrick, Herrington & Sutcliffe LLP is employed as special counsel. Jim Murray, and David Hilty, at Houlihan Lokey Howard & Zukin Capital, Inc., have been tapped as investment banker and financial advisor. Protiviti Inc. has also been engaged for financial advisory services. KPMG LLP is the tax consultant. Epiq Systems, Inc. is claims and noticing agent. In its bankruptcy petition, Thornburg listed total assets of $24,400,000,000 and total debts of $24,700,000,000, as of Jan. 31, 2009. TITLEMAX HOLDINGS: Court OKs Temporary Access of Cash Collateral ---------------------------------------------------------------- The U.S. Southern District of Georgia authorized TitleMax Holdings, LLC, and its debtor-affiliates to use until May 20, 2009, the cash securing repayment of the loan from Merrill Lynch Mortgage Capital Inc. The Court also authorized the Debtors to grant adequate protection to the secured lenders. A final hearing on the Debtors' motion is set for May 19, 2009, at 10:00 a.m. As reported in the Troubled Company Reporter on April 27, 2009, the Debtors cite these reasons for seeking to use their lenders' cash collateral: -- The value of the Debtors' loan receivables, which are subject to the secured lenders' lien and security interests, exceeds the liabilities owed to the secured lenders; -- The Debtors' proposed adequate protection to the secured lenders puts them in a better position than they would be were the Debtors to comply strictly with their obligations under the prepetition credit agreement; -- The Debtors' projections show that the secured lenders' equity cushion will actually increase postpetition and that the Debtors will be able to make significant postpetition principal payments; -- The Debtors anticipate operating at a significant postpetition profit; -- The Debtors have significant unsecured creditors including subordinate debt holders and trade creditors whose interests would be wiped out if the Debtors are not permitted to use the cash collateral; and -- The Debtors employ approximately 1,800 people in eight States who would lose their jobs if the Debtors are forced to cease operation. The Debtors have been unable to secure reasonable proposals to refinance the prepetition credit agreement. Prepetition Loans On April 20, 2007, the Debtors entered into a loan and security agreement with Merrill Lynch, as both agent and lender, and Fortress Credit Funding I LP, Fortress Credit Funding III LP, and Fortress Credit Opportunities I, LP. The maximum amount of the loan facility under the prepetition credit agreement is $255 million, of which $225 million comprises the Tranche A maximum amount, and $30 million the Tranche B maximum amount. Tranche A advances bear interest at one-month LIBOR plus a 2.50% margin. Tranche B advances bear interest at one-month LIBOR plus a 10% margin. Pursuant to the prepetition credit agreement, the agent was granted, for the benefit of the secured lenders, a continuing lien on and security interest in substantially all of the Debtors' assets. The Tranche A and Tranche B advances are secured by the same collateral. As of TitleMax Holdings' petition date, the total outstanding principal amount under the loan facility was approximately $165 million, all of which consists of Tranche A advances and a small amount of Tranche B advances. The prepetition credit agreement has a scheduled maturity date of April 20, 2009. In a separate request, the Debtors have sought permission that all available funds held in their blocked accounts and all funds that are received into the blocked accounts on or after the petition date be automatically transferred on a daily basis into the Debtors' master finance account at SunTrust, rather than their collection account. The Debtors will grant (a) current cash payment of non- default rate interest, fees and expenses; (b) superpriority administrative claims; and (c) a continuing lien on postpetition generated cash collateral. The Debtors related that the secured lenders are adequately protected because of the existence of a substantial equity cushion. The secured lenders are owed approximately $165 million. As of April 20, 2009, the principal face value of the prepetition receivables was approximately $208 million. Thus, the prepetition receivables have a face value far in excess of the amount owed to the secured lenders, approximately 126%. Additionally, the Debtors proposed to pay all postpetition interest so that the total amount owed to the secured lenders will not increase during the pendency of the bankruptcy and the equity cushion will not be eroded. About Titlemax Holdings Savannah, Georgia-based Titlemax Holdings LLC dba TitleMax, TitleBucks, US TitlePawn, American Title,and CheckMax is a closely held title-lending company with about 550 locations in seven states -- Georgia, South Carolina, Tennessee, Mississippi, Missouri, Virginia and Illinois. It holds customers' vehicle titles in exchange for cash. The Company was founded in 1998 and has 1,800 employees. The Company and its affiliates filed for Chapter 11 protection on April 20, 2009 (Bankr. S. D. Ga. Lead Case No. 09-40805). DLA Piper LLP represents the Debtors in its restructuring efforts. The Company has assets and debts both ranging from $100 million to $500 million. TITLEMAX HOLDINGS: U.S. Trustee Picks 7-Member Creditors Committee ------------------------------------------------------------------ The U.S. Trustee for Region 21 appointed seven creditors to serve on the official committee of unsecured creditors in Titlemax Holdings LLC and its debtor-affiliates' Chapter 11 cases: The Committee members are: 1. Gregory M. Parker 222 Drayton Street Savannah, GA 31401 Tel: (912) 844-7306 (912) 231-1001 Fax: (912) 231-0030 2. National Retail Properties Attn: Chris Tessitore Executive Vice President and General Counsel 450 S. Orange Avenue, Suite 900 Orlando, FL 32801 Tel: (407) 650-1115 3. William Dascombe 10 Judson Court Savannah, GA 31405 Tel: (912) 898-1500 Fax: (912) 256-0229 4. TechDiscovery, LLC Attn: J. Paul Heerin, CFO 5 concourse Parkway, Suite 2250 Atlanta, GA 30328 Tel: (678) 990-3650 Fax: (678) 990-3654 5. Nuvox Attn: Pamela J. Hanlon, Senior Account Manager 6001 Chatham Center Dr., Suite 1706 Savannah, GA 31405 Tel: (912) 629-7603 Fax: (912) 629-7610 6. Richard J. Greco, MD 5361 Reynolds Street Savannah, GA 31405 Tel: (912) 655-1845 7. Deemer Dana & Froehle Attn: John Vandaveer, CPA 118 Park of Commerce Drive Savannah, GA 31405 Tel: (912) 232-3482 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 Titlemax Holdings Savannah, Georgia-based Titlemax Holdings LLC dba TitleMax, TitleBucks, US TitlePawn, American Title,and CheckMax is a closely held title-lending company with about 550 locations in seven states -- Georgia, South Carolina, Tennessee, Mississippi, Missouri, Virginia and Illinois. It holds customers' vehicle titles in exchange for cash. The Company was founded in 1998 and has 1,800 employees. The Company and its affiliates filed for Chapter 11 protection on April 20, 2009 (Bankr. S. D. Ga. Lead Case No. 09-40805). DLA Piper LLP represents the Debtors in its restructuring efforts. The Company has assets and debts both ranging from $100 million to $500 million. TODAY'S WAY: Case Summary & 3 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Today's Way Manufacturing LLC 426 Freeport Road Creighton, PA 15030 Bankruptcy Case No.: 09-11586 Debtor-affiliates filing separate Chapter 11 petition: Entity Case No. ------ -------- Unifide Industries LLC 09-11587 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of Delaware (Delaware) Judge: Brendan Linehan Shannon Debtor's Counsel: Christopher Dean Loizides, Esq. Loizides & Associates 1225 King Street Suite 800 Wilmington, DE 19801 Tel: (302) 654-0248 Fax: (302) 654-0728 Email: ecf.admin@loizides.com Pace Reich, Esq. 726 Meetinghouse Road Elkins Park, PA 19027 Tel: (215) 887-0130 Fax: (215) 887-5617 Email: pacereichpc@msn.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtors' petition, including their list of 3 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/deb09-11586.pdf The petition was signed by Michael F. Dignazio, corporate secretary of the Company. VP PHASE IV: Case Summary & 12 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: VP Phase IV Ltd 7065 Westpointe Blvd. Suite 318 Orlando, FL 32835 Bankruptcy Case No.: 09-06253 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court Middle District of Florida (Orlando) Debtor's Counsel: Norman L. Hull, Esq. Norman Linder Hull PA 746 North Magnolia Avenue Orlando, FL 32803 Tel: (407) 422-1235 Fax: (407) 423-2842 Email: flabankruptcy@earthlink.net 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 ------ --------------- ------------ Quadriga Design LLC $97,128 7065 Westpointe Blvd. Orlando, FL 32835 Orlando Utilities Utilities $50,171 PO Box 42901 Orlando, FL 32835 BSB Design of Florida Trade Debt $11,591 1601 West Lake Pkwy Des Moines, IA 50266 Bogin Munns & Munns Legal Services $10,749 Florida Engineering Engineering $9,669 Services DGB Construction $8,540 Scott Partnership Architectural $2,351 Architecture services Radakovich & Shaw $1,710 Horicultural Sciences LLP Trade Debt $1,576 Pro-Tek Services of Trade Debt $372 Central Florida National Graphic Imaging Trade Debt $271 GW Systems Inc. $260 WENDY B. BALDENSPERGER: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Joint Debtors: Wendy B. Baldensperger Scott W. Baldensperger 23060 East Smoky Hill Road Aurora, CO 80016 Bankruptcy Case No.: 09-18471 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of Colorado (Denver) Judge: A. Bruce Campbell Debtors' Counsel: Aaron A. Garber, Esq. 303 E. 17th Ave. Ste. 500 Denver, CO 80203 Tel: (303) 832-2400 Email: aag@kutnerlaw.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 the Joint Debtors. WEYERHAEUSER CO: Loses Investment Grade on Industry Conditions -------------------------------------------------------------- Moody's Investors Service downgraded Weyerhaeuser Company's (Weyerhaeuser) senior unsecured debt ratings to Ba1 from Baa2 and its commercial paper rating to Not Prime from Prime-2, concluding a review initiated on February 9, 2009. At the same time, Moody's assigned a Ba1 corporate family rating and an SGL-1 speculative grade liquidity rating. The rating outlook is stable. The downgrade reflects the company's weakened financial position and the expectation that the company will continue to face challenging industry conditions over the next 12 to 18 months. Industry conditions across all four of Weyerhaeuser's business segments of timber harvesting, cellulose fibers, wood products and home building are not expected to improve significantly in the near term to materially reduce the company's expected cash burn levels, notwithstanding actions taken to reduce costs and curtail higher cost production. The company's weakened credit profile is principally due to its significant exposure to the protracted downturn in the U.S. residential construction market. Moody's anticipates that the company's performance will remain challenged until U.S. housing starts recover towards trend levels. Weyerhaeuser's ratings are supported by its position as the second largest private timber holder in North America, its dominant position and scale in forest products and cellulose fibers and the company's current liquidity position with approximately $1.8 billion in cash. While the extensive timberland holdings provide long term debt reduction capability, Moody's believes the market value and the salability of large tracts of timberlands are uncertain in the current environment as many of the potential buyers of timberland have significantly less liquidity. The SGL-1 liquidity rating indicates that Weyerhaeuser has strong liquidity supported by its large cash balance, its unencumbered asset base that can be used to augment liquidity (most notably the timberland holdings), a manageable level of near-term debt maturities and significant unused borrowing capacity under its bank lines. Moody's expects 2009 cash flow shortfalls to be accommodated by Weyerhaeuser's cash position. Going forward, we believe that the company's liquidity position may weaken as the company continues to burn cash, as more than half of the company's $2.2 billion undrawn credit facilities mature in less than one year and as the headroom under the company's financial covenants diminishes. The stable rating reflects Moody's expectations that Weyerhaeuser has the liquidity to weather the current industry conditions and that the company's financial performance will gradually improve to generate credit protection metrics in line with its revised rating. Downgrades: ..Issuer: Braxton (County of) WV ....Senior Unsecured Revenue Bonds, Downgraded to Ba1 from Baa2 ..Issuer: Camden (Town of) AL, Industrial Dev. Board ....Revenue Bonds, Downgraded to Ba1 from Baa2 ..Issuer: Cedar Rapids (City of) IA ....Revenue Bonds, Downgraded to Ba1 from Baa2 ..Issuer: Henderson (County of) KY ....Senior Unsecured Revenue Bonds, Downgraded to Ba1 from Baa2 ..Issuer: Lowndes (County of) MS ....Senior Unsecured Revenue Bonds, Downgraded to a range of Ba1 to NP from a range of Baa2 to P-2 ..Issuer: MacMillan Bloedel Limited ....Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 from Baa2 ..Issuer: New Jersey Economic Development Authority ....Revenue Bonds, Downgraded to Ba1 from Baa2 ..Issuer: Pennsylvania Economic Dev. Fin. Auth. ....Senior Unsecured Revenue Bonds, Downgraded to Ba1 from Baa2 ..Issuer: Perry (County of) KY ....Senior Unsecured Revenue Bonds, Downgraded to Ba1 from Baa2 ..Issuer: Weyerhaeuser Company ....Issuer Rating, Downgraded to Ba1 from Baa2 ....Senior Unsecured Bank Credit Facility, Downgraded to Ba1 from Baa2 ....Senior Unsecured Commercial Paper, Downgraded to NP from P-2 ....Senior Unsecured Medium-Term Note Program, Downgraded to Ba1 from Baa2 ....Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 from Baa2 ....Senior Unsecured Shelf, Downgraded to (P)Ba1 from (P)Baa2 ..Issuer: Weyerhaeuser Real Estate Company ....Commercial Paper, Downgraded to NP from P-2 ..Issuer: Willamette Industries, Inc. ....Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 from Baa2 Assignments: ..Issuer: MacMillan Bloedel Limited ....Senior Unsecured Regular Bond/Debenture, Assigned 52 - LGD4 ..Issuer: Weyerhaeuser Company ....Probability of Default Rating, Assigned Ba1 ....Speculative Grade Liquidity Rating, Assigned SGL-1 ....Corporate Family Rating, Assigned Ba1 ....Senior Unsecured Bank Credit Facility, Assigned 52 - LGD4 ....Senior Unsecured Regular Bond/Debenture, Assigned 52 - LGD4 ..Issuer: Willamette Industries, Inc. ....Senior Unsecured Regular Bond/Debenture, Assigned 52 - LGD4 Outlook Actions: ..Issuer: MacMillan Bloedel Limited ....Outlook, Changed To Stable From Rating Under Review ..Issuer: Weyerhaeuser Company ....Outlook, Changed To Stable From Rating Under Review ..Issuer: Weyerhaeuser Real Estate Company ....Outlook, Changed To Stable From Rating Under Review ..Issuer: Willamette Industries, Inc. ....Outlook, Changed To Stable From Rating Under Review Moody's last rating action on Weyerhaeuser was on February 9, 2009 when the ratings were placed under review for possible downgrade. Headquartered in Federal Way, Washington, Weyerhaeuser Company is one of the world's largest integrated forest products companies with operations in the growing and harvesting of timber; the manufacture, distribution and sale of forest products; and real estate construction, development and related activities. WHITE ENERGY: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: White Energy, Inc 5005 LBJ Freeway, Suite 1400 Dallas, TX 75244 Bankruptcy Case No.: 09-11601 Debtor-affiliates filing subject to Chapter 11 petitions: Entity Case No. ------ -------- White Energy Holding Company, LLC 09-11600 WE Hereford, LLC 09-11602 Plainview BioEnergy, LLC 09-11603 US Energy Partners, L.L.C. 09-11604 Type of Business: The Debtors build and acquire ethanol production projects. See http://www.white-energy.com/ Chapter 11 Petition Date: May 7, 2009 Court: District of Delaware (Delaware) Judge: Christopher S. Sontchi Debtor's Counsel: Michael R. Lastowski, Esq. mlastowski@duanemorris.com Duane Morris LLP 1100 North Market Street, Suite 1200 Wilmington, DE 19801-1246 Tel: (302) 657-4900 Fax: (302) 657-4901 Claim Agent: Garden City Group Inc. Estimated Assets: $100 million to $500 million Estimated Debts: $100 million to $500 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Archer-Daniels- Trade $2,901,455 Midland Company 4666 Faries Parkway Decatur, Illinois 62526 Attn: President Fax: (217) 424-6187 The Scoular Company Trade $1,752,915 10801 Mastin Street, Ste. 800 Overland Park, Kansas 66210 Attn: Eric Perry Fax: (913) 338-2999 Novozymes North Trade $608,526 America, Inc. 77 Perry Chapel Church Road Franklinton, NC 27525 City of Hays Trade $346,056 Oneok Energy Services Co LP $317,000 Russell County Trade $290,457 Milbank, Tweed, Professional $208,731 Hadley & McCloy LLP Univar USA, Inc. Trade $134,385 Occidental Chemical Corp. Trade $114,170 Blue Cross Blue Shield Trade $100,449 US Water Services, Inc. Trade $61,013 Agco, Inc. Trade $60,141 Dahlsten Truck Line Inc Trade $53,015 City of Hereford Trade $52,726 RSM McG1adrey, Inc. Professional $43,427 Gavilon Fertilizer LLC Trade $43,220 Ernst & Young, LLP Professional $42,445 Kansas Gas Service Trade $36,500 GE Mobile Water Trade $29,400 The petition was signed by David M. Diwik, chief executive officer. WILLIAM J. BIELSER: Case Summary & 4 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: William J. Bielser 4000 Goodsell Ln. Reno, NV 89523 Bankruptcy Case No.: 09-51374 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court District of Nevada (Reno) Judge: Gregg W. Zive Debtor's Counsel: Stephen R. Harris, Esq. Belding, Harris & Petroni, Ltd 417 W Plumb Ln Reno, NV 89509 Tel: (775) 786-7600 Fax: (775) 786-7764 Email: steve@renolaw.biz Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Mr. Bielser's petition, including his list of 4 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nvb09-51374.pdf The petition was signed by Mr. Bielser. WINDY CITY GRILL: Case Summary & 8 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Windy City Grill of Pine Island, LLC dba Uno's Chicago Grill 9641 Wilshire Lake Blvd Naples, FL 34109 Bankruptcy Case No.: 09-09373 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Crusty Creations of Coconut Point, LLC 09- 03327 Crusty Creations, LLC 09- 09269 EMD Group of SW Florida, LLC 09- 02543 Windy City Grill of Daniel's Parkway, LLC 09- 02547 Windy City Grill of Vanderbilt Beach, LLC 09- 02545 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court Middle District of Florida (Ft. Myers) Debtor's Counsel: Buddy D. Ford, Esq. 115 N. MacDill Avenue Tampa, FL 33609-1521 Tel: (813) 877-4669 Fax: (813) 877-5543 Email: Buddy@tampaesq.com Total Assets: $722,500 Total Debts: $3,135,677 According to its schedules of assets and liabilities, $3,100,000 of the debt is owing to secured creditors and the remaining debt to creditors holding unsecured nonpriority claims. 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/flmb09-09373.pdf The petition was signed by Edward M. Deleo, managing member of the Company. WOLVERINE TUBE: Edward Howard Advised on Bond Debt Refinancing -------------------------------------------------------------- Edward Howard said it was hired earlier this spring by Wolverine Tube, Inc. (Other OTC: WLVT) to help with corporate communications related to the company's recent successful refinancing of its bond debt. Wolverine Tube, based in Huntsville, Alabama, is one of the world's largest manufacturers of surface-enhanced copper and copper alloy tube. On April 29, 2008, Wolverine completed an exchange offer for its outstanding 10 1/2% Senior Notes due 2009. Holders of 88% of the $138 million in principal amount exchanged their notes for new notes due 2012. As a result, Wolverine has approximately $122 million in aggregate principal amount of new notes outstanding and all of the old notes have been cancelled. Edward Howard has served as public relations counsel to clients in more than two dozen cases of debt refinancing, bankruptcy reorganization and out-of-court financial restructuring. Edward Howard -- http://www.edwardhoward.com/-- says it leverages the power of communication for its clients, helping them achieve their goals by telling their stories, protecting their reputations, selling their products and growing their value. The firm's specialty is solving complex communication challenges. Founded in 1925, Ohio-based Edward Howard (with offices in Cleveland, Columbus and Dayton) is the nation's longest- established independent public relations firm, serving clients About Wolverine Tube Wolverine Tube Inc. -- http://www.wlv.com/-- is a leading manufacturer and supplier of technically advanced, surface- enhanced copper and copper alloy tube, fabricated products, and high-tech brazing and joining products. Wolverine's proprietary, custom-engineered tube products provide thermal management solutions for our customers in multiple markets including HVAC, refrigeration and appliance, electronics cooling, power generation, petrochemical and chemical processing. Wolverine delivers the most advanced metal surface technology enhancements for heat transfer solutions in today's marketplace. Standard & Poor's Ratings Services lowered its corporate credit rating on Wolverine Tube Inc. to 'SD' (selective default) from 'CC'. At the same time, S&P lowered the issue-level rating on Wolverine's 10.5% senior unsecured notes due 2009 to 'D' from 'C'. The downgrade follows the Company's April 29, 2009 announcement that it has completed an exchange offer of its 10.5% senior notes due 2009 for new 15% senior secured notes due 2012. Holders of $122 million of Wolverine's $138 million in principal amount of notes outstanding exchanged their notes for the new notes due 2012. All of the old notes due 2009 have been cancelled. S&P deems the options in the exchange offer for the new notes as less than the original promise, because the new notes' maturity extends beyond the original notes' maturity in April 2009. WOLVERINE TUBE: Successfully Exchanged Notes Due April 2009 ----------------------------------------------------------- Wolverine Tube Inc. has completed the exchange offer where $122 million of maturing 10.5% unsecured notes were exchanged for new 15% senior secured notes to mature in 2012. On April 28, 2009, Wolverine Tube issued the $121,558,000 aggregate principal amount of 15% Senior Secured Notes due 2012 pursuant to an indenture, dated as of April 28, 2009, among Wolverine Tube, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee and collateral agent. As security for the performance of its obligations under the Indenture, Wolverine Tube entered into a guarantee and collateral agreement, dated as of April 28, 2009, among Wolverine Tube, the Subsidiary Guarantors and U.S. Bank, as collateral agent. The Senior Secured Notes are secured on a first-priority basis by substantially all of the assets of Wolverine Tube and the Subsidiary Guarantors and will rank pari passu in right of payment with all of Wolverine Tube's future senior indebtedness and senior in right of payment to all of Wolverine Tube's future subordinated indebtedness, if any. The Guarantee and Collateral Agreement provides for the unconditional guarantee by the Subsidiary Guarantors of the payment of the principal and interest on the Senior Secured Notes and the performance of all other obligations of Wolverine Tube under the Indenture. The Senior Secured Notes will mature on March 31, 2012. Wolverine Tube will pay interest on the Senior Secured Notes at 15% per annum until maturity, of which 10% is payable in cash and 5% is payable by issuing additional Senior Secured Notes ("PIK Notes"); provided, that (a) if the outstanding principal amount of Senior Secured Notes at the close of business on March 31, 2010 exceeds $90 million, the interest rate will increase to 16%, of which 10% will be payable in cash and 6% will be payable in PIK Notes, and (b) if the outstanding principal amount of Senior Secured Notes at the close of business on March 31, 2011 exceeds $60 million, the interest rate will increase to 17%, of which 10% will be payable in cash and 7% will be payable in PIK Notes. Wolverine Tube will pay interest semiannually on March 31 and September 30 of each year, commencing September 30, 2009. Interest will be computed on the basis of a 360-day year of twelve 30-day months. At any time and from time to time, Wolverine Tube may redeem all or a part of the Senior Secured Notes upon not less than 30 nor more than 60 days' notice, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, on the Senior Secured Notes redeemed to the applicable redemption date, subject to the rights of holders on the relevant record date to receive interest on the relevant interest payment date. Unless Wolverine Tube defaults in the payment of the redemption price, interest will cease to accrue on the Senior Secured Notes or portions thereof called for redemption on the applicable redemption date. Under the Indenture, Wolverine Tube is not required to make mandatory redemption or sinking fund payments with respect to the Senior Secured Notes; provided, however, that if Wolverine Tube grants any liens to lenders under a credit agreement, Wolverine Tube will issue a notice of redemption to redeem an amount of Senior Secured Notes equal to 55% of "eligible NAFTA inventory" and "eligible NAFTA accounts receivable" (in each case as such terms are defined in such credit agreement). A notice of redemption will be delivered immediately prior to or concurrently with the closing of such credit agreement. The Indenture contains covenants that limit the ability of Wolverine Tube and its subsidiaries to incur additional indebtedness; pay dividends or distributions on, or redeem or repurchase capital stock; make investments; issue or sell capital stock of subsidiaries; engage in transactions with affiliates; create liens on assets; transfer or sell assets; guarantee indebtedness; restrict dividends or other payments of subsidiaries; consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries; and engage in sale/leaseback transactions. These covenants are subject to important exceptions and qualifications. About Wolverine Tube Wolverine Tube Inc. -- http://www.wlv.com/-- is a leading manufacturer and supplier of technically advanced, surface- enhanced copper and copper alloy tube, fabricated products, and high-tech brazing and joining products. Wolverine's proprietary, custom-engineered tube products provide thermal management solutions for our customers in multiple markets including HVAC, refrigeration and appliance, electronics cooling, power generation, petrochemical and chemical processing. Wolverine delivers the most advanced metal surface technology enhancements for heat transfer solutions in today's marketplace. Standard & Poor's Ratings Services lowered its corporate credit rating on Wolverine Tube Inc. to 'SD' (selective default) from 'CC'. At the same time, S&P lowered the issue-level rating on Wolverine's 10.5% senior unsecured notes due 2009 to 'D' from 'C'. The downgrade follows the Company's April 29, 2009 announcement that it has completed an exchange offer of its 10.5% senior notes due 2009 for new 15% senior secured notes due 2012. Holders of $122 million of Wolverine's $138 million in principal amount of notes outstanding exchanged their notes for the new notes due 2012. All of the old notes due 2009 have been cancelled. S&P deems the options in the exchange offer for the new notes as less than the original promise, because the new notes' maturity extends beyond the original notes' maturity in April 2009. WR GRACE: Asks Court to Approve Settlement of ERISA Litigation -------------------------------------------------------------- In June 2004, Keri Evans and Timothy Whipps, former employees of W.R. Grace & Co., on behalf of themselves and other participants in the Debtors' 401(K) Savings and Investment Plan, filed a class action against members of the board of directors of W. R. Grace & Co., and certain current and former officers and employees of the Debtors for alleged violation of the Employee Retirement Income Security Act of 1974. The Evans Plaintiffs, who sought compensatory damages before the U.S. District Court for the District of Massachusetts alleged that the Grace D&O, taking into account the decline in the price of Grace's common stock from July 1999 to February 2004, breached their fiduciary duties under ERISA by failing to: -- sell or take appropriate action in regard to Grace's common stock held by the S&I Plan during that period; and -- disclose adequately to S&I Plan participants the risk of investing in Grace's common stock. In December 2006, the District Court dismissed the complaint ruling that the Evans Plaintiffs lacked standing. U.S. District Court of Appeals, First Circuit, reversed the District Court's decision two years after following an appeal by the plaintiffs. While the appeal was pending, Mark Siamis, an active participant in the S&I Plan, filed a second class action asserting the same claims filed by the Evans Plaintiffs. In August 2008, the District Court consolidated the Evans complaint and the Siamis complaint. The Debtors maintain insurance coverage for potential fiduciary liability relating to various employee benefits, including the S&I Plan. Their principal policy related to the ERISA Litigation amounts to $25 million issued by National Union Fire Insurance Company of Pittsburgh, Pennsylvania. The Debtors believe that the ERISA Insurance Policy provides coverage to pay any liability resulting from the ERISA Litigation. In December 2004, the Debtors sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to use the ERISA Insurance Policy to pay legal fees and expenses incurred in connection with the ERISA Litigation as well to settle the ERISA Litigation. Subject to a full reservation of rights, National Union has paid certain legal fees, costs and disbursements incurred by the Grace D&O in connection with the ERISA Litigation. "Although the Debtors are not individually named defendants in the ERISA litigation, the Debtors have a duty to defend and indemnify their directors, officers and employees for liability, including that arising out of the ERISA litigation, pursuant to the Debtors' certificates of incorporation and by-laws and applicable laws," says Laura Davis Jones, Esq., at Pachulski, Stang Ziehl & Jones LLP, in Wilmington, Delaware. After a successful negotiation, the parties enter into a settlement agreement, which provides that the Debtors and the Non- Debtor Defendants will settle the ERISA Litigation for $10 million from funds obtained from National Union under the ERISA Insurance Policy, and paid into a designated account. Pursuant to an insurer agreement, the Debtors and National Union have agreed to mutual releases of claims they may have against each other that relate to or arise out of the ERISA Litigation. National Union is obligated to pay for any additional defense costs incurred by the Debtors' counsel related to the defense or settlement of the ERISA Litigation, and for up to $50,000 of the Debtors' costs of retaining Independent Fiduciary Services, Inc., as independent fiduciary to the S&I Plan. The Massachusetts District Court must approve the Settlement Agreement after a hearing for preliminary and final approval and certify the ERISA Litigation as a class action for settlement purposes. The Settlement Agreement must also be approved by IFS. The Debtors will pay IFS $60,000 for its services, and reimburse the firm for reasonable fees and expenses of outside legal counsel up to $40,000. National Union has agreed to split these costs. The ERISA Plaintiffs will release the Debtors and the Non-Debtor Defendants from all claims related to the ERISA Litigation, will dismiss their claims in the Debtors' Chapter 11 cases with respect to the ERISA Litigation, and will not file any new claims in the Debtors' Chapter 11 cases relating to the ERISA Litigation. Ms. Jones points out that the agreements will resolve significant potential liabilities alleged against the defendants, whom the Debtors are required to provide defense and indemnification. Accordingly, the Debtors ask the Court to approve: * the settlement agreement with the ERISA Plaintiffs; * the retention of IFS to review the settlement on behalf of the S&I Plan; and * the claims release agreement with National Union. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, says the amounts payable by National Union under the Agreements do not exhaust, or even nearly exhaust, the Debtors' available insurance coverage. The Debtors maintain excess insurance policies that are not utilized at all by the settlement, she adds. WR GRACE: Discloses Six Environmental Claims Settlement ------------------------------------------------------- W.R. Grace & Company and debtor-affiliates disclosed that they settled six environmental claims of four parties-in-interest during the period from January 1 through March 31, 2009. (a) The Debtors stipulate with Harrington Tools, Inc., thus resolving Claim No. 15160 for $112,547 relating to environmental response costs in connection with the Harrington Tools site in Los Angeles, California. Claim No. 15160 is allowed in full as an unsecured, prepetition, non- priority claim against the Debtors, the parties agreed. (b) The Debtors and Hain Capital Holdings, Ltd., reached a stipulation resolving Claim No. 2087 arising from environmental costs in the Harrington Tools site, in Los Angeles, California. Claim No. 2087 is allowed as an unsecured, prepetition, non-priority claim for $893,781, the parties agreed. (c) The Debtors entered into a stipulation with General Electric Company resolving GE's Claim No. 12938 for $136,562. Claim No. 12938, which is allowed as an unsecured, prepetition, non-priority claim, pertains to environmental costs involving the Green River Site, in Maceo, Kentucky. (d) The Debtors settled their dispute with NL Industries, Inc., on Claim Nos. 2625, 2626 and 2627. The parties agreed to allow Claim No. 2627 for $100,000 as a general unsecured, prepetition, non-priority claim against the Debtors. Claim Nos. 2625 and 2626 are disallowed and expunged, the parties further agreed. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. As reported by the Troubled Company Reporter on March 11, 2009, the Bankruptcy Court approved the disclosure statement explaining the First Amended Chapter 11 Joint Plan of Reorganization filed by W.R. Grace and its debtor affiliates, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, and authorized Grace to begin soliciting plan votes. The Court scheduled a two-phase confirmation hearing: -- Hearings on June 22 to 25 to deal with objections by insurance companies; and -- Hearings on Sept. 8 to 11 for objections related to claims from the facility in Libby, Montana. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Parties entitled to vote on the Plan must file objections to Plan confirmation, if any, no later than 4:00 p.m. Eastern time on May 20, 2009. Supplements to the Plan may be filed until May 10. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) WR GRACE: Judge Molloy Dismisses Criminal Case vs. Two Ex-Officers ------------------------------------------------------------------ Judge Donald Molloy of the U.S. District Court for the District of Montana dropped the criminal charges against William McCaig, one of former W.R. Grace & Company officers named as defendants in the U.S. Government's indictment against the chemical company, Bloomberg News reported on April 30, 2009. Mr. McCraig, a former manager of operations at Grace's Libby, Montana mine, was acquitted at the behest of the prosecution, Bloomberg said. Judge Molloy also discharged all cases against Robert C. Walsh, former vice president of Grace. "With respect to Mr. Walsh the government cannot prove its case without a reasonable doubt," a prosecutor told Judge Molloy, The Western News related in an April 28, 2009 report. The dismissal of the cases against the two former Grace officers leaves only three former Grace officers as defendants in the indictment -- Robert Bettachi, former senior vice president, Jack Wolter, former vice president and general manager of the Libby vermiculite mine's Construction Products Division, and Henry Eschenbach, former director of health and safety. Former Grace legal counsel Mario Favorito, who was also named as individual defendant, will be tried separately, Bloomberg said. Alan Stringer, a seventh defendant and a former general manager of operations in Libby, died in 2007. According to Tristan Scott of The Missoulian, lawyers representing Mr. McCraig argued that evidence presented over the past two months during the criminal case's trial is insufficient to convict Mr. McCraig beyond a reasonable doubt. The prosecutors, led by U.S. Attorney Kris McLean, asked charges against Mr. McCraig to be dropped, the report said. Judge Questions Conspiracy Theory & Evidence Prior to dropping the charges against the two former Grace officials, Judge Molloy, according to The Salt Lake Tribune, questioned how the prosecution intended to prove a conspiracy charge against Mr. McCraig who left the Libby mine in 1988. "You can't have a conspiracy to do something illegal, can you, if there is no law that makes your conduct illegal?" Judge Molloy asked, referring to the Clean Air Act's criminal statute, which wasn't enacted until 1990, the report related. Judge Molloy has also threatened to throw out the Government's charges against Grace and its former officers on the grounds that the prosecution has "misbehaved" and has repeatedly violated court orders and the use of a star witness who lacked credibility referring to Robert Locke, a former Grace executive, The New York Times said. Defense counsel lead by David Bernick, Esq., at Kirkland & Ellis, LLP, in Chicago, Illinois, has constantly maintained that Mr. Locke issued false and misleading statements during his stand as a witness for the Government. The defense told Judge Molloy that the Government and Mr. Locke failed to turn over 128 e-mails between Mr. Locke and Robert Marsden, an investigator with the Environmental Protection Agency, Bloomberg related. The e-mails, according to the defense, showed that the prosecution team had an "improperly close" relationship with Mr. Locke and that Mr. Locke "loathed" his former boss, Robert Bettachi, who is one of the named defendants in the indictment, the report continued. "The guy will say anything, any time, any place, as long as he thinks it's what somebody wants to hear," Bloomberg quoted Judge Molloy as saying to Kevin Cassidy, one of the two lead prosecutors in the case. "I can't believe you guys ever put him up on the stand." Judge Molloy continued, "[h]e testified to facts. Made 'em up as he went along, but he testified to facts." The trial, which started in mid-February 2009, is almost nearing its end, but Judge Molloy still has a lot of motions to dismiss charges pending on his desk. Judge Molloy, the Associated Press said, told prosecutors last week that they "presented discombobulated allegations" and didn't understand the evidence. Judge Molloy is yet to rule on the pending dismissal requests. If found guilty, Grace could be subject to up to $280 million in fines, plus additional amounts for restitution to victims. The indictment alleges that Grace could face an amount equal to twice the after-tax profit earned from its Libby operations or twice the alleged loss suffered by victims. The Government said Grace's after-tax profits were $140 million. If found guilty, Grace executives could face maximum prison sentences from 55 to 70 years. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. As reported by the Troubled Company Reporter on March 11, 2009, the Bankruptcy Court approved the disclosure statement explaining the First Amended Chapter 11 Joint Plan of Reorganization filed by W.R. Grace and its debtor affiliates, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, and authorized Grace to begin soliciting plan votes. The Court scheduled a two-phase confirmation hearing: -- Hearings on June 22 to 25 to deal with objections by insurance companies; and -- Hearings on Sept. 8 to 11 for objections related to claims from the facility in Libby, Montana. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Parties entitled to vote on the Plan must file objections to Plan confirmation, if any, no later than 4:00 p.m. Eastern time on May 20, 2009. Supplements to the Plan may be filed until May 10. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) WR GRACE: Proposes New Plan-Related Deposition Timeline ------------------------------------------------------- W.R. Grace & Co. and its debtor affiliates, together with certain of their insurers, filed with the U.S. Bankruptcy Court for the District of Delaware an amended case management order governing the confirmation of the Debtors' Joint Plan of Reorganization. The revised CMO reflects these modifications: (a) the deadline for completion of Phase I non-expert depositions will be changed from May 4 to May 18, 2009; (b) the deadline for objectors to the Debtors' reorganization plan to file their Phase I trial briefs will be moved from May 18 to June 1, 2009; and (c) the deadline for Plan Proponents to file their Phase I trial briefs will be changed from May 29 to June 8, 2009. According to the Debtors' counsel, James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, the Insurers also seek to revise the CMO to clarify that certain issues on the Asbestos Reimbursement Agreements will not be addressed in Phase I. The Debtors ask the Court to sign a proposed 3rd Amended CMO, a full-text copy of which is available for free at: http://bankrupt.com/misc/grace_prpsd3rdAmnddCMO.pdf In a separate certification, Mr. O'Neill related that the proponents and objectors to the Debtors' reorganization plan have negotiated the terms of a proposed protective order governing confidentiality of insurance and other confirmation discovery, a full-text copy of which is available for free at: http://bankrupt.com/misc/grace_prpsdprotectiveORD.pdf The proposed protective order is filed for the Court to approve. Libby Claimants Also Seek Changes to CMO The asbestos injury claimants in Libby, Montana also asked the Court to amend the second amended CMO to: -- provide a deadline for the Plan Proponents to serve on each party objecting to the Plan detailed preliminary contentions in response to the preliminary objection served by that Plan Objector; -- extend the deadline to conclude depositions currently set on June 15, 2009; and -- establish a briefing schedule for Daubert motions, as agreed in principle by the parties. On behalf of the Libby Claimants, Adam G. Landis, Esq., at Landis Rath & Cobb LLP, in Wilmington, Delaware, complained that the Plan Proponents' responses to the interrogatories lodged by the Libby Claimants are "inexcusably scant" in prejudice to the Libby Claimants, who, with barely five months to the September 2009 final hearing, are still without the needed factual and legal assertions from the Plan Proponents to frame the issues on which discovery is necessary. Thus, the Libby Claimants ask that Phase II of the confirmation hearing by at least 60 days to accommodate the proposed deadline changes. The Court will convene an expedited hearing on motion, at the behest of the Libby Claimants, on May 14, 2009, at 9:00 a.m., in Pittsburgh, Pennsylvania. Responses and objections must be filed by May 8. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. As reported by the Troubled Company Reporter on March 11, 2009, the Bankruptcy Court approved the disclosure statement explaining the First Amended Chapter 11 Joint Plan of Reorganization filed by W.R. Grace and its debtor affiliates, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, and authorized Grace to begin soliciting plan votes. The Court scheduled a two-phase confirmation hearing: -- Hearings on June 22 to 25 to deal with objections by insurance companies; and -- Hearings on Sept. 8 to 11 for objections related to claims from the facility in Libby, Montana. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Parties entitled to vote on the Plan must file objections to Plan confirmation, if any, no later than 4:00 p.m. Eastern time on May 20, 2009. Supplements to the Plan may be filed until May 10. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) WR GRACE: Seeks Permission to Continue Deloitte Engagement ---------------------------------------------------------- W.R. Grace & Co. and its affiliates seek permission from the U.S. Bankruptcy Court for the District of Delaware to continue to employ Deloitte Tax LLP as their tax service providers pursuant to a modified engagement letter dated April 24, 2009. Under the original engagement letter, which has already expired, Deloitte Tax will perform a broad range of tax services, including communication and assistance on federal, foreign, state and local tax matters. Kathleen P. Makowski, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, relates that the scope of the services are the same under the Modified Engagement Letter, but that for substantial projects, the Modified Engagement Letter provides that parties will sign Statements of Work specifying in more detail the terms of the particular project. This is for both the Debtors and Deloitte Tax to more effectively organize and monitor the progress of the project, she explains. Under the April 24 Engagement Letter, the Debtors will pay Deloitte Tax based on these hourly rates: Professional Hourly Rate ------------ ----------- Partner/Director $610 - $640 Senior Manager $510 - $540 Manager $430 - $460 Senior $360 - $380 Staff $260 - $330 The Modified Engagement Letter includes indemnification provisions for Deloitte Tax personnel in connection with the engagement. The Letter also provides that, by agreement of the parties, particular work orders may provide for different fee arrangements. Deloitte Tax will disclose the arrangements in its fee applications with the Court as soon fee arrangements are agreed upon with the Debtors, Ms. Makowski says. A copy of the April 24 Engagement Letter is available for free at http://bankrupt.com/misc/grace_DeloitteTxEngmnt_apr24.pdf Deloitte Tax maintains that it is a disinterested person within the meaning of Section 101(14) of the Bankruptcy Code. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. As reported by the Troubled Company Reporter on March 11, 2009, the Bankruptcy Court approved the disclosure statement explaining the First Amended Chapter 11 Joint Plan of Reorganization filed by W.R. Grace and its debtor affiliates, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, and authorized Grace to begin soliciting plan votes. The Court scheduled a two-phase confirmation hearing: -- Hearings on June 22 to 25 to deal with objections by insurance companies; and -- Hearings on Sept. 8 to 11 for objections related to claims from the facility in Libby, Montana. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Parties entitled to vote on the Plan must file objections to Plan confirmation, if any, no later than 4:00 p.m. Eastern time on May 20, 2009. Supplements to the Plan may be filed until May 10. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) WR GRACE: Seeks to Settle Income Tax Dispute With IRS ----------------------------------------------------- W.R. Grace & Co. seek permission from the U.S. Bankruptcy Court for the District of Delaware to settle a federal income tax controversy with the Internal Revenue Service relating to specified liability losses incurred by W. R. Grace & Co.-Conn. in 1998 and carried back to the 1989 taxable year, and to implement the terms of that settlement. During its 1998 taxable year, Grace-Conn. applied as a carry back $130 million of specified liability losses to its 1989 taxable year. Grace-Conn then filed for a refund of $28 million, which IRS refunded to Grace-Conn's former parent, Fresenius Medical Care Holdings, Inc. Under existing agreements between Fresenius and Grace-Conn, Fresenius paid the tentative refund to Grace- Conn. Grace Conn thereafter filed for additional refund after it determined that it has an additional $30 million SLL in 1998 that it could also carry back to 1989. Grace-Conn applied for refund of an additional overpayment of tax in 1989. In March 2007, the IRS issued a notice of deficiency for 1989 to Fresenius seeking the payment of $32,554,061 in taxes based on a disallowance of the 1989 carryback. The IRS also disallowed Grace Conn's additional carryback. At about the same time, the Debtors sought to modify the automatic stay to commence a United States tax court litigation to resolve the SLL controversy. The Debtors then petitioned the U. S. Tax Court for a redetermination of the deficiency notice and disallowance notice. IRS and the Debtors agree that the total amount of net operating losses allowable as SLL is $161,526,580. They, however, disagree as to whether the carryback may be used to offset all income of the consolidated group of which Grace-Conn. was a member. The IRS asserts that the carryback is subject to limitations imposed by the separate return limitation year rules. If the SRLY rules were to apply to the Carryback, such Caryback would only be deductible against Grace-Conn's separate company income in that year rather than the income of the consolidated group. Grace- Conn had no separate company income in 1989 and, therefore, if the SRLY rules applied none of the Caryback would be deductible in 1989. The Debtors argued that the SRLY rules should not apply under the so-called "Lonely Parent Exception", pursuant to which the SRLY rules do not limit the deductibilty of a loss if the corporation generating the loss is considered the "Lonely Parent" of the consolidated group for the year in which the loss is carried. Thereafter, the Debtors and IRS reach a settlement that the total net operating loss at issue of $161,526,580 will be allowed as a SLL carryback to the 1989 taxable year. Of that amount, $53,526,580 may be used in 1989 without limitation by the SRLY rules, resulting to a tax refund of $14.7 million plus interest for the 1989 taxable period. The settlement also allows the Debtors to retain the remainder of the SLLs at issue for use in later years subject to the SRLY rules. Should the Court grant the Debtors' request, the IRS will then forward the Settlement to the Joint Committee for final review and approval so that Tax Court can enter a final decision, Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, says. If the Bankruptcy Court denies the Settlement, the Debtors will be forced to litigate the matter. The proceedings will likely be protracted, the cost expensive, and a favorable outcome cannot be assured, Ms. Jones tells the Court. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. As reported by the Troubled Company Reporter on March 11, 2009, the Bankruptcy Court approved the disclosure statement explaining the First Amended Chapter 11 Joint Plan of Reorganization filed by W.R. Grace and its debtor affiliates, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, and authorized Grace to begin soliciting plan votes. The Court scheduled a two-phase confirmation hearing: -- Hearings on June 22 to 25 to deal with objections by insurance companies; and -- Hearings on Sept. 8 to 11 for objections related to claims from the facility in Libby, Montana. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Parties entitled to vote on the Plan must file objections to Plan confirmation, if any, no later than 4:00 p.m. Eastern time on May 20, 2009. Supplements to the Plan may be filed until May 10. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) WR GRACE: Anderson Brings Claims Dispute to District Court ---------------------------------------------------------- Anderson Memorial Hospital takes an appeal to the U.S. District Court for the District of Delaware from the memorandum opinion and order of the U.S. Bankruptcy Court for the District of Delaware, disallowing and expunging the Canadian Zonolite Attic Insulations claims filed against W.R. Grace & Co. Anderson also takes an appeal to the U.S. District Court from the order issued by Judge Judith Fitzgerald disallowing Claim No. 1709 Anderson filed on behalf of itself and all buildings encompassed in its Certified Class Action. The Bankruptcy Court had rejected an attempt on Anderson's part to obtain certification of a class of property damage claimants. In 2005, Anderson sought class certification based on the existence of a purported class certified prepetition in South Carolina state court. The Bankruptcy Court, however, denied that certification request holding that "there is no pre- or post- petition Anderson Memorial class certified as to Grace." In September 2008, the District Court denied Anderson's motion for leave to appeal from the Bankruptcy Court's decision. An appeal on the District Court's rejection of the motion for leave is pending before the Third Circuit Court of Appeals. Anderson Memorial has filed several claims in the Debtors' Chapter 11 cases asseerting property damages caused by the installation of the Debtors' asbestos-tainted ZAI product. Christopher D. Loizides, Esq., at Loizides, P.A., in Wilmington, Delaware, represents Anderson Memorial. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. As reported by the Troubled Company Reporter on March 11, 2009, the Bankruptcy Court approved the disclosure statement explaining the First Amended Chapter 11 Joint Plan of Reorganization filed by W.R. Grace and its debtor affiliates, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, and authorized Grace to begin soliciting plan votes. The Court scheduled a two-phase confirmation hearing: -- Hearings on June 22 to 25 to deal with objections by insurance companies; and -- Hearings on Sept. 8 to 11 for objections related to claims from the facility in Libby, Montana. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Parties entitled to vote on the Plan must file objections to Plan confirmation, if any, no later than 4:00 p.m. Eastern time on May 20, 2009. Supplements to the Plan may be filed until May 10. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ZARNOCH HYSON: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Zarnoch Hyson, LLC dba Marsh Harbour Inn 308 W Moore St. Southport, NC 28461 Bankruptcy Case No.: 09-03747 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court Eastern District of North Carolina (Wilson) Debtor's Counsel: George M. Oliver, Esq. Oliver & Friesen, PLLC PO Box 1548 New Bern, NC 28563 Tel: (252) 633-1930 Fax: (252) 633-1950 Email: efile@oliverandfriesen.com Total Assets: $8,675,737 Total Debts: $3,513,140 According to its schedules of assets and liabilities, $2,984,615 of the debt is owing to secured creditors, $37,677 for taxes owed to governmental units, and the remaining debt to creditors holding unsecured nonpriority claims. 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/nceb09-03747.pdf The petition was signed by Rodney J. Hyson, Sr. * 6th Circuit Permits Cramming Down Mobile Home Debt ---------------------------------------------------- Although the U.S. Senate last week decided against allowing bankruptcy judges to cut down mortgages on principal residences, two U.S. Circuit Courts of Appeal have now ruled that the mortgage on a mobile home can be reduced to market value when the owner files bankruptcy, Bloomberg's Bill Rochelle said. Reading the bankruptcy statute as it's written, the Sixth Circuit Court of Appeals in Cincinnati said that the prohibition against trimming down home mortgages only applies to real property. Since a mobile home isn't real property under Ohio law, the bankruptcy judge was authorized to cut down the mortgage to current market value, the report said. As for the land where the mobile home sits, the property by itself isn't a residence, so the cram-down prohibition doesn't apply either, the report added. The Court of Appeals sitting in Richmond, Virginia, reached the same result in a case decided in February. The 4th Circuit, considered to be conservative, also read Congress' choice of words strictly. The new case is Reinhardt v. Vanderbilt Mortgage & Finance Inc. (In re Reinhardt), 08-3309, 6th U.S. Circuit Court of Appeals (Cincinnati), and the prior case is Enis v. Green Tree Servicing LLC (In re Ennis), 07-2134, 4th U.S. Circuit Court of Appeals (Richmond, Virginia). * Claim Buyer May Challenge Discharge of Debt --------------------------------------------- According to Bill Rochelle at Bloomberg, the U.S. Court of Appeals in San Francisco has ruled that if a claim is sold, the buyer has a right to file suit in bankruptcy court seeking a declaration that the debt isn't wiped out by the bankruptcy discharge, The case Boyajian v. New Falls Corp. (In re Boyajian), 07-55713, 9th U.S. Circuit Court of Appeals (San Francisco), involved a debt that was allegedly obtained based on a false financial statement used to deceive the lender. The lender transferred the claim and all rights associated with it to a buyer. The buyer filed suit in bankruptcy court arguing that the debt couldn't be discharged for the underlying fraud. According to Mr. Rochelle, the bankruptcy judge ruled against the buyer, saying the fraud had not been perpetrated against the buyer. The bankruptcy appellate panel reversed, and the 9th Circuit affirmed. Looking at the language of the statute, the Circuit Court concluded that Congress didn't intend to bar dischargeability suits when a claim was sold. The court also saw the result as being consistent with the purpose of dischargeability laws in preventing fraud. * Trustees Not Automatic for Ponzi Scheme Bankruptcies ------------------------------------------------------ With Ponzi schemes being discovered frequently, a decision last week from the U.S. Court of Appeals in New York is important for ruling that a Chapter 11 trustee isn't automatically required when a receiver was appointed before bankruptcy, Bill Rochelle at Bloomberg News said. In the case Adams v. Marwil (In re Bayou Group LLC), No. 07-1508, before the Second Circuit Court of Appeals (Manhattan), the U.S. Trustee unsuccessfully argued that the receiver appointed before bankruptcy was automatically ousted on the filing under Chapter 11. The case involved a hedge fund named Bayou Group LLC that turned out to be a Ponzi scheme. The Second Circuit Court of Appeals reasoned that there was no management void, and thus no need for a Chapter 11 trustee, because the receiver had been given management powers in addition to custody of the assets, Mr. Rochelle said. The Appeals Court, the report adds, also said there were no allegations that the receiver himself was incompetent or guilty of fraud. Based in Chicago, Illinois, Bayou Group LLC operated and managed hedge funds. The Company and its affiliates were sent to Chapter 11 on May 30, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-22306) to pursue recoveries for the benefit of defrauded investors. Elise Scherr Frejka, Esq., at Dechert LLP, represents the Debtors in their restructuring efforts. Joseph A. Gershman, Esq., and Robert M. Novick, Esq., at Kasowitz, Benson, Torres & Friedman, LLP, represent the Official Committee of Unsecured Creditors. Kasowitz, Benson, Torres & Friedman LLP is counsel to the Unofficial Committee of the Bayou Onshore Funds. Sonnenschein Nath & Rosenthal LLP represents certain investors. When the Debtors filed for protection from their creditors, they reported estimated assets and debts of more than $100 million. Bayou also filed lawsuits against former investors who allegedly received fictitious profits and an inequitably large return of their principal investments. Jeff J. Marwil, Esq., at Jenner & Block, was appointed on April 28, 2006, as the federal equity receiver. As reported in the Troubled Company Reporter on April 16, 2008, Bayou Group and its debtor-affiliates delivered 47 adversary complaints to the Honorable Adlai S. Hardin Jr. of the U.S. Bankruptcy Court for the Southern District of New York, seeking to recover certain fraudulent transfers made by investors against the Debtors. The Bayou entities include Bayou Management LLC, Bayou Advisors LLC, Bayou Equities LLC, Bayou Fund LLC, Bayou Superfund, Bayou No Leverage Fund LLC, Bayou Affiliates Fund LLC, and Bayou Accredited Fund LLC. The Debtors said the adversary proceedings arose from a massive fraudulent investment scheme committed by the Bayou entities, which controlled private pooled investment hedge funds. * Airlines Must Rebound in Revenues & Credit Market Access ---------------------------------------------------------- Fitch Ratings views a near-term rebound in revenue fundamentals and credit market access as increasingly urgent if the U.S. airline industry is to avoid another period of intense liquidity pressure as macroeconomic and air travel demand fundamentals improve only slowly moving into 2010. In the spring edition of 'Airline Credit Navigator,' Fitch also says in spite of cash flow support delivered by plunging crude oil and jet fuel prices since last summer's alarming peak, the outlook for operating margins and free cash flow has taken a turn for the worse among most U.S. carriers in early 2009. 'Despite deep concerns related to the revenue environment, low fuel prices represent a huge source of cash flow support for the industry,' said Bill Warlick, senior director at Fitch Ratings. 'We estimate that U.S. carriers as a group could realize over $17 billion of annualized cash savings this year as a result of the dramatic decline in spot jet fuel prices from over $4.00 per gallon at last summer's peak to less than $1.50 per gallon early this year.' While some U.S. carriers had limited success in raising new capital in the first quarter, access to credit markets remains highly constrained. With heavy and steady refinancing requirements over the next few years, this situation will need to change quickly if liquidity levels are to remain comfortable during a prolonged period of operating stress. 'Even factoring in a slow improvement in year-over-year unit revenue comparisons as the economy stabilizes, U.S. airlines generally lack the free cash flow generation power to fund heavy debt maturities without solid access to the capital markets,' continued Warlick. 'While the industry has historically had success in tapping new sources of liquidity even when operating conditions are poor, the current state of the world financial system and the very limited size of remaining unencumbered asset bases will preclude any rapid return to the era of open aircraft- backed debt financing seen earlier in the decade.' Fitch says the greatest risk factor for the industry over the near-term is the potential for further weakness in demand, yields and passenger revenue per available seat mile extending through the summer as the global recession continues. While some very preliminary signs of a moderation in year-over-year RASM comparisons started to take shape in April 2009 as booking trends seemed to stabilize at the March lows, new concerns appeared on April 27 as the swine flu virus began to spread beyond Mexico. The scope of any immediate revenue shock linked to swine flu is likely to be limited to heavily-affected areas including Mexico where total U.S. industry exposure is relatively small. Should the number of new flu-related deaths remain low, with a potential leveling off of new cases by early summer, the industry revenue shock will be relatively mild. In addition, margin pressure in affected markets will be contained in part by announced schedule reductions aimed at temporarily realigning capacity with a lower level of demand. Airlines currently rated by Fitch include: -- AMR Corp. 'CCC'; Negative Outlook; -- Continental Airlines, Inc. 'B-'; Stable Outlook; -- Delta Air Lines, Inc. 'B'; Negative Outlook; -- JetBlue Airways Corp. 'B-'; Negative Outlook; -- Southwest Airlines Co. 'BBB+'; Stable Outlook; -- UAL Corp. 'B-'; Negative Outlook; -- US Airways Group, Inc. 'CCC'; Negative Outlook. * Big US Banks Face More In Losses Despite Q1 Gains, S&P Says ------------------------------------------------------------- The first quarter provided a respite from relentless bad news for large U.S. commercial and investment banks, but Standard & Poor's Ratings Services believes it will not last, according to a report it published today on RatingsDirect, "Major Banks' First-Quarter Improvements May Prove Temporary As Loan Quality Continues To Slide." "One theme that we discern is that stronger banks are distinguishing themselves from the weaker ones as market shares shift," said Standard & Poor's credit analyst Tanya Azarchs. "The trend is especially visible in fixed-income trading." The firms' investment-banking arms handled a huge increase in fixed-income trading, and mortgage-banking production revenues surged. But the drumbeat of mounting problems in loan quality was clearly audible for the diversified banks, and we believe it could become the dominant theme in the coming quarters. The trend was so pronounced that it even drowned out the noise of continuing write- downs on troubled securities. With the pressures on earnings came pressures on capital and on the ratings themselves. Standard & Poor's cited increasing industry risk as a rationale for putting the commercial banks in this peer group on CreditWatch with negative implications on Monday (see "Ratings On 23 Financial Institutions Placed On CreditWatch Negative," published May 4, 2009, on RatingsDirect). * Federal Reserve Tells 7 Banks to Boost Capital Levels by $65BB ---------------------------------------------------------------- Deborah Solomon, David Enrich, and Damian Paletta at The Wall Street Journal report that the Federal Reserve has directed at least seven of the U.S.'s biggest banks to increase their capital levels by about $65 billion. WSJ states that these banks need to boost their capital: -- Wells Fargo & Co. needs to find $13 billion to $15 billion; -- GMAC LLC, needs to find about $11.5 billion; -- Citigroup Inc., needs about $5 billion; -- Morgan Stanley needs $1.5 billion; -- Regions Financial Corp.; and -- State Street Corp. of Boston. As reported by the Troubled Company Reporter on May 7, 2009, regulators told BofA that it must take steps to address a roughly $35 billion capital shortfall based on results of the government's stress tests. WSJ says that results for the remaining six banks couldn't be learned, but analysts and investors expect several of them to face sizable capital deficit. According to WSJ, banks are being told to boost their capital not because they are in trouble, but because regulators think they don't have a big enough buffer to continue lending if the economy worsens in the coming months. WSJ quoted Federal Deposit Insurance Corp. Chairman Sheila Bair as saying, "There will be additional needs for capital buffers for some institutions, but I think there will be mechanisms to do that within the next six months." Banks that need more capital will have until June 8 to develop a plan and November 9 to implement it, WSJ states. WSJ relates that the banks must review their management and assure regulators that leadership has "sufficient expertise and ability," to manage through the current environment. WSJ states that some of the stronger banks will be allowed to repay funds borrowed from the government under its Troubled Asset Relief Program and escape the related restrictions on compensation and dividend payments. The report states that the administration officials continue to believe many banks will be able to add to their capital without using TARP's remaining $109.6 billion and they are optimistic that much of the money will come from private investors, selling assets or offloading bad debt to a program set up by the Treasury. According to WSJ, banks that can't tap private markets would be encouraged to refill their coffers through "mandatory convertible preferred" shares. WSJ says that banks could apply for new funds from the government by agreeing to sell these preferred shares to the Treasury. Banks, WSJ states, could exchange the government's existing preferred stakes, received in exchange for TARP funds, for mandatory convertible preferred shares, which would convert into common equity if the bank posts losses in the future. Citing people familiar with the matter, WSJ relates that the result of the government's two-and-a-half-month examination of the U.S.'s 19 largest financial institutions shows that these banks won't have to raise additional capital: -- J.P. Morgan Chase & Co., -- Goldman Sachs Group Inc., -- MetLife Inc., -- American Express Co., -- Bank of New York Mellon Corp., and -- Capital One Financial Corp. * Stress Test Results Say 10 Banks Must Raise $75BB in Capital -------------------------------------------------------------- Michael R. Crittenden and Jessica Holzer at The Wall Street Journal report that the Federal Reserve's stress test results show that 10 of the 19 largest financial institutions in the U.S. will be required to raise a combined $75 billion in capital. The results show that the quality, more than the quantity, of capital at the banks is what needs to be improved, WSJ relates, citing Federal Reserve chairperson Ben Bernanke. According to WSJ, Treasury Secretary Timothy Geithner said that the department will reopen existing programs to make capital available to banks of all sizes. The Treasury Department has enough money left over from the $700 billion financial bailout to help the 19 banks achieve the capital buffers required by the government, the report says, citing Mr. Geithner. WSJ states that these banks were told to raise capital: -- Bank of America Corp., -- Citigroup Inc., -- Wells Fargo & Co., -- GMAC LLC, -- Morgan Stanley, -- Regions Financial Corp., -- Fifth Third Bancorp, -- KeyCorp, -- PNC Financial Services Group Inc., and -- SunTrust Banks. WSJ says that BofA must raise almost $34 billion in capital. According to WSJ, all 10 banks must raise Tier 1 common capital to boost their reserves. WSJ relates that Wells Fargo and Morgan Stanley said that they will sell billions of dollars in stock to address the government- identified shortfalls. Wells Fargo, according to WSJ, said that it will offer $6 billion in stock, while Morgan Stanley said it will sell $2 billion in stock and $3 billion of senior notes not guaranteed by the Federal Deposit Insurance Corp. WSJ reports that these banks don't have to raise additional capital: -- J.P. Morgan Chase & Co., -- Goldman Sachs Group Inc., -- American Express Co., -- BB&T Corp., -- State Street Corp., -- MetLife Inc., -- Bank of New York Mellon Corp., -- US Bancorp, and -- Capital One Financial Corp. Federal Reserve chairperson Ben S. Bernanke said in a statement, "The examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months. However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn." "The capital assessment results we are reporting today are just one important element of the government's broader and ongoing efforts to strengthen the financial system and the economy. The current crisis has been one of the most challenging financial and economic episodes in modern history, but we face no problems that cannot be overcome with insight, patience, and persistence. The Federal Reserve, through its independent actions and in collaboration with the other agencies represented here, will certainly do its part in our common effort to restore stability and prosperity," Mr. Bernanke stated. Details on the stress test results are available at: http://ResearchArchives.com/t/s?3c94 * BOOK REVIEW: Megamergers - Corporate America's Billion-Dollar Takeovers ------------------------------------------------------------ Author: Kenneth M. Davidson Publisher: Beard Books Hardcover: 427 pages Listprice: $34.95 Review by Henry Berry Megamergers are nothing new to the business world. One of the first occurred in 1901, when Carnegie Steel merged with several rival steel corporations, resulting in the billion-dollar United States Steel. Since then, megamergers have been a part of American business. However, the author notes that megamergers have historically "occurred sporadically and been understandable" on face value. By contrast, in recent decades there has been a "current wave of large mergers [that] is unprecedented." In Megamergers - Corporate America's Billion-Dollar Takeovers, Davidson looks at the unprecedented number of megamergers occurring today and considers whether this signals a change in the thinking of U.S. business leaders. Legislators, corporate executives, mergers specialists, and anyone else involved in, or affected by, megamergers will find this book enlightening. An announcement of a merger is usually accompanied with the pronouncements that it will result in greater synergies, operational efficiencies, and improved servicing of markets. Davidson questions whether this has, in fact, been the case. He analyzes the subsequent financial performance of the corporate behemoths produced by these megamergers and concludes that the majority of them were not justifiable nor, ultimately, productive. Davidson is an admitted skeptic about the value of mergers to the overall economy and to employees, stockholders, and consumers. He is critical of the overly optimistic rationales prevalent in today's business climate that lead many businesspersons into mergers. For the most part, though, he keeps his biases in check. He rejects many of the common criticisms of mergers. For example, he finds unpersuasive the argument that mergers should be rejected on the ground that they undermine market competitiveness. Nor, does he say, is it worthwhile to revisit the ongoing debate over whether "`risk arbitrageurs are good guys or bad guys." The author states that his "first intention [is] to paint a picture of what is happening [to] clarify the issues involved and areas of dispute." He offers a balanced examination of the megamerger phenomenon, particularly as it pertains to the energy and financial services industries. He goes beyond seeing megamergers only as phenomena of contemporary corporate culture, and his analyses go beyond mere statistics. Megamergers have their roots not only in business ambitions and current trends, but also in human nature. Recognizing this, the author also addresses the psychology underlying megamergers. As noted in the section "The Acquisition Imperative," mergers present a temptation to the decision-making executives of successful companies "look[ing] beyond their product and consider[ing] the disposal of excess profits." Davidson explains why a merger appears to many executives to be a better option than distributing profits to shareholders, starting new businesses, or investing in securities. The informed perspective Davidson offers in this book, first published in 2003, is just as relevant today. It is a book that brings new wisdom to old ways of thinking about megamergers. An attorney for the U. S. Federal Trade Commission for 25 years, Kenneth M. Davidson has also been a corporate attorney and a visiting law professor. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Ma. Theresa Amor J. Tan Singco, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2009. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***